Through its cloud, Tranium already carries around $225 billion in commitments from OpenAI, Anthropic and Uber. On infrastructure, Meta has contracted to buy around 1.6 gigawatts of computing capacity from Crusoe at two US sites tied to a former Stargate project. Oracle and OpenAI have stepped back. We end in India. The Telegram block here has triggered a record rush to VPNs, with downloads up 49% in a single day, the biggest spike since early 2025. The government cut access until June 22 over exam fraud fears tied to the Nitri test. Telegram has challenged the order in the Delhi High Court, which rules this morning. But here's the plot twist: Telegram's own users in India actually rose 17% the day the ban hit. So we'll have to see what happens today when the Delhi High Court rules, and for the students appearing for the retest of the medical examination.
Okay Raja, thank you so much for that. But with that we're absolutely out of time on this edition of Power Breakfast. Nifty implied open is still indicating a red gap for the Indian market, so watch out for that. Up next you have Bazaar Morning Call to take you through all that market action.
Every morning the countdown begins for the markets with meticulous research, search and analysis designed to help you capitalize on the trading day, live from the CNBC TV18 Motilal Oswal studio.
Good morning. You're with us here on a fresh new edition of Bazaar Morning Call. We are coming to you live from the CNBC TV18 Motilal Oswal studios. Friday morning, last day of the week, and the week has been pretty good. We are breaking out of levels and hopefully that won't change this last day. I'm Prashant, and Nigel and Mangalam are with me. Good morning.
Morning. It's a Friday indeed, and we have put behind ourselves five days of gains. Let's see whether we are sixth-day lucky this time around. All eyes on the IT pack today because of Accenture and what the overlaps are, how much is in the price. We broke out yesterday in the last hour, so let's see whether that momentum sustains.
Well, the initial part of the trade will belong to tech, and I think the later part will belong to the big boy Reliance Industries. That's going to be important to track. Also, if you woke up early this morning, you got a sense the monsoon was here, but around 8 a.m. it fooled us again.
Mangalam had some showers. You had showers. Now it's Prashant's time to have the showers. It's visiting each of us. I think it's the 19th, right? The IMD says the 23rd or 24th. Hopefully it should be here. But that's a big data point we don't pay enough attention to, because when it doesn't come is when the problem starts. So let's hope it's late but abundant when it comes.
You know, that's a big data point we don't pay enough attention to. It comes and when it doesn't come the problem starts. So let's just hope it's late but abundant when it comes. Anyway, let's take it from the top. The interim peace deal between the US and Iran is starting to take effect. Oil is still at about $79, so not much new information. We are still 15% lower from the $95 level seven trading sessions back, which is great news. Incrementally, the next leg lower for oil perhaps. We're maintaining those levels because the focus is on shipping and whether ships are getting through the Strait of Hormuz. Yesterday there were reports of two supertankers from Iran getting out. But it's not just Iranian vessels. Focus will be on how many ships get through every day compared to pre-war, pre-February 28, and how quickly normalization happens. Markets will track it. US equities clawed back some post-FOMC losses; NASDAQ up 1.9%, S&P up 1%, driven by semiconductors. Nvidia up 3%, Intel up 10%. Intel apparently has a deal with Apple to make chips. Accenture reported Q3 numbers and cut guidance: 3% growth for the quarter on a constant currency basis, but full-year guidance cut. Stock down 17%, one of the largest single-day falls. Revenue guidance cut on the top end from 3-5% to 3-4%. The market is extrapolating softer demand for enterprise vendors. Accenture also said the Middle East conflict took about $100 million from consulting revenues, and some spillover into Q4. They plan to spend $9 billion on acquisitions vs $5 billion earlier. Indian IT is also going the acquisition route: HCLTech invested in Cerem, outright acquisitions from TCS, Infosys. 2026 is set to be a year where Indian IT acquires capabilities. The ADR pack saw sharp cuts: Infosys ADR down 10%, Wipro down 4%, EPAM, Cognizant double-digit cuts. We are in a flux zone trying to determine disruption versus expansion. Some say AI enables more software, so companies will be required. Others point to price deflation pressure. RIL AGM today in the afternoon; you'll hear from Mr. Mukesh Ambani. All eyes on whether they give an indication on the Jio listing. I don't think we'll get exact numbers, but maybe a hint. Reliance stock has done poorly; can this turn the narrative around? Quick levels: Nifty targets 24,000, 24,482, then 24,602 (late April, early May high). Support at 24,088 and 23,820. The IT index may open 180 points lower. Nigel has the FNO positioning.
Gift Nifty is suggesting a gap down of around 200 points. By end of today, you don't want the 23,950 mark to breach on the downside. Yesterday, FIIs sold only around 1,000 crore, which is digestible given DII flows. In index futures, they covered some shorts and added long positions; short position remains around 87%. Options data: at the 24,200 call, we see good open interest buildup, premium down to around 100. Writers don't want higher levels breached. If Reliance participates and tech bounces, Nifty Bank continues its good form, there is some out-of-the-money call at 24,500. Downside: 23,950 is key. Accenture's numbers were disappointing, but Nifty IT already underperformed. If it opens much lower, you'll still bank on the 52-week low. Nifty Bank has been in super form, headed towards all-time highs near 61,000. Reliance will be the stock to watch in the final two hours. Both need to offset what the IT index does. Gift Nifty suggests a gap down; hopefully it gets filled.
Take that point, Nigel. 24,000 will be an important psychological support at the open. Let's see whether the Nifty Bank and Reliance outdo what the IT index takes away. Updates from West Asia: US Vice President JD Vance defended the MOU with Iran, warning you can't kill your way out of security problems. The 14-point agreement extends a ceasefire by 60 days. The two parties will meet in Geneva. The White House said Vance will not attend. Listen to his comments: 'If I were in the Israeli government cabinet, I might not be attacking the only powerful ally I have left. Over the last three months, two-thirds of the defensive weapons protecting your homeland have been built by American hands and paid for by American tax dollars.'
You know, that's a pretty strong soundbite, right? It really hits you.
Did you ever think an American vice president or president would go after Israel, reminding them that we are all the protection you have? Look at the language: 'You can't kill your way out of all your national security problems.' This is perhaps the lowest relations between the two closest allies have been. It's quite incredible.
At some point I was tempted to ask, 'Look who's talking.'
Yeah, that is a question for another time, but I'm just saying.
Whatever Israel has done, the US has always... I don't think the fundamental core equation changes. Israel did not want the war to stop. There have been statements on both sides. It's temporary, but the core relationship is still there. I don't think we should doubt that.
Just a little bit of volatility in an otherwise bull market. Let's get an expert opinion from overseas. We have Robert Subaraman, head of global macro research at Nomura. Rob, while last week we were discussing West Asia, it seems a large part is behind us. Now concerns are around AI and its impact on IT services. We saw that in Accenture's results: stock down 17%, managed services down 15%. How much worse do we get on the IT pack before signs of repivoting and growth?
We'll have to see on the AI side. Clearly software stocks have been hit. But as AI gets adopted, we will see productivity gains over time. The new Fed chair is focused on that. Getting back to the Strait of Hormuz opening up: our work at Nomura shows India benefits the most from the drop in oil prices from $100 to $80, a 20% drop. A 10% drop in oil can reduce India's current account deficit by 0.5% of GDP and reduce inflation by 0.5%. It boosts growth. This can significantly improve India's fundamentals.
No, you're absolutely right. Just a quick thing, Rob. Capital flows and outflows have been a problem even before the war. The Iran war added oil. FDI flows have been poor, with retail exits. Do you think some of that settles down? Capital looks for the highest rate of return.
Highest rate of return but also fundamentals. If oil prices stay around these levels, it will improve India's fundamentals. Prashant, you're right: India's balance of payments has deteriorated. We think the new government scheme to attract NRI inflows with sweetened deposit rates could attract $55 billion, swinging the deficit into surplus. The scheme runs through September. Add that to lower oil prices, current account deficit coming down, inflation down, growth positive. Capital inflows can change the dynamic, especially if the rupee appreciates against the dollar.
Hi Rob, good to see you. Last time we spoke about the triple shock: oil price spike, tariffs, AI disruption. Things are aligning for India: crude oil down, hopefully a favorable US deal, AI disruption nearing end, our companies can participate, helping capital flows. The rupee is showing stability. I wanted your comment on Fed Chair Bosch's first speech, which seemed hawkish. When do you factor in a Fed hike? October is what most are talking about. Do you think it comes in?
For the Fed, it was no forward guidance, only mentioning price stability. Overall hawkish, markets reacted. Inflation forecasts revised up: 9 of 18 FOMC members see a hike this year, 8 of those see more than one. But Walsh in the press conference was neutral to slightly dovish. There is a political element ahead of midterms. Nomura's forecast is still the Fed on hold this year. Oil and gasoline prices are coming down. If the Strait of Hormuz stays open, US inflation could roll over. We are comfortable with the Fed on hold, but the risk is a hike. With little forward guidance, more surprises are possible.
Rob, we'll leave it there. Thank you for joining us. Always a pleasure having you on CNBC TV18. Let me run through what's lined up: At 8:35, Moshe Katri on Accenture results and Indian IT. 9:00, Prashant Byani on rainfall impact. 9:20, Naresh on markets and macros. 9:30, management of Google Exports on UK India FTA. Kylokar Ferris with management RV Gumasa. 9:50, Turtleman Fintech IPO founders. Lal speaks with Lionel Johnson and Arvin Charie on macros. Stay tuned. On the other side, top 10 stocks: Amber, Bharat Forge, Endurance Tech, Diamond Power Infra, True Walt Bio reacting to positive news. Negative: Tech Autoarma, Jubilant, Farova, Gold Sensitives. Neutral: Brigade Enterprises. Take a break.
You're watching Bazaar Morning Call. Gift Nifty indicating a near 200-point downtick. A large part on account of IT stocks. We're discussing our list of top stocks. Let's go to Vinnie. Vinnie, all the IT stocks seeing a sharp downtake after Accenture overnight. What's the impact on Indian IT?
Hi, good morning. Yes, we could see that impact on Indian IT. Accenture's Q3 revenue rose 5.6% but missed estimates. EPS at $3.80 vs $3.49, in line. Bookings fell 2%. Full-year guidance narrowed from 3-5% to 3-4% on constant currency. Free cash flow maintained, EPS outlook raised. On the call, they said crime budgets are not increasing even with AI; spends are redeployed, not expanded. Average size of AI orders increasing. Some impact from Middle East. So negative read-through. Narrowing guidance indicates soft demand. Large managed services opportunities moved to FY27, so Indian IT booking trends may be weak. Indian IT will see a downtick.
Got it. Thanks, Vinnie. Let's hop across to Pasna. Morning, Pasna. Some good news for Amber.
Certainly. Amber will remain in focus as it entered a manufacturing collaboration with Oppo India for local smartphone production. Under this partnership, Amber will manufacture for Oppo, OnePlus, and Realme. This marks entry into smartphone manufacturing, combining Oppo's expertise with Amber's capabilities. No investment disclosed. Company is diversifying; last week announced entry into defense and aerospace electronics. Electronic segment has done well, guided 40%+ revenue. Smartphones are high volume, low margin. Brokerage view: Dixon is relatively insulated. All eyes on how this pans out.
Thanks for that. Amber in focus. Brigade Enterprises issued a clarification on the Chennai project environmental clearance cancellation. They said all is in order and they will appeal. Sonel has got more son money.
