Asian Paints, JSW Steel, and BPCL: These 3 Nifty Stocks See Over 25% Drop in Q1 Profit

Significant Profit Declines in Key 3 Nifty Stocks: Asian Paints, JSW Steel, and BPCL

adminAugust 19, 20242 Mins read156 Views

In the first quarter of FY25, corporate earnings mostly met expectations, driven by sectors such as healthcare, real estate, capital goods, and metals. However, oil marketing companies (OMCs) negatively impact overall earnings, according to Motilal Oswal Securities Limited (MOSL).

Nifty-50 earnings grew by 4% year-on-year, slightly above MOSL’s forecast of 3%. However, the overall performance was pulled down by the underperformance of OMCs.

Without the OMCs, Nifty would have shown a 9% earnings growth, which is short of MOSL’s 10% expectation. This indicates that other sectors managed to perform well despite the challenges faced by the oil sector.

Looking ahead, MOSL predicts that earnings growth will continue but at a slower pace, expecting it to taper to around 15% over FY24-26. Key investment themes highlighted include Industrials and Capex, Consumer Discretionary, Real Estate, and PSU Banks.

Despite the resilience in several sectors, some companies experienced significant declines in their Profit After Tax (PAT) during the June quarter. Below are details on three stocks that saw more than a 25% drop in PAT during this period:

Asian Paints:

Asian Paints reported a 25% decline in consolidated net profit, reaching ₹1,170 crore, down from ₹1,383 crore in the same period last year. The company’s revenue from operations in Q1 FY25 dropped by 2.3% to ₹8,943 crore, compared to ₹9,154 crore a year ago.

This decline was mainly due to price cuts in the previous quarter and a change in product mix. Although there was a 7% increase in domestic decorative business volume, overall revenue decreased by 3%. Total expenses rose to ₹7,559.04 crore, up from ₹7,305.09 crore last year. The stock has fallen by nearly 4% over the past year and over 10% in 2024 year-to-date.

JSW Steel:

JSW Steel saw a 64% decline in consolidated net profit for the first quarter, amounting to ₹845 crore, significantly below market expectations of around ₹1,254 crore. The company’s revenue from operations rose by 2% year-on-year to ₹42,943 crore. However, EBITDA decreased by 22% year-on-year to ₹5,510 crore, with margins narrowing by 390 basis points to 12.8%.

The company’s crude steel production for the quarter was 5.3 million tonnes, down 3% year-on-year and 7% quarter-on-quarter, while steel sales increased by 3% year-on-year to 5.09 million tonnes. Despite these challenges, the stock has gained over 15% in the past year and more than 3% in 2024 year-to-date.

BPCL:

Bharat Petroleum Corporation Ltd (BPCL) experienced a sharp 73% drop in net profit for the June quarter, with profits declining to ₹2,841.55 crore, compared to ₹10,644.30 crore in the same period last year.

This decline was largely due to reduced refinery margins and lower fuel prices, which affected marketing margins. Sequentially, BPCL’s net profit fell by 40.6% from ₹4,789.5 crore in the previous quarter.

Revenue from operations in Q1 FY25 saw a slight decline of 0.1% to ₹1.28 lakh crore, while total expenses rose by 8.5% to ₹1.25 lakh crore. Despite this, BPCL’s stock has surged by over 88% in the past year and more than 47% in 2024 year-to-date.