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Titan Company Rides High on Gold: Quarterly Revenue Soars Amid Price Surge
Equities, Markets, Research, Result Updates - February 14, 2025

PC Jewellers recorded a strong net profit of Rs. 148 Cr in 3QFY25 mainly driven by strong festive demand

PC Jewellers recorded a strong net profit of Rs. 148 Cr in 3QFY25 mainly driven by strong festive demand

About the Stock

PC Jeweller Ltd. is involved in the operations of manufacturing, sale and trading of diamond studded jewellery, gold jewellery, and silver articles. It is one of the important jewellery firms in the Indian organised jewellery retail sector.

It offers a diverse range of diamond, silver, and gold jewellery for various occasions like wedding, party and casual wear as well. It has several famous jewellery collections- Bandhan, Anant, The Fluttering Beauty, Animal Collection, Dashavatar, Amour, Folia Amoris, Hand Mangalsutra, Wedding Collection, Men’s Collection, and many more

The company had its own in-housing manufacturing and designing facility. It has around four manufacturing units located in Noida, Uttar Pradesh. 

The company has three wholly-owned subsidiaries- PCJ Gems & Jewellery Limited, Luxury Products Trendsetter Private Limited, and PC Jeweller Global DMCC.

In the third quarter of the financial year 2025, the company had around 55 showrooms (consisting of 3 franchisee showrooms) in around 41 cities in 15 states of India. In this quarter, the company’s showrooms at Allahabad and Preet Vihar were closed. The company is currently operating in the domestic market only. 

 

Quarterly Update

1.In the third quarter of the financial year 2025, PC Jewellers recorded a robust growth of about 1496 percent in the revenue which accounts to Rs. 639 crore compared to the its revenue growth of Rs. 40 crore in the same quarter of the previous financial year.  The company recorded a turning point from being in loss to profit in the third quarter of the current financial year.

2.In the third quarter of the financial year 2025, the company recorded a surged in total expenses to Rs. 535 crore from earlier total expenses of Rs. 244 crore in the same quarter of the previous financial year which accounts to about 199 percent. It is because of hike in cost of materials consumed and the increase in rise in the purchase of stock.

3.The company recorded growth in EBITDA (including other income) by about 323 percent YoY in 3QFY25 which accounts to Rs. 155 crore compared to loss of Rs. 69 crore in the same quarter of FY24.

4.The company also registered a strong growth in its PAT by about Rs. 146 crore compared to its loss of Rs. 200 crore in the same quarter of the previous financial year. The company recorded a consolidated net profit of Rs. 148 crore.

 

Commentary

1.In the previous  financial year 2024, the company was record loss. The company was facing the debt and financial issues.  In the current financial year, the company has started to record profit. It has taken measures like one-time settlement with the bank and preferential issuance of fully convertible warrants to investors in the current financial year.

2.The company recorded strong growth in terms of revenue due to rise in consumption demand by consumers. The reason for the strong growth is mainly driven by festive and wedding season. It led to the hike in the consumer demand levels. This revenue growth is based completely on its sales at domestic level. 

3. The rise in total expenses in terms of purchases of stock and cost of material consumed indicates company trying to match up with the robust consumption demand driven by festive and wedding season, along with elevated gold prices.

Years (In Cr) Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Revenue 639 40 1495% 505 26%
COGS 505 96 428% 404 25%
Gross profit 134 -56 340% 101 32%
Gross Margin% 20.94% -139.03% 115% 20.03% 5%
Employee cost 7 7 0% 5 30%
Other expenses 17 11 59% 10 62%
Total OpEx 24 17 36% 16 51%
EBITDA 110 -73 251% 86 29%
EBITDA Margin% 17.24% -182.35% 109% 16.95% 2%
Depreciation 5 5 4% 4 17%
EBIT 105 -78 236% 81 29%
EBIT Margin% 16.48% -193.93% 108% 16.13% 2%
Interest cost 3 126 -98% 2 91%
Other income 44 4 1133% 44 1%
PBT 146 -200 173% 124 18%
Tax expenses 0.08 0 -55 -100%
Tax Rate% 0% 0% -11% -100%
PAT 146 -200 173% 179 -18%
PAT Margin% 22.89% -500.12% 105% 35.44% -35%
EPS 0.27 -0.43 163% 0.38 -30%

 

Con Call Highlights

1.The company recorded a rise in its domestic sales by Rs. 639 crore in the third quarter of the financial year 2025. It is mainly driven by a hike in consumer demand due to the wedding and festive season leading to an increase in consumption and customer traffic for the company and the sector.

2.In the first three quarters of the financial year 2025, the company was successful in recording a PBT of Rs. 353 crore compared to its loss of Rs. 525 crore in the previous first three quarters of the financial year 2024. It indicates remarkable progress for the company.

3.To address the issue of debt burden and bring financial stability in the company, the company took the approach of offering to subscribe and issuance of warrants.

4.On 30th of September, 2024, PC Jewellers completed its one-settlement agreement with its consortium banks. In the period of third quarter, the company paid its payment as per the decided timeframe in the Settlement Agreement.

5.On 11th October, 2024, the company executed its issuance of warrants of Rs. 2,702.11 crore which received a subscription of about 99.89 percent. In the third quarter, the company allotted about 118,41,30,520 equity shares by converting its warrants. The company executed this conversion after getting 75 percent  of the issue price from its investors. The company recorded a strong support by investors for the preferential issuance of fully convertible warrants due to the decision of the Union Budget to change import duty on gold to 6 percent from earlier 15 percent.

6.In the period of the third quarter of FY25, the company declared its first-ever stock split with the ratio of 1:10. It resulted in change in face value Rs. 10 to Rs. 1.

7.The company’s efforts to increase its brand presence and expansion in marketing is reflected in its performance of 9 months of the financial year 2025.