Well yes, they will appeal. They say the revocation is legally unsustainable. Brigade and the landowner have filed an appeal with the Supreme Court. The matter is subjudice. They got all key approvals including environmental clearance and CMDA in 2025. A petition was dismissed by Madras High Court. The project spans 2 million square feet with a gross development value of 2,100 crore. Phase one is launched; phase two remaining. Construction won't continue until resolved. Brigade will be in focus.
All right, thanks for that. We'll take note of Brigade. Sudarshan joins with his list: Aurobindo Pharma, Bharat Forge, and Endurance Tech.
Regarding Aurobindo: the FTC asked them to divest four generic products to complete a $250 million acquisition; impact $4-5 million, so mild red. For Bharat Forge: subsidiary Kalyani Strategic Systems and AM General formed a partnership; AM General proposed to the US government to develop and deliver a 155 mm MTC solution based on Kalyani's mounted artillery gun platform. Positive. For Endurance Technologies: they have existing two-wheeler battery capacity and will expand to four-wheelers with 36,440 battery packs per month, investment 62 crore, completion by Q3 FY27. Green for Endurance and Bharat Forge, red for Aurobindo.
Thanks for that. Let's hop across to Ria for more stocks under the news. Hi Ria, morning.
Hi, good morning. Three stocks. Diamond Power Infra: board approved a 2,000 crore QIP (up from 1,000) to meet MPS norms; they aim for full compliance. True Alt Bio Energy: received 150 crore financial assistance under PM G1 Yojna for a sustainable aviation fuel project with planned capacity of 10 crore liters per annum; incentive covers 7-10% of project capex. Both expected to open green. Jubilant Pharma: a US FDA inspection at their Spokane, Washington facility issued 8 observations, none related to sterility; they will respond within 15 business days. Stock expected to trade under pressure.
Very much, Ria. Gold sensitives in focus; Manisha has that on her mind. Manisha, good morning.
Morning. We saw a sharp decline in gold prices overnight, trading below $4,200, down 8% for June. From all-time highs of $5,600 in January, that's a sharp decline. Markets digested hawkish Fed and expectations of higher-for-longer rates, plus an ECB rate hike. Strong US dollar weighing. No safe-haven buying due to geopolitical de-escalation. Weak import and demand trends from India after the 9% import duty hike puts India at a premium.
Right, thanks. Those gold sensitives will be on our radar. We'll take a short break. On the other side, full tilt on IT with Moshe Katri as Accenture cuts growth guidance. Stay tuned.
Welcome back to Bazaar Morning Call. Here with Hormas to talk about big movers from yesterday. Morning, Hormas.
Good morning. What a day for BA yesterday: stock up 17%, biggest single-day gain in 20 years. Volumes over 1 crore shares, sum of last 69 sessions. Last such volumes were in March 2006. 10% delivery. 20-day average only 1 lakh. BA had 11.5 lakh shares for delivery vs average 60,000. From November 2021 peak of 2,000, stock is down 70%. Textile stocks: Wellspun Living third best Nifty 500 performer, up 11% on Thursday, 20% in five sessions. Over 2.5 crore shares traded, sum of last 95 sessions. 18% delivery. Nika: not done well, but gained 10% in two days. Volumes almost 4 crore, highest since February, 37% delivery. Year-to-date positive and at 52-week high.
Thanks, Hormas. IT stocks under pressure after Accenture cut guidance. The ADR selloff indicates that. The IT index is down 24% YTD. Moshe Katri from Wedbush Securities joins us. Moshe, good morning. How much should we extrapolate from Accenture for Indian IT services?
As if we needed another reason to be negative on the sector. Accenture is a bellwether. After earnings, the sector saw names down 5-15%, even companies growing north of 10%. Accenture had specific issues: consulting hit by Middle East tensions, deal slippage due to macro and AI disruption. The industry is going through big changes. Bellwethers impact the entire universe.
Hi Moshe. One concern for Indian IT is that Accenture launched a new brand to focus on mid-market enterprises. Will that challenge midsize Indian IT companies?
Not necessarily. Good point about focus. Interesting that before earnings, they announced multiple acquisitions in cybersecurity, signaling a pivot away from traditional business due to cannibalization. That's another negative, indicating they are trying to pivot.
Since we have you, we also need to ask about Indian IT companies pivoting. We recently heard about HCLTech's investment in Saram AI. What do you make of that?
It's about new models: outcome-based, hybrid software and services, more products. These changes take a couple of years. Good move, but question is execution. Margins are better than expected, but topline growth acceleration is lacking. PE multiples in the US have fallen from 15-20x EV/EBITDA to 6-7x for companies growing low to mid singles. India still trades at a premium.
Last time we chatted, you said Indian IT trades at high teens PE; you'd be constructive when they come to low teens. We've corrected. Would you selectively look at some? They are adapting to AI, have cash, cash flow yield, big correction. Is most bad news in the price?
We thought 7-8x was the floor; we got a new floor. Hard to call the bottom. Maybe wait for Anthropic and OpenAI IPOs. Multiples are sentiment-driven. Until sentiment improves, hard to buy unless companies have unique AI technologies. Two publicly traded: Fractal (India) and InnoData (US) growing 40%. Some privates doing well. Others are work in progress.
Yeah.
Sorry, Moshe. Do you have coverage on Fractal?
We don't cover Fractal at Wedbush, but we know the company well.
Okay. And you think they're doing the right things and set up nicely?
They seem well positioned given growth rates. They've had a few bumps but positioning is good.
One more thing, Moshe. In India, many investors think AI is cooling off. A tension is the cost of tokens. So far it's been subscription; do you think everyone will move to per-token usage? If so, revenue assumptions compress. For $20 a month you use as much; with per token, you may not. Do you think we are at that point?
The ideal scenario is that tokens become so expensive that companies use a hybrid model of subscriptions and human engineers to spend money better. That's the model down the road. Is it happening today? Definitely not.
All right. We'll leave it there. Thank you very much, Moshe. Appreciate you joining us. Always great to be.
Speaking with you. Thank you very much.
Thank you. I think what, 20 minutes? Not 20 actually, 12 minutes to go for the pre-open session to kick off. Uh, Mangalam, we have Sat Kinka with us and by the way, I don't know if you want to ask Sadat about BA, and we were talking about and BA was one of the headlines yesterday I saw in the evening as well, 16% by close, Mangalam, right?
Yes, 17% by close. It's a big close. Like I said, you know, if you had to draw a Venn diagram of problems and you look at the most common shaded area for solutions, the new management of BA would be that. What is the problem? You know, the shoes aren't selling. Second part, the shoes aren't selling fast enough. Third part is they need to be turned around.
I'm not a buyer, but I have to tell you, some of their Hush Puppies collections, I did purchase a few pairs. But I have to tell you, you know, the credentials that Mr. Ral brings. He is ex-Nike, Zara, and is a turnaround specialist. Customer for the last, I think, at least 20 years.
I was a BA customer when I was a schoolboy, but then increasingly a little bit Hush Puppies and some of their sneakers. But be that as it may, let's get to Sedat Kimka. Sid, you know, 2140 was the stock earlier, now before yesterday's announcement fell all the way down to 680 thereabouts. You know, this announcement was obviously a shot in the arm, but how does this change your investment thesis? Would you actually wait for the management to join and thereafter see what steps they're taking and then take a call, or maybe just enter right away because of this news itself?
Good morning. I think a lot of discussions yesterday after this news. I would say that while this news is positive and a big shot in the arm as you rightly said, Mr. Ra brings a lot of credence to the table. But if you see last few years for the entire consumer segment and especially for the footwear companies, it has not been that great, and in that, BA has been losing market share. I think they tried some transformation but that's not working. So for now, as you rightly said, we'll have to wait for the management to join and then lay out their field strategy. Until then, our current estimate, if you look at last year's number, FY26 they did a decline of almost 16-17%. And on a low base, around 12 to 15% earnings growth may not justify the value of them. Just that they've seen historically how some of these consumer companies, a management change, leadership change brings in a lot of credence as well as the entire thought process, strategy changes, improves for a lot. So I would definitely take it as a positive but not going all in right now. We'll definitely wait for him to join and then show the strategy and then maybe incrementally turn positive, but for now we remain neutral on BA.
Okay. All right. What about Amber? What's the view out there? They have gone ahead and they've signed a manufacturing strategic pact with OPPO India. That's going to be very good news for them, I would believe. And if you could give us your view on Amber, and would it mean some kind of a negative for Dixon, or do you believe that their part of the book is protected?
Nigel, I think there are two parts to this story. Definitely a big positive for Amber. Mobile phones is a new segment for them. But they just signed the deal. The volumes and all the other finer details are yet to come out. What we believe is that this would start contributing to Amber's numbers meaningfully from FY28, FY29 onwards and would positively contribute given that they are not yet present in the mobile phone segment and OPPO, which is a licensed manufacturer for mobile phones not only for OPPO but OnePlus, Realme brands in India. So I think this is a big positive apart from the fact that Amber continues to see recovery in the RAC segment, the other electronics, railways as well as defense segment. So yes, continue to remain positive on Amber. I think Dixon, not that negative because the overall view that we have is that any OEM will not try to expand beyond 30-35% from a single vendor, and which is where this diversification was always looming. I think for Dixon, the announcement of JV with Vivo is something that remains a key positive, and I think the final approval is expected soon, and that will be a big volume driver, about 22 million units on an annual basis from Vivo India's volume. And we believe that at current valuations, there is still room for upside in Dixon, about 15-20%. We have a target price of about 14,500 on Dixon as well.
Got it, Sid. So good news for Amber and not such a big concern for Dixon because they have a JV announcement as well that could be in the works with regard to Vivo, and that'll more than compensate for any kind of negative. So clarifying out there, and a couple of notes as well say that they don't believe it's a big risk for Dixon. So we'll have to see how that goes. But good news for Amber. We'll slip into a short break. We continue our chat with Sid. We also get chatting with Midesh as well as Sudeep who will be joining in to give us their technical traits.
Welcome back. You're watching us here on Bazar Morning Calls. Kimcast with us, Sedhart. The second half of today's trading session will be all eyes on Reliance. The annual general meeting today. It's the 49th annual general meeting as you can see. Everyone will be looking at what the company has to project in terms of their growth outlook and any sort of value unlocking as well, the road to unlocking value in the retail business, in the telecom business, etc. 5 hours from here we will have the chairman speaking. What do you make of the stock and do you think today's event could be something that could be an inflection point for the stock which has otherwise not been doing too well?
I think, Mangalam, if you look at Reliance, it has been struggling because of a lot of global macro headwinds, but even on the domestic front, some of these key businesses, like Jio, they have been unable to take a price hike for the last almost 18 months, which has been a big overhang not only for Jio but also for Bharti. And I think the stage is now set for the Jio IPO, with the final details of which could come out today, and I think that will be a key driver going forward. In the retail segment also, it has been struggling. As we spoke some time back, the consumer demand has not been that strong. But of late, I think things are now turning, and with the Middle East war now getting more crude below 80, I think inflation worries will now recede, which could lead to some improvement in the footfalls for the retail business as well. And the core business, the oil chemicals, that is again doing well. Key details expected from the AGM. I think the newer businesses, the new green fuel investments that they have been doing, any details on that will also give some clarity to the stock. So overall, net net, we believe that the biggest growth driver for Reliance going forward would remain Reliance Jio of the digital services, likely to contribute almost 80% of Reliance's incremental EBITDA over the next two to three years. So I think with that being the key factor, as well as some of the capex heavy businesses on the hydrogen fuel cells, I think this will be a key monitorable for the stock, and unlocking could drive the stock in the near term.
