Exponential Research

𝐄𝐱𝐩𝐨𝐧𝐞𝐧𝐭𝐢𝐚𝐥 𝐎𝐧𝐞 𝐏𝐚𝐠𝐞𝐫! A quick insight into small and mid-cap companies with an ROCE of 15%+. Spread the word if you find this helpful, and help us reach a wider investing community. 𝐂𝐀𝐑𝐄 𝐑𝐚𝐭𝐢𝐧𝐠𝐬 𝐋𝐭𝐝. Disc: No reco

𝐄𝐱𝐩𝐨𝐧𝐞𝐧𝐭𝐢𝐚𝐥 𝐎𝐧𝐞 𝐏𝐚𝐠𝐞𝐫! A quick insight into small and mid-cap companies with an ROCE of 15%+. Spread the word if you find this helpful, and help us reach a wider investing community. 𝐈𝐂𝐑𝐀 𝐋𝐭𝐝. Disc: No reco

𝐄𝐱𝐩𝐨𝐧𝐞𝐧𝐭𝐢𝐚𝐥 𝐎𝐧𝐞 𝐏𝐚𝐠𝐞𝐫! A quick insight into small and mid-cap companies with an ROCE of 15%+. Spread the word if you find this helpful, and help us reach a wider investing community. 𝐀𝐃𝐅 𝐅𝐨𝐨𝐝𝐬 𝐋𝐭𝐝. Disc: No reco

𝐄𝐱𝐩𝐨𝐧𝐞𝐧𝐭𝐢𝐚𝐥 𝐎𝐧𝐞 𝐏𝐚𝐠𝐞𝐫! A quick insight into small and mid-cap companies with an ROCE of 15%+. Spread the word if you find this helpful, and help us reach a wider investing community. 𝐒𝐭𝐲𝐥𝐚𝐦 𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐋𝐭𝐝. Note: This is not an investment recommendation.

𝗜𝗣𝗢 𝗔𝗹𝗲𝗿𝘁: 𝗕𝗮𝗷𝗮𝗷 𝗛𝗼𝘂𝘀𝗶𝗻𝗴 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗟𝗶𝗺𝗶𝘁𝗲𝗱 #𝗜𝗣𝗢 #𝗕𝗮𝗷𝗮𝗷𝗵𝗼𝘂𝘀𝗶𝗻𝗴 #𝗕𝗮𝗷𝗮𝗷𝗴𝗿𝗼𝘂𝗽

𝗪𝗲𝗲𝗸𝗲𝗻𝗱 𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝗪𝗶𝘀𝗱𝗼𝗺: 𝗥𝗶𝘀𝗸 𝘃𝘀. 𝗩𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 In academic finance, volatility in stock prices is considered a measure of risk for shareholders. However, in reality, it does not accurately capture the actual risk. To understand why, consider this. When we look at fixed-income instruments like bonds and debentures, we evaluate the credit default risk. But when will a company default on debt payments? A company defaults when it runs out of cash. For lenders, the risk of not being able to service the debt comes primarily from the operations, capital structure, or external factors. How can the risk be different for lenders and owners? After all, both are providers of capital to the business. The bottom line is that cash flow is everything. As a matter of principle, we assign value to a company based on its ability to generate future cash flows. When a company loses its ability to generate these cash flows, the possibility of total loss arises. This possibility of investment loss is the actual risk, not the volatility in stock prices. #𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 #𝗪𝗲𝗲𝗸𝗲𝗻𝗱𝘁𝗵𝗼𝘂𝗴𝗵𝘁𝘀 #𝗥𝗶𝘀𝗸𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁

𝗪𝗲𝗲𝗸𝗹𝘆 𝗠𝗮𝗿𝗸𝗲𝘁 𝗨𝗽𝗱𝗮𝘁𝗲: 𝗡𝗶𝗳𝘁𝘆 𝟱𝟬: 24,852 (-1.52%) 𝗡𝗶𝗳𝘁𝘆 𝗠𝗶𝗱-𝗰𝗮𝗽 𝟭𝟱𝟬: 21,675 (-1.14%) 𝗡𝗶𝗳𝘁𝘆 𝗦𝗺𝗮𝗹𝗹-𝗰𝗮𝗽 𝟮𝟱𝟬: 18,307 (+0.76%) One of the important readings this week was DSP Mutual Funds’ September edition of DSP Netra. An important chart in this study was about equity dilution. According to the study, quarterly promoter dilution in Small and Mid Cap companies was above 20%, which is near a two-decade high. Equity dilution is concerning for two reasons: One, Promoters’ skin in the game reduces and Second, there may be perceived overvaluation by promoters themselves. A quick scanner reveals that around 350 companies with a market cap over INR 1,000 Cr had equity dilution between 0-25% in the Jun'24 quarter. This may include stake sales by private equities and mandatory dilution to bring promoter holding to 75%. However, more than 300 companies had dilution ranging from 0-6%, which may indicate that promoters are indeed cashing out their stake. Equity dilution is an important metric to consider from a corporate governance point of view. 𝗡𝗼 𝗺𝗮𝘁𝘁𝗲𝗿 𝗵𝗼𝘄 𝗯𝘂𝗹𝗹𝗶𝘀𝗵 𝘁𝗵𝗲 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝗮𝗿𝘆 𝗶𝘀 𝗶𝗻 𝗰𝗼𝗻-𝗰𝗮𝗹𝗹𝘀, 𝗶𝗳 𝘁𝗵𝗲𝗿𝗲 𝗶𝘀 𝘀𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝘁 𝗲𝗾𝘂𝗶𝘁𝘆 𝗱𝗶𝗹𝘂𝘁𝗶𝗼𝗻 (𝗤𝗼𝗤 𝗮𝗻𝗱 𝗬𝗼𝗬), 𝗶𝘁’𝘀 𝘂𝘀𝘂𝗮𝗹𝗹𝘆 𝗻𝗼𝘁 𝗮 𝗴𝗼𝗼𝗱 𝘀𝗶𝗴𝗻 𝗳𝗼𝗿 𝗺𝗶𝗻𝗼𝗿𝗶𝘁𝘆 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀 #equitydilution #corporategovernance #investing #equitymarkets

𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗼𝗻 𝗤𝘂𝗶𝗰𝗸 𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗲 𝗳𝗿𝗼𝗺 𝗖𝗟𝗦𝗔 𝗥𝗲𝗽𝗼𝗿𝘁: 𝗜𝗻𝗱𝗶𝗮𝗻 𝗥𝗲𝘁𝗮𝗶𝗹 𝗠𝗮𝗿𝗸𝗲𝘁: Worth USD 1 trillion based on gross order value. Out of this, USD 600 billion or roughly 60% is food and grocery. 𝗞𝗶𝗿𝗮𝗻𝗮 𝗦𝘁𝗼𝗿𝗲𝘀: Local small vendors control approximately 95% of this food and grocery market. Quick commerce’s ultra-fast delivery and efficient last-mile operations are challenging this network of kirana stores. 𝗩𝗮𝗹𝘂𝗲 𝗔𝗱𝗱𝗶𝘁𝗶𝗼𝗻: Quick commerce’s value addition lies in removing layers in the supply chain and enhancing channel efficiency to offset delivery costs. These companies can buy directly from manufacturers instead of products going through layers like super-stockists, distributors, and retailers. 𝗗𝗮𝗿𝗸-𝗦𝘁𝗼𝗿𝗲 𝗠𝗼𝗱𝗲𝗹: In this model, QC companies maintain large warehouses in strategic locations. Products are bought in bulk, and deliveries can be done in minutes with the help of technology. Also, since margin layers are reduced, products can be offered slightly below kirana store prices. That’s a great combo of convenience as well as value. 𝗙𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗲𝗱 𝗥𝗲𝘁𝗮𝗶𝗹 𝗠𝗮𝗿𝗸𝗲𝘁: In a USD 1 trillion market, only Reliance Retail and DMart have over USD 5 billion in retail sales. 𝗚𝗿𝗼𝘄𝘁𝗵 𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹: Gross Order Value for quick commerce can reach USD 10 billion (or 1% of the total retail market) in the next two years. In other words, it can more than double from the current USD 3.8 billion in FY24. 𝗧𝗼𝗽 𝗣𝗹𝗮𝘆𝗲𝗿𝘀: Blinkit, Zepto, and Swiggy Instamart are the top three players and hold more than 90% of the market share by revenue. Blinkit holds 39%, and the other two hold 28% market share respectively. 𝗘𝗻𝗮𝗯𝗹𝗶𝗻𝗴 𝗧𝗿𝗲𝗻𝗱𝘀: Key trends enabling quick commerce in India include lower labor costs, lack of modern retail alternatives, lower car ownership, and higher congested cities (In the US, people can travel to suburban areas where ultra-large Walmart stores are located). 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 𝗳𝗼𝗿 𝗙𝗠𝗖𝗚 𝗣𝗹𝗮𝘆𝗲𝗿𝘀: While quick commerce is great for customers, it brings challenges for established FMCG players like Unilever, Marico, Dabur, etc. First, the distribution network that they built over the years is facing stiff competition from the QC model. Secondly, new D2C brands can quickly scale up with the help of QC, which was quite difficult in the absence of a retail network earlier. #Quickcommerce #Investing #Insights

