1. BSE:
This stock market exchange saw an 8.4% surge on Thursday following the announcement of its Q1 results after market hours on Wednesday. The firm posted a revenue growth of 2.5X YoY at Rs 674 crore in Q1FY25, surpassing Trendlyne's Forecaster estimate by 14.5%. Adjusted net profit rose 2.6X YoY to Rs 265 crore, beating estimates by 14%.
In Q1FY25, transaction charges, which make up more than half of the total revenue, soared 5.6X YoY to Rs 366 crore. Revenue from equity derivatives jumped to Rs 242 crore, compared to just Rs 1.6 crore in Q1FY24, thanks to a relaunch in May last year. However, the currency derivatives segment faltered as revenue plunged by 85% YoY, following the RBI mandate requiring traders to demonstrate foreign currency exposure to participate in this segment.
BSE shares had surged 6% on July 31 after SEBI proposed seven key amendments to curb the FnO frenzy. SEBI had observed that most traders lose money on expiry day trading, where premiums are low but risk is high. One of the amendments aims to limit both NSE and BSE to only one weekly expiry contract each.
Analysts anticipate these changes to impact FnO volumes. But they also forecast a significant market share gain for BSE from its current 20% level, since these amendments are expected to impact NSE more severely, as it currently holds 80% market share with four weekly expiry contracts on different days, compared to BSE's two.
MD & CEO Sundararaman Ramamurthy said, “BSE’s foray into single stock derivatives space from July 1, 2024, with a mid-month expiry, has gained considerable traction.” He highlights that performance has exceeded his expectations, with a total turnover of Rs 341 crore in July.
Motilal Oswal reiterates its ‘Neutral’ rating on BSE due to the uncertainty surrounding potential new regulations for FnO. However, they view the relaunch of BSE derivatives products last year as a game-changer and expect the recent launch of stock derivatives to drive further market share gains for BSE.
2. Adani Wilmar:
This edible oils company rose by 10.6% over the past week, after Adani Enterprises approved a scheme of arrangement to demerge its food FMCG business and transfer it to Adani Wilmar, along with investments in Adani Commodities LLP.
Adani Wilmar reported a net profit of Rs 313.2 crore in Q1FY25 compared to a net loss of Rs 78.9 crore in Q1FY24, helped by inventory destocking. Revenue grew 9.6% YoY to Rs 14,168.6 crore, during the quarter. The firm missed Trendlyne’s forecaster estimates for revenue by 1.6%, but beat net profit estimates by 81.9%.
Adani Wilmar got a boost from a notable increase in volumes, with edible oils up 12% YoY and Foods & FMCG up 42% YoY. The company increased its market share by 60 bps to 19% in the edible oil business, with its brand "Fortune" leading the segment. The firm’s market share in edible oil is nearly 1.5 times that of its next competitor, Patanjali Foods, dominating in North and Central India. CFO Shrikant Kanhere said, “We expect 30-40% YoY annual volume growth for the next three years once our Gohana plant is operational, enabling a more efficient in-house supply chain.”
The company has broadened its product range with "Pehli Dhaar," a cold-pressed mustard oil, and is utilizing its established distribution network to boost food product sales and reach more customers. It plans to cover 50,000 rural towns by March 2025 to enhance product distribution. Adani Wilmar also aims to expand its export business, focusing on specialty chemicals and branded food products, to explore new markets.
KRChoksey maintains its “Accumulate” rating with an upgraded target price of Rs 382.4, indicating a potential upside of 6.5%. The brokerage highlights favorable commodity prices, improved margins, and a scaling up of the food portfolio as drivers for future growth.
3. Godrej Consumer Products:
This personal products maker has declined more than 3.9% in the past two days after announcing its Q1FY25 results. Its revenue declined 3% YoY to Rs 3,409 crore in Q1, missing Forecaster estimates by 2.4%. This was largely due to a 25% YoY decline in GAUM ( Godrej Africa, USA, and Middle East). Net profit grew 41.4% YoY to Rs 450.7 crore during the quarter, but missed estimates by 8.2%.
International markets (which make up around 37% of the total revenue), saw Godrej Consumer’s Indonesia business outperform, with a 7% YoY growth in volumes. The growth was led by its hair colour business, and the newly launched Stella Electric Diffuser. However, Africa, US & Middle East business volumes declined due to devaluation of Nigeria’s naira currency, and the Red Sea crisis.
In the domestic business, the homecare segment (which contributes around 38% of revenue) grew 8% YoY led by air fresheners and liquid detergent. However, the household insecticide business was impacted by severe heatwaves. The management highlighted that Goodknight Agarbatti is scaling up and gaining market share from unorganised incense stick players. Meanwhile, the personal care segment (contributing around 58% of the revenue) sales grew by 6% YoY.
