1. Ultratech Cement:
This cement & cement products company fell 6.2% since Thursday despite announcing its foray into the wires and cables (W&C) segment, investing Rs 1,800 crore to set up a plant in Gujarat over the next two years.
The stock plunged after analysts at Citi Research said the expansion would hurt Ultratech’s positioning as a pure-play cement company. Other analysts at JM Financial, Axis Capital, and Jefferies noted that the firm’s investment in a non-cement business might raise doubts among investors about capital allocation.
The company’s board of directors also approved the demerger of the cement business from its subsidiary, Kesoram Industries. As per the demerger agreement, shareholders of Kesoram Industries will get one share of the demerged entity for every 52 shares held in the company.
The board aims to meet the growing demand for wires and cables across residential, commercial, infrastructure, and industrial sectors. The wires and cables industry grew at a CAGR of 13% from FY19-24.
CLSA expects the new segment to drive 4x- 5x revenue growth with 11-13% margins. However, the brokerage expects rising competition in the wires and cables segment may hurt sector profitability. It also expects UltraTech to prioritize wires over cables in its new venture.
Speaking on the expansion plans, Ultratech Cement’s Chairman, Kumar Mangalam Birla said, “We intend to expand our presence in the construction value chain through our foray in the cables and wires segment, which aligns with our vision of providing comprehensive solutions to our end customers in the construction sector.”
The company’s expansion news came as a disaster for the cables & wires industry, with Polycab India, KEI Industries, R R Kabel, and Havells India plunging 18.8%, 21%, 19.8%, and 6.2%, respectively, on Thursday. These stocks fell after expectations of de-rating and margin pressure from investors.
2. Blue Star:
This air conditioner manufacturer's stock rose 2.5% on February 27 after it announced the commissioning of a new assembly line for room air conditioners (AC) at its Sri City plant in Andhra Pradesh. The company has allocated Rs 200 crore for the project, expanding its capacity by 20,000 units per month.
Blue Star’s Sri City facility is operating at full capacity with 6.5 lakh units and will expand to 12 lakh units by FY27. The company aims for a 13.8% market share by FY25 and 14.3% in FY26. Its 15% target, initially set for FY25, has been pushed to FY27.
Managing Director B. Thiagarajan said, "We aim to maintain an 8.5% operating margin while working towards a 15% market share. The original equipment manufacturers (OEMs) are increasing their production capacity, which should help stabilize supply and demand." He also mentioned that the room AC market is expected to grow by 20-25% with a promising summer ahead.
In Q3FY25, Blue Star’s revenue grew 20% YoY, driven by outperformance in the electro-mechanical projects and commercial AC segment. Net profit rose 36% YoY, driven by lower finance costs and inventory destocking. Both revenue and net profit beat Forecaster estimates by 4% and 5%, respectively.
Over the past quarter, foreign investors increased their holdings from 18.1% to 18.5%, while mutual funds reduced their stake from 20.8% to 20.1%. However, mutual funds have shown renewed interest, as the stock appears in a screener of companies where they increased holdings in the last month.
Jefferies downgraded Blue Star to 'Hold', citing limited upside potential after the stock surged 140% in CY24. However, the brokerage noted that demand for ACs and cooling products in Q4FY25 is expected to exceed 25%.
3. Havells India:
This electrical equipment company fell 6.2% to a new 52-week low of Rs 1,402.2 on Thursday, following UltraTech Cement's announcement of its entry into the wires and cables segment, with a Rs 1,800 crore investment over the next two years. This development is expected to intensify competition and lead to pricing pressures in the industry, impacting companies like Havells India, Polycab India, and KEI Industries.
In Q3FY25, Havells' net profit fell 3.3% YoY to Rs 278.3 crore as its EBITDA margin contracted 100bps YoY to 8.8%. However, revenue grew 10.8% YoY to Rs 4,889 crore, driven by the wires and cables segment, which rose 7% YoY to Rs 1,690 crore. This segment contributes 35% to the total revenue.
The lighting segment faced challenges due to price cuts owing to competitive pressure from brands like Philips, which impacted the margins. Havells’ Lloyd division, acquired in 2017 for Rs 1,600 crore, still remains unprofitable. Although performance improves during peak seasons, the division has not yet achieved full-year breakeven.
Havells India plans to enter the electric vehicle (EV) charging market within the next six months. Vivek Yadav, Executive Vice President of the company,stated, “The EV scene in India is set to grow multi-fold. We identified chargers as a key business, as the charging infrastructure in India is still nascent.” The company intends to start with a business-to-business focus on automakers before expanding into the retail market.
