Vikas Solanki

Giva Raises Fresh Capital to Strengthen Jewelry Business, Valued at ₹3,950 Crore

Equities, Markets, Research, Research Reports, Result Updates - October 21, 2024

LTFH Q2FY25: Strong Retail Loan Growth, NIM Expands, CoF Remains Stable

About the stock
➡️LTFH is leading NBFC cater diversified financial lending prodcut in both rural and urban areas. Its offer consumer loan, 2W loan, home loan, MFI, farm and SME loans. Distribution network remain strong with 13,200+ distribution touch point, pan India presence in 2 lakh villages/100+ citiesand cover 18 states in India.

Reatil book shine up (28% YoY) led by 2W, HLand MFI segment
➡️LTF retail loan book has been contributing 95%> of overall loan book, company achieveing its FY2026 lakshya goal. Retail book grew 28% YoY (+5% QoQ) to 88,975 Cr driven by 2W, HL and MFI segment. 2W book contribute 14% of retail book, growing 33% YoY and MFL contribute 30% of retail book, growing 22% YoY and Home loan contribute 20% of retail book, growing 39% YoY in Q2FY25.
The total book increased by 22% YoY (+5% QoQ) to 93,015 Cr led bt strong growth in retail book.
➡️Whole sale book report 56% YoY growth but its weight has been reduce to only 4% in overall loan book in Q2FY25.
➡️Retail disbursement grew 12% YoY (+2% QoQ) to 15,092 Cr led by 2W and home loan segment. While MFL shake the disburesement growth down by 5% YoY and its contribute 35% of retail disbursement.
➡️Company’s borrowing lagging in line with credit growth. Borrowing grew half of loan book growth at 11% YoY to 84,912 Cr during the quarter.

Key metrics	Q2FY25	Q2FY24	YoY (bps)	Q1FY25	QoQ (bps)
Yield	15.38	15.23	15	15.54	-16
CoF	7.8	7.79	1	7.85	-5
NIMs	8.94	8.62	32	9.31	-37
Credit Cost	2.59	2.58	1	2.37	22
ROA	2.6	2.42	18	2.68	-8
ROE	11.65	10.81	84	11.58	7
PCR	71	76	-500	75	-400
CAR	22.16	25	-284	22	16

NII grew on book growth, yield expansion and stable CoF
➡️Interest income grew 15% YoY (+6% QoQ) to 3,654 Cr driven by robust retail book growth and expansion in yield by 15 bps YoY. NII increased 18% YoY (+4% QoQ) to 2,178 Cr attributed to NIMs expansion by 32 bps YoY and stable CoF at 7.8%. PPOP grew robust at 25% YoY (+14% QoQ) to 1,490 Cr thanks to higher other income and stable other OpEx. Profitability comes in line with topline, grew 17% YoY (+2% QoQ) to 697 Cr due to higher provision expense (up 40% YoY).

All figures are in Cr.

Years	Q2FY25	Q2FY24	YoY (%)	Q1FY25	QoQ (%)	Commentry
Interest income	3,654.41	3,168.54	15%	3,452.62	6%	Driven by book growth and yield expansion
Interest expenses	1,476.28	1,324.91	11%	1,351.41	9%
NII	2,178.13	1,843.63	18%	2,101.21	4%	led by stable CoF and Nims jump by 32 bps YoY
Other income	369.61	313.53	18%	331.99	11%
Total Net income	2,547.74	2,157.16	18%	2,433.20	5%
Employee expenses	548.78	448.62	22%	519.34	6%
Other OpEx	508.88	515	-1%	601.41	-15%
Total Opex	1057.66	963.62	10%	1120.75	-6%
PPOP	1,490.08	1,193.54	25%	1,312.45	14%	Grew by other income and stable other Opex
Provision	550.51	396.15	39%	390.18	41%
PBT	939.57	797.39	18%	922.27	2%
Tax expenses	242.89	203.17	20%	237.02	2%
Tax rate	26%	25%	1%	26%	1%
PAT	696.68	594.22	17%	685.25	2%	Kick in opEx efficiency offset by higher provision, PAT grew in line with NII
PAT%	17%	17%	1%	18%	-4%
EPS	2.79	2.39	17%	2.75	2%
No. of equity shares	249.26	248.3	0%	248.98	0%

Asset quality dissapoint on QoQ basis
➡️LTF asset quality has maintain on YoY basis but decline sequentailly. GNPA down 8 bps YoY but jump 5 bps QoQ to 3.19% while NNPA dissapoint YoY as well as sequentially by 14 bps/17 bps to 0.96%. Its normal effect due to the lower base on last quarter while NNPA below the management target of 1% till FY26.

Asset Quality	Q2FY25	Q2FY24	YoY (bps)	Q1FY25	QoQ (bps)
GNPA	3.19	3.27	-8.00	3.14	5
NNPA	0.96	0.82	14.00	0.79	17

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.71 Price to book value. Yield on loan jump 15 bps to 15.38% while CoF remain stable at 7.8% YoY. This result in expansion in NIMs by 32 bps to 8.94% as of Q2FY25. credit cost remain stable at 2.59% YoY while increased by 22 bps QoQ.

