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Air India’s Mega Aircraft Deal: Financing India’s Largest Fleet Expansion via GIFT City and Global Leasing Hubs
Business, Equities, Markets - January 13, 2025

Air India aims to double international transit traffic in next 3 years

Air India aims to double international transit traffic in next 3 years

Air India’s Chief Commercial Officer (CCO) Nipun Aggarwal stated that currently Air India’s total international passengers close to 10 percent use Indian airports as transit hubs. Annually, around 130 million passengers fly over India. In this, the transit traffic of about 10 percent and 7.5 percent is handled by Dubai and Doha, respectively. Compared to this, Delhi handles less than 1 percent of this transit traffic in current times. According to Aggrawal, this could act as a significant growth opportunity. Air India’s total international traffic is expected to grow by 15 percent to 20 percent in the next three years. This is Air India’s aspiration and commitment to achieve the goal.

Expansion plan of international transit traffic
Aggrawal states that the airline has already increased its transit traffic to the west and now it is time to increase the connectivity in the east of India as well. With a particular focus on Southeast Asia to attract more international-to-international (I2I) traffic.

He further states that Indian airlines have largely failed to notice the unexplored potential in the Europe-Australia corridor. Air India has adjusted their flight schedules to ensure smooth and convenient connectivity of Western destinations such as Frankfurt, Paris, London with Eastern destinations such as Melbourne and Sydney.

Rebuilding Widebody planes
Since the year 2019 -20, Air India’s business class and premium economy cabins have recorded an increase in revenue by 2.3 times. While, the revenue generation of the economy class has recorded an increase by 1.6 times. By taking into consideration the category-wise revenue generation, the company plans to increase the number of seats in business as well as premium economy cabins which is also known as front-cabins in its widebody planes. Once the upgrade is finished, the number of front-cabin seats available will be doubled compared to the present number of seats available. Also, the revenue will also increase from these planes. The airline plans to start rebuilding of widebody planes by the month of July.

Expansion plans of Direct Flights
Air India has repeatedly rejected increasing bilateral rights with countries such as Qatar and UAE. It believes that these countries’ airlines use their hubs to carry a significant share of traffic from India to countries in North America and Europe. Also, the current bilateral rights of India with Dubai and Doha hubs is more than sufficient fr the purpose of origin-destination (point-to-point) traffic.

In the near future, Air India intends to increase its shares in traffic by increasing direct flights to North America and European countries. The company understands that in order to achieve a big share of the international market, there is a need to strengthen Delhi and Mumbai hubs.

Wet Leasing planes
Wet Leasing planes refers to not only leasing aircraft but also its crew, insurance and maintenance unlike dry leasing which only allows renting aircraft. In the month of December 2024, the government of India allowed airlines to wet lease planes on new routes. It was started to satisfy the rising demand and to give a temporary solution to slow deliveries of new aircrafts. The CCO of Air India stated that the company is not involved in wet leasing.

The reason for not using wet leasing planes is due to its operational challenges associated with it, particularly occurring while creating a sustainable flight network. The wet leasing method is quite useful in times of sudden rise in demand. Air India’s purpose is not at present to satisfy this current surge in demand but to focus on long-term growth. The company has already put orders for new planes.

Sales Channels of Air India
Air India’s website or app contributes to 20 percent of its international ticket sales. While, the domestic sales channels contribute to 40 percent of sales and the remaining sales of Air India’s international ticket is carried through foreign sales channels. It is difficult to identify a strategy to increase sales through foreign sales channels as it changes market to market. Also, the company focuses on maximising returns and not on focusing on one particular sales channel and its revenue.

Impact of Rupee depreciation
The current rupee depreciation has significantly burdened the cost structure of Air India. The reason for that is the company’s many expenses are done in dollar-denomination except employee related expenditure.

Due to its presence in operating many international flights and also charging in foreign currencies give it a somewhat natural protection from currency fluctuation. Despite this, it is facing challenges in profitability and fares due to around half of the tickets being sold in Indian currency. Also, depreciation of currency not only affects fares prices but also demand. This challenge is faced by the entire Indian aviation industry. Air India is taking efforts to resolve this issue by increasing productivity and also implementing measures to ensure efficiency in operations.

