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Dixon Technologies saw a stock decline of around 7.5% following its Q2 earnings report, which highlighted a shift in business dynamics affecting profitability. Despite significant revenue growth of 133% to ₹11,534 crore and an EBITDA increase of over 100%, margins were impacted by a higher contribution from the low-margin mobile business. The EBITDA margin for the quarter was 3.6%, a 40 basis-point decrease from the previous year’s 4%.

The company’s consolidated profit was bolstered by an exceptional one-time gain of ₹210 crore, tied to Dixon’s 6.5% stake in Aditya Infotech Ltd. This gain came after Dixon restructured its joint venture with Aditya Infotech, in which Dixon sold its 50% stake in AIL Dixon to its partner and received a stake in Aditya Infotech in exchange. Aditya Infotech is expected to launch an IPO by late FY25 or early FY26, with increased focus on backward integration and design. Excluding this fair value gain, Dixon’s consolidated profit still grew by 78%.

Segment Analysis and Key Contributors

The mobile division was the standout performer, reporting a 235% increase in revenue compared to last year. Now comprising around 81% of Dixon’s total revenue, this growth was fueled by a surge in orders and the integration of Ismartu, which Dixon acquired in 2023. From mid-August to the end of September alone, Ismartu contributed approximately ₹1,100 crore. The increased revenue share of the mobile division, however, has impacted margins. Dixon’s CFO, Saurabh Gupta, noted that margin support will come from Dixon’s investment in the components business, expected to add at least 100 basis points to margins in the next 12-18 months.

In the home appliances segment, Dixon posted a revenue increase of 22% to ₹444 crore, though margins fell by 60 basis points to 11%. Within this segment, the washing machines division saw monthly production reach 30,000 units, demonstrating steady growth. The consumer electronics division, producing refrigerators and LED TVs, achieved 90% capacity utilization, manufacturing 1.2 million refrigerator units with plans to increase this to 1.6 million. Dixon supplies key clients, including Voltas, Kelvinator, Acer, and BPL. However, the LED TV segment faced a subdued performance this quarter, in line with broader industry trends.

New Growth Avenues

Dixon is expanding into the telecom and IT hardware segments, anticipating 3x growth in telecom revenue for FY25 due to opportunities in 5G Fixed Wireless Access. Plans to double production capacity in this division are underway. In IT hardware, the company has secured partnerships with major brands HP, Asus, Lenovo, and Acer for laptop manufacturing. Revenue from IT hardware is projected to reach ₹4,500 crore to ₹5,000 crore by FY26.

Future Guidance and Strategic Investments

Dixon’s FY25 revenue guidance stands at around ₹32,000 crore, with a capital expenditure (capex) target of ₹580 crore for the year, ₹370 crore of which was spent in H1. As the company ventures further into the components sector, Dixon expects margins to improve over the next 15-18 months, offsetting current pressures from the high share of low-margin business in its portfolio.

Stock name: Nestle India Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since March 2023, the stock has been on an upward rally but formed a double top pattern between October 2023 and October 2024. A breakdown occurred around October 20, 2024, accompanied by strong trading volume. Following the breakdown, the stock has continued its downward movement, again with significant volume. According to technical analysis, this momentum suggests further declines may follow. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator. Top of FormBottom of FormBottom of Form

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Adani Wilmar Ltd.

Pattern: Support and reversal (Parallel channel)

Time frame: Daily

Observation:

The stock consolidated within a parallel channel from December 2023 to October 2024 and is now at the support level, showing a reversal on October 23, 2024. It gained further momentum on October 24, 2024, with strong volume. If this momentum continues, technical analysis indicates that the stock may see further upward movement ahead. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Elecon Engineering Co. Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since 2022, the stock has been on an upward trend, but it formed a double top pattern from September 2024. Around October 20-21, a breakdown from this pattern occurred with significant volume. In the next session, the stock continued its downward movement, closing below the breakdown line. If the stock sustains this momentum, it may see further decline according to technical analysis. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator. Top of FormBottom of FormBottom of Form

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Bajaj Finance Ltd.

