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The new year kicked off with significant developments for ITC Hotels, as its demerger became effective on January 1, 2025. The record date for this milestone is set for January 6, 2025, marking the day the ITC stock goes ex-demerger. But what does this mean for shareholders? How will the demerger affect ITC’s share price and what will it bring to the table for everyone involved? Let’s break it down step-by-step.

What Does the Demerger Mean for ITC Shareholders?

If you’re an existing shareholder of ITC, this demerger brings both clarity and opportunity. For every 10 shares of ITC you own, you will receive 1 share of ITC Hotels. However, to qualify for ITC Hotels shares, you must hold ITC shares by January 3, 2025. Investors purchasing ITC shares on or after the ex-date, January 6, 2025, will not be eligible to receive ITC Hotels shares.

The demerger process includes a special pre-open session (SPOS) on January 6, which will establish the intrinsic value of ITC Hotels based on market dynamics.

When Will ITC Hotels Shares Reflect in Your Portfolio?

Despite the demerger being effective immediately, ITC Hotels shares will not appear in your portfolio right away. Approval from stock exchanges is still pending, and until this is granted, ITC Hotels will remain a dormant stock within indices like the Nifty 50 and BSE Sensex.

Once trading begins for ITC Hotels, it will take three trading days for the stock to be removed from indices. However, if the stock hits circuit limits on the first two days, its exclusion will be delayed by another three days.
Source: Financial Express

The Strategic Rationale Behind the Demerger

ITC’s decision to demerge its hotel business into a separate entity, ITC Hotels, is a strategic move aimed at unlocking value for shareholders. ITC will retain a 40% stake in the new entity, ensuring strategic support and synergies with its hotel operations, while shareholders will directly own the remaining 60%. This approach avoids a vertical division and positions ITC Hotels for future growth.

ITC’s Financial Performance and Hotel Business Growth

In the second quarter of FY25, ITC reported a consolidated net profit of Rs 4,993 crore, marking a 2% year-on-year growth. Revenue from sales of products and services grew 16% to Rs 20,360 crore. The hotel business contributed significantly, with revenue rising 12% year-on-year to Rs 728 crore in Q2 FY25, and the PBTrising marginally to Rs 151 crore from Rs 126 crore in the same period last year.

ITC’s financial health remains robust, with a 5-year P/E ratio of 29, near its median P/E of 23, and an almost debt-free balance sheet.

Market and Institutional Holdings Trends

Institutional holdings have shown mixed trends:

• Foreign Institutional Investors (FIIs): Decreased their stake from 42.68% in September 2022 to 40.53% in September 2024.
• Domestic Institutional Investors (DIIs): Increased their holdings from 42.38% to 44.59% over the same period.
  Source: Financial Express

ITC’s Stock Performance vs. Nifty 50

Over the past year, ITC’s stock has risen 4.5%, with a year-to-date increase of 1.9%. Over six months, it has delivered a 12.5% return. In comparison, the Nifty 50 has grown 11% in the past year and over 9% year-to-date, while showing a slight decline of 0.5% in the last six months.

ITC Hotels’ Stock Price

The share price of ITC Hotels will be determined by the difference between ITC’s closing price on January 3 and its open price during the SPOS on January 6. ITC’s share price is expected to be adjusted by Rs 22-25 on January 6, reflecting its 40% stake in the hotel business and a 20% holding discount.

Inclusion in Stock Indices and Future Prospects

• Nifty 50 and Sensex: ITC Hotels will temporarily appear as the 51st constituent of the Nifty 50 and the 31st in the Sensex, with its weight calculated based on the discovered price during the SPOS.
• MSCI Indexes: ITC Hotels is projected to qualify for the MSCI Global Small Cap Indexes, while ITC Ltd. will remain part of the Standard Index. MSCI plans to apply a Price Adjustment Factor (PAF) to ITC’s price on January 6 to reflect the spin-off.
• FTSE Index: If ITC Hotels does not list within 20 working days after the record date, it will be excluded from the FTSE Index.
• Futures and Options (F&O): ITC Hotels will require at least six months of trading history and SEBI approval to qualify for inclusion in the F&O segment.

Source: Mint

Market Reactions and Key Dates to Watch

On January 1, ITC’s share price traded marginally higher, reflecting the excitement surrounding the demerger. A special trading session on January 6 will determine ITC Hotels’ fair price. The stock is expected to be listed within 60 days of receiving the NCLT order, dated December 16, 2024.

