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Bharti Airtel Stock May Soar to ₹2,350 as Growth Prospects Strengthen
Equities, Markets - February 27, 2025

Airtel in no rush to implement 5G network

Airtel in no rush to implement 5G network 

 

Overview of 5G market in India

The Indian 5G market is expected to develop at a compound annual growth rate (CAGR) of 43.8% from 2023 to 2031, from its 2022 valuation of USD 7,065 million to USD 1,78,546.1 million by 2031. India is the fourth largest market for 5G phones, with a 14% share in the June quarter, according to reports. India is currently in the early stages of adopting consumer 5G services, with 18% of mobile customers expected to use the technology by 2025.

 

Speaking about the landscape of 5G services in the Indian telecom sector, Jio has the largest 5G client base whereas, Airtel’s 5G network is now accessible in a number of states, with ambitions to extend nationwide soon. Additionally, Vodafone Idea plans to deploy its 5G services in the near future.

 

Reliance Jio, India’s telecom market leader, is the only telco that has chosen a 5G SA network – in which all of its infrastructure or cell sites broadcast solely 5G signals – from the start, in 2022, after investing in efficient but expensive sub-GHz 5G airwaves in the 700 MHz range. Airtel, on the other hand, chose a non-standalone 5G network that makes use of existing 4G network infrastructure and airwave resources, resulting in far lower capital expenditure than Jio.

 

Recently, Bharti Airtel has announced plans to move its 5G services to a standalone (SA) network in one or two cities within three years, albeit they would continue to use non-standalone (NSA) mode due to high 4G traffic. The shift’s goal is to use mid-band spectrum and create sustainable monetization applications for 5G technology.

 

Airtel to delay 5G Standalone

Bharti Airtel plans to transition its 5G services to a standalone (SA) network from the non-standalone (NSA) mode in one or two cities over the next three years. However, India’s second-largest telco still has a high volume of traffic on its 4G bands and that switching modes provides no tangible benefit to subscribers.

 

The executive lamented that, even after three years of debut, 5G has yet to generate any new revenue streams for telecom operators in India or elsewhere in the world, with speed remaining the only differentiation from 4G.

 

Reasons for delaying boarding the 5G wagon

Transitioning to SA involves a considerable expenditure, estimated at Rs 30,000-40,000 crore, primarily for the acquisition of sub-GHz spectrum. Airtel prefers to wait for 4G spectrum bands to progressively clear as traffic shifts to 5G.

 

Furthermore, 5G network utilization is currently low, with Airtel focusing on expanding its 4G network to convert remaining feature phone users to smartphones. This poor utilization does not justify the immediate deployment of 5G infrastructure. In terms of technological and strategic factors, Airtel is deploying non-standalone (NSA) 5G infrastructure that uses current 4G infrastructure. This arrangement is inexpensive and enables devices to smoothly move between 4G and 5G networks. Airtel intends to move to SA over the next three to four years as demand grows and more people upgrade from 4G.

 

In terms of monetization challenges, 5G services now have limited monetization prospects, making rapid expansion less appealing. Airtel is pushing the conversion of 4G consumers to 5G services, which cost more. Airtel plans to transition its Fixed Wireless Access (FWA) services to SA by December 2024, adopting a deliberate approach to deploy SA for certain use cases rather than a full-scale implementation.

 

Thus, currently, SA has no benefits for Airtel as there are no applications that capitalize on the technology. It was anticipated that in three years, networks would emerge in one or two places with plenty of spectrum and increasing traffic with customers not likely noticing the difference between SA and NSA.

 

                                                   

 

 

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Oil India Ltd. plans to expand oil and natural gas production in the upcoming years

 

 

 

 

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Equities, Markets - February 27, 2025

Oil India Ltd. plans to expand oil and natural gas production in the upcoming years

Oil India Ltd. plans to expand oil and natural gas production in the upcoming years

 

Oil India Ltd, a public-owned company in India plans to expand its crude oil and natural gas production in the upcoming financial years. It anticipates the start of production from some blocks in the near term.

 

The company has a goal to expand crude oil and natural gas production to 4 million tonnes and 5 billion cubic metres, respectively, in the upcoming financial years. Additionally, it is positive about the start of drilling work in the Kerala-Konkan region by the month of October, 2025. 

 

Present business operations of the company 

Currently, Oil India is using about 20 drilling rigs for its production activity. It intends to increase the number of drilling rigs to 24 in the upcoming 6 months. 

 

The total acreage of the company is around 60,000 square kilometers in the present times. It will get an additional acreage of 50,000 square kilometers under the 9th round of Open Acreage Licensing Policy (OALP). It will result in a total operating acreage of 1 lakh square kilometers. 

 

Future Plans of Oil India

In the current financial year, the company’s goal is to produce 3.8 billion cubic meters of natural gas and 3.8 million tonnes of crude oil. In the previous financial years, Oil India recorded an annual growth rate of 5 to 6 percent in production each year. Additionally, it aims to expand its operating acreage. 

 

The company also plans to do international partnerships or joint ventures in the upcoming years. It is currently in interaction with a number of international oil entities like PPT Exploration and Production Public Company, TotalEnergies, Petronas and Chevron. It wants to work on offshore hydrocarbon blocks. The main aim of these tie-ups is to expand the exploration and production capabilities of the company in the offshore areas as well. The company is planning to conduct seismic studies, which will help in finding oil and gas.

 

International oil companies are quite interested to work with Oil India in offshore projects acquired under the 9th and 10th round of OALP. 

 

Additionally, Oil India plans to partner with major Indian oil companies for its new international projects. These companies include Indian Oil Corp and ONGC Videsh. The company stated that it would want an international company to take charge of operating the block, in case of tie-up with an international entity.

 

Further the company has plans to diversify its mining activities of critical minerals. In the present times, the company secured a block in Arunachal Pradesh that contains graphite and vanadium. The company plans to start its exploration operations in the upcoming financial year 2026. 

 

Oil India already has an exploration license from the state government. It is currently working on getting permissions from the local population. In present times, it is looking for any potential partners for exploration and mining activities. 

 

 

 

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CRDMO Sector to boom by 2035

 

 

 

 

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Equities, Markets - February 27, 2025

CRDMO Sector to boom by 2035

CRDMO Sector to boom by 2035

 

Overview of CRDMO Sector

The Contract Research Development and Manufacturing Organization (CRDMO) market in India is expanding at a rapid pace, owing to a combination of favorable factors such as cost benefits, technology improvements, and a solid regulatory environment.

 

According to a research, India’s Contract Research Development and Manufacturing Organization (CRDMO) sector is at a tipping point and has the potential to grow to USD 22-25 billion by 2035. According to a survey by Boston Consulting Group (BCG) and Innovative Pharmaceutical Services Organization (IPSO), India now accounts for 2-3% of the USD 140-145 billion worldwide CRDMO market but it has the skill and potential to grow in years to come.

 

Tailwinds driving growth

Four important tailwinds propelling sector growth include an effort to de-risk supply chains, which has made India a desirable outsourcing location. Furthermore, economic pressures and laws such as the Inflation Reduction Act (IRA) are driving outsourcing, while increased demand for advanced modalities such as ADCs, gene therapy, and RNA therapies is boosting specialized CRDMO services, according to the report.

 

Challenges to overcome

As per the report, the sector must overcome five major difficulties in order to grow sustainably. To lessen dependency on imports, the sector needs 6-7x more personnel by 2035, speedier regulatory clearances, and a stronger tier 1 supplier base. Limited funding and high capital costs impede the required 4-5x investment, while ESG compliance remains behind Western rivals, according to the report.

 

Vikash Agarwalla, Managing Director and Partner at BCG, remarked that the CRDMO business is entering a period of rapid expansion with numerous tailwinds. The BCG report illustrates how India’s natural capabilities, small molecule knowledge, cost competitiveness, and quickly increasing innovation ecosystem serve as a springboard to becoming a dominating player in the global CRDMO market. However, unleashing this full potential will require a collaborative effort from both industry and policymakers.

 

Government Initiatives driving the CDMO sector

India’s federal government has played a critical role in supporting the CDMO business in the pharmaceuticals manufacturing segment through targeted incentives and legislative frameworks. The PLI initiative, which has a budget of INR 150 billion (US$1.72 billion) for promoting home manufacturing of important Key Starting Materials (KSMs)/drug intermediates (DIs) and APIs, intends to boost domestic drug production while reducing import dependency. Furthermore, the central government has set out INR 69.4 billion (US$799.9 million) to encourage domestic API and bulk medication manufacturing.

 

Investments towards the CDMO sector

Several top CDMO enterprises in India are making significant expenditures to improve their capabilities and broaden their service offering. Aurigene Pharmaceutical Services, a subsidiary of Dr. Reddy’s, has opened a biologics facility in Hyderabad’s Genome Valley (Telangana) to produce therapeutic proteins, antibodies, and viral vectors. This facility, which has been operational since June 2024, provides comprehensive clinical research and commercial production services.

 

In January 2024, it was reported that Aragen Life Sciences, a global Contract Research, Development, and Manufacturing Organization (CRDMO), will invest INR 20 billion (US$230.5 million) in Telangana to grow its presence in drug research, development, and manufacturing.

 

Another crucial investment was done by Laurus Labs, a worldwide pharmaceutical and biotechnology firm headquartered in Hyderabad, is expanding by INR 9.9 billion (US$114.1 million), transitioning from API research to antiretrovirals and intermediates, with the United States and Europe accounting for 60 percent of its income.  Another Telangana-based pharmaceutical business, Jubilant Pharmova, has invested US$370 million to expand its sterile injectable capacity in Spokane and Montreal, bolstering its North American expansion prospects.

 

Conclusion

India’s CRDMO industry has immense growth potential and can achieve up to USD 22-25 billion by the year 2035, stimulated by beneficial determinants of cost competitiveness, research and development progress, and bolstering regulatory frameworks. Although challenges of increased need for skilled talent and improvement in infrastructure exist for the industry, policy measures and foreign investments are continuously working on it. The nation’s developing innovation ecosystem, cost competitiveness, and small molecule expertise make it a leading candidate to dominate the global CRDMO market. To realize this potential, however, will need sustained partnership between industry players and policymakers to address challenges and unlock the sector’s full growth potential.

 

 

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Reasons behind forced apparel discounts

 

 

 

 

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Equities, Markets - February 27, 2025

Reasons behind forced apparel discounts

Reasons behind forced apparel discounts

 

Apparel retailers in India sold close to 40 percent of their clothing products by giving discounts or end-of-season sale (EOSS). The reason for this is due to these retail stores having more inventory stock than they can sell. It indicates the mismatch between the planned inventory of the store and its actual sales. 

 

Reasons for forced discounts on apparels

The retailers often faced the issue of having more inventory stock of clothing products than their actual sales. It leads them to give discounts or end-of-season sales to reduce the inventory. Apart from this, retailers also face issues with the supply chain in the market. It often faced the issue of delayed delivery of clothing products to their retail stores. The delay can occur in between 7 to 30 days resulting in contraction in the time period to sell products at their full price. It forces most of the retailers to implement discounts in order to clear their inventory. This information is based on the survey conducted on 100 companies by Vector Consulting Group and Nielsen IQ on apparel industry.

 

Impact of discounting on margins

Though discounts boost sales in the market, it adversely affects the margins of the company. The CEO of lifestyle business, at Aditya Birla Fashion and Retail, Vishak Kumar stated that the company is trying to limit their discounts by creating a balance between physical stores and online channels which will lead to healthy sales growth. 

 

However, the task of balancing the stocks between different channels manually is quite time-consuming and inefficient in nature. The apparel brands have to decide their clothing collection prior to 6 to 9 months. It is the reason why it is difficult to project future demand in the market accurately. It often results in unsold clothing product stock in the stores. Additionally, some products which are trendy get sold out but some remain in the inventory only. 

 

The expansion in inventory stocks than the actual sales results in serious issues in terms of financial and operational functioning of the brands. 

 

Festive seasons are often considered good for the apparel brands. Many retailers recorded strong growth in the festive season. However, it faced subdued demand in the winter season later. According to V-mart, it is difficult to project dynamics of seasonal demand. V-mart faced subdued demand for apparels in the winter season. It stated that in this situation, stores have to either give a bit of discount in order to reduce inventory or it has to face some leftover stock in the stores.

 

Approach of retail brands

Many apparel brands are taking efforts to limit forced discount offerings in order to maintain stable margins. The companies are focusing on expanding their channel mix, particularly online channels. Arvind Fashions was successful in achieving full price on its sales. It delayed offering discounts and did not have end-of-season sales.  

 

The company believes that focusing on discounting and thinking it as a solution to reduce inventory leads to low-quality growth. Its main purpose is to remove business strategies resulting in low-quality growth. It also closed its under-performing stores. It resulted in contraction in total store space of the company in the first half of the previous year. The company is now focusing on growth driven by online channels.

 

 

 

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Airfare to rise marginally if tariff proposal accepted

 

 

 

 

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Airfare to rise marginally if tariff proposal accepted
Equities, Markets - February 27, 2025

Airfare to rise marginally if tariff proposal accepted

Airfare to rise marginally if tariff proposal accepted

 

Overview

Delhi International Airport Limited (DIAL) CEO Videh Kumar Jaipuriar stated on Wednesday that if the Airports Economic Regulatory Authority (AERA) accepts the tariff proposal that DIAL submitted, the cost of tickets for travelers going to and from the airport will increase by no more than 1.5%. The largest airport in India, DIAL, which is run and managed by the GMR Group, has asked the AERA to increase the user development fee (UDF) for first-class and international business travelers over the next four years in comparison to economy and premium economy.

 

Marginal hike in airfare

The aeronautical tariff for IGIA for the five-year period ending March 31, 2029, is presently being determined by the Airports Economic Regulatory Authority of India (AERA). DIAL had filed a suggested tariff card as part of the process, which would have imposed costs that were much higher than the current rates. The plan sparked rumors that, should AERA approve the increased charges, flying to and from the Delhi airport might become more expensive.

 

However, according to DIAL, the effect on airfares is only anticipated to be slight. Given that the company has a large amount of capital expenditures and debt, the operator claims that raising tariffs is essential to its ability to stay financially viable and keep investing in the airport. Stakeholder engagements are ongoing as part of the tariff-determining process, and AERA will undoubtedly have the last word in the tariffs.

 

Current composition of aeronautical taxes and Recent DAIL suggestions

Airline levies such as landing and parking fees, which the carriers pay, and user development fees (UDF), which customers pay directly, are examples of aeronautical taxes that have an indirect effect on airfares.

 

DIAL has suggested differing usage fees for customers traveling in business and economy, with the latter being required to pay extra. Additionally, it has suggested charging more for flights that operate during morning and evening peak hours than for flights that operate at other times. This is the first time an airport operator in India has requested varying rates depending on the travel class and time. Furthermore, DIAL has suggested charging travelers traveling to Delhi an additional UDF.  At the moment, passengers must pay the UDF when they depart.

 

The current effective fare for passengers, both local and international, who travel straight to the airport is approximately Rs 129 per departing passenger. The UDF is set at Rs 405-610 per passenger for domestic flights in 2025-26 (FY26) and FY27, and Rs 210-315 for FY28 and FY29, according to the proposed tariff card that DIAL presented. The suggested UDF for domestic flights arriving in Delhi is Rs 140–210 per passenger in FY26 and FY27, and Rs 80–115 per passenger in FY28 and FY29. The planned UDF for international flights is much higher, at Rs 810-1,620 per leaving passenger for FY26 and FY27, and Rs 430-860 for FY28 and FY29.  The planned tax for arriving foreign passengers is Rs 150-300 for FY28 and FY29, and Rs 280-570 for FY26 and FY27.

 

DIAL’s estimates indicate that the proposed tariff hikes would have little effect on airfares, despite the fact that the proposed UDF hikes are clearly significant. According to Jaipuriar, DIAL’s average yield per passenger (YPP) would increase from the current Rs 145 to Rs 370. However, since airport taxes make up a minor portion of the cost, the impact on airfare would be minimal at most.

 

DIAL’s Debt Struggles and Potential Impact on Future Operations

Jaipuriar claims that DIAL has made significant investments in the IGIA’s development over the last 20 years, resulting in the operator’s excessively large debt. The largest expense that has prevented DIAL from being profitable is the interest paid on its debt, which has resulted in losses of about Rs 2,900 crore. This is mostly due to the fact that such major infrastructure projects necessitate frontloading capital expenditures and taking out large loans.  However, DIAL has not experienced any operational losses.

 

DIAL maintains that it might have to take out new loans to pay off its current debt if the projected tariff increase doesn’t happen. Jaipuriar claims the operator is sitting on more than Rs 14,000 crore in debt and that its equity is eroding. If these issues are not resolved, the DIAL’s credit ratings may suffer and its borrowing costs may rise.

 

According to Jaipuriar, DIAL has invested over Rs 30,000 crore in the IGIA over the last nearly two decades, with an additional Rs 25,000 crore going to the government-owned Airports Authority of India (AAI) under the revenue sharing arrangement between DIAL and AAI.

 

Conclusion

DIAL’s tariff hike proposal, which will have a nominal effect on airfares, is necessary to help tackle its rising debt and financial issues. The airport has invested substantially on the development of IGIA, which has cost it heavily in the form of heavy interest payments. Although DIAL has not incurred operational losses, the fee hike proposals are necessary for its financial health. The ultimate discretion is with AERA, and if the increase in tariff is rejected, DIAL may incur increased financial stress and higher interest costs.

 

 

 

 

 

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Microfinance sector recorded surge in NPAs to Rs. 50000 crore

 

 

 

 

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Microfinance sector recorded surge in NPAs to Rs. 50000 crore
Banking, Business, Equities, Markets - February 27, 2025

Microfinance sector recorded surge in NPAs to Rs. 50000 crore

Microfinance sector recorded surge in NPAs to Rs. 50000 crore

 

Microfinance sector in India recorded non-performing assets (NPAs) of Rs. 50,000 crore at the end of December, 2024. The NPAs of the microfinance sector is about 13 percent of the gross credits. Despite the efforts of RBI to mitigate risk by lowering capital allocation requirements for risky unsecured loans, the NPAs of the microfinance sector hit an all-time high record of Rs. 50,000 crore.

 

Hike in portfolio at risk (PAR)

The portfolio at risk which could convert into NPA surged to 3.2 percent of the total credit. It was only 1 percent last year. Overall scenario of the microfinance loan portfolio indicates serious concerns about the credit discipline prevailing in the sector. 

 

Cautious Approach

In the midst of a hike in NPAs and the portfolio at risk in the microfinance segment, industry leaders in the market are looking at the future with a careful approach. Managing director of IndusInd Bank, Sumant Kathpalia said that the bank continues to have a prudent approach in terms of the microfinance segment. He stated that the bank’s customer base is indicating early signs of stability and it will be highlighted in the first quarter of the financial year 2026. Though, there is a probability of a rise in slippages in the upcoming quarter of the financial year 2025. 

 

Total share of NPA in microfinance segment

According to the information of Crif High Mark, the total proportion of NPAs, which are due for more than 90 days in the microfinance segment, is about 13 percent.  The total credit not paid for about 91 to 180 days accounts to 3.3 percent of the total loans. Also, the loans not paid for more than 180 days are recorded at 9.7 percent of the total loans.

 

The information does not include the data for the previous six months. It is likely for NPAs of the microfinance sector to hike to 14 percent of total loans or Rs. 56,000 crore, if the previous six months’ data is added to it. 

 

Performance of microfinance sector

In the past three quarters of the financial year, the microfinance sector in India recorded contraction in growth. Even though lenders tried to clean up their financial records by writing off bad assets. Another reason for this subdued performance is giving too many credits to low-income borrowers in order to achieve high growth quickly. It led to further expansion in defaults in the microfinance sector. 

 

Microfinance credit is generally given to women from low-income households with income less than Rs. 3 lakh on yearly basis. These loans usually do not have any collateral leading to becoming risky in terms of economic issues. 

 

Effect on Financial institutions and banks

The hike in NPAs in the microfinance sector indicates high risk for banks largely operating in unsecured lending segments. Though, every unsecured credit does not come in the microfinance sector. Some of the banks with large unsecured loans and currently facing high pressure in the loan segment are IDFC First, RBL Bank, Bandhan Bank, and IndusInd Bank. In the past, Bandhan Bank was a microfinance institution which later changed into a universal bank. At the present times, the bank has about Rs. 56,120 crore of unsecured loan portfolio and 7.3 percent of these unsecured loans are NPAs at the end of December, 2024. 

 

Recently RBI took the decision to lower capital requirement on micro loans given to MFIs to about 75 percent, which was earlier 125 percent. It aided in releasing more capital for creditors to lend and expand their businesses. The unsecured loans offered for the purpose of consumption remain at 100 percent of capital requirement.

 

Major Concerns of small finance banks and NBFCs

Due to the rising NPAs and potential risk of NPAs in microfinance lending, small finance banks like Utkarsh and ESAF recorded net losses in the third quarter. Small finance banks like Ujjivan, Equitas, Jana, and Suryoday recorded contraction in net profits by about 64 percent, 67 percent, 18 percent, and 42 percent on YoY basis, respectively, in the third quarter.

 

In terms of NPAs in microfinance loans in universal banks is recorded to be around 15.7 percent. On the other hand, total NPAs in microfinance loans in small finance banks stood at 18.3 percent. 

 

NBFC-MFIs like Spandana and Fusion broke their financial agreement due to recording quarterly losses in a row. The main reasons for these losses were expansion in the number of bad loans and hike in funding costs. 

 

In the past, the microfinance sector acted as a main driver for financial inclusion in the economy. It is now facing serious concerns as lenders are unable to balance both asset quality and growth of the finance institutions. 

 

 

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Deal-making in the Indian Hospital Segment booming

 

 

 

 

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Equities, Markets - February 26, 2025

Deal-making in the Indian Hospital Segment booming

Deal-making in the Indian Hospital Segment booming

 

Overview

The hospital sector is undergoing a rise in dealmaking, with KKR paying $400 million for Healthcare Global. This pattern demonstrates the industry’s increasing investor interest, which is being fueled by the expanding need for high-quality healthcare services.  The sector has grown significantly due to a number of factors, including medical tourism, government assistance, and rising insurance coverage.

 

The healthcare industry in India is humming with frantic negotiations.  In the most recent of the major transactions that are bringing major players into the industry and consolidating it, KKR, a global private equity and investment firm based in New York, paid close to $400 million to acquire a controlling interest in Healthcare Global (HCG), a leading cancer care hospital chain, from private equity peer CVC Capital Partners. After one of its largest payouts in India left Max Healthcare two years ago, KKR returned to the industry last year when it acquired Baby Memorial Hospital.

 

Deal making in the Healthcare Sector

In recent years, India’s hospital industry has seen a boom in deal-making, with hospitals now accounting for the majority of FDI, according to a December TOI report.  Hospitals received $1.5 billion, or 50%, of all foreign direct investment (FDI) in FY24.  Hospitals’ proportion of healthcare FDI has more than quadrupled from 24% in FY21 and has been increasing from 43% in FY20, indicating its increasing relevance. This is a significant increase.  Alongside the historically favored pharmaceutical industry, the pattern also shows a growing investor preference for hospitals.

 

According to a senior executive of the European investment bank Rothschild & Co., the robust private equity interest in India’s healthcare services firms is a very reliable sign of the multi-decade growth potential present in the industry. Hedley Goldberg, partner and worldwide head of healthcare services at Rothschild & Co., recently stated that an increase in interest is anticipated as foreign businesses assess the market and become more accustomed to the domestic environment.

 

Large Indian companies are also drawn to the healthcare industry in addition to a number of private equity investments. Although a number of corporations, like Tata, Birla, and Hinduja, are involved in the healthcare industry, none have established a substantial presence throughout India. However, the Bajaj Group is getting ready to enter the healthcare industry by establishing a network of hospitals in the nation’s major cities. It has set aside Rs 10,000 crore as an initial investment, according to Bloomberg.

 

Reliance Industries, owned by billionaire Mukesh Ambani, paid Rs 375 crore a few months ago to acquire Karkinos, a technology-driven healthcare platform with a cancer focus.  Under the Insolvency and Bankruptcy Code (IBC), Reliance purchased it.  During the Covid-19 pandemic, hospitals in particular saw significant growth in the healthcare industry.  However, many independent hospitals found it challenging to maintain their operations as the situation improved. Two groups of bidders have shown interest in these hospitals: those who are already in the business and looking to grow, as well as those who wish to turn these organizations around before they are sold to another party.

 

Prominent healthcare organizations, such as Manipal Hospitals, Apollo Hospitals, and Fortis Healthcare, have been making significant investments in key areas by purchasing both new and old buildings for greenfield projects. These purchases assist healthcare providers reach high-demand areas with inadequate medical infrastructure in addition to enabling them to swiftly develop their operations.  Last year, Manipal Hospitals, a division of Temasek Holdings, paid Rs 415 crore for a five-story hospital complex in the western district of Andheri, Mumbai.

 

Indian Healthcare Sector: A sweet spot for investors

The Indian hospital and diagnostic industry’s market capitalization has risen ninefold from Rs 37,500 crore in FY20 to Rs 3.5 lakh crore, revealing that the industry has attracted significant investor attention during COVID-19.  The growth has been driven by a combination of improved pricing, expanded insurance coverage, and shift towards more advanced surgeries, including transplants. The shares of major hospital chains such as Apollo Hospitals and Max Healthcare performed well in the stock market.  The large underserved rural market beyond urban areas, increased disease incidence, and growth in insurance coverage are the key growth drivers of the industry. The sector is highly attractive to investors as hospital chains are putting more money into growth, which is projected to grow at a rate of 12% per year in the next three years.

 

Need for more beds

India’s healthcare sector is being led by a rising number of lifestyle diseases and the requirement for affordable treatment. Seven listed hospitals will increase 14,000 beds in the next three to five years, supplementing the 22,000 extra beds in private hospital chains, as per a report by HSBC Global Research. The WHO states that India currently has a very low bed availability of approximately 16 per 10,000 individuals, and even with these augmentations, there will not be beds to spare. Over the next five to seven years, India will need to have an additional 100,000 beds to meet the growing healthcare demands of the nation, particularly as non-communicable diseases such as diabetes, cancer, and cardiac ailments increase.

 

Budget 2025 incentives

Healthcare and industry professionals praised the Union Budget 2025-26, which was released in February, for its emphasis on developing a patient-centric environment and reinvigorating medical tourism.  ‘Heal in India’ and medical tourism would be pushed in collaboration with the business sector, according to Finance Minister Nirmala Sitharaman.  According to her, it will be supported by simplified visa requirements and capacity building.

 

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Weakest performance of Rupee at 87.21 against US dollar

 

 

 

 

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Equities, Markets - February 26, 2025

Weakest performance of Rupee at 87.21 against US dollar

Weakest performance of Rupee at 87.21 against US dollar

 

Following 3rd February, 2025, Indian rupee recorded its worst intraday fall on 25th February, 2025. It faced a contraction of 0.57 percent which accounts to Rs. 87.21/USD. The reason for this is the expiration of the position of RBI in the non-deliverable forwards (NDF) segment. It resulted in an increase in demand for the US dollars leading to depreciation of the Indian rupee. 

 

Despite the efforts of the RBI to mitigate losses, the performance of the Indian rupee was identified as the worst compared to other Asian currencies in the market. It closed at Rs. 87.21 per US dollar contracted from its previous close of Rs. 86.70 per US dollar.

 

Reasons for depreciation of Indian rupee

In the non-deliverable forwards (NDF) market, the Reserve Bank of India had a forward dollar position. It expired on 25th February, 2025, resulting in a surge in demand for US dollars in the market. Additionally, there was higher demand for US dollars in the market at the end of the month. The end of the month’s demand was driven by importers’ payments in the midst of growing uncertainty in the market due to Trump’s trade tariffs. 

 

Apart from this, foreign portfolio investors sell-off their Indian equities leading to expansion in demand for US dollars in the market. Ultimately, it led to a contraction in the value of the Indian rupee. 

 

According to the information of BSE data, foreign portfolio investors sold equity stock of around R. 3,529 crore on 25th February, 2025. As per the depository information, stocks worth Rs. 30,390 core are sold by foreign portfolio investors until now in the month of February, 2025.This fresh sell of equity shares in the market resulted in high pressure on performance of Indian rupee in the market as demand for Indian rupee contracted. 

 

The dollar index was positioned at 106.65 US dollars against a basket of six important currencies in the world leading to a burden on rupee value. The rally in the dollar index indicates a surge in demand for US dollars compared to other currencies. Trump’s regime confirmed tariff enforcement on Mexico and Canada. It indirectly affected Indian rupee due increase in market uncertainty, boost to foreign investment outflows, severe impact on trade, and surge in demand for US dollars.  

 

Apart from this, elevated crude prices, imposition of US tariffs on Iran oil sector,  increase in demand for oil led to strong depreciation in rupee value. 

 

Performance in relation to other Asian currencies

Following the depreciation of Thai Baht to 0.6 percent, depreciation of Indian rupee is considered as the second worst performer among Asian currencies’ performance in the market. The depreciation of Indian rupee is identified to be its largest intraday decline in the previous three weeks. Though, a marginal recovery in value of Indian rupee was recorded after this sharp drop.  

 

In the present times, there is a probability of persistent depreciation in Indian rupee due to growing geopolitical concerns, inflation in crude prices, and strong capital outflows. 

 

 

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India- EU to work together on major industries

 

 

 

 

 

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India- EU to work together on major industries

India- EU to work together on major industries

 

Overview

India and the EU will work together on semiconductors, telecoms, electric vehicles, and Al, with a focus on secure connectivity. With a budget of Euro 60 million, they seek to standardize EV charging standards and concentrate on battery recycling research. Commitments to market access will also be discussed at high-level discussions.

 

India-EU to cooperate on key industries

In their top-level meeting this week, India and the EU are likely to enhance cooperation in vital infrastructure and technology sectors, including telecom, semiconductors, electric vehicles (EVs), and artificial intelligence (AI). The establishment of “secure and trusted” communications networks will be among the priority areas, providing an alternative to China-led infrastructure projects.

 

To ensure efficiency and compatibility, both sides aim to harmonize EV charging infrastructure standards. A “joint research cooperation” program will also be established with the intention of recycling electric car batteries. The Horizon Europe program and India will have a joint budget of €60 million to fund these projects.

 

India is pushing the EU to commit to more stronger ties in the short term on market access. There have been disagreements, however, with the EU wanting this issue to be dealt with within the framework of the agreed free trade agreement and India demanding explicit mentions in the Trade and Technology Council statement.

 

Previous and Current Meets

On Thursday and Friday, EU President Ursula von der Leyen will visit India with the European Union College of Commissioners. Von der Leyen is visiting India for the third time having traveled to India in September 2023 to attend the G20 Leaders’ Summit and in April 2022 on a bilateral diplomatic visit. Von der Leyen and Prime Minister Narendra Modi have frequently met outside of global gatherings.

 

The EU College of Commissioners’ first-ever trip to India will be one of the first of its kind since the current European Commission’s mandate began in December 2024, following the June 2024 European legislative elections. Von der Leyen and Modi will preside over a plenary session of the College of Commissioners and the Indian government during the visit. While Von der Leyen and Modi will meet bilaterally, College members will also meet with their counterparts one-on-one.

 

The EU said last Friday that Vice-President Virkkunen, High Representative/Vice-President Kaja Kallas, and commissioners Maros Sefcovic and Ekaterina Zaharieva will represent the EU at the second meeting of the Trade and Technology Council, which will also take place during the heavy-duty visit. The EU’s second such bilateral forum is the council with India; the first was with the US and was established in 2021.

 

Conclusion

Through the council meeting, which will be led by the Ministry of Electronics and IT, India is likely to examine more cooperation and purchases with the EU in the semiconductor sector. India and the EU are cementing their ties in strategic sectors such as semiconductors, telecom, electric vehicles, and AI under a shared budget of €60 million. A focus on bringing EV charging systems into harmony as well as pioneering battery recycling technologies is among these. Although access to markets remains an area of negotiation, visits such as the one by EU President Ursula von der Leyen indicate deepening cooperation. The partnership is intended to enhance safe connectivity and offer an alternative to China-driven infrastructure projects, which reflect the strategic value of India-EU relations.

 

 

 

 

The image added is for representation purposes only

FMCG companies initiative to lower replenishment period in rural areas

 

 

 

 

 

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FMCG companies initiative to lower replenishment period in rural areas

FMCG companies initiative to lower replenishment period in rural areas

 

In recent times, rural demand in India is growing more rapidly than the demand in urban areas. Major fast-moving consumer goods (FMCG) players like Britannia, Godrej Consumer, and ITC are using  stock-ready vans to quickly deliver their products to small shops in rural areas. It will aid the shop owners in getting stock at faster speed and also keep their stock full. It will promote good business for the retailers as well the companies. Its main purpose is to contract turnaround times for shop owners. 

 

Old two-step process of FMCG distribution

In the past, FMCG used to distribute their products to the retailers in rural areas by following a two-step process of FMCG distribution. In this, the sales representatives will visit retailers in rural areas and collect their respective orders. The delivery of the stock will be completed on the same day or the next day. 

 

New initiative of FMCG firms

In this new plan, many FMCG players partnered with stock distribution vendors. These vendors are the one with responsibility to coordinate between stockists and van drivers. According to this new initiative, the stockists load the company’s products in a van. On a daily basis, the van driver, along with stock distribution vendors goes to 4 to 5 villages. The most important benefit of this initiative is that it leads to immediate fulfillment of the order in just a few hours. In the past, the time period required to fulfill orders was 1 to 2 days leading to stockout. With the help of this plan, replenishment period is contracted to just a few hours. 

 

The main goal of the plan is to reduce replenishment time to less than a single day. It will aid in mitigating revenue losses caused by no stock. In the previous few months, some FMCG players have implemented this strategy. 

 

It broadens the role of van drivers to someone who is knowledgeable about a firm’s product portfolio and also able to promote it. In the past, the role of van drivers was just to deliver products of the companies at the right location. 

 

In the midst of growth in rural demand, this initiative of FMCG firms is gaining progress. Many firms are adopting this strategy to expand their market presence in rural areas. 

 

Steps taken by ITC

ITC is the leading company to introduce a van-led distribution model in rural areas for a long period of time. To ensure their products reach to the most remote parts of the country, ITC uses stock-ready mobile vans. It is cost-effective and makes it easier and faster to deliver products in the most remote parts of India as well. It ensures the products are reached to small retailers in the village in a short span of time and helps them to not get stockout. 

 

The company also appointed stockists to handle the work of vans in order to improve its distribution network in the country. Apart from this, the firm uses the latest technology like artificial intelligence (AI) and geo-spatial mapping. It helps the company to recognize high potential markets and plan the best route for their delivery vans. It aids in improving the efficiency of distribution networks. 

 

In order to expand product sales via vans in rural areas, Godrej Consumer launched Vistaar 2.0. Many companies have identified the growing potential of rural demands supported by expansion in disposable incomes and rise in internet penetration in rural areas.

 

In the present times, many companies are using stock-ready vans, and smart logistical strategies. The recent initiative of FMCG companies will help them to improve their sales efficiency and transform the dynamics of the rural retail market in India. It will increase availability and accessibility of essential products in the rural market. 

 

 

 

 

The image added is for representation purposes only

Adani, Ambani to invest Rs. 50,000 Cr. in Assam

 

 

 

 

 

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