Prime Stocks: Results update 2 for quarter ending June 2025
Results update for 29 of our Prime Stocks.
More like this
Nifty IT Stocks Rally: A price bounce or a sector turnaround?
PrimeInvestor Research Team
August 4, 2026
Read More »
Technical outlook: Promise in Consumer Durables, the grind continues in Nifty50
B Krishnakumar
August 3, 2026
Read More »
8 thoughts on “Prime Stocks: Results update 2 for quarter ending June 2025”
Blue Dart
Are you still positive for it or sell coming soon?
The fundamental problem: Revenue grew 7.4% but profit fell 8% — this is negative operating leverage, the opposite of a compounder. Blue Dart transported more volume, but earned less profit per unit.
✗ Capex ROI lagging: 18-24 month monetization window is too long; Q1 shows zero impact
✗ Margin recovery credibility lost: Promised in FY25, delayed to FY26, now pushed to FY27
✗ Capital efficiency deteriorating: ROCE 24.5% (down 1000 bps in 2 years) — below cost of capital
✗ Negative operating leverage: Revenue +7.4% but profit -8% shows structural problem
✗ Valuation expensive: 55-57x P/E vs. fair 28-32x leaves no margin of safety
⚠ Risk/reward unfavorable: 12% upside to analyst target vs. 30% downside risk if margins don’t recover
Welcome your query sir,
There is a problem with earnings growth and capital efficiency, which the Co. has been suffering for last two years. Here are some of the reasons for that;
1. Incremental capital deployment in Surface logistics in last 2 Years – Infrastructure and penetration
2. Inability to pass some costs like road toll increases, etc to customers
3. Demand side issues/slower demand in many consumer goods categories in later part of FY24 and FY25
These reasons are not cited to justify our argument or the management. But these point out to existence of some “headwinds” for the sector.
Whenever they exist, Cos in any sector struggle to pull revenue growth and margin expansion.
What has been holding us to it was their ability to pull some revenue growth amid these challenges at a time when its smaller peer (TCI express) is NOT growing and its larger peer (Delhivery) is struggling to grow at a decent rate (promise is a high growth in that case)
Secondly, the industry is also seeing consolidation in express services with some of the start-ups being absorbed by players like Mahindra and Delhivery
Lastly, on capital efficiency, we also don’t want the RoCE of the Co. to go below current levels
(Btw, the 1000 pts drop in 2 Yrs also is a matter of just an earnings bounty they got in Covid years pushing RoCE then. But we will be extremely concerned about RoCE dropping from current levels)
As of now, we believe Blue dart is as good a relevant player as it was in the logistics space. At this stage, we want to give benefit of doubt to the Co. and wait out a bit and see how FY26 closes. The critical factor being that it is able to pull revenue growth organically at this size.
There is no thought on a call reversal at this point of time.
Further, this is also not a Co. that will throw any magic on growth. The best-case scenario is that a combination of growth revival and operating leverage can justify the “compounder” tag
Hope this clarifies our expectations and our stance.
Thank you
Thank you sir. Your response is very helpful.
1) 930 cr acq. for 48% stake values the business at ca. 1900+ cr. Excl. seasonal impact, if we use 25 cr/quarter EBITDA, this business is valued at ca. 19x EBITDA. Isnt this valuation on higher side when we compare with more established brands like Heritage (14x)/Parag (14x) with 2x growth profile of Creamline? 2) If we look at the EBITDA of the other dairy companies, they have not reported dip in EBITDA on account of unseasonal rains. How do you read into this?
3) How long should one intend to stay put in this business given the opportunity cost of investing elsewhere?
You are right sir. Sorry for being late to reply
As of now, the acquisition is done to assume full control, which of course comes at a Premium.
For Godrej Agrovet shareholders, it is extremely important that they turn it around to 8-9% EBIDTA margin levels to make the acquisition valuation meaningful. Anyhow, the business has already turned around and it is about moving to next level, closer to its peers
Since they may borrow also to fund this acquisition, RoI on this capital outflow will be extremely impt.
As of now, South is where majority of listed Dairy players are, there is ecosystem and there is profitability track record. Godrej can additionally expand over Maharashtra where its brand equity is also strong
Let’s keep monitoring the performance and they should be able to deliver same margins as their peers at their scale (2X revenue from now)
Then it will turn value creative
Hope this clarifies
Thank you
Hello,
What is the impact of Mexico’s tariffs on Bajaj Auto?
https://www.moneycontrol.com/news/business/markets/m-m-eicher-motors-bajaj-auto-shares-fall-up-to-2-mexico-s-tariffs-profit-booking-among-key-reasons-13726015.html
Thanks.
This has been responded to separately in your comment on the Bajaj Auto report. – thanks, Bhavana
Thank you sir. On GAVL front, how do you see the change in leadership from Mr. Yadav to Mr. Kataria now? Mr. Kataria, especially, comes from Raymond lifestyle where post de-merger, the results were not up to the mark despite tall claims made by the CEO in concalls and media.
Welcome your query sir,
Nothing much to read on leadership change. Actually, Kataria was earlier with Godrej Consumer Products, its India business head.
From there he went to Raymond group.
Since GAVL is a complicated business with both B2B and B2C businesses, it seems like the group wanted a known and trusted person to lead. Can’t easily get external/focused CEOs to lead this kind of business. That may be the reason
Even on his stint at Raymond lifestyle, this lifestyle/fashion business is not something that someone can do a magic. Highly competitive. And Raymond has literally lost on brands other than Raymond without building brand visibility
Colorplus was one as status-symbol as a Louis Philippe, but they themselves destroyed while Louis Philippe is the top of the mind or only upmarket brand in that space. Likewise with other brands like Parx and Park Avenue. Not easy to deliver outcomes for those brands from that stage of poor visibility, not for him, but for any CEO
Nothing much to read positive or negative on CEO change. It is just that they need a trusted person on top for this complicated Co.
We need to closely look at Dairy and processed foods businesses for performance improvement and if that happens, it can get into an uptrend on earnings growth. Dairy has a professional/focused CEO.
Burjis Godrej from Godrej Family itself has taken charge of ailing Astec Life, but turning around now
The reason for our reco. on GAVL was that every business division was at its trough/bad earnings phase in FY24 and that they can only improve. It is playing out one by one.
We hope this would gradually accelerate and earnings would trend up in the long term
Meanwhile we haven’t anticipated this capital allocation decision of GAVL buying out Dairy Business stake for Rs.930 crore. This would add to debt and interest burden. However, if they show sustainably healthy margin, market would be forgiving of that. This will be one of the key businesses we will be watching for improvement in margins and RoCE following a major capital allocation decision.
Hope this clarifies
Thank you
Comments are closed.