Indian equity markets opened flat on September 25, with the Sensex and Nifty 50 taking a breather after achieving record highs for four consecutive sessions.

The benchmarks began the day with mixed global cues, indicating a cautious start for traders.

At 9:30 AM IST, the Sensex was down 4 points, or 0.01%, at 84,909, while the Nifty slipped slightly by 0.4 points to settle at 25,940.

Market breadth reflected a balanced sentiment, with 1,730 stocks advancing compared to 1,115 decliners, while 108 shares remained unchanged.

Declines were led by IT, FMCG, and energy stocks, whereas metal shares maintained their upward momentum, supported by recent stimulus measures from China aimed at rejuvenating its economy.

Power Grid Corp, Hindalco Industries, Tata Steel gain

Key gainers on the Nifty included Power Grid Corp, Hindalco Industries, Tata Steel, Adani Enterprises, and JSW Steel, while notable losers were Wipro, HCL Technologies, Shriram Finance, Bajaj Auto, and LTIMindtree.

In the spotlight, Ola Electric Mobility shares surged over 3% to reach ₹107.5 after a favorable report from Bernstein.

The brokerage highlighted the company’s competitive position in the electric two-wheeler segment, noting strong growth prospects and improving EBITDA margins, further solidifying its market leadership.

Delta Corp’s stock also made headlines, soaring more than 8% following the announcement of its plan to demerge its hospitality and real estate businesses into a new entity, Delta Penland Private Limited (DPPL).

This strategic move aims to unlock value and create enhanced growth opportunities for both sectors.

Conversely, shares of EaseMyTrip experienced a decline of over 6% to ₹38.48 following a block deal in which promoters offloaded a 2.6% stake, valued at ₹176.5 crore.

Approximately 4.6 crore shares changed hands at a marginal discount to the previous closing price, underscoring the ongoing fluctuations in the travel sector.

As the trading session unfolds, market participants are keenly observing these developments and assessing potential opportunities amid the cautious tone in the broader market.

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DocuSign (DOCU) stock price has underperformed the market in the past few years. It was trading at $60 on Tuesday, where it has been stuck for a while. Since August 2022, it has remained inside $40 and $70 while top American indices like the Nasdaq 100 and S&P 500 have jumped to a record high.

Smartsheet acquired

A potential catalyst for DocuSign emerged this week when Blackstone and Vista Equity Partners teamed up to acquire Smartsheet in a $8.4 billion deal.

This is a notable deal because Smartsheet is a single-product company that used by thousands of customers globally. 

It is a sign that private equity companies, with trillions of dollars in dry powder, are about to start buying cheap companies at a time when their growth are slowing.

Smartsheet, started 19 years ago, had strong growth during the pandemic. Its annual revenue has risen from over $270 million in 2019 to over $1 billion in the trailing twelve months (TTM).

However, there are signs that its growth is starting to slow, with analysts expecting the figure to rise to $1.12 billion in 2024 and $1.29 billion in 2025. 

This growth is slowing as companies become more concerns about costs. Many firms have also started to move to large companies like Salesforce and Microsoft that offer numerous solutions. 

Analysts expect that M&A deals will accelerate for two main reasons: interest rates are now falling while the US could have a President Trump, who has vowed to deregulate the economy. 

DocuSign could benefit

DocuSign is another company that could benefit from the Smartsheet acquisition because the two companies are almost similar.

They are both single-product companies whose growth has slowed after surging during the Covid-19 pandemic.

For starters, DocuSign is a company that offers an eSignature solution to companies and individuals worldwide. Its product includes tools like website forms, electronic notarisation, document generation, and identity management. 

DocuSign is used by thousands of companies like United Airlines, Santander, Unilever, Ducati, and Flowserve. 

Its annual revenue soared from over $974 million in 2019 to over $2.7 billion in the last financial year.

Like Smartsheet, its business is growing at a slower rate than before. Analysts expect that its revenue will come in at $745 million in the third quarter from $700 million in the same period in 2023. 

Analysts also expect that its annual revenue will jump to over $2.95 billion and $3.12 billion in 2025, representing 6.70% and 5.90% growth, respectively. In the past, the company was used to have high double-digit growth rates.

The most recent results revealed that its total revenue grew by just 7% in the second quarter to $736 million. It expects that its revenue will be between $743 million and $747 million in the current quarter.

And like Smartsheet, DocuSign’s insiders don’t have a big stake in the company, which can complicate the buyout process. Insiders own just 1% of the total shares, according to Yahoo Finance. In contrast, acquiring a company like Asana would be difficult because insiders, especially Distin Moskovitz own 42% of the float.

Competition is a big issue

One reason why DocuSign’s growth has slowed is that, like Smartsheet, the industry has become highly competitive. 

DocuSign is now competing with many eSignature brands. For example, Google has started offering eSignature solutions on Google Docs and its other solutions. This means that people and organisations using Docs and Sheets can easily sign documents without using an external provider.

Other companies like Adobe, HelloSign, SignNow, and RightSignature have also launched their solutions. HelloSign was acquired by Dropbox in 2019.

Therefore, a private equity company can buy Dropbox, hoping to improve its operations as a private company. 

Besides, there are signs that Dropbox is highly undervalued. One way for valuing a SaaS company like DocuSign is to use the so-called rule-of-40, which is calculated by adding a company’s growth and margins. In Dropbox’s case, it has a net income margin of 34% and a growth rate of 7%, giving it a figure of 40. 

Most importantly, there have been rumours of the company’s acquisition for a long time. In December, WSJ reported that the firm was exploring a sale.

DocuSign stock price analysis

DOCU chart by TradingView

The weekly chart shows that the DOCU share price has moved sideways in the past few years as its growth slows. It has remained inside the key support level at $39.85 and the resistance level at $70. 

DocuSign stock has continued to oscillate at the 50-week and 25-week moving averages while the Average True Range (ATR) has dropped, signaling that it has little volatility.

Therefore, the stock will likely remain in this range for a while. In the long-term, however, it will likely bounce back as odds of an acquisition rise. If this happens, it will likely retest the key resistance point at $70. 

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Private equity companies have done well in the past 12 months, helped by the robust inflows into alternative assets. The closely-watched Invesco Global Listed Private Equity ETF (PSP) has jumped by over 30% in this period and is hovering at its highest point since 2022.

David Rubenstein’s Carlyle has trailed peers

Carlyle Group (CG) stock has trailed other popular PE companies in the last few years. It has barely moved in the last three years while companies like Apollo Global Management and KKR have more than doubled. 

This underperformance has continued this year, as shown below. In this period, Carlyle’s stock has risen by 9.16% while TPG and KKR have risen by 40% and 60%, respectively. Other companies like Apollo, Blackstone, and Brookfield Asset Management have all jumped by over 205. 

Carlyle Group’s underperformance is mostly because of the management issues it went through in 2022 when Kewsong Lee abruptly resigned before the end of his five-year contract. His resignation was mostly because of his pay and the substantial disagreements about how to run the company since David Rubenstein and William Conway were still around.

Carlyle Group then appointed Harvey Schwartz, a former president and Chief Operating Officer at Goldman Sachs. 

Schwarz’s tenure has benefited from the general outperformance of the private equity industry and the increased inflows by institutions. It has also benefited from high interest rates, which have boosted its net interest income from $82.6 million in 2019 to over $239 million last year.

Carlyle Group’s annual revenue retreated to $2.42 billion last year from $4.1 billion a year earlier.

Carlyle Group earnings

The most recent financial results showed that Carlyle Group’s total assets under management (AUM) rose to over $435 billion, a 13% increase from the same period last year. Its fee earning assets jumped to $307 billion while its perpetual capital was $90 billion. 

Carlyle Group raised $12.4 billion in the last quarter and $40.9 billion in the last twelve months (LTM). 

Its quarterly revenue came in at $1.06 billion, higher than the $462 million in the same period last year. This revenue soared was mostly because of an increase in management fees and investment income. 

Carlyle Group did several important transactions this year. The most important one was the acquisition of a landmark deal to acquire Discover Financial Services in a $10 billion deal. It has also remained highly active in the Collateralized Loan Obligations (CLO) industry, where it deployed $9 billion after raising $12 billion in the last twelve months.

Carlyle has also become a major player in the private credit industry. It raised $5 billion last quarter and is aiming to approach its credit target of $40 billion. 

Analysts expect that Carlyle Group’s business will continue doing well as demand for private credit continued growing.

Interest rates and US election

A likely catalyst for the Carlyle Group stock is the recent interest rate cuts by the Federal Reserve and the upcoming US election.

The Fed decided to slash interest rates by 0.50% last week and hinted that more of these cuts will continue this year. 

At the same time, the US will go to an election in November, and there are chances that Trump will win. Analysts believe that a Trump victory will be a positive thing for private equity companies for two main reasons. First, Trump will not introduce a bill to end the carry trade loophole.

Second, he will likely appoint a Federal Trade Commission (FTC) chair who will be willing to approve M&A deals. Therefore, companies like Carlyle Group and Blackstone will likely increase their realizations.

Carlyle Group stock is cheaper

There are a few reasons why Carlyle seems like a good investment for now. First, it has a higher dividend yield, which stands at 3.25%, higher than other firms like KKR, Apollo, and Blackstone. Of course, this yield is higher because the stock has underperformed the peers.

Carlyle has a forward one-year price-to-earnings ratio of 11.5, which is much lower than other companies. Brookfield has a multiple of 33 while TPG, Blackstone, Apollo, and KKR have multiples of 29, 34.5, 17, and 28, respectively. Its forward 3-year P/E multiple is 9, much lower than the other companies. 

Additionally, while Carlyle is behind most of these firms in private credit, it is working on that, with its goal of reaching its $40 billion target. Consider what the CEO said in the last earnings call:

“Management fees in Global Credit and Solutions experienced double-digit growth year-over-year and hit record levels. We expect total management fees to accelerate across the second half of the year, driven by the nearly $20 billion of pending fee-earning AUM, the highest level since 2021.”

In my last article on Carlyle Group in January, I noted that the firm was a good acquisition target as companies race to the $1 trillion mark. For example, by acquiring Carlyle, Apollo, with its $695 billion in assets, would become a $1.1 trillion PE firm, making it bigger than Blackstone.

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Thailand has officially launched the first stage of its ambitious $14 billion stimulus plan aimed at revitalizing the country’s economy.

Dubbed the “digital wallet” scheme, the initiative is designed to provide financial relief to millions of citizens, eventually covering 45 million people who will each receive 10,000 baht.

The government believes this direct infusion of cash will drive consumer spending and generate economic momentum.

In the first phase, 14.5 million welfare cardholders and individuals with disabilities will receive the cash payout by the end of the month.

Prime Minister Paetongtarn Shinawatra, speaking at the program’s launch, expressed optimism about its impact:

Cash will be put into the hands of Thais and create a tornado of spending.

Government eyes economic recovery through spending

The digital wallet initiative was originally intended to operate via a smartphone app, allowing recipients to spend the funds within their local communities over six months.

Despite initial technical plans, the program begins with direct cash handouts as the government seeks to accelerate economic activity.

“There will be more stimulus measures, and we will move forward with the digital wallet policy,” the prime minister emphasized during her speech.

While the scheme is intended to jumpstart Southeast Asia’s second-largest economy, which is projected to grow by 2.6% this year following a modest 1.9% increase last year, the program has faced significant opposition.

Economists question fiscal responsibility

Despite the Thai government’s firm stance on the stimulus plan, concerns have been raised by economists, including two former governors of the central bank, who argue that the initiative is fiscally unsustainable.

Critics worry about the impact on national finances, especially as the government struggles to secure adequate funding to support the large-scale handouts.

However, the administration has stood by its decision, viewing the program as a necessary step to boost the country’s economic growth, which has lagged behind other nations in the region.

Thailand reconsiders tourism amid revenue concerns

In a separate move aimed at increasing government revenue, newly appointed Tourism Minister Sorawong Thienthong has announced plans to reintroduce a tourism tax that had been previously shelved by Prime Minister Srettha Thavisin.

The tax, which requires foreign visitors arriving by air to pay 300 baht, and those entering by sea or land to pay 150 baht, is expected to contribute to the government’s goal of increasing tourism revenue to at least 3 trillion baht this year.

Thienthong stated:

I believe the collection of the tourism fee benefits the tourism industry since the revenue can be used for the development of infrastructure and attractions, along with ensuring tourist safety.