This ain't surprising at all as all you hear now a days in Ahmedabad is 'Premium ketlu che?' (What's the GMP?).

𝗧𝗼𝘂𝗿𝗶𝘀𝗺 𝗶𝘀 𝗯𝗼𝗼𝗺𝗶𝗻𝗴! No. of Indians taking two or more international trips has grown by 32%. Rising disposable incomes is one driving factor but other factors are also playing a role. 𝗙𝗶𝗿𝘀𝘁𝗹𝘆, 𝘁𝗵𝗲𝗿𝗲 𝘀𝗲𝗲𝗺𝘀 𝘁𝗼 𝗯𝗲 𝗮 𝗰𝘂𝗹𝘁𝘂𝗿𝗮𝗹 𝘀𝗵𝗶𝗳𝘁. Millennials and Gen Zs don’t hesitate to spend money on ‘exploring’ destinations and new cultures. Interestingly, this is now no longer limited to metro cities. Tier 2 and 3 cities are catching up rapidly. 𝗦𝗲𝗰𝗼𝗻𝗱𝗹𝘆, 𝘁𝗵𝗲𝗿𝗲 𝗶𝘀 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗶𝗻𝗴 𝗲𝗮𝘀𝗲 𝗼𝗳 𝗯𝗼𝗼𝗸𝗶𝗻𝗴 𝗮𝗻𝗱 𝘁𝗿𝗮𝘃𝗲𝗹 𝗶𝗻 𝗴𝗲𝗻𝗲𝗿𝗮𝗹. There are more direct flights now than ever to famous travel destinations. 𝗧𝗵𝗲 𝘁𝗵𝗶𝗿𝗱 𝗳𝗮𝗰𝘁𝗼𝗿 𝗶𝘀 𝗦𝗼𝗰𝗶𝗮𝗹 𝗠𝗲𝗱𝗶𝗮. This is an underrated factor but influencer culture has had a great impact on promoting destinations which are ‘Instagrammable’. The whole travel ecosystem is set to benefit from this trend and this includes airlines, airports, travel booking platforms, luggage manufacturers and map service providers. #𝗧𝗼𝘂𝗿𝗶𝘀𝗺 #𝗧𝗿𝗮𝘃𝗲𝗹𝗘𝗰𝗼𝘀𝘆𝘀𝘁𝗲𝗺 # 𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