Welcome to the 94th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 4 companies across 4 industries and a Regulator’s interview.

Regulator

• IRDAI Chairman

Automobile

• Bajaj Auto

Financial Services

• State Bank Of India

FMCG

• Emami Agrotech

Building Material

• Century Plyboards (India)

Regulator

Insurance Regulatory and Development Authority of India | Insurance Decommissioned

The Insurance Regulatory and Development Authority of India is the statutory body tasked with regulating and licensing the insurance and reinsurance industries in India. It focuses on protecting policyholder rights and maintaining the financial stability of the insurance sector through comprehensive policy frameworks.

[Interview]

The regulator is framing new rules not just to cut costs, but to overhaul the entire efficiency of the Indian insurance ecosystem. Investors should view this as a structural shift that will force all industry participants to justify their cost structures.

“To clarify a key point: this consultation paper is not merely about distribution costs. It lays the foundation for a far more efficient insurance sector positioned to support India’s Viksit Bharat journey. Every stakeholder across the value chain—insurers, distributors, and the regulator—must become more productive and cost-efficient.”

— Ajay Seth, Chairman, IRDAI

Management is highlighting a significant spike in operating costs across both life and general insurance sectors over the last few years. The regulator expects companies to slash these expenses back to historical norms, which could pressure short-term earnings for high-cost insurers.

“To look at the numbers: Life Insurance: In FY21, the industry’s cost of doing business was around 16.5%. Today, it has escalated to 22%. We are asking the industry to return to the 15% efficiency levels achieved five to six years ago. General Insurance: Operating costs were historically 30% plus, declined to around 26% between FY17 and FY19, but have now spiked back to 32%. Our expectation is simple: regain the efficiency levels achieved seven to eight years ago, and then build further productivity milestones from there.”

— Ajay Seth, Chairman, IRDAI

The Chairman expressed concern that mature insurance companies have allowed their expense ratios to balloon rather than achieving scale benefits. This indicates that established players will no longer be given leeway for high costs and must transition to leaner, tech-driven operations.

“However, we observe companies that have been operating for 15 to 25 years with cost-of-doing-business metrics as high as 25% to 30% or more. They are no longer startups; they have relied on market information asymmetry to sustain high-cost operating models. For example, one major private life insurer previously operated at an expense ratio below 12%, but that metric has escalated to 18% today. Insurers must cut operational flab and focus on digital efficiency and technology adoption.”

— Ajay Seth, Chairman, IRDAI

The regulator is favouring an ‘open architecture’ model where distributors offer products from multiple companies rather than just one. This shift will likely increase competition and could impact the high-margin ‘tied-agent’ networks that many traditional insurers rely on.

“It comes down to open versus closed architecture rather than IDE versus IDP. IDEs operate on an open architecture, offering competing products across multiple insurers or bank partners. IDPs—specifically tied agents—can only sell the products of the single insurer with whom they are affiliated. In a closed architecture, an agent presents a single choice that may or may not fit the customer’s specific financial needs. In an open architecture, an intermediary offers a range of options across multiple entities, making product suitability easier for the customer to evaluate.”

— Ajay Seth, Chairman, IRDAI

The regulator is allowing individual distributors to sell a wider range of financial products, including complex insurance and mutual funds, to boost their total income. This change aims to expand insurance reach into rural India while making the distributor role more financially viable through volume rather than high commissions.

“First, the framework provides additional commission incentives for smaller towns (defined liberally as towns with a population below 50,000) and smaller cities (population below 10 lakh). This covers underserved geographies. Second, we are significantly expanding the operational scope for POSPs. Previously, POSPs were restricted to selling simple, low-ticket products like basic motor or term insurance. Under the proposed framework, POSPs who complete online training and pass an on-demand test can sell the full suite of insurance products, including ULIPs and complex policies, without ticket-size limits. Third, we are enabling distribution cross-selling. Insurance intermediaries and POSPs will be permitted to sell non-insurance financial products (such as pension products and mutual funds) as well as non-financial products. Furthermore, over five lakh Common Service Centres (CSCs) and Banking Correspondents (BCs) in rural areas are being integrated into the insurance distribution ecosystem. By enabling individual distributors to earn across multiple financial products, volume expansion and higher overall productivity will offset lower per-product percentage margins.”

— Ajay Seth, Chairman, IRDAI

IRDAI has identified excessive profit margins and commission rates among top distributors that it believes should instead be returned to customers. This signals an impending squeeze on the margins of large, listed insurance distribution platforms and bank-led distributors.

“To provide a concrete data point: one major insurance distributor currently generates a post-tax profit margin of 44% on its top-line commission income. Another major distributor saw its effective commission rate rise from 6%–7% a few years ago to 38% today. When distribution margins reach these levels, value is being diverted away from policyholders. The savings achieved through commission caps and EOM rationalisation must be passed directly to policyholders through better pricing and improved product value.”

— Ajay Seth, Chairman, IRDAI

New rules will force brokers to disclose their commissions on large corporate deals worth over ₹50 crore to ensure transparency. This is likely to push the corporate insurance market toward a fee-based model, potentially reducing commission income for brokers in the high-ticket commercial segment.

“The mandatory disclosure requirement applies specifically to large commercial policies where the sum insured exceeds ₹50 crore (representing medium-to-large corporate risks) and large corporate group health policies. It does not apply to retail policies or small enterprise policies below ₹50 crore. Corporate buyers purchasing large-scale commercial covers have the sophistication to evaluate risk-advisory fee structures versus commission payouts. In group health insurance, we observed counterintuitive data where commission percentages on large corporate group policies were sometimes higher than on retail policies. Mandating transparency for large commercial covers encourages a shift toward fee-based risk advisory and allows corporate buyers to evaluate whether distribution costs are justified.”

— Ajay Seth, Chairman, IRDAI

The regulator is banning digital platforms from collecting customer data before showing product quotes, viewing this as a ‘dark pattern’. This will force digital aggregators to change their lead-generation tactics and could affect their customer conversion rates.

“Under Central Consumer Protection Authority guidelines and general market principles, dark patterns—including forcing consumers to surrender personal data before displaying product pricing—are prohibited. In a competitive market, consumers have an absolute right to view product features, coverage details, and pricing upfront before deciding whether to share personal information for KYC and underwriting purposes. Restricting price transparency behind a paywall or data-collection wall violates basic market principles.”

— Ajay Seth, Chairman, IRDAI

IRDAI plans to lower renewal commissions for health insurance because renewals require less work than new sales. This change is intended to stop agents from unnecessarily moving customers between companies just to earn higher commissions.

“Health Insurance Renewals: Data shows that policyholders naturally persist with health insurance due to cumulative benefits like No-Claim Bonuses. Selling a health policy for the first time requires substantial advisory effort, whereas servicing a renewal requires a reminder prompt. First-year commissions reflect that initial acquisition effort, whereas lower renewal commissions align with actual servicing costs and discourage commission-driven churning or forced portability.”

— Ajay Seth, Chairman, IRDAI

The regulator is unbundling motor insurance costs and setting very low commissions for mandatory third-party covers on new cars. Investors should note that this will improve pricing for consumers but may lower the revenue profile of motor insurance for many distributors.

“Motor Insurance: Motor Third-Party (TP) cover is mandatory by law. First-year TP insurance on new vehicles involves zero selling effort, so commission limits are set at minimal levels. Subsequent renewals after the initial multi-year policy period require active agent outreach, which is why higher commission allowances apply to renewal servicing. Furthermore, line items across Third-Party cover, Own Damage (OD), legal liability, and personal accident cover must be unbundled and clearly itemised.”

— Ajay Seth, Chairman, IRDAI

The regulator is moving toward a Risk-Based Capital model by April 2025 and is incentivising ‘term’ insurance over investment-linked products (ULIPs). This strategic shift will favour companies with strong protection portfolios and could require capital adjustments across the industry.

“We are actively working toward implementing the Risk-Based Capital (RBC) framework, targeting a rollout timeline around April 1st. The consultation paper deliberately allows higher commission flexibilities for pure protection (term) products, which require greater distribution effort to sell, compared to market-linked investment products like ULIPs where lower commission structures preserve underlying policyholder yields. Expanding pure protection coverage is vital for national financial resilience, and our capital and distribution frameworks are being calibrated to support that objective.”

— Ajay Seth, Chairman, IRDAI

Automobiles

Bajaj Auto | Large Cap

Bajaj Auto is a leading global manufacturer of two-wheelers and three-wheelers, renowned for brands like Pulsar and the Chetak electric scooter. The company maintains a strong export presence in over 70 countries and is a significant player in the transition to electric mobility.

[Interview]

Management clarified that the recent sales miss was due to specific supply chain issues rather than a drop in buyer interest. This helps investors understand that the volume drop is a temporary logistics hurdle rather than a long-term demand problem.

“While we delivered a strong quarter overall, our internal monthly target was approximately 570,000 units. We ended up about 40,000 units short of our plans, driven entirely by supply chain constraints—some unfortunate component delays and some stemming from a rapid ramp-up in demand for new products. Breaking down that 40,000-unit shortfall: 1. Chetak EV (20,000 units): Inbound shipment delays for critical components prevented us from maxing out production. Instead of hitting over 60,000 units, we completed only 42,000 units. Channel inventory remains extremely low, and we are working to convert existing bookings into retail sales. 2. Exports (15,000 units): Outbound logistics constraints impacted shipments. Operating at our scale—where a container leaves our plants every 10 minutes, 24/7—any shipping availability disruption causes severe deferrals. 3. New Launches & Component Bottlenecks (5,000–7,000 units): Market reception for our 10 new Q2 launches across Pulsar, Triumph, and KTM ranges exceeded expectations. Channel stock for these models sits at only 9–10 days, particularly for sporty 150cc+ models like the Pulsar N160. Rapid volume growth led to shortages of key electronic components like Electronic Fuel Injections (EFIs). Without these supply disruptions, total monthly volume would have reached 570,000 units, representing around 13% growth.”

— Rakesh Sharma, Joint Managing Director

Component issues for the electric scooter segment have been fixed, and production is now ramping up to meet strong demand. Investors should watch for a significant volume jump in the coming month as backlogged orders are fulfilled.

“The primary bottleneck on Chetak was resolved over the last few days of the month. Our total Chetak production capacity ranges between 60,000 and 65,000 units, while underlying demand exceeds 65,000 units. We expect Chetak volumes to climb from 42,000 units in September to over 62,000 units in October.”

— Rakesh Sharma, Joint Managing Director

The company expects a strong recovery in total sales for October, supported by record-breaking performance in the three-wheeler segment. This signal suggests that the infrastructure for both electric and traditional engines is operating at high utilisation.

“Overall, October sales should comfortably exceed 5.7 lakh units. There is no underlying demand weakness. The recent shortfall was entirely driven by supply chain constraints and component shortages. In fact, three-wheeler volumes hit an all-time high of 90,000 units in a single month, with strong demand across electric and ICE autos challenging our production capacity.”

— Rakesh Sharma, Joint Managing Director

Global container shortages are currently making it difficult to ship products to international markets despite healthy demand. The company is actively diversifying its port usage to bypass these bottlenecks and protect its export revenues.

“The export shortfall was not geography-led or demand-driven; it was purely caused by container availability and shipping line constraints. Global shipping lines have diverted container capacity toward China-Europe and China-US trade routes. To mitigate this, we scrambled logistics across JNPT, South Indian, and Gujarat ports.”

— Rakesh Sharma, Joint Managing Director

Sales in Nigeria, a critical export market for the company, are showing signs of stabilisation and recovery. This growth reduces a major risk factor that has historically impacted the company’s international earnings.

“Regarding Nigeria: demand is recovering well. September sales in Nigeria crossed 35,000 units, landing between 35,000 and 37,000 units.”

— Rakesh Sharma, Joint Managing Director

Management expects a predictable 40% surge in volumes during the festive period based on historical seasonal trends. This transparency allows investors to benchmark the company’s performance against historical peaks during the high-stakes holiday season.

