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Market rally boosts stocks of loss-making companies on turnaround hopes
Mumbai
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India's stock market rally in the last few weeks lifted not just quality stocks but also those of loss-making companies that surged as much as 64 per cent. Analysts, however, remain cautious on such a spurt and suggest investors put money in stocks of companies where there is earnings visibility amid reasonable valuations.
In the NSE500 universe, 29 companies from Oil Electric to Swiggy reported losses for the quarter ended March 2025 (Q4-FY25). However, 26 of those gave a positive return so far since April 1, while 17 counters beat the returns from the benchmark Nifty50, according to data compiled
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Time of India
5 hours ago
- Time of India
ETtech Explainer: Swiggy's losses balloon despite moving towards improving economics
The company reiterated that it is past the expansionary phase in quick commerce. 'With nearly half our dark stores less than a year old, we're now shifting gears—from rapid expansion to consolidation and leverage,' it had said in its FY25 annual report, published earlier this week. It even slowed down dark store additions in the April-June period, with only 41 stores being added to its network, compared to 316 in the January-March quarter. In an interaction with ET, Swiggy CFO Rahul Bothra said that any expansion from hereon will be a 'derivative of growth and not necessarily flag planting.' During the company's earnings call, Instamart CEO Amitesh Jha said that the company can find near-term growth from the top 10-20 cities and will focus on that. On the unit economics front, Swiggy said it was pushing higher average order values (AOVs) on Instamart. For the June quarter, AOVs increased 16% quarter-on-quarter (QoQ) to Rs 612. To achieve higher AOVs, the company said it was focusing on Maxxsaver—its bulk order offering that lets users order a larger number of items with higher discounts. This helps the company save on last-mile logistics costs. It also increased the minimum basket size on Instamart for free deliveries, resulting in the filtering out of low AOV orders. In Q1, besides the heavy losses, Swiggy also burnt through more than Rs 1,000 crore in cash—the second consecutive quarter of it doing so. For quick commerce, the company saw orders per dark store per day declining on a sequential basis to 985 from 1,190. On a YoY basis, Instamart's gross order value (GOV) per square foot fell about 20% to Rs 13,163. Swiggy also said that its operating losses for Instamart peaked in March. However, adjusted Ebitda loss for the June quarter came in at Rs 896 crore, up from Rs 840 crore in Q4FY25 and Rs 318 crore in Q1FY25. Academy Empower your mind, elevate your skills Swiggy added a significant number of dark stores in the March quarter, and the full cost of operating those new stores hit in Q1, before they had time to mature and become efficient. Just like it did in its food delivery business, the company spent more on getting delivery partners on board during Q1 on account of seasonal challenges like monsoon and reverse migration. Maxxsaver was fully rolled out in Q1, and Swiggy said that while it helped increase AOVs, it didn't boost contribution margins immediately. Swiggy's fixed expenses jumped by Rs 56 crore compared to the previous quarter, mainly due to employee appraisals and hiring of senior executives. Even though store expansion has slowed, the company continues to spend heavily on brand and performance marketing to compete with rivals, keeping overall costs high. When Swiggy reported its losses for the April-June quarter, doubling to Rs 1,197 crore , it laid out a series of steps it had taken to improve profitability. But the high cash burn that the company is fraught with indicates that these measures may take some time to show their impact. For its quick commerce business , Instamart, Swiggy continued to guide for a contribution margin break-even between Q3FY26 and Q1FY27. Contribution refers to revenue minus the direct order fulfilment said that while Instamart's contribution margin is likely to improve going forward, Swiggy's falling cash balance remained a of June 30, Swiggy had a consolidated cash balance of Rs 5,354 crore, down from Rs 6,695 crore as of March 31 and Rs 8,183 crore as of December 31.'In our view, (Swiggy's) quick commerce contribution margins should improve sharply in the coming quarters with improvement in average throughput per store…cash balance is already down from around $1 billion in Q3FY25 to $620 million after Q1FY26. If capital expenditure and working capital investments do not fall sharply in the coming quarters, we worry cash exhaustion could continue to be significant,' HSBC Global Research said in a note on stock ended 2.85% down at Rs 392.3 on the BSE on Friday.
