Reliance Retail Registers Net Profit of ₹2,836 Crore in Q2, Revenue at ₹76,302 Crore

Reliance Retail Ventures Limited (RRVL) reported its financial results for the second quarter (Q2) of the fiscal year 2024-25 (FY25). The company achieved a net profit of ₹2,836 crore on a revenue of ₹76,302 crore. However, this marked a 1.1% decline compared to the same period last year, primarily due to softer demand in the Fashion and Lifestyle (F&L) segment and strategic adjustments in the B2B business.

Focus on Streamlined Operations

The dip in revenue is attributed to the company's focus on streamlining its operations and a measured approach to its B2B business, which was aimed at improving margins. Despite the revenue decline, Reliance Retail managed to increase its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) slightly by 0.3% year-on-year (YoY) to ₹5,850 crore. EBITDA from core operations saw a growth of 1%, reaching ₹5,675 crore, and operational margins improved by 40 basis points, standing at 8.5%.

Expansion and Depreciation

Reliance Retail expanded its footprint by adding 464 new stores during the quarter, bringing the total to 18,946 stores. The retail giant now operates across 79.4 million square feet of retail space. The company also recorded over 297 million footfalls in Q2 FY25, showing a 14% YoY increase. Depreciation expenses for the quarter amounted to ₹1,420 crore, reflecting a 1.5% YoY increase due to accelerated depreciation on stores that were closed.

Continued Investment in Technology and Infrastructure

Isha M. Ambani, Executive Director of Reliance Retail Ventures, emphasized the company's commitment to building a strong foundation for future growth through continued investments in technology and infrastructure. "We continue to strengthen our customer proposition with innovative products that span everyday essentials to premium offerings," she said.

Digital and New Commerce Initiatives

The company has been scaling up its Digital Commerce and New Commerce initiatives, which contributed 17% to overall revenue. With a registered customer base of 327 million, Reliance Retail remains one of the most preferred retailers in India. JioMart, the company's e-commerce platform, showed strong growth in non-grocery categories, with the average order value (AOV) doubling YoY. The seller base also expanded by 46%, with a 13% increase in product range.

Growth in Consumer Electronics and Service Expansion

Reliance's digital electronics stores under the consumer electronics division performed well, surpassing 650 outlets across the country. The company attributed a 60% YoY revenue increase to the "Digital India" campaign, which promoted consumer electronics. Additionally, the on-demand service resQ expanded its presence to 150 cities, with service volumes increasing by 28% YoY.

Challenges in Fashion and Lifestyle Segment

The Fashion and Lifestyle segment faced challenges due to weaker demand, but Reliance Retail focused on product innovation and customer engagement to counter this. The company launched exclusive partnerships, including one with Delta Galil to expand lingerie and activewear offerings, and introduced the ASOS brand in India. AJIO, the company's fashion e-commerce platform, gained 1.8 million new customers and expanded its product catalog by 25%, introducing new brands like H&M, Timberland, and ASOS. Additionally, the youth-centric brand Yousta crossed 50 stores within its first year.

Strong Performance in Grocery Division

The grocery segment continued its steady growth, driven by Smart Bazaar and Smart store formats. Key categories like confectioneries and snacks saw a 30% YoY growth, fruits grew by 26%, and apparel by 49%. The company also reported its highest-ever single-day sales on Independence Day during the "Full Paisa Vasool Sale."

Continued Growth in New Commerce for Grocery

Reliance Retail's Grocery New Commerce business, particularly the Metro format, continued to grow, deepening its engagement with trader and HoReCa (Hotels, Restaurants, and Caterers) segments. Marketing campaigns such as "Freedom Sales" and "Mehangai Se Azadi" contributed to the division's growth. JioMart, the quick commerce vertical, also expanded significantly, with a notable increase in non-grocery categories, especially consumer electronics. The platform's AOV doubled YoY, driven by a broader seller base and product offerings.

Conclusion

Despite a slight dip in revenue, Reliance Retail has shown resilience and a strategic approach to growth. By expanding its physical store network, investing in technology, and scaling up its digital and new commerce channels, the company continues to strengthen its market leadership. With strong growth across multiple segments and a focus on customer-centric innovations, Reliance Retail is well-positioned for future expansion.

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SEBI's ASBA-like Mechanism to Benefit Investors but Impact Broking Firms' Income

The Securities and Exchange Board of India (SEBI) has introduced a new mechanism for the secondary markets that could significantly impact the income of broking firms while offering benefits to investors. On September 30, 2024, SEBI approved a new rule requiring Qualified Stock Brokers (QSBs) — the largest brokers based on client funds and trading volumes — to provide either an ASBA-like facility or a 3-in-1 trading account to their clients by February 1, 2025.

