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Tale of the Tape 

Good evening everyone. Happy Friday! 🥳

Nifty and Sensex ended a boring range-bound session with minor cuts. Midcaps (+0.3%) and Smallcaps (+0.4%) fared better. The advance-decline ratio was evenly split. ✌️

Across sectors, it was an even mix of red and green. Real estate (+1%) and Pharma (+0.4%) saw decent gains. PSU banks (-1.1%) and Oil & Gas (-0.4%) stocks were hit by selling pressure. 📉

Vodafone Idea surged 8% today. Is the stock high on hope or fundamentals? Read our top story below. 🔍

Aditya Birla Group has unleashed a bazooka in the paints sector. How will it impact rivals? More details below. 🎨

Brokerage action. Yes Bank slipped -3% after Goldman Sachs downgraded the stock to a sell. On the other hand, Citi sees a 27% upside in MamaEarth. 🚀 

Jio Financial Services zoomed 11% today; the stock is up 22% in the last week. 🔥

Idea Forge rallied +8% on reports that the company may expand into the US market. 🌎 

Sona BLW Precision Forgings gained 6% after its key product received PLI certification from the GOI. ✅

Kalyani Steel will invest Rs 11,750 cr to set up manufacturing plants in Odisha. 🏭

IPO update. Juniper Hotels IPO sailed through on the final day. 👍

Here are the closing prints: 

Nifty 22,212 -0.1%
Sensex 73,142 -0.1%
Bank Nifty 46,811 -0.2%

Painting A New Picture

India’s paint sector is in for a massive SHAKE-UP! ICYMI – the Aditya Birla Group officially entered the paints biz yesterday. Chairman KM Birla says the new venture aims to be profitable within three years and hit Rs 10,000 cr in revenue by then! Insane stuff. 🤯

For the unaware, a little context first. The paint sector has been dominated for DECADES by just 4 companies. Asian Paints, Berger, Kansai and Akzo. Out of this, in the all-important decorative paint segment, Asian Paints had a 54% market share, while Berger had 20%. 📊

In the last 3 years, other players have also jumped in: Astral, JSW Group, Pidilite and JK Cement. Most experts predict a competition bloodbath. For the next year or so, there will be no winners, only losers. A margin hit is obvious. In its Q3 earnings call, Berger management said it was ready to sacrifice margins to protect market share. Asian Paints hit a solid 22% EBITDA margin in 9MFY24, but cut its margin guidance in the medium-term to 18%-20%. Yes, the paint industry is projected to grow at an 8% CAGR over the next few years, but most players will see a declining topline in the near term. 📉

Big Picture: Massive competition will hurt the fringe players the most in the beginning, not Asian Paints. Birla’s stated aim is to become the market’s Number 2. Brokerage Nuvama’s analysis projects that in the long-term, the Number 1 and 2 players can “happily” co-exist with Birla Opus. It’s when it comes to Number 3 and Number 4, that things will get rough. But that doesn’t mean there will be no short-term pain for Asian Paints. FYI – Jefferies has an underperform call and sees a 16% potential downside to Asian Paints stock. 🚨

Stocktwits Specials

IRFC has surged 8x in the past year. At 150-ish the stock is down slightly from its all-time highs. So, should you buy the dip? 🧐

Check out our latest video where we break down all the key updates on IRFC, covering both fundamental and technical analysis. Also, get to know SEBI RAs’ views on the stock. 👇🏻

Watch Now

VI Is Killing It! (Silently)

What’s going on with Vodafone Idea? If you looked only at its share price, you’d think there’s nothing wrong. The stock has more than DOUBLED in the last six months and is up a cool 12% today alone. 🚀

Yes, investors are excited that the firm’s board will decide on fundraising plans on Feb 27. But we’ve been here before. The stock price alone doesn’t show the full picture. Let’s take a quick walk down memory lane. 🤓

1) Bleeding subscribers: The latest TRAI data shows that VI continues to lose users at an alarming rate. The company lost 13.68 lakh wireless subscribers in Dec 2023, up from the 10.73 lakh it lost in November. FYI – its subscriber base also declined for NINE STRAIGHT MONTHS in a row in 2023. 🛜

2) Losses galore: In Q3FY23, VI’s losses “narrowed” yes. But it narrowed from an insane Rs 7,990 cr net loss to a still insane Rs 6,985 cr. Fun fact: As of Dec 2023, the firm’s gross debt stood at a whopping Rs 2.15 lakh cr; the majority being deferred spectrum payment costs at Rs 1.38 lakh cr. Average revenue per user has increased slightly over the last year to Rs 145, but still far away from competitors (Jio – Rs 182 and Airtel – Rs 203). 👎

3) Fundraising hopes: The company has been trying to raise Rs 20,000 cr- Rs 25,000-cr for over a year now. This money is needed to turn around operations and launch key 5G services. But, nothing has really worked out until now. Remember those market rumors of Elon Musk’s Starlink tying up with Vodafone? LOL. 😂

TL;DR: There’s a lot wrong with VI’s fundamentals right now. New funds will help, but it’s unclear whether the company’s fundraising attempts will be successful or not. Let’s see what happens next. 🤞

Movers and Shakers 

Here’s a look at this week’s top NSE500 movers. Tata Investment Corp took the pole position after rallying +21% 🥇 Archean Chemical (+20%) hit a new all-time high. Motilal Oswal Financial Services (-9%) closed down for a second consecutive week. PNB Housing (-9%) closed down on a weekly basis for the 4th time in the last 5 weeks. 📉 Check out their charts below: