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NZD/USD analysis amid potential Fed and RBNZ divergence

The NZD/USD exchange rate continued its freefall this week and reached its lowest level since 2022. The kiwi plunged to a low of 0.5600, down by about 12% from its highest level this year, after the latest New Zealand data.

Hopes of more RBNZ cuts rise

The NZD/USD pair has been in a strong bearish trend in the past few months as the US dollar index continued.

This sell-off accelerated this week as odds of more divergence between the Federal Reserve and the Reserve Bank of New Zealand (RBNZ) continued.

The RBNZ delivered another jumbo interest rate cuts this month, when it slashed its lending rate from 4.75% to 4.25%. This was the third interest rate cut that has seen them move from the year-to-date high of 5.25%.

The bank justified the cuts to the need to support an economy that has been ailing for a while in the past few years.

Odds of more RBNZ cuts rose after the statistics agency published weak economic numbers on Thursday.

The report showed that the economy has moved into a technical recession in the third quarter. It contracted by 1.0% in Q3 after contracting by 1.1% in the previous quarter. That contraction was much deeper than the median estimate of 0.2%.

The economy contracted by 1.5% on a YoY basis, also much lower than the median estimate of minus 0.4%. It had contracted by 0.5% in the previous quarter. 

This contraction happened because of the relatively weak consumer spending and business investments. It was partially offset by the rising government spending in the country.

More data released on Friday showed that New Zealand’s trade numbers were not all that good. Imports dropped to N$6.92 billion, while exports rose to $6.48 billion. That left the country with a trade deficit of over $437 million. 

Odds of more RBNZ cuts have also increased because of the falling inflation. The most recent data showed that the headline Consumer Price Index (CPI) dropped to 2.2% in Q3, the lowest level in years. It has dropped from the post-pandemic high of over 7%. 

Central banks usually cut interest rates when inflation is falling in a bid to stimulate growth in the economy.

Fed divergence

The NZD/USD pair plunged as the hopes of a potential divergence between the Fed and the RBNZ continued. The Fed decided to slash interest rates by 0.25% on Wednesday.

At the same time, officials expect to deliver just two cuts in 2025, much lower than what analysts were expecting. Fed officials had also hinted at four rate cuts in 2025.

Therefore, if the Fed lives up to the guidance, it means that rates will end the year between 3.50% and 3.75%. 

In contrast, the RBNZ will continue cutting rates further in 2025 to support the ailing economy. Currencies often crash when there is a divergence between the local central bank and the Federal Reserve.

NZD/USD technical analysis

NZD/USD chart by TradingView

The daily chart shows that the NZD/USD exchange rate has been in a strong downward trend in the past few months. It has now slipped below the key support at 0.5852, its lowest point in April and August this year. 

The pair has also moved below the key support at 0.5775, its lowest swing in October 2023. It has also moved below the 50-day and 200-day moving averages, while the MACD and the Relative Strength Index (RSI) tilted downwards.

Therefore, the pair will likely continue falling as sellers target the next key support level at 0.5515, its lowest level in October 2022.

The post NZD/USD analysis amid potential Fed and RBNZ divergence appeared first on Invezz

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DXY index analysis: Here’s why the US dollar is soaring

The US dollar index continued its strong surge this week as the greenback gained against most currencies. The DXY surged to a high of $108.50, its highest level since 2022, and 8.30% higher than its lowest level this year. 

US dollar index surge accelerates

The greenback has jumped sharply against most emerging and developed country currencies after the most central banks delivered their decision this week.

  • The EUR/USD pair crashed to 1.0361, its lowest level since November 2022. This is notable since the euro is the biggest part of the dollar index.
  • The USD/JPY exchange rate jumped to 158, its highest level since August this year, and about 13% higher than the September low.
  • The GBP/USD pair fell to 1.2490, its lowest swing May this year, and about 7% below the year-to-date high. Its sell-off accelerated after the Bank of England left interest rates unchanged at 4.75%.
  • The USD/CNY exchange rate rose to 7.3, its highest level in a few months.

