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Solid reason for GST reduction on two-wheelers
Business, Equities, Market News, Markets - January 10, 2025

Two-Wheelers, Tractors to Outpace Cars, Trucks by FY27

Two-Wheelers, Tractors to Outpace Cars, Trucks by FY27

The report of Jefferies, an investment banking and financial services company stated that the volume of two-wheelers (2Ws) and tractors will increase by 13 to 15 percent of the compounded annual growth rate (CAGR). It will surpass passenger vehicles and trucks in the financial year 2025-27.

CAGR Projection
According to the report, the two-wheeler’s CAGR is expected to increase strongly by 13 percent and the CAGR for tractors is expected to grow by 15 percent during the financial year 2025-27. While, the two-wheelers and tractors’ CAGR is estimated to grow by 12 percent and 6 percent in the financial year 2025.

The report also states the volume growth for passenger vehicles and trucks segment is estimated to increase at a rate ranging from 5 percent to 8 percent. It is comparatively lower than the growth rate of two-wheelers and tractors.

Further, the report states that the CAGR of passenger vehicles and trucks is estimated to grow at 8 percent and 5 percent over the financial year 2025-27. While, the CAGR estimations for the financial year 2025 for passenger vehicles and trucks is positive growth by 2 percent and negative growth of 4 percent, respectively.

Growth Rebound
The growth prospects for two-wheelers between the financial year 2021 and 2023 were not good due to weakened demand. Its demand was lower than the passenger vehicle’s demand. The reasons for the slow demand were disruptions caused due pandemic and also increase in regulatory costs. It resulted in making two-wheelers less affordable for lower-income class people. The regulatory costs such as the On-Board Diagnostics (OBD) led to an increase in production costs, increase in commodity and input prices and also third-party insurance premiums hike for two-wheelers with engines bigger than 150cc. The Covid-19 pandemic was a period of financial difficulties for many people. This made it difficult, especially for people of lower income groups to purchase and maintain two-wheelers along with the issue of new regulations.

In the financial year 2024, the volume of two-wheelers in wholesales strongly bounced back. It increased by 14 percent year-on-year (YoY) growth, which exceeded the 8 percent of passenger vehicles growth.

Despite the two-wheelers’ recovery in the financial year 2024, it remained 13 percent lower than its peak growth in the financial year 2019. On the other hand, passenger vehicles were able to surpass its growth of the pre-pandemic level. Its volume surged by 25 percent above its pre-pandemic levels.

The tractor segment in the Indian automobile industry is showing signs of cyclical recovery. Indicating another good thing for the automobile industry in India. For the financial year 2025-27, the growth for the two-wheelers and tractor segments is estimated to be 12 percent and 15 percent, respectively.

In contrast to these growth prospects, the passenger vehicles and trucks segments is expected to grow at a moderate CAGR of 8 percent and 5 percent, respectively, during the same period.

Company-wise growth
The markets of traditional lead companies such as Maruti Suzuki and Hyundai observed a fall in the PV segment of around 12-year lows in the first half of the financial year 2025. In the midst of this shift in position in the automobile industry, Mahindra & Mahindra (M&M) is leveraging its position and is anticipated to surpass Hyundai as the second-largest original equipment manufacturer (OEM) in Passenger Vehicles by the financial year 2027.

Market shares of Electric Vehicles
According to the report, the market share of electric vehicles in two-wheeler sales has become sluggish in the range of 4 percent to 7 percent for the previous two years. Despite this, the period observed launch activity of lower-priced vehicles by the original equipment manufacturers (OEMs). The reasons for this weak demand was the growing concerns regarding the reliability, longevity and the resale value of the vehicles.

In contrast to this, the sales of electric vehicles in the two-wheelers segment is estimated to rise by 10 percent over the financial year 2027. The companies such as Bajaj Auto and TVSL are considered the leader in this segment.

On the other hand, the electric vehicle adoption in the passenger vehicles segment is considered to remain weaker at 2 percent growth rate. In this, Tata Motor is considered as the leading company in the midst of the rising competition.

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2025: A Year of Consolidation and Policy-Driven Growth

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Interest Payment Burden to reduce in FY26
Business, Equities, Market News, Markets - January 10, 2025

Budget 2025 see higher focus on government capex

Budget 2025 see higher focus on government capex

Widespread growing concern is seen among economists, government and policy makers about the subdued economic growth in India. The financial year of 2024-2025 has faced a slowdown in economic growth as well as government capital expenditure (Capex).

Reasons for Economic slowdown
According to economists, the reason for a decrease in public expenditures is due to the General Elections of 2024 and also increase in social expenditure such as welfare programs, social services and subsidies, etc. One of the other reasons for the slowdown is the delayed final budget for the financial year 2024-2025. It led to a fall in cumulative capex until the month of October 2024.

According to some analysts, it is due to the government’s change in priority in its third term as it has to focus on balancing subsidies given for the purpose of improvement of rural conditions and capex for the purpose of economic growth. Also subdued growth in consumption level has led to a burden on the government to increase social expenditure in order to curb it.

