On Thursday, the shares of B3, Brazil’s main stock exchange, experienced a dramatic surge of 5.71%, climbing to R$11.10.
This surge followed a crucial decision by the Superior Chamber of the Administrative Council of Tax Appeals (Carf), which unanimously ruled in favour of B3 regarding the tax amortization of goodwill for the years 2014, 2015, and 2016.
According to local media outlet InfoMoney, this legal victory is expected to result in effective removal of substantial potential tax liability, thus reinforcing investor confidence in B3’s financial stability.
The case
The Superior Chamber of the Administrative Tax Appeals Board (CARF) ruled unanimously in favor of B3, canceling the R$5.77 billion tax assessment issued by the Brazilian Federal Revenue Service (RFB).
The case pertained to the amortization of goodwill from B3’s 2008 acquisition of Bovespa Holding SA for the tax years 2014, 2015, and 2016.
Since the risk of loss was classified as “Possible,” the ruling will not impact the company’s financial statements.
This decision, along with the ruling in Goodwill Case III, is final and confirms B3’s compliance with tax legislation.
Market reactions and analyst outlook
Genial Investimentos rated the decision as positive because it removes a significant potential liability and confirms the legal certainty of B3’s tax structure.
“Although there is no direct accounting impact, the removal of this risk may be a positive factor for the market’s perception of the company,” explains the brokerage.
Following this clarification, Genial maintained its “buy” recommendation and set an optimistic target price of R$14.
“We expect a positive market reaction, as the case was a significant overhang on the stock,” said Goldman Sachs analysts, who reiterated their buy recommendation for the shares.
The stock B3 (B3SA3) is presently trading at R$11.10, up 5.71% or R$0.60 from the previous close of R$10.50.
The trading day saw a range of R$10.93 to R$11.17, with an initial price of R$10.40.
Despite today’s strong momentum, the stock has fallen 10.91% in the last 52 weeks, indicating a shaky long-term performance.
B3 latest earnings
Last month, the company posted its earnings for the quarter ended December.
B3 reported a recurring net profit of R$1.2 billion ($208 million) for the fourth quarter of 2024, reflecting a 13.6% increase from the same quarter in 2023 but a 2% decline from the previous quarter.
Total revenue stood at R$2.67 billion, up 7.0% year-over-year but down 1.6% sequentially.
Recurring EBITDA reached R$1.60 billion, rising 9.5% from the prior year but falling 6.4% from the previous quarter.
A key highlight was the continued growth in Bitcoin Futures, which closed the quarter with an ADV of 206,000 contracts, contributing R$42.8 million in revenue.
In the OTC segment, the issuance of fixed-income instruments rose 13.8% year-over-year, while the outstanding balance increased 23.9%.
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