Got it. Okay. All right, Sid, stay with us for the time being. We slip into a short break. Come back pre-open rates. We'll also connect with Prashant Bani of Elara who'll be joining in for a conversation on the El Nino impact on the sugarcane output. Stay tuned.
Oh. Welcome back. There is the pre-open session which has kicked off. The dollar rupee perhaps also there, unchanged almost 94.35, 94.33 was the close yesterday. And the Nifty is starting exactly almost at where the Gift Nifty indicated, which is about 190-200 points lower. So those are first rates in the pre-open which are starting to come through. Midesh Tucker is with us, President Retail Research Bonanza Portfolio, and Sudeep Shav Securities is with us as well. Gentlemen, good morning, good to have both of you here. Thanks very much. Well, Midesh, good moves. I mean, actually yesterday looked like an absolutely flat day. Last 40 minutes changed everything. Almost 80-90 points added in the last 40 minutes. This morning there is a bit of a gap down which is being indicated. What's your sense and which way do we head? I think you and Suzan both have been saying that buy deeper pullbacks, right? So when you get a 200 point pullback, is that the dip to buy or would you want to watch?
Actually, you know, the bullish bias despite the fact that we might open with a 200-point kind of a gap down for me remains on the upside. Now we've had a rally from close to about 23,000 levels to as high as 24,200. I think the retracement levels would come close to about 23,800. There's also a gap over there, 50-day averages which have also started rising, also placed in that range. So if a 200-point gap means we open around 23,950, maybe if slightly lower, I would be even more happy to venture into long side positions on the index. So for me, I think the bias on the upside, the buying zone for me is slightly lower. I would start buying from 23,900 and slowly accumulate all the way down to about 23,800. Get your average price around 23,850-840 and then keep 23,700 as your stop loss. I still believe that there is a good probability and higher chance of us heading towards 24,300-350 in the next few days, and if we start getting past that, there's also a chance of heading towards 24,600. So overall, despite the fact that we might have a negative start, the idea is that if you get some more declines during the day, look for slowly accumulating the index positions.
Right. What individual stocks would you focus on, Midesh?
Yeah. So on the stock side, I have a mix of buys and sells. And you know, I think IT is somewhere which is showing some signs of buy reversals, but with today the kind of news flow and the Gift Nifty indications, it might actually see a fresh breakdown. So I have two sell calls from IT and two long calls in the markets. KPI Debt is a sell with a stop at 761 for targets of 710. Again, if there's a big gap down, you might have to wait for the risk equation to come into play. And Inforces is a sell with a stop at 1141 for targets of 1095. And on the buying side, G Vanova, if you get a 20-25 point kind of a gap down in the morning, that's a buy around 5225, keep a stop below 5165, look for targets of 5350. And Ambuja Simmit is showing some signs of reversal, but it should get past yesterday's high for a confirmation. So buy above 433 if it does manage to go to that level today. Keep a stop at 426, look for the first trading target of 450.
All right. What about you? What are your trades?
Morning, Prashant. What I feel is that firstly, Nifty on this dip should be bought because it may underperform, but you have capital goods, defense, auto, and banking all ready to move up. So I guess it will be balanced. The IT fall will be nullified by the rise in all these sectors. And a capital goods midcap as well as an EV stock is on my radar. The first stock which I feel could do well in this market is Semens Energy. There's a decent breakout here. 3770-3775 was the previous close. What we feel is that the volumes in the last few days have been above average, as well as the stock is trading above its moving averages. So here, this could be bought at the current levels and on dips to 3740. The stop loss would be 3710. The targets would be 3900-3950 on the upside, and the time frame is 1 week from here on. The another stock that is on my radar is Isra. Here also there has been strong breakout with volumes. We have seen the EV stocks moving well: Electra, JBM Auto. So the stock has closed yesterday somewhere around 1445. This can be bought at the current market price as well as on a dip to 1430-1425. The stop loss has to be placed at 1410. The first target on the upside would be 1490 and 1520 would be the second target.
All right. Electra Green Tech is a call that you have. But the stock on our radar is Reliance set to announce its road map for the next 12 months at its 49th annual general meeting today. Sonel joins in with all the updates on what can be expected. Son?
Well, the next 12 months will be important because it will see ramp up of solar and battery manufacturing plus generation, the electrolyzer gigafactory for new energy. So new energy could continue to be the big focus point this time around because there could be notable growth in the medium term. Now let's look back and talk about FY26 because big capex was done by the company: 1.44 trillion, which is an increase of 10% on a Y-o-Y basis. If you talk about segments, retail plus digital combined did see a decline of 25% on a Y-o-Y basis at 54,200 crore rupees, but oil to chemicals capex rose 21%. A lot of pet plants saw expansion. The reported capex in the other segment saw a 2.1 times increase on a Y-o-Y basis at 52,500 crore rupees, and a big chunk there was new energy at around 30,000 crore rupees as most of the expenditure is now being undertaken through standalone Reliance Industries. The cumulative capex in new energy so far has been around 70,000 crore rupees. So what will investors watch out for? The new business insights because in Q4, Mukesh Ambani did indicate that they are making rapid progress in operationalizing new energy gigafactories. CLSA indicated that this is something investors will track very closely. The battery energy and storage systems production will start in 2026. The Jio IPO hope continues, of course, because in Q4 they did again mention that they are advancing steadily towards the listing of Jio Platforms. Retail could be the next wave as well. A Kotak report analyzed last 10 years of capex where they indicated retail spent 1.9 trillion in the past decade, out of which 84% was done in just five years at that 1.6 trillion mark. The future capex in O2C and ENP will be watched out for because it has been coming down. It's just 21% of the total capex. Now they have been focusing on diversification: new energy, digital, media, others. And on the total 1.7 trillion capex towards other businesses, around 60% has been incurred in just the last three years. So there's a lot of focus on that. So commentary on Jio and new energy is something that will be critical to track this time.
Thank you very much for that, Son. So 2:00 is when the speech starts, and we'll hear, as Son said, from of course the chairman, Mr. Mukesh Ambani, and others at Reliance Industries across business verticals as well. So always an interesting and marquee event as far as corporate timeline is concerned. Well, what does the rain deficit in the month of June mean for the agri space, especially sugar? Let's get some opinion in with Prashant Bayani, Vice President Institutional Equity at AR Securities. Prashant, good morning. Good to have you with us here. Thanks very much for joining us. So just first up, you know, so far deficient, maybe will be made up in July onwards, but so far it is what it is. What are the implications for the sector?
The implications will certainly be a bit negative if the deficiency continues. Historically we have seen Maharashtra and Karnataka have been more vulnerable to rain deficits. So I think this time again, if the El Nino impact is severe, then these two states will have impact on the sugarcane production. UP is relatively better because there we have canal irrigation facilities, but UP may also get impacted. But Maharashtra and Karnataka, we have seen a clear impact in the year of El Nino or rain deficit years.
Yeah. So typically, what are the important months for the sugarcane crop, Prashant?
Sugarcane is a steady crop, but I think there needs to be a certain amount of rainfall or water availability in these four to five months. So all the months are important before the crushing season. It is not that one particular month or a season is important. So we need to have rainfall across all four to five months. And then for sugarcane which is crushed around say February onwards, for that winter season is also important. But primarily for Maharashtra and Karnataka, I think rainfall has to be good, so all the four months of June, July, August, and September would be important.
Right. For the listed sugar companies, when the West Asia crisis was on and still is underway, crude prices were high. The benefit was that the street was hoping that higher ethanol sales would make up for all of these things. Now with crude prices coming down, do you think that trade will also begin to come undone?
The stock trade may get undone, but the efforts that government has taken, the overall narrative for the industry looks to be quite good on the ethanol front because flex fuel engines, government has allowed now 100% ethanol blending there. And on the sugar prices side also, because of lower production even this year, sugar prices are likely to increase. So narrative is good. The only thing is that if the minimum blending threshold of 20% also gets increased, then I think on the narrative part we are doing fine itself. Just because of the stoppage of West Asia or the stock prices may come down a bit.
So what's your top pick now and what are the calls that you have on the sector?
Yeah. So see, sugar broadly is a very rangebound trade, so to say. One cannot be outright extremely bullish or negative because government comes or intervenes on both fronts. For example, if this year we have a lower cane production, government also has levers to reduce the diversion of sugarcane towards ethanol and increase more of sugar production. So one has to be a bit rangebound positive or negative. Within that, we like.
All right. Thank you very much, Prashant. Good speaking with you, always a pleasure. Brokerage calls of the day. Sud has got that. So take it away.
So first one is Volume Web. CLSA maintains high conviction outperform call and target price 654 rupees per share. It says company has entered into a partnership with Asai Group Holding to manufacture, distribute, and sell Kalpis brand, which is strategically positive as per CLSA, and it adds a differentiated formatted data-based RTD offering to existing portfolio. Next on Bajaj Finance, JP Morgan maintains overweight call with a target price of 8,080 rupees per share. It has mentioned few takeaways after the management meet. First, growth momentum on the ground remains strong. Second, asset quality remains benign across the loan segments. No visible impact from the Middle East conflict, and company is confident on delivering the guidance that it had given for net interest margin.
So like a bullet train there. I think which means we have about 20 seconds.
I think he needs a shot of that Kalpis drink himself that he's speaking about Vun Beverages.
All right. Well, Vun and Bajaj Finance are the two names in focus as far as the brokerage radar is concerned. I think market open coming up in a couple of seconds basically, and we'll pick it up from there. I think the IT stocks will all be in focus. I think in the pre-open they're all down between 3 and 5%, at least the large cap ones. And they'll settle and we'll sort of look back at them. Even the midcap names in the pre-open are down between 2-3%. So at least the Nifty is not that large down, but it is down 0.8-0.9% lower on the Nifty. So in line with the Gift Nifty, 23,975. You've got the Nifty Bank which is down 0.4%. The Sensex is down 0.8-0.9%. The small cap index also should flip into the green. That's yesterday's close. The small cap index is down about a quarter percent. Yeah, there you go. So across the board there are cuts, but the broader markets are doing better. Small caps in specific are down the least. So the tech names are all there at the bottom of the screen, and I think that's where the pressure is coming from. Maybe just look at the Nifty IT index as well. Yeah. So oh boy, 6% lower. So maybe it's got to come from the large caps, TCS, Infy, etc. Which we will also just look at Nifty heat map, I guess should give you that sense. The top four or five losers will all be IT. And there you go, Infy, TechM, HCL Tech. Those are the top five losers. On the other side, you've got Bajaj Auto, Cipla, Sun Pharma, and Apollo Hospitals which are higher. So you got about 10 names up and about 40 lower. So that's the lay of the land right at the word go, 23,940, Mangalam.
Well, it's a lot better in the broader markets. You know, the advance-decline split is right down the middle, and we do have an equal number of stocks which are advancing and declining. On the declining side, obviously you do have a lot of the midcap IT companies as well. But if you look at some of the gainers, you know, you have Amber, the deal with OPPO doing extremely well for them. You do have follow-on buying that we're seeing on names like Vun Beverages and Nika as well. HFCL is one that stands with a gain of almost 5%, and we are seeing some traction in Angel One. Now if you look at the losers, Persistent Systems down 6%, Emphasis down 5%, LTM down 5%, Co-F Basoft. So of the top eight or nine FNO losers, you have all of them in the midcap IT pack. The only one which is actually a non-IT stock is probably Prestige Estates which is lower by about 3%. But in the broader markets, look at G&G Electronics. We had the management join us last week as well. There was a large trade. The company was fairly optimistic on its refurbished laptop business, up 10% locked in upper circuit at open itself. Textile companies doing extremely well. SP Apparel for one up around 5%. MTAR Tech, can't take that stock out of equation as well, has crossed past its earlier high and now has recovered all the losses that we saw on account of the uncertainty that we're thinking of. Bloom Energy up nearly 4%, 310 higher on that stock. VTH Wabag is the other one which is higher by 3.5% as well. So the midcaps, yes, they're lower, but not as bad as the large caps would have you believe.
