In Samvat 2080, Amit Jeswani bets on MCX, Zomato as Diwali dazzlers

Keep focusing on high-growth companies. Growth is where the largest wealth creation will happen.

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After an eventful Samvat 2079, where the key benchmark indices showed tremendous resilience and scaled fresh life-time highs notwithstanding multiple headwinds, experts are upbeat for Samvat 2080.

Investors should focus on high-growth companies, according to Amit Jeswani, founder of Stallion Asset Management. At the Moneycontrol Diwali celebration, he shared two stocks that hold the potential to shine in the coming year.

MCX

NSE sees Rs 300 of Options traded for every Re 1 of Futures; at MCX, Rs 3 of Options are traded for every Re 1 of Futures. So, there’s a potential to grow 100 times the current scale, Jeswani said.

The trade on commodity derivatives exchanges has been shifting quickly from futures to options due to the lower cost of transactions.

Also Read | Samvat 2080: Shankar Sharma says past is no indicator of future; small-cap, mid-cap have a strong case

Two years ago, MCX started the options platform. It earned options revenue of Rs 10 crore in the first quarter. Subsequently, this revenue has seen a steady rise, reaching Rs 52 crore in Q1 FY24.

To put it into perspective, NSE's revenue is Rs 13,000 crore, of which, majority is options. MCX boasts a market capitalisation of just over Rs 13,000 crore. It reported an overall profit of Rs 149 crore in FY23. In a base case scenario, the company is poised for a profit after tax (PAT) of at least Rs 400-500 crore.

However, the best-case scenario holds even greater potential. Jeswani cited the example of IEX, which, even with a lower growth rate, trades at a PE (price-to-earnings) ratio of 40.

On November 8, the MCX shares closed marginally lower at Rs 2,618.45 on the National Stock Exchange (NSE). In the last one month, the stock has risen nearly 26 percent. So far in 2023, Zomato share price has surged around 80 percent, doubling investors' money.

Watch Moneycontrol's special Diwali celebration

Zomato

Jeswani believes that new-age tech firms such as Zomato can make a lot of money if things go right. Zomato’s gross merchandise value (GMV) in Q2 FY24 was at Rs 8,000 crore.

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

Zomato's adjusted EBITDA stands at 3 percent. The management's guidance suggests that Zomato's adjusted EBITDA will be in the range of 4-5 percent. "At 4 percent, you are looking at around Rs 1,600 crore of profit after tax (PAT), while at 5 percent, you are looking at Rs 2,000 crore of PAT," said Jeswani.

Also Read | Samvat 2080: Not easy to make money in a tough market like today, says S Naren

Zomato has a valuation of over Rs 1 lakh crore at present. If it achieves the expected profit range of Rs 1,600 to 2,000 crore, and since its growth is 3-4x of the industry average, the stock could command a PE ratio of even up to 100x, Jeswani said.

On November 8, Zomato shares closed 3.17 higher at Rs 125.15 on the National Stock Exchange (NSE). In the last one month, the stock has risen nearly 20 percent. So far in 2023, the Zomato share price has surged over 107 percent, doubling investors' money.

That said, Jeswani cautioned investors that his firm frequently and aggressively updates positions. “We keep changing positions so aggressively that if last week you asked me, one of the stocks would be Angel One. However, it has already moved up 60 percent in one week," Jeswani said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.