Conclusion

The ITC Hotels demerger is a landmark event, signaling the company’s strategic shift to unlock value for shareholders while allowing its hotel business to operate independently. For shareholders, the immediate benefits include receiving ITC Hotels shares and the potential for enhanced value realization in both ITC and ITC Hotels stocks. However, the true impact will unfold as ITC Hotels begins trading, and its market dynamics become clearer.

For ITC as a whole, this demerger aligns with its broader vision of focusing on core business segments while providing strategic backing to its spin-off entities. ITC Hotels now has the autonomy to chart its own growth path, backed by ITC’s continued support. As investors await the stock’s listing and market performance, the demerger stands as a testament to ITC’s commitment to creating long-term value in an evolving corporate landscape.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The Bombay Stock Exchange witnessed an intraday low in the share price of Adani Wilmar Limited. The shares nosedived 7% in the early market hours after Adani Enterprises Limited announced its exit from the 25-year-old joint venture with Wilmar International, which seeks strategic investors to replace Adani. Did the divesting affect just the WiImar shares? Let’s understand how the news affected both companies.

Adani Enterprises Limited’s Exit Plan

Adani Enterprises Limited (AEL) is set to exit its 25-year-old joint venture with Wilmar International in a $2 billion deal. AEL will divest its 44% stake in Adani Wilmar Ltd (AWL) in two phases. To comply with public shareholding norms, AEL will first sell 13% of its stake in the market at an estimated price of Rs.305 per share. The remaining 31% stake will be sold to Wilmar, raising Wilmar’s ownership in AWL from 44% to 75%.

The proceeds from this divestment will be directed toward strengthening AEL’s core infrastructure platforms, including energy, utilities, transport, and logistics. This strategic shift is part of AEL’s broader focus on its infrastructure portfolio.

Effect Of The Exit On Adani Wilmar Limited Shares:

The AWL share price trend in the past year has given a negative return of 13.83%, with its price ranging between Rs.279 and Rs.408.95. After the divesting news, the shares dipped nearly 7% to the intraday low of Rs.303.10.  

The downward trend can be attributed to the financials of AWL for FY2024. 

Overview of Adani Wilmar Limited:

Adani Wilmar Ltd (AWL) is a leading FMCG company in India, specializing in essential kitchen commodities such as edible oils, wheat flour, rice, pulses, and sugar. The company caters to diverse customer groups with products offered under popular brands like Fortune, King’s, Raag, and Bullet, spanning a broad price spectrum.

Established in 1999, AWL is a joint venture between the Adani Group, a diversified business conglomerate with interests in transport, logistics, energy, and utilities, and Wilmar International, a prominent agribusiness group based in Singapore. AWL is a market leader in edible oils and a significant player in castor exports, oleochemicals, soya nuggets, and wheat flour production.

The company operates 23 manufacturing facilities and 38 leased units, ensuring robust production capabilities. Its overseas subsidiary in Bangladesh focuses on refining and trading crude edible oil. For FY2024, AWL’s financials were as follows: 

1. Revenue:

In FY2024, Adani Wilmar reported a turnover of Rs.51,262 crore, with a sales volume of 60 lakh MT and a gross profit of Rs.5,632 crore. However, these figures show a decline compared to FY2023, when the company recorded a revenue of Rs.58,185 crore and a gross profit of Rs.6,002 crore. The decline was primarily driven by a 16% drop in sales in its edible oil segment, which could not be offset by the 23% year-on-year growth in its FMCG business.

Net Profit

The company reported a net profit of Rs.148 crore in FY2024, 75% lower than the FY2023 profit of Rs.582 crore. 

One of the reasons for the fall in net profit could be attributed to Adani Wilmar’s efforts over the last three years to diversify its portfolio away from its core edible oil sector as a hedge against the volatility of edible oil prices. As a result of these diversification efforts, the contribution of the edible oil segment to its top line has decreased to 61%, down from more than 85% in early 2022. This shift has impacted overall profitability despite growth in other segments.

1. Debt and Liabilities:

AWL is debt-free, reinforcing its financial stability and leadership in the FMCG sector. It had a debt-to-equity ratio of 0.9 in FY2015, which reached zero in FY2022 and maintained the same until FY2024. 

What Happens In AWL After the Exit?