The US dollar also rallied against other currencies, especially those in the emerging markets. For example, it has moved to a record high against currencies like the Indian rupee, Turkish lira, Argentina peso, and Brazilian real. 

This performance happened because of the Federal Reserve decision, which concluded its two-day meeting on Wednesday. It decided to slash interest rates by 0.25% as most analysts were expecting.

The Fed’s decision was highly hawkish since officials hinted that the bank would only slash rates two times in 2025. This was a big change because the bank had hinted that it would cut rates by four times in 2024 as it remained focused on the labor market.

The Fed has now shifted its focus on inflation, which has remained stubbornly high this year. Core inflation has remained at 3.35, while the headline consumer price index (CPI) rose from 2.4% to 2.7% in November. This means that it continued moving further away from the Fed’s target of 2.0%. 

The Fed’s key concern is that Donald Trump’s plans will have an impact on inflation. Trump wants to deport millions of illegal migrants from the United States, a move that will affect key areas like construction and agriculture. 

He also wants to implement large tariffs on most imports, especially from China, Canada, and Mexico. These tariffs will be passed to consumers through higher prices and will not help to improve the country’s trade deficit. 

Still, the Fed’s statement is not cast on stone. For example, last year, the bank hinted that it would deliver several rate cuts this year. It ended up doing just three. The bank will likely continue to react on incoming data when making its interest rate decisions.

DXY index analysis

DXY chart by TradingView

The daily chart shows that the US dollar index has continued its strong uptrend in the past few months. It has jumped from near 100 to over 108.50 today. Most recently, it moved above the key resistance level at 107.30, its highest swing on October 23rd.

The index also formed a golden cross as the 50-day and 200-day moving averages crossed each other. Oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards. 

It also formed an inverse head and shoulders chart pattern. Therefore, the DXY index will likely continue rising as bulls target the next psychological point at 110. 

The post DXY index analysis: Here’s why the US dollar is soaring appeared first on Invezz

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Russia’s MOEX index has crashed, with 90% of stocks in the red

The MOEX index has plunged this year as most of its companies remained in the red and the Russian ruble slipped. The index, which tracks the biggest 50 companies in Russia, was trading at RUB 180, down by over 30% from its highest point this year. It has become one of the worst-performing indices.

Why Russian stocks plunged

The MOEX index has continued to plunge as woes in the Russian economy continues. A key concern for the economy is that the price of crude oil and natural gas has dropped sharply this year

Brent has dropped to $70, while the West Texas Intermediate (WTI) moved to $67. Russia’s ural benchmark is trading at a much lower price, affecting the amount of money the government is receiving. 

Most companies in the MOEX index are exposed to the energy sector. Indeed, most of the biggest ones like Rosneft, Lukoil, and Gazprom are the biggest players in the oil and gas industry. The same is true with the biggest Russian banks.

The MOEX index has also dropped because of the weakening Russian ruble. The USD/RUB was trading at 103.20, up from 86 in January. 

A weaker ruble has led to higher inflation rate. Recent data showed that inflation has remained above 9% this year and analysts expect that it will cap the year at about 10%.

This inflation has pushed the central bank to hike interest rates sharply. Economists expect that the central bank will hike rates from 21% to 23% on Friday this week.

These rate hikes have led to movement from stocks to the bond market. With interest rates above 20%, and with inflation at 9%, it means that one can generate a 10% inflation-adjusted return by just buying Russian bonds. 

Most MOEX companies have plunged

The MOEX index has plunged as most companies have fallen. Just four out of 50 companies in the index have rallied this year. 

Aeroflot, a leading airline company in Russia, has jumped by 43% in 2024. This rally is in line with other global airline companies like United Airlines and IAG that have soared by double digits. 

Polyus is another MOEX index company that has surged this year. It rose by over 24% because of the rising gold prices. Gold surged to a record high, helped by the rising demand from individuals and central banks.

