Chris Wood of Jefferies has introduced an investment in Zomato with a 4 percent weightage in his India long-only portfolio. That investment will be compensated instead of HDFC Life, which has been removed from the same. The India long-only portfolio will also see an increase in the weightage of Rural Electrification Corporation (REC) by two percentage points. This will be done by trimming the weightage of ONGC, which will be reporting its March quarter results today.
Food delivery platform Zomato will also be added to the global long-only portfolio with a similar 4 percent weightage. This will be compensated by shaving off investments in Chinese online platforms JD.com and Alibaba by two percentage points each.
Zomato's consolidated net loss for the March quarter narrowed to Rs 187.6 crore during the March quarter, compared to Rs 359.7 crore during the same period last year. Revenue also grew by 70 percent year-on-year. The company's business, excluding quick commerce turned profitable on an adjusted EBITDA level. The management is also optimistic on turning profitable on a net level, inclusive of the quick commerce business over the next four quarters.
Shares of Zomato have risen 12 percent so far this year, but continue to trade below their IPO price of Rs 76. On the other hand, shares of HDFC Life have underperformed, remaining flat over the last 12 months, as well as on a year-to-date basis.
Wood, in his note "Greed & Fear" also mentions that foreign investors have returned as net buyers of Indian equities after retreating from China, having bought stocks worth $7 billion since March. "One issue here is that India's neutral weighting in the MSCI benchmarks has always been inappropriately low given the size of the economy," Wood said. Therefore, Greed & Fear has had an average 40 percent exposure to India in the Asia ex-Japan long-only portfolio in recent years, the note said.
The note also highlights the outperformance of India's private sector bank index, which has risen by 1,073 percent in US Dollar terms since it was established in 2005. On the other hand, the MSCI AC World Bank index is down 20 percent over the same timeframe.
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First Published: May 26, 2023 8:29 AM IST
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