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RBI's Revised Co-Lending Norms Set to Transform NBFC Growth

Business, Equities, Market News, Markets - October 18, 2024

RBI Bars Four NBFCs for Regulatory Breach

RBI Suspends Four NBFCs from Loan Issuance: A Regulatory Crackdown
In a significant regulatory move, the Reserve Bank of India (RBI) has prohibited four non-banking financial companies (NBFCs) from issuing new loans. The action follows these firms’ violations of regulatory norms related to lending practices, signaling the central bank’s growing vigilance toward the sector.

The four entities impacted by the RBI’s order are:

Muthoot Microfin Ltd
Handygo Technologies Pvt Ltd
Vibrant Microfinance Ltd
Pai Power Solutions Pvt Ltd
This development has far-reaching implications, given the crucial role of NBFCs in extending credit, especially to underserved segments such as small businesses and low-income households.

Reasons Behind the Regulatory Action
The RBI has not disclosed the precise nature of each company’s violations. However, it indicated that the affected NBFCs breached guidelines governing fair lending practices and responsible operations. These norms are critical to ensuring transparency, borrower protection, and financial stability within the sector.

Given the RBI’s emphasis on systemic health, even relatively minor lapses in governance, documentation, or compliance can attract swift punitive actions. Analysts speculate that the infractions could involve issues such as improper loan underwriting, failure to maintain sufficient capital buffers, or mismanagement in lending portfolios.

Implications for the NBFC Sector
The RBI’s regulatory action sends a clear message to the broader NBFC ecosystem. As financial intermediaries with less stringent regulatory oversight compared to banks, NBFCs have expanded aggressively in recent years. However, this growth has heightened concerns over asset quality and operational transparency.

For investors, the incident highlights the risks associated with non-bank lenders. Companies that fail to maintain proper compliance structures risk not only regulatory action but also a deterioration in market reputation. On the other hand, NBFCs that demonstrate robust governance may find it easier to attract capital and enhance customer trust.

This crackdown may prompt other NBFCs to reassess their processes and tighten internal controls to avoid similar repercussions. Furthermore, it underscores the importance of regulatory arbitrage—a phenomenon where NBFCs operate with fewer restrictions relative to banks—remaining in check.

Impact on Credit Flow and Borrowers
The immediate impact of the ban is expected to be limited to the operations of the four affected NBFCs. However, if systemic tightening across the sector follows, it could temporarily disrupt the flow of credit to small businesses and individuals who rely heavily on non-bank lenders.

Additionally, the affected companies will likely experience increased scrutiny from stakeholders, including investors and rating agencies. Operational constraints may also hinder their ability to grow loan portfolios, further constraining profitability.

Broader Market Implications
The regulatory crackdown aligns with the RBI’s broader objective of maintaining financial discipline across the financial services ecosystem. With the sector growing rapidly, the central bank’s proactive stance aims to mitigate risks that could destabilize the economy.

NBFCs play a vital role in filling credit gaps left by traditional banks, especially in rural and semi-urban areas. However, incidents like these highlight the need for robust compliance frameworks to ensure that the sector continues to grow sustainably.

Conclusion
The RBI’s ban on four NBFCs from issuing loans serves as a reminder of the importance of regulatory adherence within India’s financial system. It demonstrates the central bank’s focus on strengthening governance practices in non-bank lending to protect borrowers and investors.

For the affected NBFCs, the path forward will require addressing the compliance gaps identified by the regulator. On a broader level, this regulatory action reinforces the need for financial institutions to operate transparently while balancing growth with sound governance.

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IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%

Business, Equities, Market News, Markets - October 18, 2024

India’s 2030 Renewable Energy Targets: A Green Transition in Focus

India’s commitment to renewable energy has gained momentum, with ambitious targets set for 2030 to drive the country’s transition towards a sustainable energy future. These goals, aimed at curbing carbon emissions and boosting energy security, also represent a significant shift in the power sector, promising new opportunities and challenges for investors.

Ambitious Targets and Current Progress
India plans to achieve 500 GW of non-fossil fuel-based capacity by 2030, marking a pivotal step towards decarbonization. As of June 2024, the total installed renewable capacity stands at approximately 174 GW, including solar, wind, hydro, and bioenergy sources. Solar energy leads the pack with 71 GW, followed by wind energy at 44 GW. The government aims to ramp up capacity with an annual increase of 30–40 GW over the next few years to align with these targets.

Key Policy Support Driving Growth
The government has introduced various policy frameworks to accelerate renewable energy adoption. The recently announced Production Linked Incentive (PLI) schemes offer financial support to domestic manufacturers, reducing import dependency. Furthermore, tenders for hybrid projects (combining solar, wind, and storage solutions) have gained momentum, creating a more balanced energy mix and improving grid stability.

In parallel, initiatives like green hydrogen projects and offshore wind energy have been prioritized, diversifying India’s renewable portfolio. By capitalizing on technological advancements and reducing tariffs through competitive bidding, the sector is positioned to attract both domestic and foreign investment.

