Synopsis:
Indian businesses are increasingly exposed to risks from rapidly evolving regulations in addition to market fluctuations. Stricter laws and global influences can impact even well-established companies.
Regulations in India are changing quickly, and many companies are now facing risks that not only come from market ups and downs, but also due to stricter laws, new rules, and global factors. Tighter regulations may harm the growth of strong businesses.
India’s rules are shaped by more than just business needs; they focus on protecting consumers, ensuring data security, increasing transparency, and addressing social concerns. Regulators like SEBI, RBI, and TRAI have become more active in enforcing policies.
The following is the list of stocks prone to regulatory headwinds:
1. Indian Energy Exchange Limited
The company is engaged in offering a digital platform and systems to facilitate buying and selling electricity. It is facing a problem of working together with multiple power exchanges to set prices. A new rule from the Central Electricity Regulatory Commission. This change can reduce the profit and customer base of IEX. Because of this, IEX’s stock price has fallen, and experts expect the shares to shrink.
With a market capitalization of Rs.12,747.63 crores, it was trading at Rs. 141.85 from its previous closing price of Rs. 139.75. The company’s 1-year and 5-year returns are negative 40.16 percent and positive 125.9 percent, respectively.
In Q1FY26, the company’s revenue from operations grew to Rs.141.7 crore from Rs.123.5 crore in Q1FY25, and in Q1FY26, net profit rose to Rs.120.6 crore from Rs.96.4 crore. ROE is 40.5 percent and ROCE is 53.6 percent. With a P/E of 29.17 versus the industry average of 53.67.
2. ITC Limited
The company is the country’s biggest cigarette maker and seller. It is engaged in four main businesses, such as Cigarettes, Paperboards and Packaging, and Agriculture. ITC relies heavily on its cigarette business; factors like steep taxes, restrictions on promotions, and ethical or sustainability concerns can affect profits.
With a market capitalization of Rs.5,07,830.91 crores, it was trading at Rs.405.40 from its previous closing price of Rs.409.75.The company’s 1-year and 5-year returns are negative 22.14 percent and positive 135.72 percent, respectively.
In Q1FY26, the company’s revenue from operations grew to Rs. 21,496 crore in Q1FY26 from Rs . 17,778 crore in Q1FY25, net profit declined to Rs.5,343.41 crore from Rs. 5,177 crore. ROE is 27.3 percent, and ROCE is 36.8 percent. With a P/E of 25 versus the industry average of 49.50, the stock appears undervalued compared to peers.
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3. BSE Limited
The company is engaged in offering a transparent platform for trading stocks, bonds, derivatives, mutual funds, and stock lending. It is India’s largest stock exchange by number of listed companies, with over 5,000 on its platform.
BSE may face risks from stricter SEBI rules, such as changes in derivatives contracts. It also faces the general risk of penalties if there are gaps in oversight or system problems.
With a market capitalization of Rs.89,052 crores, it was trading at Rs.2,169 from its previous closing price of Rs.2,096.20.The company’s 1-year and 5-year returns are 61.13 percent and 3,433.55 percent, respectively.
In Q1FY26, the company’s revenue from operations grew to Rs.958.39 crore from Rs.601.87 crore in Q1FY25, net profit rose to Rs.538 crore from Rs.262.4 crore. ROE is 36 percent, and ROCE is 46.6 percent. The company has a P/E of 56.13 versus the industry average of 53.67.
Written By Jhanavi Sivakumar
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