However, the minister also indicated that the system’s readiness to collect these fees still needs to be assessed before finalizing a start date.

With these dual strategies—the digital wallet stimulus and the reintroduction of the tourism tax—Thailand’s government is aiming to both stimulate domestic spending and bolster its tourism sector, hoping to set the country on a path toward economic recovery in the face of both internal and external challenges.

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Li Auto (NYSE: LI) stock price has staged a strong recovery in the past few days, joining other Chinese EV companies like Xpeng and Nio. It has risen in the last three consecutive days, reaching a high of $24.75, its highest point since May 13, and 41% above the current level.

China stimulus hopes

Li Auto and other Chinese companies like PDD Holdings and Alibaba surged this week after Beijing committed to offering more economic stimulus.

The current stimulus came in the form of a drop in bank reserve ratios or cash that these companies should have in their balance sheets. By adjusting that figure, the Peoples Bank of China (PBoC) hopes that it will unlock over $125 billion, which will be used for lending.

The bank hopes that more lending to consumers, at a time when interest rates are already low, will help the country achieve its 5% growth target of the year.

However, analysts caution that the stimulus will not have a big impact on the Chinese economy since most people are focusing on debt reduction. Besides, home prices have continued falling this year, a notable thing since most people in China have invested huge sums of money in the industry.

Li Auto and other companies like Nio, Xpeng also jumped as investors anticipated more auto spending in the next few years. 

Li Auto is a strong EV brand

China has emerged as the biggest EV market globally. Many people in the country are buying EVs from companies like Nio, BYD, and Li Auto. Also, it is estimated that there are now over 100 EVs in the country.

The challenge, however, is that the EV industry has become crowded at a time when demand in the country is easing. As a result, many firms have been forced to slash vehicle prices to stay competitive.

Li Auto is one of the fastest-growing EV brand in the country. The firm sells numerous vehicles, including Li MEGA, Li L9, Li L8, Li L7, and Li L6. Most of these vehicles are SUVs, which have become highly popular in China and other countries. 

Li’s growth has been strong in the past few years. Its annual revenue jumped from just $40 million in 2019 to over $17.4 billion last year even as competition rose. 

This happened as the company grew its deliveries from about 1,000 in 2019 to over 208k last year, and the management believes that there is room for more growth as it adds more vehicle brands.

The most recent monthly delivery figures showed that Li Auto delivered 48,122 vehicles in August, a 37.8% increase from the same period in 2023. It has now delivered over 921k vehicles. 

Growth concerns remain

The Li Auto stock has dropped by almost 50% from its highest level this year because investors are increasingly concerned about its revenue growth and profitability growth.

That’s because the Chinese market has become highly saturated, with firms like BYD, Tesla, and Xpeng producing thousands of vehicles per month.

These growth concerns are real. However, Li Auto believes that there is still room for growth, especially in the international market. 

In the future, the firm hopes to expand its sales to Europe, Latin America, Southeast Asia,  and the Middle East. 

Analysts believe that there is demand for these vehicles in these areas, especially in Europe, which has the infrastructure to support EVs. Many consumers will buy these vehicles because of their technology and low costs, even with tariffs.

Li Auto’s financial results

The most recent financial results showed that Li Auto’s revenue came in at $4.2 billion in the second quarter, a 8.4% increase from the same period in 2023. Its vehicle margins dropped from 19.3% to 18.7%, which explains why its stock dropped sharply after its earnings.

Still, analysts believe that Li Auto has more room to grow. Its annual revenue this year is expected to come in at $20.48 billion, a 17.3% increase from last year. They also see revenue growing to $26.5 billion next year when its earnings per share will get to $1.15. 

Li Auto stock price analysis

The daily chart shows that Li Auto shares formed a double-bottom chart pattern at $17.74. In price action analysis, this is one of the most bullish signs. Most notably, it has jumped above the neckline at $22, meaning that bulls are now in the driver’s seat.

The company has also jumped above the 50-day Exponential Moving Average (EMA) while the MACD indicator has crossed the neutral point. 

Therefore, the path of the least resistance for the stock is bullish, with the next point to watch being at $30, its highest point in March this year. If this happens, it will likely rise by about 20% from the current level.

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