Pattern: Support and reversal (Parallel channel)

Time frame: Daily

Observation:

The stock consolidated within a parallel channel from January to September 2024, briefly breaking out in mid-September. However, it failed to sustain the breakout and slipped back into the channel, following the market trend. On October 23, 2024, the stock reached the channel's support level and rebounded, forming a bullish engulfing pattern, signalling a potential reversal. If the current momentum holds, technical analysis suggests that the stock may see a upward movement ahead. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Usha Martin Ltd.

Pattern: Parallel channel pattern

Time frame: Daily

Observation:

In the previous blog (please refer here), the stock was noted to be moving within a parallel channel pattern. It previously rebounded from the support line, rising to reach the channel's resistance line. From October 16th onwards, the stock was unable to sustain the momentum and it has started moving downward, staying within the channel. Further price action of the stock is to be checked to see if it will continue in the parallel channelBottom of Form.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Kotak Mahindra Bank Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since May 2024, the stock has shown some upward movement. Between September and October 2024, it formed a double top pattern on the daily chart, with a breakdown occurring on October 21, 2024, supported by strong trading volume. Based on technical analysis, if this momentum persists, the stock may experience further decline. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: ICICI Lombard General Insurance Company Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

The stock has been moving upward since June 2024 but formed a double top pattern between August and October 2024. It experienced a breakdown around October 16-17, 2024, and has been declining since. A large-volume downward candle on October 21, 2024, signals continued bearish momentum. According to technical analysis, this momentum suggests the stock may face further declines. Bottom of Form

It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Bajaj Auto Ltd.

Pattern: Support and rebound

Time frame: Daily

Observation:

The stock reached its previous all-time high (ATH) in June 2024, forming a resistance line at that level. After several attempts, it broke through this resistance in August 2024, leading to a strong upward move until late September. Following this, the stock declined in line with the broader market's bearish sentiment. On October 21, 2024, it found support at the former resistance level and rebounded with strong volume, forming a morning star pattern. According to technical analysis, if the stock sustains this rebound momentum, it may see further upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Equitas Small Finance Bank Ltd.

Pattern: Head and shoulders pattern and retest

Time frame: Weekly

Observation:

The stock has been in an uptrend since June 2022. From June 2023 to July 2024, it consolidated and formed a head and shoulders pattern on the weekly chart, breaking down in the last candle of July with strong volume. After retesting the breakdown level, it resumed its downward move. According to technical analysis, if the current momentum persists, further declines may occur. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: UTI Asset Management Company Ltd.

Pattern: Resistance breakout

Time frame: Weekly

Observation:

The stock experienced a strong upward movement since its listing, reaching its previous all-time high (ATH) in September 2021. After a downward phase until May 2023, it began to recover and broke through its previous ATH in September 2024, supported by strong volume. The stock has since retested the breakout level and, in the latest weekly candle, rebounded from the retest with good volume. According to technical analysis, if the stock can maintain this rebound momentum, further upward movement may follow. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

India's city gas distribution (CGD) sector, represented by companies like Indraprastha Gas Ltd. (IGL), Mahanagar Gas Ltd. (MGL), and Gujarat Gas, has long enjoyed stable growth. However, recent challenges, including cuts in domestic gas allocations and soaring global liquefied natural gas (LNG) prices, have raised concerns about the future of these companies. Investors are now facing the possibility of a derating—where the market assigns a lower valuation to these stocks due to weaker growth prospects.

What is Derating?

In financial markets, a derating refers to a decline in the price-to-earnings (P/E) ratio, typically reflecting reduced investor confidence in a company's future earnings growth. For IGL, MGL, and Gujarat Gas, multiple factors have come together to trigger concerns of a potential derating, including profitability pressures and valuation worries.

1. APM Gas Allocation Cuts and Their Impact

A major blow to the CGD sector came when the government reduced its allocation of cheaper domestic natural gas, known as Administered Price Mechanism (APM) gas. As a result, companies are now forced to rely more on expensive imported LNG to meet their needs, leading to shrinking profit margins.

According to The Economic Times, shares of IGL and MGL fell by up to 15% following the announcement of the APM gas allocation cuts. Both companies have warned that profitability will be hit hard, as they’ll have to pay higher prices for gas on the open market. IGL, in particular, stated that this reduced allocation would adversely impact its earnings.

