Amit Jeswani wagers on MCX and Zomato as Diwali dazzlers in Samvat 2080

 Amit Jeswani wagers on MCX and Zomato as Diwali dazzlers in Samvat 2080

During the Moneycontrol Diwali event, Amit Jeswani, the founder of Stallion Asset Management, revealed two equities that might do well in the next year.

Experts are optimistic about Samvat 2080 after an exciting Samvat 2079 in which the major benchmark indexes shown incredible resilience and reached new all-time highs in spite of several headwinds.

High-growth firms should be the focus of investors, says Stallion Asset Management founder Amit Jeswani. He presented two stocks that have the potential to be very successful in the next year at the Moneycontrol Diwali party.

MCX.

For every Re 1 in futures, there are 300 options traded on the NSE, while for every Re 1 in futures, there are 3 options traded on the MCX. According to Jeswani, there is thus room to increase 100 times the existing size.

Because options have a cheaper transaction cost than futures, the trading in commodity derivatives has been moving swiftly from futures to them on exchanges.

MCX launched the options platform two years ago. In the first quarter, it brought in Rs 10 crore in options income. As a result, this income has increased steadily, hitting Rs 52 crore in the first quarter of FY24.

To put things in perspective, the bulk of NSE's Rs 13,000 crore in income comes from options. With a market valuation of little over Rs 13,000 crore, MCX is very successful. In FY23, it declared an overall profit of Rs 149 crore. The firm is expected to generate a profit after tax (PAT) of at least Rs 400–500 crore in a base case scenario.

The best-case scenario, however, has much more promise. Jeswani used IEX as an example, which trades at a PE (price-to-earnings) ratio of 40 despite having a lower growth rate.

On November 8, the National Stock Exchange (NSE) saw a slightly lower closing price for MCX shares, at Rs 2,618.45. Within the last month, the stock has increased by about twenty-six percent. Zomato's share price has increased by around 80% so far in 2023, more than tripling investors' capital.

Zingo

According to Jeswani, if all goes according to plan, modern internet companies like Zomato might become very profitable. In the second quarter of FY24, Zomato's gross merchandise value (GMV) was Rs 8,000 crore.

"If you do the analysis, Zomato will be done Rs 32,000 crore of GMV in FY24 in the food ordered through the website; for FY25, this number would be anything around Rs 40,000 crore," he said.

Zomato has an adjusted EBITDA percentage of 3%. Zomato's adjusted EBITDA is expected to be between 4 and 5 percent, according to the management's projection. "At 4 percent, you are looking roughly Rs 1,600 crore of profit after tax (PAT), while at 5 percent, that you are looking at Rs 2,000 crore of PAT," Jeswani said.

Zomato is now valued at more over Rs 1 lakh billion. Given that its growth is three to four times higher than the industry average and that it is forecast to earn between Rs 1,600 and Rs 2,000 crore in profits, the company might fetch a PE ratio of as much as 100x. Said Jeswani.

On November 8, Zomato's shares concluded trading 3.17 points higher on the National Stock Exchange (NSE) at Rs 125.15. The stock has increased by roughly 20 percent in the last month. The Zomato share price has increased by almost 107% so far in 2023, more than tripling the money invested by investors.

Nevertheless, Jeswani issued a warning to investors, saying that his company adjusts positions aggressively and regularly. "We switch around so often that if you had asked me last week, one of the stocks would have been Angel One. But in only one week, it has already increased by 60%," Jeswani said.