Well, that's right, Mangalam. A few stocks, just to add to the list that are doing well. Diamond Power, that's another stock. There was some positive news flow on that one. So that stock has opened gap up in today's trading session. It's holding with gains as well. They've got a board note, I think, for a QIP if I got that correct. So 2000 Pro QP, that one's up and about. Now, there's good news coming in for Amber because they will make phones for OPPO. However, some part of the street is a little bit concerned. What does it do with the current relationship that Dixon has with the group? Will it be some competition out there? We'll have to see how the volumes are split. For the time being, Dixon is down close around a percent and a half, but that is one of the fears. So some clarity on that front will be important. And from Dixon's perspective, we are waiting for the positive news flow with regard to the JV with Vivo. So that's going to be an important mantra for the time being. Dixon down close to around 2%. The other couple of names that are moving around, HFCL has returned back to its winning way. So that's up close around 5%. Angel One saw a bit of a knock a few trading sessions ago. That as well has popped up in trade. The tech pack is down. The Nifty IT index, well that's breached the 27,000 mark, which effectively means it's made a fresh 52-week low. The earlier low was 27,80 odd. So that one's breached that level. It's down around 6%. You want some kind of stability because that's one leg of the market that's actually dragging itself. Vedanta group companies, Vedanta Iron and Steel for the last few trading sessions that's been moving from circuit to circuit. It listed at the lower end of that sum of parts. So that has gradually now in fact it's seen profit taking. It started up close to 3%, now it's getting sold into. So after the last few trading sessions upper circuit, that one is a little bit lower. What else? Nelco is up close around 6.5%. J Axels as well is up close to around 6% as we speak. Good up move is what we're seeing out there. Nifty has managed to defend the 23,950 barely. But the Nifty Bank actually has seen a good recovery while the IT index is dragging down.
Yeah, 150 points off the lows on the Nifty Bank right now. It's curtailed its losses to just about 160-170 points after opening about 350 points lower. And Reliance, just pull up that stock, that too has opened fairly well in the green right now and holding with a gain of almost a quarter of a percent ahead of its annual general meeting. So if this big boy moves, we will see some traction out there. And before tossing it back to Prashant, Prashant, just look at BA was up 17% in yesterday's trading session. Some bit of profit taking which is taking place right now. But be very interesting to see whether that dip on BA is bought into right now or not, because if you're buying the stock from a management change standpoint, then obviously these dips would be opportunities for those who are looking at 17% uptick yesterday.
Absolutely right. And you know, so little bit of pullback out there in BA, but otherwise I mean it's 200 points lower as we speak. And things with management change, the thing is you've got a timeline, some period of suspense right until the point that you actually hear from the new man at the top. Which means that typically they would be perhaps you'd hear them here on CNBC or there would be an analyst call or there'd be something where the new management will articulate the strategy, and that strategy may the market may like it may not like it. But the point is, till that point, whenever that point is, you can hope that it'll be to the market's liking. So in any case, as I think Mangalam has been highlighting, the stock has done pretty poorly, but our numbers have also been pretty poor for the last couple of years. So that is about it for you.
And Stock Mart Tech, you know that Bloom case played out. The stock saw a sharp correction, it's making a fresh 52-week high, 8,500 rupees. Just take a look at the way that stock is moving, massive volumes in the first few minutes, and it's up close to around 2.5-3%, in a world of its own, blooming away.
Blooming away, and you know it sees 10% kind of pullbacks once in a while like it saw, and then immediately it once again goes back. The last time it sold off 10% was that confusion. There were some reports that a project has been cancelled or deferred etc. And we had them on and they said well nothing, absolutely nothing at all, and if anything, they're being pressurized to ramp up capacity to meet the demand from Bloom, which in turn of course is supplying to hyperscalers in the US. So that is the picture. And we are 195 still on the index at this stage. Well, let's welcome in Nir, founder and CIO at 3R Investment Management. Nir, good morning, good to have you with us here. Thanks for joining in. Just your sense, what is important from an equity market point of view here in India? You marry the macro and the bottom-up. Macro-wise, things are looking much better compared to 10 days ago.
Good morning, thanks for having me. I do think there's slightly better backdrop here for India, much more for sure from a macro perspective. Obviously, you're watching the dollar-INR move over the last few days. So combination of the oil price decline and all the measures that we saw from RBI, I think very welcome, and the markets are reacting to it. And in reality, on a relative basis, the Indian rupee is outperforming all of the other Asian currencies at this point because we have seen a move up in the dollar against all majors. So clearly INR is showing strength, which is one of the ingredients of the confidence from a foreign investor perspective. Equities, I still have a little bit of a caution driven by the IT services sector, but more at a sector level there are some positives there. So I think all in all, the macro picture with some caution on IT services will remain.
Caution on IT services will remain. What about financials? Because that kind of is more tied in a straight way to what's happening on the macro front, right? And that's a space which has done so poorly, large private banks.
So I think financials, I would argue, are actually better placed in India. Obviously we'll see a continuation of credit growth in the system. The corporate capex I would expect to start seeing some traction as we go into the later part of the year. So I think the financials are actually well placed in terms of where they are in terms of the NPL cycle, credit growth, and the margins from here.
Hi Nir, good to see you. When you said the rupee stabilizing is good news at least just in the near term because it fell one way from 89 to 97 I think between December till a couple of weeks ago. That said, what about the FII flows? They've been underweight India. They've been selling various emerging markets, but they've also been getting heavy into this AI trade which is lacking out here. Do you think the FIIs gradually come back into the Indian market since the pieces are coming together? Crude is down, there are measures coming in from the RBI to stabilize the rupee as well.
So I do expect the FIIs to move towards a neutral, but I don't think there's going to be a significant shift beyond that. And part of it is driven by what you see: the global equity impulse is very much an AI trade, and you see that in Asia playing through mainly at this point Korea, Japan, and Taiwan. So you're not seeing a broad-based rally across the region. In fact, even China has been underperforming over the last few months. So I don't think that's changing unless you see a pause in the AI-driven rally and the broadening of that, which could happen, but I'm not sure we are there as yet. And we're speaking about the AI-driven rally and can't not once again speak about the IT pack. At least today, you know, the IT index down about 6% right now with stocks like Infosys, TCS, HCL Tech, VRO all of them falling like nine pins. Inforces is down 8%, TCS down 6%. We have a bigger gash on some of the midcap names as well. In the past you've said that there is an opportunity for Indian IT companies to pivot. We've seen some signs of that. ACLT has made an announcement, you know, about 10% equity in Saram AI. Is that significant enough for you to actually look at it after a decline, or maybe you'll wait this rally out? Are you tempted?
So I would still be cautious, and part of it is driven by what you saw obviously the Accenture guidance. The EPS was fine, but the concerns are about the forward revenues, and hence based on that growth or some shrinkage of the business, what multiple do you put at? So I don't think we have seen completely the end of that because obviously the AI theme broadly is still evolving. I do think we will see an opportunity in the sector, but it still might be one or two quarters away. And on your point about the pivoting towards the AI theme, it's early days. I don't think looking through the numbers that it has started to show up for any IT services business in India as a meaningful move. It's early days of the trying to pivot, but most of the revenues are still from the traditional business.
Oh yeah, got that. You know, just your do you have any strong views on precious metals? We're seeing a bit of a move lower on gold and silver, and there are a few basically on the lending side there are a few companies which have done phenomenally well. So just your thoughts.
So long-term, I still remain bullish on the precious metals. Near-term, I do expect to see some pressure. Part of it is also driven by if you watch what's happening in the US, the FOMC. There's certainly a shift there. In fact, there's the biggest evolution in the monetary policy we are seeing right now as we see the new chair coming into the Fed committee and obviously is slowly trying to move or pivot towards a different way of monetary policy. In fact, in my mind, we're going back to the Greenspan era and the hawkish hold from the Fed because of the inflationary backdrop. I think that'll keep some pressure on gold in the near term. If you take a 12 to 18 month view, I'll still be a buyer of gold from a broader portfolio allocation perspective.
Okay, got it. And what should I mean, you know, just asking you off the cuff, but what kind of exposure should you be having to gold? 5% 10% of portfolio?
I'm normally a believer that gold between mid to high single digits still has a position in the portfolios.
Indeed. You know, in the last two years, if you had a larger position, you'd be happier. But that said, what about some of these export-oriented names? You know, the textiles companies, everyone was scribbling about the rupee weakening, but some of these companies actually could potentially gain, and some of those headwinds particularly for sectors like textiles, they're going to be turning around because the India-US trade deal is likely to get finalized, you have FTA signed with various other countries as well, and the rupee weakness actually should do well. Any view on that space?
I'm actually positive on that sector given where the rupee is, and to your point about the additional trade deals that have come into play, I think a lot of that will start getting traction in the coming quarters, and I do think the benefit will start accruing to these businesses in terms of the growth in exports and the operating leverage.
Okay, is there a play there because it's such a narrow set of stocks that not a lot of funds can buy a lot of volumes?
It's not a Nifty play for sure because it's a very small part of the index. It's again more of a bottom-up security selection and more for the smaller nimble funds rather than a big player taking a big position because you don't have as much of a float in the sector right now.
Okay. All right. We'll leave it there. Thank you very much for joining us. Good speaking with you. It's always a pleasure having you on. Well, you know, let's just stick with the textile theme and let's welcome in the management of Gokulas Exports who's with us. So Civ Ramakrishna Gpati is Vice Chairman and Managing Director at Gokulas. He's with us now. Good to have you with us here, good morning, thanks for joining in.
So let's just first start with the UK-India FTA which comes into effect on the 15th. What does this do for Gokulas? We've spoken about this in the past, but just revise our memories.
So India-UK FTA gives us duty-free access into UK. Okay. And puts us at an advantage vis-a-vis China by 12% because China goes with a 12% duty. Bangladesh, Vietnam go duty-free. Now India gets a level playing field with two competing countries namely Bangladesh and Vietnam. And vis-a-vis China we get 12% advantage. Obviously, you know, this is a huge constraint lifted on India, and for us it allows us to expand our business into UK. We already working with three large companies in UK, and naturally the expectation is that the business volumes in terms of exports to that country will grow.
As an opportunity for the country. If you look at the numbers, India's exports into UK is only about a billion, whereas if you look at Bangladesh it's about 3.5 billion, and China is still at 5 billion. Of course, a lot of it is MMF-based where China has a natural advantage. But if you look at some degree of rationalization now that both countries Bangladesh and India will have equal zero duty access into UK, there will be a little bit of pivoting by the UK-based customers into sourcing from India just for diversification reasons, and with competitiveness established with China, there'll be some movement of goods from there to India as well. I would think it's a more than a billion dollar opportunity for India as a whole.
So basically you're saying export to UK for India could move from a billion to two billion?
It could.
Bangladesh is at 3.5. So there's enough headroom there.