Yandex, Russia’s answer to Google, has also done well this year as it jumped by over 31%. This rally happened after the company sold its Russian business in a $5.4 billion deal. 

The other companies that have had some small gains are Moskovskiy Kreditnyi Bank and Surgutneftegas, a leading Russian gas company. 

All the other companies in the MOEX index have slumped this year, with VK, a leading social media network, being the worst performer. It has crashed by over 55% this year. The other top laggards are companies like PIK SHb, Transneft, Severstal, Novatek, Magnit, and AFK Sistema. All these firms have crashed by over 40%.

MOEX index analysis

The daily chart shows that the MOEX index peaked at 253 RUB earlier this year and it then imploded to a low of 169 RUB. It has moved below the 38.2% Fibonacci Retracement level and even formed a death cross as the 200-day and 50-day Exponential Moving Averages (EMA) crossed each other. A death cross is one of the most bearish patterns in the market.

The MOEX index’s Relative Strength Index (RSI) and the MACD have pointed downwards. Therefore, the path of the least resistance for the index is downwards, with the next point to watch being at RUB 150. 

The post Russia’s MOEX index has crashed, with 90% of stocks in the red appeared first on Invezz

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Here’s why the KOSPI index has plunged this year

The KOSPI index has remained on edge as concerns about the South Korean economy continued. This retreat also happened as the South Korean won remained in a strong downward trend, with the USD/KRW rising to 1,451, up by over 12% from its lowest point this year.

Why the KOSPI index has plunged

There are three main reasons why the KOSPI index has plunged. The most recent reason was the political crisis in the country after the president, Yoon Suk Yeol, announced a state of emergency, followed by an impeachment. 

Analysts expect that the political issues will continue in the coming months, which could push foreign investors away from the market. 

Further, the KOSPI index has also plunged after Donald Trump won the recent election in the US. He has pledged to reshape the American economy by imposing large tariffs on American allies and foes, especially those with a trade deficit.

Trump has not mentioned South Korea lately, but he will be concerned that the country has a large trade deficit. Data showed that the two countries had an annual trade of over $224 billion, with the US exporting goods worth over $94 billion and importing $130 billion.

Trump views a trade relationship in the form of deficits and surpluses. He believes that countries the US has a large deficit with steals from Americans. The reality, however, is that the US lags in the form of exports because of its high cost of doing business. 

Third, the KOSPI index has crashed because of the woes surrounding Samsung, the backbone of the South Korean economy. Samsung has lagged behind its global peers, especially in the semiconductor industry, which has pushed its stock much lower.

There are concerns that Trump’s policies on China will have an impact on Samsung and other high-tech companies from South Korea. Trump has already appointed officials like Marco Rubio who are highly critical on China. 

The KOSPI index also reacted to this week’s Federal Reserve interest rate decision. In its monetary policy decision, the bank decided to slash interest rates by 0.25% and then hinted that it would deliver two more cuts next year. That hawkish tone led to a crash in most stocks and a surge in US bond yields.

Top KOSPI index companies

Most companies in the KOSPI index have dropped this year. Hanon Systems shares have plunged by over 44% in 2024, while Lotte Energy Materials fell by 40.9%. KG Mobility stock tanked by 56%, as woes in the automobile industry continued. 

The other top laggard in the KOSPI index was Lotte Fine Chemical whose stock retreated by 32%, and Hyundai Engineering and Construction whose stock fell by 27%. Lotte Chemical Group fell by 60%, while Hyundai Steel, Iiljin Display, Namyang Dairy, and Isu Chemical were some of the worst-performing companies in the index. 

Capro, on the other hand, was one of the best-performing companies in the KOSP index, as it jumped by over 327% this year. Doosan stock is up by 167% this year, while Gaon Cable, SG Choongbang, and Orientbio have risen by over 100%.

KOSPI index analysis

KOSPI chart by TradingView

The daily chart shows that the KOSPI index has been in a strong downtrend in the past few weeks. It has slumped from the year-to-date high of KRW 2,895 to a low of KRW 2,400 as the USD/KRW has surged.

The index formed a death cross pattern as the 200-day and 50-day moving averages crossed each other. This cross is one of the most bearish patterns in the market.

It has moved to the key support at KRW 2,390, where it has failed to move below in the past few months. 

Therefore, the path of the least resistance for the index is downwards, with the next point to watch being at KRW 2,300.

The post Here’s why the KOSPI index has plunged this year appeared first on Invezz

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Analyst sees Reliance owned small cap stock surging 190%

Shares of Reliance-owned Just Dial have remained muted in the past six months.

Just Dial’s share price has moderated around 2% in the past six months.

Ventura Securities has initiated coverage on Justdial with a “buy” rating, assigning a target price of ₹2,920 (£27.28) for the stock over the next 24 months.

The target indicates an over 190% upside from the stock’s current market price of around ₹1,000.

The brokerage firm’s bull case target price for the stock is ₹3,378 and the bear case target price is ₹2,689.

Justdial’s secret sauce?

Justdial, one of India’s largest local search engines, is uniquely positioned in a competitive landscape that includes global platforms like Google and Bing, as well as local players such as The Urban Company and India Intermesh.

Despite the competition, Ventura notes that Justdial’s businesses—including JD Xperts (on-demand services), JD Mart (B2B platform), and its core listing services—are benefiting from strong tailwinds.

With low penetration and relatively low competitive intensity in these areas, Ventura expects the company to achieve double-digit growth over the medium term.

Justdial’s business model generates revenue from listing fees, subscription packages, JD Xperts, and JD Mart.

While the company’s core listing business remains dominant, contributing approximately 97% of total revenue in FY24, Justdial is gradually diversifying into other avenues, such as on-demand services, B2B marketplaces, and cloud-hosted business solutions.

The company’s market leadership in India’s local search engine industry gives it an edge in helping small and medium enterprises (SMEs) gain visibility and expand their digital presence across the country, the brokerage highlighted.

With a presence in over 11,000 pin codes and more than 250 cities, Justdial connects businesses nationwide, facilitating digital growth for traditional offline businesses.

Justdial’s strong operational metrics

Ventura highlights Justdial’s improving operational metrics as a key indicator of financial strength.

The company’s active listings have grown by 40% over the past three years, reaching approximately 4.4 crore in FY24.

Additionally, its average unique quarterly visitors have increased by 39%, from 12.3 crore in FY21 to 17 crore in FY24, reflecting the platform’s growing user engagement.

Furthermore, the company’s total ratings and reviews have risen by 25%, from 12 crore in FY21 to 15 crore in FY24.

Revenue and growth projections

Ventura projects Justdial’s revenues to grow at a compound annual growth rate (CAGR) of 16.2% to reach ₹1,635 crore by FY27. This growth will be driven by:

  • A 12.3% CAGR in the Listings vertical, contributing ₹1,459 crore.
  • A 44.9% CAGR in the Transactions vertical, contributing ₹176 crore.

Profitability and Margins

With increasing automation, Ventura expects Justdial to experience operating leverage, leading to significant growth in gross profits, EBITDA, and net earnings. The brokerage projects the following CAGRs:

  • Gross Profits: 35.7% to ₹808 crore by FY27.
  • EBITDA: 42.8% to ₹631 crore by FY27.
  • Net Earnings: 24.8% to ₹705 crore by FY27.

The post Analyst sees Reliance owned small cap stock surging 190% appeared first on Invezz

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Why India’s Adani Group stocks are in the green today

All 10 listed stocks of the Adani Group were trading in the green at the time of writing on Friday.

The surge in the stocks comes even as the broader market was under the pump.

Both the benchmark Sensex and the broader Nifty were in the red on Friday, extending losses for the fifth straight session.

Why are Adani Group stocks upbeat today?