8.The company now has 55 showrooms (consists of 3 franchisee showrooms) in 41 cities in about 15 states in India.

9. The company is optimistic about its growth in the industry as well as development in business operations in the upcoming quarters. 

 

Valuations

In present times, the stock of PC Jeweller Ltd is trading at multiple of 20.6 x  0.73 EPS at the CMP of Rs. 13.7. In book terms, trading  2.14x than its book value of Rs. 6.35.  As of today, the ROCE and ROE of the company is at -1.74 percent and -19.0 percent, respectively. The company recorded a net profit of Rs. 146 core in the third quarter of FY25 due to strong consumption demand driven by festive and wedding season.

 

Investment Rationale

India is known for its high jewellery consumption levels. India consumes about 850 to 900 tonnes of gold on yearly basis. In the period of April to December of the year 2024, India recorded expansion in import levels of gold jewellery to around 87.4 percent higher in relation to its import levels in the previous financial year of the same period. These imported gold jewellery prominently includes rings, chains, and earrings. 

India’s Gem and Jewellery  sector plays a crucial role in the progress of the Indian economy. The reason for this is that this industry is considered as one of the biggest exporters of India in the world.  It also plays a major role in creating jobs for artisans.  One of the issues in this industry is the proportion of unorganized jewellers is higher than organized segments. In the FY 2023, the organized retail jewellery segment comprised around 37 percent of jewellers at both regional and national level. There is a positive projection of rise in market size of the Indian jewellery retail industry to 145 billion US dollar  by the financial year 2028.

In the Union Budget 2025, the jewellery companies got the relief as the budget announced reduction in tariff duties to jewellery  by  20 percent. It was earlier 25 percent. It resulted in a rally of many jewellery companies to about 9 percent. Apart from this, the budget announced lowering duties on platinum metal by about 5 percent which was earlier 25 percent. It also IGCR conditions imposed on Lab Grown Diamond (LGD) leading  to becoming duty-free product. The objective of these measures is to contract the cost and to raise the demand in the market. It is also anticipated to promote the luxury jewellery segment.

Budget 2025 announcement of tax relief for income up to Rs. 12.75 lakhs is expected to aid in increasing demand in the jewellery industry and also rise in job levels in the sector. In the first 9 months of the current financial year , domestic jewellery companies recorded a rise in consumption due to hike in gold prices,  high number of auspicious days and wedding days,  and consumers moving towards branded jewellery. 

In the current financial year, the company has started to record profit after a long period of loss. The company is now focused on increasing its market presence in India. It is expected to continue to get benefitted with the expansion in consumption demand of the consumers. 

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HDFC bank Q3FY25: Loan growth decline, NIMs margin stable

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HDFC Bank Cuts FD and Savings Rates!
Equities, Markets, Research, Result Updates - February 11, 2025

HDFC bank Q3FY25: Loan growth decline, NIMs margin stable

HDFC bank Q3FY25: Loan growth decline, NIMs margin stable

About the Stock

HDFC Bank Limited is recognized as the biggest private sector bank in India in terms of assets value. The market capitalization of the bank is around Rs. 13,17,354 crore. On the basis of its large market capitalization , it is considered as the third biggest company on the Indian stock market. 

The company is active in various segments of banking which includes retail banking, wholesale banking, and rural banking. The bank has five major subsidiaries- HDFC Asset Management Company Limited (HDFC AMC), HDB Financial Services Limited, HDFC ERGO General Insurance Company Limited, HDFC Life Insurance Company Limited, and HDFC Securities Limited. 

Quarterly Update

1.Growth in net income and net profit- In the third quarter of the current financial year, the company recorded a growth of 7.7 percent YoY in net interest income which accounts to around Rs. 30,653.25 crore. HDFC also recorded a rise in PAT by 2.2 percent YoY which accounts to Rs. 16,735.5 crore. In terms of quarter-on-quarter basis, the rise in net income was about 1.8 percent. The provisions for NPAs fell to about 25 percent leading to a rise in net profit on a year-on-year basis.

  1. Robust growth in deposit ratio and slowdown in loan growth- HDFC recorded a strong  growth in its average deposit to around 15 percent YoY compared to moderate growth of gross advances by only 3 percent. It is faster than the credit growth of the bank. It acts as an aid for the bank in achieving the goal of stable credit-deposit ratio. Currently, the AUM advances growth of 7.6 percent YoY. 
  2. Slowdown in CASA- The company recorded weak CASA of only 1.1 percent QoQ growth in the third quarter of FY25. Consumers are opting more for time deposits due to economic uncertainties and high interest rates. The average time deposits surged by 22.7 percent in the third quarter.
  3. Stable Net interest Margin- In the third quarter of the financial year 2025, the company recorded a net margin of 3.43 percent compared to 3.46 in the previous quarter of the same financial year. It accounts for marginal decline. 
  4. Marginal increase in GNPA and NPA- The company recorded growth in GNPAs  to about 1.42 percent higher than the 1.36 percent in the previous quarter of the current financial year. Also, the company recorded a net NPA increase of about 0.46 percent compared to its net NPA growth of 0.41 percent in the second quarter of the current financial year. The reason for this is hike in GNPA and NPA is the seasonal slippage.
Years (In Cr) Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest Income 76006.88 70582.61 7.7% 74016.91 2.7%
Interest Expenses 45353.63 42111.27 7.7% 43903.01 3.3%
NII 30653.25 28471.34 7.7% 30113.9 1.8%
Other income 11453.56 11137.04 2.8% 11482.73 -0.3%
Total net income 42106.81 39608.38 6.3% 41596.63 1.2%
Employee Cost 5950.41 5351.76 11.2% 5985.3 -0.6%
Other expenses 11156 10609.32 5.2% 10905.59 2.3%
Tota Opex 17106.41 15961.08 7.2% 16890.89 1.3%
PPOP 25000.4 23647.3 5.7% 24705.74 1.2%
Provision 3153.85 4216.64 -25.2% 2700.56 16.8%
PBT 21846.55 19430.66 12.4% 22005.18 -0.7%
Tax Expenses 5111.05 3058.12 67.1% 5184.31 -1.4%
Tax Rate% 23% 16% 48.6% 24% -0.7%
PAT 16735.5 16372.54 2.2% 16820.87 -0.5%
PAT% 22% 23% -5.1% 23% -3.1%
EPS 21.88 21.40 2.2% 21.99 -0.5%
No. of shares 765 765 765