Following AEL’s exit, AWL will become a subsidiary of Wilmar International through its fully owned entity, Lence Pte. Ltd. Wilmar plans to fund the acquisition through internal resources and bank borrowings. It also aims to attract strategic investors to further drive AWL’s growth.

Additionally, the company will undergo a rebranding process, adopting a new name approved by the Ministry of Corporate Affairs. AEL’s nominee directors have already resigned, signaling a complete transition of control to Wilmar.

Bottomline:

The exit of Adani Enterprises from its joint venture with Wilmar International marks a significant shift for both companies. For Adani Wilmar, the exit could impact its share price in the short term, given the uncertainty around the transition. Despite recent diversification efforts, AWL’s financial performance showed a decline in revenue and profit for FY2024. Additionally, the upcoming rebranding and changes in control might affect investor sentiment. On the other hand, Wilmar’s increased stake and its focus on bringing in strategic investors could drive growth in the long term.

As with any investment, investors must assess the situation thoroughly, considering the potential risks and rewards. The reorganization might present opportunities, but a detailed evaluation of the company’s plans and market trends is essential—thoroughly research before making investment decisions.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

KFin Technologies recently overtook Computer Age Management Services (CAMS) in market capitalization, drawing significant attention across the financial sector. This achievement highlights the company’s growing prominence and diversified business strategy. Let’s explore the factors fueling its success.

KFin Technologies Notable Market Cap Achievement

By December 26, 2024, KFin Technologies’ market capitalization soared to ₹273.44 billion, marking substantial growth over the past year (Source: stockanalysis.com). The company’s shares recently peaked at ₹1,620, a significant jump from their debut price of ₹364 in December 2022 (Source: livemint.com). This remarkable turnaround underscores the market’s recognition of KFin’s potential.

Key Drivers Behind KFin Tech’s Ascent

KFin Tech’s innovative and diversified approach has set it apart. Here are some notable elements:

• Domestic Mutual Fund Services: This segment remains a cornerstone, contributing about 70% to total revenue in FY24. However, KFin’s strategic diversification ensures it’s not overly reliant on one area (Source: livemint.com).
• Issuer Solutions: A leader in this domain, KFin served 6,677 corporate clients in FY24, up from 4,413 in FY21. This segment was rebranded as an issuer solution and contributed 13% to FY24 revenue. Growth in IPOs and new clients like NTPC Green Energy and Hexaware Technologies further bolstered this business
• Global Expansion: KFin’s international operations, spanning countries like Malaysia and Thailand, focus on alternative investment funds (AIFs) and fund accounting. This segment added 10% to revenue in FY24 and is expected to grow further with a robust client pipeline (Source: investor.kfintech.com).

Strong Financials Back the Buzz

It’s not just about market share and diversification; the financials paint an equally compelling picture:

• Revenue Growth: In FY24, the company’s revenue climbed to ₹8.61 billion, marking a solid 17.92% year-over-year growth (Source: stockanalysis.com).
• Profitability: The net profit for the same period stood at ₹2.99 billion, with a profit margin of 30.01%, highlighting effective cost management and operational efficiency (Source: simplywall.st).

Comparing with CAMS

While a long-standing leader, CAMS relies heavily on domestic mutual fund services, which account for 87% of its revenue. In contrast, KFin’s diversified model, with exposure to international markets and issuer solutions, offers resilience against market fluctuations

Is KFin Tech’s Growth Sustainable?

While the company’s stock has seen a fourfold increase since its IPO, sustainability depends on its ability to maintain momentum across diverse revenue streams. Its international business grew 23% in H1FY25, but the booming domestic mutual fund segment, with 37% growth, remains a significant contributor

Challenges and Valuation Considerations

Despite its strengths, KFin faces challenges. Regulatory changes in the asset management sector could reduce earnings, while market shifts toward passive funds may lower revenues. Furthermore, KFin’s valuation is steep: It trades at 66x FY26 earnings compared to CAMS’s 44x. This premium reflects high investor expectations (Source: livemint.com).

What Should Investors Keep in Mind?

• Growth Sustainability: Success will depend on KFin’s ability to expand and manage its diverse operations effectively.
• Operational Challenges: Running a multifaceted business globally requires robust systems and expertise.
• Valuation Metrics: Investors should evaluate whether the current valuation accurately reflects future growth potential (Source: stockanalysis.com).

What Should Investors Watch?

