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By EquityPandit

BUSINESS

Hero MotoCorp: Q1 Sales Low, Volume Recovery Still Hopeful

A steep drop in sales led to adverse impacts on HeroMotoCorp Ltd in the June quarter. But the company still sustained with a report of an operating profit of Rs 108 crore. Profit after tax stood at Rs 61 crore.
Hero MoroCorp addressed the scenario in a statement, “Delivering a positive bottom line, despite only 25% capacity utilization, reflects the resilience of the portfolio and ability to optimize costs and improve productivity.” The Friday morning trade saw the stock down 1%.
Operating profit margin dived to 3.6% from 14.4% in the year-ago quarter as a steep fall in sales volumes adversely impacted operating leverage. Because of the closure of manufacturing plants the company was unable to fully recover fixed costs. Aside from the fixed cost for the lockdown period, the operating profit margin for the quarter would have been 12%, points out Hero MotoCorp.
Earlier quarters witnessed improvements in realizations per vehicle, reflecting the benefits of BS-VI emission transition-led price hikes. Revenue for the quarter dropped 63% tracking the 69% fall in sales volumes.
Motilal Oswal Financial Services Ltd said in a note, “Gross margin declined ~90 basis points year-on-year to ~29.5% (versus the estimate of ~31.5%), impacted by lack of loading of contribution margins on BS6 cost pass-on.” Gross margins when combined with the fall in operating profit margins, see the operating earnings slump 91% from the year-ago quarter to Rs 108 crore.
After the resumption of operations post initial COVID-19 restrictions, the stock recovered, 10 higher than highs in January.
The stock benefitted with faster recovery in two-wheeler sales, the involvement of Hero MotoCorp in the economy and semi-urban, rural areas.
“We are already seeing green shoots, and expect them to sustain and get stronger as we move towards the festive season. Our July month sales were more than 95% of pre-covid sales and we do see the positive trend moving forward,” Niranjan Gupta, chief financial officer, Hero MotoCorp said in a statement. July sales were 14% up and 4% down from the year-ago month.
Sustainability remains doubtful with recoveries aided by pent-up demand, local lockdowns and reduced customer incomes.
“India’s 2W registrations, after recovering over May-to-mid-July, have come off in the last three weeks and were down 41% YoY last week (week-ending 8-August),” analysts at Jefferies said in a 10 August note.

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BUSINESS

Cochin Shipyard Signs MoU with AP Moller-Maersk

Ali Waghbakriwala

Cochin Shipyard announced on Monday, 17 February, that it has signed a Memorandum of Understanding (MoU) with AP Moller-Maersk to explore collaboration in ship repair, maintenance, and shipbuilding in India.

The agreement outlines key areas of cooperation, including sharing technical expertise to meet global ship maintenance standards, exploring opportunities in ship repair, dry docking, and new builds, as well as conducting joint training programs to promote responsible practices and skill development for both Cochin Shipyard and Maersk seafarers, according to the company’s exchange filing.

For the third quarter, Cochin Shipyard reported a 27.6% drop in net profit to Rs 177 crore from Rs 244.4 crore in the same period last year. Revenue from operations rose 8.6% to Rs 1,147.6 crore compared to Rs 1,056.4 crore a year ago. However, EBITDA declined 23.4% to Rs 237.4 crore from Rs 310.1 crore, with EBITDA margins contracting to 20.7% from 29.4% YoY.

Additionally, the board of directors declared a second interim dividend of Rs 3.5 per equity share (face value of Rs 5) for the financial year ending 31 March 2025. This follows the earlier interim dividend of Rs 4 declared on 7 November last year.

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BUSINESS

NBCC Bags Two New Orders Worth Rs 850 Crore 

Ali Waghbakriwala

NBCC (India) Ltd, on 14 February, announced that it has secured new orders worth Rs 851.69 crore. 

The first contract, valued at Rs 776.75 crore, was awarded by Damodar Valley Corporation for the construction of buildings and related infrastructure in townships at Durgapur, Koderma, and Raghunathpur in Kolkata.

The second contract, worth Rs 74.94 crore, was secured from the Ministry of Housing and Urban Affairs for maintenance work at the New Moti Bagh GRPA Complex for two years, extending until FY27.

In terms of financial performance, the state-owned Navratna infrastructure firm reported a 25.1% year-on-year (YoY) increase in net profit, reaching Rs 138.5 crore for the quarter ended December 2024, up from Rs 110.7 crore in the same period last year.

Revenue from operations also saw a healthy 16.6% YoY growth, rising to Rs 2,827 crore in Q3 FY25 from Rs 2,423.5 crore in the previous year. At the operational level, EBITDA increased 22% YoY to Rs 142 crore, compared to Rs 116.8 crore in Q3 FY24, with EBITDA margins improving slightly to 5% from 4.8%, reflecting enhanced efficiency.

On 13 February, NBCC provided strong guidance for FY26, projecting revenue growth of 25-35%, significantly higher than the current 10-15% run rate. The company also expects margin expansion of 0.5-1% from existing levels.

