ZOMATO IN FOCUS... ALIBABA HOLDS 10 % STAKE IN ZOMATO

*Garware Hi-Tech Films Ltd.* | *CMP* Rs. 477 | *M Cap* Rs. 1107 Cr | *52 W H/L* 932/476.55
(Nirmal Bang Retail Research)
*Result has declined*
Revenue from Operations came at Rs. 324.4 Cr (-17.8% QoQ, -2.9% YoY) vs QoQ Rs. 394.8 Cr, YoY Rs. 333.9 Cr
EBIDTA came at Rs. 45 Cr (-32.7% QoQ, -30.4% YoY) vs QoQ Rs. 66.8 Cr, YoY Rs. 64.7 Cr
EBITDA Margin came at 13.9% vs QoQ 16.9%, YoY 19.4%
Adj. PAT came at Rs. 30.4 Cr vs QoQ Rs. 48.1 Cr, YoY Rs. 42.9 Cr
Quarter EPS is Rs. 13.1
Stock is trading at P/E of 6.6x TTM EPS

*Dishman Carbogen Amcis Ltd.* | *CMP* Rs. 86 | *M Cap* Rs. 1348 Cr | *52 W H/L* 201/80
(Nirmal Bang Retail Research)
*Result improved*
Revenue from Operations came at Rs. 639.8 Cr (4.2% QoQ, 13.8% YoY) vs QoQ Rs. 614 Cr, YoY Rs. 562.1 Cr
EBIDTA came at Rs. 113.9 Cr (44.9% QoQ, 4% YoY) vs QoQ Rs. 78.6 Cr, YoY Rs. 109.5 Cr
EBITDA Margin came at 17.8% vs QoQ 12.8%, YoY 19.5%
Adj. PAT came at Rs. 47 Cr vs QoQ Rs. -10.1 Cr, YoY Rs. 35.4 Cr
Quarter EPS is Rs. 3
Stock is trading at P/E of 159.8x TTM EPS

*Rupa & Company Ltd.* | *CMP* Rs. 253 | *M Cap* Rs. 2012 Cr | *52 W H/L* 586/253
(Nirmal Bang Retail Research)
*Result has declined*
Revenue from Operations came at Rs. 236 Cr (-17.4% QoQ, -45.5% YoY) vs QoQ Rs. 285.6 Cr, YoY Rs. 433.2 Cr
EBIDTA came at Rs. 14.3 Cr (-51.3% QoQ, -82.4% YoY) vs QoQ Rs. 29.2 Cr, YoY Rs. 80.9 Cr
EBITDA Margin came at 6% vs QoQ 10.2%, YoY 18.7%
Adj. PAT came at Rs. 5.5 Cr vs QoQ Rs. 16.9 Cr, YoY Rs. 58.3 Cr
Quarter EPS is Rs. 0.7
Stock is trading at P/E of 23.9x TTM EPS

*Info Edge (India) Ltd.* | *CMP* Rs. 3810 | *M Cap* Rs. 49219 Cr | *52 W H/L* 5140/3313
(Nirmal Bang Retail Research)
*Result is marginally above expectations*
Revenue from Operations came at Rs. 555.1 Cr (4.4% QoQ, 37.7% YoY) vs expectation of Rs. 553.1 Cr, QoQ Rs. 531.8 Cr, YoY Rs. 403.3 Cr
EBIDTA came at Rs. 216.7 Cr (17.8% QoQ, 93.4% YoY) vs expectation of Rs. 193.3 Cr, QoQ Rs. 184 Cr, YoY Rs. 112.1 Cr
EBITDA Margin came at 39% vs expectation of 35%, QoQ 34.6%, YoY 27.8%
Adj. PAT came at Rs. 191.8 Cr vs expectation of Rs. 168.3 Cr, QoQ Rs. 168.1 Cr, YoY Rs. 111.3 Cr
Quarter EPS is Rs. 14.8
Stock is trading at P/E of 78.2x TTM EPS

