Zomato, Swiggy, Trent & Bikaji Foods: What Prashanth Tapse of Mehta Equities says on these 4 stocks

Prashanth Tapse, Senior VP (Research) at Mehta Equities, on Friday said Zomato Ltd has an advantage over Swiggy Ltd in the online food and delivery space as the former's profitability is already proven. "The select industry is growing very fast, around 40 to 45 per cent on a month-on-month (MoM) basis. Both these companies would do good in terms of revenue growth but there would be a cash burn in Swiggy to maintain its market share as well as compete with Zomato and the other two or three expected entrants. There is a huge competition coming in and Swiggy would burn more cash but I think Zomato has that edge by which it can maintain its margins along with growth trajectory," the market expert told Business Today.

"If investors want to take a call, 60-70 per cent can be a weightage given to Zomato and 30-40 per cent weightage to Swiggy at this point," Tapse added. Zomato shares climbed 2.10 per cent to close at Rs 233.85 while Swiggy slipped 2.03 per cent to settle at Rs 381.

In response to a query on Trent Ltd, he said, "The company's MoM's store sales growth was down and this has raised concerns. In terms of valuations, the stock has been trading at 100-plus P/E and around 40 P/B value which is a matter of concern for the sector as of now. Last year, the stock outperformed by giving more than 1,000 per cent returns. There would be some correction due to the re-rating of the industry. The stock does not look good at this price. I would be going long when the counter slips below Rs 5,100. It would be a good level to enter." Trent's stock moved up 3.42 per cent to Rs 5,455.50 level.

When asked about Bikaji Foods International Ltd shares, the market specialist highlighted that the company's earnings were bad with respect to the EBITDA margins and PAT (profit after tax). "Even the segment-wise volume growth has seen some negative decline which is a bigger concern for the stock. It may witness pressure in the near term and fall towards Rs 500-550 levels," Tapse further stated. Bikaji Foods tumbled 9.94 per cent to end at Rs 659.55.

Meanwhile, Indian equity benchmarks continued to fall for the third consecutive session as first key interest rate cut by RBI failed to boost investor sentiments. Domestic equities were dragged by banks, financials, FMCG and energy stocks.

The 30-share BSE Sensex pack slipped 198 points or 0.25 per cent to close at 77,860 and the broader NSE Nifty index moved 43 points or 0.18 per cent to finish at 23,560. Broader markets were mixed as mid-caps rose 0.20 per cent and small-caps shed 0.29 per cent.

Eight out of the 19 sector gauges -- compiled by the NSE -- traded in the red. Sub-indexes Nifty Bank, Nifty Financial Services, Nifty FMCG and Nifty Oil & Gas underperformed the NSE platform by falling as much as 0.44 per cent, 0.51 per cent, 1.30 per cent and 0.90 per cent. The downside was somehow limited as Nifty Auto and Nifty Metal rose 0.69 per cent and 2.66 per cent, respectively.

The overall market breadth was extremely weak as 1,520 shares declined while 2,402 advanced on BSE. 142 stocks remained unchanged.