Okay. Got that. And the currency, recent sharp appreciation in the yuan also helps in terms of comparative competitiveness.
Always helps, right? I mean, it's always a relative advantage, and a weaker rupee vis-a-vis other currencies is always a plus for India.
Yeah. But how does it play out? The point is, even after the move, I think we can all agree the yuan is hugely undervalued. It's kept undervalued. So it depends on when they allow it to appreciate more or whatever. But how does this play out? The currency advantage if it stays at these levels, we stay where we are, and the yuan stays where it is now, you think it's a big one?
I think if we stay where we are, that's a big if. I don't know how Indian currency will move going forward, but at the zone where we are, I think it's a major plus from an exporter standpoint. We always would like to have a competitive scenario with competing countries. China is not the only competitor; we also compete heavily with Bangladesh and Vietnam. Overall, Indian rupee weakening over the last several months has definitely helped us boost our prospects when we do our costings for the future quarters. We do have some advantage there.
Right. Let's now talk to the other big market, much bigger market, which is the US. Here we've been, the higher tariffs were cut down, and I think what are tariffs now to the US?
10% but that's reciprocal tariff, and then there's underlying tariff on the products which vary anywhere between 14 and 32%. But this reciprocal tariff will expire, right? It's got a in July sometime.
Indeed, it's expiring on July 24th.
So what will come after 21st of July is the big question, right? Which everyone is wondering. Yesterday, we had an economist from JP Morgan based in Washington who said, well, you know, all these 301 tariffs will start to kick in, right? And it was not about one sector, but he was just saying that watch out for that, that's a risk. But just your thoughts on this.
So we need to see what the India-US BTA will come up with. There is a lot of expectation that it'll be positive for India as there is considerable amount of dialogue going on between US trade representatives and India at a political level as well. Subject to that, which we don't know, the general expectation was that India would go back to about 80% odd. We have to wait and watch as to where it is. But I would place some faith on the India-US BTA which is being worked out. As long as we have a level playing field vis-a-vis competing countries, namely other Southeast Asian, South Asian countries, we are good. If we have an advantage over them, then it'll be an awesome event for Indian apparel exports. So what you're hoping for is that before the 24th of July, we have a BTA in place which then addresses this, right?
Got it. But would you imagine, and typically what would this be like? Something we've seen with the India-US or India-UK? How would it be?
I don't know. I don't want to speculate. Let the negotiations play and let's hope for the best. As I said, even the worst case is we should come in the border of 20s. But if it's anything better than that, that would really improve the prospects of this industry going forward. That would be a massive constraint being lifted on India.
Okay, you're saying the not the underlying product tariff, but this 10% settles in the vicinity of 20, that'll be okay.
That's the general expectation. See, as you know, the 10% is today 10% for everyone in the world. So that's a level playing field. If that 10 goes to 20, still it's a level playing field. So what I'm saying is that we came in when we were at an unlevel playing field where there was a huge millstone on India's neck. Now we've got a level playing field. Look at how the business volumes have started surging. Now as long as there is a level playing field, we are good. But if there is a playing field which is tilted towards India, which historically many other regions have enjoyed, we would really benefit from that window of opportunity where a lot more investments can go into Indian apparel manufacturing and a lot more business would move. And once a business moves into a country, it stays there. So it also has a cascading effect on the value chain where the fabric ecosystem and all other ecosystems also start developing to support that. Keep in mind that export-oriented industry demands a very high quality. So that really sets up a high quality supply chain out of India, and once that is done, that becomes a competitive advantage.
All right. Hi sir, good morning. Good to see you. Thanks for giving us fair color on all those issues. Let's focus on a couple of other things then. BRFL, know that's come into your fold now, and I understand it's got approvals from a lot of global retailers, which is great news. Could you tell us in terms of utilization levels, what is it functioning at now, and say by FY28, what kind of EBITDA contribution can it give? By when does it break even first, and EBITDA contribution in FY28?
So the process of merger of BTPL is on, and we anticipate that to happen in the third quarter of the current financial year. So at the moment, BTPL is more or less kind of breaking even, and the expectation is by the end of second quarter or early third quarter, we should see it generating about mid-single digit EBITDA margins. And its capacity utilization is growing; at the moment it's about 50-55%, and it should start climbing up to about 65-70% by then. In the next year, we should start seeing BTPL also contributing to a double-digit EBITDA margin going forward. So as you know, we are seeing good traction coming in from customers. Many of our customers have started nominating BTPL for its fabrics. We are seeing that the fabric quality and consistency is pretty good. So a lot of those production related issues are being resolved.
technical issues have all been sorted, solved and the output which is coming out of that factory seems to be consistently on an upward trajectory.
So BDPL could do around 175 200 crores in FI28. Would that be possible? Would that be an aspiration? What's 175 200? AIA contribution?
That would be more like FI29. FI9 from BTB.
Got it. In the next two years you know the street is very optimistic for the last year the net profit was close to around 100 crores but with the approvals that are coming in there and a lot of those headwinds now gradually turning into tailwinds and business returning back to normalcy people expect the profitability maybe to triple in the next two years is that possible? FI28 net profit number goes from 100 crores which was on a depressed base of last year does it go to around 300 crores in FI28?
As they say but you know...
You have my best wishes. But shareholders want to know whether or not it's possible.
Yeah definitely it's the right expectation. That's what we're all working for. Last year's was an exceptionally depressed number primarily because of the huge tariff. So obviously once that burden is lifted that itself will give a fillip and then looking at growth trajectory directionally what you're saying is making a lot of sense. Bill, we wish you well sir and thanks a lot.
Mr. Sorry, just one last question. How's the demand environment in both in this particular season US and in terms of ordering etc. It's all full up.
So far so good. All full up.
That is correct. And Europe as well.
And Europe as well. And since I have you, do you think down the line in terms of cotton, yarn, etc. But you are further up in the value chain. This rainfall situation will make a difference at all in any which way.
Oh that has to be seen because we don't know but I'm expecting that cotton prices to cool off a little bit. Let's hope for the best.
Okay. All right. So we'll leave it there. Thank you very much. Appreciate you joining in and speaking to us here on CBCTV18. Interesting conversation. Very useful to get all those details. We'll take a break. We are back with the management of Kerloskar Ferrer. Stocks done very well. And Mr. Arvi Gumaste is going to be with us for that conversation.
Welcome back. You're tuned into corporate trader. Well, the next company on our radar, Skidloskar Ferris. Remember the company yesterday had spiked up in trade because they bagged a new export order for pig iron. The value is just around $13.5 million and the shipment is to be completed by August 2026. To understand more about this, we're joined by Mr. Gumaste, the managing director at Kiloskar Ferris. Hi Mr. Gumaste. Good to see you. We thought it wasn't a very large development but the street said that they are very excited about this. So give us a few details. It appears this 30,000 tons is around 4% of your volumes. If you could confirm that and give us some color on the buyer. Is it a foundry? Is it a steel pipe maker? Who is it? In the UK.
I think the consignment is going to Africa not to UK. UK is the buyer and really it's not really a big excitement as such. But the difference between earlier exports and now is that we exported some small quantities in containers but this time it's going in a big shipment. As you know international pig iron prices have moved up very substantially very smartly and making it possible for interior plants like ours to export pig iron. I hope that this should open up opportunities for us whether it will happen or it's going to happen one-off export I really don't know but I think it's a big development as far as the international price of pig iron is concerned and it's an encouragement to us.
You know Mr. If I put in the math, it appears that the rough calculation appears to around 43,000 rupees per ton, right? If I just do a basic mathematics and that is more or less in line with domestic prices, but you're saying the pricing is favorable. Explain why. And is it margin accretive?
Actually, you need to look at what is the plant realization. I think that's the two points are the difference. One is the what is the ex-plant realization and another one is the parity between foundry grade pig iron and the steel grade or basic grade. This export is steel grade or basic grade pig iron and not foundry grade pig iron and there is a cost differential and price differential of 3,000 rupees and freight to Punjab is 3 and a half thousand. I think once you do all these calculations correctly we get higher ex-works sales realization for export than sending the pig iron to Pune.
Okay. So this is margin accretive then profitability better as well and it opens up a new opportunity. Would that be fair to say?
Yes. Absolutely. Absolutely.
Give us a few details then sir in terms of volume growth for this year on pig iron on casting as well as on tubes if you want to give us absolute numbers as well what could you deliver in this year.
I think with respect to the bigger volumes I'm still looking for a growth of around 75,000 metric tons of hot metal being produced more which amounts to about 10 to 11 to 12% growth on the volume. In pig iron we are running all the three blast furnaces well and we don't expect in near future any stoppage because of market conditions. And coming to the castings, the going has been very great. Demand from tractor industry, auto industry, earth moving equipment everywhere demand is good. We have to ramp up our outputs and sell more quantities. We were catching up with that and though we could not achieve 15% growth in production and sales last year, we achieved 14%. And I look forward to something like 17-18% increase in production and sales this year. And the peace in Middle East also should be an encourager for this and as you know we have productionized Oliver foundry in Pancha. It has a capacity of realizable capacity of 25,000 metric tons per annum. We are sold out completely on that foundry. We have started producing 2,000 per month and selling 2,000 per month. It's a great encouragement for us and we have already decided and started the project to double the capacity in Oliver. It will happen by March 27. Within these 10 months we will double the capacity because we need to serve our customers in the north and we would not like to lose the opportunity and time. So we are going ahead with the expansion there in Oliver.
And in tubes how much will you do? So casting will be around what 190 to 2 lakh tons for this year?
Not 2 lakh tons, I think we are looking more closer to 190. Last year we increased the volume by 20,000 tons, 19 or 20,000 tons. This year I look forward to increase maybe 24-25,000 tons which happens to be 17-18% growth.
And you want to give us the tubes number?
Yeah yeah, see always something goes up something goes down. I think steel also is doing well because demand of auto pulls the steel up. Coming to the tubes, we did not have a favorable condition in quarter one because of the delays in infrastructure projects, delays also export not really doing well because of many conditions including the war. I think we will have to see because we have another 10 months to go. I'm looking forward to a revival in the tube business so that we can achieve definitely at least 10% growth in tube as well.
Okay. All right Mr. Gumaste you know you're almost through with this quarter but give us a brief number. Input costs have gone up right? Input cost coal they've gone up a little bit because of this Middle East crisis as well. So what is the cost escalation that we've seen in quarter 1 versus quarter 4 but there's also been a price increase so what has that been if you could equate the two and what would it mean in terms of spreads for this quarter in comparison to last?
Basically I would like that margins etc to be covered in more detail after the quarterly call but I would like to say that some improvement in margin in pig iron is taking place because of the price increase and we have passed on some advantage to the exchange rate and also to coal price but I think we are still able to improve the margins in pig iron compared to overall last year.
Okay, final question. You don't want to talk about this quarter but for the year if you could give us a guidance. Last year you did around 850 crores of EBITDA. This year what could the outlook look like in terms of EBITDA and I think capex have lined up is around 600 crores for this year. What is your net debt and where does that go? EBITDA and net debt and then we'll let you go Mr. Gumaste and we'll chat up after the quarterly results.
No, I think it's very important to understand what is happening to our green power initiative and drive. We are commissioning 35 megawatt of solar within these couple of months July August. We are also commissioning 25 megawatt of wind within these three months June, July, August. So I think this is going to bring the cost advantage surely for the second half but some partially for quarter two and I expect a total advantage of at least 40 to 50 crore coming from the additional green power commissioning. Our drive on cost reduction in pig iron is also giving some benefit. Definitely as we are driving both growth as well as margin improvement. Not much in our hand with respect to pig iron but casting whatever is the price increase input cost increase we have arrangement to pass on to the customer. We are also working with the customers to take care of certain other unexpected cost increases like the fuel. I expect that we should get support and good market is good for us to improve our margins as well.