2. Rising Global LNG Prices

The global rise in LNG prices has compounded the problem. Driven by geopolitical tensions, supply chain disruptions, and increasing demand from Europe and Asia, the surge in LNG prices has significantly raised input costs for Indian gas distributors. Historically, companies like IGL and MGL relied on a balance between domestic APM gas and LNG imports. However, with reduced access to cheaper domestic gas, they are now more exposed to volatile international prices.

This upward pressure on costs is eating into the margins of these companies, which have limited room to pass on the full price increase to consumers. Price-sensitive segments, such as compressed natural gas (CNG) for vehicles and piped natural gas (PNG) for households, may see a drop in demand if costs rise too sharply.

3. Valuation and Market Sentiment

Previously, CGD companies traded at premium valuations due to their robust growth potential, driven by government policies promoting cleaner energy. However, recent developments have called these valuations into question. As profitability comes under pressure and growth slows, investors are reassessing the high multiples these stocks were once assigned.

With the likelihood of reduced earnings growth, market sentiment has shifted. The derating of these stocks reflects broader concerns that the golden era of double-digit growth in the sector may be coming to an end. While the long-term growth potential remains intact, the immediate challenges are weighing heavily on investor confidence.

4. Regulatory Uncertainty

Another layer of uncertainty for the sector comes from potential policy shifts. Changes being discussed, such as a unified tariff system and the inclusion of natural gas under the Goods and Services Tax (GST), could further affect profitability. Regulatory risks are a persistent concern for the sector, and any unfavourable decisions could lead to further downside risks.

While the Indian government remains committed to expanding the use of natural gas as part of its energy transition strategy, the near-term outlook is clouded by these regulatory uncertainties.

What Lies Ahead for the Sector?

Despite the current challenges, the long-term outlook for the city gas distribution sector remains positive. The Indian government’s push for cleaner energy solutions, increasing urbanization, and the expansion of gas distribution networks are strong growth drivers. Demand for CNG and PNG is expected to grow as India continues to transition away from more polluting fuels like coal and oil.

However, the short-term outlook is likely to remain volatile. Investors should watch how IGL, MGL, and Gujarat Gas navigate these turbulent waters—particularly how they manage rising costs and maintain demand. Key areas of focus will be their pricing strategies, cost management, and ability to secure favourable gas supplies.

Conclusion

The city gas distribution sector in India is facing headwinds that are shaking investor confidence. The reduction in domestic gas allocations and the rise in global LNG prices have put significant pressure on the profitability of IGL, MGL, and Gujarat Gas. This has led to a potential derating of these stocks, as the market reassesses their future growth potential.

For investors, the long-term growth story of natural gas remains intact, but the near-term risks are substantial. Profitability will be squeezed as companies grapple with higher input costs, and regulatory uncertainties add another layer of complexity. Investors would do well to remain cautious in the short term while keeping an eye on the broader energy transition trends that could support the sector’s growth in the future.

इंद्रप्रस्थ गॅस लि. (IGL), महानगर गॅस लिमिटेड (MGL) आणि गुजरात गॅस यांसारख्या कंपन्यांद्वारे प्रतिनिधित्व केलेल्या भारतातील शहर गॅस वितरण (CGD) क्षेत्राने दीर्घकाळ स्थिर वाढ केली आहे. तथापि, घरगुती गॅस वाटपातील कपात आणि जागतिक द्रवीभूत नैसर्गिक वायू (एलएनजी) किमतींसह अलीकडील आव्हाने या कंपन्यांच्या भवितव्याबद्दल चिंता वाढवत आहेत. गुंतवणूकदारांना आता कमी होण्याची शक्यता आहे—जेथे बाजार कमकुवत वाढीच्या शक्यतांमुळे या समभागांना कमी मूल्यांकन देते.

Derating म्हणजे काय?

वित्तीय बाजारांमध्ये, डेरेटिंग म्हणजे किंमत-ते-कमाई (P/E) गुणोत्तरातील घट, विशेषत: कंपनीच्या भविष्यातील कमाईच्या वाढीमध्ये कमी झालेला गुंतवणूकदार आत्मविश्वास दर्शवितो. IGL, MGL आणि गुजरात गॅससाठी, नफाक्षमतेचा दबाव आणि मूल्यांकनाच्या चिंतेसह संभाव्य घटतेच्या चिंतेला चालना देण्यासाठी अनेक घटक एकत्र आले आहेत.