KFin Tech’s rise is exciting, but there are a few points for investors to consider:

• Sustainability of Growth: Expanding and managing such diverse services isn’t easy. How well KFin Tech executes across these segments will be crucial.
• Operational Challenges: Managing a multifaceted global operation demands expertise and robust infrastructure.
• Valuation Metrics: At a price-to-earnings (P/E) ratio 91.82, investors should weigh whether KFin Tech’s valuation reflects its long-term growth potential (Source: stockanalysis.com).

Final Thoughts

KFin Technologies’ leap ahead of CAMS is a testament to its diversified business model and strategic execution. While its growth story is compelling, its ability to sustain this momentum will determine its long-term success. For investors, the message is clear: keep an eye on the numbers, watch the execution, and make informed decisions.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQs

The stock market is often a treasure trove of opportunities for investors willing to take calculated risks. Cellecor Gadgets is a prime example of how small-cap stocks can deliver stellar returns. Over the past year, this SME (Small and Medium Enterprise) stock has turned heads by transforming an investment of just ₹1.10 lakh into a whopping ₹7.45 lakh. Let’s dive deeper into the factors contributing to this astronomical growth. (Source: Livemint)

Source:tradingview.com  

But what does a stock split mean? 

A stock split is a corporate action in which a company divides its existing shares into multiple new shares to boost liquidity. For instance, imagine a single share as a whole pizza. In a 1:10 stock split, that pizza is sliced into 10 smaller pieces. While the size of each slice is smaller, the total amount of pizza remains the same, making it more accessible to more people without altering its overall value.

The Catalyst: 1:10 Stock Split

Cellecor Gadgets specializes in consumer electronics, delivering a range of gadgets and tech products that align with modern trends and consumer needs. Their focus on quality and innovation in electronics has allowed them to carve a unique position in the market, driving their strong financial performance and investor interest.

Cellecor Gadgets recently executed a 1:10 stock split, a strategic move that has significantly bolstered its market appeal. A stock split increases the number of shares in circulation while proportionally reducing the stock price. This enhances liquidity and makes the shares more affordable to retail investors. For Cellecor, this decision wasn’t just about affordability but also about boosting investor confidence and attracting a broader base of stakeholders.

Stock splits often create a ripple effect. While they don’t inherently change the company’s valuation, the increased accessibility can lead to heightened trading activity, as was evident with Cellecor. Post-split, the stock saw a surge in demand, underlining the market’s enthusiasm for the company’s growth story.

Impressive Financial Performance

One of the primary drivers behind Cellecor’s meteoric rise is its robust financial performance. In an age dominated by gadgets and technology, Cellecor has managed to carve out a niche by delivering quality consumer electronic products. The company’s ability to align with market trends and cater to evolving consumer needs has been pivotal in its success.

The SME segment often goes unnoticed, but companies like Cellecor demonstrate the potential for massive returns when sound business fundamentals meet favorable market conditions. Investors have noted Cellecor’s consistent revenue growth and its knack for innovation, making it a standout performer in the gadget and electronics space.

A Multibagger in the Making

Cellecor’s journey from a lesser-known SME stock to a multibagger is a testament to the rewards of identifying and investing early in growth-oriented businesses. The stock’s return of over 313% within a year after being public is remarkable. (Source: Moneycontrol) For investors, this underscores the importance of spotting trends and investing in companies poised to benefit from macroeconomic tailwinds and sectoral growth.

Lessons for Investors

1. Focus on Growth Sectors: Cellecor operates in the consumer electronics space, which has immense growth potential as technology becomes integral to daily life.
2. Monitor SME Opportunities: Although SME stocks may carry higher risks, they offer significant upside potential for those willing to explore them.
3. Understand Corporate Actions: Events like stock splits can unlock value and attract a broader investor base. For Cellecor, the 1:10 stock split was instrumental in its recent success.
4. Patience Pays Off: Cellecor’s stellar returns didn’t happen overnight. Investors who held their positions benefited immensely, highlighting the value of a long-term perspective.

Looking Ahead

As Cellecor Gadgets continues to innovate and expand, its trajectory inspires other SMEs striving to make their mark in competitive markets. This story reminds investors that diligent research and strategic investments can lead to impressive returns, even in lesser-known corners of the stock market.

While the past performance of Cellecor Gadgets is undoubtedly impressive, future investors should remain vigilant about market conditions and the company’s ongoing performance. After all, past success is not always indicative of future results, and a balanced approach to investing remains crucial.