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Upcoming Budget: Real estate Industry seeks Stamp duty cuts and revised home loan limits

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MRF Q1 FY26: Revenue Up, Profits Down on Margin Pressures
Automobile News, Autos, Business, Equities, Markets - January 13, 2025

JLR Leads Tata Motors’ Q3FY2025 Recovery, But Domestic Challenges Persist

JLR Leads Tata Motors’ Q3FY2025 Recovery, But Domestic Challenges Persist

Jaguar Land Rover Ltd (JLR), the global subsidiary of Tata Motors Ltd, has shown signs of recovery in Q3FY2025, driven by improved wholesales and a better product mix. However, challenges in Tata Motors’ domestic business and uncertainties in the global auto market may limit the upside.

JLR: A Positive Turnaround in Q3FY2025
After a subdued performance in the first half of FY2025, JLR’s wholesales grew by 3% year-on-year (YoY) in Q3FY2025, reflecting an improvement in demand across key developed markets. While demand for premium and luxury vehicles remained tepid in retail channels, higher wholesale dispatches and an improved average selling price (ASP) indicate better revenue and profitability prospects.

Regionally, JLR’s performance was bolstered by strong demand in the US and parts of Western Europe. However, challenges persisted in the UK and China, where demand moderated. An increase in the contribution of JLR’s power brands to 70% of total sales, up from 64% six quarters ago, highlights a favorable shift towards premium models, which bodes well for margins.

Supply-side constraints that impacted JLR in earlier quarters have eased, as evidenced by reduced inventory levels and higher dispatches. Analysts anticipate a sequential improvement in JLR’s EBITDA margin for Q3FY2025, though it may still lag YoY levels. Importantly, the company remains on track to achieve £1 billion in free cash flows (FCF) for FY2025, supported by a net-cash balance sheet—a significant positive for Tata Motors’ consolidated financials.

The premium product mix in JLR’s sales continues to boost profitability prospects. As JLR’s power brands increasingly dominate the sales portfolio, the company benefits from higher margins. This trend, along with easing supply constraints, has led to improved inventory management. Analysts believe that these positive developments mark a crucial step in rebuilding investor confidence.

Domestic Business: A Mixed Bag
While JLR’s revival brings optimism, Tata Motors’ domestic operations face headwinds. The commercial vehicle (CV) segment has seen flat volume growth, reflecting a challenging demand environment. Meanwhile, Tata Motors’ passenger vehicle (PV) business has been losing market share, with electric vehicle (EV) sales failing to meet expectations amidst rising competition.

The domestic PV market is undergoing a significant transformation, with multiple new entrants and rising competition in the EV space. Tata Motors, despite its early lead in EVs, faces challenges in maintaining its growth momentum. Increased competition from both established players and startups is pressuring market share. Additionally, the company’s focus on expanding EV offerings has yet to deliver the desired results in terms of volume and profitability.

In the CV segment, economic factors such as rising interest rates and uneven demand recovery are limiting growth. Infrastructure development and government spending on large projects, which typically boost CV sales, have been slower than anticipated. Consequently, Tata Motors’ CV business has struggled to deliver strong results this quarter.

Consolidated Outlook: Recovery with Caution
Improved operating leverage in JLR and the standalone entity is expected to drive a recovery in Tata Motors’ Q3FY2025 consolidated profit margins and net profit compared to Q2FY2025. However, the path to sustainable growth will hinge on several factors:

Global Luxury Auto Market: The global premium car market’s recovery remains uneven, with concerns around whether discounts will be needed to stimulate demand in 2025. Prolonged economic uncertainties and geopolitical risks could further impact consumer sentiment in key markets like Europe and the US.

EV Ramp-Up: Both JLR and Tata Motors’ domestic EV businesses need to accelerate growth to capture emerging opportunities. JLR’s transition to electric models will require significant investments and strategic partnerships to ensure competitiveness in the evolving global market.