The sentiment around the stocks received a boost as the Bombay High Court dismissed a petition filed by UAE-based Seclink Technologies Corporation on Friday, which had challenged the Maharashtra government’s decision to award the Dharavi Redevelopment Project to Adani Realty.

In 2022, Adani Group emerged as the highest bidder for the 259-hectare Dharavi Redevelopment Project, securing the project with a bid of ₹5,069 crore. This followed a fresh tender process after the government canceled an earlier bid, which had seen Seclink Technologies submitting a ₹7,200 crore bid.

Seclink had contested the Maharashtra government’s decision to cancel the initial tender and issue a new one with revised conditions, leading to the legal challenge that has now been dismissed.

The group has been under pressure regarding the project attracting criticism from the country’s opposition parties.

Another development that has been seen as a positive for the conglomerate is the resignation of US Attorney Breon Peace.

Breon Peace, the US Attorney for the Eastern District of New York, is set to resign on January 10, 2025, ahead of President-elect Donald Trump’s inauguration on January 20.

Appointed by President Joe Biden in 2021, Peace’s resignation comes just as he has been involved in high-profile charges against Indian billionaire Gautam Adani.

In November, Peace’s office indicted Adani, head of the Adani Group, accusing him of defrauding US investors by allegedly concealing a bribery scheme to win Indian government contracts.

Adani responded by stating that his company is committed to addressing legal matters and reaffirming its commitment to world-class regulatory compliance.

All Adani Group stocks in green

Adani Enterprises: shares were up 0.78% to trade at ₹2,438.25 on Friday.

ACC: shares were up 0.51% to trade at ₹2,126.20 on Friday.

Adani Energy Solutions: shares were up 0.18% to trade at ₹797.45 on Friday.

Adani Green Energy: shares were up 1.80% to trade at ₹1,093.00 on Friday.

Adani Ports and Special Economic Zone: shares were up 0.20% to trade at ₹1,207.35 on Friday.

Adani Power: shares were up 1.85% to trade at ₹517.70 on Friday.

Adani Total Gas: shares were up 0.52% to trade at ₹700.90 on Friday.

Adani Wilmar: shares were up 0.13% to trade at ₹297.35 on Friday.

Ambuja Cements: shares were up 0.75% to trade at ₹567.55 on Friday.

New Delhi Television: shares were up 0.18% to trade at ₹165.20 on Friday.

The post Why India’s Adani Group stocks are in the green today appeared first on Invezz

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Laopu Gold stock surges 437% since June listing: what’s fueling the rally?

Despite sluggish demand in the retail jewellery market, Beijing-based Laopu Gold has emerged as a standout success.

With revenue skyrocketing 148% year-on-year in the first half of 2024 and stock prices surging 437% since its June Hong Kong listing, the jeweller has become the best performer on the Hang Seng Composite Index this year.

Since its market debut, the 14-day relative strength index (RSI) of Laopu Gold’s stock has surpassed 80 on at least five occasions—a notable achievement often signalling a strong outperformer.

While an RSI above 70 typically suggests the stock may be overbought, analysts remain optimistic.

All 14 analysts covering the company have issued buy recommendations, according to Bloomberg data.

The Hermès of gold: what’s behind Laopu’s irresistible allure?

Laopu Gold has maintained an impressive gross margin above 40% over the past three years, far surpassing the industry average of 8% to 20%.

Founded 15 years ago, the jewellery maker distinguishes itself by focusing on heritage gold jewellery inspired by Buddhism, priced as high-end luxury items rather than by weight.

This strategy has elevated the brand, drawing comparisons to global icons like Cartier and Tiffany.

Offering fixed prices for its jewellery, it has distanced itself from fluctuations in gold prices that typically influence consumer behaviour in China.

The brand also distinguishes itself with unique practices: it avoids franchising, operates only directly managed stores, and exclusively uses “old craft” pure gold, with no low-carat options.

This approach has earned Laopu the moniker “Hermès of gold,” cementing its place as a luxury leader in China’s jewellery market.

Laopu’s “relatively small size” is also an advantage that allows it to focus on quality over quantity, said Mark Tanner, managing director of consultancy China Skinny in Shanghai, as reported by Bloomberg.

The brand “fills a space” in the untapped China-made luxury market, he said.

With just 33 stores, the brand’s exclusive presence enhances its appeal among China’s high-net-worth clientele.

A 7.2-gram Laopu necklace can retail for 11,230 yuan (US$1,540)—a premium far above its weight-based value—further solidifying its luxury standing.

For wealthy patrons seeking bespoke pieces that incorporate classic Chinese motifs, prices can reach hundreds of thousands of yuan.

Laopu Gold stock bucks broader market trends

While many Chinese retailers await government stimulus to boost consumption, Laopu Gold has already carved a thriving niche.

Its focus on wealthy repeat customers has paid dividends, with loyalty members making purchases five times or more doubling since 2021.

JPMorgan Chase analysts forecast Laopu’s revenue to grow by 55% annually between 2024 and 2026.

The company plans to expand its footprint with 10 new stores in mainland China and five across Hong Kong, Macau, Singapore, and other Asian cities within three years.

The jeweller also capitalizes on digital sales via Alibaba’s Tmall, JD.com, and WeChat, enhancing its reach beyond brick-and-mortar locations.

Despite its successes, Laopu Gold faces potential hurdles. Maintaining its aura of exclusivity while scaling operations will be critical, Tanner said.

Additionally, fluctuating gold prices and intensifying competition from established brands like Chow Tai Fook and Cartier may test its resilience.

The post Laopu Gold stock surges 437% since June listing: what’s fueling the rally? appeared first on Invezz

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Here’s why the KOSPI index has plunged this year

The KOSPI index has remained on edge as concerns about the South Korean economy continued. This retreat also happened as the South Korean won remained in a strong downward trend, with the USD/KRW rising to 1,451, up by over 12% from its lowest point this year.

Why the KOSPI index has plunged

There are three main reasons why the KOSPI index has plunged. The most recent reason was the political crisis in the country after the president, Yoon Suk Yeol, announced a state of emergency, followed by an impeachment. 

Analysts expect that the political issues will continue in the coming months, which could push foreign investors away from the market. 

Further, the KOSPI index has also plunged after Donald Trump won the recent election in the US. He has pledged to reshape the American economy by imposing large tariffs on American allies and foes, especially those with a trade deficit.

Trump has not mentioned South Korea lately, but he will be concerned that the country has a large trade deficit. Data showed that the two countries had an annual trade of over $224 billion, with the US exporting goods worth over $94 billion and importing $130 billion.

Trump views a trade relationship in the form of deficits and surpluses. He believes that countries the US has a large deficit with steals from Americans. The reality, however, is that the US lags in the form of exports because of its high cost of doing business. 

Third, the KOSPI index has crashed because of the woes surrounding Samsung, the backbone of the South Korean economy. Samsung has lagged behind its global peers, especially in the semiconductor industry, which has pushed its stock much lower.

There are concerns that Trump’s policies on China will have an impact on Samsung and other high-tech companies from South Korea. Trump has already appointed officials like Marco Rubio who are highly critical on China. 

The KOSPI index also reacted to this week’s Federal Reserve interest rate decision. In its monetary policy decision, the bank decided to slash interest rates by 0.25% and then hinted that it would deliver two more cuts next year. That hawkish tone led to a crash in most stocks and a surge in US bond yields.

Top KOSPI index companies

Most companies in the KOSPI index have dropped this year. Hanon Systems shares have plunged by over 44% in 2024, while Lotte Energy Materials fell by 40.9%. KG Mobility stock tanked by 56%, as woes in the automobile industry continued. 