Impact on Broking Firms' Revenue

This decision is expected to hit broking firms' profitability. Currently, brokers hold client funds, earning interest from this float. With the new ASBA-like mechanism, clients' funds will stay blocked in their bank accounts until trade execution, meaning brokers will no longer have access to these funds. As a result, the ancillary income generated from holding client funds will significantly reduce.

Industry experts suggest that the new regulation may reduce brokers' overall revenue by 15-25% initially, and an additional 15-25% loss is expected when the ASBA-like facility becomes mandatory. This combined revenue hit could lead to a 30-50% decline in income for some brokers.

Benefits to Investors

While broking firms may face challenges, investors will benefit from the new system. The ASBA-like mechanism ensures that clients retain their funds in their bank accounts until the moment of trade, allowing them to earn interest on the blocked amount. According to SEBI, this change could generate Rs 2,800 crore annually in savings for investors, based on the interest accrued on cash collateral held by brokers.

Options for Clients

Clients of QSBs will have the choice to either adopt the ASBA-like facility or continue with the traditional method of transferring funds to the broker's account. However, the move towards the ASBA-like mechanism may result in higher service costs for brokers, as they will need to invest in new technologies to implement this system.

Conclusion

While SEBI's new regulations aim to enhance investor protection and benefits, broking firms are likely to face considerable revenue challenges. The full impact of these changes will be felt in the next fiscal year, with many brokers potentially losing a significant portion of their income.

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F&O Trading Losses in FY24: SEBI Data Reveals Majority of Traders, Whether 'New' or 'Regular', Incurred Losses

Key Highlights from SEBI Data:

• New Traders in FY24: 42 lakh new Futures and Options (F&O) traders entered the market during FY24. These new traders, defined by SEBI as those who placed their first trades within the last three years, accounted for nearly half of all traders in the fiscal year.

• Significant Losses for New Traders: According to SEBI's data, a staggering 92.1% of these new traders suffered losses, averaging a net loss of approximately ₹46,000 per trader in FY24.

• Losses Not Limited to New Traders: While new traders incurred losses, experienced or "Regular Traders" were not exempt. SEBI defines regular traders as those who have been active in F&O trading for three consecutive years (FY22 to FY24). In FY24, about 88% of regular traders faced losses, averaging a substantial ₹1.50 lakh per person.

• Deepening Losses Amid Market Highs: Despite the broader markets reaching new highs during the fiscal year, the data showed that loss-making traders experienced deeper losses compared to the profits of those who did make money. On average, loss-making traders suffered a loss of ₹1.20 lakh per person, while profit-making traders earned ₹1.03 lakh per person.

• Cost of Transactions: Another significant factor adding to traders' woes was the cost of transactions. SEBI's study showed that traders who incurred losses faced a higher transaction cost relative to their losses. Losing traders bore about 27% of their transaction costs on top of their net losses, while profitable traders incurred approximately 22% of transaction costs as a percentage of their gross profits.

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Analysis of SEBI's Findings:

The data highlights a key trend in F&O trading: whether a trader is new or experienced, the derivative market has been unforgiving, with most participants ending up in the red. While many new traders are drawn to the market with hopes of quick profits, the reality revealed by SEBI is that only a small fraction manage to consistently earn a profit, and even those who do often face high transaction costs.

The losses of new traders, who accounted for a significant portion of the market, could be attributed to factors such as lack of experience, high transaction costs, and the complexities of F&O trading, which is often dominated by more seasoned investors or institutional players. The heavier losses for regular traders suggest that even those with experience are not immune to the challenges of F&O markets, where volatility and leverage can lead to significant financial setbacks.

Implications for Retail Investors:

For retail investors considering entering the F&O market, SEBI's data serves as a cautionary tale. The high percentage of loss-making traders underlines the risks inherent in F&O trading, which may not be suitable for all investors. Additionally, the report suggests that traders should be mindful of transaction costs, which can further erode their returns, especially for those already facing losses.

Conclusion:

SEBI's data on F&O trading in FY24 offers a sobering reminder of the challenges faced by traders, particularly new entrants. The high percentage of loss-making traders and the significant financial losses incurred indicate that caution, experience, and careful risk management are critical for anyone participating in these markets.