“Festive demand remains structurally healthy. Looking at seasonal trends over a 3-to-4-year window, Q3 volumes typically expand to 1.4 times pre-festive run rates. Year-to-date total volume growth stands at 13%, while our premium 150cc+ motorcycle segment grew at 28% from April to August. We see no underlying weakness in consumer demand heading into the festive season.”

— Rakesh Sharma, Joint Managing Director

The premium motorcycle category is growing twice as fast as the overall business, driven by strong interest in high-end models. This shift toward a more expensive product mix generally supports better profit margins for the company.

“Year-to-date total volume growth stands at 13%, while our premium 150cc+ motorcycle segment grew at 28% from April to August. We see no underlying weakness in consumer demand heading into the festive season.”

— Rakesh Sharma, Joint Managing Director

While markets like the Philippines are doing well, economic or regulatory issues in neighbouring countries are weighing on the Asian export numbers. Investors can see that the company’s geographic diversification helps offset localised regional slowdowns.

“Asia remains a mixed bag and our most underperforming export region. We are witnessing rapid growth across Latin America and Africa, while the Middle East and North Africa remain soft due to geopolitical factors. Within Asia, markets like the Philippines and Sri Lanka are performing well, whereas Nepal and Bangladesh continue to underperform.”

— Rakesh Sharma, Joint Managing Director

Financial Services

State Bank of India | Large Cap

State Bank of India is the country’s largest public sector lender, commanding a dominant market share in domestic remittances and digital payments. The bank provides a comprehensive suite of financial services through its extensive branch network and digital platforms like YONO.

[Interview]

SBI has confirmed it is technically ready to implement the new merchant discount charges on UPI transactions starting October 15. This indicates that the bank’s core systems can already handle the complex task of split-fee distribution across the payment network.

“From an operational and technical preparedness standpoint, collecting and distributing MDR across payment ecosystem participants is a well-established process within banks. When the framework kicks off on October 15th, SBI will have the full technical capability to operationalise it in close coordination with the National Payments Corporation of India (NPCI).”

— Rama Mohan Rao Amara, Managing Director

Management is focusing on educating the public to prevent concerns that small transactions or consumers will be taxed. This clarity is important because it protects high-volume, low-value digital payment habits while targeting a specific merchant segment for revenue.

“Right now, the primary focus across banks and regulators is creating stakeholder awareness—among consumers, merchants, and technology providers—to dispel misconceptions: 1. Consumer Protection: P2M transactions under ₹2,000—which account for 96% of total UPI transaction volumes—remain completely exempt. Furthermore, retail consumers incur zero charges regardless of transaction size; the cost is strictly a merchant-side discount rate. 2. Targeted Merchant Application: The charge applies to a small subset of large merchants handling transactions above ₹2,000. 3. Caps and Exemptions: Critical and essential utility payments (such as fuel and railway ticketing) carry a flat ₹5 MDR rather than a percentage fee. Across all applicable P2M transactions, MDR is capped at a maximum of ₹300 per transaction.”

— Rama Mohan Rao Amara, Managing Director

The bank believes that introducing these fees is necessary to fund the expensive technology and security upgrades required to keep the payments system safe. Investors should see this as a move toward making digital banking infrastructure a self-sustaining business rather than a sunk cost.

“From an industry perspective, MDR revenues will partly offset the substantial, ongoing capital investments banks make in underlying payment infrastructure—specifically in upgrading cybersecurity, strengthening fraud risk management, and expanding server capacity. It creates a far more equitable and financially sustainable model for digital payments.”

— Rama Mohan Rao Amara, Managing Director

The management clarified that the vast majority of their transaction volume will not be affected by the new fee structure. This suggests that the immediate revenue impact will be limited to a small, high-value tier of their merchant network.

“While I cannot share specific internal merchant metrics, industry-wide data indicates that 96% of all UPI transactions are exempt. A similar ratio applies to our merchant base, meaning only around 4% of total transaction volume will be subject to MDR.”

— Rama Mohan Rao Amara, Managing Director

SBI plans to use the new revenue stream to expand its presence in merchant services, where it has traditionally been less active. This shift could diversify the bank’s digital income beyond its current dominance in processing payments for individual users.

“Historically, SBI’s primary strength has been on the remitter (payer) side, where we hold a dominant 27% market share. On the beneficiary and merchant acquisition side, our footprint is relatively smaller, managed partly through our joint venture, SBI Payments. However, introducing a modest MDR stream creates a clear financial incentive for SBI to play a far more active role across the merchant acquiring value chain. We will evaluate specific segments where SBI can deliver distinct value-added services to merchants rather than simply replicating existing market players.”

— Rama Mohan Rao Amara, Managing Director

The improved economics of digital payments are driving the bank to scale up its technical services for merchants and payment apps. This suggests that SBI is looking for profitable growth in the digital ecosystem rather than just chasing transaction volume.

“Definitely. Rebalancing the economics encourages us to expand beyond our traditional remitter dominance into merchant acquisition, PSP services, and our proprietary digital applications. However, revenue is only one element. We will expand into new segments of the payments value chain only where we can deliver tangible technology and operational value to merchants and ecosystem partners.”

— Rama Mohan Rao Amara, Managing Director

While the fees will help cover the massive costs of maintaining the UPI network, they are not expected to be a major profit centre for now. Investors should view this as a way to reduce the financial burden of digital operations rather than a massive boost to net interest margins.

“UPI infrastructure operates as a shared technology stack within the bank, supporting multiple digital banking services, so we do not isolate a standalone cost figure. However, broader industry estimates place the total annual system-wide infrastructure and maintenance cost between ₹15,000 crore and ₹20,000 crore. While actual MDR collections will depend on consumer and merchant transaction behaviour post-rollout, we expect the revenue to largely offset core infrastructure costs rather than act as a net profit driver. It provides the financial foundation to continue investing in digital innovation and value-added merchant features.”

— Rama Mohan Rao Amara, Managing Director

SBI chose not to partner with Apple Pay for its India launch after reviewing the business terms. This reflects a disciplined approach to partnerships where the bank prioritises its own strategic interests and commercial viability over simply joining global platforms.

“Apple Pay did approach SBI, and we had the opportunity to evaluate their commercial proposition and technical framework. After a thorough internal evaluation, SBI took a strategic decision not to participate in that specific ecosystem at this stage. We continually evaluate global payment partnerships, and our position may evolve as commercial and operational terms shift over time.”

— Rama Mohan Rao Amara, Managing Director

FMCG

Emami Agrotech | Small Cap

Emami Agrotech is a prominent Indian edible oil and food products manufacturer under the Emami Group. The company produces a variety of branded oils, spices, and snacks, leveraging an extensive national distribution network.

[Interview]

The government’s decision to lower import duties has helped stabilise domestic supply and cap international price increases during the peak festive season. This move has cleared distribution bottlenecks and restored consumer demand that was previously stalled by high costs.

“Following a significant multi-month rally driven by geopolitical tensions, elevated energy prices, rising input costs, and rupee depreciation, the government’s duty cut was timely and welcome. It arrived right as consumer festive demand builds up, balancing the needs of farmers alongside consumer affordability in conjunction with recent Minimum Support Price (MSP) increases. Demand is picking up now that duty certainty has returned. Products are moving steadily from ports into distribution pipelines that had run dry in anticipation of the announcement. Interestingly, following India’s duty cut, international edible oil prices actually moderated. The 10% duty reduction on sunflower oil created an artificial ceiling on price surges, keeping soybean oil and palm oil prices in check.”

— Sudhakar Desai, CEO

Short-term supply growth in Southeast Asia is currently managing palm oil availability, but future markets are forecasting higher prices. Investors should note that increasing biofuel requirements and potential weather disruptions are expected to tighten supply in the first quarter of 2025.

“While palm oil faces near-term origin supply pressure from increased production in Malaysia and Indonesia, forward markets for Q4 (January–March) are pricing in higher biofuel demand and potential El Niño impacts on palm yields.”

— Sudhakar Desai, CEO

Recent price reductions are reaching institutional and bulk buyers quickly, though retail consumers will see the benefits after existing stocks clear. Rapid price adjustments in mass-market brands indicate high competitive intensity within the sector.

“While packaged shelf inventory typically takes about 15 days to reflect price cuts due to pipeline stock, the immediate impact was felt in loose oil sales to Horeca (Hotels, Restaurants, and Catering) institutional buyers and popular mass-market brands. Prices for popular brands dropped immediately due to competitive selling.”

— Sudhakar Desai, CEO

The company is overhauling its product packaging to meet new regulatory standards for food safety and transparent labelling. This initiative is critical as they diversify their product mix into value-added categories like spices and snacks.

“Yes, absolutely. In compliance with FSSAI front-of-pack labelling regulations, we are updating packaging across our portfolio. Beyond edible oils, Emami Agrotech is expanding into food products—including Mantra spices, snacks, and chocolate spreads—so strict adherence to FSSAI clean-label guidelines is a top priority.”

— Sudhakar Desai, CEO

Emami Agrotech is utilising its established edible oil logistics to drive growth in higher-margin food categories. This diversification strategy aims to improve overall profitability by spreading distribution costs across a wider variety of consumer goods.

“Once we established a robust distribution network and pipeline, it made strategic sense to leverage our supply chain efficiencies to market adjacent food categories. We have launched chocolate spreads, snacks, chips, wheat products ( atta, maida, suji ), soya nuggets, and a complete range of spices under the Mantra brand.”

— Sudhakar Desai, CEO

Edible oil volume growth slowed significantly due to high prices but is expected to return to its historical growth rate as costs stabilise. A recovery in the broader packaged food and snack industry is a key driver for this anticipated demand rebound.

“Historically, Indian edible oil consumption grew by 3% to 4% annually. However, elevated prices over recent months temporarily dampened demand, holding volume growth to a modest 1% to 1.5%. As prices stabilise over the next three to four months, we expect consumption to rebound. Edible oil demand is directly linked to the broader food service sector—including biscuits, packaged snacks, and sweetmeat items—all of which were impacted by higher input costs but are now recovering.”

— Sudhakar Desai, CEO

Despite earlier concerns about agricultural yields, the summer harvest has exceeded expectations across the country. This stable crop output provides a better outlook for domestic raw material availability and pricing.

“While localised agricultural income stress in specific geographies warrants caution, the overall Kharif crop output has turned out far better than originally feared.”

— Sudhakar Desai, CEO

Management is optimistic about the winter oilseed harvest because key crops like mustard are less reliant on inconsistent monsoon rains. Higher government support prices and favourable market conditions are incentivising farmers to increase planting.

“It is too early to give a definitive ground assessment, as October rainfall will determine soil moisture levels for November and December planting. However, mustard and rapeseed crops are largely irrigated rather than purely monsoon-dependent. Supported by favourable market prices and higher government MSPs, we expect a strong Rabi oilseed harvest, provided the monsoon’s ending phase holds up reasonably well.”

— Sudhakar Desai, CEO

Building Materials

Century Plyboards (India) Limited | Small Cap

Century Plyboards (India) Limited is a leading Indian manufacturer of wood-panel products, specialising in plywood, laminates, and medium-density fiberboard (MDF). The company operates several production facilities across India and is currently expanding its presence in the high-growth MDF and value-added laminate segments.

[Interview]

Management reports that the business is successfully passing on cost increases to customers while seeing a recovery in MDF profit margins. This suggests that the company’s profitability is stabilising and could see further expansion in the second half of the year.

“MDF margins are actively recovering. Demand traction across all product segments has been robust in Q2, and we have successfully passed on most raw material price increases. Consequently, Q2 margins should look similar to or slightly better than Q1. Looking into H2, we expect further demand improvement alongside potential margin expansion as raw material costs ease, although some system volatility remains.”

— Keshav Bhajanka, Executive Director

The company intends to keep a larger share of savings from falling raw material costs rather than lowering prices for customers. Investors should note this strategy as a clear lever for boosting gross margins, particularly in the MDF and Particle Board segments.