*Dec. IIP - 4.3% Vs. 7.1% - Expected also 4.3%*

*Instl. Investors EQUITY Cash Trades PROV. - 10/02/2023 : Rs. CRS. :*

*FIIS : BUY +1458 (7,700-6,242)*

*DIIS : SELL -291 (4,882-5,173)*

UK skirts recession with zero Q4 growth

https://www.moneycontrol.com/news/world/uk-skirts-recession-with-zero-q4-growth-10050001.html



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*Jefferies' Chris Wood tweaks India equity portfolio, to add investment in Bajaj Finance, trim in 2 insurance stocks*

In the Greed & Fear note, Jefferies' global head of equity strategy Christopher Wood highlighted the small tweaks he will make to the India's long-only portfolio this week, which was launched in 2021 and includes 17 Indian stocks in total. The recent changes will involve adding investment in Bajaj Finance while trimming that in HDFC Life Insurance and ICICI Lombard General Insurance.

“Two small adjustments will be made this week to the Asia ex-Japan and India long-only portfolios. The investment in Bajaj Finance in the Asia ex-Japan long-only portfolio will be increased by one percentage point by shaving the investment in HDFC Life Insurance. Similarly, the investment in Bajaj Finance in the India long-only portfolio will also be increased by one percentage point by shaving the investment in ICICI Lombard General Insurance," the note stated.

In 2021, Wood had launched India's long-only equity portfolio that included 16 stocks such as HDFC, ICICI Bank, State Bank of India (SBI), Reliance Industries (RIL), Bajaj Finance, Tata Steel, Container Corporation of India, Maruti Suzuki among others. In June, the investment in HDFC in the India long-only equity portfolio was removed and replaced by an investment in HDFC Bank. The investment in ICICI Lombard General Insurance in the India long-only portfolio was also reduced by one percentage point with the money added to HDFC Bank.

Under financials, the equity portfolio consists investments in stocks such as ICICI Bank, HDFC, SBI, Bajaj Finance, ICICI Prudential Life Insurance, ICICI Lombard General Insurance, and CAMS.

Jefferies' India long-only equity portfolio also has investments in real estate stocks like Godrej Properties, Century Textiles, DLF, Macrotech Developers, and other stocks include Maruti Suzuki, L&T, Jubilant FoodWorks and Container Corporation of India.

*Adani hires US legal powerhouse Wachtell in short-seller battle*

FT

Gautam Adani has hired one of Wall Street’s fiercest activism defence law firms to fight back against claims made by short seller Hindenburg Research, as the Indian billionaire battles to reassure investors about the financial health of his business empire.

In recent days, the Adani Group has tapped senior lawyers at New York’s Wachtell, Lipton, Rosen & Katz to advise it on how to stem the crisis facing the Indian conglomerate since Hindenburg accused it of accounting fraud and stock market manipulation in late January, four people with direct knowledge of the matter said.

The Adani Group’s decision to hire Wachtell, known as one of the most expensive law firms in the US, shows the severe international pressure the group is facing since Hindenburg levelled its claims.

For decades, Wachtell has been among the most sought-after advisers by besieged corporate boards at some of the largest US companies trying to fend off activist investors or hostile takeovers.

The Adani Group, whose business interests range from airports to energy, has been facing difficulties since New York-based Hindenburg made its allegations. The Gujarat-based company has denied the claims in a 413-page rebuttal.

This week the global index provider MSCI changed its weightings for several Adani Group stocks after reviewing how many shares were available on the stock market, and the Financial Times reported that Gautam Adani repaid a $1.1bn share-backed loan after facing a margin call of more than $500mn.

Wachtell was approached by the Adani Group’s lawyers at the India-based Cyril Amarchand Mangaldas firm, which is leading defence of the industrial giant, people with knowledge of the matter added.

Cyril Amarchand Mangaldas is led by Cyril Shroff, whose daughter Paridhi is married to the oldest son of Gautam Adani and works at the law firm.

Since accepting the role, Wachtell has been seeking to enlist further advisory support for the Adani Group, including from crisis communications firms, some of the people said.

The Adani Group, Wachtell and Shroff declined to comment.

Wachtell will predominantly focus on co-ordinating legal, regulatory and public relations for the group, whose market value has collapsed by more than $100bn since Hindenburg published its paper alleging fraud.