Got it Mr. Gumaste. Thanks a lot for joining in and filling us in with all of those details. Wishing you all the best and we chat up soon.
All right, with that let's move on to the primary issue. Right now we have insure tech platform Turtleman fintech near 900 crore rupee IPO opens for subscription near 700 crore rupees of that fresh issue and the rest would be offer for sale. The details of the IPO are for you on the screen. Price band fixed between 144 to 152. Importantly the company obviously generates most of its income through commissions on sale and renewal of insurance products on mutual fund products on credit card products etc. We do have Direendra along with him is Anand both of them the top management of the company joining us on the show. Thanks a lot gentlemen for joining us in the studios and good luck. It's an important day but I just wanted to understand a couple of things if you could explain to us the rough business of the company in terms of revenue profile I see about 750 crores in the last 9 months of the financial year in terms of revenue how much of it is contributed from the insurance bit how much of it comes from mutual fund credit card and loans and how are these spaced across margins.
Right so you should think of TurtleMint as an insurance business largely. We have created a granular network of PSPs. They give advice doorstep advisory to the last mile policy holder mostly in tier 3, tier 4 market and that's been the genesis of the business. It's very recently that other alternatives like mutual funds and other products have been added but 97% plus is insurance business.
Right so 97 plus is the insurance business and that's where a little of the concern is as well right because concentration is always a concern. Add to that the recent policy developments that have taken place which is expected to practically remove all commissions or even... Before that can we just look back just pull back a little bit and just explain to us a little bit about the business itself 97% is insurance. Anand how are you different from I mean for our viewers. You are not policy bazaar but you're not just a regular insurance distributor. The business model is different. They are also insurance distributor but what you do is different. So just talk to us a little bit about how you're different.
Yeah. So we started out with a mission of taking insurance to the last mile of the country, the remotest parts of the country. And what we realized is that if you wanted to take insurance there, knowledge of insurance is a challenge for people. They don't even think about it. So creating trained manpower is very important. Trained advisers basically in these remote areas. And that's how we started out. We focused on creating this trained manpower. Technology was very important. So we built an app that helps these advisers in the small towns and cities in more than 19,000 plus pin codes to deliver the products, to train them, to also help them with marketing tools. So that's fundamentally different from a call center based or a fully digital kind of model.
Can I go to the turtleman website and buy a policy? No, I cannot.
You can buy but the focus of our business model is the advisor enablement which we do through our turtleman pro app which is meant for advisers. So you have people on the ground. And the other big difference I think compared to a much larger player in the space which is policy bazaar is that you operate in tier 3, tier 4 cities and they are in tier 1. Actually they are all over, they're much larger but that's a clear differentiation.
Yeah 75% of our business comes from the smaller towns and cities. We also are there in the larger cities but the big thesis of our business has been that insurance penetration is lower beyond the metros. So we focused on looking beyond the metros and we built our business model around the opportunity in those areas.
No smaller cities and smaller towns will also mean smaller ticket size of products sold right? So is that correct?
So I'll just explain the insurance business is slightly different from wealth management business where it's a business of population number of people unlike in other businesses where let's say one person with a high wealth could be.
My final point is somebody in Bombay will take a 5 crore policy, somebody in a smaller town will take a 20 lakh policy, 25 lakh policy. You as distributors will take a commission of whatever that value is. So my point is that is that a differentiation?
Yeah so largely it is B30. Most of the people who are buying are getting introduced to insurance for the first time. So we are expanding the market in the B30 area and B30 in the last 5 years has started to grow at a rate 50 to 60% higher than the top 30 market because those markets have been traditionally underpenetrated and it's very difficult to create a last mile network there because earlier viable models have not existed because technology did not exist. But with turtle pro coming up with more than 5 million downloads and within 600,000 plus registered users they are able to reach through their social network to the last mile people and distribute products and create this new source of income while distributing the product. So ticket sizes are different but it's a volume game. We have issued more than 2 crore plus policies in the DRSP period and hence this is a large volume business.
All right. So that still doesn't take away from the risk, right? Commissions are still your main source of income irrespective of how you're operating versus all the other players and that's where there is a risk. I mean has been looking at capping commissions or BMAC may take the need away from commission. So is there an existential risk to a business like yours?
One primary thesis that we have is consumers, all policy holders need expert advice when they are making a decision and nobody wakes up thinking that they want to buy insurance and hence intent creation is the single most valuable activity in the insurance distribution value chain. We create that intent through the social network of the person without spending any money on creating that intent. So model point of view it's a transaction model. Second, all the shift towards creating policy holder affordability and driving towards better penetration moves in the right direction because in Q1 when GST cuts were implemented the volumes grew by 70-80% and that structurally the insurance is a fast growing industry. Within that B30 is fast growing market. Turtlement has a significant presence there and hence it will be a fast growing market. So anything in the direction of policy affordability will help penetrate the market and under the insurance for all 2047 mission of the government it will help.
Because you're in tier 3 and beyond alongside that your ticket sizes are small, it's a volume game, you have people on the ground etc. Your costs would obviously be higher than the leader as well. So if the commissions were to come down unilaterally the impact on your earnings would be a lot more than the others.
It will get offset by the volumes that we will do. The tech has been built out so it's largely tech-led platform. So in the last 3-4 years our tech cost, our fixed cost has not gone up and fixed cost as a ratio has gone down from 42% to 24-25%. So that shows the operating leverage. Higher the volume, better is the operating leverage, economies of scale start playing out. So it will actually be a tailwind because it will move in the direction of driving more policy transactions.
So just give us a couple of numbers. You've been growing at a phenomenal clip and as you have been saying that there's a tremendous potential for growth. So on growth what kind of a run rate should we be looking at? The previous year was around 50%. And as you said cost as a percentage of revenue that's come down from around 45% to around 22-23% or thereabouts. So that declining trend does continue and the focus on profitability because in a business like yours it's very tricky. You have a beautiful ambition you looking at big growth but your shareholders are going to say where's the money? Where's the profitability? Are we going to see green like you are wearing right now?
Right. So thank you for that question. We are in a pre-profitability stage right now. If you look at the KPI that we measure is P3M active. In the past 3 months how many people have issued a policy so that has been growing at CAGR of 55% for the last 8-9 years now and this is driven largely by the fact that the market is growing and structurally we are growing there. There are two parts with the way to look at profitability. One is service AIA that we measure which is a key KPI that we've given out. We've moved from minus 11% to plus 11%. Second, the platform has been built out. So there is no new incremental large investment that needs to go into the platform. So fixed cost as a ratio has gone down. So abizer percentage negative abizer percentage has reduced from -54% to minus 15%. So we've been adding about 100-110 crores plus every year for the last 3-4 years. So it is at a pre-profitability stage right now and it's almost looking like it's converging.
Just in terms of valuations, right? What is the overall valuation? This is great news for investors because if the business is good then they're getting it at a cheaper valuation than they would have gotten 3 years back because it was valued at about 6,500 crores and now you're seeking a post-listing market cap of 4,500 crores. This is in the last 3 years. What has changed from 6,500 crores to 4,500 crores?
Yeah. So the way the valuation was arrived at was obviously with the support with our consultants, bankers and the overall feedback that we got. We have a 75% QIB book. The valuation has been designed for all categories and all sets of investors to come in. It's a fast growing market. It's a large growing...
Value should go up not down. What has changed is the question.
So it has been designed basis of feedback and also...
Is it a function of your business? Is it a function of market conditions? What is it? So there has also been a market resetting that happened between 2022 because we were in 2022 when there was a different phase we are in now 2026. So there has been a market resetting.
Is that why you reduce the size of the IPO as well?
So our existing investors continue to be long-term committed. They have been with us in the trenches. They have supported us, mentored us. They think of this business as a large opportunity going forward. So they have decided not to sell significantly, hardly 3-4%.
Or not to sell at this valuation and maybe sell when it reaches 6,500 crore post listing.
So they believe in the India story and they believe in the insurance story. So anybody looking at a long term thinks of insurance as a long-term large growth opportunity then structurally this offers a great opportunity.
Well gentlemen we appreciate you coming down.
Just one more thing we will get the distribution reforms shortly. The IID chairman and Bimukum is one thing but there is comprehensive distribution reforms also coming in over the next one week or so. Do you see that as a threat per se because it directly addresses distribution commissions etc. Just wanted your thoughts there.
Also like I was mentioning earlier, anything that moves in the direction of improving policy because the regulator is working towards policy holder protection.
That's not an answer I'm looking for. You know that more volumes but I'm saying it directly impacts what you make now. So is there a will that squeeze margins for you?
In the quarter we have seen one example where due to GST reduction the commissions were reduced but absolute value grew for us by almost 80%. On those categories where the product commission were reduced and margins also improved because the better volume scale level, commissions was received by us. We see it as an opportunity. We see it as a tailwind. Our business has been built on the tailwinds of the regulatory changes that happened.
I'm just insisting because I would be remiss not to ask you that because it is imminent. We had you know as I said we closely followed.
I think we should have in the next 5 days basically. Add one point. We have built out the platform, built out a very large network. So we are quite confident we are the lowest cost distributor in the country. So the others would get impacted a lot more before.
Yeah. So we should benefit if there is a movement towards the lowest cost producer here.
And just to wrap this up, you've also begun your diversification journey. 97% is still insurance. The other 3% is other products. Do you focus a little more on that as well? Do you have a target on how much do you want from outside of insurance? Because this is the one thing that a lot of these fintech and new age companies are looking at. They are looking at cross-selling and opportunities of multiple products selling on the same platform.
Yeah, we have that. We have a great opportunity. The network is built out. The same customer that has bought insurance from us also wants loans, wants mutual funds and we are enabling these products through our network. So it's a big opportunity.
Well, I think you're one-tenth the size of the larger competitor. So there's lots of room to grow. That's the way I would look at it. Wish you all the best of luck gentlemen as you kickstart the IPO process and we will talk more specific numbers as far as the quarterly numbers etc go. So thank you very much once again. That's Turtle Mint in the insurance distribution space with a conversation around what they aim to do and of course sounding pretty bullish about prospects. Just the sheer volume should take care of any squeeze as far as margins and commissions etc go. We'll take a break. We're back. Manisha Gupta focuses on commodities on the other side. Stay tuned.
Okay, welcome back. Manisha is here with commodities in focus. Manisha, morning.