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BUSINESS

BAT Looking to Sell Stake in ITC Hotels 

Ali Waghbakriwala

British American Tobacco (BAT) intends to sell its 15.3% ownership in ITC Hotels by 2026. Its share in ITC’s hotel subsidiary is currently worth Rs 5,405 crore ($623 million).

During its FY24 earnings call, the company stated that it has no plans to purchase long-term shares in a network of hotels in India. Thus, it will decide when it is most advantageous to raise shareholder value. “We have no interest in becoming a long-term shareholder of a hotel chain in India,” said Tadeu Marroco, Chief Executive Officer of BAT.

Last year, BAT sold a 3.6% stake in ITC Ltd. for £1.57 billion, allowing it to begin its share repurchase program in accordance with the wishes of several important shareholders. BAT plans to repurchase a further £900 million this year, having already repurchased £700 million in 2024.

Following ITC’s extended ESOPs and BAT’s stock sale, BAT’s stake in ITC was reduced to 25.4%, or around $15 billion, in today’s currency. Moreover, BAT purchased ownership in ITC Hotels as a consequence of the demerger. During this reorganization, ITC Hotels immediately issued equity shares to ITC investors.

In accordance with their respective ownership stakes, the remaining shares were distributed to the other equity holders, with ITC keeping 40% of the shares. While BAT presently controls 15.3% of ITC Hotels, the country’s biggest insurer, Life Insurance Corporation of India (LIC), currently holds 9.2%.

Marroco also explained his plans for the proceeds from the sale of ITC Hotels’ stock. He said on the analysts’ call, “We will use the proceeds to ensure that we reach the leverage corridor of 2-2.5 by 2026,” he said during the analysts’ call.

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BUSINESS

Volvo Group Planning to Invest Rs 1,400 Crore in Karnataka 

Ali Waghbakriwala

Swedish truck and bus manufacturer Volvo Group has announced a ₹1,400 crore investment to expand its manufacturing operations in Karnataka.

On 13 February, the company signed a Memorandum of Understanding (MoU) with the Karnataka government to establish its fourth global manufacturing hub in Hosakote, Bengaluru.

The agreement was formalized at Chief Minister Siddaramaiah’s official residence, ‘Cauvery,’ in the presence of Large and Medium Industries Minister MB Patil. The MoU was signed by Industries Department Principal Secretary S. Selvakumar and Volvo India Managing Director Kamal Bali.

In a media statement, Volvo Group stated that the new facility will generate over 2,000 direct jobs and significantly enhance production capacity. With this expansion, the Hosakote plant’s annual output is expected to rise from 3,000 to 20,000 trucks and buses, serving both domestic and international markets.

Speaking at the event, Chief Minister Siddaramaiah emphasized Volvo’s 25-year legacy in Karnataka and its impact on the state’s transportation sector, particularly in the luxury bus segment. He also assured government support to drive job creation and economic growth through this expansion.

Martin Lundstedt, CEO of Volvo Group, said, “This expansion will strengthen India’s role in the global supply chain while boosting the company’s production capabilities.”

Martin added, “With annual revenue exceeding $50 billion, Volvo’s expansion aligns with its strategy to strengthen its presence in India’s fast-growing market.”

Martin added that this expansion will enable the company to manufacture around 20,000 buses and trucks per year, allowing them to meet local demand and contribute significantly towards employment generation. 

The upcoming Hosakote hub will further strengthen Volvo’s presence in Karnataka, complementing its existing facilities in Peenya, Hosakote, and Dharwad. Additionally, Bengaluru is home to Volvo’s Global Competence Center (GCC), which employs over 3,500 professionals across R&D, IT, procurement, logistics, and finance.

The MoU signing ceremony was also attended by LK Atheeq, Additional Secretary to the Chief Minister, and Gunjan Krishna, Commissioner for Industrial Development and Director of the Department of Commerce and Industries.

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BUSINESS

Titagarh Rail Secures Order From Ambuja Cements and ACC

Ali Waghbakriwala

Titagarh Rail Systems announced on Wednesday 12 that it has received a letter of acceptance (LoA) from Ambuja Cements and ACC Ltd to manufacture and supply 16 BCFCM rake wagons in addition to BVCM wagons for a total consideration of Rs 537.11 crore.

It is scheduled to be finished between January 2026 and March 2027.

This week, the company announced its intention to enter two new business sectors in addition to its core train operation.

It is going to enter the “Shipbuilding and Maritime Systems” sector in order to pursue maritime commercial activities, including shipbuilding and ship repair.

The company has also announced its plan to enter the “Signalling and safety systems” industry, where it will, subject to compliance, carry out railway safety and signaling-related activities such as train control and condition monitoring.

This division, according to Titagarh, will focus on railway operations and develop and execute solutions that enable safe and effective train operations.

Last month, the company said that it wants to create 1,000 wagons each month for the freight industry.

Vice-Chairman and Managing Director Umesh Chowdhary said, “In the previous quarter (July-September 2025), we achieved a run rate of about 900 wagons per month or about 2,700 wagons a quarter. We are fairly confident that from March quarter onwards, we will be able to stabilize at the 3,000 wagon per quarter run rate.”

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