Commentary

  1. The company recorded contraction in provisions of NPAs to around 25 percent leading to rise in net profit in the third quarter of FY25. The reason for this is wholesale credit segment performing well. Earlier, the contingent provision was set aside for its wholesale account. As it was unutilised due to performing assets in the segment, the company recovered it.
  2. The growth in deposit ratio is mainly driven by rise in retail term deposits rather than CASA ratio. The consumers’ preference towards term deposits was high in the third quarter due to the high interest rate and market condition in the economy. The management is also focused on holistic customer relationships. It believes CASA will gain again when changes in the interest rate take place.
  3. The loan portfolio of HDFC recorded contraction in credit growth by 10.4 percent YoY in corporate and other wholesale segments. While, the growth in credit creation of the commercial and rural banking segment was 11.6 percent. Apart from this, the growth in retail loans was about 10 percent due to cautious steps taken by the company in the midst of growing uncertainties in the economy. The growth in retail credit is mainly driven by growth in retail non-mortgages by about 10.5 percent YoY compared to 9.7 percent YoY in the retail mortgages segment. Overall, it aids in the company’s steps to stabilize its credit-to deposit ratio in the upcoming to 2 to 3 years.  
  4. 4. The growth in NIM margin is stable and fairly in range of its trend in previous consecutive quarters. The reason for this is a cautious approach towards loan growth and focus on deposit growth. It is also due to the shift of consumers towards retail term deposits in the scenario of macroeconomic uncertainty and high interest. This cautious approach of the bank can possibly lead to stable NIMs in the upcoming terms as well. 

Key Concall Highlights of 3QFY25
• HDFC Bank Ltd underlines some of the prevailing macroeconomic conditions such as moderate growth in demand at
urban levels, tightening of liquidity, depreciation of rupee, sluggish growth in private capital investment, and rise in
capital outflows in the midst of growing uncertainties in the world.
• Some positive indications like rise in government expenditure and also expansion in rural demand in the economy is
observed. It resulted in strong growth in service exports and inflation levels are gradually slowing down.
• Robust growth in deposit ratio to about 15 percent mainly driven by retail term deposits. While, slowdown in CASA
ratio and loan growth. It is expected to achieve stability in credit‐to‐deposit ratio in the upcoming 2 to 3 years.
• The employee headcount of the rose again by 2,10,000 in the 3Q compared to its contraction in 2Q of the current
financial year. The company is currently focused on increasing productivity of the employees.
• Addition of more than 1,000 branches YoY in the 3QFY25 and still able to maintain growth in cost at around 7 percent.
It indicates productivity gains for the company.
• Post‐merger of the company, the company manages to open about 1.9 million fresh accounts. It indicates the success
of the merger.
• The company aims to make investment in branches, people and technology. It expects to grow at a similar pace in the upcoming financial year 2026 and higher in the financial year 2027.

Valuations

In present times, the stock of HDFC is trading at multiple of 19.1 x  91.3 EPS at the CMP of Rs. 1,759. In book terms, trading  2.90x than its book value of Rs. 601  As of today, the ROCE and ROE of the company is at 7.67 percent and 17.1 percent, respectively. The company is progressive in terms of its strategy to expand deposit levels and is supported by hike in retail term deposits and moderate loan growth.

Investment Rationale

  • According to the Economic Survey of 2024-2025, the monetary and financial sector in India has recorded a robust performance in the first three quarters of the financial year 2025. Overall, the growth of bank deposits was in double-digit. 
  • According to the recent RBI report,  the banking sector in India recorded profitability for the sixth year in a row in the financial year 2023-24. It is anticipated to record profitability in the current financial year as well.  Also, the GNPAs of the Indian banking sector went down to 2.7 percent which  is the lowest since the last 13 years. It indicates an improvement in the asset quality of the banks 
  • In the first half of the current financial year, Indian banks are recording a continued rise in their Return on Assets and Return on Equity by 1.4 percent and 14.6 percent, respectively.  Apart from this, the scheduled commercial banks in India (including 21 private sector banks and excluding RRBs) recorded growth in their consolidated balance sheet 15.5 percent in the financial year 2023-2024. 
  • In the budget 2025, the decision of tax relief up to Rs. 12.75 lakh income is not only expected to drive consumption in the economy but also increase deposits levels of the banks to more Rs. 40,000 to 45,000 crore. It is anticipated to aid in mitigating liquidity issues of the banking sector.  
  • In terms of growth of HDFC Bank, the growth of the deposit ratio of the company is also increasing like the overall growth of deposit levels of the banking sector. It accounts for 15 percent YOY in the third quarter.  After the company’s merger in the year 2023, the company planned a goal to contract its loan-deposit ratio in the upcoming 2 to 3 years and to bring better financial stability in the company. 
  • Its result in the third quarter of FY25 indicates its progressive steps towards lowering loan-deposit ratio. Currently, the credit to deposit ratio is around 98 percent. The company believes that it will grow in line with the industry growth in the upcoming financial year and higher in the financial year 2027.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Budget 2025: Aims for expansion in consumption demand through tax reforms

Budget 2025: Aims for expansion in consumption demand through tax reforms

With the aim to give relief to the middle class population of India and to also boost consumption and savings in the country, the finance ministry declared tax relief to income upto Rs. 12.75 lakh in the Budget 2025. Consumption is one of the important factors for the growth of the country.

Many reforms were taken into consideration in the current budget which ranges from boost to the agricultural sector, MSMEs, electronics, leather and toy industry. However, the one which gained the most significance was implementation of tax relief reform. It came with the idea to increase the disposable income of the consumer which in turn will expand consumption levels in the economy. This relief is expected to result in a reduction of higher than 100,000 crore of direct tax collection.

Along with reduction in taxes, the government focuses on capital expenditure of about Rs. 11.2 lakh crore for the financial year 2026. It aims to reduce fiscal deficit and bring fiscal consolidation in the economy.

The government aims to take steps for boosting consumption demand in both urban and rural areas.

Elimination of Generation disparity
The tax reforms by raising the limits for both tax collection and tax deduction have resulted in benefits for different generations of the population. It is able to address the demands and needs of different ranges of population. The tax exemption turned out to be good for both landlords and the senior citizen population in the country due to the rise in the tax deductions limit. For instance, the senior citizen can avail benefits from interest income till Rs. 1 lakh , which is present only Rs. 50,000 without tax deductions. It will not only give senior citizen population more money for use but also increase deposit and enhance credit to deposit ratio of Indian banks. In case of landlords, it gives tax exemption rise to 6 lakh compared to current Rs. 2.4 lakh annually. It will boost the rental market in the country, particularly metro cities around India.

It is helpful for parents sending their wards to foreign countries for acquiring education and for travellers also due to the rise in the limit of tax collection. The changes are made in the liberalised remittance scheme as a rise in tax on Rs. 10 lakh which is currently Rs. 7 lakh. In the current budget, tax on education loans are eliminated completely.

Also, more people are expected to opt for the new tax regime which is anticipated to be 63 million for the financial year 2025 and higher in the upcoming financial year 2026.

Impact of the tax relief
High disposable incomes encourage the purchasing power of the consumers in the economy. Its benefits to the population is better accessibility to expensive healthcare facilities and education, and also to essential commodities.

It will promote growth of major sectors like Hospitality, Auto, Travel and Leisure, FMCG and Automobile. It will also bring growth in the BFSI sectors in terms of credit creation and credit cards.

The staple firms are considered to mostly get the advantage of the expansion in disposable income. The reason for this is people shift towards purchasing important commodities. Along with this, consumer segments like liquor, quick service restaurants (QSR) and innerwear anticipated to observe a rise in consumption demand. The most significant one was relief to cigarette manufacturers due to no hike in taxation rates.

Challenges in the economy
The rise in disposable income can lead to change in the historical trend of tax-saving schemes. The current reform can certainly create a hike in consumption levels but it can also affect the growth of the economy in the long-run. The historical trend of NPS has indicated that it not only helps a person but also enhances the benefits of the nation.

Even though the reason behind taxation relaxation is to raise consumption level, the questions arise of whether consumers would really spend their incomes. In the scenario of tax cuts, the capex plan of the government slightly increased to about Rs. 11.2 lakh crore compared to previous capex of Rs. 11.1 lakh crore. It indicates restricted growth in capital goods and infrastructure sectors of India. Consumer-driven sectors is likely to earn more than infrastucture and capital goods sector. Reduction in capex does not promote growth in the economy like increase in capex does. Thus, reduction in capex is a more crucial subject for the economy than the relaxation of taxes for the population.

Impact on the market
In the trading session of the 2nd February, the consumption-driven stocks observed a surge in the market. Many investors believe that the rise in disposable income will lead to a hike in consumption level in consumer products, electronics, cars and other non-essential products.

In the market, Nifty Auto index and Nifty Realty index surged to 1.9 percent and 3.4 percent, respectively. Also, both the Consumer Durables index and FMCG index recorded a rise of around three percent. In contrast to this, the benchmark Nifty recorded a fall by 0.1 percent in the market.

In terms of stocks of the companies, the expansion in the stocks of Zomato and Dmart by 6.7 percent and 8.7 percent, respectively. Also, companies like Tata consumer, ITC, Bajaj Auto, Maruti Suzuki, and Eicher Motors recorded a rise in the market in the range of 3 percent to 5 percent.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Budget 2025: Aims to expand domestic production in electronics industry with help of tariffs relief

Budget 2025: Aims to expand domestic production in electronics industry with help of tariffs relief

Budget 2025 emphasizes on boosting the progress of the electronics industry in India at global level. The Indian Ministry of Electronics and Information Technology is given more than Rs. 26,000 crore of fund allocation which is about 48 percent of growth in fund allocations. It aims to expand production of electronics and semiconductors in India. The government of India announced relief in import duties on some of the important components used for producing smart LED TVs, mobile phones, and other electronic gadgets. To become an international manufacturing hub in the world, India sets up the goal of growth of 500 billion dollars in Indian electronics manufacturing over the year 2030.

Performance of Electronics Industry in India
The Economic Survey of India for the financial year 2024-2025 states that the Indian electronics market shares in the international market is only 4 percent. The Indian electronics market majorly concentrates on assembly. It has made only small developments in component manufacturing and designing.

Despite this, the electronics industry in India was able to make significant progress in reduction of imports, and expansion of exports and domestic production in the country. In the previous 10 years, it was able to increase domestic production to about Rs. 9.52 lakh crore in the financial year 2024 which is an upward trend from the earlier domestic production of Rs. 1.90 lakh crore in the financial year 2015. Apart from this, India has successfully limited its reliance on other countries for smartphones by achieving around 99 percent of production at domestic level.

