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Govt Raises Agri Credit Target to ₹28 Lakh Cr, But Efficiency Concerns Remain
Business, Equities, Markets - January 23, 2025

Agricultural sector in India anticipates enhancement of rural income in the upcoming Budget

Agricultural sector in India anticipates enhancement of rural income in the upcoming Budget

Overview
Every financial year, the Union budget gives a chance to make improvements in the rural areas of India. Its main purpose is to maintain agricultural productivity, increase the base of various income channels and also expand the overall productivity of rural regions in India.

According to the observations of the FMCG sector, the demand in rural areas is showing positive signs. It is partially because of factors such as sufficient reservoir levels, strong government aids, and also positive monsoon season.

Taking this matter into consideration, the Union Budget 2025 can certainly aim for strengthening of demand and income levels of hinterland areas in India.

Subsidies related to Fertilizers
Fertilizer is one of the important elements in agricultural production. The overuse of chemical fertilizers such as Urea can severely harm the agricultural land as well as its production. The government of India aims at implementation of balanced fertilization of land to enhance productivity in agriculture. To achieve this goal, it has implemented a subsidy known as Nutrient-based Subsidy. This scheme gives incentives to fertilizers which do not use urea as a component. It helps farmers to buy fertilizers at affordable prices. However, recently the amount of funds given for subsidy under this scheme has declined due to the hike in cost incurred on making these fertilizers.

Despite this concerning situation, the government aims to have balanced use of various nutrients in the agricultural land and not completely depend on Urea as fertilizer. It indicates that the government of India will have increased allocation of funds for nutrient-based subsidy in the upcoming budget. Apart from this, the government of India will take more schemes such as Soil Health Card for farmers. It gives info of soil health of farmer’s land and which nutrients are required for the land. It helps to balance use of various nutrients and not completely depend on Urea as fertilizer.

Investors can observe performance of companies such as Paradeep Phosphates and Coromandel International.

The government of India is expected to enhance use of advanced types of fertilizers such as organic and nano fertilizers. The reason for this is to contract the use of chemical fertilizers, enhancement of production, reducing import levels of fertilizers as well as improvement in budget allocated for subsidies.

National Mission on Natural Farming
Under this programme, the government of India decided to encourage about 1 crore farmers into natural farming in a period of two years. It will help in enhancing the health of agricultural land, reduce use of fertilisers and improve agricultural production. It implements this scheme by giving certification and branding to farmers who integrate natural farming.

Increase in production of coarse grains and oil seeds
In the previous years, the government of India focused on making India self-sufficient in terms of production of oilseeds like sesame, sunflower, soybean, mustard, and groundnut. The government has taken initiatives such as providing welfare schemes and minimum support price for encouraging expansion of production of oilseeds and non-wheat products. It is expected that in this year as well, the government will take actions towards expansion of production of these crops.

Other channels of income
The latest NABARD’s report shows that a compounded annual growth rate (CAGR) of about 9.5 percent is recorded as the average monthly income of rural households for the duration of financial year 2017 and financial year 2022. In aggregate terms, the growth in income levels of rural households is around 57 percent. Though it seems good, it is quite below the target set by the government of India of making farmers’ income twice in the same period of time.

In this situation, to improve income levels of rural households, the government needs to focus on other channels of income.

In the past few years, several actions have been taken by the government of India such as white revolution, honeybee-keeping, and blue revolution to improve income levels of farmers. The budget allocated for fisheries increased by a CAGR of 24 percent and allocations of funds for dairy increased by a CAGR of about 20 percent. The initiatives were taken to aid shrimp farming in India by creation of Nucleus Breeding Centres in the previous year.

If the government again takes steps towards enhancement of these segments, then it will possibly have influence on companies such as Apex frozen foods, Avanti and many more.

Enhancement of supply chain of agriculture
The supply chain of agriculture includes logistics, crop insurance, cold storage chains, and agricultural producer markets. The improvement in these components of the supply chain will certainly lead to development of the agricultural sector and rural areas of India. Also, the strong agricultural supply chain aids in mitigating the rise in food inflation recorded in the past few years.

In conclusion, there is a possibility that the government of India will again focus on its previous year plan of bringing resilience and productivity in agricultural sector in India.

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Impact of Trump 2.0 on Indian Equity Market

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Rapido vs Ola-Uber: How a Bike Taxi Startup Disrupted India’s Ride-Hailing Market
Business, Equities, Markets - January 23, 2025

US Launches $500B Stargate AI Project, India Eyes Key Role

US Launches $500B Stargate AI Project, India Eyes Key Role

Overview
US President Donald Trump joined Oracle Chairman Larry Ellison, SoftBank CEO Masayoshi Son, and OpenAI CEO Sam Altman on January 22 to announce the establishment of Stargate, a new business aimed at developing AI infrastructure in the nation. Major IT companies will initially contribute $100 billion to the project, which has a target investment of up to $500 billion in the upcoming years. Trump claims that the project will create 100,000 new jobs in the United States.

Stargate Project
The initial funding partners in Stargate include MGX, Oracle, OpenAI, and SoftBank. Stargate’s primary partners are SoftBank and OpenAI, with Altman’s AI lab handling operations and Masayoshi Son’s company handling finance. The chairman will be Son. The primary first technological partners are Arm, Microsoft, NVIDIA, Oracle, and OpenAI. As we finalize definite agreements, we are assessing potential locations across the US for additional campuses, and the buildout is presently underway, beginning in Texas, according to OpenAI.

Opportunity for India by way of Stargate Project
Industry analysts stated on Wednesday that India has a great chance to accelerate its AI objectives by strengthening its partnerships with the United States through the $500 billion Stargate Project, which is the brainchild of OpenAI, Softbank, Oracle, and others. This can be accomplished by utilizing India’s participation in the Indo-Pacific Economic Framework for Prosperity (IPEF) and the Critical and Emerging Technology (iCET) agreement between the two countries—co-developing innovative technologies and expanding its domestic capabilities.

According to Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA), proactive diplomacy, strategic investments, and cooperative approaches will be essential to ensuring that India not only gains from the global advancements in AI but also positions itself as a powerful player in the global AI landscape.

India has the possibility of benefiting from the Stargate Project, even if its main goal is to strengthen US supremacy in the AI ecosystem. Nvidia, Arm, Microsoft, Softbank, Oracle, and OpenAI are just a few of the big businesses that are actively using Indian expertise and already have a sizable presence in India. Chandak went on to say that this gives Indian professionals the chance to work on this enormous project and advance their knowledge of cutting-edge AI technologies.

During the 120-day review process, there is cautious hope that the US administration would take industry input into account and loosen its restrictions on AI exports, particularly with regard to India and other key allies.

Need for AI Policy
Dr. Ajai Chowdhry, the head of HCL and chairman of the National Quantum Mission, said that this endeavor demonstrates the US’s real intention to regulate large language models (LLMs) and keep strong control over AI. There is a need to develop our own AI policy and begin tightly managing our own data if we want to achieve strategic autonomy. Additionally, Chowdhry stressed that we need to create domestic data center hardware since it will become more and more difficult to manage our data in any other way. He went on to say that in order to develop a new AI policy, the government and industry must collaborate.

The first data centers are now being built in Texas as part of the Stargate Project; 20 centers totaling half a million square feet are planned. According to Ellison of Oracle, these centers might enable AI applications that range from sophisticated healthcare solutions to electronic health records.

IndiaAI Mission
An important step towards strengthening India’s AI ecosystem was taken in March 2024, when the Cabinet authorized an allocation of more than Rs 10,300 crore for the IndiaAI Mission. The IndiaAI Mission’s key initiatives, such as the IndiaAI Compute Capacity, IndiaAI Innovation Centre (IAIC), IndiaAI Datasets Platform, IndiaAI Application Development Initiative, IndiaAI FutureSkills, IndiaAI Startup Financing, and Safe & Trusted AI, are expected to be accelerated by this significant financial infusion, which is planned to take place over the course of the next five years. The IndiaAI Compute Capacity, a key component of this endeavor, aims to establish a state-of-the-art, scalable AI computing infrastructure by deploying more than 10,000 Graphics Processing Units (GPUs) through smart public-private partnerships.

The main goal of this investment is to support India’s AI innovation ecosystem by ensuring a systematic execution of the IndiaAI Mission through a public-private partnership approach. The government claims that about 8.6 lakh applicants have signed up for the IndiaAI “Future Skills” program, which was created in partnership with business partners to offer training in line with the most recent standards.

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Impact of Trump 2.0 on Indian Equity Market

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Can India’s Private Sector Growth Sustain Itself Amid Cooling Momentum?
Business, Equities, Markets - January 22, 2025

IT Firms witness healthiest recovery in Q3FY25

IT Firms witness healthiest recovery in Q3FY25

Overview
After a period of slow growth, the Indian IT sector saw its biggest rebound in Q3 FY25, signaling a dramatic turnabout. The most recent quarter offers fresh hope for the sector with rising revenue numbers, significant deal wins, and indications of a recovery in discretionary spending. The third quarter of FY25 was a turning point, as businesses demonstrated their best recovery in 18 months. Despite the difficulties of a typically bad time characterized by furloughs, the quarter ending December 31, 2024, saw better constant currency revenue, deal wins, and operating margins.

The IT services markets have shown the strongest recovery in the past 18 months, according to these results (Q3FY25). Phil Fersht, CEO of HFS Research, told Moneycontrol that many businesses have begun to increase their investments in AI, data infrastructure, and cyber security since the US market is no longer paralyzed by the election.

Quarter 3: Recovery of the Eurozone
Q3 highlighted the recovery in a few other sectors, including the Eurozone, whereas Q2 focused on the banking, financial services, and insurance (BFSI) vertical and the North American geography. According to Gaurav Parab, Principal Research Analyst at consultancy firm NelsonHall, growth in other sectors has followed the BFSI rebound in prior quarters, as anticipated. Growth in other verticals has also been made possible by the BFSI recovery. This, according to Parab, was due to geopolitical clarity, a clear US mandate, and the settlement of disputes that endangered international stability.

Hiring Trends
There is no longer any doubt about the US’s H1-B visa regulations or whether IT companies would have been negatively impacted. Since they have been recruiting more locals for a while, the big companies, including TCS, Infosys, HCLTech, and Wipro, have stated that they rely very little on these visas. Additionally, the top five exporters of IT services added 10,412 workers over a nine-month period (9MFY25), which represents a cautious recovery after they laid off roughly 57,608 workers during the same period the previous year.

Coming to hiring figures of major tech firms, over 5,000 new hires were added by Infosys in Q3, and the company anticipates hiring over 20,000 new hires in FY26. Further, HCLTech has consistent hiring momentum by adding 2,134 new people to its workforce. Despite a long-term hiring expectation of 40,000 new hires in FY25, TCS saw a drop of 5,370 employees. Speaking of Wipro, although Wipro reduced its workforce by 1,157 workers, the firm placed a strong emphasis on increasing retention and matching hiring strategies to demand. Lastly, business restructuring was the main reason given by Tech Mahindra for their 3,785 employee layoffs.
Thus, across the board, attrition rates were still high but controllable. Hiring is anticipated to increase in FY26 as the demand climate improves.

Discretionary Spending on the rise in Q3FY25
In their Q3FY25 earnings conferences, the leading IT services companies in India stated that they have a “cautiously optimistic” outlook on discretionary spending. Although there were signs of recovery, businesses were hesitant to declare it a full-fledged comeback. Early indications of improvement were seen in discretionary spending overall, as clients resumed investments in particular fields like artificial intelligence, cloud computing, and digital transformation.

According to TCS CEO K Krithivasan, the company is confident that 2025 could surpass 2024 because of certain early indications of discretionary expenditure. TCS’ immediate rival, Infosys, reported increasing discretionary expenditure in industries including financial services and retail in the US and Europe, supporting its enhanced revenue growth estimate. Salil Parekh pointed out that client investments are gradually becoming more optimistic, while the rate is still slow.

Similar opinions were expressed by HCLTech, the third-largest provider of IT services in India, which attributed the increase in discretionary expenditure to customers’ emphasis on efficiency and innovation, especially in Generative AI (Gen AI) and data-driven transactions. However, Wipro is witnessing a gradual but steady recovery in discretionary expenditure. While clients are still cautious, there is increasing momentum in areas related to transformative projects, according to Chief Executive Officer Srinivas Pallia.

High TCV deal wins and management commentary about the increase in discretionary spending are favorable signals, according to Pareekh Jain, Founder, and CEO of EIIRTrend. Additionally, most providers are seeing a steady increase in discretionary demand in particular categories, according to Yugal Joshi, leader of technology services research at management consulting firm Everest Group. Joshi further added that they refer to it as “green shoots” rather than a trend. Although it is more difficult to make a trend from this, discretionary demand typically rises after a decline of five to eight quarters, and the period is nearly over. As a result, clients’ discretionary spending will improve in the future.

The Gen AI Boost
In Q3FY25, generative artificial intelligence (Gen AI) became a major growth driver, progressing from pilot to active client operations deployment. According to TCS, Gen AI revenue increased in Q3 FY25 and made up roughly 10–12% of total revenue last quarter. Infosys’ emphasis on advanced AI skills is demonstrated by the development of more than 100 agentic AI solutions and the expansion of its small language model offerings. More feasible AI use cases were made possible by HCLTech’s approximately 85% cost reduction in the implementation of big language models when compared to early 2023.

Future Outlook
The prognosis for the IT industry is cautiously bullish as companies go into Q4 and beyond. IT majors are setting themselves up for long-term success as discretionary spending appears to be steadily increasing. In FY26, several factors will be carefully examined, including the conversion of big deal wins into actual revenue growth, the expansion of AI-led transformation initiatives, the sustained demand in the BFSI, retail, and healthcare sectors, hiring trends and attrition rate management, and macroeconomic stability in the US and Europe.

The Indian IT industry seems to have made progress, despite ongoing threats like shorter deal cycles and difficulties in emerging markets. The industry may have a significant resurgence in FY26 if the recovery momentum continues.

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Interest Payment Burden to reduce in FY26
Business, Equities, Markets - January 22, 2025

No requirement of capital investment in state-run banks in the Budget 2025

No requirement of capital investment in state-run banks in the Budget 2025

According to the Reserve Bank of India (RBI) regulations, banks in India are required to maintain a Capital to Risk-Weighted Assets Ratio of atleast 11.50 percent. It aims to maintain capital adequacy in the banks in order to fulfill financial commitments as well as to mitigate financial losses. It is to give protection from various risks such as operational risk, credit risk, and market risk.

Most of the public sector banks in India not only fulfill the criteria but also have CRAR of around 16 percent and more as well.

Capital Adaquecy of Public Sector Banks
In the month of December 2024, the Bank of Maharashtra’s CRAR is about 18.71 percent which is the highest record in between all the public sector banks in India. While, the position of lowest capital position is held by Bank of Baroda. It has a CRAR of about 16.26 percent. Even the lowest CRAR fulfills the criteria of RBI’s capital adequacy regulations.

Overall, it indicates state-run banks are not in need of capital financing at this point of time.

Asset quality of Public Sector Banks
In recent times, asset quality of state-run banks is not risky. In the month of September, 2024, their ratio of gross non-performing assets fell to 2.6 percent of the total credits. As per the recent report of RBI’s Financial Stability, it is the lowest record compared to the records of the previous 12 years. While, the net non-performing assets ratio is close to 0.6 percent.