Macroeconomic Uncertainty: Changes in US policies on duties, taxes, and oil prices could impact demand dynamics in key markets. Rising energy costs and inflationary pressures could further complicate the operating environment for global automakers.

While JLR’s progress in Q3FY2025 is encouraging, sustaining this momentum will require consistent execution and strategic clarity. Tata Motors must address its domestic challenges while leveraging JLR’s global recovery to build a stronger consolidated performance. The coming quarters will be critical in determining whether Tata Motors can achieve sustainable growth and enhance shareholder value.

Tata Motors’ ability to navigate these challenges will define its performance in 2025 and beyond. Its strategic focus on premium vehicles, EV transition, and operational efficiency will be key to overcoming headwinds and delivering long-term growth. Investors and stakeholders will closely monitor the company’s efforts to address domestic market weaknesses while capitalizing on JLR’s improving trajectory in global markets.

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Upcoming Budget: Real estate Industry seeks Stamp duty cuts and revised home loan limits

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AstraZeneca Pharma India Q1 2026: Strong Growth and Resilience
Business, Equities, Health, Market News, Markets - January 13, 2025

Indian Pharma's 2025 Budget Wishlist: Growth, Innovation, and Challenges

Indian Pharma’s 2025 Budget Wishlist: Growth, Innovation, and Challenges

From making a few reasonably priced generic medications, the Indian pharmaceutical sector has advanced to become the global center for the production of pharmaceuticals and vaccines. In addition to meeting 25% of the UK’s pharmaceutical needs, India distributes pharmaceutical items to more than 200 countries, 50% of Africa, and 40% of the US generic market. With over 60,000 products in 60 therapeutic categories and more than 500 APIs, India is the world’s third-largest manufacturer of pharmaceuticals by volume and fifteenth by value. With a focus on biopharmaceuticals and biosimilars, Indian businesses have not only increased access to healthcare around the world but have also established themselves as reliable partners in enhancing healthcare systems around the world.

Numerous measures have been taken by the Indian government to facilitate and promote innovation and development in the Pharma sector, especially in cell and gene therapies such as a boost in funding and infrastructure investments. For instance, the Pharma MedTech Sector’s Scheme for Promotion of Research and Innovation (PRIP) was introduced to strengthen research and innovation capabilities. This program has sanctioned a total spending of INR5,000 crore (about US$604.5 million) between 2023 and 2028 and supports innovative research in pharmaceutical as well as the medical technology field. These findings are likely to make the environment of India regarding research vibrant as well as more cooperative.

Despite these encouraging growth dynamics and government support, however, many challenges have to be met before the potential of this industry can be seized in the future. The available R&D funding is less than satisfactory, and state-of-the-art testing facilities, intellectual property protection, and insufficient incentives for investment in industry-wide ventures are required. So, Pharma Inc.’s expectations comprised largely of increased public healthcare funding and incentives for pharmaceutical research and development, with some tax exemptions towards more life-saving medications in this 2025 budget.

Reduction in Custom Duties for life-saving drugs
Executives in the healthcare sector stated that increasing the number of life-saving medications free from import duties and GST will help make them more affordable for patients. They want the benefit to extend to all cancer drugs. The government was pushed by hospital owners to lower customs taxes on necessary medical supplies and equipment. Depending on the kind of medication and whether it is imported or not, India has different tax rates for necessary medications.

Modification in Section 115BAB
Anil Matai, director-general of the Organization of Pharmaceutical Producers of India (OPPI), stated that expanding the application of Section 115BAB of the Income Tax Act, 1961 to businesses exclusively involved in pharmaceutical research and development, acknowledging the high-risk, long-gestation nature of R&D, and offering a 200% deduction rate on R&D expenses.
According to Section 115BAB, a corporation that manufactures or produces any kind of item or a thing that aids in conducting research to or distributing such items is eligible for a 15% concessional tax rate. According to Deloitte, businesses engaged solely in research-related activities will be eligible for a concessional tax rate under section 115BAB, rather than being limited to research pertaining to the company’s manufactured or produced goods, given that the government wants to encourage research, innovation, and development in India.

