Broad Strokes, August 02, 2024

Zomato Shares Surge After Strong Q1 Results

• Zomato’s shares surged nearly 19% to a record high of Rs 278.45 following impressive Q1FY25 results.
• Net profit rose to Rs 253 crore, up from Rs 2 crore a year prior, with a 74% year-on-year revenue increase to Rs 4,206 crore.
• Analysts are bullish on the stock, with target prices set by CLSA at Rs 350, Nuvama at Rs 285, and Motilal Oswal at Rs 300.
• Growth was driven by strong performance in food delivery (27% YoY increase in gross order value) and quick commerce (130% YoY growth).
• Zomato plans to expand its Blinkit store count to 2,000 by 2026, further boosting investor optimism.

SEBI Introduces AI for IPO Document Processing

• SEBI, led by Chairperson Madhabi Puri Buch, is implementing AI for processing IPO documents and a new “demystified filing” system with a fill-in-the-blank template.
• This initiative aims to reduce IPO approval times from over 40 days to just 23 days by merging rights issues with preferential allotments.
• 80% of document processing is now handled by AI, ensuring compliance while simplifying the application process.
• SEBI is also addressing concerns regarding Key Performance Indicators (KPIs) in IPOs by consulting the Industry Standards Forum.

Tata Motors Shares Decline Amid Q1 Results

• Tata Motors’ shares fell over 4% to Rs 1,095 following Q1FY25 results, despite a 74% year-on-year increase in consolidated net profit to Rs 5,566 crore and a 5.7% rise in revenue to Rs 1.07 trillion.
• The decline was due to management’s cautious outlook on subdued global demand for the fiscal year, particularly in the passenger vehicle segment.
• Brokerages like Jefferies and Nomura raised their target prices to Rs 1,330 and Rs 1,303, respectively, while UBS maintained a ‘sell’ rating with a target of Rs 825.
• The overall auto index dropped over 2% amid weak July sales, impacting Tata Motors and its peers.

Adani Enterprises Approves Food FMCG Demerger

• Adani Enterprises has approved the demerger of its food FMCG business into Adani Wilmar.
• This led to a 10% surge in Adani Wilmar’s shares, closing at Rs 383.15 on the NSE.
• Existing shareholders of Adani Enterprises will directly hold shares in Adani Wilmar, receiving 251 shares of AWL for every 500 shares of AEL.
• The demerger is expected to unlock shareholder value and enable focused growth strategies for both companies.
• Adani Enterprises reported a 116% increase in net profit for Q1 2024.

Sensex Experiences Significant Drop of 886 Points

• On August 2, the BSE Sensex plummeted 886 points (1.08%) to close at 80,982, while the NSE Nifty fell 293 points (1.17%) to settle at 24,718.
• The decline was driven by a global sell-off, particularly in the U.S. markets, where weak manufacturing data raised concerns about economic growth.
• The market capitalization of all listed companies on the BSE dropped by ₹4.56 lakh crore.
• Sectors particularly impacted included auto, energy, and IT stocks.
• The India VIX rose sharply, indicating heightened market anxiety.

Ola Electric IPO Opens with Strong Demand

• Ola Electric Mobility’s IPO opened with strong demand, raising Rs 6,145.56 crore.
• The IPO was 28% subscribed on the first day, with retail investors fully booking their portion.
• Hyundai Motor Company holds a significant stake in Ola Electric, valued at approximately $99 million.
• Despite concerns over profitability and high valuations, brokerages like Geojit and LKP Securities have recommended a ‘Subscribe’ rating for long-term investors.
• Analysts caution about the competitive landscape and the company’s ongoing losses, which reached Rs 1,584.40 crore in FY24.

SEBI Proposes F&O Curbs to Limit Risks

• SEBI has proposed measures to curb excessive speculation in the futures and options (F&O) market, particularly on expiry days.
• The proposed regulations include increasing minimum contract sizes and implementing stricter trading conditions.
• Experts warn that these measures could push traders towards illegal dabba trading or other unregulated markets.
• SEBI’s intent is to enhance market stability and protect investors, but concerns have been raised about the potential rise in hedging costs and reduced liquidity.

ixigo Reports 78% YoY Profit Increase

• ixigo reported a 78% year-on-year increase in profit after tax (PAT) for Q1 FY25, reaching Rs 14.9 crore.
• Revenue from operations rose 16% to Rs 182 crore, with EBITDA surging 62% to Rs 19.2 crore.
• The company’s gross transaction value (GTV) exceeded Rs 2,988 crore, marking a 27% growth year-on-year.
• This strong performance led to a 5% jump in ixigo’s share price.
• Investors are confident in the company’s growth trajectory and market share expansion, particularly in the travel sector.