The report of Sanford C Bernstein, an international brokerage and research firm states that the Indian government was able to secure only 37 percent of its capex target in the financial year 2025 till now. On the other hand, it was able to meet 56 percent of its subsidies target in the initial six months by the month of September only. The report further said that it is in the best interest of India and its economy to focus on government capex in 2025 even without reducing subsidies.

Historically speaking, government capex and growth are strongly correlated to each other. Taking the example of the pandemic itself, the increase in government expenditure played a critical role in improving economic growth.

The current public spending is required to be increased in sectors such as roads, railways, defence, airports and affordable housing. At the same time, encouraging private capex is important as well in industries such as steel, oil, gas, cement, and power.

The Berstein report states that when government and private capex moves together, it would certainly lead to a booming phase in the economy and markets.

Emphasis on government capex by CII
The President of Confederation of Indian Industry (CII) Sanjiv Puri states that a 25 percent increase in government capital expenditure, personal income tax relief, and deliberated measures taken to encourage manufacturing activity and integration of domestic industries into global value chains will help to provide the required growth momentum. He is the chairman and managing director of ITC ltd.

He also demanded a cut in interest rate in the budget. He advised that a significant contraction in fiscal could adversely affect investments. He further states that public capex is crucial in enhancing the level of competitiveness in the economy and helps to provide a push for growth in the economy. The government capex has its own economic mutlipliers. The CII has recommended a 12 percent increase in the government’s capex for the budget of financial year 2025-2026 compared to Rs. 11.11 lakh budget for the financial year 2025.

According to him, the gross domestic product (GDP) estimated at 6.4 percent is a four-year low GDP for the financial year 2025 is a fairly good number. As the GDP figures needed to be viewed by considering dynamic situations around the world. The industry body anticipates economic growth to rebound to 7 percent in the financial year. He states consumption is the biggest contributor in GDP. Also, private investment cannot alone act as a key for economic transformation.

Emphasis on government capex by EY India
The global consulting and professional services firm Ernst & Young India also advocated focusing on public capex in the budget 2025. According to EY India, the Indian economy should focus on crucial areas such as increase in public expenditure, reduction in fiscal deficit, promoting private sector improvement and also introduction of tax reforms to stimulate business innovation.

The government should particularly focus on small and medium enterprises (SMEs) and also removing complexities in tax compliance for the purpose of encouraging business activities. To achieve sustainable growth in the financial year 2025-26, it should focus on lowering the fiscal deficit to around 4.5 percent of GDP. It should also focus on decreasing debt-to-GDP ratio which is currently around 54.4 percent and 40 percent above the target of FRBM.

To increase private sector investment, interest rates should be progressively reduced. To gain economic growth and increase urban demand, employment schemes should be expedited

The Budget for the financial year 2025-26 will be formally present on 1st February, 2025.

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2025: A Year of Consolidation and Policy-Driven Growth

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Bosch Ltd Q2 FY26: Auto Demand Boosts Sales, Profit Inches Up Despite Higher Costs
Business, Equities, Market News, Markets - January 10, 2025

Domestic Rubber Prices Decline, But Tyre Companies Should Remain Cautious

Domestic Rubber Prices Decline, But Tyre Companies Should Remain Cautious

Overview
In the current fiscal year, tyre manufacturers adopted price raises of around 5-6 percent in replacement markets, which is not sufficient to offset the pain of raw material price increases. The Indian tyre sector is expected to grow by 7-8% in revenue, driven by price increases and replacement demand. Despite this growth, profitability is likely to fall due to rising raw material costs. Although export growth is still constrained, tire producers are working on strategic investments and pricing modifications to overcome these constraints. Rubber prices in India have been decreasing since October, when they reached their top. Spiralling prices in the first part of FY2025 harmed tyre companies’ profit margins. Despite the recent decrease, worldwide rubber prices are expected to rise due to a demand-supply mismatch. Furthermore, inclement weather in Thailand, Vietnam, and Malaysia (the main rubber-producing countries) is expected to keep rubber supply and pricing fluctuating. Meanwhile, moderate auto sales may have an influence on tyre demand. Tyre companies have postponed capex plans that could limit leverage and so boost earnings.

Rubber Prices take a hit
Rubber prices have begun to fall after skyrocketing for more than a year, beginning in August. Since then, the price of RSS- Grade 4 rubber used in tyres has declined from a high of Rs 240/kg to its current level of Rs 159/kg. While this is a huge relief for tyre makers, it’s unclear whether the dramatic drop in rubber costs will last long enough to boost revenues and margins.

Reasons for a down turn
Two important reasons highlight the pessimism in user industries, especially tyres, regarding rubber pricing. One, the demand-supply mismatch that existed in domestic markets caused rubber prices to skyrocket in early 2024. As a result, economists predict that prices would rise by 32% on average between April and October. In the current fiscal year, tyre manufacturers raised prices by 5-6 percent in replacement markets, which is insufficient to counteract the impact of raw material price increases. Clearly, this will have an impact on the profitability of domestic tyre companies in FY2025. As a result, until the first half of the fiscal year, most companies’ operating margins had already fallen by 200-300 basis points (bps) year on year (yoy).

Secondly, a global shortfall of natural rubber in the first half of FY2025, induced by adverse weather in Thailand, Vietnam, and Malaysia (the leading rubber producing countries), is expected to keep rubber prices volatile and high. This, combined with the ongoing Red Sea issue, which will result in increased freight costs, is projected to maintain the landed cost of natural rubber in Indian markets relatively high for the next few quarters. To be sure, the prices for synthetic rubber and crude oil-linked futures are currently relatively low. However, international natural rubber prices have stabilised at higher levels than in FY2023 and FY2024.

Conclusion
Rubber prices in India have just dropped, and rubber tappers are optimistic about increased supply this season. However, ratings agency India Ratings predicts that rubber prices would remain unpredictable in the short to medium term.

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Electricity Distribution Companies Continue to Strain State Finances, Says RBI

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Jio’s Giant Leap: Reliance Confirms IPO in Early 2026
Business, Equities, Market News, Markets - January 10, 2025

Reliance Industries Q2: Telecom and Retail Sectors Fuel Strong Growth Overview

Reliance Industries Q2: Telecom and Retail Sectors Fuel Strong Growth

Overview
Mukesh Ambani, a billionaire and India’s richest person, leads Reliance Industries, the country’s largest firm by market capitalization. However, RIL is not the only company led by Ambani that is listed on the stock exchange. Reliance Industrial Infrastructure Limited, a RIL-promoted firm, has declared its quarterly earnings for the October-December 2024 period.

Price History of RIIL
On Wednesday, shares of the Reliance Industries-backed company closed at Rs 1113 per on the BSE, down 2%. RIIL, with a market capitalization of Rs 1,680.63 crore, is a component of the S&P Smallcap Index. Reliance Industrial Infrastructure shares have fallen 20% in the last six months and 17% over the last year.
According to BSE statistics, the Reliance stock has increased by 22 percent in the last two years and 29.53 percent in the last three years and consequently, the shares of RIIL have surged by 142& in the last 5 years. Meanwhile, Ambani-led Reliance Industries is a promoter in the company, with 68,60,064 shares representing a 45.43 percent ownership.

Bernstein Report
Reliance Industries Limited will experience a recovery cycle following a bad year in 2024, according to Bernstein analysis. According to this analysis, RIL’s near-term growth drivers will include telecom, retail, and refining. In 2025, the recovery will be spearheaded by a 12% increase in Jio’s Average Revenue Per User (ARPU) without rate increases, as well as 4-5% user growth. Retail operations are also expected to improve, with double-digit EBITDA growth, providing strength to the RIL.

The research notes that the company’s current valuation of 10.1x projected EV/EBITDA is 17% lower than its three-year average. With earnings likely to climb by 19% or higher in FY26, Bernstein has upped its target price for RIL to Rs 1,520, representing a 25% upside.
According to the analysis, Reliance Jio would be a primary driver of RIL’s recovery, with revenue growth forecast at a CAGR of 17% over the next three years.

By FY26, ARPU is forecast to increase by more than 14%, and Jio’s subscriber base is expected to reach 500 million, resulting in a 48% revenue market share.
According to the study, Jio’s lower capital investment is further bolstering its profitability, which benefits RIL. According to the research, RIL’s retail business is expected to rebound from the setbacks suffered last year following the shop rationalisation. It expects a return to 15% growth by FY26, aided by normalized capital spending and higher revenue per square foot.

According to the research, the refining business, which was under pressure from dropping GRMs in FY24, has begun to reverse its trajectory. GRMs are predicted to rise by 5.4% year on year in FY26, helped by a weaker Indian rupee.
The corporation will gain from its new investments in the energy sector, which include solar and storage capacity. RIL intends to use 20 GW of panel production for internal consumption and manufacture green H2 in 2025, with a goal of reaching 50 Wh of cell-to-pack battery manufacturing by 2027.The Reliance gigacomplex will be the largest end-to-end renewable energy manufacturing facility.

According to the study, Reliance plans to create a battery gigafactory by 2026 and to accelerate sodium iron technology to a megawatt level by 2025. RIL inked its first 25-year PPA for 128MW and an MOU with the Maharashtra government for 100kTPA GH2 production (an investment of USD1.8 billion), which will help the business in public markets, according to the report.

Bernstein values RIL using a sum-of-the-parts approach, taking into account growth in its core segments. Jio’s telecom section is valued at 12x projected EV/EBITDA, while the retail segment is evaluated based on core and non-core operations. Refining and petrochemical segments are valued at 7 times FY26 EV/EBITDA. Bernstein emphasized RIL’s potential to generate substantial free cash flow and offer solid returns for investors, citing a steady-state EBITDA of USD 22 billion expected for FY25-27.

Q3 Results Date
The Ambani-led firm’s Board of Directors will meet next week on January 15, 2025, to accept un-audited standalone and consolidated financial reports for the quarter/nine months ended December 31, 2024. RIIL said last month that the Trading Window closing period will begin on January 1, 2025 and expire 48 hours after the Company’s financial statements for the third quarter ended December 31, 2024 become Generally Available Information.

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Electricity Distribution Companies Continue to Strain State Finances, Says RBI

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RBI's Revised Co-Lending Norms Set to Transform NBFC Growth
Business, Equities, Market News, Markets - January 10, 2025

RBIs financial stability review spots two risk from trump 2.0

RBIs financial stability review spots two risk from trump 2.0

The Reserve Bank of India (RBI) publishes its Financial Stability Review (FSR) semi-annually in a financial year. It generally evaluates the nature and magnitudes of risks affecting the Indian financial sector. It analyzes the strength of financial institutions to mitigate these risks with the help of stress tests. These risks consist of both international and domestic risks, with special focus on domestic risks. In the month of December 2024, the FSR realised signals of two prominent risks coming from the US elected-President Donald Trump’s administration.

The Financial Stability Unit (FSU) of RBI and its FSR publication came into existence to initiate crisis management and also to prevent crises such as the global financial crisis 2008. The FSU came into existence in August 2009 by global financial crisis 2008 and implementation of semi-annual publication of FSR in October 2009. Today, the FSR is released in the months of June and December every year. The FSR focuses on both macroeconomic and market related risks.

Current FSR report
The FSR of the month of December 2024 identifies two distinct risks associated with the upcoming new administration in the USA which will assume office in a fortnight. The first risk is the uncertainty brewing in the economy due to the support given to cryptocurrency by Trump’s regime. While, the second risk is the risk to the global economy from Trump’s proposed economic policies. It could occurring due to increasing geopolitical tensions, uncertainty associated with trade and industrial policies and potential tightening of financial conditions around the world leading to lower global economic output compared to its baseline projects.

The victory of Donald Trump in the US presidential elections gave a liberating path for the people and institutions who support the idea of decentralised finance or DeFi and particularly cryptocurrency. The Trump has a favorable opinion about Bitcoins and preference for crypto friendly regulations. Following the victory of Trump, Bitcoins registered pricing hiting more than $100,000 in the secondary market. This rally was influenced by the expectation of implementation of crypto-friendly policies under his regime.

Three reasons influencing the Bitcoins
There are three reasons which strongly influenced the rally of Bitcoins. Donald Trump in his election has constantly promised that he would make a strategic bitcoin hoard. This hoard would act as a reserve asset, where the US government would accumulate and hold a significant amount of Bitcoin. This reserve asset would be similar to any country’s foreign exchange or gold reserves. The main purpose for creating this reserve asset is to bring stablization in the financial system by mitigating inflation and also to strengthen its position in the global cryptocurrency market. The second reason is Trump and his family are closely connected with the cryptocurrency and DeFi movements via investments. The last reason is Trump nominated Paul Atkins, cryptocurrency supporter for the position to head the Securities and Exchanges Commission. It hints at easing up of earlier regulatory restrictions on crypto products.

Views of RBI
The Reserve Bank of India is worried about the risks associated with crypto products on the overall financial system. Its attempt to ban crypto products in India was rejected by the Supreme Court of India. As the Supreme court said that RBI does not have the right to impose restrictions on cryptocurrency trading. After this judgement, RBI strengthened the regulations and prohibited regulated entities from financing or supporting crypto products.

Many senior officers have given their public opinions on risks associated with cryptocurrency. The Deputy governor of RBI, T. Rabi Sankar stated that cryptocurrencies are created with the specific purpose to avoid a regulated financial system in his public speech in the year 2022. Further he stated that the cryptocurrencies have the potential to destroy the currency system, the monetary system, the banking system and overall government’s capacity to control the economy. The crypto products act as a threat to the financial sovereignty of a nation. There is also a possibility of strategic manipulaton by private firms or the governments who created and control them. These are reasons which led to the formation of the most advisable and possible choice of banning cryptocurrency in India.

During the discussion at Peterson Institute, Washington DC in October 2024, the former governor of RBI, Shaktikanta Das asserted the risk associated with cryptocurrency to the financial and monetary system. He requested coordination between central banks across the world regarding regulation on the crypto products.

Despite all this, the strong position of the Trump administration towards crypto products is increasing anxiety within RBI and its view towards risks associated with it. The current FSR report particularly states that widespread use of crypto-assets and stablecoins will certainly affect macroeconomic and financial stability. It could adversely impact the effectiveness of monetary policy, fical risk and avoid capital flow managment measures. It will also draw away the resources available for the purpose of financing the real economy and in turn threaten global financial stability. Despite the crypto products market being small in size, it keeps on growing. Its association with the traditional financial system is increasing to a potential systemic risk. Stablecoins also pose a potential risk.

The RBI is worried about the linkages between the monetary system and DeFi due to the potential it carries. As instability in DeFi can lead to temporary issues like liquidity problems, maturity mismatches, price volatility in assets and also have a spillover impact on the real economy, while regulators having no control on it.

Trump is promoting tokenisation as well. He and his three sons are providing support to World Liberty Financial, who develops tokens against crypto products. Though the company declines association with Trump’s extended family, there are proofs such as purchases of tokens or play roles of advisory.

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Tata Motors Stock Slump: Analyzing the Decline and Road Ahead

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Waaree Energies Surges Over 11% on FTSE Index Inclusion Buzz
Business, Equities, Market News, Markets - January 10, 2025

Infrastructure: Prioritizing Consistent Growth in Budget 2025-26 Overview

Infrastructure: Prioritizing Consistent Growth in Budget 2025-26
Overview

Overview
With the Indian economy flourishing, there are numerous investment opportunities in multitude of sectors. The growth potential is excellent, thanks to technological advancements in the dynamic industry, which are augmented by different legislative reforms. The Indian economy has so far been resilient to persistent downside threats. Despite the slight dip in expectation of growth at 6.5-7% in the fiscal year 2024-25 according to the Economic Survey 2023-24, there is a positive sentiment about global economic backdrop. Coming to infratruscture segment of the nation, it is believed that Finance Minister Nirmala Sitharaman is likely to increase capital expenditure (capex) in the infrastructure sector in the Union Budget 2025-26 in order to bolster and boost urban development. Sitharaman will deliver the budget for 2025 on February 1, 2025. According to Federation of Indian Chambers of Commerce & Industry (FICCI) regarding the upcoming budget, the focus of government in the last few years on capex has been contributing to support recovery and sustain the momentum of growth. During persistent headwinds from the global front, public capex, especially physical, social, and digital infrastructure, would be critically important for the maintenance of growth momentum.
In the previous Union Budget that is in 2024-25 maintained a strong commitment to balancing multiple objectives in order to achieve Viksit Bharat’s vision. Continuing and extending the reform program on the nine priorities established in the Union Budget 2024-25 will be critical to maintaining the economy’s resilience.

India’s Infrastructure
India’s landscape is fast changing as the Government of India spends extensively in infrastructure projects such as roads, railroads, and renewable energy. To stimulate domestic manufacturing and increasing demand for machinery and construction materials, the government has launched projects such as ‘Make in India’. The infrastructure sector was allocated ₹11.11 lakh crore in the Union Budget 2024, and is expected to increase to ₹18 lakh crore in the next Budget 2025. As a result of thse schemes, GDP figures are expected tom improve significantly at the same time boosting public-private partnerships.Other notable initiatives such Housing for All, National Infrastructure Pipeline (NIP), and PM Gati Shakti would support and aid in enhancement of the infrastructure sector in India.

Smart City Mission
Another major budget expectation for the infrastructure sector, would be Smart Cities Mission development and implementation. India’s urban development and overall landscape is bolstered by Smart Cities Mission. Launched in 2025, by PM Narendra Modi, the Smart City Mission aims at improving quality of life in 100 cities across in India by way of infrastructure, sustainable environment and effective essential services. Further, the solutions offered through this mission aim to promote economic growth, financial inclusion, sustainability in urban development, etc.

Mitu Mathur, Director of GPM Architects and Planners, told ETNOW.in that the 2019 budget will prioritize essential expenditures in India’s urban development, with a focus on safety, sustainability, and infrastructure. She stated that the primary focus should be on transit-oriented development, which has the potential to alleviate traffic congestion by up to 30% while increasing property prices near transit hubs by 20%. “This focus on TOD will contribute to more sustainable, connected cities with both environmental and economic benefits,” according to her.

Mathur added that the future budget must prioritize sustainable infrastructure as India’s urban population continues to grow. She emphasised that green initiatives could bring down energy consumption by up to 50% while at the same time, improved waste management could reduce 70% of urban waste going to landfills. Furthermore, in light of recent instances, women’s protection in metropolitan areas is projected to become a top focus. Beyond improved street lighting and monitoring, we anticipate financing for smart lighting systems that respond to pedestrian activity, as well as the creation of safe pathways with well-maintained paths and emergency stations,” she stated.

Goonmeet Singh Chauhan, Founding Partner of Design Forum International, anticipates that the 2025 budget would place a greater emphasis on blue-green infrastructure under the Smart Cities Development initiative. “Given the gravity of the AQI issue in most towns, a data-driven approach is required to create and improve urban green cover, tree biomass, and tree demography, as well as their relationship with habitation density. Ideas such as responsive green infrastructure, the integration of ‘city forests’ into urban fabrics, and the Federal Acquisition Regulation (FAR) of forest pockets must be adopted immediately. Expanding on ‘blue infrastructure,’ hydrological master plans for all future smart cities must be developed to capture the current nature of hydrological behavior, with a particular emphasis on drainage and aquifer studies” he emphsised.

Conclusion
India’s strong economic foundations and concentration on innovation and technology make it a prominent investment destination. The sectors mentioned above are at the heart of India’s growth story. Keeping a close eye on these industries and their potential will allow you to better capitalize on future chances.

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Tata Motors Stock Slump: Analyzing the Decline and Road Ahead

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BEML Surges by 7.86% on Likely Upgrade to Navratna Status
Business, Equities, Market News, Markets - January 10, 2025

Q3 Preview: Top-Line Growth Slows for 7th Straight Quarter

Q3 Preview: Top-Line Growth Slows for 7th Straight Quarter

In the December quarter, many brokerages predicted continued slow growth rate for companies. Only a few sectors are exceptions to this scenario and are expected to be recording strong earnings. According to the brokerages, the top-line growth for companies listed on exchanges are expected to remain muted for the seventh consecutive quarter. It is also predicted that the year-on-year margins for firms will face pressure leading to sub-10 percent of profit growth in the third consecutive quarter.

Expected Sector-wise growth
Poor profits are expected to be recorded by sectors such as automobiles, construction materials, banks, consumer staples, and oil with a growth only in single-digit. While sectors such as pharmaceuticals, telecommunications and real estate are anticipated to gain strong profit-after-tax (PAT) growth.

Announcement of Earnings report
In this ongoing earning season, Tata Consultancy Services, a leading global software services company is about to announce its earnings report on 9th January 2025. While, the firm Avenue Supermarts, owner of supermarket chain D-mart, is going to announce its earnings report on 11th January 2025.

Reasons for subdued top-lined growth
The sectors such as automobile and components sector are facing issues because of occurrence of margin compression leading to lower profit margins. According to the brokerages, margin compression challenge is observed in this sector due to unfavorable product mix and higher discounts. The weak loan growth and also rising provisions for NPAs are expected to impact the Banking sector.

The weak realisations in the construction materials sector is probably going to affect profit margins for the sector. According to a CRISIL report, cement manufacturers’ profitability is expected to hurt in the financial year 2025 due to lower realisation and poor pricing power. There are a number of reasons for the weak realisation in the cement industry such as base effect, shortage of laborers during general elections period, fall in construction activity the initial half of the year. The prices are expected to fall around 5 to 6 percent due to low demand growth and also increasing competition. This decline in realisation is due to weak pricing power and poor demand, despite inputs costs are anticipated to remain in control.

The slowing urban demand is expected to adversely affect the consumer staples sector. The sectors such as metals, mining, oil, gas and consumable fuels are predicted to report poor net income growth in single-digit.

Sectors projected to have strong growth
The sectors such as pharmaceuticals, real estate, capital goods, diversified financials and telecommunications are projected to have strong year-on-year net income growth. The stable demand will possibly benefit the capital goods sector and higher average per user (ARPU) will support robust growth in the telecommunications secto. While, the pharmaceuticals sector is expected to record strong growth due to benefits from stable pricing of US generics and also growth observed in other markets in the world. The real estate is benefitted from improvement in launch activities such as the luxury housing boom, increased land transactions and new launches.

Projections
According to Kotak Institutional Equities, the net profits for third quarter of financial year 2025 is expected to increase by 7.2 percent YoY for the BSE-30 index and the Nifty-50 index is expected to surge by 9 percent YoY and 2.2 perent QoQ. On the other hand, Motilal Oswal Securities predicts an increase of 6 percent YoY growth in earnings for both MOFSL Universe and Nifty-50. Nuvama, a brokerage firm, expected top-line growth of 8 percent YoY in the third quarter of financial year 2025 for its coverage universe (OMCs not included) compared to 6 percent of growth in second quarter of financial year 2025. These projections indicate the subdued top-line growth of 10 percent in the seventh consecutive quarter.

Also, the Nuvma’s coverage universe (commodities and BFSI not included) is expected to have stable EBITDA margin growth YoY compared to its significant expansion in the financial year 2025. It will certainly influence PAT growth. The brokerage firm expects 9 percent of PAT growth compared to 6 percent of PAT growth in the second quarter of the financial year 2025. This growth is weak compared to more than 20 percent growth in the financial year 2025. The profits on a year-on-year basis is estimated to be weak for commodities, consumer goods, and pharmaceuticals. On the other hand, it will be a robust growth for the industrials, banks and the chemicals sector.

According to brokerage firms, the EBITDA margins will remain flat on an year-on-year basis at 17.7 percent for listed firms. This is due to strong performance in the healthcare and telecom setcor and also due to weak performance in commodities and cement industry which balances it out.

Motilal Oswal Securities predicts moderate earnings growth, mainly influenced by the BFSI sector and also positive support from healthcare, real estate, capital goods and technology sector. According to it, the earnings for PSU Banks, NBFC-lending, and Private banks are estimated to increase by 13 percent, 8 percent and 2 percent on an year-on-year basis, respectively. The expected growth for PSU and private are actually indicating lowest earnings growth since the last 10 and 13 quarters, respectively. While non-lending NBFCs who are capital market players are estimated to record a 39 percent year-on year earnings. This is mainly driven by exchanges and brokers.

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Tata Motors Stock Slump: Analyzing the Decline and Road Ahead

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Investing in India’s EV Future: Analyzing Mercury EV-Tech’s Strategic Merger and Market Expansion
Business, Equities, Market News, Markets - January 9, 2025

India's Car Sales Growth Hits 4-Year Low as Urban Market Struggles

India’s Car Sales Growth Hits 4-Year Low as Urban Market Struggles

Overview
In 2024, the growth rate of automobile sales fell to barely 5%, which was the slowest pace in four years and highlighted difficulties in urban areas, according to ToI. The automotive industry is expected to sell approximately 43 lakh vehicles in 2024, up from 41.1 lakh units in 2023, based on preliminary forecasts. During the period under analysis, SUVs sales accounted for 54% of the total sales which reflects their popularity and sets SUVs as the main growth drivers.

Given the strong sales foundation of prior years, several automakers voiced optimism about the 5% growth rate, while others are preparing for more difficulties in the upcoming year. Speaking on this issues, a prominent company executive stated that the industry is now focused on getting incentives from the upcoming budget scheduled on 1st of February, 2025, and consumption would be fueled if potential income tax rates are cut.

Car sales in Urban Centres
Throughout the year of 2024, the demand for passenger vehicles remained weak which resulted in manufacturers to give aggressive price reductions coupled with discounts to accelerate sales, specifically in the latter part of 2024 which includes festive seasons. The sub-Rs 10 lakh market, which has seen a steady drop in previous quarters, has seen the most noticeable dip, according to a story in The Indian Express. Trends observed in other important consumer industries are consistent with this trend in the automotive sector. Companies that sell fast-moving consumer goods (FMCG) have also noted first indications of a slowdown in demand. Tata Consumer Products Ltd. executives have voiced concerns about a “softness” in urban demand, while Nestle India said that demand was muted in key cities, partially due to strong pressures from food inflation. Furthermore, vehicle affordability has suffered as a result of rising auto prices brought on by the recent enforcement of stronger safety and pollution standards. The slow development of urban sales has been exacerbated by this trend.

This downturn in the automobile industry is occurring at the same time that the GDP is growing more slowly. Growth fell short of the Reserve Bank of India’s 7% forecast in the first quarter, from 7.8% in the previous quarter to roughly 6.7% in the first quarter, and may further slow to 6.5% in the July-September quarter, according to the study. Additionally, rising FMCG volumes and an increase in sales of three-wheelers and tractors suggest that rural demand is still strong, according to the Finance Ministry’s September economic review. But because of weaker consumer sentiment, lower foot traffic brought on by more rain than usual, and seasonal shopping restrictions, urban demand is waning.

Performance of major car companies in 2024

Maruti Suzuki
Strong demand in rural areas helped Maruti Suzuki achieve its highest-ever yearly sales in 2024, despite the general decline in the auto sector. The company sold 17.9 lakh units in 2024 as opposed to 17.4 lakh units in 2023. In a statement given by an official from Maruti Suzuki said that they have managed to gain growth across segments. Furthermore, the sales growth spread out in almost all segments and not just SUVs where the company now has 27% share.

Hyundai India
With sales increasing by barely 1%, 2024 was a very flat year for Hyundai India. During the year, the company sold just over six lakh cars. “Despite significant challenges faced by the industry as a whole, Hyundai has maintained sales momentum in 2024,” stated Director and COO Tarun Garg.

Tata Motors
In 2024, Tata Motors sold more than 5.6 lakh cars, beating its sales record for the fourth year in a row. Managing Director of Passenger Vehicles and Electric Mobility Shailesh Chandra attributed the increase to the growing demand for SUVs and CNG-powered automobiles. Chandra further stated that PV sector saw moderate growth which was driven by SUV segment and growing demand for eco-friendly vehicles.

Conclusion
The government’s policies will determine the industry’s expectations for 2025. Many automakers are hoping that the upcoming budget would provide incentives, such as possible income tax rate reductions, that will increase affordability and stimulate consumption. However, in the near future, the persistent issues of growing expenses and stagnant urban markets can still have an impact on sales growth. The auto sector is still concentrating on sustaining growth in rural areas and using the robust demand for SUVs to offset the general slowdown in the market. Vehicle manufacturers now anticipate with strategic pricing models and supportive policies, obstables in the near future would be overcome.

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Q3 FY25: A Crucial Turning Point for India’s Growth Story

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Business, Equities, Market News, Markets - January 9, 2025

Copper holds near five months low as weak demand outlook dominates

Copper holds near five months low as weak demand outlook dominates

Copper prices remained around five month lows due to a weak demand outlook dominating the market. The reasons for this poor demand perspective is the weak performance of the manufacturing sector around the globe. The negative outlook and poor performance of manufacturing activity across the world have outweighed the usual positive effect of the weaker dollar on copper prices. Usually, a weaker dollar supports higher prices of copper because it makes it cheaper for consumers using other currencies than dollars to buy dollar-priced copper.

On the London Metal Exchange (LME), the benchmark for copper increased by 0.1 percent only to $8,775 metric ton by 11:07 GMT on 2nd January, 2025. On 31st December 2024, it touched its lowest of $8,757 since 8th August.

Despite the weak US dollar making dollar-priced metals cheaper for purchasing through the use of other currencies, traders anticipate that the dollar will appreciate again in the upcoming days. This will make dollar-priced metals more expensive for consumers using other currencies because consumers have to spend more of their own currencies. Thus, the strengthening of the dollar will result in an increase in the metal price that has been due since the end of September.

Industrial metals are also anticipated to come under the pressure occurring due to uncertainty in macroeconomic factors. This is due to the prospect that US President-elected Donald Trump might impose tariffs on imports, which could likely lead to the initiation of a trade war and adversely impact global economic growth and demand.

As per the statement of one of the copper traders, there is a lot of nervousness regarding what steps or the potential action the US President Donald Trump will take when he takes his official position as President. This uncertainty has led to not much growth in manufacturing activity and demand.

Surveys of Purchasing Managers
According to the surveys of Purchasing Managers, the slowdown in the manufacturing sector and its operation was observed in China and South Korea in the month of December. The rate of declining manufacturing activity of European factories is at a faster rate than in the month of November.

Other Metal Commodities
Aluminum prices reached an intra-day high of $2,574.50 a ton. This peak is due to growing worries about supply issues in the London Metal Exchange (LME) market. In the official trading session, it gained 0.3 percent, which accounts for $2,599. The concerns regarding supply issues resulted in reducing the discount rate for the three-month aluminum cash contract. It fell from $40 in the month of December to $23 per ton.

The LME-registered warehouses provide storage facilities for metal brands registered with the LME, and it is authorized by the LME. The aluminum stocks under the LME-registered warehouses recorded a fall of more than 40 percent, since May of the previous year. It accounts for 634,650 tons.

The metal allocated for shipment is indicated by canceled warrants. At present, it constitutes 54 percent of the total aluminum stocks. Indicating that more aluminum is expected to leave LME-registered warehouses soon.

On the basis of technical analysis, the aluminum has an upside resistance of around $2,575 per ton with a moving average of 21-days and support level of $2,553 with a 100-day moving average.

While lead price fell by 0.6 percent to $1,940.50 per ton and price of Zinc decreased by 1.3 percent to a six-week low of $2,938.50 per ton. On the other hand, the price of tin decreased by 2 percent to $28,490 per ton, and the price of nickel slumped by 1.1 percent to $15,160 per ton.

On 7th January 2025, the benchmark copper price on the LME increased by 1.7 percent, which accounts for $9,031 per metric ton at 15:30 GMT. Since the US election in the month of November, the perspective towards copper has been filled with uncertainty resulting in copper being kept in a narrow range of $9,000. According to the Analyst of Consultancy group CRU Robert Edwards, the price is influenced by macro factors. Nothing can be said certainly about the direction of the market till any solid actions such as US import tariffs take place.

The weak demand for industrial metals in China has significantly affected global prices of metals. This is due to sluggish economic growth and consumption of industrial metals. Also, the copper market is affected due to tight supplies of metals occurring due to operational issues and disruptions.

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TVS Motor Reports 7% Sales Surge in December, Reaching 3.2 Lakh Units

TVS Motor Reports 7% Sales Surge in December, Reaching 3.2 Lakh Units

TVS Motor, the third-largest motorcycle company in India in terms of revenue. The company registered a sales surge in the month of December by 7 percent compared to the previous year of the same period. The monthly sales of the company increased by 321,787 units in the month of December 2024 as compared to 301,898 units of sales in the same period of the previous year.

The December month was good for automakers as most of the car and bike manufacturers gave a strong performance in terms of sales.

Sales of TVS motors
The TVS company registered a growth of 8 percent in their total two-wheelers sales which accounts for units in the 312,002 month of December 2024 compared to 290,064 units of sales in the month of December 2023. While sales of domestic two-wheelers recorded around 215,075 units of sales in December 2024 compared to 214,988 units of sales in December 2023.

While the total sales of motorcycles was recorded at 144,811 units in the month of December 2024 compared to 148,049 units in the month of December 2023. The overall sales of the scooter recorded an increase in sales growth by 30 percent. It observed an increase in sales growth by sales of 133,919 units in the month of December 2024 against sales of 103,167 units in December 2023. The sales of EVs vehicles by the company was 20,171 units in December 2024 compared to sales of 11,288 units in the month of Decmber 2023. It indicated an increased growth by 79 percent.

The total sales of three-wheelers of the TVS company is recorded at 9,685 units in the month of December compared to the previous year’s same period which registered sales of 11,834 units.

Exports of the TVS Motors
Total exports of the company surged to 22 percent in the month of December 2024. It recorded an increase in export units by recording 104,393 units in December 2024 and 85,391 units sold in the same period of the previous year. While the company’s export in two-wheelers recorded a growth of around 29 percent. Its performance in exports of two-wheelers is 96,927 units in December 2024 compared to exports of 75,076 units in the same month of the last year.

Comparison of third quarter of the financial year
In the third quarter of this financial year, strong sales growth was observed which accounted for 11 percent growth. This third quarter recorded total sales of 11.8 lakh units compared to 10.6 lakh units in the same quarter of the financial year 2023-2024.

Performance of other Auto Companies
As per the data released by Tata Motors, the sales observed in the third quarter of the financial year 2024-2025 by Tata Motors in the international and domestic markets is around 235,599 units of sales compared to its sales units account to 234,981 units during the third quarter of the financial year 2023-2024. Its sales on the domestic level increased only 1 percent which accounted for 76,599 units of sales compared to 76,138 compared to previous year of the same period.

Ashok Leyland company’s combined sales of domestic and international accounts for increased sales at 5 percent higher in the month of december 2024 compared to previous year of the same month. The sales of the month of December 2024 was around 16,957 units compared to 16,154 units of sales in the month of December 2023.

One of the reasons for the increase in sales could be due to many automakers signalling that they probably would raise the price of a cars per unit in the New Year.

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Strong Growth in India’s Auto Components Industry: A Positive Outlook for FY25

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