Removal of Section 194R
The Income Tax Act’s Section 194R permits businesses to deduct taxes from any type of gift or incentive and remit it to the government. In the pharmaceutical industry, it stands for drug samples that businesses give to physicians and medical facilities. The additional administrative load placed on businesses by having to keep track of smaller transactions is one of the main causes of the demand. The process is made more complicated by the requirement that the business deducts the tax imposed under Section 194R on behalf of the beneficiary, such as a hospital.
Thus, the removal of Section 194R which is marketing samples, would facilitate streamlining business operations, according to Sudarshan Jain, Secretary of, the Indian Pharmaceutical Alliance (IPA).

Other additional expectations
Furthermore, efficiency and simplicity in doing business will be achieved when Advance Pricing Agreement (APA) processes, such as fixing deadlines for quick settlement of the case, as well as making sure renewals are done within time, are free of procedural redundancies. Going ahead, the necessity of expanding public funding for health programs and incorporating the Ayushman Bharat scheme’s missing middle class is of crucial importance.
To promote innovation and investment, the industry group has also urged for removing turnover conditions for safe harbor laws for R&D and requiring deadlines for appeals, especially those handled by the Income Tax Appellate Authorities (TAA).
Further, it would be encouraging if the Union Budget restored 200 percent weighted deductions for R&D expenditures, expanded the patent box regime to include income from patents abroad, and allocated at least 10% of the National Research Fund to life sciences, according to Sudarshan Jain, Secretary, IPA.

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Copper holds near five months low as weak demand outlook dominates

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Affordable housing to take a hit in the upcoming Budget
Business, Equities, Market News, Markets, Real Estate, Real Estate News - January 13, 2025

Upcoming Budget: Real estate Industry seeks Stamp duty cuts and revised home loan limits

Upcoming Budget: Real estate Industry seeks Stamp duty cuts and revised home loan limits

The Indian Real Estate Industry is seeking stamp duty cuts, revised home loan limits and improved affordable housing norms in the upcoming Union Budget 2025-2026. The realtors are seeking these changes through Pradhan Mantri Awas Yojana (PMAY), eco-friendly policies, single-window clearance, and more.

Some of the industry leaders and consultancy firms in India such as Raheja, Gaurs, Kanodia, Anarock, Justo, Reach, Urban Space and Eros have put forth their expectations for changes to real estate sector norms in the upcoming budget.

Affordable housing
President of CREDAI-NCR and Chairman and Managing Director of Gaurs Group, Manoj Gaur stated that one of the crucial demands of the real estate sector is adjustment of stamp duty. The reason for this is that the stamp duty rate has increased significantly in recent years. It is adversely affecting home buyers giving them financial pressures. He also emphasised on considering changing the current tax deduction limit of Rs. 1.5 lakh under Sector 80(c) to Rs. 5 lakh as it will help in easing home ownership.

He recommends changing the affordable housing criteria of price limit of Rs. 45 lakh to carpet area-wise criteria. In this, the focus should be on the carpet area of 60 square metres in metro areas and 90 square metres in non-metro areas. He also advocates reintroduction of the 100 percent tax holiday for affordable housing projects before 31st March 2022. This will promote both affordable housing and also India’s mission of ‘Housing for all’.

Commercial Real-estate Sector
The vice-president (Sales) of Raheja, Mohit Kalia stated that the needs for reforms in the commercial real-estate sector. The government’s actions to encourage entrepreneurship promotes the start and growth of business. It not only helps in boosting economic growth and creation of job opportunities but also aids in thriving the business of commerical real-estate sector. Along with this, the sector requires policies that will support in sustaining the growth and success of the sector. He also states that the adjustment in interest rates in a way that makes advances affordable will help in increasing demand in the sector. Also, the implementation of the single-window clearance system can make approval processes faster and easier. These steps will help in strengthening the overall real estate ecosystem.