“If crude derivative prices cool off, we will retain a portion of those cost savings to expand gross margins rather than passing them through entirely. In Plywood and Laminates, price pass-through is smaller, whereas in MDF and Particle Board, partial cost pass-through will occur while retaining a margin cushion.”

— Keshav Bhajanka, Executive Director

Export challenges in the Laminates division are being characterised as temporary shipping delays rather than a loss of customer interest. This clarifies that any short-term revenue misses in exports are timing issues and do not reflect a deterioration in structural demand.

“In Laminates, container constraints represent timing deferrals rather than demand destruction—a shipment moving from the 27th of one month to the 1st of the next simply shifts revenue recognition between quarters. The operational recovery in Laminates is well underway, and we expect sequential quarterly improvements.”

— Keshav Bhajanka, Executive Director

The Plywood division achieved record sales in July, prompting management to prepare an upward revision of their growth targets. With existing plants full, the upcoming Hoshiarpur facility is critical for meeting this excess demand and driving the next leg of volume growth.

“Our official guidance will be updated upward when released. Following 30%+ growth in Q1, the month of July marked the highest monthly Plywood sales volume in our company’s history. Our existing Plywood capacity has been operating near 100% utilisation. The commissioning of our Hoshiarpur capacity next month will provide a significant operational boost.”

— Keshav Bhajanka, Executive Director

Strong growth in the Plywood segment has temporarily increased debt levels because the company needs more cash to fund its daily operations. Investors should monitor this as a sign that leverage is being driven by operational scale rather than poor financial health.

“We are currently at peak debt. The rapid top-line growth—such as 30% growth in Plywood—requires a 45-to-60-day working capital cycle, driving incremental short-term borrowings.”

— Keshav Bhajanka, Executive Director

The company is transitioning to a lower capital expenditure phase by focusing on plywood units rather than more expensive MDF plants. This shift is expected to turn strong earnings into cash that will be used to systematically pay down debt and improve the balance sheet.

“Following the Hoshiarpur plant commissioning, our next major expansion is a Plywood unit in Uttar Pradesh late next year. Because Plywood capex is significantly lower than MDF or Particle Board, and with no new greenfield MDF or Particle Board plants currently planned, strong operating cash flows will drive sequential debt reduction. Our long-term financial policy is to maintain long-term debt below 1.0x EBITDA.”

— Keshav Bhajanka, Executive Director

Management has committed to a specific target to keep long-term debt levels well within safe limits by the end of the fiscal year. This commitment provides a clear benchmark for investors to track the company’s financial discipline as it exits a heavy investment cycle.

“Deleveraging has already begun. By the end of this fiscal year, our long-term debt-to-EBITDA ratio will sit comfortably below 1.0x.”

— Keshav Bhajanka, Executive Director

The company expects its efficiency in using capital to improve gradually over the next few years as new investments begin to generate returns. Reaching the 20% hurdle rate by FY29 would signal that the current aggressive expansion phase has successfully created shareholder value.

“On ROCE, we expect steady quarterly recovery, crossing our internal 20%+ ROCE hurdle rate within two years (by FY29).”

— Keshav Bhajanka, Executive Director

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Shahid Barmare.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 93rd edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 5 industries.

Energy

• Adani Power Ltd

Financial Services

• Motilal Oswal Financial Services Ltd

Automobile

• Ather Energy

Telecom

• HFCL

Real Estate

• Lodha Developers

Energy

Adani Power Ltd | Large Cap | Energy

Adani Power is India’s largest private-sector thermal power producer with a current operating capacity of 18 GW and a targeted expansion to 45 GW by FY36. The company operates a diversified fleet across India and is transitioning from a pure-play thermal generator into a broader base-load power platform including hydro and nuclear energy.

[Concall]

Adani Power is executing a lifetime asset ownership strategy, with 95% of its operating 18 GW fleet locked into long-term contracts to ensure revenue and fuel cost visibility toward a 45 GW capacity target by FY36.

“Adani Power Ltd currently has an operating capacity of 18 gigawatts of thermal power plants and an upcoming capacity of another 27 gigawatts, which would take us to 45 gigawatts by FY36. We follow a lifetime asset ownership strategy. We set up power plants, acquire power plants, and then own and operate them for their entire life cycle, rather than following a development and churning philosophy. We currently have 18 gigawatts operating, of which 95% of the capacity is tied up in long-term and medium-term contracts, primarily with state DISCOMs and with a few private-sector DISCOMs as well. This gives us very long-term visibility in terms of our future revenues, with very efficient fuel cost recovery and very good visibility in terms of our profitability.”

— Nishit Dave, Head of IR

By pre-ordering key boilers, turbines, and generators for its 24 GW expansion from BHEL and L&T, the company has secured a 20–30% capex advantage over current market setup costs.

“Another very important thing that we have done is to order the entire boilers, turbines, and generators the key equipment required for setting up these power projects in advance. Therefore, for the entire 24-gigawatt capacity, we already have an assured supply of equipment. We have contracted with BHEL and L&T, from which we are sourcing the boilers, turbines, and generators. This gives us a high degree of supply-chain assurance and an advantage when it comes to rapid project capacity expansion. Along with that, it also gives us a cost advantage because we tied up these assets and equipment earlier than the rest of the market and were able to lock in lower prices compared with current market prices. All these factors together give us an advantage in terms of our project cost per megawatt. Currently, the market is setting up projects at around 12-14 crores per megawatt, while we enjoy a cost advantage of approximately 20-30% over their project costs.”

— Nishit Dave, Head of IR

The company has captured a 67% win rate in recent revised thermal PPA tenders, securing long-term contracts for nearly 14 GW of its 24 GW pipeline under construction.

“So far, around 22 gigawatts of thermal power bids have been issued under the revised regime for thermal power PPAs by various state governments, and Adani Power has won nearly 14 gigawatts of these bids. This represents a strike rate of nearly two-thirds, or around 67%, and we have been able to book a large part of our existing capacities in this way... Out of the 24 gigawatts of capacity that we are building, we have already won PPAs for nearly 14 gigawatts. There are enough PPAs in the market to give us a high degree of confidence that we will be able to book the untied capacities within a short period of time, within the next year or so.”

— Nishit Dave, Head of IR

Management plans to fund its ₹2.2 trillion capital expenditure program using an equity-first model, deploying ₹1.2–1.4 trillion in internal operating cash flows and raising only gap debt.

“Our plan is to deploy all this cash flow directly into our capacity expansion. We will follow an equity-first model of capex, which means that we will primarily deploy equity in our capex and resort to debt funding only to the extent required to meet the cash flow gap between annual cash flow generation and the capex requirement during the year. Over the next 6 years, we are projecting cash generation of around 1,20,000-1,40,000 crores from current operations. This will go toward funding the capacity expansion. The balance, which would be around 60,000 crores, would be raised through debt from domestic banks and financial institutions and from the domestic capital market in the form of corporate debt, typically with a duration of 3-7 years. This would also be used to fund our capex.”

— Nishit Dave, Head of IR

Adani Power is diversifying into non-coal base-load power by acquiring domestic hydro assets and executing a 5,000 MW hydropower MOU with Bhutan’s Druk Green Power Company.

“We are now looking at other modes of power generation that also fall within the base-load power supply segment, including hydropower and nuclear power. These plans are still at a very early stage. Overall, in terms of our exposure, we currently own 24% of Jayprakash Power Ventures Limited, which has a 400-megawatt hydropower project and two thermal power plants with a combined capacity of 1,820 megawatts. Therefore, there is existing exposure to hydropower through that investment. We have also received a letter of intent in relation to our resolution plan for GVK Energy. This is another company that has the 300-megawatt Alaknanda hydropower plant. In this way, we are going to increase our exposure to hydropower projects in India through inorganic growth. On the organic side, we are currently in the process of setting up a hydropower project in Bhutan under a joint venture. Overall, under the joint venture agreement, or the memorandum of understanding, that we have with the Bhutanese government-owned renewable energy company, Druk Green Power Company, we have an MOU covering 5,000 megawatts of potential development.”

— Management

The company is targeting 10 GW of nuclear power capacity over a 10-year horizon, pending the finalisation of private sector regulatory frameworks under the Shanti Act and single-window clearance policies.

“Our target is 10 gigawatts. We are looking at a timeline of roughly 10 years to achieve this target, or to bring all these projects under construction within that timeframe. This, of course, assumes that all the required permissions, as well as the formulation and finalisation of the rules and regulations, will take place over the next year or so. Once the rules and regulations are finalised, we can proceed with obtaining permissions for the different sites that we have chosen or where we are currently acquiring land. We are also working with the government, both as an industry and as an organisation, to help formulate policies that can enable investment in the sector. For example, we are advocating a single-window clearance policy covering technology, site clearance, and related matters, which would help accelerate the development process.”

— Management

Strict enforcement of the Praapti portal and Late Payment Surcharge rules has reduced state DISCOM payment cycles to ~70 days, significantly improving operating cash flows.

“Over the last few years, we have seen the states become responsible and regular in making payments against the long-term PPAs that we have with them. The reason is that the Praapti portal has now been established, where all power generators have to upload their receivables from the states, and the central government monitors the level of overdue amounts. Second, with the promulgation of the Late Payment Surcharge rules, the states have to pay a significant penalty in case of any delays in payment. As a result, the states have become quite regular in making payments. We receive payments within approximately 70 days of raising the bill. This has resulted in our cash flows improving and our fund-based working capital utilisation declining.”

— Management

Adani Power plans to cap merchant spot market exposure at 1–2% over the long term to shield revenues from renewable-driven spot market price volatility.

“In the long term, only around 1-2% of our capacities would remain open or untied. Currently, 95% is tied up. The incremental capacities that we are setting up are also coming up with PPA tie-ups. Sometimes, a plant may come up first and the PPA may commence 6 months or 1 year later, so there may be some temporary open capacity. However, in the long term, almost all these capacities will be tied up. Even for the current open capacities, to the extent that we can obtain medium-term PPAs with good tariffs, we would like to tie them up under those arrangements. Over time, we will reduce our exposure to the merchant market. The reason is that, with increasing solar power penetration and gradually increasing battery storage penetration, there will be greater volatility and, to some extent, a limitation on the upside in the merchant market over the longer term.”

— Management

Financial Services

Motilal Oswal Financial Services Limited | Mid Cap | Financial Services

Motilal Oswal is a diversified financial services group with a strong presence in asset management, private wealth, retail broking, and housing finance. The company is distinct for its large treasury book, which reinvests retained earnings into its own equity-focused investment products.

[Concall]

The company has successfully shifted its revenue mix from volatile transaction fees to steady, recurring annuity income. This transition provides a more predictable earnings profile and supports management’s confidence in maintaining a 20% long-term growth rate.

“Our total annuity revenues as a proportion of operating revenue are now at 66%. This number has been growing rapidly. As the share of annuity revenues continues to rise, our profit growth has become qualitatively much better because of the higher mix of annuity revenues, and these are more sustainable profits. That is why we believe that a minimum base case of 20% plus CAGR can be easily achieved, given our annuity-led assets and flow growth.”

— Shalibhadra Shah, Group CFO

A large portion of the company’s mutual fund lineup is just reaching the three-year performance track record required by many distributors and investors. This expansion of ‘mature’ funds is expected to drive significant new inflows and market share gains in the asset management business.

“We previously had only six active schemes that had completed three years, so our growth journey so far has been based on those schemes. However, we will now have 10 more funds completing three years over the course of the next 15 months. These will be growth drivers for us, and further market share gains through flows will happen through these funds because almost all of these products rank first over the last three years.”

— Shalibhadra Shah, Group CFO

Motilal Oswal is aggressively expanding its alternative investment offerings by entering the private and commercial credit markets. These new funds diversify the product suite and create new streams of fee-based income beyond traditional equity markets.

“We have now recently launched a private credit business line. We launched the first fund and received 2,500 crores of commitments. The fund will close in Q3 at 3,000 crores. The fourth line of business we are going to launch there is the commercial credit fund, which is planned for launch in Q3 of this year. It is also going to be about a 2,000 crore fund and will be the first of our credit offerings.”

