The BSE Smallcap index was reeling under pressure, falling 3 per cent to 42,816.61 on the BSE in Friday’s intra-day, as sell-off in equity market continued, due to weak earnings. According to analysts, small-caps continue to lag their larger peers on all growth metrices, with most sectors facing operating challenges.
Thus far in the month of February 2025, the smallcap index has slipped 14 per cent, and will be recording its sharpest monthly fall in the past five years. In March 2020, during Covid pandemic, the BSE Smallcap index tanked 30 per cent.
With February month’s decline, thus far in the calendar year 2025, the smallcap index has plunged 22 per cent. It has corrected 26 per cent from its all-time high level of 57,827.69 touched in the month of December 2024.
Out of 936 stocks from the BSE Smallcap index, more than half or 540 stocks have underperformed the index by falling more than 14 per cent during the month of February. Of these 9 stocks, including Zen Technologies (Zen), Tilaknagar Industries, Vakrangee, WPIL, Best Agrolife, Oriental Rail Infrastructure, Precision Camshafts and Suratwwala Business Group saw their market value erode between 40 per cent and 66 per cent.
A total of 282 stocks from the index hit their respective 52-week lows today – of these 27 stocks touched all-time lows in intra-day trades. Notable stocks that hit 52-week lows include, Apollo Tyres, JK Tyre, PVR Inox, Bajaj Electricals, BEML, Great Eastern Shipping Company, Graphite India, Hindustan Construction Company, HFCL, Indigo Paints, Tata Chemicals and TTK Prestige.
The continued weakness in broader markets has resulted in continued downgrades in consensus earnings for small-caps compared to large-caps in the October-December quarter (Q3FY25). Post the Q3FY25 changes, mid-cap companies have seen 11 per cent/ 9 per cent cut in their FY2025/ 26 estimates, while small-cap companies in the BSE-500 universe have seen 25 per cent/ 17 per cent cuts in FY2025/ 26 estimates in 11MFY25, according to Kotak Institutional Equities.
Among individual stocks, WPIL has slipped 46 per cent in February as the company reported a weak set of numbers for Q3FY25.
In Q3FY25, WPIL reported 93.1 per cent year-on-year (YoY) and 47.2 per cent quarter-on-quarter (QoQ) decline in its consolidated profit after tax (PAT) at Rs 37.10 crore, due to a drop in revenue. The company’s revenue from operations decreased 11.4 per cent YoY, and 22.2 per cent QoQ, to Rs 381.60 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted 365 basis points (bps) YoY and 867 bps QoQ at 12.60 per cent.
The management said the projects division revenues (which account for 65 per cent of total revenues) in the quarter were affected due to Jal Jeevan Mission funds shortage across all clients. The project execution momentum slowed down in the quarter as outstandings drastically increased; however the company maintained its construction focus to take advantage of the winter construction period.
The company expects the situation to improve starting next fiscal on the back of announcements made in the Budget 2025. Similarly, the pace of new tenders is also expected to pick up going forward and the company expects to see growth in this segment next fiscal onwards, WPIL said.
Shares of Tilaknagar Industries slipped 42 per cent in the current month. The market price of the maker of Mansion House Brandy was under pressure after the Bombay High Court dismissed the company’s plea in a trademark dispute over the Mansion House brand.
“The status quo as of this date remains with the company continuing its uninterrupted use and sale of the brand MANSION HOUSE whilst preparing for filing an appeal against the concerned order before the Division Bench of Bombay High Court,” Tilaknagar Industries had said in an exchange filing on February 8, 2025.
Tilaknagar Industries’ brand portfolio includes multiple categories, featuring two ‘Millionaire’ brandy brands – Mansion House and Courrier Napoleon – along with a strong presence in the whisky, rum, and gin segments through Mansion House Whisky, Madiraa Rum and Blue Lagoon Gin. Recently, Tilaknagar has expanded into the luxury segment with Monarch Legacy Edition Brandy.
Shares of Zen Technologies plunged 42 per cent in February as the company reported a weak set of numbers for Q3FY25.
In Q3FY25, Zen reported a 22 per cent YoY rise in standalone PAT at Rs 38.62 crore as against Rs 31.67 crore in Q3FY24. On a sequential basis, the company’s net profit declined 40.8 per cent from Rs 65.25 crore in Q2FY25. The company’s Ebitda margin contracted to 35.90 per cent in Q3FY25 from 47.34 per cent in Q3FY24.
While Zen experienced a rise in profitability due to higher other income in Q3FY25, the management said it expects to achieve Ebitda target of 35 per cent by the end of the current financial year. Revenue from operations, meanwhile, grew 44 per cent to Rs 141.52 crore from Rs 98.08 crore in the year-ago quarter. The management said the company is on track to meet its stated guidance of Rs 900 crore revenues for FY25.
Zen is engaged in designing, developing, and manufacturing state-of-the-art simulators. The company primarily caters to training simulators for police forces, anti-drone systems, and paramilitary and armed forces, along with government departments in sectors such as transport, mining, and infrastructure, as well as the civilian market.