Financial health of Public Sector Banks
The macro stress tests conducted on Public Sector Banks indicates that these banks have the strong capability to tackle stressful situations. In the month of September, 2024, public sector banks’ capital adequacy was about 16.60 percent. It indicates their strong financial health. It also hints that it is improbable for the Union budget 2025 to provide capital financing for state-run banks in India.
Probability of Capital Investment in Public Sector Banks
In the past, the government of India has often taken an initiative of providing capital investment to state-run banks. In the previous 10 Union Budgets of India, the government of India has given capital investment to public sector banks for about three times. The total capital financing accounts to Rs. 3.35 lakh crore.

The main purpose of these capital investments in the state-run banks is to fulfill the regulations. It is also to maintain strong credit growth. It is important to maintain credit growth as it helps to expand the scope of lending to businesses and people. It results in boosting economic growth. This purpose of boosting credit growth is important in state-run banks compared to private sector banks.

Apart from the funding through the Union Budget, state-run banks were able to get capital financing from the Indian government. It got capital investment of about Rs. 20,000 crore in the financial year 2022. In this same financial year, four state-run banks in India got capital financing of about Rs. 14,500 crore in the month of March. This financing was done with the use of pure discount bonds.

The overall financial health of public sector banks indicates that the budget 2025 may not have new capital investment for public sector banks in India.

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Trump Tariffs Push US Inflation to Eight-Month High
Business, Equities, Markets - January 22, 2025

Trump Regime: Opportunities of transformation in the midst of Chaos

Trump Regime: Opportunities of transformation in the midst of Chaos

Overview
On 20th January, 2025, Donald Trump became the US President for the second time. Before taking his oath on Monday, an article was published by the Wall Street Journal regarding Trump not making any statement regarding tariffs matter on his first day of official authority. This resulted in the dollar going down and a hike in US stock futures. This indicated that the investors are relieved. However, he made an announcement of implementation of 25 percent of import tariffs on goods from Mexico and Canada by 1st February, 2025. This led to fall in US stock futures as well as rise in dollar indicating investors are nervous. This whole situation implies the impact of Trump’s news and actions on the markets and also indicates that such uncertainty will prevail in the upcoming 4 years as well. The Indian stock market has also been facing fluctuations since yesterday.

Trend of Crypto Coins
Before his official oath on Monday, he launched a meme coin known as $Trump. The price trend of this coin was quite volatile as first it spiked high and later fell at a rate. The same situation was observed in the crypto coin launched by Melania Trump which is known as $Melania. This overall trend shows how investors need to get ready for a ride of excitement and later nervousness in this uncertain cryptomarket and overall market.

This situation is not actually difficult for US investors as Trump and his allies understand and work for fulfilment of the needs of US investors. In contrast to this, other countries’ stock markets, especially countries like Panama, Canada, and Mexico, have to take cope unaided.

Policies of New Trump Regime
The current uncertainty in the market indicates strong unpredictability of policies implemented under Trump’s regime. Trump has constantly focused on matters such as tariffs, change in immigration policy, and increase in oil production. So far, his actions are aligning with his agendas during election campaigns. His focus has not yet shifted towards China but there is a high chance that it will move towards it. Apart from this, it seems Trump looks at tariff matters from the point of negotiation tool or strategy to gain upper hand. It is possible that he is trying to get compromises from other nations.

Trump’s ideas seem to move towards expansionism. Although, he looks like someone who is only focusing on domestic matters. He is considering taking over regions such as Greenland, Panama Canal, and Canada. It indicates his idea towards expanding territory of the United States as he mentioned about growth in wealth, expansion of territories, in his oath ceremony speech. Trump also seems to admire the work of Willian Mckinley as the US President. The US President William Mckinley took control of regions such as the Philippines and Gaum from Spain, and also Puerto Rico, and Cuba.

Trump believes that the United States is a special country. It should be allowed to do anything it wants, without considering its effect on the other economies in the world. This is also one of the reasons why he wants the country to leave the Paris Agreement, the OECD tax treaty and World Health Organization (WHO).

United States’ Dominance
In the shadows of all his strong speeches, the main purpose is to keep the supremacy of the United Stated in all aspects including dominance in the economy. Currently, China is facing economic issues. Despite this, it is one of the emerging economies in terms of technology hub. Trump’s regime wants to ensure that the United States is no longer in a falling state and it is approaching to become the biggest dominant nation in the world.

Trump looks at China as the biggest competitor of the United States. It indicates that the country’s focus will be on the Asian region. Countries in Asia such as Taiwan and India could possibly play a major role in his strategies. Though, the United States looks at Taiwan as a challenge for establishing its supremacy in the semiconductor industry. Trump also believes that European countries should give fees to the country for protecting them. These countries are highly dependent on the United States and now going through a state of fear that Trump might sign a peace agreement with Russia in regards to the Ukraine situation.

Chaos of Trump’s regime
There is a lot of unpredictability in Trump’s ideas and his actions. He wants to stay away from wars but he was the one who aided the ceasefire in the Gaza region. Currently, China is suffering from an economic situation of capital outflow and deflation. In this situation, it is possible that China will agree with tariffs changes by the United States. Apart from this, there are several conflicts of interest among various groups. The people focusing on strengthening the domestic market have different views compared to ideas of supporters of Trump’s views and outlook of international entrepreneurs like Elon Musk. One of the instances of this situation is the H1-B visa case.

In conclusion, Trump’s regime will surely bring a lot of chaos in the upcoming four years. However, there is a chance of opportunities for reforms in this situation of uncertainty.

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Sensex Jumps 450 Points Amid Renewed US-China Trade Hopes and Strong Sectoral Buying
Business, Equities, Markets - January 22, 2025

Indian Quick Commerce: Growth Amid Challenges

Indian Quick Commerce: Growth Amid Challenges

Industry Overview
It is anticipated that the Indian Quick Commerce market will bring in US$5,384.00 million by 2025. A compound annual growth rate (CAGR 2025-2029) of 16.60% is anticipated for this market, resulting in a projected market volume of US$9,951.00m by 2029. A youthful, tech-savvy populace and rising smartphone penetration are driving the quick commerce sector in India. The Quick Commerce sector has expanded as a result of India’s expanding middle class and rising disposable income. Furthermore, the digital economy has grown as a result of foreign investment drawn to India by the government’s digitization initiatives and the country’s ease of doing business. Nonetheless, regulatory obstacles and inadequate infrastructure remain a danger to the expansion of the Quick Commerce business in India.

Recently, the quick commerce space has been near a saturation point due to cut-throat competition amongst key players in the market such as Swiggy, Zomato, Zepto, etc. Investors have begun to worry even more after the Q3 Results of Zomato which were announced on the 21st of January, 2025.

Worrisome Stakeholders
Investors in Quick Commerce companies have been rudely awakened by Zomato’s performance. On Tuesday, January 21, the company’s stock was down 10%, while rival Swiggy’s stock was down 9%. Based on their performance up to the previous quarter, shop rollouts, and market trends including expanding customer bases, increasing order values, expanding assortments, and store expansion, investors had mentally mapped out a path to profitability for these companies’ rapid commerce businesses. It was anticipated that Blinkit, Zomato’s fast commerce division, would approach breakeven during the December quarter.

While affirming that these tendencies are still there, Zomato’s management comments that accompanied its results also indicated a sense of urgency to open locations quickly, even at the risk of lower profitability. By the end of the year, it plans to build another 1000 dark stores, bringing its total to 1000, extending its goal by a full year. Additionally, it stated that even though the gross order value will expand by more than 100%, losses will persist in the near future.

The two main factors causing this trend to change are competition and the increasing demand from customers. The privately funded Zepto has become aggressive with its intentions for retail expansion, while publicly traded competitors like Swiggy are growing. The popularity of speedy commerce in the private market has also been cemented by the success of Zomato and Swiggy in the public markets. Zepto seems to be receiving money from investors hand over fist. Then there are e-commerce businesses that are entering the fast-paced market. Even omni-channel retailers are investigating methods to expedite delivery. The word “quick” is becoming synonymous with all online retail platforms.

As a result, the incumbents are working to increase their market share in other markets while also fortifying their position in the top ten cities, which are the primary drivers of rapid commerce growth. Future app fatigue may be a major contributing factor in this case.

Customer Retention is crucial
Analyze Blinkit’s retention rate for clients who made a single purchase between September 2022 and December 2022 from a different angle. Despite the rise in competition during this time, this customer group’s retention rate is 40–42 percent from March 2024 to December 2024. These clients also cover the cost of shipping. They are also what consumer firms call stickiness, even if Zomato promotes them as evidence of its unique proposition and execution.
Thus, if you attract clients early and provide them with a positive experience, they may become lifelong clients. This explains why it is necessary to open more stores in order to attract a larger percentage of clients who are switching to rapid commerce and then provide them with the services they require to stay loyal in the face of competition.

This will result in more depreciation, more investments, and a larger percentage of new stores that are not yet profitable in the short term. Because of the increased need for labor in the rapid commerce sector, competition may also result in higher operating expenses. When Swiggy’s results are released, it should be evident whether this kind of retail expansion has an effect on the company’s performance.

There’s another reason to be concerned. Zomato claimed that because of the low level of customer demand, their meal delivery service grew somewhat slowly. This is related to the slowdown in urban consumption that has occurred in certain areas. Profitability has increased, but business growth has slowed. In the December quarter, QoQ growth was only 3%.

Future of QC companies
The performance and future prospects of listed rapid commerce companies are questioned by Zomato’s financials, but the ecosystem is also called into uncertainty. For QC players as well as e-commerce and omnichannel businesses, online commerce will be a difficult environment. Significant expenditures and faultless execution are required in the battle to get customers on board—not just for groceries, but for everything from clothing to electronics—and deliver them in ten minutes. If not, accidents will probably occur, and it won’t be shocking if they do within the next year or two.

Conclusion
The primary cause of investors’ preference for short-term investments over long-term ones is their perception that QC plays are becoming profitable, which led them to overlook the comparatively high stock prices. Second, it’s unknown who will ultimately prevail among the expanding field of QC competitors. Thirdly, it is also clear how lengthy the long-term prospects will be if everyone chooses to invest. Investor opinion for these stocks may improve as the winners are separated from the losers, as time goes on, or when values become more realistic.

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HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth
Equities, Markets, Research, Result Updates - January 22, 2025

HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth

HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth

Company Name: Housing & Urban Development Corporation Ltd | NSE Code: HUDCO | BSE Code: 540530 | 52 Week high/low: 354 / 145 | CMP: INR 227 | Mcap: INR 45,551 Cr | P/BV – 2.66

HUDCO delivered an exceptional performance in Q3FY25, with its Profit After Tax (PAT) surging to INR 7.35bn, surpassing estimates of INR 6.32bn. The PAT grew by 6.7% QoQ and an impressive 41.6% YoY, driven by robust business momentum, strong Net Interest Income (NII), and significant provision writebacks due to marked improvement in asset quality.

Strong Net Interest Income and Stable Margins
NII for the quarter came in at INR 9.83bn, well above expectations of INR 8.32bn, reflecting growth of 23.3% QoQ and 47.3% YoY. This stellar growth was fueled by healthy interest income, supported by stable Net Interest Margins (NIM) at 3.19% for 9M FY25, compared to 3.2% in the same period last year.

Record AUM Growth Driven by Urban Infrastructure
The company’s Asset Under Management (AUM) reached a historical high of INR 1,189.3bn, growing 7.1% QoQ and 40.9% YoY, exceeding expectations. Urban Infrastructure emerged as the key driver, growing 6% QoQ and 72% YoY, and now accounts for 60% of AUM. Meanwhile, the Housing segment showed subdued growth of 8% QoQ and 11% YoY, though it is expected to gain momentum in Q4FY25 with disbursements under the Pradhan Mantri Awas Yojana (PMAY).

Resilient Disbursements Despite Prior Glitch
Disbursements for the quarter stood at INR 100.6bn, registering an 11% QoQ growth following a temporary setback in Q2FY25. Urban Infrastructure disbursements were particularly robust, rising to INR 98.5bn, an increase of 22% QoQ and an astonishing 189% YoY. However, Housing disbursements remained subdued at INR 2.1bn, witnessing a decline of 78% QoQ and 66% YoY.

Moderate Sanctions and Declining Other Income
Sanctions for the quarter were recorded at INR 156.8bn, a significant 53% YoY growth, although they declined by 75% QoQ from the record levels seen in Q2FY25. Other income witnessed a decline of 63.8% QoQ and 43.5% YoY, amounting to INR 242mn.

Efficient Cost Management and Operating Performance
Operating expenses for Q3FY25 came in at INR 925mn, down 4.9% QoQ but up 26.5% YoY. The cost-to-income ratio improved to 9.2% from 11.3% in Q2FY25, reflecting better efficiency. Pre-Provision Operating Profit (PPoP) stood at INR 9.1bn, significantly above estimates of INR 8bn, with a growth of 19.3% QoQ and 43.5% YoY.

Improvement in Asset Quality and Recoveries
Asset quality saw a notable improvement, with Gross Non-Performing Assets (GNPAs) declining to 1.88%, down 16bps QoQ and 126bps YoY. Absolute GNPA stock reduced by 2% QoQ and 16% YoY, to INR 22.3bn. During FY25, the company resolved four long-pending NPA accounts, recovering INR 2.6bn, bringing total recoveries to INR 4.6bn, including INR 1.7bn from six government agencies.

Status of Stressed Accounts
HUDCO continues to address stressed accounts, with INR 12.2bn worth of consortium projects under NCLT resolution and INR 0.35bn of projects outside NCLT, both fully provided for. For non-consortium projects, INR 0.3bn is under NCLT, while suit-filed or DRT cases involve projects worth INR 4.3bn, all with 100% provisions.

Valuation and Outlook
At the current market price, HUDCO is trading at an FY27E PABV of 1.9x. With a strong growth trajectory, improvement in asset quality, and robust performance in key segments, the company is well-positioned for sustained growth. We maintain our conviction BUY rating and will revisit our estimates in light of these outstanding results.

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Easing of risk weights on loans given to MFIs and NBFCs
Business, Equities, Markets, Research, Result Updates - January 22, 2025

South Indian Bank Q3FY25: Moderate NII, Robust Profitability, Improved Asset Quality

South Indian Bank Q3FY25: Moderate NII, Robust Profitability, Improved Asset Quality

Company Name: South Indian Bank Ltd | NSE Code: SOUTHBANK | BSE Code: 532218 | 52 Week high/low: 36.9 / 22.3 | CMP: INR 26.8 | Mcap: INR 7,014 Cr | P/BV – 0.79

NII Moderate; strong Profitability; NIMs flat; Asset quality improved

About the Stock
➡️South indian bank is private sector bank operate in south region of India headquartered in kerala. The bank has 950 branch network and majority situated in south India. The customer bas has increased from 7.3 Mn to 7.8 Mn within one year period. The bank loan book is well diversified 40% with corporate and remaining 60% retail book includes perosnal, agri and business.

Strong growth in Advances and Disbursement in Q3FY25
➡️The bank has reported strong growth annually in key business parameter. Gross Advances grew 12% YoY to 86,966 Cr, with corporate segment contributing 40% of the loan book, growing at 17% and personal segment contribute 26%, growing at same pace 26% while business loan and Agriculture contribute 15% and 19% respectively.

➡️Disburement grew 86% YoY to 1,22,572 Cr led by corpoarte book. While the bank deposit lagging behind, increased by 6% YoY and borrowings decline 30% YoY. The CASA stand at 31.15% in Q2FY25 lower by 65 bps YoY.

➡️Personal segment loan book driven by growth in mortgage loan at 79% folowed by home loan loan at 64%, gold loan 10%, auto loan 25% and credit card 4%.

➡️Retail disbursement momentum help by home loan, auto loan while agriculture and personal loan remian flat annually.

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Advances  86,966 77,686 12% 84,714 3%
Disbursement  1,22,572 65,805 86% 76,872 59%
Borrowings  2,956 4,213 -30% 2,609 13%
Deposit 1,05,387 99,155 6% 1,05,452 0%


NII growth moderate while PAT jump 12% led by lower opex and tax expense
➡️Interest income increased by 9% YoY (+1% QoQ) to 2,371 Cr driven by yield expansion and advance growth. The yield on loan expand 11 bps YoY to 7.64% while Cost of fund jump 13 bps to 4.84% result contraction in NIMs.

➡️NII grew moderate at 6% YoY (-1% QoQ) to 869 Cr due to high expansion in CoF makes NIMs flat.

➡️The bank’s PAT surged 12% YoY (+5% QoQ) to 342 Cr led by lower operating cost and tax expense despite the jump in credit cost. The stable the employee cost and total operating cost kick in operating leverage and boost the profitability.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  2371 2184 9% 2,355 1%
Interest expenses 1501 1365 10% 1,472 2%
NII 869 819 6% 882 -1%
Other income  447 452 -1% 449 -1%
Total Net income 1316 1271 4% 1,332 -1%
Employee expenses 415 460 -10% 421 -2%
Other OpEx 373 328 13% 360 3%
Total Opex  788 788 0% 782 1%
PPOP 529 483 9% 550 -4%
Provision 66 49 36% 110 -40%
PBT 463 435 6% 440 5%
Tax expenses  121 130 -7% 116 5%
Tax rate  0 0 -12% 26% 0%
PAT  342 305 12% 325 5%
PAT% 12% 12% 5% 12% 5%
EPS 1.31 1.46 -10% 1.24 5%
No. of equity shares  262 209 25% 261 0%

Asset quality enhanced; stress book reduce
➡️Company has reduced the stress assets from 894 Cr in Q3FY24 to 404 Cr in Q3FY25. Bank has churned 78% of overall loan book since covid level and 91% current GNPA from old book. GNPA/NNPA stood at 4.43%/1.25% decline by 44bps/36 bps YoY (10bps/6 bps QoQ). Slippages ratio decline to 0.33% in Q3FY25 vs 0.34% in Q3FY24. The provision coverage ratio expand 310 bps YoY to 81.07% vs 77.97% in Q3FY24.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 4.3 4.74 -44 4.40 -10
NNPA 1.25 1.61 -36 1.31 -6

Valuation and Key metrics
➡️Currently the stock is trading at 0.79 price to book value. The yield on advances jump 11 bps to 7.64% while CoF up by 13 bps YoY to 4.84%. This result in flat in NIMs at 3.19%. The increased in deposit rate to maintain and increased the deposit growt led to higher CoF and contract NIMs as Yield is stable.

Key metrics  Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
Yield 7.64 7.53 11 7.68 -4
CoF 4.84 4.71 13 4.80 4
NIMs 3.19 3.19 0 3.24 -5
ROA 1.12 1.07 5 1.07 5
ROE 13.93 16.38 -245 13.71 22
CASA  31.15 31.8 -65 31.8 -65
PCR 81.07 77.97 310 80.72 35
CAR 18 15.6 240 18.04 -4

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Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

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Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Company Name: Jana Small Finance Bank Ltd | NSE Code: JSFB| BSE Code: 544118 | 52 Week high/low: 761 / 364 | CMP: INR 430 | Mcap: INR 4,509 Cr | P/BV – 1.25

Abouth the stock
➡️Jana SFB is leading small finance bank engaged in providing MSME loan, affordable housing loan, 2W loan, gold loan, Micro LAP etc. Jana SFB has rapidly expanded network with 778 banking outlet including 252 outlet in unbanked rural centres, in 22 states/ 2UTs while serving 4.6 Mn active customers.

Robust Advance growth thanks to secured book
➡️Jana’s total advance book grew 18.5% YoY (+6% QoQ) to 27,984 Cr thanks to the secured book. Secured book at 68% of the Jana total book report a growth of 35.8% YoY (+11.9% QoQ) to 19,085 Cr while Unssecured book down at 6.90% YoY and de-growth 4.80% QoQ to 8,899 Cr. Secured book contribution jump from 60% in Q3FY24 to 68% in Q3FY25 and management further planning to increased its weight in overall book.

➡️Healthy growth of secured book attributed to affordable housing (up 39.1% YoY) and Micro LAP (up 22.5% YoY) segment. This both combines cross the milestone of 11,000 Cr. 2W and gold loan also report a sound growth of 108.8% and 127.9% YoY but have low weightage in overall book. MSME and term loans to NBFCs grew 15.5% YoY and 33.4% YoY respectively.

➡️Deposit growth higher than advance growth at 24.4% YoY to 25,865 Cr while CASA as % of total deposit decline to 18.4% in Q3FY25 vs 18.8% in same quarter previous year.

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Advance  27,984 22806.96 18.50% 26304.96 6%
Secured  19,085 12252.57 35.80% 16813.89 11.90%
Unsecured 8,899 9513.031 -6.90% 9326.152 -4.80%
Deposit 25,865 19553.94 24.40% 24752.81 4.30%

NII grew single digit on solid advance growth while NIMs contact
➡️Interest income grew 13% YoY and remain flat on QoQ to 1,177Cr led by solid secured book growth while yield down 10 bps YoY (+20 bps QoQ) to 17.4%.
➡️NII grew 8% YoY to 593 Cr with support of advance growth while CoF expand and NIMs decline. On QoQ NII remain flat led to modest growth of book on QoQ and NIMs contraction.
➡️PPOP report -5% YoY and -7% to 279 Cr due to higher operating expenses. PAT down 18% YoY and sequentially 14% to 111 Cr led by higher provision growth.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  1,177 1,038 13% 1,166 1%
Interest expenses 585 490 19% 572 2%
NII 593 548 8% 594 0%
Other income  177 140 27% 176 1%
Total Net income 770 688 12% 770 0%
Employee expenses 309 245 27% 296 5%
Other OpEx 181 148 22% 175 4%
Total Opex  491 393 25% 471 4%
PPOP 279 295 -5% 299 -7%
Provision 174 161 8% 210 -17%
PBT 105 135 -22% 89 18%
Tax expenses  5 0 -8 -167%
Tax rate  5% 0% -9% -156%
PAT  111 135 -18% 97 14%
PAT% 8% 11% -29% 7% 13%
EPS 10.49 18.3 -43% 9.28 13%
No. of equity shares  10.47 7.36 42% 10.45 0%

Asset quality tempered on YoY basis
➡️Jana asset qaulity has been decline due to the stress in the MFI segment. GNPA/NNPA jump 65 bps/24 bps YoY while on QoQ down 15/4 bps 2.71%/0.91%. Net NPA has 82% secured loan which signifies higher chances of recovery.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 2.71 2.06 65 2.86 -15
NNPA 0.91 0.67 24 0.95 -4

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.25 price to book value and book value per share stood at 342 Rs. Yield decline 10 bps YoY (+20 bps QoQ) to 17.4% while CoF jump 40 bps YoY and down 5 bps on QoQ to 8.03%. Yield contraction is led by competitive environment and challenges in MFI segment while CoF expansion driven by increase in deposit rate for attracting retail deposit. This result in decline in NIMs by 30 bps YoY and 10 bps QoQ to 7.6%. Return ratio dissapoint as ROE and ROA down by 670 bps and 20 bps YoY. Company’s capital position remain solid with 18.4% Capital adequacy ratio.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
Yield 17.4 17.5 -10 17.2 20
CoF 8.03 7.64 39 8.08 -5
NIMs 7.6 7.9 -30 7.7 -10
ROA 1.5 1.7 -20 1.2 30
ROE 13.5 20.2 -670 10.2 330
PCR 66.9 6690 67.2 -30
CAR 18.4 16.3 210 18.8 -40
CASA 18.4 18.8 -40 20.1 -170

Management Guidance for FY25
➡️Management expect overall 20% growth in AUM and deposit in FY25.
➡️PAT growth of 30%-40% in FY25 will led by advance and disbursal growth.
➡️ROA and ROE maintained at 1.8% -2% and 19%-21% respectively. Company will continue to increase the secured business led to decline in NIMs.

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India Targets 50% EV Sales by 2030 for Net Zero Emission by 2070

India Targets 50% EV Sales by 2030 for Net Zero Emission by 2070

India has a set goal of achieving a net zero emission target for the year 2070. In order to achieve this goal, India has to complete Electric vehicles sales growth of 50 percent by the year 2030. On 20th January, 2024, Environment Minister of India, Bhupender Yadav made this announcement in the third International Conference on Sustainable Circularity held by Society of Indian Automobile Manufacturers (SIAM). He further stated that India has achieved a capacity to sell cars per annum more compared to the size of population of few countries. Along with this milestone, great responsibility of conserving the environment comes.

Need to hike EV sales
The Environment Minister of India states that India is recording a hike in sales of vehicles which is a good sign. The auto industry and government must work together to make sure that this hike will not harm the environment.

Electric vehicles sales are anticipated to hit the record of close to 35 percent in the year 2030. However, to make sure the automobile industry achieves the target of net zero emission by the year 2070, the sales needs to increase by 50 percent.

The hike in EV sales will not only help climate conservation but will also promote job creation. The number of sales in the Electric vehicles segment is expected to record around 10 million units by the completion of the year 2030. It will help to create employment of about 5 million.

Electric Vehicles also play a major role in reduction of CO2 emissions. These vehicles are quite sustainable for the earth. It does not release pollution in the environment. It requires batteries to work and these batteries are charged using electricity.

By the end of the year 2030, electric vehicles in India are expected to reduce CO2 emission to about 5 metric tonnes. This cutting of CO2 emissions can reach a range of 110 to 380 metric tonnes by the end of the year 2050.

Participation in GCP
Minister encouraged companies in the automobile industry to voluntarily contribute towards the environment by engaging in the Green Credit Programme (GCP) of India. By becoming part of GCP, it will give automakers rewards for their steps taken towards environment conservation.

Promote Circularity Practice
The circularity practice refers to reuse of components as well as depletion of waste formed while producing a commodity. The environment minister states that India could raise about 624 billion US dollars every year by the end of the year 2050, in case of implementation of circular practices in the manufacturing activity of the country.

The Society of Indian Automobile Manufacturers (SIAM) must encourage the practice of circularity in the manufacturing of vehicles in India. It should also make consumers aware of the significance of such practices.

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