— Shalibhadra Shah, Group CFO

The acquisition of a custody license allows the company to offer a full end-to-end service suite to institutional investors, a rare capability for a non-banking firm. This regulatory milestone removes a major hurdle for scaling their institutional equities and capital markets business.

“We have now also received the custody license. This completes our entire institutional offering to clients because that was the only missing piece. We are the first to receive this license after almost 15 years, when Edelweiss had received the license. No non-bank player has been allotted this license so far. We are the first to receive it, and soon we will make further announcements for this business.”

— Shalibhadra Shah, Group CFO

Management believes their integrated model gives them a unique advantage by allowing them to offer exclusive, large-scale investment deals to high-net-worth clients. Using the company’s own balance sheet to co-invest alongside clients helps build trust and secure larger mandates in the wealth management space.

“There is no other player in the industry that has a very strong retail broking business, a retail AMC business, and a private wealth business. In alternatives, we have track records in equity growth, credit, and real estate. These are niche products available only to our private wealth clients. I also spoke about private credit as a new line, where we are co-investing in many of these deals with the fund. If the fund size is 3,000 crore, the fund can write a 300 crore cheque. But if we are investing, say, a 1,500 crore cheque, we have a balance sheet and a private wealth business. Those family office clients need a lot of this capital, and I think that is where we are very much present.”

— Shalibhadra Shah, Group CFO

The company is less exposed to recent regulatory crackdowns on derivative trading than many of its competitors. Because high-risk F&O trading only accounts for a tiny fraction of total group revenue, investors should see less volatility from policy changes in that segment.

“Within that pool, brokerage contributes only 40% from F&O. The industry has a higher proportion of F&O. We have always been more focused on cash advisory than F&O, so the impact of the regulation is relatively lower on us. Even within F&O, if you look at brokerage in the overall pool, retail brokerage represents only about 15-16% of the Group’s revenues. Within that, F&O is only about 40%, so only 5-6% of Group revenue comes from F&O.”

— Shalibhadra Shah, Group CFO

Management has ruled out spinning off the asset management business into a separate listed entity, arguing that the synergies between departments are too valuable. They believe that as long as the businesses perform well, the market will value the combined group fairly without a discount.

“We do not view AMC separately as a segment to be listed on its own. If the business is performing well and outperforming the industry, there should not be any holding-company discount. If the businesses grow, they will always be valued without any holding-company discount. There is therefore no point in viewing it as a demerger. In fact, the players that have tried to demerge have done so because they diluted a subsidiary through an investor, because of large ESOP pools in the subsidiary, or because of a capital requirement. From our perspective, we do not see a need for such a demerger.”

— Shalibhadra Shah, Group CFO

The group maintains a significant portion of its capital in liquid, high-performing equity assets to ensure it can act quickly on new business opportunities. This strategy turns the company’s balance sheet into a profit centre while providing a safety net for its brokerage operations.

“Treasury is approximately 60% invested in our AMC, 25% in alternative private market funds, which are equity growth funds consisting of unlisted investments, and 25% in direct equities. These investments have generated more than 20% IRRs and are growing well. We will continue to maintain a large proportion of approximately 50% in AMC assets, which are public market listed assets, because we want good liquidity on our balance sheet. We should be able to redeem money on a T+2 basis if we need capital for our brokerage business, for any inorganic opportunity that we may decide to pursue in the future, or for similar requirements.”

— Shalibhadra Shah, Group CFO

Automobile

Ather Energy | Mid Cap | Automobile

Ather Energy is a leading EV company in India that specialises in selling electric two-wheelers (E2Ws) along with a comprehensive product ecosystem including software, charging infrastructure, and smart accessories. They offer two product lines, the Ather 450 and the Ather Rizta, with a total of seven variants.

[Concall]

Ather believes the recent acceleration in EV adoption is more than a temporary spike, helped by policy support, fuel costs and broader consumer sentiment.

“From the perspective of what is happening with the US-Iran war, how crude has behaved, and how fuel has become a concern overall in terms of availability and cost, we are seeing consumer sentiment move towards EVs. This appears to be more of a structural move rather than a short-term move.”

— Abhinav, VP Finance

Electric penetration is rising much faster within scooters than the overall two-wheeler market.

“We have been able to move E2W penetration closer to 11%, which is 44% higher year-on-year. From the perspective of scooter penetration, it is close to 25%. One out of every four scooters being sold right now is electric.”

— Abhinav, VP Finance

Ather is seeing demand accelerate sharply, with both the top of the funnel and paid pre-orders growing substantially.

“From the perspective of Ather inquiries, we have seen a 95% year-on-year increase. From a pre-order perspective, we have seen an increase of approximately 160%. That is a significant uptick in demand.”

— Abhinav, VP Finance

Monthly pre-orders have risen from roughly 19,000–20,000 a year ago to around 50,000, while the existing Hosur plant can supply only about 35,000 units a month.

“Unfortunately, we are behind from a supply perspective. We have been able to supply approximately 30,000 units, and therefore we have unserved demand of around 15,000 units... our supply is restricted to around 35,000 units a month from our current Hosur plant.”

— Abhinav, VP Finance

The Aurangabad plant should roughly double monthly capacity initially, with another expansion already being contemplated.

“Our capacity through the new plant in Aurangabad... will improve our capacity from 35,000 per month to approximately 70,000–77,000 per month. On an overall basis, we are increasing it to approximately 9.2 lakh units on an annualised basis... reasonably, within a year to a year and a half, we should be able to increase our capacity further to approximately 1.4 million units.”

— Abhinav, VP Finance

Q1 marked an important profitability milestone, but management cautioned that commodity inflation could reverse some of the improvement.

“For the entire first quarter, we also saw EBITDA at approximately 0.8% positive for the first time. While EBITDA is positive at this point, there could be challenges from commodities... Therefore, we do not consider this to be sustainable EBITDA at this stage.”

— Abhinav, VP Finance

Management sees two structural shifts occurring simultaneously: scooters taking share from motorcycles and buyers moving toward more premium scooters.

“Scooters have increased from a 30% contribution to the market to a 40% contribution over approximately the last 5–6 years... Within scooters, there is also significant premiumization. The market share of scooters with 125cc and above has increased from approximately 20%–25% to close to 54%–55% in recent times.”

— Management, Ather Energy

Battery degradation is one of the biggest concerns around EV resale value and longevity. Ather says its oldest fleet provides evidence that degradation can be relatively modest.

“Our Gen 1 vehicles, which are now 8.5–9 years old, continue at a fleet level to retain approximately 83% charge. This means that even after nine years, the battery is retaining its capacity.”

— Management, Ather Energy

Some states are already seeing roughly one-third of scooter sales electrified, which Ather views as a sign of where the broader market could eventually move.

“In states such as Karnataka and Kerala, and in parts of Odisha and Rajasthan, electrification has already reached one in every three scooters. That trend should continue. We can expect it to reach 50%–60% at some point in the future.”

— Management, Ather Energy

Ather imports cells but retains control of battery design and pack manufacturing. Its ability to use NMC, NCA and LFP provides sourcing and technology flexibility.

“From a battery perspective, we currently own the entire battery design. That is our critical USP. Cells are a commodity, and we import them... we work with multiple chemistries, including NMC, NCA, and LFP chemistries. This gives us fungibility and flexibility regarding the chemistry we use in our vehicles.”

— Management, Ather Energy

The company says its defensibility comes less from patenting broad feature concepts and more from protecting the specific algorithms and implementation behind them.

“We have approximately 790 patents from the last few years... These patents cover hardware, software, and processes... What can be patented is the unique algorithm or the unique method through which Ather implements it, and we have a patent for that.”

— Management, Ather Energy

Management views detachable batteries as a compromise on vehicle dynamics, usability, reliability and safety—and says they aren’t part of Ather’s future roadmap.

“Because it is a removable battery, the contacts between the battery and the vehicle itself have a higher chance of failure. That can cause safety issues as well as maintenance issues. Therefore, we prefer to have the battery permanently installed in the vehicle... We are not looking to adopt any type of removable battery in our roadmap.”

— Management, Ather Energy

Ather plans to eventually expand beyond scooters through its Zenith motorcycle platform, but the launch isn’t imminent.

“We are working on, for example, a motorcycle on the Zenith platform, but that is at least two years away. There could be further products on the EL platform that we recently introduced... Beyond that, we can add more product lines on the EL platform as market demand becomes more concrete.”

— Management, Ather Energy

Despite Hero being a major shareholder, Ather says the two companies don’t share R&D, IP or distribution. Management prefers building its own retail network and says it has already doubled stores from roughly 350 to more than 700.

“Hero has been an investor for more than a decade. They continue to operate independently of us, and we continue to operate independently of them. It is essentially a financial investment. We share no R&D, technology, IP, design, or downstream sales-channel distribution, service, or sales operations.”

“We would rather establish our own distribution. We have demonstrated this over the last year by increasing our network from approximately 350 stores to more than 700 stores. That is effectively one store a day.”

— Management Ather Energy

Management sees charging infrastructure as one of its key ways of reducing range anxiety and differentiating the ownership experience.

“Ather has India’s largest DC fast-charging network for two-wheelers. We have more than 6,000 fast-charging stations across the country, where customers can add approximately 30 kilometres of range in 10 minutes. That provides a day’s worth of driving in just 10 minutes.”

— Management, Ather Energy

Resale value remains a major barrier to EV adoption. Ather is directly underwriting part of that risk through buyback guarantees.

“In the third year, we will give customers 60% of the value back, and in the fourth year, we will give them 50% of the value back if they want to sell the scooter back. These programs are available. In addition, we are running programs through which we want to extend this to six years, seven years, eight years, and so on.”

— Management, Ather Energy

Rather than keeping its charging architecture proprietary, Ather wants its LEX standard adopted more widely across the two-wheeler EV ecosystem.

“Our charging standard, LEX, has been adopted by BIS as India’s two-wheeler charging standard. We have also applied to IEC for a similar international certification. The standard itself is open-source and can be licensed at no cost by any CPO or other OEM. Several other OEMs also use it.”

— Management, Ather Energy

This is one of the more important near-term risks management highlighted. Aluminium, copper, steel and polymers remain inflationary, and Ather hasn’t taken another price increase in Q2.

“Based on the current trends in aluminium, copper, steel, and polymers, they are still inflationary. We could see further margin contraction... Regarding further price increases, we have not taken any in Q2. Given that we are already at a reasonable price point from an ASP perspective, we will wait and watch how demand develops before deciding whether to take any price increases.”

— Management Ather Energy

This reinforces how acute the current capacity constraint is: management says adding distribution today would accomplish little because existing stores themselves aren’t adequately stocked.

“Even if we were to use Hero stores today, we would not have enough supply to provide them because we do not have sufficient supply to keep our own stores stocked in the first place. Therefore, we will continue to add distribution over the next few quarters and beyond as supply increases.”

— Management Ather Energy

Telecom

HFCL | Small Cap | Telecom

HFCL Limited (formerly known as Himachal Futuristic Communications Limited), established in 1987, is a leading Technology Enterprise connecting the world with fully integrated communication network solutions and specialised services. The company is a diverse telecom infrastructure enabler with active interest spanning telecom infrastructure development, system integration, and manufacture and supply of high-end telecom equipment, optical fibre and optical fibre cable (OFC).

[Concall]

Historically, OFC demand surged with each telecom generation and then entered a lean period. Management believes AI hyperscalers and data centres have fundamentally changed this cycle.

“Historically, we have seen that OFC has always been cyclical in nature. With every new application, such as 2G, 3G and 4G, we have seen a sharp increase in demand, and after 2–3 years, the industry has gone through a lean period. However, this time, we are witnessing structural changes in the industry, mainly driven by demand from hyperscalers and data centres. We believe that this time the demand is more structural, and we see a long runway ahead of us.”

— Amit Agarwal, Investor Relations

Of roughly 750 million fibre-km of current global demand, management estimates 400–450 million fibre-km is coming from hyperscaler data centres.