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Adani Energy Solutions Set for Massive Growth: Global Brokerage Predicts 125% Upside

Adani Energy Solutions Limited (AESL) shares surged 3.66% to an intraday high of ₹1,014.90 on September 20, 2024, following a report by global brokerage Cantor Fitzgerald. The firm has projected a massive 125% upside for the stock, with a target price of ₹2,251 per share. The power stock, part of the Adani Group, has already delivered impressive multibagger returns of 353.36% over the past five years, enriching investors with substantial gains.

Bullish on India's Expanding Energy Market
Cantor's research report highlights the growth potential of Adani Energy Solutions, expecting its revenue to grow at a compound annual growth rate (CAGR) of 20% between FY2024 and FY2027. The report lauds AESL's position in India's rapidly expanding energy market, positioning the company as the largest private-sector power transmission and distribution player in the country.

Diversified Portfolio and Future Projects
AESL boasts a diversified portfolio, including transmission and distribution assets, as well as a growing smart metering business. The company is set to complete nine new transmission projects over the next 18-24 months, ensuring steady growth in its core business areas. With an enterprise value of $18.5 billion, Cantor regards AESL as one of the most attractive investment opportunities in the energy sector across the US, Europe, and Asia.

Riding India's Renewable Energy Wave
As India's most populous nation, the demand for electricity is set to soar, driven by the government's significant investment in renewable energy. AESL's infrastructure capabilities for transmitting and distributing electricity, especially from renewable sources, position the company perfectly to capitalize on this increasing demand. The focus on renewable energy is a key factor in Cantor's optimistic outlook for AESL's long-term growth.

Conclusion: A Powerhouse for Investors
With an 'Overweight' rating from Cantor Fitzgerald and significant growth prospects, Adani Energy Solutions is rapidly becoming one of the most attractive investment opportunities in the energy sector. Investors looking for long-term returns may find AESL's growth story irresistible as India's energy needs continue to expand.

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Market Movers: Top 10 Stocks That Defined September 17

On September 17, 2024, the Indian stock market saw a mixed bag of gainers and losers. Sensex and Nifty ended the session with slight gains, powered by telecom, banking, and construction stocks, while metal stocks faced declines. A total of 1,712 stocks advanced, 2,237 declined, and 109 remained unchanged, as per BSE data. Here's a detailed look at the top 10 stocks that saw the most movement:

1. Bajaj Housing Finance
   CMP: ₹181.5 per share
   Bajaj Housing Finance continued its stellar post-IPO performance, with shares hitting the upper circuit and surging by 10%. The stock, which debuted at ₹165, saw a 135% rise from its IPO price of ₹70. Investors remain bullish, extending its rally.

2. IGL
   CMP: ₹547 per share
   Shares of Indraprastha Gas Limited rose over 3% following an upgrade to 'buy' by UBS, which also hiked the target price. The stock rallied further due to strong volume growth prospects.

3. DCX Systems
   CMP: ₹347 per share
   DCX Systems surged to an upper circuit of 5% after announcing that its wholly-owned subsidiary had been granted an industrial license. This was seen as a key growth catalyst for the company.

4. Suzlon Energy
   CMP: ₹81 per share
   After delivering multi-bagger returns of 110% in just three months, Suzlon Energy saw a 4% dip due to profit booking. Despite the correction, the stock is still up 115% for the year.

5. SpiceJet
   CMP: ₹72 per share
   SpiceJet shares dropped nearly 7%, as investors booked profits following the stock's recent rally. The decline comes after the airline opened a Qualified Institutional Placement (QIP) to raise ₹3,000 crore at a floor price of ₹64.79 per share.

6. Geojit Financial
   CMP: ₹155 per share
   Geojit Financial's stock slumped by over 8%, even as the company's Rights Issue Committee is set to meet on September 19 to finalize key details about its upcoming rights issue, including the price and entitlement ratio.

7. Reliance Infrastructure
   CMP: ₹235 per share
   Shares jumped over 9% after the company announced a board meeting to discuss raising long-term funds. The stock surged despite no specific details about the mode or amount of fundraising.

8. Firstsource Solutions
   CMP: ₹308 per share
   The stock climbed by 3% following the announcement of a new partnership with Microsoft. The collaboration aims to deliver cutting-edge digital transformation services, boosting investor sentiment.

9. Ola Electric Mobility
   CMP: ₹118 per share
   Ola Electric Mobility saw its stock hit the upper circuit, rising by 10%, fueled by bullish calls from Bank of America and Goldman Sachs. The stock's growth outlook remains strong, with positive coverage from major global brokerages.

10. MGL (Mahanagar Gas Limited)
    CMP: ₹1,901 per share
    MGL shares rallied by almost 5% after UBS upgraded its rating to 'buy' and increased the target price, citing strong volume growth prospects.

