By Sunday last week, exit polls almost unanimously predicted that the Bharatiya Janata Party (BJP) would win the 2024 Lok Sabha elections with a clear majority. This sent the Nifty 50 up by 3.3% and to an all-time high of 23,338.7 on Monday.
But the forecasts turned out to be pretty hollow when actual vote counting began, with the BJP losing 63 seats to end up with a total of 240, failing to secure a single-party majority. This led to the most volatile day for Indian equity markets since the pandemic, with indices falling sharply. However, the Nifty and Sensex recovered some of its losses by market close on June 5.
A coalition government can impact some industries as capital allocation can change due to differences in investment preferences between coalition parties. We look at Trendlyne’s Q4FY24 results dashboard to identify industries that have been top performers, as well as those who struggled. We also examine the drivers of positive or negative industry sentiment.
This edition of Chart of the Week looks at YoY growth in net profit and revenue for Q4FY24 across industries, and the biggest contributors to this industry growth.
Rising investor interest drives revenue growth for exchanges and capital markets
The capital markets industry registered an overall net profit and revenue growth of 123.2% YoY and 75.4% YoY, respectively, in Q4FY24. Companies such as Motilal Oswal Financial Services (MOFSL), ICICI Securities, Angel One, and IIFL Securities contributed significantly to this surge.
MOFSL’s capital markets segment rose 74% YoY, while its asset and wealth management segment grew by 55.3% YoY in Q4FY24. The treasury investments segment witnessed a turnaround amid high interest rates, with the company reporting a net profit of Rs 285.7 crore compared to a loss of Rs 146.4 crore in Q4FY23.
Angel One’s revenue grew 64.4% in Q4. However, this did not fully translate into net profit growth, where there was a moderate gain of 27.4%. This was because the company ventured into the asset management and insurance businesses which led to higher employee costs, coupled with expenses of Rs 22.7 crore for sponsoring IPL in March quarter. Angel One’s CFO Vineet Agarwal in Q4 earnings call said that the company’s committed cost for IPL for the next four years is Rs 82.5 crore annually, excluding advertisement cost. He added that for the IPL season gone by, the company spent around Rs 143 crore, out of which Rs 23 crore was accounted for in Q4, and the remaining Rs 120 crore will be accounted for in the current quarter.
The Bombay Stock Exchange (BSE) and Multi Commodity Exchange of India (MCX) were significant contributors of the exchange industry with average net profit rising by 57.6% YoY and revenue growth of 69.5% YoY in Q4.
MCX India posted a net profit of Rs 87.9 crore in Q4FY24, a 16x increase compared to the same quarter the previous year, driven by the launch of its commodity derivatives platform in October last year. Meanwhile, BSE’s revenue doubled YoY in Q4 to Rs 548.4 crore, following the relaunch of Sensex and Bankex derivative contracts, and increased transaction charges on Sensex near-expiry options.
Realty firms get a boost from luxury real estate, while demand for loans drove banking firms higher
Realty companies saw an average revenue growth of 25.3% YoY in Q4, with net profit growth of 18.6%. Key contributors included DLF, Oberoi Realty, and Brigade Enterprises, with their net profits up 61.5%, 64.1%, and 197.6% YoY respectively. This was fueled by demand for luxury residential properties. For example, DLF announced that its luxury residential project, 'DLF Privana West,' valued at approximately Rs 5,590 crore, was sold out within just three days.
Meanwhile, the banking industry posted revenue growth of 25.9% and net profit growth of 45.2% YoY in Q4FY24. All 41 banks reported positive revenue growth, thanks to rapid growth in loans, stable margins, and lower provisions. According to Trendlyne’s Bank Operations Report, banks in Q4 saw a loan growth of 28.5% YoY, which outpaced deposit growth of 20.6% showing higher spending by Indians which boosted demand.
Two Tata Group firms, Titan and Tata Steel saw revenues moderate in Q4
The gems and jewellery industry saw a net profit decline of 5.5% YoY in Q4, with revenue down 14.7% YoY. Gold and synthetic diamonds player Rajesh Exports was a major laggard, with revenue declining 20.6% YoY to Rs 91,649.3 crore and a net loss of Rs 31.6 crore compared to a profit of Rs 366 crore a year ago. The company has struggled with high operating costs. Meanwhile, Titan’s revenue grew 20.6% in Q4, with a moderate net profit growth of 5.6% YoY. Its jewellery segment, contributing 87% of Q4 revenue, saw margins decline due to higher consumer discounts and an 11% YoY surge in gold prices.
The iron and steel industry on the other hand, saw a sharp decline of 39.3% YoY in net profit, while revenue fell 2.7% YoY. This was driven by Tata Steel and JSW Steel, whose net profits declined 64.1% and 64.5% YoY respectively in Q4 owing to their ongoing expansion plans.
Agrochemicals & commodity chemicals industry suffer due to weak monsoon and Chinese dumping across the globe
In Q4FY24, the agrochemical industry’s revenue declined 12.5% YoY with net profit declining 52.7% YoY. UPL and Bayer CropScience saw their net profit decline 95% and 39.4% respectively in Q4FY24 due to a slump in demand for agrochemicals, as monsoons grew erratic in the past year. Another contributing factor was a sharp decrease in price realisation because of higher supplies from Chinese competitors.
Meanwhile, the commodity chemicals industry, which was impacted the most, saw its average net profit plunge 96% YoY with an 11.2% YoY fall in revenue during the quarter. Industry leader, Tata Chemicals was hit by quarterly revenue decline of 21.2% YoY, with a net loss of Rs 850 crore compared to a profit of Rs 709 crore in the same period last year. The company faced challenges due to the weak demand-supply scenario for soda ash in Europe which led to lower realisations. This can be attributed to inventory destocking, coupled with an oversupply situation in the European markets.