Meanwhile, Godrej Consumer Products announced its entry into the pet care industry, by creating a subsidiary, Godrej Pet Care, with an expected cash investment of Rs 500 crore planned over the next five years. The production will begin in Q2FY26, and the company will have a manufacturing agreement with Godrej Agrovet, operating in the animal feed and agribusiness sectors. Aasif Malbari, the CFO acknowledged the jump in pet ownership in India, saying, “Pet foods is a Rs 5,000-crore category with the potential for strong double-digit growth for the next few decades”.
Post results, Motilal Oswal maintains its ‘Buy’ rating with a target price of Rs 1,700. The brokerage believes the implementation of disruptive innovations, the introduction of access packs, expansion into new growth categories, and increased advertising expenditure will contribute to a consistently robust growth trajectory.
4. Carborundum Universal:
This industrial products company fell by over 10.8% over the past week. It announced its results on July 31s – the company’s net profit fell by 0.2% YoY to Rs 112.5 crore in Q1FY25, while its revenue fell by 2.4% YoY, mainly on the back of declines in electro minerals and ceramics segment revenues. The firm missed trendlyne’s forecaster estimates for revenue by 5.4% and for net profit by 14.7%. The stock shows up in a screener for stocks in the PE sell zone.
Electro minerals are the basic raw material used in the manufacturing of abrasives and for surface preparation in tile and paint industries. Carborundum Universal manufactures these, as well as industrial ceramics like Zirconia Ceramic, which is used in the food industry for grinding applications. The company’s consolidated electro-minerals sales struggled in Q1, falling by 9% YoY to Rs 380 crore due to a drop in price realization by 4-6% from Chinese dumping. Consolidated ceramics sales fell by 6% YoY to Rs 270 crore, primarily due to delays in refractory orders.
China has cast a shadow on Carborundum Universal’s numbers. Analysts note that the firm has reported a muted set of results since the last four quarters on account of competition with Chinese abrasives, loss of a customer in engineered ceramics, and the decline of the Russian ruble, which negated the gains of growth in subsidiaries’ revenues.
Sridharan Rangarajan, MD of the firm, commented: “For FY25, in the previous call we said that full-year consolidated sales growth could be 9% to 11% and consolidated sales could be Rs. 5,100 to 5,200 crore. We are confident of delivering the same. We expect growth of 11% to 12% in Abrasives, 12% to 14% in Ceramics as told earlier. We maintain the same stands for Electro Minerals as well, a growth of 5% to 6%. Abrasive India growth would be 9% to 11%. We expect the second half to be better. All the projects that we plan to execute are in line and we are confident of what we guided in the last call.”
Despite management optimism, ICICI Securities has downgraded the stock to a “Sell” rating with a target price of Rs 1,450. The brokerage highlights that due to its well-diversified and large product basket, the firm is a key beneficiary of the increased focus on hi-tech manufacturing in the domestic market. However, with near-term headwinds in mind, the brokerage has maintained Its target price and now values the stock at 36x FY26 EPS.
5. Torrent Power:
This electric utilities company surged 16.5% to its all-time high of Rs 1,908 per share on 31 July, the day after its Q1FY25 results. The company’s net profit grew by 88% YoY to Rs 972.2 crore, beating Forecaster estimates by 50.1% while its operating revenue rose by 22.9% YoY to Rs 9,110 crore, largely driven by higher merchant power sales of 1.7 billion units (vs. 400 million units YoY).
During the quarter, the company reported a sales growth of 65% YoY in the generation segment from Rs 2,229.3 crore in Q1FY24 to Rs 3,677.6 crore in Q1FY25. Its transmission and distribution segment grew 4.7% YoY to Rs 6,934.3 crore while its renewables segment grew 5.5% YoY.
The company also signed a memorandum of understanding (MoU) with AIA Engineering and Torrent Urja 16 to supply renewable energy. This agreement involves developing and setting up hybrid projects with a capacity of up to 33 MW in Gujarat. The power will be supplied to AIA's production units through open access from the TU16 project.
Saurabh Mashruwala, Chief Financial Officer of the company said, “The current electricity market conditions are favorable for generators like us, given sufficient capacity and the lack of recent major investments in thermal power. We expect to reach 5 GW of renewable energy capacity in the next two to three years.” The company is capitalizing on these favorable conditions by investing in the development of two major transmission projects. The first, the Khavda Transmission Project, which has a return on equity of 15% and is expected to cost more than Rs 800 crores. Second is the Solapur transmission project which will involve an investment of Rs 470 crores.
ICICI Securities maintains a ‘Hold’ rating on the stock with a target price of Rs 1,825. The brokerage does not expect contribution to decline in the next three quarters, leading to moderation in quarterly profit, and expects EBITDA margin to be 17.1% in FY25 and 18.7% in FY26.
Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.