Time of India
8 hours ago
- Time of India
Explained: Why Nifty50, BSE Sensex have closed in red for 5th week in row; top 5 reasons
FIIs have consistently sold Indian stocks during the past 9 trading sessions. (AI image) Indian stock markets indices, Nifty50 and BSE Sensex , ended the week down over 1%. In fact, the benchmark indices have seen their fifth consecutive week of closing in red. Nifty50 has dropped over 270 points this week, while BSE Sensex plunged over 860 points. ' The benchmark index Nifty wrapped up its fifth consecutive week in the red — its longest losing streak since August 2023, raising eyebrows across the street. What adds to the concern is the back-to-back formation of bearish candles with long upper shadows on the weekly chart. This pattern is a classic sign of rejection at higher levels,' says Sudeep Shah, Head - Technical and Derivatives Research, SBI Securities. "Despite making multiple attempts to scale up, the index has struggled to hold ground, only to be met with selling pressure each time. The long upper wicks are a telling story — bulls tried, but bears had the final say. It reflects a market that's finding it hard to build on gains, weighed down by renewed supply pressure and a cautious sentiment hovering overhead," he added. Nifty50 sees longest weekly losing streak in 2 years The broader markets weren't spared either. Both the Nifty Midcap and Nifty Small Cap 100 indices came under notable selling pressure and have now underperformed the frontline index for the second consecutive week. The Nifty Pharma index recorded a 3.3% decline on Friday, marking its third consecutive negative session and registering a weekly loss of 2.9%. Global pharmaceutical companies saw pressure following the White House's directive to 17 international drug manufacturers asking for reduced prescription drug prices in the US to align with global standards. Why is the Indian stock market falling? What's driving the bearish sentiment? According to SBI Securities, several factors have contributed to this shift in tone — from renewed concerns around the progress of India–US trade negotiations, to persistent FII outflows, and a string of underwhelming corporate earnings that failed to meet market expectations. 1) Unrelenting FII selloff Foreign Institutional Investors (FIIs) continue their selling trend, with a substantial Rs 5,588.91 crore worth of shares sold on Thursday. FIIs have consistently sold Indian stocks during the past 9 trading sessions, with the selloff reaching Rs 27,000 crore. FIIs have established record bearish positions, with short positions in index futures reaching 90%, the highest level since March 2023. The long-to-short ratio declined to 0.11 at the August series commencement, whilst the Nifty rollover rate decreased to 75.71% in July from June's 79.53%. "Investor sentiment weakened further as FIIs now hold the second-highest net short position in derivatives, reflecting elevated caution," said Vinod Nair, Head of Research, Geojit Investments. The significant increase in the dollar index to 100 has further accelerated the FII selloff. "FIIs had been selling right through the month. So, they probably had an inkling that the BTA is not really going India's way, and there were other factors around the FIIs selling, which was China looking very good from a valuation and a growth upgrade perspective. I think China's growth is now projected to shoot up to 4.8," market expert Sunil Subramaniam was quoted as saying in an ET report. 2) Donald Trump's 25% Tariff on India Market confidence deteriorated after US President Donald Trump signed an executive order that imposed a higher-than-anticipated 25% tariff on India. The prospect of additional penalty for India's purchase of Russian oil and arms has also weighed on sentiment. "The Indian equity market extended its decline for a second day, pressured by renewed tariff threats and punitive duties that could undermine India's global trade competitiveness," said Nair of Geojit Investments. 3) Underwhelming Q1 results India Inc's first quarter earnings have seen muted and underwhelming results. Over the last 30 days, the IIT index has declined by 10%, whilst the Nifty Bank is flat. The combined performance of India's leading nine private sector banks showed modest growth of 2.7%, indicating cautious economic expansion and subdued lending activity. 4) Global Markets Hit Asian markets saw big losses on Friday as traders evaluated new US tariff implications whilst awaiting US employment statistics. The MSCI Asia-Pacific index (excluding Japan) declined by 1.5%, seeing a weekly dip of approximately 2.7%. European shares displayed weakness, with the Stoxx 600 declining 1%, moving towards its poorest weekly performance since April. "Global equity markets were mostly weak over the past week, as the US tariff saga continued. The Indian equity market continued to underperform global equity markets in the past week," Shrikant Chouhan, Head – Equity Research said. 5) Strong US Dollar The US dollar index has seen a big 2.5% increase over the week, going beyond 100 and achieving its highest level in two months. This has been the dollar's best week in approximately three years. The strengthening dollar has led to increased capital outflows from emerging economies, India included. Stay informed with the latest business news, updates on bank holidays and public holidays . Discover stories of India's leading eco-innovators at Ecopreneur Honours 2025
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Business Standard
8 hours ago
- Business Standard
Markets selloff as Donald Trump tariffs stoke global trade war fears
Domestic markets tumbled along with global peers as the latest US tariff announcements sparked concerns about global trade and dampened investor sentiment. The benchmark Sensex fell by 586 points, or 0.72 per cent, to end at 80,600, while the Nifty 50 index tumbled by 203 points, or 0.82 per cent, to close at 24,565, its lowest level since June 3. Both indices also capped their fifth consecutive weekly loss—their longest losing streak since August 2023. Most Asian markets fell, with South Korea leading the drop, retreating nearly 4 per cent. US President Donald Trump signed an executive order on Thursday, modifying 'reciprocal' tariffs on several countries, with analysts warning that further tariff hikes could be on the horizon. Analysts are concerned about possible retaliation from countries affected by President Trump's latest tariffs. Some experts say the lack of details in the new framework could make it harder for businesses to plan ahead. 'It remains to be seen how the tariff dispute will continue and how inflation in the US will develop as a result of the tariffs. With this news, one thing is clear: the issue will continue to occupy us for a long time to come, and surprises are to be expected at any time,' said Antje Praefcke, an FX analyst at Commerzbank AG, in a comment to Bloomberg. All sectoral indices compiled by Bloomberg fell, except the Nifty FMCG index, which rose 0.7 per cent due to safe-haven buying. The Nifty Pharma index fell the most, dropping by 3.33 per cent after Trump pushed for immediate reductions in charges for existing drugs and sought a guarantee that future medicines be launched at comparable prices to those in other countries. Leading drug exporters Aurobindo Pharma and Sun Pharma tumbled by 5 per cent each. The India Vix index rose nearly 4 per cent to 12. The broader market indices, Nifty Midcap 100 and Nifty Smallcap 100, fell by 1.33 per cent and 1.66 per cent, respectively. A day earlier, the domestic equity markets ended their four-month winning streak, which had stretched from March to June and propelled benchmark indices nearly 15 per cent higher. Both the Nifty and Sensex ended July down by about 3 per cent. The broader Nifty Smallcap 100 and Nifty Midcap 100 indices dropped by 6.7 per cent and 4 per cent, respectively. During the preceding four months, the two indices had surged by over 20 per cent each. Indian equities lagged most global peers in July as sluggish earnings momentum cast a shadow over their already premium valuations compared to other emerging markets. With the exception of FMCG and pharmaceuticals, all sectoral indices ended the month in the red, with the IT sector leading the declines, sinking by nearly 10 per cent. Foreign portfolio investors (FPIs) offloaded nearly Rs 20,000 crore in equities in July, while domestic institutional investors stepped in, purchasing over Rs 50,000 crore worth of shares.