Challenges Hindering Fast-Track Execution
However, certain hurdles could slow down progress. Land acquisition continues to be a bottleneck, particularly in high-potential regions like Rajasthan and Gujarat. Project developers often face delays due to environmental clearances and logistical bottlenecks. Additionally, grid integration remains a challenge, as intermittent sources like solar and wind require large-scale storage solutions to ensure stable supply.

Financing is another concern. Despite falling costs, many projects require substantial capital investments. Banks and financial institutions are cautious about lending to long-gestation infrastructure projects, further exacerbating the funding gap. Regulatory uncertainties and changes in power purchase agreements (PPAs) also weigh on investor sentiment.

Investment Opportunities for the Private Sector
India’s renewable energy journey is generating significant interest from global investors. Major companies, including Adani Green, Tata Power Renewables, and ReNew Power, are expanding their portfolios to benefit from the favorable policy environment. With increasing pressure on corporations to reduce their carbon footprint, large-scale power purchase agreements between private players are becoming more common, providing steady revenue streams for developers.

The rise of Electric Vehicle (EV) adoption is also expected to contribute to renewable energy growth. As EV infrastructure develops, the demand for clean power sources will rise, pushing companies to explore distributed energy solutions and rooftop solar projects.

Geopolitical and Climate Implications
The energy transition aligns with India’s climate commitments under the Paris Agreement, aiming to reduce carbon intensity by 45% from 2005 levels by 2030. On the geopolitical front, reduced dependence on fossil fuel imports will enhance energy security and position India as a leader in the global renewable space. However, achieving these ambitious targets requires sustained policy support, financial backing, and close collaboration between the public and private sectors.

Conclusion: A Critical Decade for India’s Energy Future
The path to 2030 offers both opportunities and challenges for India’s energy landscape. While policy support, technological advancements, and private sector participation are fueling growth, addressing logistical, financial, and regulatory issues will be crucial to meeting targets on time. From an investment perspective, the renewable energy sector presents a compelling long-term opportunity, with sustainable growth potential and alignment with global environmental goals.

This decade will be a defining one for India’s energy future as it races to meet its green ambitions. Investors with a long-term view can benefit from the unfolding transition, but success will hinge on a delicate balance of innovation, infrastructure, and policy execution.

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Visteon Invests $10M in India's Camera Manufacturing!

Equities, Markets, Research, Research Reports, Result Updates - October 17, 2024

South Indian Bank Q2FY25: Strong Profit, NIMs Contract, Asset Quality Improves

NII Moderate; Strong Profitability; NIMs contract; Asset quality improved

About the Stock
➡️South indian bank is private sector bank operate in south region of India headquartered in Kerala. The bank has 955 branch network and majority situated in south India. The customer bas has increased from 7.3 Mn to 7.8 Mn within one year period. The bank loan book is well diversified 40% with corporate and remaining 60% retail book includes personals, agri and business.

Strong growth in Advances and Disbursement in Q2FY25
➡️The bank has reported strong growth annually in key business parameter. Gross Advances grew 13% YoY to 84,714 Cr, with corporate segment contributing 40% of the loan book, growing at 24% and personal segment contribute 25%, growing at same pace 24% while business loan and Agriculture contribute 15% and 20% respectively. Disbursement grew 77% YoY to 76,872 Cr led by corporates book. While the bank deposit lagging behind, increased by 9% YoY and borrowings decline 56% YoY. The CASA stand at 31.8% in Q2FY25 lower by 8 bps YoY.
➡️Personal segment loan book driven by growth in mortgage loan at 75% followed by home loan loan at 42%, gold loan 11%, auto loan 18% and credit card 37%.
➡️Retail disbursement momentum help by home loan, auto loan while agriculture and personal loan remains flat annually.

NII growth moderate while PAT jump 18% led by other income and lower tax
➡️Interest income increased by 11% YoY (+2% QoQ) to 2,355 Cr driven by yield expansion and advance growth. The yield on loan expand 19 bps YoY to 7.68% while Cost of fund jump 23 bps to 4.80% result contraction in NIMs. NII grew moderate at 6% YoY (+2% QoQ) to 882 Cr due to high expansion in CoF makes contract NIMs by 7 bps. The bank’s PAT surged 18% YoY (+10% QoQ) to 325 Cr led by higher other income and lower tax expense despite the jump in credit cost. The stable the employee cost and total operating cost kick in operating leverage and boost the profitability.

Asset quality enhanced; stress book reduce
➡️Company has reduced the stress assets from 1,159 Cr in Q2FY24 to 476 Cr in Q2FY25. Bank has churned 75% of overall loan book since covid level and 93% current GNPA from old book. GNPA/NNPA stood at 4.40%/1.31% decline by 56bps/39 bps YoY (10bps/13 bps QoQ). Slippages ratio decline to 0.36% in Q2FY25 vs 0.42% in Q2FY24. The provision coverage ratio expand 290 bps YoY to 80.7% vs 77.8% in Q2FY24.