The main reasons for this strong growth is availability of skilled workforce, cost of labour is low, and also existence of a big market at domestic level. Along with this, the number of incentives, Production linked incentive (PLI), easing of business activities, development of infrastructure, and projects like Digital India and Make in India have helped in encouraging foreign investment and spurring growth in manufacturing at domestic level.

Measures taken by Budget 2025
The budget 2025 pointed out reforms in tariffs for some important electronics materials and components. Its aim is to make India’s electronics industry cost structure effective and efficient in the market. It will result in encouraging domestic production, expansion in investment and more use of materials and components which are produced in the Indian markets only.

Measures taken to promote domestic manufacturing of mobile phones
To encourage manufacturing of mobile phones in India, the actions taken by government of India is to eliminate earlier basic customs duty (BCD) which accounts to 2.5 percent on components used for making mobile phones such as wired headsets, fingerprint reader and scanners, printed circuit board assembly (PCBA), USB cables, camera modules, microphones, and connectors. Now these components are duty-free. It will lead to lower prices of the mobile phones supported by measures taken by the government to increase disposable income of the people.

Apart from this, open cells which are crucial for the production of TV panels like LCD and LED are also made duty-free by the Budget 2025. It is anticipated to give advantage to both manufacturers and consumers in the market due to contraction in the cost of production.

Measures taken to boost electric vehicles segment
For the production of electric vehicles and mobile phones, lithium-ion batteries are one of the crucial elements. To make lithium-ion batteries, materials such as scrap of lithium-ion batteries, cobalt power, and some 12 important minerals are used. Finance ministry of India made a public statement of making these materials duty-free. In the list of no duty, the number of capital goods for production of batteries of mobile phones and electric vehicles are added 28 and 35 capital goods more, respectively. It aims to promote manufacturing of batteries at domestic level in order to achieve the goal for becoming a global hub in areas of manufacturing of electric vehicles and mobile phones as well.

Steps taken to address issue of inverted tariff structure
India faced the issue of high custom duties on importing of components used for production which is higher than duties on finished commodities. The Finance ministry took measures to raise custom duty on components such as interactive flat panel displays to around 20 percent, which was earlier 10 percent.

Measures taken to promote semiconductors
The fund allocation in the budget 2025 for promoting display and semiconductors production in India is about Rs. 7,000 crore in the upcoming financial year compared to previous financial years’ allocation of Rs. 3,816.47 crore. It has also increased the allocation of funds twice which accounts to Rs. 2,499.96 crore. The budget has also raised funds to establish facilities for creation of silicon photonics, compound semiconductors, sensor fab, and other equiment related to semiconductors and to estabilish units like OSAT and ATMP. For this purpose, fund allocation was expanded to about 56 percent which accounts to Rs. 3,900 crore in the upcoming financial year compared to Rs. 2,500 crore in the financial year 2025. It will provide support to the semiconductor projects going on in Dholera by TATA and in Sanand by Micron.

Outlook of Electronics Industry in India
In present times, India is considered as the second biggest producer of mobile phones in the world. Companies like Samsung and Apple share in the mobile phones market in India is about 22 percent and 23 percent, respectively.

The programs like national manufacturing mission, contraction in various tariffs on crucial components used for electric vehicles and other electronics goods will lead to expansion in foreign investment, reasonable prices for consumers segment and expansion in domestic productivity of the country.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Interest Payment Burden to reduce in FY26
Equities, Markets - February 1, 2025

Interest Payment Burden to reduce in FY26

Interest Payment Burden to reduce in FY26

Overview
The fact that the central government’s market borrowings result in unproductive interest payments accounting for a significant portion of its revenue has long been a source of criticism. In addition to high interest rates, previous fiscal mismanagement has plagued the exchequer and kept the central government’s interest outflow high.

Interest Payment over the years
In the last ten years, interest payments have made up 25% of all expenses. From 23% in FY20 to 24% in FY25, this load grew gradually. In FY25, interest payments are projected to account for 31% of revenue expenditures, a significant increase from FY20’s 27%.

Despite a dramatic decline in borrowing costs due to the steep decline in bond yields, the interest burden increased during the pandemic years. The primary cause is the increase in the government’s overall borrowing. Reducing gross borrowing has been difficult since it doubled in FY21, the year of the pandemic. Even though the fiscal deficit may decrease, most analysts predict that the total market borrowing for FY25 would stay around Rs 15.51 trillion.

This is due to the fact that market borrowings account for the majority of the government’s deficit funding, with the remainder coming from its different savings plans. Its primary source of funding to close the fiscal shortfall is the bond market. The magnitude of the government’s borrowing may keep interest payments high even though bond yields are predicted to be stable and even decline over the course of the upcoming fiscal year. Additionally, previous borrowings were more expensive, which raises the overall interest expense. Any benefit from FY26’s lower borrowing costs may be slight and primarily available in subsequent fiscal years rather than right away. Keep in mind that long-term bonds are how the government borrows money.

Solutions to managing interest payments
For interest payments to be less than 20%, gradual reduction in market borrowing, which would require the government to strengthen its alternative funding sources would be necessary. The plan would specifically need to improve its small savings schedules. Of course, it may also reduce its expenditures by increasing its efficiency.

Last Financial Year Scenario
According to a senior government source, the federal government’s interest payout is anticipated to increase by 11–12% in the upcoming fiscal year compared to the current fiscal 2024. An estimated Rs 10.80 lakh crore, or roughly 24% of the financial year’s budgeted expenses, was paid out in interest in FY24. Interest payments totaling Rs 6.12 lakh crore made up 22.8% of all expenses in the pre-Covid FY20 period.