“Of this 750 million fibre kilometres, approximately 400–450 million fibre kilometres of demand is coming from hyperscaler data centres. Around 200 million fibre kilometres is coming from telecom companies.”

— Amit Agarwal, Investor Relations

Management highlighted defence as a completely new demand driver. Fibre used in certain drones is effectively consumable, creating potential repeat demand.

“There is also a new demand use case coming from the defence segment. These days, drones are using approximately 40–45 kilometres of fibre in a single drone, and this is used only once. Once the drone is down, the entire fibre is wasted. This new demand driver has generated approximately 100 million fibre kilometres of demand.”

— Amit Agarwal, Investor Relations

HFCL expects hyperscalers, telecom capex, 6G and defence to sustain the cycle, with demand broadening beyond the US into Europe, Asia and the Middle East.

“With demand from hyperscalers, demand from telecom companies, the 6G rollout, and demand from defence applications, there is significant potential for this demand cycle to continue for a minimum of 7–8 years.”

— Amit Agarwal, Investor Relations

Tight supply and AI infrastructure demand have sharply lifted fibre realisations, particularly for the A2 fibre supplied to hyperscalers.

“The fibre supplied to hyperscalers is called A2 fibre. It used to trade at around $7–8 per fibre kilometre, and it has now reached $25 per fibre kilometre. We have seen a sharp increase in prices, and consequently, realisations have improved sharply.”

— Amit Agarwal, Investor Relations

This is the strongest financial guidance from the call. After initially guiding for 20% growth and then raising it to 40% following Q1, management has now lifted the aspiration again.

“Considering the current strong demand and the strong tailwinds in the industry, we believe that we will exceed 40%, and we will grow by a minimum of 60% over the FY26 numbers.”

— Management

The scale of HFCL’s exposure to the AI infrastructure build-out is particularly notable. Management says most of this business is export-led and earns better realisations.

“Currently, approximately 85–90% of our revenue is coming from AI and data centre hyperscalers. Most of this is export revenue, and margins are relatively better because of the cable construct, the shortage of fibre, and the significant increase in demand.”

— Management

This is perhaps the clearest evidence behind management’s argument that the current AI-driven fibre cycle is different from previous telecom cycles. Data-centre cables also contain more fibres than traditional telecom cables.

“This cycle appears to be quite long. In addition, customers are willing to book capacity for a longer period, possibly 5–7 years. In some cases, you may have seen capacity being booked for 10 years.”

“The demand is significant and is entirely new demand, unlike the telecom sector. The cable requirement is also completely different. Cables for data centres start at 864 fibres, and currently go as high as 6,912-fibre cables. This compares with the cables previously supplied to telecom operators, where the maximum was 288 fibres.”

— Management

Hyperscalers are driving the current cycle, but management expects telecom companies that delayed capex while waiting for fibre prices to fall—to eventually return to the market.

“Over the last 1–1.5 years, since prices have moved up so sharply, telecom companies did not undertake capex because they were under the impression that prices would soften and that this trend would not sustain. However, that has not been the case.”

“We have also started receiving inquiries from large telecom companies across the world, and we strongly believe that the next phase of demand will also be driven by telecom companies because they will have to densify their networks and will soon have to start their capex programs.”

— Amit Agarwal, Investor Relations

Even as competitors add substantial capacity, management expects demand growth to be strong enough to keep the market relatively tight.

“Against the current supply of 600 million fibre kilometres, everyone in the industry is adding capacity. In parallel, we expect the 750 million fibre kilometres of demand to reach 900 million fibre kilometres by FY29. Therefore, we still anticipate that there will be some shortage in the demand-supply equilibrium.”

— Amit Agarwal, Investor Relations

Management believes HFCL is insulated from Chinese competition in AI/data-centre cables, while scale and purchasing power help it compete against other global suppliers.

“We are very well protected because of the scale of our capacities and production. We have bulk-buying capability, purchasing power, and economies of scale. We are very competitive and comparable with suppliers globally.”

“The buyers of AIDC products, namely the hyperscalers, do not purchase Chinese products for this segment. Therefore, in this particular segment, there is effectively no competition from China.”

— Management

This provides an interesting lead indicator for HFCL. The large global data-centre capex announcements being made today may translate into physical cable demand only several quarters later.

“When a company announces that it is setting up a data centre, demand for cables and accessories generally arises 5–6 quarters later, once the civil infrastructure or other infrastructure is ready. Only then does the requirement for cables and accessories arise.”

— Management

Real Estate

Lodha Developers | Large Cap | Real Estate

Lodha Developers is one of India’s largest residential real estate developers with a dominant presence in the Mumbai Metropolitan Region and growing operations in Pune and Bangalore. The company is diversifying its portfolio into high-growth segments including industrial warehousing, digital infrastructure, and large-scale data centre parks.

[Concall]

Management has set a target to more than double profits by FY31 while achieving a 20% Return on Equity. This trajectory is supported by a strategy to turn the core development business net cash positive within three years, significantly reducing financial risk.

“As we stand today and look ahead to the next 5 years, the company is planning to grow its profits by a 20% CAGR over the next 5 years. This essentially means reaching more than 8,500 crores by FY31, from about 3,450 crores, which is the end of the decade. ROE should be very close to 20%. Right now, it is about 16% or thereabouts, and we should be very close to 20% by the end of the decade. During this period, we will have very conservative leverage. In fact, our Devco business, which is the development business, will become net cash positive in the next 2 to 3 years. Any remaining debt on the corporate balance sheet will be backed by rental assets in the form of LRDs.”

— Anand Kumar, Head of Investor Relations

The company plans to push price increases slightly higher while keeping them below wage inflation to ensure sustained demand. This pricing power is expected to drive EBITDA margins from the current low-30s to the mid-30s by the end of the decade.

“Generally, we aim for 5% to 6% price growth, which is well below the 10% to 12% salary growth seen in white-collar jobs. However, we feel that we can take it slightly higher, perhaps to 6% to 7% or 7% to 8% price growth, while still remaining below white-collar salary growth. It is important to maintain affordability if price growth remains below white-collar salary growth. This will help us drive slightly better margins consistently and raise the margin thresholds. Currently, we are in the early 30s in terms of EBITDA margin for the Devco business, and we feel that by the end of the decade, we should be close to the mid-30s or slightly ahead of the mid-30s.”

— Anand Kumar, Head of Investor Relations

The company is leveraging strategic land assets and government policy to create a data centre hub with industry-leading low power costs. This significant cost advantage is expected to attract major global operators and drive high-value land monetisation.

“This 660-acre park has been approved under the Green Data Centre Policy of the Maharashtra government. Among many other things, this provides us with several fiscal incentives, including tax waivers. However, the most important aspect is that any operator operating from this park can tie up power with any power producer in the country because we have 5 different transmission lines passing through our land. This gives us access to power from anywhere in the country and allows it to be delivered to the park. This means that the landed power cost in the park will be among the lowest in the world, if not in India. Power can essentially be delivered here at about 6 to 7 rupees per unit, compared with the 10 to 12 rupees that is often seen in industrial tariffs across Maharashtra.”

— Anand Kumar, Head of Investor Relations

Lodha is developing a self-funded model for its massive 1 gigawatt data centre project, using land sales to finance construction. Once operational by FY32, this segment is projected to contribute up to 2,500 crores in high-margin recurring rental income.

“The 1 gigawatt of powered shell will entail incremental capex of 10,000 to 11,000 crores. This capex will be funded by the sale of the remaining 140 acres in Phase 1, which will generate between 9,000 and 10,000 crores. This will fund the capex for the build-out of the 1 gigawatt of powered shell, which will be on our own balance sheet. This will generate more than 2,000 to 2,500 crores of rental income by FY32. This is going to be a very strong growth driver for us in terms of rental generation. Given that there is a significant amount of demand for data centres, especially for land where power and water connectivity is already in place, and that is what we have, this is going to be one of the most lucrative land parcels for setting up data centres.”

— Anand Kumar, Head of Investor Relations

The company follows a disciplined two-phase expansion model, prioritising local team building and low-risk joint ventures before full-scale growth. They are currently applying this pilot approach to the NCR market with an initial project pipeline of 4,000 crores.

“Every 2 to 3 years, we enter a new city. Whenever we enter a new city, we first enter it through a pilot phase. Therefore, our entry is always a 2-phase entry. The first phase is the pilot phase, where we initially attempt to build our local empowered team because this business cannot be run from headquarters. It needs a local empowered team that can make decisions on a day-to-day basis. ... Whenever we enter the growth phase in a city, that is when we look for the next city to enter in the pilot phase. We have now entered NCR in the pilot phase. It will remain in the pilot phase for the next 2 to 3 years. We have added 2 small projects with a combined GDV of about 4,000 crores in NCR. These are also JDA projects.”

— Anand Kumar, Head of Investor Relations

Management balances high-margin outright land purchases with high-return joint development agreements to optimise overall performance. This mix is designed to maintain a steady 20% profit margin and return on equity across the portfolio.

“For JDAs, when we underwrite them, we underwrite them with IRRs of more than 30% and profit margins, or PBT margins, in the high teens, around 18% to 19%. For outright land, where we acquire the land outright, the economics reverse. The PBT margin will be 28% to 30%, but the IRRs will be 18% to 19%. The combination of the two gives us a 20% PAT margin and 20% ROE, which is what we are aiming to achieve at the company level. To a large extent, we have already achieved that.”

— Anand Kumar, Head of Investor Relations

Management dismisses fears of interest rate hikes impacting their core segments due to low loan-to-value ratios among their buyers. Since luxury and premium buyers rely more on savings than mortgages, the company expects demand to remain resilient despite macro shifts.

“In the premium segment, LTVs are generally 20% to 30%. Even in the mid-income segment, which is above 1.5 crore, LTVs will not be more than 40% to 50%. This segment has sufficient savings. Therefore, even if loan eligibility comes down slightly, buyers have enough savings to deploy, and demand does not suffer as much. ... As you move up the value chain from mid-income to premium to luxury, hardly anyone in the luxury segment takes a mortgage. Therefore, there is no question of interest-rate sensitivity in that segment.”

— Anand Kumar, Head of Investor Relations

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Shahid & Meher.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Welcome to the 92nd edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 5 industries and 2 addresses by Regulators.

Regulator

• Reserve Bank of India

• Securities and Exchange Board of India

Financial Services

• National Stock Exchange of India (NSE)

Energy

• Oil and Natural Gas Corporation Limited

Auto Ancillary

• Hero Motors Limited

FMCG

• Bikaji Foods International Limited

Textile

• Pearl Global Industries

Regulators

Reserve Bank of India | Dr. Poonam Gupta Address | Macro Economy & Financial Stability

At the 13th SBI Banking & Economics Conclave, RBI Deputy Governor Dr. Poonam Gupta outlined India’s macroeconomic resilience amid compounding global shocks, detailing fiscal consolidation trends, capital market disconnects, and the structural outlook for the Indian Rupee.

[Speech]

India prioritised fiscal prudence over unsustainable economic stimulus during recent global shocks, leading the IMF to project a 5.7 percentage point decline in India’s public debt-to-GDP ratio by 2031.

“In response to such shocks, one mistake countries often make is that they try to pump-prime their economies beyond their productive capacities while stretching their fiscal envelopes beyond sustainable levels. Such endeavours end up compromising macroeconomic stability and thereby leading to growth sacrifice for a much longer period subsequently. Instead, for the past decade, India has prioritised fiscal prudence. In the latest edition of its Fiscal Monitor, the IMF (2026) projected that, in contrast to most other countries, India’s public debt, as a proportion of GDP, would decline between now and 2031 by 5.7 percentage points. This consolidation is attributed both to fiscal prudence as well as high GDP growth (both real and nominal).”

Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India

The Reserve Bank of India highlights a disconnect between real domestic economic strength and financial markets, noting that bond markets are outperforming as they price in fiscal credibility and anchored inflation.