APM गॅस वाटप कपात आणि त्यांचे परिणाम

CGD क्षेत्राला मोठा धक्का बसला जेव्हा सरकारने स्वस्त घरगुती नैसर्गिक वायूचे वाटप कमी केले, ज्याला Administered Price Mechanism (APM) गॅस म्हणून ओळखले जाते. परिणामी, कंपन्यांना त्यांच्या गरजा पूर्ण करण्यासाठी महागड्या आयातित एलएनजीवर अधिक अवलंबून राहावे लागत आहे, ज्यामुळे नफ्याचे प्रमाण कमी होत आहे.

द इकॉनॉमिक टाईम्सच्या मते, APM गॅस वाटप कपातीच्या घोषणेनंतर IGL आणि MGL चे समभाग 15% पर्यंत घसरले. दोन्ही कंपन्यांनी चेतावणी दिली आहे की नफ्यावर मोठा फटका बसेल, कारण त्यांना खुल्या बाजारात गॅससाठी जास्त किंमत मोजावी लागेल. IGL, विशेषतः, असे नमूद केले की हे कमी वाटप त्याच्या कमाईवर विपरित परिणाम करेल.

एलएनजीच्या जागतिक किमती वाढल्या

जागतिक स्तरावर एलएनजीच्या किमती वाढल्याने समस्या आणखी वाढली आहे. भू-राजकीय तणाव, पुरवठा साखळीतील व्यत्यय आणि युरोप आणि आशियातील वाढत्या मागणीमुळे एलएनजीच्या किमतीत झालेल्या वाढीमुळे भारतीय गॅस वितरकांच्या इनपुट खर्चात लक्षणीय वाढ झाली आहे. ऐतिहासिकदृष्ट्या, IGL आणि MGL सारख्या कंपन्या देशांतर्गत APM गॅस आणि LNG आयात यांच्यातील संतुलनावर अवलंबून होत्या. तथापि, स्वस्त घरगुती गॅसचा प्रवेश कमी झाल्यामुळे, ते आता अस्थिर आंतरराष्ट्रीय किमतींना अधिक सामोरे गेले आहेत.

खर्चावरील हा वरचा दबाव या कंपन्यांच्या मार्जिनला खात आहे, ज्यांच्याकडे संपूर्ण किंमती वाढ ग्राहकांपर्यंत पोहोचवण्याची मर्यादा आहे. किंमती-संवेदनशील विभाग, जसे की वाहनांसाठी कॉम्प्रेस्ड नॅचरल गॅस (CNG) आणि घरांसाठी पाइप्ड नॅचरल गॅस (PNG), जर खर्च खूप वाढला तर मागणीत घट होऊ शकते.

मूल्यांकन आणि बाजार भावना

पूर्वी, CGD कंपन्या त्यांच्या मजबूत वाढीच्या क्षमतेमुळे प्रीमियम मूल्यांकनावर व्यापार करत होत्या, स्वच्छ ऊर्जेला प्रोत्साहन देणाऱ्या सरकारी धोरणांमुळे. तथापि, अलीकडील घडामोडींमुळे या मूल्यांकनांवर प्रश्नचिन्ह निर्माण झाले आहे. नफ्यावर दबाव येत असल्याने आणि वाढ मंदावल्याने, गुंतवणूकदार या समभागांना एकदा नेमून दिलेल्या उच्च गुणाकारांचे पुनर्मूल्यांकन करत आहेत.

कमाईतील वाढ कमी होण्याच्या शक्यतेसह, बाजारातील भावना बदलली आहे. या समभागांची घसरण या क्षेत्रातील दुहेरी अंकी वाढीचा सुवर्णकाळ संपुष्टात येत असल्याची व्यापक चिंता दर्शवते. दीर्घकालीन वाढीची क्षमता अबाधित असताना, तात्काळ आव्हाने गुंतवणुकदारांच्या विश्वासावर मोठ्या प्रमाणात भार टाकत आहेत.