Valuation and Key metrics
➡️Currently the stock is trading at 0.76 price to book value. The yield on advances jump 19 bps to 7.68% while CoF decline by 23 bps YoY to 4.80%. This result in contraction in NIMs by 7 bps to 3.24%. The increased in deposit rate to maintain and increased the deposit growth led to higher CoF and contract NIMs as Yield is stable.

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Diversification Strategy: IOC’s Foray into Petrochemicals and Renewable Energy

Business, Equities, IPO research, Market News, Markets, Research, Research Reports - October 16, 2024

IPO Research Note on Waaree Energies Ltd

Company Overview
Waaree Energies Ltd. is a leading player in the solar energy sector, with a strong presence across manufacturing, EPC (Engineering, Procurement, and Construction), and independent solar projects. Originally incorporated as Anmol Fluid Connectors in 1990, it transitioned into renewable energy by rebranding as Waaree Solar in 2007 and later becoming Waaree Energies. The company exports solar products to over 68 countries and operates one of India’s largest solar photovoltaic (PV) module manufacturing facilities.

With the ambitious expansion of 6GW capacity in Odisha, Waaree aims to strengthen its foothold across the solar energy value chain, enhancing vertical integration from wafer production to module manufacturing.

IPO Details
IPO Type: Fresh Issue and Offer for Sale (OFS)
Fresh Issue Size: ₹30,000 million
Offer for Sale (OFS): Up to 3.2 million equity shares
Face Value: ₹10 per share
Price Band: ₹1427 to ₹1503
Bid Lot Size: 9
Use of Proceeds: Primarily for:

Funding 6GW manufacturing plant in Odisha
Working capital needs
General corporate purposes
Anchor Investor Bidding Date: One day prior to the IPO opening

Stock Exchange Listing: NSE and BSE

The IPO will consist of both fresh shares and an offer for sale by promoters, including Waaree Sustainable Finance and key stakeholders. Investors will participate through the book-building process, and the final price will be determined based on investor demand during the bidding period.

Industry Outlook and Growth Drivers
India’s solar energy industry is poised for significant growth, driven by a shift toward clean energy, government incentives, and decreasing production costs. Solar power accounts for nearly 50% of India’s renewable energy capacity target by 2030.

Key Growth Drivers:
Government Support and PLI Schemes: India has introduced the Production-Linked Incentive (PLI) scheme to boost domestic manufacturing of solar modules and reduce import dependency.
Carbon Emission Targets: India’s commitment to net-zero carbon emissions by 2070 and intermediate targets for 2030 will enhance the adoption of solar energy solutions.
Increasing Solar Adoption: Commercial, industrial, and residential sectors are witnessing increasing demand for rooftop solar and utility-scale installations.
Technological Innovations: New technologies like bifacial modules, half-cut cells, and enhanced efficiency systems will drive market demand.
Falling Costs: The declining cost of PV modules has made solar power more attractive compared to other energy sources.

Key Financial Analysis
Revenue Growth: Waaree has posted consistent revenue growth, benefiting from rising domestic and export demand for solar modules.
Profit Margins: The company enjoys stable margins, though fluctuations in raw material prices (such as polysilicon) remain a challenge.
Debt Levels: Waaree’s ongoing capacity expansion has led to higher debt, but the company maintains manageable leverage levels, supported by cash flows from operations.
Cash Flow Position: Positive cash flow generation provides a cushion for working capital requirements and reduces dependency on external borrowings.

Comparison with Competitors
Key Competitors:

Adani Solar: An integrated solar manufacturer with strong backing from the Adani Group. It benefits from scale and group synergies.
Vikram Solar: Focused on high-quality manufacturing and strong export business. However, Waaree has a more diversified business model with its EPC and project businesses.
Tata Power Solar: A well-established player in the EPC segment. Tata focuses on project development, while Waaree offers a wider range of solar products and solutions.
Waaree Energies distinguishes itself with its focus on integrated operations (from manufacturing to EPC) and ambitious capacity expansion, making it one of the few companies in India capable of scaling quickly to meet growing demand.

Risks and Challenges
Volatility in Raw Material Prices: Polysilicon and other components are key to solar module production. Any fluctuation in global prices could impact margins.
Policy Risk: Changes in government incentives, import duties, or tax policies could affect profitability.
Execution Risk: Timely completion of the 6GW project in Odisha is critical to the company’s growth outlook. Delays or cost overruns could impact financial performance.
Competition from Global Players: Chinese solar manufacturers continue to dominate the market with competitive pricing.
Currency Risk: The company’s exposure to international markets exposes it to foreign exchange fluctuations.

Valuation Outlook
Waaree’s IPO valuation will be based on its growth potential, industry positioning, and earnings outlook. Comparable solar companies in India trade at P/E multiples of around 25-30x. Given Waaree’s expansion plans, strong demand outlook, and government support for domestic manufacturing, it may command a premium valuation. However, market sentiment toward the renewable energy sector will play a crucial role in determining final valuation multiples.

