Hemang Jani sees 15-25% upside for Swiggy, 18-22% for Eternal on strong cash position

Economic Times

a day ago

"But if you have IPO clearance and on a lower base you start looking for next year numbers, obviously there will be a significant growth that one can really look at. And then the fact that the position they have through gift, this entire SGX Nifty part, a large part of the market share is being grabbed by them, the data monetisation will happen," says Hemang Jani, Independent Market Expert.
ADVERTISEMENT We are just trying to understand BSE and then, there is NSE and there is MCX. Why suddenly exchange valuations have gone up? I mean, I was looking at a data yesterday where the valuations of NSE are now higher than Nasdaq.
Hemang Jani: Very interesting question. NSE, of course, by far the biggest exchange particularly in terms of the dominant position it has on the option side. Definitely, there is appetite across investors. The only point is that this year because of the new sebi regulations which effected NSE's performance for last quarters, it has not been great. But if you have IPO clearance and on a lower base you start looking for next year numbers, obviously there will be a significant growth that one can really look at. And then the fact that the position they have through gift, this entire SGX Nifty part, a large part of the market share is being grabbed by them, the data monetisation will happen.
So, it is interesting story and people really want to participate there. As far as BSE is concerned, the valuation is definitely stretched at 75 times. The only positive takeaway I can see for BSE is that on the market they have a share of about 15%, the premium, and now that the expiry issue will settle more or less with Sebi's diktat that you will have Tuesday and Thursday as the two expiries, there is a sense that the BSE will eventually get a market share of 30-35% versus when you have market share gain story, people would want to participate, but I do think that things are looking much better for NSE and MCX versus BSE at this point.
Any new ideas that you are working with in this market or would you say that the valuations are getting a little toppish?
Hemang Jani: First thing that comes to my mind is that some of these fintech platform companies, Eternal and Swiggy, I do think that given the recent trends wherein the unlisted names like Zepto, even Flipkart some issue in terms of raising funds, the cash burn is on a higher side and when we look at Eternal which is sitting on a cash of 18,000 crore, even Swiggy because of the IPO and the cash raise that they have done are relatively better placed. So, from quarterly earnings surprise perspective and their dominant positioning perspective, I do find both these companies quite compelling at this point. I think there is a case for a minimum 15% to 25% kind of an uptake for Swiggy and about 18% to 22% kind of uptake as far as Eternal is concerned.
ADVERTISEMENT What do you like within the alcohol beverage space because I get a sense that looking at the price trend, that these stocks have consolidated enough. I mean, they are now ready to get into that spin if I may use the word early morning.
Hemang Jani: I think while that space is looking quite divergent in terms of performance, what has stood out is that some of the larger players be it United Spirits, United Breweries, even Radico Khaitan have done much better and when you look at closely at the numbers in the case of United Spirits what stood was that the premium brand's growth continues to be about 8% to 10% and if you trade treaty with UK that bring in additional amount of cheer for the stock.
ADVERTISEMENT So, I do think that United Spirits by far looks the best in the current scenario followed by United Breweries where because some states there were some issues going on. So there will be some volume benefit over there, but stick to the larger names to my mind.
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