Additionally, Havells is investing in internet-connected household devices, enhancing its Internet of Things (IoT) capabilities, which enables consumers to monitor and optimize their energy consumption efficiently. Yadav noted that the company allocates over 2% of its turnover to research and development.
Motilal Oswal maintains its ‘Neutral’ rating on the company, highlighting that while revenue growth in Q3FY25 was driven by improved consumer demand, lower margins in the switchgear segment and higher losses in the Lloyd division weighed on earnings. The brokerage expects revenue, EBITDA, and net profit to grow at a CAGR of 14%, 21%, and 23% over FY25-27.
4. Chalet Hotels:
Thishotel company’s share price rose 3.6% over the past week afterICICI Securities increasedthe target price to Rs 1,017 (from Rs 965 earlier) while retaining its ‘Buy’ call. Chalet Hotels recentlyacquired Mahananda Spa and Resorts in an all-cash deal worth Rs 530 crore.
This deal adds the Westin Resort & Spa to Chalet Hotels' portfolio. The acquired hotel has 141 rooms, with an expected average room rate of Rs 25,000-30,000 per night. The resort has 45% occupancy and is expected to reach 60% within a year. With the addition of these 141 rooms, the company will have around 3,200. It aims to reach around 5,000 rooms over the next two quarters.
Chalet Hotels’ revenue grew 21.9% YoY to Rs 457.8 crore inQ3FY25, beatingTrendlyne’s Forecaster estimates by 0.6%. Improvements in the hospitality and rental segments drove growth. Meanwhile, net profit increased 36.7% YoY to Rs 96.5 crore.
During thequarter, the company’s hospitality revenue grew 17% YoY. Chalet Hotels’ revenue per available room (RevPAR) increased 16% to Rs 9,090, while its occupancy reached 70%. The management is optimistic that the company will achieve double-digit RevPAR in FY25.
Commenting on the future outlook, Managing Director and CEO Sanjay Sethisaid, “Q4 is always better than Q3, and we expect this trend to continue in the coming quarters. For Q1FY26, we see weddings contributing to demand, which was not the case last year, providing an upside. Additionally, we expect corporate travel to remain strong in the coming months.”
ICICI Securities believes the recent acquisition strengthens growth prospects while its expansion plans are on track. The brokerage is optimistic about Chalet's growth, citing its rental expansion, hotel developments, and upcoming projects like the Taj Hotel at Delhi Airport T3, Hyatt Regency Navi Mumbai, and CIGNUS POWAI Tower II. Analysts expect strong industry demand driven by leisure and business travel. The changing preference for branded hotels, a shift of weddings to hotels, and growth in destination weddings also bode well for the hotel operator.
5. Bharti Airtel:
Thistelecom company surged 2.5% on Wednesday following theannouncement of ongoing discussions to merge the Tata Group’s DTH business with its own. This deal is reportedly expected to be structured as a share swap, with Airtel acquiring a majority stake and existing Tata Play shareholders retaining a 45-48% stake in the combined entity.
InQ3, the firm reported revenue growth of 19%, and its net profit surged six times YoY. Both revenue and net profit exceeded Forecaster estimates. The surge in net profit was due to the consolidation of Indus Towers and a lower tax rate. Average revenue per user (ARPU) grew 18% YoY to Rs 245, driven by tariff hikes, and net subscriber addition stood at around 5 million, 50% higher than that of Jio.
Mobile services, whichcontribute most of its revenue, surged 21% YoY as subscribers transitioned from 2G to 4G. Postpaid subscriber growth of 13% YoY and rising ARPU added to the revenue surge. VC and MD Gopal Vittal believes that 80 million subscribers can potentially upgrade to Airtel’s postpaid services, further adding to the growth momentum.
Bharti Airtel incurred 5% lower capex of Rs 7,400 crore in Q3 compared to the same period last year. Vittalsaid, “We are not putting any investments in 4G capacity; all we are doing is a few more 5G radios as we expand and see more devices coming in.” He expects capex to decline this year and further reduce in FY26.
ICICI Securitiesmaintains a ‘Buy’ rating on the stock as it expects Bharti to increase its market share further and narrow its gap with Jio. They also believe that disciplined capital allocation and tight control on capex will improve EBITDA margins by 410bps in FY26. With a target price of Rs 1,925, Bharti Airtel has a potential upside of 22.6%.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