Recommendation
Waaree Energies offers a compelling investment opportunity, driven by:

Robust government incentives under the PLI scheme
Strong demand for solar modules in India and export markets
Expansion of the 6GW plant, positioning it for long-term growth
However, the company faces risks from raw material volatility, execution challenges, and global competition. Investors with a long-term outlook on the renewable energy sector may consider subscribing to the IPO. The company’s ability to manage its expansion efficiently and sustain margins will be critical in delivering shareholder value post-listing.

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Business, Equities, IPO research, Market News, Markets, Research, Research Reports - October 15, 2024

Hyundai IPO: Accelerating Toward Long-Term Growth

IPO Overview
Hyundai Motor India Limited (Hyundai) is gearing up for a landmark Initial Public Offering (IPO), set to be the largest in Indian history. The offering is an entirely offer-for-sale issue, allowing existing shareholders to monetize their holdings. With a price band of ₹1865-1960 per share, the issue size at the upper end will be ₹27,870 crore, implying a market cap of ₹1,59,258 crore. Priced at a 19.3x FY27 earnings multiple, the IPO offers investors a chance to capitalize on Hyundai’s strong market presence and promising future in the passenger vehicle (PV) industry.

Investment Highlights
1. Wide Product Portfolio and Market Leadership
Hyundai’s diverse range of offerings includes hatchbacks, sedans, and SUVs, providing an edge over competitors like Maruti Suzuki, which has traditionally been focused on entry-level and compact cars. This product diversification allows Hyundai to cater to a broader spectrum of customers, stabilizing its revenues across market cycles.

The company has also established a significant foothold in the export market, strengthening its position as a global player with higher average selling prices (ASPs) internationally. Hyundai is India’s largest passenger vehicle exporter, which not only enhances profitability but also mitigates domestic market risks.

2. SUV Leadership Fuels Margin Growth
The SUV segment remains Hyundai’s key growth driver. In FY24, Hyundai sold 3,89,000 SUVs, contributing to 63% of its domestic volumes, a stark contrast to Maruti Suzuki’s 36% SUV mix. SUVs, being premium products, command higher ASPs and margins, driving 7.4% CAGR growth in ASPs between FY22 and FY24.

This strategic focus on high-margin segments enabled Hyundai to achieve 100 bps expansion in EBITDA margins, even as commodity prices rose during FY21-FY22. Hyundai’s ability to maintain profitability through an optimized product mix highlights the company’s superior operational model.

3. Operational Efficiency and Capacity Expansion
Hyundai’s operational efficiency is reflected in its 10x asset turnover, outperforming Maruti’s 8x. The company’s plants run in three shifts, ensuring optimal utilization of capacity. Hyundai recently acquired General Motors’ Talegaon plant, which will expand its production capacity from 8.1 lakh units to 10.7 lakh units by FY29. The ₹32,500 crore investment required for this expansion will be funded entirely from internal accruals, underscoring the company’s financial strength.

4. Electric Vehicle Push and Future-Readiness
Hyundai is aggressively preparing for the transition to electric vehicles (EVs). It already has the Kona Electric on the market and plans to launch the Ioniq 5 soon. Hyundai aims to roll out six EV models by 2028 and is investing ₹4,000 crore in manufacturing and infrastructure to support this transition. This focus on future mobility solutions positions Hyundai as a frontrunner in the evolving EV landscape, giving it a competitive edge over peers like Maruti Suzuki, which has been slower to embrace the shift to electric.

5. Valuation and Attractive Pricing
At the upper price band, the IPO is valued at 19.3x FY27E P/E, which we believe is reasonable given Hyundai’s earnings potential. Additionally, the IPO is priced at a 12% discount to Maruti Suzuki’s trailing FY24 P/E, indicating that the company has left value on the table for investors. This makes Hyundai’s IPO not only an attractive long-term bet but also competitively priced compared to industry peers.

Risks to Consider
Supply Chain Dependence:
Hyundai imports about 20% of its cost of goods sold, mainly semiconductor components. Any disruption in global supply chains could impact production and profitability. However, the Indian government’s push for domestic semiconductor manufacturing may reduce this risk over time.

Rising Competition:
Hyundai faces intensifying competition in the SUV and EV segments from new players like Kia and MG Motors, which could put pressure on its market share and pricing power.

Royalty Payments:
Hyundai pays 3.5% of its sales as royalty to its parent company in South Korea. An increase in royalty payments could negatively impact margins.

Conclusion: A Compelling Long-Term Investment
Hyundai Motor India’s IPO presents a solid investment opportunity, backed by its strong market positioning, leadership in SUVs, and aggressive push into EVs. The company’s operational efficiency, combined with a diverse product portfolio and export strength, ensures a stable and scalable business model.

While the size of the IPO may limit listing gains, Hyundai’s growth prospects, competitive pricing, and strategic capacity expansion make it an attractive bet for long-term investors. Investors looking to ride India’s automotive growth story, particularly in high-margin SUVs and EVs, will find Hyundai well-positioned to capitalize on future opportunities.

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Hyundai Q3 FY2025 Sees 19% Profit Drop Amid Lower Sales and Rising Costs

Business, Equities, Market News, Markets - October 14, 2024

Hyundai and Kia Set to Surpass 100,000 EV Sales; Hyundai Targets India for Future Growth

Hyundai Motor Co. and its affiliate Kia Corp. are on course to sell more than 100,000 electric vehicles (EVs) by the end of October 2024, according to data released on October 13, 2024, reported by Yonhap News Agency. This surge highlights the two South Korean automakers’ increasing focus on electrification, especially as they plan further expansion into emerging EV markets such as India.

From January to September, Hyundai and Kia sold a combined total of 91,348 EV units, representing a robust 30.3% year-on-year growth. Hyundai’s EV sales grew by 4.5%, with 48,297 units sold during the period, while Kia saw an exceptional 80.3% surge, delivering 43,051 units. Market analysts anticipate that their joint EV sales will exceed 100,000 units by the end of October and could touch 120,000 units by the end of 2024.

Hyundai Targets India with Creta EV and a Broader EV Roadmap
Hyundai Motor India recently announced plans to bolster its EV lineup, signaling its intent to tap into the growing demand for electric vehicles in India. At a roadshow event on October 9 ahead of the company’s initial public offering (IPO), Managing Director Unsoo Kim highlighted the company’s focus on mass and premium segments. As part of this strategy, Hyundai will launch the electric version of its best-selling Creta SUV in the final quarter of the fiscal year, alongside plans to roll out four additional EV models over the next few years.

“India’s EV market is still in the early stages of development, but we anticipate strong growth by 2030,” Kim stated. He also underscored Hyundai’s commitment to developing localized supply chains for essential EV components, such as battery packs, powertrains, and battery cells. The company is also investing in expanding India’s EV charging infrastructure to support future growth.

Hyundai’s Chief Operating Officer Tarun Garg reiterated the company’s ambitious roadmap for EVs. “The launch of the Creta EV will be followed by three additional models, which will help accelerate our EV sales in India,” Garg said. This strategic push aligns with Hyundai’s efforts to position itself as a leader in India’s evolving EV market, focusing on both affordability and premium features.

Balancing EVs with a Diversified Powertrain Portfolio
While Hyundai and Kia continue to ramp up their EV sales, Hyundai remains committed to maintaining a diversified product portfolio that includes hybrids and other alternative fuel vehicles. “We have access to advanced technologies across the spectrum—from petrol, diesel, and CNG to hybrids, plug-in hybrids, and even hydrogen-powered vehicles,” Kim noted. “This gives us a competitive advantage to meet varied customer demands in different markets, including India.”

Hyundai has maintained leadership in India’s hybrid vehicle segment since 1998, and the company aims to leverage this experience as it transitions into the EV space. By pursuing a dual strategy of promoting EVs and hybrids, Hyundai intends to address challenges like range anxiety and limited charging infrastructure that are prevalent in India today.

Conclusion
The combined efforts of Hyundai and Kia in ramping up EV sales globally, coupled with Hyundai’s focus on expanding its electric lineup in India, reflect the automakers’ strategic pivot towards electrification. With localized supply chains, new product launches like the Creta EV, and investments in infrastructure, Hyundai aims to capitalize on the growth potential of India’s nascent EV market. As the automotive landscape continues to evolve, Hyundai’s diversified approach with hybrids and EVs positions the company to cater to a wide range of consumers and maintain a competitive edge in both domestic and international markets.

This aggressive push by Hyundai and Kia showcases their commitment to becoming key players in the global EV transition, setting the stage for significant market share gains as consumer preferences shift toward greener mobility solutions.

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Walmart’s Indian Bet: E-commerce and Sourcing Power Next Wave of Global Growth

Business, Equities, Market News, Markets - October 14, 2024

Festive Ecommerce Sales Surge to $6.5 Billion in One Week, Mobile Phones Lead Demand

India’s online marketplaces achieved record sales of $6.5 billion (approximately ₹55,000 crore) within just one week of festive sales starting September 26, marking a 26% year-on-year increase. This robust performance, primarily driven by mobile phones, electronics, and consumer durables, underscores the evolving consumer behavior toward higher-priced products with equated monthly installment (EMI) options playing a crucial role.

Record Sales and Early Trends
The week-long festive period accounted for 55% of the expected total sales during the entire festive season, with the Gross Merchandise Value (GMV) forecast to reach $12 billion this year, up from $9.7 billion in 2023, according to Datum Intelligence. Flipkart’s Big Billion Days and Amazon’s Great Indian Festival began with early access for premium subscribers on September 26, contributing to the initial surge in purchases. Meesho, a rising player in the ecommerce space, reported a 40% year-on-year jump in orders, with 45% of its demand coming from smaller towns (tier-IV cities and beyond).

Vidit Aatrey, cofounder and CEO of Meesho, highlighted that the demand was “front-loaded” this year as customers planned their purchases early to ensure timely deliveries before the festival season. Flipkart also emphasized strong demand across both metros and smaller towns, with customers from cities such as Medinipur, Hisar, and Bankura actively participating in the sale.