Tax Relief on Construction Materials
The Kanodia of Delhi-NCR advocates tax relief and GST reduction on construction materials in order to achieve lower project costs and also encourage developers to initiate new ventures with better efficiency.

The Kanodia Group’s founder Gautam Kanodia stated that the upcoming Budget 2026 has a strong prospect to strengthen the real estate industry and also to play a more crucial role in the development of the country’s economic framework.

Revision of Home Loan Limits
The founder and Chairman of Reach, Harinder Singh Hora advocated raising the deduction limit in home loans to Rs 5 lakh from the current Rs. 2 lakh in order to encourage investment opportunities and to attract more investors.

Changes in PMAY
The chairman of Anarock Group, Anuj Puri recommends reintroduction of Credit-linked subsidy Scheme (CLSS) under the PMAY scheme for economically-weaker section (EWS) households, which has ended in the year 2022. This would give financial incentives to first-time homebuyers to purchase affordable homes by providing subsidies on loans for construction of new houses or essential addition to existing properties.

As per the eligibility criterias of PMAY for rural regions provide subsidies to convert ‘kaccha’ into ‘pucca’ homes. The real estate industry players believe that there is a need to update the definition of affordable housing needs, particularly in high-cost cities such as Mumbai. They also advocate raising of current price caps reflecting the higher cost of living and property prices prevailing in these areas.

Given data from Anarock, the sales share of affordable housing decreased to 18 percent in 2024 compared to 38 percent in 2019. This significant decline indicates the pressing need for government intervention. He further stated that there is a need to be more focused on affordable housing and targeted benefits, which was not given much attention for the past two years.

The reason for slowdown in the Indian real estate sector in the year 2024 is the general elections and state elections conducted in the year. The top seven cities in India observed a fall in housing sales by 4 percent which accounts to around 446,000. While, the new launches of properties declined by 7 percent which accounts to around 413,000 units. Despite this, implementation of appropriate steps taken for affordable housing in the year 2025 could lead to revival of growth and also promote the residential segment to regain the high sales and launches achieved in the year 2023.

Rental housing and infrastructure growth
In the year 2024, institutional funding in real estate registered a record of 6.5 billion dollars. It indicates strong investor confidence. The introduction of increasing liquidity measures will help to ensure that real estate projects are completed on time. This is crucial to maintain the growth momentum in the sector. The Director of Eros states that while entering in the year 2025, the policies pertaining to expansion of rental housing and infrastructural growth should be taken for driving urbanisation.

The founder and director of real estate fintech firm Justo, Pushpamitra Das advocates the adjustments in GST on under-construction residential and commercial properties, tax benefits for REITs, extension of SEZ benefits. He also stated that India’s real estate sector plays a significant role in driving economic growth by boosting GDP and employment levels.

Home decor Industry
The co-founder of Urban space, Radhika Koolwal stated that the home decor industry is positive about the measures undertaken to boost growth and innovation. The industry expects the policies undertaken will focus on encouraging domestic manufacturing such as subsidies on raw materials and machinery, tax benefits for MSMEs and startups, reduction in GST rates on home furnishings and decor items in order to achieve more accessibility to quality products to the middle class.

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Copper holds near five months low as weak demand outlook dominates

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Mumbai Property Market Soars to New Record in 2024
Business, Equities, Market News, Markets - January 10, 2025

Mumbai Property Market Soars to New Record in 2024

Mumbai Property Market Soars to New Record in 2024

Mumbai has been considered as India’s largest and most expensive market for a long time. In 2024, it again proved this statement right by achieving its best-ever annual performance in terms of deal registrations as well as stamp duty collection. This strong demand growth is boosted by the stable economic conditions and also persistent confidence among buyers.

In the year 2024, Mumbai hit a record of more than 1,41,000 registrations. It made the year 2024 as the best year for property sales in both primary and secondary markets. It surpassed the previous year’s record by 11 percent.