Conclusion

Cellecor Gadgets’ rise to fame in the stock market is a remarkable success story highlighting SME stocks’ potential. The company’s 1:10 stock split, strong fundamentals, and strategic market positioning have cemented its place as a multibagger. The lesson is clear for investors: opportunities abound for those willing to venture into less-explored territories with foresight and strategy.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

During the early trading hours of 26th December, BPCL (Bharat Petroleum Corporation Limited) saw its share price rise by approximately 2%. This increase followed the company’s selection as the lowest bidder for NTPC’s 150 MW solar PV power project and its announcement of pre-project activities in Andhra Pradesh. What does the new milestone mean for BPCL and its investors? And what is the project all about? Let’s decode.

The Project Announcements:

Bharat Petroleum Corporation Limited (BPCL) announced two significant developments on Tuesday in its exchange filings:

1. The commencement of pre-project activities for a greenfield refinery-cum-petrochemical complex on the East Coast of Andhra Pradesh, with an estimated cost of Rs 6,100 crore. These activities include land identification and acquisition, initial studies, Environment Impact Assessment, the Detailed Feasibility Report preparation, and the development of Basic Design and Front End Engineering Design packages.
2. BPCL became the lowest bidder in NTPC’s reverse auction for 1,200 MW of ISTS-connected solar PV projects across India. Specifically, BPCL was selected as the lowest bidder for a 150 MW capacity out of 1,200 MW. Once finalized, the project will be developed over two years with a capital investment of Rs 756.45 crore. It is expected to generate annual revenue of approximately Rs 100 crore and produce around 400 million units of clean energy. Source: Company Press Releases)

BPCL’s Share Price Trend

After the announcements, the share price of BPCL rose by around 2% during the initial trading hours and reached the day’s highest at Rs.299.30. 

So far, BPCL shares have risen by approximately 30.03% over the past year, surpassing the Nifty 50’s 10.76% gain during the same period. However, the company’s financial performance has not mirrored this share price growth, as it reported a 72% year-on-year decline in Q2 FY25 consolidated net profit, dropping to Rs 2,397 crore. Were other financial aspects on the declining side, too? Let’s take a closer look to find out. 

Overview of BPCL

BPCL is a public-sector company that refines crude oil and markets petroleum products. It operates 82 retail depots and around 20,000 retail outlets across India, holding a market share of approximately 26% in the domestic petroleum market. BPCL is on a growth path and has announced two new petrochemical projects in Bina and Kochi, with a capital investment of ₹54,000 crore by the end of FY2024. These projects aim to take advantage of the integrated refinery and petrochemical operations.

Additionally, BPCL is moving towards becoming a low-carbon energy company. It has invested nearly ₹1,000 crore to establish two 50 MW captive wind power plants and another ₹300 crore in a 72 MWp solar project in Prayagraj. On the other hand, the company’s financial performance shows mixed results, with growth in some areas and challenges in others.

Net Profit:

In FY 2023-24, BPCL reported a net profit of Rs.26859 crore. However, despite a big year-over-year increase, profits moderated to ₹3,015 crore for the first quarter of FY 2024-25. This was mainly due to lower product spreads and unfavorable crude oil prices in international markets.

EPS

The company’s EPS increased from Rs. 126.08 in FY2023 to Rs.126.08 in FY2024, a jump of nearly 1160%.

Revenue

Although BPCL’s revenue has grown over the last three years, it contracted in FY2023-24 to Rs.5,06,993 crore, down 4.98%.

Source: Annual Report

However, the company reported a market sales increase of 3.22% in the first quarter of FY2024-25 as it achieved the highest-ever ethanol blending of 14.4%. 

What Does the Project Mean For BPCL and Its Shareholders?

The recent developments indicate possible growth for BPCL and its investors. These projects align with BPCL’s strategy to increase refining and petrochemical capacity while transitioning towards low-carbon energy. The solar project is part of BPCL’s push into clean energy, reflecting its role in India’s shift towards sustainable energy sources. The capital investment in these initiatives shows the company’s focus on diversifying its portfolio.

For investors, these developments have led to a 2% increase in BPCL’s share price, suggesting a positive market response. Although BPCL’s financial performance has shown mixed results, its diversification into renewable energy, alongside its traditional petroleum business, may offer stability and potential growth moving forward. 

Therefore, before finalizing your investment, you should thoroughly review the company’s growth, expansion plans, and market factors.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQs