Cyient Investors Face Shock
- 22nd January 2025
Aaj Ka Bazaar
Wall Street indices were up on Tuesday, with the S&P 500 and the Dow reaching their highest levels in over a month, as investors reacted to Donald Trump’s initial actions as US president. His comments on international trade were perceived to be less aggressive than anticipated. The Dow Jones Industrial Average rose by 1.24%, the S&P 500 gained 0.88%, and the Nasdaq Composite gained 0.64%. In the Asian markets, most stocks advanced as Trump’s emphasis on boosting investment in AI improved the outlook for regional tech firms. After closing at their lowest levels since June, the Indian markets are expected to open on a slightly positive note, tracking global gains, as indicated by GIFT Nifty. On the stock-specific front, Adani Energy Solutions Ltd., India’s largest private transmission and distribution company, secured a Rs. 25,000 crores contract for the Bhadla (Rajasthan) to Fatehpur (Uttar Pradesh) HVDC transmission project. This marks its largest order win to date, boosting its order book to Rs. 54,761 crores and expanding its transmission network to 25,778 km with a transformation capacity of 84,186 MVA.
Markets Around Us
BSE Sensex –76,184.30 (0.46%)
Nifty 50 – 23,089.70 (0.28%)
Bank Nifty – 48,633.60 (0.13%)
Dow Jones – 44,084.07 (0.13%)
Nasdaq – 19,753.89 (0.63%)
FTSE – 8,548.29 (0.32%)
Nikkei 225 – 39,631.50 (1.57%)
Hang Seng – 19,836.29 (-1.36%)
Sector: Industrial Product
Cyient DLM Falls 12% on Q3 Weakness
Cyient DLM shares dropped 12% on January 22 after the company reported a steep decline in net profit and margins for the December quarter. At 9:35 AM, the stock was trading 10% lower at ₹533, extending its 18% loss over the past year, significantly underperforming the Nifty 50’s 3% drop. Consolidated net profit fell 30% sequentially and 40% year-on-year to ₹11 crore, while EBITDA margins dropped to 8.1% from 9.2% a year ago, impacted by higher costs from integrating Altek Electronics, a U.S.-based EMS company. However, revenue from operations grew to ₹444.2 crore in Q3FY25, up 38% year-on-year and 14% from the previous quarter, with EBITDA also rising to ₹35.9 crore. Despite revenue growth, higher expenses and shrinking margins have weighed on the stock, raising concerns among investors.
Why it Matters:
This matters because Cyient DLM’s sharp profit decline and shrinking margins raise concerns about cost management and future profitability, despite revenue growth. The stock’s significant underperformance against the market reflects reduced investor confidence. It highlights the impact of rising expenses from acquisitions on financial performance.
NIFTY 50 GAINERS
APOLLOHOSP – 6939.90 (2.35%)
ULTRACEMCO – 10869.85 (2.31%)
WIPRO – 304.40 (1.38%)
NIFTY 50 LOSERS
ADANIENT – 2422.50 (-0.83%)
ONGC – 267.16 (-0.82%)
TRENT– 6042.00 (-0.79%)
Sector: Internet & Catalogue
Indiamart Slumps 10% on Weak Q3
Indiamart Intermesh shares fell 10% to ₹2,065 on January 21, despite a 47.6% YoY jump in Q3 net profit to ₹121 crore and a 16% rise in revenue to ₹354.3 crore. While EBITDA surged 61.4% to ₹138.3 crore, concerns emerged over a decline in paying subscribers for the first time since COVID and weak standalone collection growth of 8% YoY. Management’s guidance of sub-10% collection growth for future quarters, coupled with high customer churn and low retention, has raised doubts about medium-term growth. Brokerages like Nuvama and Nomura downgraded the stock, citing subdued collection trends and reduced profit estimates for FY25-27 by 4-13%. Nuvama set a target price of ₹1,970, while Nomura lowered it to ₹1,900. The stock has dropped 9% over the past three months, reflecting investor concerns over slow subscriber growth despite temporary boosts in profitability from reduced marketing costs.
Why it Matters:
This matters because Indiamart’s decline in paying subscribers and weak collection growth signal potential long-term challenges for its business model, despite strong profit and revenue numbers. Investor confidence is shaken as brokerages downgrade the stock, citing slow growth, high churn rates, and reduced medium-term profit expectations. These issues could impact its ability to sustain growth and compete effectively in a dynamic market.
Around the World
Asian stocks rose on Wednesday, led by technology shares, after OpenAI announced a $500 billion partnership with major U.S. firms to build AI infrastructure, boosting demand for AI chips and tech equipment. Japan’s Nikkei 225 jumped 1.5%, while South Korea’s KOSPI and Taiwan’s TSMC gained as optimism around AI lifted chipmakers and tech stocks. However, Chinese markets lagged, with the Shanghai Composite down 0.8%, as U.S. President Trump hinted at imposing 10% tariffs on Chinese imports by February over fentanyl-related issues. This reignited trade war concerns, even as Chinese stimulus measures are expected. Meanwhile, Wall Street’s tech rally, driven by strong Netflix earnings, added positive momentum to most Asian markets, with Australia’s ASX 200 and Indian Nifty 50 futures also showing slight gains. However, Hong Kong’s Hang Seng fell 1.3%, reflecting caution amid ongoing trade uncertainties.
Option Traders Corner
Max Pain
Nifty 50 – 23,300
Bank Nifty – 50,000
Nifty 50 – 23,142 (Pivot)
Support – 22,858, 22,693, 22,409
Resistance – 23,308, 23,592, 23,757
Bank Nifty – 48,848 (Pivot)
Support – 48,153, 47,736, 47,041
Resistance – 49,265, 49,960, 50,340
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