According to the data of the Inspector General of Registration (IGR) and Controller of Stamps, Maharashtra, the total stamp duty collection increased by 12 percent which accounts to Rs. 12,138 crore.

Significance of Mumbai’s Property market
Mumbai’s real estate market continues to exhibit strong resilience and adaptability with the changing times. The consistent rise in registrations and increasing revenue indicate strong demand. Its robust demand is particularly seen more for premium and spacious houses. These preferences indicate the homebuyers change in preference towards quality and value. The strong performance of Mumbai’s real estate market underlines it as a key driver of economic activity and also an interesting long-term investment opportunity.

The market recorded a consistent rise in property registration at higher value in Mumbai. In the month of December, the property registration for real estates priced at Rs 2 crore and above observed a surge of 23 percent compared to its record of 18 percent in the month of December 2023. The real estate priced under Rs. 50 lakh recorded a fall to 25 percent of share compared to previous share of 30 percent. It indicates a shift in homebuyers preferences towards higher-value real estate segments. A strong inclination is observed towards premium properties with a total purchase of 2,879 properties.

The preference for homes having an area of 1,000-2,000 sq ft. increased rapidly to 12 percent of shares compared to earlier shares accounts to only 8 percent. While, the shares for homes above 2,000 sq ft recorded stable growth of 2 percent. In contrast to this, homes till 500 sq ft recorded a sharp fall in registrations which accounts to 51 percent compared to the previous shares of 35 percent. This change in preference in real-estate area-wise signals an increase in preference for spacious homes.

The real estate developers used this strong sales opportunities to capitalise by launching new supply in the market. It resulted in the launch of 96,470 new units in 2024 making the highest volume launch since 2024. It observed a 4 percent year-on-year growth. While, the average residential prices surge by 5 percent year-on-year surpassing the year 2023. The continued demand for real estate kept the price growth and sales momentum steady.

In the month of December, around 12,363 property registrations contributed Rs. 1,131 crore of the revenue to the state government of Maharashtra.

Reasons for the best performance
The report of Knight Frank India on the India Real Estate- Office and Residential Market (July-December 2024) states that Mumbai is leading in terms of residential sales among all the metro cities.

Mumbai is considered as the financial hub of India with strong economic growth in finance, commerce and industry. It is supported by infrastructural projects such as the Mumbai coastal Road, Mumbai Trans Harbour Link (MTHL) and Metro Line 3.

The development in the urban landscape due to these infrastructural projects undertaken in Mumbai are acting as a significant key in the progress of the property market. The infrastructural projects help in increasing connectivity between the places. It has boosted the demand in real estate as more and more homebuyers are participating to take advantage of this developed connectivity. The strong government’s capex in these projects has supported increased real estate activities, influencing price dynamics and also in new real estate ventures.
The first half-yearly sales of 2024 was the highest half-yearly since 2012. The second half-yearly sales for the year 2024 recorded an increase in sales by 4 percent compared to the first half-yearly sales of 2024. The reasons for robust sales were festive seasons such as Navratri, Dussehra and Diwali. These festivals for years are reasons for the increase in purchases of real estate. Also, it was further boosted by new launches and attractive payment plans surged the sales activity.

Price dynamics in the 2024
Mumbai’s residential properties rates increased by 5 percent. It recorded the highest average price per square foot of Rs. 8,277. It is the highest among the 8 major cities in India. While, Central Mumbai and South Mumbai recorded the highest residential price surged of 8 percent and 7 percent, respectively.

The current property market in Mumbai is in a strong position to take advantage of this situation and keep on sustaining the growth path during the 2025 as well.

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Centre Eases Capex Loan Norms to Boost State Spending in FY25

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IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%
Equities, Market News, Markets, Research, Research Reports, Result Updates - January 10, 2025

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

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

Company Name: Indian Renewable Energy Development Agency Ltd |  NSE Code: IREDA |  BSE Code: 544026 |  52 Week high/low: 310 / 104| CMP: INR 201 |   Mcap: INR 54,078 Cr   |  P/BV – 5.81

About the stock

IREDA is PSU NBFC engaged in the business of financing green energy projects. Its finances project such as solar, wind power, hydro power etc. GoI has conferred the Navratna status upon IREDA in April 2024. Loan portfolio well diversified across the 23 states and 4 UT in FY24. It contributing major role in fueling the India’s RE taget of 500 GW by 20230.

Robust growth in loan book up 36% YoY /7% half yearly

As on 30 December 2024, loan book stood at 68,960 Cr represent growth of 36% YoY while half-yearly growth was moderate at 8%. This growth led by loan given to state utilities (68% YoY) followed by hydro power at 35%, solar 18% and wind at 3%.

Along with loan book disbursement and sanction grew 25% and 45% to stood at 7,449 Cr and 13,227 Cr respectively.

Asset quality improved YoY but dissapoint QoQ

During the Q3FY25, gross asset quality has improved by 22 bps YoY declined in GNPA stood at 2.68% While QoQ jump 49 bps during the quarter. NNPA down 2 bps YoY to 1.5% but jump 46 bps QoQ despite the surge in provision coverage ratio.

Borrowing jump 39% during the quarter – domestic rise while foreign declined

During H2FY25 company’s borrowing increased by 39% to stood at 57,931 Cr. Dometic borrowing raised 54% to 49,361 Cr while foreign borrowings declined 12%.

In domestic borrowing, bank loan weightage has declined to 45% in Q2FY25 vs 57% in Q3FY24. while money raised through bonds weightage rise to 55% in Q3FY25 vs 43% in Q3FY24. The rising chance of rate cuts will declined the borrowing cost for company as bank loan and bond both equally weight in borrowing.

Within the foreign borrowing, un-hedged portion rise to 26% in Q3FY25 vs 21% in Q3FY24. While hedged portion has declined equally to increased in un-hedged. The surge in un-hedged portion increased the currency risk.

Valuation and key metrics

currently stock is trading at 5.79x its book value while the industry median P/B stood at 2.41x. During the quarter, Yield on loan jump 9 bps to 9.96% while Cost of borrowing decline by 15 bps to 7.68%. This result in surge in spread and NIMs by 23 bps and 13 bps to stood at 2.28% and 3.33% respectively. The cost of borrowinf can further decline in coming quarter as RBI ready to ease monetary policy. Capital Adequacy ratio stood at 19.63% which is above the guidance of RBI but decline by 425 bps YoY.

Q3FY25 Results updates

Interest income increased by 37% YoY (5% QoQ) to 1,654 Cr while interest expense jumped 36% YoY (0% QoQ) to 1,032 Cr. This result in NII grew by 39% YoY (14% QoQ) to 622 Cr. The surge in NII led by Nims expansion and increased in new loan book.

PPOP grew 52% YoY (30% QoQ) to 642 Cr due to lower Opex (down 65% YoY). While PAT surged by 27% YoY and 10% on QoQ basis to stood at 425 Cr.The PAT lowered due to higher growth in provision and tax expenses. 

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Bank Q3 Results reflect slower credit growth

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Peerless Group to Exit Insurance Distribution and Double-Down on Hospitals
Business, Equities, Market News, Markets - January 10, 2025

TCS Q3FY25: Seasonal Challenges Persist, But Positive Outlook Inspires Confidence

TCS Q3FY25: Seasonal Challenges Persist, But Positive Outlook Inspires Confidence

The leading Indian IT company, Tata Consultancy Services (TCS), reported a 12% increase in its consolidated net profit for the December quarter, which came to Rs 12,380 crore on Thursday. This is almost in line with Dalal Street’s forecast of Rs 12,490 crore and represents an increase from the Rs 11,058 crore recorded in the same quarter last year. TCS CFO, Samir Seksaria stated that the company’s great execution, effective cost control, and strategic currency risk mitigation all helped to boost margins and solid free cash flows during the quarter, despite substantial cross-currency volatility. Additionally, long-term company growth should be well supported by focused expenditures in infrastructure and talent.