Morning, Prashant. Thank you for that. When I'm looking at the monsoons right now and every day that passes in the month of June, you're looking at the deficiencies just about increasing. So when you look at the 1st of June to 18th of June, the monsoon in India is now 40% below normal. It has been a late onset. It's an earlier year as well. But the kind of numbers that we are looking at on the weaker side, the IMD and various other forecasters believe that it's going to be difficult for India to pick up these numbers. So when I look at the various geographies and as you can see the biggest deficiencies clearly coming in for the central part of India. Now this is your breadbasket, where cereals and most of the Kharif crops are grown. And then you have east and northeast India looking at 46% deficiency. 20% decline in rainfall is what south peninsula is facing. Northwest better at just about 2% decline. But when I take you through the states that are looking at deficiencies, it's really large. Number of states that have seen deficiency anywhere between 20 to 30% are three. Six states are dealing with deficiencies between 30 to 40% and you have four states also looking at deficiencies anywhere between 40 to 50% and a state that is looking at a deficiency almost at 60%. And when you look at deficiencies almost at 50 to 60% those are called large deficiencies. And there are many states within that category as well. Megalia looking at 86% deficiency in rainfall, Gujarat at 79%, Maharashtra 78%, Jarkan 70%, also Goa, Chhattisgarh are looking at anywhere between 60 to 68% deficiency. So when you look at overall India, large excess number is only at about 8%. You have excess rainfall in some places as well, that constitutes around 7% of India. Normal rainfall is at about 18%. And now comes on your screen the deficiencies and large deficiencies and no rains at all. This comprises nearly 67% of India which has seen deficiency and large deficiency. You might say this is just June and we still have 3.5 months to go, but the concerns are in the numbers. Remember it's an El Niño year and many people are calling it a super El Niño. El Niño is about unusual warming of surface waters in central and eastern tropical Pacific Ocean. The temperature departure from the sea surface from long-term average and the severity of that is what El Niño means. It leads to weak trade winds and moisture diversion. According to IMD data, in June it's going to be a weak El Niño, 0.5 to 1.0°C deviation. By July and August, it's going to be a moderate El Niño, deviation from 1 to 1.5%. By September, deviation 1.5 to more than 2%. Some reports talk about 2.5 to 3, and 2.5 onwards is severe El Niño. So the concern is real. Already facing 40% decline in monsoon, and going forward stronger El Niño. Reports also suggest that it could be the weakest year in 2027 as well, impacting Rabi crop as well.
All right. Well, we'll have to watch this closely but it's extremely important not just for agriculture but for industry as well as we learned earlier this week with those water cuts for real estate, industrial use. Important one. We'll take a break. We are back and I'll be in conversation with Lionel Johnson of Pacific Pension and Investment Institute and Arvin Shari of Q India on foreign fund view on the markets. Stay tuned.
Welcome to a special markets and macros discussion. Even as the fall in crude prices gave us hope as Indians of a return of foreign funds, the less than expected earnings of Accenture has led to a fresh coat of red paint on Indian shares. Has the foreign investor perception of Indian assets changed at all after the stabilization of the rupee and the seeming end of the Iran war? To understand the FII psyche, the foreign fund psyche, I have with me a very special guest, Lionel Johnson, president of the Pacific Pension and Investment Institute, a global forum for long-term institutional investors. Also with him is Arvin Chari, the CIO of Q India, a well-known face. He's Q India of course is a group entity of Quantum Advisors. Arvin, Lionel, thank you very much for dropping into our studios.
Okay, Lionel, first if you can tell us what exactly is PPI? It's not very well known over here. Who are your members? I mean, whom can you influence?
Well, thank you for the opportunity to be with you. The Pacific Pension and Investment Institute, or PPI, is a global membership organization of institutional investors, global pension funds, endowments, sovereign wealth funds that invest globally. We have membership from North America, Europe, across Asia. We bring leaders together periodically to look at issues that impact their investment decision-making as it relates to the Asia region. We have a long relationship with India. We were here with our full delegation in 2017 where we met with the Prime Minister and the Finance Minister and had a very robust discussion here in Mumbai. It's been almost a decade, and I think it's important now for us to refresh the appreciation.
You're bringing your members again.
We'll be here in October for a full week. It's time for a fresh look at what's happening here.
Okay. I assume you already went to Delhi and met people, correct? In this visit as well. Are you getting a sense? What are your members telling you? India has gone all out to woo foreign investors. They've taken out the withholding tax and capital gains tax on debt investments into government securities and there are other things. Subcategories have been removed. Has this cut ice with your members?
Yes, I think so. And I think it's just as important, however, for them to come. I can go back and enthusiastically encourage them to participate in our delegation. But I think it's really important for them to come to see what the government has done in the last several years to improve the investment environment for investors like ours, long-term investors who have a horizon of quite a few years.
Yes. I guess decades as you pointed out. What is the perception you've got so far? The numbers are telling us that people are walking out. Year to date 2026 itself there has been about $26 billion of money that has flowed out of India. We're not used to it. Typically we are used to a surge of inflows. Are you getting a sense that there is a return? Are you getting a sense that even longer-term investors are waiting for some kind of a growth story?
So this investment that you just alluded to, I think was more on the short-term investor side, not the institutional investors. We have several members from Canada and Australia that continue to be in this market. They have not addressed their position at all. Again, going back to that long-term perspective they have. There's a lot of volatility we've seen and the US and Israeli war with Iran was a big part of that. But the institutional investor has stayed put and I think that is a big difference that we want to mention.
Okay. So let me come to the medium and the short term as well. Arvin, what is the sense you're getting with the changed rules after the June 5th policy of the Reserve Bank? Is there any reigniting of interest?
So I can just add on to what Lionel was saying. Quantum has been a very long-term member of PPI. As you know, I've written very elaborately about the fact that global institutional investors are so underallocated to India. I put out a note where if you look at the global AUM that is available, India gets less than 1% of that global allocation. India's weight in global GDP is 3-3.5%, India's weight in global market cap now it's come down but it's about still 3-3.5%. So India is very significantly underallocated in global portfolios. A part of the reason for that is many investors when they invest in India, they do it from a global lens. So like a global fund or a global emerging market allocation or an Asia allocation and then India is a weight on that. Unfortunately, MSCI is not only a performance benchmark, it also becomes an allocation guidance. So people will look: I want to be overweight India or underweight India given the weight that is already there. Only when investors start looking at dedicated allocations, and Lionel mentioned that Canadian pensions, some of them have offices in India which means they've taken a dedicated choice that they want to be part of the long-term story. They want to understand the risks first, so they send their team, do their research and get the opportunity. That's been our effort with PPI as well, saying that come to India. PPI's membership is global and high-level, so CEOs, CIOS of these pensions and asset owners come and attend. The idea is they hear good things, bad things, and they go back.
I got that. I'm just asking you whether there is a return of interest after the events of the last two weeks.
So we've had a pressure on the currency and it's not only from West Asia, we've had it before that because we've seen outflows from both foreign portfolio investors, which has been concerning, but also from foreign direct investor which is good because when you return capital back to LPs as they call limited partners, they will then reinvest that capital. So that's a good way. India didn't stop those money. But if I look at cumulative flows from foreign investors in equities since 2018, and I'm saying 2018 because that's when capital gains tax was reintroduced in India, it's negative. 7-8 years of negative cumulative flows. That's concerning. What we've tried now is on the bond side, the 20% withholding tax on government bond should not have been there. We've been talking about India's inclusion in bond index and when it actually happened, we increased the tax. So they have done that which is good. The FCNR, which is a time-tested approach by us, is whenever we have a currency issue, we tap the NRIs and we get money. Looks like we're going to get sizable amount of $40-50 billion of flows. And if we get included in the Bloomberg bond index, it will improve sentiment.
What are the chances? Are you hearing that there's a...
It seems, when I spoke to policy makers this week, the intention was very clear that we reduce it. That was one of the threshold pain points for the inclusion. We hope to get included. Of course, the eventual inclusion will happen over 18-24 month period. So it will improve sentiment in the sense that currency depreciation fear, and if we actually get $50-80 billion which is what everybody is talking about, then it settles the current account deficit issue we would have had this year if oil had stayed at $95-100.
No, actually now the math is working to a BOP surplus. There's no two ways about it. You may dispute whether it is a $5 billion surplus or a $50 billion surplus because that can vary but it's clearly a surplus given the amount of money.
Yeah. But on the sentiment side, I would have wished that the capital gains tax reduction to happen on the equity side because that's where your long-term capital comes in. On bonds you get it. But if you remember in 2013, the initial depreciation of the rupee in May and June happened because of bond outflows. It was selling by European prop foreign banks which actually depreciated the currency. So bonds can be risky if there is outflow out of EM.
At the moment we don't believe that they have been more sticky, correct? It's the equity guys who have been...
And that's the reason right. If you look at September 2024 was when markets peaked and since then we've seen out...
And that's the reason right. There are valuations in India were expensive relative and in absolute terms.
No, we know the reason. I want to know whether any sentiment is changing on the margin.
I think if we get back that nominal GDP growth back to that 10-11-12% which seems to be happening. I think it was happening before but for the West Asia crisis we could see GST cut, income tax cut, we could see almost 1% of GDP of tax direct cash transfers to women across all states. These were all if you could see sentiment indices going up and you could see private capex. I like the way I look at private capex. September and December quarter were the first two quarters of double digit y-o-y since 2012. So you could see some aspects and then this war happened. Now as it's clearing out, the earnings trajectory has to come back to double digit. Because what is India's story? India's story is that India has very good companies.
Actually yesterday we got the direct tax collections, it's 15% higher, way above nominal GDP as well. So it looks good. Lionel, what is the sense you have heard from your cohort?
For my cohort, I think it's a consensus that it is moving in the right direction. The policy environment is making that possible. What I heard in Delhi at the beginning of my trip was reassuring along those lines. So my goal is to go back and convey that to our membership. I will just as a coincidence be speaking in a couple of weeks before the board of directors of the California Public Employees Retirement System, the largest pension fund in the US, and that will be my message. I will encourage those trustees to join our group. Many of them did come years ago but there are a number of new members that would like to be engaged in understanding India and thinking about the investment possibility.
I mean, this may not be your core concern that India's inclusion in the Bloomberg bond index is likely. We have ticked most of the boxes except your clear. So have you heard anything?
I have not heard anything directly about that.
Have you not directly in the last week?
But I've been involved in this for a long time and there is a sense that we will get included.
Okay, just a final question. Kevin Bosch seems to sound that there is at least no cut. Does that alter the funds or does that make Indian US exceptionalism even stronger?
Interesting to see. From a near-term allocation perspective, if people who have diversified away from the US have actually lost out because US has done so well. But from an allocation perspective, if you really want to diversify away from the US, actually India has the best aspect: big market, absorptive capacity, very diversified. Look at other EM indices, they are so concentrated. India has actually diversified. If you get that growth back, which is our normal story, I think you should get a lot of capital flowing into India if we get things right. And capital gains tax is actually a very big hindrance because it increases the threshold rate of return needed to allocate to India.
I completely agree. Even if you're making rupee gains, you're making dollar losses and you were still paying a capital gains tax. I think your point that we hope the government is listening, and of course Lionel is going to come back with a lot of investors in October. We'll catch up at that time.
Thank you very much Arvin and Lionel for dropping into our studios. Thank you.
Well, that's discussion as close as you can get from foreign investors. We wrap up on Bazar Chartbusters coming up after a break.
The index is down 5.5% with multiple stocks declining. Amber Enterprises partners with Oppo India for smartphone manufacturing. VA Tech Wabag secures a $150 million seawater osmosis project in Kuwait. Aurobindo Pharma to divest four generic products for a $250 million acquisition, with an impact of $4-5 million.
Hello and welcome to Chart Busters. We're coming to you live from the CNBC TV18 Motilal studio. I'm Nigel. With me is Manglam. The market is in the red, dragged by the tech index, but we have a very exciting show with two interesting managements.
Let's get straight to the action. But your portfolios would feel better today because the number of green stocks has crossed the red ones, despite the 200-point decline on the Nifty. 1,500 stocks in the green versus about 1,400 in the red. New India Assurance is up 6% on stake sale in NSE IPO. Berger Paints is up 8-12% on lower crude prices and price hikes. Speaking of retail, let's go across to Prem Devand, CFO of Electronics, joining us now.
Thanks for joining. Have increased AC sales due to extended summer? How much do they account for in overall sales and how has that grown this year on last year's low base?
Good morning. This summer was very good for ACs because of swinging temperatures. We cannot compare to last year as it was washed out. Compared to earlier years, AC sales saw impressive growth and it continues in June. This is a positive sign for the industry.
Could you tell us how much ACs contribute to overall sales and how much more this year compared to an average summer year?
Historically, AC contribution was about 12% of top line, but this year we expect it to go up to 15% based on current trends, and that will add to the bottom line.
What about induction cooktops and microwaves? What percentage of mix are they and where is that heading?
Induction cooktops and microwaves are about 1-2%. Induction cooktops contribution is negligible. Microwave is doing very well but in absolute terms not significant.
After the spike in March-April, have these sales cooled off? Is demand elevated and sustained?
No, it didn't sustain. It was temporary for a couple of weeks. Later on, it fell.
On same store sales growth, how has Q1 panned out and what is the full-year projection?
Full-year SSG will be around high single digits. In Q1, it's much better due to low base, around above 15%.
Full year you said high single digit. And what about margins? With price increases, old inventory, higher operating costs and NCR store contribution, how to look at margins?
Last year we were around 6% EBITDA margin. This year there will be significant growth, at least 50 bps improvement to above 6.5% at company level, as NCR stabilizes and Q1 had decent growth across categories.
On NCR, what's the store expansion plan? Realizations are higher but competition and margins are lower. When do they normalize?
It will take at least two more years for NCR stores to mature. North cluster margins will be at least 50 bps lower than south cluster even after maturity. We are focusing on organic store additions in existing clusters and looking at eastern markets from Kolkata.
So you're looking at eastern India. What is the target 3-5 years from now? That means further investments, margins capped at 6.5-7%, growth coming from revenue and new stores.
NCR is on track and stabilized. We are expanding to new territories where initial burn will not be as significant as NCR because we had to invest heavily in real estate there. That will not be the scenario in Kolkata market.
Overall revenue growth for the year?
We are targeting 15% top-line growth this year.
15% growth. Well, thank you for joining. The street likes what you've said. The stock has moved to the high of the day. All the best for the remainder of this quarter. For the time being, we slip into a short break.
Welcome back to India Chartbusters on CNBC TV18. The markets are down about 200 points, but there are many stocks moving. Lloyd Engineering announced a deal yesterday, stock down 5% but recovered. JTL saw a large trade, massive volumes. DCX, a defense stock, is up 6-12% on large volumes.
We're also seeing traction in defense names, Paris Defense hit a fresh high, up 7.5%. Hospitality space is buzzing, Leela Palaces up 5-12%. We got commentary that Q1 is not as bad as feared. Let's bring in Ashish Jakunal, founder chairman MD of Sami Hotels. Ashish, you quantified Q4 impact of West Asia crisis at 20-22 crores. A large part was felt in Q1 as well. How has Q1 panned out and what is the full-year outlook?
Thank you. We need to be cautious with year-on-year due to multiple interruptions last year. One key metric is occupancy: since March, March-April-May saw occupancy of 75.6% across our portfolio, up from 73.5% same period last year. Rate growth was not as high because demand was domestic. June is very strong with occupancy touching 80%, indicating the West Asia crisis impact is tapering off.
Occupancy touching 80%. Rate increases weren't as much due to domestic demand. What proportion of revenue comes from Mumbai and MMR region, given water supply issues?
We have no inventory in Mumbai as of now. We are developing a large Westin and Fairfield in Navi Mumbai but that's a few years away.
For the full year, what is your RevPAR target?
Full year guidance is strong. We've seen solid recovery in June in both occupancy and rates. We should achieve double-digit total revenue growth for the full year despite weak April and May.
Hi Ashish, what about rare? What's the scale-up plan and revenue numbers for this year and next?
Rare is moving well on two counts: portfolio growth now 71 hotels and Marriott integration expected to start by 1st October. FY29 will see real benefit with substantial revenue growth.
So the 9,200 crore target is for FY28?
FY29. I read in your conference call that you projected 3,000 crores of free cash flow accretion over the next four years. What do you do with that? Given your market cap close to 4,000 crores vs 3,000 crore cash flow, is institutional or PE interest likely?
You've been selling companies to PE. So is more likely in form of institutional interest?
We are in a goldilocks zone. Balance sheet is healthy, producing more cash than we can consume. This creates optionality. We are focused on leverage, bringing net debt to EBITDA down to 2.5x. We have about 2,200 crores of funded capex that will grow revenue from current 1,200 crores to almost 3,000 crores over next 5 years. We keep looking at M&A opportunities, and the board will consider shareholder returns at the right time.
Should we expect some inorganic growth in 2026?
We are opportunistic. We don't set a target to buy a hotel. When we see the right opportunity with right returns, we will act. We have financial flexibility. We have an interesting pipeline but deal velocity in India is always a problem.
It's interesting because you said you recycle capital by selling old hotels at higher multiples than your current company trades. How will you buy hotels at higher multiples?
Don't make it sound like we sell to buy. It's a fiduciary responsibility to recycle capital from assets that don't create long-term value to those that do. We do it once in 18 months. But aside from that, we have invested in projects like the W in Hyderabad, Westin in Bangalore, IKEA development in Noida, Navi Mumbai. These will take revenue to 2.5-3,000 crores for Sami over 4 years. We remain opportunistic.
Well Ashish, you seem like a customer who expects not just breakfast but lunch and dinner. Thanks a lot.
Not an all-you-can-eat meal. The sundown happy hours are special. All right, Ashish. Thanks for joining. Have a good Friday.
We've come to the end of this edition of Chart Busters. All four indices are lower, about 220 points off the Nifty. The Nifty Bank is seeing fresh selling along with IT. That's why Nifty is at the lower end of the range. We leave it to the trading hour team. Thank you for watching.
Good morning. It's time for Trading Hour. I am Hormas Fataka. Joining me as always is Ritu Singh. After gaining every day this week, markets are taking a breather. We are counting down to the Reliance Industries AGM in a couple of hours. Reliance has given up most of its gains, now in the red, dragging the index down 225 points. But it's been a good week, this is profit booking.
That's right. IT is the culprit today, down 5.6%. Infosys is the top dragger, along with HDFC Bank, TCS, Tech Mahindra. Helping on the other side are AEL, Bajaj Finance, ICICI Bank, NTPC. Reliance is the heavyweight to watch after the AGM. Market breadth has turned negative, with more decliners, and India VIX spiked 5.6%. Let's focus on IT stocks. They slipped after Accenture trimmed its revenue guidance. Vinnie Motiwalla joins us for more.
Hi, good morning. Accenture revenues rose 5.6% but missed expectations. EPS came in at $3.8 versus $3.49 YoY, in line. Bookings fell 2%. The highlight was FY26 revenue guidance narrowed to 3-4% from 3-5%, lowering the top end. This is a concern. They cited weakness in West Asia business and delayed decision-making. Client budgets haven't increased even with AI. The read-through for Indian IT is muted. Managed service opportunities moving to FY27 indicates muted booking trends. Middle East sales could be a concern for the next 1-2 quarters.
Now Vinnie, stay on for more. We have brokerages' views. What are CLSA, HSBC, Nomura, Jefferies saying?
CLSA believes the guidance cut is due to negative macro, not AI. Headcount increase at Accenture is encouraging. They worry Infosys and Wipro may see more impact. HSBC says Indian IT will continue to see short-term positive triggers. Nomura prefers Infosys and Cognizant in large cap and Coforge and eClerx in mid/small cap. Jefferies maintains underperform and underweight, believing AI has not picked up as expected.
Seven out of top 10 losers on Nifty 500 are IT names. Infosys is down 8%, nearing 1,000. Besides IT, the big trigger is Reliance Industries AGM. Sonel is here to set that up.
Thank you. The next 12 months are important for ramp up of solar battery manufacturing and generation. FY26 saw massive capex: consolidated capex was 1.44 trillion, up 10% YoY. Retail and digital capex declined, but O2C capex was up 22%. New energy capex was 52,500 crores, up 2.1x, with new energy share at 30,000 crores. Cumulative new energy capex is 70,000 crores. Mukesh Ambani indicated rapid progress in operationalizing new energy gigafactory. CLSA says solar gigafactory will become operational, battery energy storage starts in 2026. Jio IPO: Mr. Ambani indicated steady progress. Retail business saw spend of 1.9 trillion over past decade, with 84% in last 5 years. Capex and new energy are focal points for the AGM.
Those are the big talking points ahead of the AGM. Countdown shows about 2 hours 50 minutes. Markets still 200 points lower on Nifty. Looking to hold 23,900. We'll get you more after a break. Bond markets in focus with Manisha Gupta.
Hello and welcome to Bond Street. Joining today is Dvang Sha, CIO at Axis Mutual Fund. Dvang, hi. First, describe Axis's fixed income philosophy and has it changed recently?
Thanks. Axis was born in crisis in 2008, so our debt philosophy is built on risk management. Fund managers are risk managers. We follow SLR: safety, liquidity, returns. That core philosophy has remained intact for 14 years.
Axis has historically leaned toward quality and credit selection. How do you balance credit quality with yield in today's environment?
That's not completely correct. We have a top-down approach. When positive on growth cycle and at bottom of interest rate, we go all out. For example, in December we said duration story is over and to look at accrual. In mid-May we said bond markets are attractive on duration side. Credit is important, but we use three levers: duration, accrual, and liquidity.
With RBI at the end of its rate cycle, where do you see duration today? How will rates head from here, considering the Fed meeting?
Yesterday's Fed meeting was hawkish. But look at RBI: they've done a superb job with measures providing external stability. We are in an environment where growth will slow due to Q1 being lost to the Middle East conflict. Inflation is close to 5%. RBI's measures will bring $75 billion of flows, positive for bond markets. Short end of the curve can remain positive. If crude doesn't fall below $100, RBI might hike in the second half.
Target maturity funds have become the industry's default retail debt products. Do they truly serve the investor or are they a distribution convenience?
It's both. Target maturity funds are easy to understand. You get an index showing maturity, assets, yield. They are simple and largely AAA investments, so quality biased. They lead to diversification and simplify retail investing. That's why they have grown.
Is there enough depth in the market given PSU bonds, SDLs, private corporate bonds?
Indian bond markets are doing superb. We are one of the most liquid Asian markets. Post the change in tax treatment, corporate bond liquidity dried up a bit, but for G-sec and SDL, liquidity is very good. Investors should look at disciplined asset allocation. Fixed income makes sense for retail investors.
Dvang, as always, thank you for joining.
Welcome back. The UK free trade agreement is set to come into effect from July 15, and later the EU FTA hopefully. Let's bring in Satyaki Ghosh, CEO at Raymond Lifestyle. Satyaki, after your third quarter, you said revenues from UK may double thanks to EU FTA eventually. With UK FTA now, give us a sense of revenue increase and what next year looks like.
Thank you. The UK FTA is positive. We are already strong in UK in suiting and blazers. India has 13% share in UK, we have 54% within that. We aim to increase our share to double over the next 24-36 months, growing by 50-60% in UK if everything goes well.
What is your current exposure to UK? And you previously said West Asia issues didn't impact demand. With peace, has demand changed?
Demand from the Western hemisphere did not diminish during the war. Now with peace, demand is picking up. US orders are back due to tariff restructuring. UK interest is high. Our Q2 is fully booked up to September, and we are starting booking for Q3. Demand is high.