“This brings us to a relevant but confounding issue of whether our financial markets are currently fully reflecting this economic reality. Perhaps, only partly so. At one level, there seems to be a bit of disconnect between some parts of the financial markets and the underlying near- and medium-term promise of the real economy. What is causing this disconnect? Among the markets, the bond market has performed well, both compared to its own past as well as in comparison to most other countries. The relative strength of the market is due to the fiscal commitment of the government and the projected sustained high economic growth rates that would make the fiscal outcomes even better going forward. Credibility of monetary policy and declining structural pressures on inflation have contributed as well.”

Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India

The recent relative lag in domestic equity markets is attributed to capital shifting toward global AI-driven trades, with expectations that strong real economy fundamentals will eventually reassert domestic market attractiveness.

“The equity markets, on the other hand, have not tracked the same optimism. This is plausibly because of a relatively more promising AI-led story in certain other economies. While the Indian equity market witnessed an exceptional run of its own, roughly from June 2022 to September 2024, some other economies are having a better run now. Eventually, the promise of the underlying real economy would reassert itself. Going by past experiences, it is only a matter of time before Indian equities look relatively more attractive again.”

Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India

While recent commodity and gold price shocks temporarily pushed the Current Account Deficit higher and drove a 13% cumulative rupee depreciation, the RBI views this pressure as a short-term correction against 7–8% real GDP growth.

“The recent oil price and gold price shocks have pushed CAD temporarily higher. In addition, in the last two years, the capital account surplus has fallen short of CAD, resulting in a negative BOP of about US$ 5.0 billion in 2024-25 and US$ 23.6 billion in 2025-26. Against these developments, the rupee has cumulatively depreciated by 13.0 per cent (on a point-to-point basis) from March 31, 2025 to September 17, 2026. The questions then arise: How long may the BOP stay in deficit? Will it self-correct? What do history and cross-country experiences tell us about the direction of BOP and the exchange rate, especially in an economy positioned to grow at 7-8 per cent in real terms, and 11-12 per cent in nominal terms, for years and decades to come?”

Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India

The central bank considers the cumulative Rupee depreciation an overcorrection, projecting market stabilisation and potential currency appreciation as external shocks subside and foreign capital flows normalise.

“Put together, these arguments indicate that one may think of the cumulative depreciation of the INR (or shall one say its overcorrection) in the past year and a half to be a temporary phenomenon. With the RBI remaining committed to ensuring orderly conditions in the foreign exchange market, and having the wherewithal to meet decades’ worth of CAD, or the net BOP deficit, the current market dynamics do not appear especially well-founded. If anything, there seems to be a fair case for the rupee to not just stabilise but perhaps even appreciate from the current levels, as was being anticipated by the market analysts when the capital flow measures were first announced.”

Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India

India is advancing on a 7%+ growth floor supported by productivity gains and broad-based sectoral diversification, with structural initiatives positioned to push the economy toward an 8%+ equilibrium.

“All in all, the Indian economy has done exceptionally well, notwithstanding the multiple shocks it has faced. It is advancing ahead on a resilient growth equilibrium of 7 per cent plus, that is spatially broad-based; sectorally diversified; and underpinned by rising productivity, while steadily working to break into an 8 per cent plus equilibrium. This is quite a feat for a large emerging market, and makes India stand out in its asset class.”

Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India

SEBI Chairman Address | Indian Capital Markets & Regulatory Reforms

At a capital markets conclave, SEBI Chairman Shri Tuhin Kanta Pandey outlined key regulatory initiatives to deepen corporate bond liquidity, streamline foreign portfolio investment workflows, and accelerate primary market capital formation to support India’s long-term infrastructure and economic growth.

[Speech]

The Chairman highlights strong primary market momentum, with ₹600 billion raised via IPOs in FY27 so far—55% representing fresh capital—and an upcoming listing pipeline estimated at ₹2 trillion.

“The momentum has continued in FY 2026-27, with around ₹600 billion raised through IPOs so far. Importantly, around 55% of IPO proceeds have represented fresh capital going to companies. Going ahead, potentially, around ₹2 trillion can be raised through IPOs.”

Shri Tuhin Kanta Pandey, Chairman, SEBI

SEBI has operationalised the SWAGAT-FI framework to digitise and expedite onboarding for trusted, low-risk Foreign Portfolio Investors (FPIs), with over 200 FPIs utilising the mechanism.

“For foreign investors, our approach has been to reduce friction across the entire investment journey. At entry, onboarding is becoming faster, digital and more proportionate to risk. SWAGAT-FI reflects this approach for trusted, low-risk investors, with around 205 FPIs already using the framework since it became operational on June 01, 2026.”

Shri Tuhin Kanta Pandey, Chairman, SEBI

To lower trading friction for foreign institutions, SEBI has permitted fund netting, reviewed block-window rules, and simplified compliance for FPIs invested exclusively in Government Securities.

“Beyond onboarding, we are reducing operational friction. The block-window framework has been comprehensively reviewed, netting of funds has been permitted to reduce funding costs, and FPIs investing only in Government Securities face simpler requirements. The objective is easier access and more efficient participation, with safeguards proportionate to risk.”

Shri Tuhin Kanta Pandey, Chairman, SEBI

Regulatory frameworks for Alternative Investment Funds (AIFs) are adopting a tiered structure to provide accredited investors and large-value funds greater flexibility to deploy patient capital.

“In alternative investments, regulation must recognise investor sophistication. Sophisticated and retail investors need not be regulated identically. We have, therefore, provided greater flexibility to accredited investors and large-value funds, while retaining clear governance and accountability. The aim is to let patient, specialised capital reach opportunities that conventional finance may not serve.”

Shri Tuhin Kanta Pandey, Chairman, SEBI

SEBI has launched Demat 2.0, a pilot program exploring the tokenisation of corporate bonds on a private, permissioned Distributed Ledger Technology (DLT) network operated by depositories.

“In corporate bonds, our approach has been to develop the entire market ecosystem - not merely increase issuance. A deeper market requires a wider issuer base, better price discovery, broader participation and greater secondary-market liquidity. Our reforms have therefore addressed issuance, distribution, market infrastructure and investor understanding together. More recently, we successfully launched Demat 2.0, a pilot for tokenisation of corporate bonds on a private, permissioned DLT network operated by the depositories.”

Shri Tuhin Kanta Pandey, Chairman, SEBI

The regulator is evaluating Depository Receipts for REITs and InvITs alongside expanding FPI participation in non-agricultural commodity derivatives to deepen global market access.

“Global market access will remain a priority. We are examining simpler digital onboarding for Persons Resident Outside India, wider FPI participation in non-agricultural commodity derivatives with appropriate safeguards and Depository Receipts against units of REITs and publicly listed InvITs.”

Shri Tuhin Kanta Pandey, Chairman, SEBI

SEBI is developing a comprehensive market-making framework for corporate debt, expanding distribution through Fixed Income Channel Partners on online bond platforms, and introducing a Credit Risk-o-Meter for retail investors.

“Corporate bonds need the next layer of depth and participation. Work is under way on developing a comprehensive market-making framework covering liquidity, market infrastructure and repo access. We are also consulting on Fixed Income Channel Partners to widen distribution through regulated online bond platforms, while the proposed Credit Risk-o-Meter seeks to make credit risk easier to understand.”

Shri Tuhin Kanta Pandey, Chairman, SEBI

Financial Services

National Stock Exchange of India (NSE) | Large Cap | Financial Services

The National Stock Exchange of India (NSE) is the country’s premier electronic exchange, providing advanced trading, clearing, and settlement services across multiple asset classes. It serves as a vital financial infrastructure pillar, supporting India’s economic growth through transparent capital formation and risk management solutions.

[Interview]

Management views the exchange as a foundational national institution whose growth is inextricably linked to the modernisation of India’s economy. Investors should see this as a long-term infrastructure investment rather than just a cyclical trading platform.

“The concept of NSE emerged from the market reforms of 1991–1992 following the Harshad Mehta scam, when India liberalised its economy. When NSE was conceptualised in 1992 as an automated, computer-driven exchange, many doubted whether bankers could successfully run a vibrant trading platform, especially after the failure of OTC. When NSE launched its debt market in 1994, followed by equities, many dismissed it as a passing phase. Yet it transformed Indian finance by pioneering electronic trading, real-time risk management, automated clearing houses, and national depositories. Institutions like NSE are created once in a nation’s lifetime. In 1994, it brought first-hand IT access to millions across India. Today’s listing is simply another milestone in India’s broader journey toward becoming a developed economy over the coming decades.”

— Ashishkumar Chauhan, Managing Director & CEO

Management believes that recent regulatory tightening in the derivatives market is a necessary correction to prevent speculation rather than a threat to growth. They expect the core business to continue growing at a double-digit rate despite these new restrictions.

“Regulatory measures surrounding retail options trading represent temporary correction phases within a long-term cycle. Neither the regulator nor the exchange questions the fundamental legitimacy of the derivatives market. The objective is to adjust market mechanics so derivatives serve their core purpose—price discovery, hedging, and risk management—rather than speculative gambling. Furthermore, we are only scratching the surface of India’s capital market potential. Even if specific trading products face calibrated restrictions, NSE’s underlying growth potential remains in the early double digits.”

— Srinivas Injeti, Public Interest Director

The exchange is diversifying its revenue streams by expanding into international capital gateways and high-potential products like gold receipts. These initiatives provide new growth avenues that reduce the company’s reliance on traditional domestic equity trading.

“NSE is developing international growth drivers, such as NSE International Exchange at GIFT City IFSC, which acts as a gateway for global capital. We are also focusing on initiatives like Electronic Gold Receipts (EGRs) to monetise India’s estimated 35,000 tonnes of domestic gold reserves, which could significantly reduce physical gold imports.”

— Srinivas Injeti, Public Interest Director

Leadership clarifies that regulatory changes are being made collaboratively with the industry to ensure market stability. The observation that trading volumes have stabilised suggests that the immediate impact of regulatory changes is already factored into performance.

“The regulator is not acting disruptively; SEBI has adopted a consultative process to implement safeguards without damaging market development. F&O volumes have stabilised rather than entering a downward spiral, so market impacts should not be overplayed.”

— Srinivas Injeti, Public Interest Director

NSE has deliberately restructured its product offerings to move away from an over-dependence on volatile weekly options. With 58% of income now coming from more stable sources, the company has built a more resilient revenue model.

“Three years ago, when daily options expiries were introduced across the industry, concerns arose regarding over-reliance on weekly options. NSE systematically rebalanced its product suite, reducing weekly expiries down to one per week and making core products like Bank Nifty monthly. Today, out of every ₹100 in NSE’s operating income: ● ~₹42 comes from weekly options. ● ~₹58 comes from non-weekly sources, including monthly options, index futures (~8%–9%), monthly stock options (~8%–9%), market data services, colocation infrastructure, terminal fees, and communications (~12%–15%).”

— Ashishkumar Chauhan, Managing Director & CEO

The exchange has demonstrated a high level of financial resilience, outperforming negative market forecasts despite significant regulatory shifts. Achieving nearly 10% growth in a challenging environment highlights the strength and scale of the platform.

“Three years ago, when regulatory tightening began, market participants expected our revenues to drop 30% to 40%. In reality, revenue dipped by just 2% to 3% before rebounding. In Q1 FY27, NSE delivered 8% to 10% year-on-year growth across revenue, EBITDA, and PAT. Our operational reality has consistently outperformed negative market expectations.”

— Ashishkumar Chauhan, Managing Director & CEO

Management is taking a conservative and regulation-first approach to listing its various business units. This suggests that while value unlocking is possible, it will not be rushed and depends heavily on regulatory approval.

“Subsidiaries must achieve critical scale and sustained profitability before listing can be considered. Furthermore, regulatory considerations play a significant role, as regulators may view certain market infrastructure subsidiaries as core public utilities that should remain unlisted.”

— Srinivas Injeti, Public Interest Director

The management plays down the impact of competition with other exchanges, noting that most volume shifts are due to regulatory adjustments rather than competitive losses. They emphasise that systemic cooperation on safety and surveillance is the actual priority over market share battles.

