Sensex down 200 points, Nifty around 18,300; metals, FMCG drag

Sneha Poddar, AVP Research, Broking & Distribution, Motilal Oswal Financial Services, on midcaps and smallcaps

“Post the sharp rally in midcaps and smallcaps, profit booking is being witnessed across them as the valuations for many stocks have touched unrealistic levels. However, if we remove some of the very expensive names, then this correction does offer bottom-up opportunities, given the more relaxations being offered and pickup in economic activities, buoyant festive mood and an improved demand backdrop. The balance sheets and cash flows continue to improve as corporates tightened costs and deleverage. Going ahead, Q2FY22 earnings delivery vs earnings expectation would provide further direction to the market.” 

Jubilant Foodworks down 2.6% ahead of earnings

Axis Securities downgrades Avenue Supermarts (DMART) to Sell

DMART for Q2FY22 reported consolidated revenue of ₹7,789 cr (shade below our estimate) as compared to Rs. 5,306 cr in Q2FY21, higher by 46.8% YoY. The growth was on the back of strong demand recovery aided by unlocking of the economy as restrictions eased following the second wave led lockdown. EBITDA Margin came in at 8.6%, lower than our estimates but higher by 238bps YoY, led by lower base and agile OPEX management. EBITDA stood at ₹669 cr, up 103% YoY on a lower base which was 4.5% lower than our estimates. Other income was down by 47% at ₹28cr and PAT came in at ₹418cr lower than our estimates but higher 111% YoY. We expect the company to continue its healthy growth trajectory going forward on the back of normalization of operational hours, accelerated vaccination and opening up of economy aiding improved people’s mobility. While, the growth story remains intact, the recent sharp run up in the stock price has led us to downgrade our rating to SELL from HOLD.

BSE Energy index down 1%

IPCA Laboratories will consider interim dividend and sub-division of shares in the 1:2 ratio on 13 Nov

BSE FMCG down 1.6%