Founded in 1965 by the partners who gave their names to the firm, Wachtell has built a reputation for taking on complex corporate governance cases. Its record of repelling unwanted attacks by corporate raiders since the 1980s has attracted clients in the crosshairs of investors and regulators.

*How Hindenburg shorted the Adani stocks*

The Adani saga has taken an interesting turn. A report in The Hindu Business Line talks of an international bear cartel targeting the company that resulted in a colossal $100 billion fall in market capitalisation.

The article talks of a planned attack on the Adani Group which was building up since December 2022 and culminated on February 1, 2023.

To understand how the entire drama unfolded, we need to first understand how a bucket shop (Dabba) operates. The reason for discussing this here will be clear soon.

*_Operations of a bucket shop_*
A bucket shop is where stock market transactions take place, but these are not reported on the exchanges. All trades are settled in cash and all one needs to trade is margin money. There are no KYC formalities to be done, nor does the profitable trader have to pay taxes.

Needless to say, these bucket shops are banned but flourish across the globe and not only in India.

When a trader takes a position in the bucket shop, the shop owner takes a counter position in the exchange, especially if it is a big position and taken by a strong trader.

Suppose a trader ‘XYZ’ buys 1000 lots of Nifty in the bucket shop. The shop owner generally does the opposite end of the transaction. In this case, the shop owner will sell 1000 lots of Nifty to trader XYZ. But now he is exposed to the market risk and may stand to lose a chunk of money if the market moves higher, so the shop owner will take a counter position in the market by actually buying 1000 lots in the exchange.

Here the earning for the shop owner is the big brokerage that he earns in the deal.

In the case of the Adani Group a similar transaction took place but through a structured product in the international market called the structured product derivatives (SPDs), a term that will be much in the news in the future.

*_SPDs_*
SPDs are structured products that are tailor-made by foreign brokers for large clients in offshore jurisdictions. These products are not available in India and hide the identity of the trader who takes a position.

Multiple instruments are at play here. Suppose a trader ABC residing abroad wants to short-sell a stock in India, he will approach a friendly broker who will allow him to buy a Put option on the stock. A Put option allows him to place a bet for a premium that the stock will fall.

Just like the bucket shop owner, there is no counterparty in the transaction but the broker. Now the broker is the seller of a Put option, which means he will make money if the stock rises and lose money if it falls.

The broker, like our bucket shop owner, would like to cover his risk and runs to the Indian markets to do so either by buying Put options, selling Call options, or shorting futures.

In the case of Adani, huge short positions were created well before the Hindenburg report was out.

Before looking at the details of the positions, let’s look at what gave away the game for Indian agencies to probe into the entire transaction.

*_The clue_*
On January 24, Hindenburg, the day the company released its report said that it “held short positions in Adani companies through bonds and non-Indian-traded derivative instruments.”

The words “non-Indian-traded derivative instruments” gave a hint of the nature of the move. It suggested that New York-based Hindenburg had created a derivative position in markets other than India. Hindenburg’s position was created in a jurisdiction that allows such positions to be taken.

The transaction was through the SPD instrument. Details of the broker who sold the Puts are not yet revealed.

*_Modus Operandi_*
The broker who sold the SPD had to take a position in the Indian market. Since the shorting was in an illiquid and closely held stock like Adani, the short selling had to be spaced out over time.

The short sellers were so confident of their action that they not only shorted Adani stocks but also the entire Indian market by short-selling the indices.

Short-selling positions were being created from December 2022 onwards. The report says that as a result of short selling by buying Put options the closely watched Put-Call ratio became skewed. Traders betting that the stock and the market would fall touched a 13-year high as compared to those betting that the market was going to rise.

Hindenburg released their report on January 24, 2023, a day after the PCR touched a 13-year high at 0.73. Even in March 2008, the peak of the financial meltdown, the PCR was 0.75.

Interestingly, the PCR of January 24 was created at a time when the market was not even in a bearish phase as compared to that in March 2008, suggesting that the short sellers were well aware of an imminent fall.