“Market share shifts reflected specific regulatory interventions designed for investor protection. Over recent quarters, NSE’s volume and market share have steadily recovered across Q1 and Q2 FY27. Regarding inter-exchange dynamics: 99.99% of the time, frontline regulatory exchanges must cooperate seamlessly on surveillance, risk management, and broker compliance. Market competition accounts for less than 0.01% of operational reality.”

— Ashishkumar Chauhan, Managing Director & CEO

NSE is monitoring global trends that allow exchanges to list on their own platforms, provided strict governance rules are in place. While not an immediate goal, this move could eventually streamline its corporate structure if the regulator approves.

“Global jurisdictions increasingly permit self-listing where robust regulatory firewalls exist to manage governance conflicts. While self-listing aligns with international best practices and remains a logical long-term framework, it depends entirely on regulatory comfort. It is not something we are desperately pursuing, but rather a framework that may evolve naturally over time.”

— Srinivas Injeti, Public Interest Director

The company’s business model benefits significantly from high operating leverage, meaning profits grow faster than revenue as volume increases. Management quantifies its growth as a multiplier of India’s GDP, positioning it as a high-growth proxy for the overall economy.

“NSE operates as a technology platform player with fixed baseline infrastructure and manpower costs. Operating leverage dictates that when market volumes expand, EBITDA margins expand accordingly. Because exchange activity is intrinsically tied to national economic expansion, NSE operates at an economic beta of approximately 1.5x to 2.0x relative to India’s GDP growth. As India’s economy grows, investor additions, corporate listings, and transaction volumes scale at a faster multiplier.

— Ashishkumar Chauhan, Managing Director & CEO

Energy

Oil and Natural Gas Corporation Limited | Large Cap | Energy

Oil and Natural Gas Corporation Limited is India’s largest government-owned energy company, specialising in the exploration and production of crude oil and natural gas. It contributes approximately 70% of India’s domestic production and maintains significant international operations through its subsidiary, ONGC Videsh.

[Interview]

The company has achieved its first successful gas discovery in the Mahanadi basin under a new government-backed risk-sharing framework. This shift in policy allows the firm to explore high-risk deepwater blocks with reduced financial exposure compared to previous models.

“Under the Samudra Manthan initiative, this well has struck natural gas. ONGC has previously discovered gas in this part of the Mahanadi basin, but under Samudra Manthan, this is our first gas strike, which is very positive news. We now have a very enabling environment because, through Samudra Manthan, the government is for the first time sharing exploration risks directly alongside operating companies.”

— O. P. Sinha, Director (Exploration)

Management estimates the total resource potential of the Mahanadi basin at 600 million metric tonnes of oil equivalent. Investors should note that these are prospective resources that require further drilling to be classified as proven, bankable reserves.

“Regarding block size and reserves, the Mahanadi basin is highly prospective, with estimated total resources of around 600 million metric tonnes of oil equivalent (MMTOE). While these are total prospective resources, conversion into proven reserves is an ongoing, continuous process. Exact reserve volumes will evolve as the drilling campaign progresses.”

— O. P. Sinha, Director (Exploration)

Domestic gas discoveries are a priority as India attempts to double the share of natural gas in its energy mix to 15% by 2030. Success in these exploration programs is vital for reducing the country’s reliance on expensive energy imports.

“On its national significance: India currently imports nearly 50% of its natural gas requirements. Discovering substantial domestic gas volumes is critical for import substitution. Furthermore, the country aims to raise the share of natural gas in its primary energy mix from the current 6%–7% to 15% by 2030. This discovery and our forward exploration work program will directly support achieving that 15% target by 2030.”

— O. P. Sinha, Director (Exploration)

The discovery well has demonstrated a flow rate of 0.25 million metric standard cubic meters per day during initial testing. This specific metric provides a baseline for analysts to model the potential output of the reservoir once it is fully developed.

“Regarding the flow rate, testing is still ongoing, but the well has tested at close to 0.25 million metric standard cubic meters per day (MMSCMD).”

— O. P. Sinha, Director (Exploration)

The company has identified both shallow and deep prospective targets, with the current discovery occurring at a shallower, more cost-effective depth. A final investment decision will depend on understanding how these different plays can be integrated into a single development strategy.

“Drilling costs directly correlate with target depth. While we struck gas at a relatively shallow depth in this specific well, the Mahanadi basin also contains deeper prospective targets that we plan to drill. Regarding commercial development timelines, we must first establish and delineate gas volumes across both the shallower and deeper plays. Once those volumes are consolidated, the comprehensive field development plan will be finalised.”

— O. P. Sinha, Director (Exploration)

Each deepwater appraisal well requires a three-month drilling window, suggesting a lengthy timeline before the project reaches a final investment decision. Management warned investors against relying on speculative market estimates for project costs during this early phase.

“Yes, drilling a single deepwater well takes approximately three months, so the full appraisal process will require additional time. Consequently, any speculative capex figures currently floating around for the development phase are unviable and unconfirmed.”

— O. P. Sinha, Director (Exploration)

The government is supporting exploration through a three-tier framework that funds seismic surveys, exploratory drilling, and shared infrastructure. This risk-sharing model significantly lowers the break-even cost and upfront capital requirements for ONGC in deepwater environments.

“It is not a matter of direct subsidies. Under the Samudra Manthan framework, the government provides structured budgetary and financial support across three core elements: 1. Funding for initial 2D/3D seismic surveys. 2. Partial funding for exploratory well drilling, which represents the major capital expenditure risk. 3. Financial support for developing common offshore infrastructure hubs. This risk-sharing support reduces upfront capex for operating companies like ONGC, improving the overall commercial viability of deepwater exploration.”

— O. P. Sinha, Director (Exploration)

Auto Ancillary

Hero Motors | Small Cap | Auto Ancillary

Hero Motors is a global precision engineering firm specialising in integrated powertrain systems and automotive components. The company operates high-margin divisions in brakes and aerospace while maintaining strategic joint ventures with global leaders like ZF and Yamaha.

[Interview]

Hero Motors is shifting from manufacturing individual parts to providing fully integrated and tested systems for its customers. This transition is expected to lift profit margins above the typical industry average for automotive component suppliers.

“Fundamentally, our company possesses strong structural capabilities supported by global joint venture partners such as ZF, Mitsui, Sumitomo, and Yamaha. We are transitioning from a component supplier to an integrated system solutions provider, moving significantly up the value chain. As we move up the value chain by offering end-of-line testing and integrated systems, margins expand beyond standard 10%–15% levels.”

— Pankaj Munjal, Chairman

The company is currently finalising major international contracts and professionalising its management structure following its stock market listing. Management wants investors to re-rate the business as a technology-driven system provider rather than a commodity manufacturer.

“In the coming months, we expect to sign several large contracts. Our Managing Director is currently in the UK finalizing agreements. While we are transitioning from an informal family-run organization into a structured, public enterprise with formal reviews, our core operational DNA remains intact. We are deploying capital, technology, and engineering capabilities to scale to the next level. Investors should classify Hero Motors not merely as a component maker, but as an integrated system solution supplier.”

— Pankaj Munjal, Chairman

Management is prioritising the expansion of sales to their current tier-one global clients to grow their ‘share of wallet.’ This strategy reduces the high cost and risk of finding new customers, ensuring more efficient capital deployment and predictable growth.

“We already serve iconic global customers. Rather than spending capital hunting for new clients, our strategy is to drill deeper into our existing customer base—who are among the best in the world—to increase our share of wallet. Expanding within established relationships lowers customer acquisition costs and reduces execution risks while driving exponential growth. Over the next two years, our business model will be fully transformed.”

— Pankaj Munjal, Chairman

The company is leveraging its relationship with Hero Cycles to supply high-value electric drive units for the booming global e-bike market. These internal synergies provide a guaranteed demand channel and position the company as a key player in the green mobility supply chain.

“Unlike a traditional component manufacturer whose product scope remains static over time, we build high-value systems. For instance, our parent entity, Hero Cycles—the world’s largest cycle manufacturer—is signing major international contracts to manufacture e-bikes globally. Hero Motors will produce and supply the integrated Electric Drive Units (EDUs) for these global e-bikes, capturing massive intra-group synergies. These operational catalysts are taking shape over the coming months.”

— Pankaj Munjal, Chairman

Hero Motors is expanding its high-precision engineering expertise into the aerospace sector through direct relationships with industry leaders. This expansion diversifies the company’s revenue streams into a high-barrier, high-margin industry beyond traditional automotive parts.

“Regarding our capabilities and growth strategy, precision engineering for aerospace has emerged as a key focus area. We are not losing focus; we specialize in high-precision engineering solutions. In aerospace, we deal directly with the top four global industry leaders and are actively working on opportunities where we expect concrete progress soon.”

— Pankaj Munjal, Chairman

The company possesses specialised divisions and joint ventures that generate significantly higher margins than its core automotive business. These technical partnerships and high-margin segments provide a strong financial foundation and a competitive technological edge.

“Beyond our core operations, we hold leading market positions across adjacent businesses—such as our brakes division, which enjoys a 28% EBITDA margin. We also operate strong joint ventures including ZF Hero, and maintain strategic relationships with global players like Foxconn.”

— Pankaj Munjal, Chairman

Leadership is currently focusing on operational efficiency and technological upgrades rather than immediate corporate restructuring or stock price movements. This emphasis on ‘shop floor’ execution suggests a long-term commitment to improving fundamental business performance and productivity.

“Regarding corporate restructuring or reverse mergers, our executive team is highly ambitious, but right now our heads are down and we are fully focused on core execution. I am not watching short-term stock price fluctuations; my focus is entirely on shop floor efficiencies, customer satisfaction, latest technology adoption, and engineering innovation.”

— Pankaj Munjal, Chairman

FMCG

Bikaji Foods International Limited | Small Cap | FMCG

Bikaji Foods International is a leading manufacturer of ethnic Indian snacks, including bhujia, namkeen, and sweets, with a significant presence across India and international markets. The company is currently expanding its presence into the western snacks category and scaling its distribution through quick-commerce and e-commerce channels.

[Interview]

Management is seeing strong consumer demand and distribution loading ahead of the Diwali festive season. The high-teens growth in core snacking indicates healthy volume momentum despite broader inflationary pressures.

“The festive season momentum and excitement are very high. Channel loading begins around 30 to 15 days before Diwali as we fill the distribution pipeline across our distributor network to reach retail outlets. For our sweets portfolio, which has a shorter shelf life, major secondary sales and offtake occur closer to the festival, starting from October onwards. Meanwhile, our core snacking portfolio is performing very well, growing in the high teens, which aligns with current consumption trends.”

— Manoj Verma, Chief Operating Officer

The company is maintaining its revenue growth targets but has lowered its full-year profitability outlook. Investors should expect a margin contraction of 1.5% as input costs outweigh top-line gains.

“On the top-line front, we are fully confident in achieving our mid-teens guidance and delivering on our commitments. However, given the sharp rise in crude and key commodity prices, operating margins will see a slight compression. We expect a margin slip of approximately 150 basis points for the full year, rather than maintaining the peak 15% to 16% level.”

— Manoj Verma, Chief Operating Officer

Bikaji is facing a significant 6% to 7% increase in raw material costs, primarily driven by expensive edible oils and crude-linked packaging. This breakdown highlights the specific macro variables that will impact earnings quality in the coming quarters.

“Two major factors are driving input cost inflation: 1. Edible Oils: Continuing double-digit price increases. 2. Packaging Materials (PM): Directly impacted by rising crude oil prices. Along with pulses (dals) and sugar, the net year-on-year inflationary impact across our entire raw material basket is around 6% to 7%.”

— Manoj Verma, Chief Operating Officer

The company has implemented partial price hikes to offset roughly two-thirds of its total input cost inflation. The decision not to pass on the full impact suggests a tactical move to protect market share and volume growth during a peak season.

“We have passed on approximately 4.5% to 5% of this inflation to consumers across select product categories, though not across our entire portfolio.”

— Manoj Verma, Chief Operating Officer

Digital sales are growing exponentially, with quick-commerce emerging as a key driver for both traditional snacks and seasonal sweets. This shift in distribution mix could improve access to urban consumers and reduce traditional inventory lag.