Consumer Shift to Premium Products
The ecommerce boom reflects a shift in consumer behavior towards high-value goods, with the average selling price (ASP) of purchases increasing. Premium smartphones like the iPhone 13, OnePlus models, and Samsung S23 Ultra were among the best-sellers. According to Amazon India’s director of consumer electronics, Ranjit Babu, the premium segment, especially items priced over ₹30,000, witnessed a 30% year-over-year growth. Notably, nearly 75% of orders for premium electronics came from smaller towns beyond tier-II cities, indicating the widening reach of ecommerce platforms.

In addition to electronics, categories like kitchenware, healthy snacks, home decor, and travel accessories saw rapid growth. Unicommerce, a software firm serving ecommerce businesses, reported a 100% rise in orders for these categories during the Navratri period. This expanding category mix demonstrates consumers exploring beyond traditional festive purchases, such as ethnic clothing and gift items.

Challenges and Supply Constraints
Despite the sales boom, supply chain issues emerged as a significant challenge. Brands have struggled to keep up with higher-than-expected demand, risking stockouts. Ahana Gautam, founder of health-snack brand Open Secret, noted that her team’s focus has shifted to managing supply. “Our biggest challenge isn’t demand but ensuring we don’t run out of stock,” Gautam said. Open Secret reported 50-200% growth across different product categories this festive season, driven by snack boxes and gifting products.

Role of EMI Payments and Discounts
EMI options and festive offers have played a key role in driving consumer purchases, particularly in higher-value categories like smartphones, TVs, laptops, and home appliances. More than 50% of buyers in these categories opted for EMI, making large purchases more affordable. Analysts noted that while the first week’s sales were brisk, consumer interest typically shifts towards lower-priced goods during the latter part of the festive season.

Satish Meena, adviser at Datum Intelligence, anticipates a second wave of strong demand between Dussehra and Diwali. “The sales momentum started fast, and we expect another uptick as customers return for lower ASP products during the next phase,” Meena explained.

Outlook
The 2024 festive season showcases the growing penetration of ecommerce into smaller towns, where consumers are increasingly purchasing premium products. With logistics and supply management becoming crucial factors, ecommerce players need to stay agile to meet consumer expectations. Brands and platforms are also leveraging early sales windows to capture demand ahead of the key festivals. As festive shopping patterns evolve, the competition to provide seamless delivery, flexible payment options, and a diverse product range will continue to shape the ecommerce landscape in the months ahead.

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Sensex Jumps 450 Points Amid Renewed US-China Trade Hopes and Strong Sectoral Buying

Business, Equities, Market News, Markets - October 11, 2024

RBI Shifts to Neutral Stance: What This Means for Indian Equities

This week, the Reserve Bank of India (RBI) took a significant step in adjusting its monetary policy. After holding interest rates steady at elevated levels for 20 months and maintaining its stance of “withdrawal of accommodation,” the latest Monetary Policy Committee (MPC) meeting has shifted the stance to “neutral.” This signals a potential change in the central bank’s future approach, hinting at possible rate cuts on the horizon.

Factors Behind the Shift
The RBI retained its FY25 forecasts for GDP and CPI inflation at 7.2% and 4.5%, respectively. However, the GDP estimate for the September quarter was slightly reduced from 7.2% to 7%, while subsequent quarters are projected to see better performance. CPI inflation for Q2 is also expected to come in at 4.1%, lower than the previously estimated 4.4%.

This slight reduction in growth and inflation estimates reflects the economy’s softer-than-expected performance. High-frequency indicators such as passenger vehicle sales and the manufacturing Purchasing Managers’ Index (PMI) also hint at a slowdown. As a result, the RBI deemed it appropriate to shift its stance to “neutral,” preparing for future rate cuts that could support growth in line with revised projections.

Despite this shift, the RBI has kept its policy rate unchanged, emphasizing its commitment to bringing inflation down to 4%. The central bank cited risks from weather disruptions, geopolitical tensions, and global inflationary pressures, keeping them cautious.

This change follows the U.S. Federal Reserve’s recent rate cut, underscoring the importance of maintaining attractive yield spreads between Indian and U.S. treasuries, which influences foreign investor behavior.

Implications for Indian Equities
A shift to a neutral stance lays the groundwork for the RBI to initiate rate cuts, likely before the end of the year. Lower rates should theoretically boost borrowing and spending, fueling economic growth and potentially lifting the stock market. However, in practice, rate cuts are often accompanied by stock market corrections, due to delayed transmission effects and liquidity constraints.

Globally, rapid rate hikes by central banks, including the U.S. Fed and RBI, have led to a narrowing of yield spreads between U.S. and Indian bonds. This resulted in foreign institutional investor (FII) outflows from Indian equities, totaling over Rs. 4 lakh crore. Although the U.S. Fed’s rate cut temporarily widened yield spreads, an RBI rate cut might halt this trend and encourage further FII outflows, especially as China’s economic stimulus continues to divert investment away from India.