Even on the budget day when the market was rallying, short sellers continued to hold on to their position.

The probe also revealed that sizeable positions were created in out-of-the-money (OTM) Put options of Adani Group stocks, indicating that someone was expecting a huge fall in these counters.

*_The trigger_*
Hindenburg published its report on January 24th, but there was no repercussion on the Adani Group stocks on that day or the next. They fell on January 27th but recovered some lost ground in the run-up to the budget.

On budget day, while the finance minister was making her speech in the parliament, there was a news flash of Credit Suisse’s decision to stop accepting Adani Group’s bonds as collateral.

After this news, all hell broke loose and we saw the market led by Adani stocks crashing.

*_The Indian connection_*
The Business Line article says that Hindenburg is not a registered research firm with any market regulator. The report it has published is similar to reports by a leading Indian market researcher in his ‘Bespoke’ reports on listed companies that were sold for $20,000 to $50,000 to private clients.

Hindenburg had claimed that it prepared its report based on SEBI investigations into Adani stocks via the right to information (RTI) application. But SEBI never shares any investigation-related info via RTI.

That’s another angle that investigating agencies will start probing.

RIL

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THIS WILL CREATE ADDITIONAL OVER 1 LKH JOBS IN STATE

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*Gokaldas Exports Ltd.* | *CMP* Rs. 370 | *M Cap* Rs. 2242 Cr | *52 W H/L* 520/301
(Nirmal Bang Retail Research)
*Result is marginally above expectations*
Revenue from Operations came at Rs. 518.9 Cr (-8.9% QoQ, -0.3% YoY) vs expectation of Rs. 521.2 Cr, QoQ Rs. 569.7 Cr, YoY Rs. 520.6 Cr
EBIDTA came at Rs. 61.6 Cr (-3.4% QoQ, 10.9% YoY) vs expectation of Rs. 57.6 Cr, QoQ Rs. 63.8 Cr, YoY Rs. 55.5 Cr
EBITDA Margin came at 11.9% vs expectation of 11%, QoQ 11.2%, YoY 10.7%
Adj. PAT came at Rs. 40.6 Cr vs expectation of Rs. 29.1 Cr, QoQ Rs. 39.8 Cr, YoY Rs. 30.1 Cr
Quarter EPS is Rs. 6.7
Stock is trading at P/E of 14.2x FY24E EPS

*VA Tech Wabag Ltd.* | *CMP* Rs. 330 | *M Cap* Rs. 2052 Cr | *52 W H/L* 375/216
(Nirmal Bang Retail Research)
*Result is above expectations*
Revenue from Operations came at Rs. 651.6 Cr (-13.2% QoQ, -12.6% YoY) vs expectation of Rs. 869.6 Cr, QoQ Rs. 750.4 Cr, YoY Rs. 745.5 Cr
EBIDTA came at Rs. 74.9 Cr (39.3% QoQ, -1.8% YoY) vs expectation of Rs. 75.5 Cr, QoQ Rs. 53.7 Cr, YoY Rs. 76.2 Cr
EBITDA Margin came at 11.5% vs expectation of 8.7%, QoQ 7.2%, YoY 10.2%
Adj. PAT came at Rs. 47.1 Cr vs expectation of Rs. 45.7 Cr, QoQ Rs. 46.7 Cr, YoY Rs. 44.2 Cr
Quarter EPS is Rs. 7.6
Stock is trading at P/E of 10.7x FY24E EPS

*V.S.T. Tillers Tractors Ltd.* | *CMP* Rs. 2305 | *M Cap* Rs. 1991 Cr | *52 W H/L* 3118/2028
(Nirmal Bang Retail Research)
*Result has declined*
Revenue from Operations came at Rs. 213.7 Cr (-8.7% QoQ, 2.5% YoY) vs QoQ Rs. 234.2 Cr, YoY Rs. 208.4 Cr
EBIDTA came at Rs. 23.3 Cr (-27.7% QoQ, -22.9% YoY) vs QoQ Rs. 32.2 Cr, YoY Rs. 30.3 Cr
EBITDA Margin came at 10.9% vs QoQ 13.8%, YoY 14.5%
Adj. PAT came at Rs. 19.4 Cr vs QoQ Rs. 22.7 Cr, YoY Rs. 21.1 Cr
Quarter EPS is Rs. 22.5
Stock is trading at P/E of 15.5x FY24E EPS