Reasons for higher interest payment
The official told ET that although interest payments are expected to increase by 11–12% in the upcoming fiscal year, they are still manageable. A rise in borrowing is indicated by higher interest payments. The official claimed that because COVID shock boosted expenditure pressure, the government’s total debt had swelled.

Additionally, the conflict between Russia and Ukraine and the subsequent surge in global commodity prices caused the Center’s subsidy bill to rise in FY23, avoiding a more severe fiscal correction. The Center estimates that its fiscal deficit will be 5.9% in FY24 and aims to reduce it to 4.5% in FY26. International organizations have called attention to India’s high debt load. The IMF predicted that by FY28, the total debt of India’s states and the central government will reach 100% of GDP in the worst-case scenario and fall to less than 70% in the best-case scenario.

Net Tax Revenue increased
The administration emphasized that the debt was primarily in domestic currency and allayed concerns about the sustainability of the loan. The Center’s net tax revenue is expected to increase by 63.5% over the previous two years, from Rs 14.26 lakh crore in FY20 to Rs 23.31 lakh crore in FY24. According to estimates, its expenses increased by 67.6% from Rs 26.86 lakh crore in FY20 to Rs 45.03 lakh crore in FY24.

Former National Statistical Commission chairman Pronab Sen stated that while the high interest outgo is a problem, it is not yet reason for undue alarm. More crucially, the government needs to drastically increase its Tax-to-GDP ratio. This will deal with the interest load problem. He added that it will also be beneficial if the government reduces its fiscal deficit to the desired 4.5% of GDP by FY26.

For the last ten years, the gross tax-to-GDP ratio has stayed between 9.8% and 11.4%. Global agencies’ worries over India’s debt sustainability, according to Sen, may have been overblown, especially considering that the nation’s external debt only accounts for a small percentage of its total obligations.

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Gold prices registered a high value as investors considers gold as safe investment in midst of uncertainty in tariff policy
Equities, Markets - February 1, 2025

Gold prices registered a high value as investors considers gold as safe investment in midst of uncertainty in tariff policy

Gold prices registered a high value as investors considers gold as safe investment in midst of uncertainty in tariff policy

On 30th January, 2025, the price of gold registered a lifetime high. Even today, the high gold prices indicate a spike up in gold prices for five weeks in a row. The reason for this is growing worries about the uncertainties of the tariff policies under Trump’s regime. This has led to many investors opting for purchasing gold as it is considered as the safe investment in the midst of increasing uncertainty in the economy. Also, investors are anticipating the release of the US inflation report.

Performance of gold
Currently, the price of gold was $2,795.92 and it surged by about 0.1 percent. In a period of one week, the gold prices have surged to about 1 percent. In the previous trading activity, the price of gold was recorded as all-time high and it accounts for $2,799.71.

Reasons for high gold prices
Trump announced that the US would enforce tariffs of about 25 percent on import goods coming from Canda and Mexico. In the current scenario of growing economic uncertainty and geopolitical tension, investment in gold is considered as the safest option for investors. Also, the performance of gold is quite good in conditions of low interest rates in the economy.

In case of low inflation levels in the US inflation report will lead to higher possibility of reduction in interest rate by the Federal Reserve. This contraction in interest rate will certainly help in making gold attractive for investors.

The report of the US personal consumption expenditures is yet to be released. The data of this report will help to find any possible changes in the interest rate in the upcoming terms. The head of Federal Reserve, Jerome Powell states that change in interest rate will depend on reports of employment and inflation level in the economy. At this point of time, the interest will remain the same.

Following November, 2024, around 12.9 million troy ounces of gold was transferred to commodity exchange storage facilities. It led to a surge in the amount of gold in the storage facility to about 73.5 percent which accounts for 30.4 million ounces. It is the largest amount after the month of July 2022. In case of implementation of suggested tariffs then the prices of gold will continue to rise and lead to a new of about 2,800 dollars.

The Central Bank of Europe reduced the lending cost by around 25 basis points. It also indicates future interest rate cuts in the upcoming terms.

Performance of other commodities
The current price of one ounce of silver and palladium is around $31.54 and $987.10, respectively. The price of silver rose by about 0.4 percent. In contrast to this, there was a contraction of the price of palladium by around 0.2 percent. The price of platinum expands to $967.80 per ounce which accounts to rise by 0.1 percent. The prices of commodities such as platinum and silver are anticipated to surge in the weekly gains. Contrary to this, the price of palladium is anticipated to decline.

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Maruti Suzuki sets the target of regaining 50 percent auto market share in India
Autos, Equities, Markets, Research, Result Updates - January 30, 2025

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Company Name: Maruti Suzuki India Ltd | NSE Code: MARUTI | BSE Code: 532500 | 52 Week high/low: 13,680 / 10,204 | CMP: INR 12,000 | Mcap: INR 3,77,433 Cr | P/E- 25

About the stock
➡️Maruti Suzuki India Ltd. is the largest passenger vehicle manufacturer in India, holding a dominant market share of over 40%. The company, a subsidiary of Suzuki Motor Corporation (Japan), offers a diverse portfolio ranging from entry-level hatchbacks to premium SUVs.

➡️It has a strong distribution network with over 4,000 touchpoints across the country. Maruti is also expanding into green mobility, with a growing focus on EVs, hybrids, and CNG models. The company has a significant export presence, catering to markets in Africa, Latin America, and the Middle East.

Strong Revenue Growth Led by Record Exports
➡️Maruti Suzuki delivered an in-line performance for Q3FY25, reporting net sales of ₹35,535 crore, up 15.7% YoY, driven by higher volumes (+13% YoY) and better realisation (+2.4% YoY). The company achieved its highest-ever exports in a quarter, with volumes rising 38% YoY, primarily supported by strong demand in Africa, Latin America, and the Middle East.

➡️Domestic sales increased by 9% YoY, aided by festive demand and growing preference for premium models. Despite these positives, realisation declined sequentially, reflecting a higher mix of entry-level models and discounting measures.

EBITDA Margin Under Pressure Due to Higher Costs
➡️Despite strong revenue growth, EBITDA declined to ₹3,890 crore, with the EBITDA margin contracting by 15 bps YoY to 11.3%, impacted by higher raw material and staff costs. However, raw material costs eased sequentially by 33 bps, offering some margin support.

➡️The average discount per car increased to ₹30,999, compared to ₹29,300 in the previous quarter, highlighting the need for promotional efforts to sustain sales momentum in the entry-level segment.

Demand Outlook: Strength in Premium Segment, Weakness in Entry-Level Cars
➡️The demand outlook remains favorable, particularly in rural markets where demand growth is outpacing urban regions. However, the entry-level segment continues to face softness, which may limit domestic volume expansion and necessitate higher sales promotions and discounts. The premium segment, particularly utility vehicles (UVs) and mid-size models, saw strong traction, contributing 20% and 17.6% to total domestic sales, respectively. This aligns with broader industry trends, where SUVs and high-end vehicles are gaining share.

Expanding EV & Green Vehicle Portfolio
➡️Maruti Suzuki has officially entered the EV market with the launch of E-Vitara, which will be manufactured exclusively by the company and exported to over 100 countries. Alongside its EV push, the company remains bullish on CNG vehicles, which now contribute one out of every three vehicles sold, reflecting a clear shift towards green mobility solutions.

Valuation and key metrics
➡️Maruti Suzuki is currently trading at 25x FY26 earnings, which is at a premium to Hyundai (22.2x) but justified by its market leadership, strong export growth, and expanding premium portfolio. The company’s return profile remains healthy, with a Return on Equity (ROE) of 13.8% and a Return on Capital Employed (ROCE) of 17.2% for the trailing twelve months (TTM). Additionally, its interest coverage ratio stands at 87.5x, indicating a strong balance sheet with minimal leverage concerns.

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RBI concerns over Small Finance Banks
Banking, Equities, Markets - January 30, 2025

RBI concerns over Small Finance Banks

RBI concerns over Small Finance Banks

Overview
It has been reported that the Reserve Bank of India (RBI) has become uneasy about a few small financing banks (SFBs) because of increased asset quality stress and excessive concentration risks.

According to three executives monitoring the industry, the banking regulator has also instructed these banks to look into mergers in order to increase their size and reduce the risks of concentration. According to one of the individuals, the RBI has “close supervision” over small finance institutions. Additionally, one solution that has been considered at the regulatory level to alleviate the issues is bank consolidation.

According to another executive, the regulator met with these lenders’ management a few months ago. The supervisory stakeholders were also concerned about gaps in succession planning and corporate governance at several of these SFBs.

NPAs on the rise
Due to the continuous strain in the microfinance industry, which saw the average gross non-performing assets (NPA) increase to an 18-month high of 11.6% at the end of September 2024, small financing institutions with a larger percentage of microloans are in the most difficult position.

Collectively, non-performing assets (NPAs) accounted for 15.3% of these lenders’ total microlending portfolio. Although industry-level data until the end of December is not yet available, quarterly results indicated that the overall sectoral asset quality is probably going to deteriorate.

Concentration Issues remain persistent
Concentration issues affect small financing banks in two ways. First, a lot of people are heavily exposed to the microfinance industry, which has been experiencing a lot of stress. Second, a small number of these banks are highly exposed to areas of greater stress.

According to the CEOs of major firms, these problems might be resolved by combining these banks or by merging with larger organizations that have substantial financial resources. Further, as per a prominent microfinance practitioner, it might make sense for banks that operate in different regions to merge since it would mitigate the concentration risk.

A Standing External Advisory Committee (SEAC) was previously established by the RBI to review applications for Small Finance Banks (SFBs) and Universal Banks. The Reserve Bank of India’s Department of Regulation would provide the committee with secretarial support, the RBI had stated in a release.

Category Risks
Coming to category risks, for example, ESAF Small Finance Bank’s native state of Kerala and its neighboring state of Tamil Nadu account for 57% of its gross advances, with unsecured loans accounting for 56% of the total. In a similar vein, Utkarsh Small Finance Bank has 916 banking locations spread over five states: Uttar Pradesh, Bihar, Jharkhand, Odisha, and Maharashtra. Of these, two-thirds of total loans fall into the category of unsecured microfinance.

That area is the primary focus of the Northeast Small Finance Bank, which combined with the fintech startup Slice, based in Bengaluru.

The majority of SFBs reported yearly increase in deposit mobilization that was higher than the average for the banking sector. Despite starting from a low foundation of Rs 6,484 crore a year ago, Suryoday leads the field with a 49.7% year-over-year rise to Rs 9,708 crore at the end of December.

In the third quarter, the bank’s gross non-performing assets (NPAs) increased to 5.5% of its total advances of Rs 9,563 crore. While lending increased 16% to Rs 19,057 crore, Utkarsh recorded a 33.5% year-over-year increase in deposits to Rs 20,172 crore.

The SFB ecosystem was established by the RBI to improve loan availability to micro and small businesses as well as the agricultural industry.

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Waaree Energies Surges Over 11% on FTSE Index Inclusion Buzz
Equities, Markets - January 30, 2025

India's Infrastructure Sector Calls for Policy Reforms to Boost Growth and Sustainability

India’s Infrastructure Sector Calls for Policy Reforms to Boost Growth and Sustainability

The companies in the infrastructure sector in India are demanding for reforms in areas such as tax relief for clean technologies, expansion in fund spending on infrastructures such as ports, roads, and railways, reforms in GST regulations, and encouraging skill development projects in order to enhance skills of employees in the construction and infrastructure sector. It also aims for promoting public-private partnerships in infrastructure projects.

Expectations of participants in infrastructure sector
The various market participants in the infrastructure sector from segments such as real estate, urban development, construction, and transportation strongly believe that the government of India needs to make changes in its fiscal and other policies in order to reduce pressure on infrastructural plans.

Managing Director of Interach Building Products, Arvind Nanda emphasized on the need for reduction in tax rates, especially for various projects using pre-engineered buildings (PEBs). Further he states that to reduce the cost incurred on projects, the government should increase input tax credit (ITC) benefits for PEBs. It will also help in adoption of environment friendly methods like PEBs and in turn will lead to development in the sector. He states that the government of India must increase investment in skill development schemes under its mission of Skill India to enhance the efficient workforce in the country’s construction sector.

These various reforms such as promotion of green energy, skill development and tax relief will encourage participation of the private sector. It will also help India to achieve its target of sustainability as promotion of green energy will encourage investment and private companies to adopt this technology.

The efficient and fair use of capex in the infrastructure sector in different states of India will help to encourage stable growth in the country. Partner at Grant Thornton Bharat, Vivek Iyer states that the government of India can distribute its funds according to the specific needs of the particular states. It will ensure implementation of financial regulations and policies in line with promoting long-term development in the infrastructure sector of India.

The capex scheme for states with an interest free loan for the duration of 50 years will help to encourage stable growth in different states in the country and in turn will lead to progress of India.

Partner at JSA Advocates and Solicitors, Ashish Suman expects expansion of capital financing in infrastructure such as ports, roads, and highways for development of the transportation sector in India. In order to encourage investment by the private sector and to develop infrastructure in India, there must be expansion in capital spending on the road segment to about 10 percent and also promote undertaking of Build-Operate-Transfer (BOT) projects.

To encourage investment in small cities (Tier 2 and 3), it is important to strengthen public-private partnerships (PPPs) projects. Suman further states that investment challenges in PPP are observed in the development of urban infrastructure. To address these issues, the government can focus on efficient use of the fund provided by the Urban Infrastructure Development Fund. It should focus on building a strong municipal bonds market which will help in resolving the issues of urban local governments who require money for financing in infrastructure projects.

Leader for India & Subcon at LWT IMEA, Priya Rustogi stated that India is anticipated to record a growth in GDP by 6.5 percent. Along with urbanisation, India can emphasize on building affordable housing and development of infrastructure of the country. This will result in expansion in demand for new, eco-friendly and good-quality bathroom related goods. She further added that the government of India should do reforms in GST implemented on sanitaryware. It should also focus on encouraging eco-friendly construction methods in order to achieve milestones of conserving the environment.

In case of progress in decorative and industrial paints, the Director of Shalimar Paints, Kuldip Raina stated that reforms in regulations are needed to have efficient supply of raw materials, incentives for advancement in technologies and tax relief to boost Research and Development in the sector. It will help in lowering energy and production costs, and also encourage more players to come in the industry.

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Hyundai Q3 FY2025 Sees 19% Profit Drop Amid Lower Sales and Rising Costs
Automobile News, Autos, Equities, Markets - January 30, 2025

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

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

Overview
On 28th January 2025, Hyundai published its third quarter reports of the financial year 2025 recording a contraction of 19 percent of consolidated net profit on a year-on-year basis. The PAT for the third quarter was about Rs.1,161 crore lower than the Rs. 1,425 crore for the previous financial year in the third quarter only. The reason for this is the fall in exports and sales at domestic level.

Performance of the company
In the third quarter of the financial year 2025, the company recorded a fall in total income to about Rs. 16,892 compared to its total income of about Rs. 17,244 crore in the same quarter of the previous financial year.

The company is popular for manufacturing hatchback models such as i20, Grand i10. It is also known for manufacturing Creta, which is a SUV model. In the third quarter of the financial year 2023-2024, the revenue of Hyundai was about Rs. 16,875. In the third quarter of the current financial year, it declined to about 1.3 percent which accounts to about Rs.16,648 crore of revenue.

After its earnings report was released, the stock price of Hyundai Motor declined.

Further, the company recorded a contraction in net profit by about 16 percent consecutively. Its net profit was about Rs. 1,375 crore in the second quarter of the financial year 2025. Also, its topline was about Rs. 17,260 crore in the second quarter which declined to about 3.5 percent in the third quarter of the current financial year.

While, its EBITDA margin was around 11.27 percent in the third quarter lower than 12.88 percent in the previous year of the same quarter. The reason for contraction in margins is due to slowdown in demand as well as rising geopolitical concerns.
Sales performance of the company
In terms of volume, Hyundai Motors was successful in selling about 1,86,408 units of passenger vehicles in the third quarter. From this total volume sales of passenger vehicles, volume sales in the domestic market was about 1,46,022 units. It is mainly driven by demand for SUV vehicles.

The company was also able to register its highest sales of CNG-based vehicles in terms of volume which accounts to growth of about 15 percent in the third quarter compared to 12 percent in the past financial year of the same period.

In terms of sales volume in rural areas, it surged to about 21.2 percent in the third quarter, higher than 19.7 percent recorded in the same quarter of the previous financial year. Also, the exports level of the company was recorded to about 40,386 units of sales volumes in the third quarter.

Future Perspective of the company
Hyundai Motors firmly believes that it will be able to expand its future growth by using its full potential and also search for new opportunities to expand profitability and sales volume of the company.

The company is optimistic about the development of the Electric vehicle segment in India. It is taking steps towards making electric vehicles with a broader view.

The company also states that the recent launch of Creta Electric model will promote growth and also acts as a breakthrough in the Electric vehicle sector.

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India’s export in auto industry reach 19 percent

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