What Should Investors Do?
Despite significant FII outflows, Indian equities have shown resilience, largely due to strong domestic institutional investor (DII) support. DIIs have injected nearly Rs. 8 lakh crore into the market, pushing indices to record highs. Behind this are retail investors, whose enthusiasm for stock markets has risen recently, often at market highs. The key question is whether these investors will stay invested through market corrections.

India’s long-term growth prospects remain solid, and any short-term market dips could present opportunities for investors to buy into fundamentally strong companies at more favorable valuations. While near-term volatility might persist, the broader outlook for Indian equities remains positive.

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Godfrey Phillips India Outshines Peers Amid Sector-Wide FMCG Upswing

Business, Equities, Market News, Markets - October 11, 2024

Mixed Signals from FMCG Companies as Costs, Weather, and Channel Disruption Weigh In

Quick commerce is experiencing a boom as convenience and rapid delivery redefine consumer expectations, with many companies aggressively expanding their dark store networks. However, the FMCG (fast-moving consumer goods) sector, a key supplier to these platforms, seems to be facing headwinds. Early trading updates for the September quarter show a mixed performance across the sector, highlighting challenges such as fluctuating raw material prices, adverse weather conditions, and disruptions in traditional distribution channels. These negative forces appear to be tempering positive trends like recovering rural demand and easing consumer inflation.

Godrej Consumer Products: Caution on Margins
Godrej Consumer Products Ltd (GCPL), a major player in home and personal care, recently provided an update on its outlook. While the company reiterated its FY25 guidance of high single-digit volume growth in India and Indonesia and mid-teens EBITDA growth, it also flagged some immediate challenges. Higher palm oil prices and increasing competition are expected to put pressure on margins in the September quarter.

Malaysian benchmark palm oil prices have risen nearly 20% since January, with a spike in the past month. Although GCPL has taken a cautious approach to passing on these cost increases to consumers, the company is investing in brand development to safeguard market share and drive volume growth. As a result, margins are expected to remain flat for now. This margin strain is further compounded by competition in the personal care segment, which necessitates gradual price hikes to maintain competitiveness.

Rising Crude Prices Add to the Cost Pressure
Crude oil prices have also added to the cost burden for FMCG companies. Earlier in the quarter, Brent crude prices fell to around $70 per barrel, providing hope for some cost relief. However, geopolitical tensions pushed prices back to approximately $80 per barrel. This reversal is reducing the anticipated margin improvements that many companies were counting on.

Godrej, like other FMCG firms, will have to navigate these unpredictable cost structures while maintaining competitiveness. Companies that use petroleum-based products, such as packaging and certain personal care items, are particularly exposed to these fluctuations, making it harder to pass on cost increases to consumers in a competitive market.

Dabur’s Weather and Channel Challenges
Dabur, another significant player in the FMCG space, recently provided a less optimistic update. The company faced a dual setback: weather-related disruptions and channel-specific challenges. Heavy rains during the quarter hurt out-of-home consumption, negatively impacting its beverages business. Additionally, Dabur encountered channel disruption as consumer demand shifted towards organized retail and e-commerce, leaving traditional kirana stores and chemists with excess inventory. As a result, Dabur has been forced to take back unsold stock from distributors, a rare event that will weigh on sales growth and margins for the quarter.

While this disruption may be temporary, it highlights the broader shift in consumer behavior toward online and organized retail channels. As quick commerce gains momentum, traditional retail channels could face similar challenges, creating inventory imbalances and distribution inefficiencies for FMCG companies reliant on these outlets.

Marico: Rural Growth vs. Rising Costs
Marico has delivered a relatively positive sales outlook, driven by stronger growth in rural markets compared to urban areas. However, like its peers, the company is grappling with rising input costs. The combination of higher vegetable oil prices, increased import duties on cooking oils, and competitive pressures is likely to compress Marico’s operating margins. Although sales growth is robust, margin pressures mean that operating profit growth may lag, a concern that investors will closely monitor in the upcoming quarterly results.

The Bigger Picture: Challenges for FMCG Giants
While companies like Hindustan Unilever, ITC, and Nestlé India do not typically provide quarterly guidance, they are likely facing similar pressures. These companies, with their diverse product portfolios, may be better positioned to offset margin challenges in some categories with strength in others. For example, ITC’s cigarette business remains relatively immune to raw material price volatility and was unaffected by tax changes in the recent budget, offering the company some protection from the broader sector’s challenges.

Investor Caution Building
The challenges facing the FMCG sector are already being reflected in market sentiment. Since reaching a peak in late September, the BSE FMCG Index has fallen by 6.2%, indicating growing investor caution about the sector’s near-term prospects. While the long-term fundamentals of the FMCG industry remain strong, the next few quarters may see uneven performance as companies navigate rising costs, weather disruptions, and shifts in distribution channels.

In conclusion, FMCG companies are walking a fine line between managing input cost pressures, adjusting to channel disruptions, and maintaining market share. Investors will be keen to see how management teams across the sector tackle these challenges in their upcoming quarterly results.

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Author Archives: Vikas Solanki

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