*Kirloskar Oil Engines Ltd.* | *CMP* Rs. 327 | *M Cap* Rs. 4732 Cr | *52 W H/L* 372/123
(Nirmal Bang Retail Research)
*Result is above expectations*
Revenue from Operations came at Rs. 1220.4 Cr (-0.6% QoQ, 19.9% YoY) vs expectation of Rs. 1076.3 Cr, QoQ Rs. 1228.1 Cr, YoY Rs. 1017.8 Cr
EBIDTA came at Rs. 192.2 Cr (6.3% QoQ, 119% YoY) vs expectation of Rs. 151.5 Cr, QoQ Rs. 180.8 Cr, YoY Rs. 87.8 Cr
EBITDA Margin came at 15.7% vs expectation of 14.1%, QoQ 14.7%, YoY 8.6%
Adj. PAT came at Rs. 88.2 Cr vs expectation of Rs. 87.9 Cr, QoQ Rs. 83.8 Cr, YoY Rs. 30.7 Cr
Quarter EPS is Rs. 6.1
Stock is trading at P/E of 16x FY24E EPS

*Alicon Castalloy Ltd.* | *CMP* Rs. 897 | *M Cap* Rs. 1445 Cr | *52 W H/L* 1111/579
(Nirmal Bang Retail Research)
*Result is ok*
Revenue from Operations came at Rs. 361.3 Cr (-4.2% QoQ, 29.5% YoY) vs QoQ Rs. 377.3 Cr, YoY Rs. 278.9 Cr
EBIDTA came at Rs. 41.6 Cr (-2.6% QoQ, 25.6% YoY) vs QoQ Rs. 42.8 Cr, YoY Rs. 33.1 Cr
EBITDA Margin came at 11.5% vs QoQ 11.3%, YoY 11.9%
Adj. PAT came at Rs. 15.6 Cr vs QoQ Rs. 15.3 Cr, YoY Rs. 12.1 Cr
Quarter EPS is Rs. 9.7
Stock is trading at P/E of 26.3x TTM EPS

*Kirloskar Brothers Ltd.* | *CMP* Rs. 358 | *M Cap* Rs. 2843 Cr | *52 W H/L* 424/243
(Nirmal Bang Retail Research)
*Result has improved*
Revenue from Operations came at Rs. 957.5 Cr (10.8% QoQ, 32% YoY) vs QoQ Rs. 864 Cr, YoY Rs. 725.3 Cr
EBIDTA came at Rs. 149.3 Cr (138.5% QoQ, 245.6% YoY) vs QoQ Rs. 62.6 Cr, YoY Rs. 43.2 Cr
EBITDA Margin came at 15.6% vs QoQ 7.2%, YoY 6%
Adj. PAT came at Rs. 88.7 Cr vs QoQ Rs. 30.7 Cr, YoY Rs. 21.7 Cr
Quarter EPS is Rs. 11.2
Stock is trading at P/E of 15x TTM EPS

*RateGain Travel Technologies Ltd.* | *CMP* Rs. 376 | *M Cap* Rs. 4071 Cr | *52 W H/L* 418/235
(Nirmal Bang Retail Research)
*Result has improved*
Revenue from Operations came at Rs. 138.3 Cr (11% QoQ, 39.7% YoY) vs QoQ Rs. 124.6 Cr, YoY Rs. 99 Cr
EBIDTA came at Rs. 22.9 Cr (30.2% QoQ, 147.1% YoY) vs QoQ Rs. 17.6 Cr, YoY Rs. 9.3 Cr
EBITDA Margin came at 16.6% vs QoQ 14.1%, YoY 9.4%
Adj. PAT came at Rs. 13.2 Cr vs QoQ Rs. 13 Cr, YoY Rs. 1 Cr
Quarter EPS is Rs. 1.2
Stock is trading at P/E of 43.1x FY24E EPS