Details of TCS Q3 Results & Market commentary

Revenue
The IT behemoth TCS reported sales for the December quarter of Rs 63,973 crore in constant currency, up 5.6% from Rs 60,583 crore in the same period last year. Nevertheless, the December quarter’s income was less than the Rs 64,750 crore Dalal Street had predicted. The company’s operating margin for the December quarter was 24.5%, which represented a 40 basis point sequential gain but a 50 basis point year-over-year fall. TCS, meanwhile, stated that at the end of the December quarter, its net margin was 19.4%.
Because of the local currency’s depreciation against the dollar throughout the quarter, analysts had projected an average sequential decline of 0.4% in dollar revenue and a 0.5% increase in rupee revenue. The largest software exporter in the nation, on the other hand, saw a 0.5% quarterly decline in revenue to Rs. 63,973 crore and a 1.7% decline to $7,539 million. The impact of furloughs and seasonal decrease in demand is more pronounced when the top line declines more than anticipated.

Dividend
TCS has announced a total payment of Rs. 76 per share which comprises of a special dividend of Rs. 66 per share and an interim dividend of Rs. 10 per share. This dividend payout would be done on 3rd February, 2025 and the record date is set to be 17th of January, 2025. The stock might receive some boost from this. The company was trading at a trailing price-earnings (P/E) ratio of 30 at Thursday’s closing price of Rs4,036.7 on the BSE, compared to a five-year average P/E of about 33.

Deals
According to TCS’s filing with the exchange, the company’s Total Contract Value (TCV) increased significantly during the December quarter, laying a solid basis for future growth. TCV was $10.2 billion in the December quarter, and the book-to-bill ratio was 1.4. The key drivers of such robust TCV figures include 1.1% hike in consumer business group, 3.4% increase in energy and utilities segment and whooping growth of 40.9% in regional markets.
After two quarters, it surpassed the $10 billion threshold, suggesting a slow but steady rebound in clients’ discretionary spending. Due to geopolitical and economic uncertainty, clients have been focusing more on maintenance projects and less on transformational deals during the last few quarters. In the upcoming quarters, clients are anticipated to place more emphasis on discretionary spending due to the incoming administration in the US, which is the biggest market for Indian IT exports. The consumer business and banking, financial services, and insurance (BFSI) verticals were the main drivers of the TCV progress in the December quarter.

Hiring and attribution
There were 607,354 workers at TCS as of December 31. In IT services, the company’s last twelve months (LTM) attrition rate was 13.0%. According to TCS Chief Human Resources Officer Milind Lakkad, the business promoted more than 25,000 employees in the December quarter, bringing the total number of promotions this fiscal year to over 110,000. Further he added that the company is indulging in investments in the general well-being and upskilling of our staff. This year’s campus hiring is proceeding as planned, and plans are underway to onboard more university hires the next year.
However, the company lost 5,370 workers on a net basis in a row, bringing its total workforce down to 6,07,354. From 12.3% in the prior quarter, the attrition rate gradually increased in the third quarter. The company claimed a renewed pace in new order wins, which can be linked to the growing influence of global capability centers (GCCs) established in India by worldwide clients.

Conclusion
According to analysts, the company’s Q3 FY2 earnings reports are the slowest since it began releasing quarterly figures in constant currency terms in FY 2013, more than ten years ago. It used to report in dollar terms on a quarterly basis.

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Bank Q3 Results reflect slower credit growth

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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2025: A Year of Consolidation and Policy-Driven Growth

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

Budget 2025 see higher focus on government capex

Budget 2025 see higher focus on government capex

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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2025: A Year of Consolidation and Policy-Driven Growth

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Navratri Demand + GST 2.0: How India’s Auto Sector Hit New Heights
Business, Equities, Market News, Markets - January 10, 2025

Domestic Rubber Prices Decline, But Tyre Companies Should Remain Cautious

Domestic Rubber Prices Decline, But Tyre Companies Should Remain Cautious

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

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

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

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

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

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Electricity Distribution Companies Continue to Strain State Finances, Says RBI

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