This list highlights the stocks that captured the most attention on September 17, with notable performances from Bajaj Housing Finance and Ola Electric Mobility leading the gains, while profit-booking hit Suzlon Energy and SpiceJet.

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Stock Market Roundup: Key Movers and Shakers on September 4, 2024

On September 4, 2024, the Indian stock market saw minor losses, with the Sensex dropping 202.80 points (0.25%) to 82,352.64, and the Nifty falling 81.10 points (0.32%) to 25,198.70. The market was weak, but investors shifted focus towards defensive stocks, especially in the FMCG and pharma sectors. Out of the shares traded, 1,852 advanced, 1,935 declined, and 90 remained unchanged.

 

Key Movers:

·         Exicom Tele Systems (CMP: ₹359.60): Shares fell by 5% after Rakesh Jhunjhunwala's RARE Enterprise sold a 1.3% stake in the company for ₹55.25 crore.

·         Sona BLW Precision Forgings (CMP: ₹721.50): Shares rose around 2% following reports of negotiations to acquire Escorts Kubota's rail engineering business for ₹2,000 crore. The company is also planning a ₹2,000 crore Qualified Institutional Placement (QIP).

·         BEML (CMP: ₹4,108): Shares surged following the Defence Acquisition Council's approval of procurements worth ₹1.4 lakh crore. Heavy trading volumes were observed as 17 lakh shares changed hands, compared to the one-month average of 5 lakh shares.

·         Rama Steel Tubes (CMP: ₹11.76): Shares soared 12% after announcing a strategic partnership with Onix Renewable, with trading volumes exceeding 10 crore shares, over 200% higher than the monthly average.

·         Godfrey Phillips (CMP: ₹6,368): Shares fell over 4% due to reports of the company finalizing the sale of its retail business, 24Seven, to start-up New Shop.

·         General Insurance Corporation of India (CMP: ₹397.50): Shares dropped 6% as the government planned to sell a nearly 7% stake through an offer for sale (OFS) route. The OFS started for non-retail investors, with retail investors and GIC Re employees eligible to bid on September 5.

·         Aether Industries (CMP: ₹934): Shares rose 5% amid high trading volumes, with around 5 lakh shares changing hands, significantly more than the one-month average of 64,000 shares.

·         Oil and Natural Gas Corp (CMP: ₹314.90): Shares fell over 2% due to a decline in crude oil prices, which negatively impacts profit margins for oil drilling companies.

·         HPCL (CMP: ₹444.75): Shares jumped over 4% benefiting from lower crude prices, which reduce input costs and improve profit margins for oil marketing companies.

·         Jubilant Ingrevia (CMP: ₹741): Shares soared around 10% after Equirus Capital raised the target price to ₹900, following the shutdown of Pyridine production by global specialty maker Vertellus.

These movements highlight the market's shifting dynamics and the impact of both corporate actions and broader economic factors.

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Apollo Pipes Soars 10% Amid Heavy Volumes and Promising Growth Outlook

On September 3, Apollo Pipes saw a notable 10% surge, with its stock price climbing to Rs 665 amid strong trading volumes. Approximately 1.6 million equity shares changed hands on the NSE and BSE during intra-day trading, far surpassing the one-week average of 0.1 million shares.

Earlier this year, Apollo Pipes had reached a 52-week high of Rs 798 per share on February 9, 2024. However, year-to-date, the stock has underperformed, lagging by 4%, while the benchmark Nifty 50 has risen by 16% in the same period.

 

Company Overview

Apollo Pipes specializes in products for the plumbing, sanitation, water supply, infrastructure, and agriculture sectors. The company operates five state-of-the-art manufacturing facilities with a combined capacity of 156,000 MTPA, offering a diverse portfolio of over 1,600 high-quality products. These include CPVC, UPVC, and HDPE pipes and fittings, bathroom products, water tanks, and solvents.

 

Growth Projections

In its annual report, Apollo Pipes' management expressed ambitions to increase volumes from 35,000 tons in FY25 to 55,000 tons over the next 2-3 years. The company plans to achieve this by adding capacity, funded through operational cash flows.

Additionally, Apollo Pipes intends to commission a new plant, introduce two new product lines, and enhance capacity at existing facilities.

 

Financial Performance

In the recently concluded June quarter, Apollo Pipes reported revenues of Rs 240 crore, down from Rs 260 crore in the same period last year. Net profit also declined to Rs 10 crore in Q1FY25, compared to Rs 13 crore in the year-ago quarter.

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