The other top laggard in the KOSPI index was Lotte Fine Chemical whose stock retreated by 32%, and Hyundai Engineering and Construction whose stock fell by 27%. Lotte Chemical Group fell by 60%, while Hyundai Steel, Iiljin Display, Namyang Dairy, and Isu Chemical were some of the worst-performing companies in the index. 

Capro, on the other hand, was one of the best-performing companies in the KOSP index, as it jumped by over 327% this year. Doosan stock is up by 167% this year, while Gaon Cable, SG Choongbang, and Orientbio have risen by over 100%.

KOSPI index analysis

KOSPI chart by TradingView

The daily chart shows that the KOSPI index has been in a strong downtrend in the past few weeks. It has slumped from the year-to-date high of KRW 2,895 to a low of KRW 2,400 as the USD/KRW has surged.

The index formed a death cross pattern as the 200-day and 50-day moving averages crossed each other. This cross is one of the most bearish patterns in the market.

It has moved to the key support at KRW 2,390, where it has failed to move below in the past few months. 

Therefore, the path of the least resistance for the index is downwards, with the next point to watch being at KRW 2,300.

The post Here’s why the KOSPI index has plunged this year appeared first on Invezz

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Analyst sees Reliance owned small cap stock surging 190%

Shares of Reliance-owned Just Dial have remained muted in the past six months.

Just Dial’s share price has moderated around 2% in the past six months.

Ventura Securities has initiated coverage on Justdial with a “buy” rating, assigning a target price of ₹2,920 (£27.28) for the stock over the next 24 months.

The target indicates an over 190% upside from the stock’s current market price of around ₹1,000.

The brokerage firm’s bull case target price for the stock is ₹3,378 and the bear case target price is ₹2,689.

Justdial’s secret sauce?

Justdial, one of India’s largest local search engines, is uniquely positioned in a competitive landscape that includes global platforms like Google and Bing, as well as local players such as The Urban Company and India Intermesh.

Despite the competition, Ventura notes that Justdial’s businesses—including JD Xperts (on-demand services), JD Mart (B2B platform), and its core listing services—are benefiting from strong tailwinds.

With low penetration and relatively low competitive intensity in these areas, Ventura expects the company to achieve double-digit growth over the medium term.

Justdial’s business model generates revenue from listing fees, subscription packages, JD Xperts, and JD Mart.

While the company’s core listing business remains dominant, contributing approximately 97% of total revenue in FY24, Justdial is gradually diversifying into other avenues, such as on-demand services, B2B marketplaces, and cloud-hosted business solutions.

The company’s market leadership in India’s local search engine industry gives it an edge in helping small and medium enterprises (SMEs) gain visibility and expand their digital presence across the country, the brokerage highlighted.

With a presence in over 11,000 pin codes and more than 250 cities, Justdial connects businesses nationwide, facilitating digital growth for traditional offline businesses.

Justdial’s strong operational metrics

Ventura highlights Justdial’s improving operational metrics as a key indicator of financial strength.

The company’s active listings have grown by 40% over the past three years, reaching approximately 4.4 crore in FY24.

Additionally, its average unique quarterly visitors have increased by 39%, from 12.3 crore in FY21 to 17 crore in FY24, reflecting the platform’s growing user engagement.

Furthermore, the company’s total ratings and reviews have risen by 25%, from 12 crore in FY21 to 15 crore in FY24.

Revenue and growth projections

Ventura projects Justdial’s revenues to grow at a compound annual growth rate (CAGR) of 16.2% to reach ₹1,635 crore by FY27. This growth will be driven by:

  • A 12.3% CAGR in the Listings vertical, contributing ₹1,459 crore.
  • A 44.9% CAGR in the Transactions vertical, contributing ₹176 crore.

Profitability and Margins

With increasing automation, Ventura expects Justdial to experience operating leverage, leading to significant growth in gross profits, EBITDA, and net earnings. The brokerage projects the following CAGRs:

  • Gross Profits: 35.7% to ₹808 crore by FY27.
  • EBITDA: 42.8% to ₹631 crore by FY27.
  • Net Earnings: 24.8% to ₹705 crore by FY27.