नियामक अनिश्चितता

या क्षेत्रासाठी अनिश्चिततेचा आणखी एक स्तर संभाव्य धोरण बदलांमुळे येतो. युनिफाइड टॅरिफ प्रणाली आणि वस्तू आणि सेवा कर (जीएसटी) अंतर्गत नैसर्गिक वायूचा समावेश यासारख्या बदलांची चर्चा होत असल्याने नफ्यावर परिणाम होऊ शकतो. नियामक जोखीम ही या क्षेत्रासाठी कायम चिंतेची बाब आहे आणि कोणत्याही प्रतिकूल निर्णयामुळे पुढील जोखीम कमी होऊ शकतात.

भारत सरकार आपल्या ऊर्जा संक्रमण धोरणाचा एक भाग म्हणून नैसर्गिक वायूच्या वापराचा विस्तार करण्यासाठी वचनबद्ध असताना, या नियामक अनिश्चिततेमुळे नजीकच्या काळातील दृष्टीकोन ढग आहे.

क्षेत्रासाठी पुढे काय आहे?

सध्याची आव्हाने असूनही, शहर गॅस वितरण क्षेत्रासाठी दीर्घकालीन दृष्टीकोन सकारात्मक आहे. स्वच्छ ऊर्जा उपायांसाठी भारत सरकारचा प्रयत्न, वाढते शहरीकरण आणि गॅस वितरण नेटवर्कचा विस्तार हे मजबूत वाढीचे चालक आहेत. CNG आणि PNG ची मागणी वाढण्याची अपेक्षा आहे कारण भारत कोळसा आणि तेल सारख्या अधिक प्रदूषित इंधनांपासून दूर जात आहे.

तथापि, अल्पकालीन दृष्टीकोन अस्थिर राहण्याची शक्यता आहे. IGL, MGL आणि गुजरात गॅस या अशांत पाण्यात कसे नेव्हिगेट करतात—विशेषत: ते वाढत्या खर्चाचे व्यवस्थापन कसे करतात आणि मागणी कशी राखतात हे गुंतवणूकदारांनी पाहावे. त्यांची किंमत धोरणे, खर्च व्यवस्थापन आणि अनुकूल गॅस पुरवठा सुरक्षित करण्याची क्षमता यांवर लक्ष केंद्रित करण्याचे मुख्य क्षेत्र असेल.

निष्कर्ष

भारतातील शहर गॅस वितरण क्षेत्राला अशा अडचणींचा सामना करावा लागत आहे ज्यामुळे गुंतवणूकदारांचा विश्वास डळमळीत होत आहे. घरगुती गॅस वाटपातील कपात आणि जागतिक एलएनजीच्या किमती वाढल्याने IGL, MGL आणि गुजरात गॅसच्या नफ्यावर लक्षणीय दबाव आला आहे. यामुळे या समभागांची संभाव्य घट झाली आहे, कारण बाजार त्यांच्या भविष्यातील वाढीच्या संभाव्यतेचे पुनर्मूल्यांकन करतो.

गुंतवणूकदारांसाठी, नैसर्गिक वायूची दीर्घकालीन वाढीची कहाणी कायम आहे, परंतु नजीकच्या काळातील जोखीम लक्षणीय आहेत. कंपनी म्हणून नफा कमी केला जाईल

Stock name: AstraZenca Pharma India Ltd.

Pattern: Resistance breakout and retest

Time frame: Daily

Observation:

After an initial rise, the stock has been consolidating since February 2024, forming a resistance line on the daily chart. It repeatedly tested this line until a breakout occurred on September 24, 2024, with strong volume. The stock has since retested the breakout and rebounded, though it currently lacks the momentum to sustain the move. According to technical analysis, if momentum builds, the stock may see further upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Five-Star Business Finance Ltd.

Pattern: Resistance breakout

Time frame: Daily

Observation:

The stock reached its previous all-time high (ATH) in August 2023 and has since consolidated, facing resistance at that level. It attempted to break past the resistance multiple times before a significant movement on October 15, 2024. With strong trading volume, the stock broke through the resistance and surpassed its previous ATH. Currently, it is holding above the breakout level. According to technical analysis, if the stock can maintain the breakout momentum, it may experience further upward movement. It's advisable to look for additional confirmations, such as RSI levels and the MACD indicator.

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Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.