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Honeywell and FedEx spinoff plans: can investors hope for a GE Vernova-like success?

Breaking up companies into smaller, independent entities is proving to be a winning formula for investors.

Spinoffs, often pursued to create shareholder value, have delivered extraordinary returns in 2024.

The Bloomberg Spinoff Index, which tracks companies separated from their parent firms over the past three years, has surged 63% this year—more than double the S&P 500’s 24% rise.

Several standout companies are leading the charge. Victoria’s Secret, spun off from Bath & Body Works, has gained 62% this year, while BellRing Brands, a former part of Post Holdings, has climbed 37%.

The crown jewel of spinoffs, however, is Constellation Energy, which was separated from Exelon in 2022 and has soared 95% in 2024 alone.

Not all spinoffs are created equal

While spinoffs have been largely successful, not every breakup yields stellar results.

In a Barron’s report, Trivariate Research’s Adam Parker points out that spinoffs involving companies in different industries than their parent firms tend to perform better, but high-quality companies should never do a spin.

“Something about breaking up a high-quality company creates dis-synergies,” he writes.

Recent examples highlight this divide. While GE Vernova, spun off from General Electric, has gained a staggering 154%, Kenvue, separated from Johnson & Johnson, has fallen more than 20% since its 2023 debut.

Similarly, Solventum spun off from 3M, has declined 17% this year, underscoring that spinoffs are not a guaranteed path to success.

GE Vernova: a spinoff success story

One of the most talked-about spinoffs of 2024 is GE Vernova, the renewable energy-focused unit of General Electric.

When Larry Culp took over GE in 2018, the company faced serious doubts about its future.

Culp’s strategy to split GE into three distinct businesses—GE Healthcare, GE Vernova, and GE Aerospace—has proven transformative.

GE Vernova, initially viewed as a “problem child,” has become a star performer, delivering a 154% return since its spin-off.

GE Aerospace has also shined, gaining 62% this year and 194% since GE Healthcare’s spin-off in early 2023.

These successes are setting a high bar for future spinoffs, making it easier for companies to pitch such moves to stakeholders.

Can Honeywell, and FedEx replicate GE’s success?

The success of spinoffs like GE Vernova has sparked a wave of new announcements from major corporations.

In the past month alone, companies like Honeywell, FedEx, and Comcast have announced plans to spin off divisions to unlock value and drive growth.

Honeywell, under pressure from activist investor Elliott Investment Management, is exploring strategic alternatives for its aerospace unit, a move that has excited Wall Street.

“We do believe there is upside simply on a sum of the parts basis…but more importantly, a simpler model should allow for better focus, prospective growth, and even higher valuation,” writes UBS analyst Amit Mehrotra, who has a Buy rating and a $298 price target on the stock, up 31% from Thursday’s close of $226.88.

FedEx has also announced plans to spin off its freight business, aiming to unlock the division’s value. The news drove the stock up over 10% in after-hours trading.

The optimism appears justified, as FedEx trades at 12.9 times its 12-month forward earnings, significantly lower than freight-focused companies like Old Dominion Freight Line and Saia, which command valuations exceeding 30 times earnings.

Ariel Rosa of Citigroup however has raised concerns about the plan.

In a note issued before the announcement, Rosa highlighted that FedEx’s freight business has lagged behind its peers in growth, potentially limiting its valuation.

Additionally, FedEx previously emphasised the synergy between its freight and express divisions, particularly in cross-selling services.

Splitting the two could pose challenges, making it difficult to achieve a clean separation and potentially driving customers to competitors.

Despite maintaining a “buy” rating on the stock due to its low valuation and other positive factors, Rosa expressed concerns about potential downside risks emerging in early 2025.

“While there is logic in spinning the business to unlock value, we see significant execution risk and remain unconvinced that a spin is in the best interest of long-term shareholders,” he wrote.

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