“E-commerce and quick-commerce channels are performing exceptionally well. Growth is no longer measured in percentages; it is scaling in multiples due to rapid consumer adoption and channel expansion. Interestingly, even packaged sweets—a category that historically lacked high salience on digital platforms—are seeing strong festive demand on quick-commerce.”

— Manoj Verma, Chief Operating Officer

International growth is being constrained by skyrocketing shipping costs and global supply chain disruptions. Investors should temper expectations for the export segment as high freight costs act as a drag on international margins.

“Conversely, our export division faces geopolitical and logistics headwinds. Ocean freight costs have surged nearly fourfold, and securing timely container availability remains a major operational bottleneck.”

— Manoj Verma, Chief Operating Officer

Bikaji is aggressively targeting the western snacks market to diversify its revenue beyond traditional ethnic products. The projected 1.5x relative growth rate indicates a strategic pivot toward a larger, albeit more competitive, market segment.

“Traditional ethnic snacks remain our core heritage and primary growth engine. However, the western snacks category presents a massive market opportunity because its total addressable market size in India is as large as—if not larger than—traditional snacks. We expect our western snacks division to grow at 1.5 times the rate of our traditional snacks segment. Over the next two years, we project western snacks to increase its contribution to around 11% to 12% of our total business revenue.”

— Manoj Verma, Chief Operating Officer

Textiles

Pearl Global Industries Limited | Small Cap | Textiles

Pearl Global Industries is a leading multinational apparel manufacturer that provides end-to-end supply chain solutions to global retailers. The company operates a multi-geographical manufacturing base across India, Bangladesh, Vietnam, and Indonesia, supported by design hubs in major fashion capitals.

[Interview]

Management is confident in reaching their long-term 2030 targets because they are already ahead of their previous growth schedules. This suggests strong demand and successful execution of their global expansion strategy.

“Good morning. What gives us confidence is our performance over the last three to four years. We are already tracking well ahead of the timelines we had outlined in our earlier guidance. The current commercial traction from our global customer base, evolving geopolitical supply chain realignments, and our strategic multi-product, multi-geography manufacturing footprint give both our customers and us the confidence to scale further. The long-term figures we have shared reflect our concrete internal forecasts.”

— Pallab Banerjee, Managing Director

The company expects a slight increase in average selling prices per garment as they refine their product mix. This modest growth in realisation provides a stable foundation for revenue expansion without relying on aggressive price hikes.

“FOB price realisation represents our average selling price at the origin port when handing over finished goods to international customers. It is calculated by dividing total garment revenue by the total number of pieces shipped. In our long-term financial modelling, we keep pricing relatively constant with minimal inflation adjustments. We are moving from a historical baseline of around ₹640 per garment toward ₹660 to ₹670 over the next four years. Because we manufacture across six distinct apparel categories, price realisation varies by product type—a basic T-shirt commands a lower unit realisation compared to an outerwear jacket, with pants and shirts falling in between. The ₹660 to ₹670 range represents our blended portfolio average.”

— Pallab Banerjee, Managing Director

Pearl Global is outperforming the broader Indian textile industry by leveraging its presence in multiple countries and offering design expertise. This multi-country approach reduces geographic risk and makes the company a more essential partner for major international brands.

“Yes, it is above standard industry averages. The domestic Indian textile industry faced significant tariff and trade headwinds over the past year. To look at global scale: the international garment trade is valued at approximately $550 billion. China leads with $150 billion in exports, followed by Bangladesh and Vietnam at $48 billion and $44 billion, respectively, while countries like India and Indonesia operate at around $15 to $17 billion each. Given our established manufacturing presence across Vietnam, Bangladesh, Indonesia, and India, we are uniquely positioned as a true global vendor to international buyers. Beyond manufacturing, we provide design solutions tailored to major retail markets across the US, EU, UK, Australia, Japan, and Canada. Delivering global fashion intelligence and design capabilities makes global retailers heavily reliant on us, differentiating Pearl Global from competitors focused on single geographies or limited product lines.”

— Pallab Banerjee, Managing Director

The company plans to boost its profit margins by manufacturing its own fabrics and handling specialised washing in-house. By performing these tasks themselves instead of paying third parties, they can keep more of the total profit for themselves.

“First, operational leverage plays a major role. As revenue scales, we leverage front-loaded fixed investments—such as our international design teams located in key fashion hubs like London, Barcelona, and New York. Second, two major strategic initiatives will directly drive margin expansion: 1. Vertical Integration: Bringing knit/jersey fabric manufacturing in-house. 2. Value-Added Processing: In-sourcing specialised garment washing and dyeing processes for high-fashion denims. By processing fabric and value-added washing internally rather than outsourcing, we directly capture that margin.”

— Pallab Banerjee, Managing Director

Management expects earnings per share to grow as fast as or faster than operating profits because they won’t need to issue new shares for expansion. This is a positive sign for shareholders as it prevents their ownership value from being diluted during growth.

“Regarding net profit compounding: because we have established our core infrastructure, future capital deployment will rely heavily on internal cash generation and standard project debt without equity dilution. Consequently, EPS and PAT growth should compound at or above the rate of EBITDA growth.”

— Pallab Banerjee, Managing Director

A large investment of 725 crore rupees is planned to expand production and integrate supply chains over the next four years. Over half of this budget is already approved, showing the company’s clear commitment to its scale-up plans.

“We have planned a total capital expenditure of ₹725 crore over the next four years, of which over ₹400 crore has already been sanctioned by our Board. The capex breakdown is as follows: ● ₹300 to ₹325 crore: Direct garment manufacturing capacity expansion. ● ₹350 to ₹375 crore: Vertical integration (knit fabric mill and in-house denim washing infrastructure).”

— Pallab Banerjee, Managing Director

New manufacturing assets are expected to be profitable immediately because the company already has the internal demand to fill those factories. This reduces the typical risks associated with new projects and helps maintain high returns on capital.

“Yes, ROCE will remain above 22%. Because the fabric and washing capacity we are setting up will immediately service existing, captive garment orders currently being procured from third parties, there is no gestation lag in demand. We already consume 40 tonnes of fabric, so bringing processing in-house immediately accrues margin to the bottom line, allowing full capital turnover within four to five years.”

— Pallab Banerjee, Managing Director

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Shahid Barmare.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 91st edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 4 companies across 4 industries and an Interview.

Automobile

• Maruti Suzuki

Interview

• Uday Kotak

Engineering & Capital Goods

• Hy-Tech Engineers

Healthcare

• Symbiotec Pharmalab Ltd

Logistics

• Skyways Air Services Ltd

Automobile

Maruti Suzuki | Large Cap | Automobile

Maruti Suzuki India is a prominent player in the manufacturing and sale of passenger vehicles in India. From the legendary Maruti 800 to a wide range of car models, the company offers diverse options from entry-level small cars to luxury sedans like Ciaz.

[Interview]

Bharti sees GST rationalisation as a structural affordability boost rather than just a temporary festive stimulus. Industry growth accelerated sharply after the tax cut.

“The GST impact has been phenomenal. It has been transformative and probably historic because, as you rightly said, H1 of last year the industry was minus 0.5%. In H2, it was 16–17% growth after the GST cut happened on 22nd September.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

The momentum has strengthened further in FY27. Maruti is substantially outpacing the passenger-vehicle industry in the first five months of the year.

“This year, April to August, the industry has grown by 29% and Maruti Suzuki has grown by 36%. Now, 36% I have not seen in the past 30 years of growth. So it’s historic.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

The demand response to lower taxes has been strong enough that Maruti is now struggling to supply enough vehicles and has accelerated capacity additions.

“The beauty is, if you alter the affordability equation, the Indian consumer responds back. We are struggling to meet demand now, and of course we’ve accelerated our capex cycle.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Before the tax change, India’s passenger-vehicle market was increasingly K-shaped: SUVs and larger cars were growing while entry-level cars were shrinking. Bharti says that trend has now reversed.

“The smaller-car segment has benefited more. So it has brought broad-based growth. Earlier, there was K-shaped growth. The bigger cars and the SUVs were growing anyway. The smaller cars were degrowing at a very fast pace. Now, the smaller cars are growing at a faster pace. So it has brought some broad-based growth to the car industry.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

With the festive season moving from Onam and Ganesh Chaturthi into Navratri and Diwali, Maruti’s primary concern isn’t demand generation but ensuring vehicles reach customers on time.

“It begins with Onam, then Ganesh Chaturthi, then it would come to Navratri in the north. So the festive season moves all over India, and that’s the beauty of our Indian social fabric.

We are seeing extremely positive demand. We are just hoping that we are able to supply vehicles in time to all these regions.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Maruti’s data illustrates the disproportionate demand response in the more affordable end of the market following GST rationalisation.

“Just to give you a perspective, in April to August this year, the cars which are in the upper GST bracket of 40% grew by 20%. But the ones which are in the smaller GST bracket of 18% have grown by 30%.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Rural markets had previously been outperforming while cities lagged. Bharti says demand is now broad-based across both geographies.

“It’s broad-based growth even between urban and rural. Earlier, rural was outperforming and urban was lagging, but now all geographies are performing well.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

This is one of the clearest outlook comments from the interview. Even with a tougher base in the second half, Maruti sees production availability as the binding constraint.

“This year, at least in H2, we’ll be constrained by supply and not demand, and demand is outpacing supply.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Input costs have turned less favourable after easing earlier in the year. Bharti believes strong demand and operating leverage should help absorb the pressure.

“There are some commodity headwinds. We had seen, to some extent after the war, in the first few months of this financial year, easing of commodities. Now some commodities have shown an uptick, but honestly, we are not too much concerned.

These are external factors that will always be there. The intrinsic strength of the industry is in the demand momentum, which is extremely healthy as of now. Once we have that and we have the operating leverage, it’s easy to handle commodities.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Protecting the demand recovery is currently a priority. The company is therefore taking a conservative approach to price increases despite commodity pressures.

“We’ve been careful not to pass on too much of these impacts to the customers, so that we don’t spoil the demand momentum. Fortunately, we’ve been extremely conservative there, and it is helping us in our demand.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Despite the much tougher second-half base following last year’s post-GST surge, Bharti still expects double-digit growth for the full year.

“Of course, there’s a base effect, but on absolute terms the industry is continuing on strong numbers and Maruti Suzuki is also continuing on strong numbers. So we should see upwards of 10% growth in this year.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Bharti argues that the volume response to lower tax rates has been large enough to offset the lower rate. Maruti’s preliminary estimates show its GST contribution increased rather than declined.

“When the GST rate was cut, there were many talks about revenue deficit for the government. But we’ve done some quick numbers. If we talk about April to August for Maruti Suzuki, we’ve done some preliminary estimates—the total GST contribution has actually gone up by 2%.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Bharti’s broader takeaway is that lower tax rates can stimulate enough additional consumption to compensate the government through higher volumes.

“A downward rate cut but an uptick in volumes—the net effect is still positive, which means if the government puts its money on the consumer, the net effect is still positive even on government revenues.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Weakness in exports isn’t being attributed to end-market demand. Maruti says logistical constraints, including ships not returning from Latin America, have increased lead times.

“Globally, the demand exists. We are facing some shipping shortages because ships are not coming back from Latin America. The lead time has increased, so there are logistical constraints. But demand is strong, and we are broad-based across 120 countries.

So, with a pause, exports will come back, but for the next few months there may be a slight headwind because of logistical challenges.”

— Rahul Bharti, Senior Executive Officer – Corporate Affairs, Maruti Suzuki India

Interview

Uday Kotak Policy & Economic Address | Macro & Indian Economy

At a national economic summit attended by Union and State leaders, Uday Kotak outlined critical macroeconomic priorities, global risks, and policy cautions required for India to navigate international fragmentation and achieve long-term growth (Viksit Bharat).

[Interview]

Uday Kotak warns that global economic fragility fueled by military conflicts, tariff disputes, and rising global interest rates remains a major threat, requiring a cautious national stance focused on macroeconomic resilience.

“Having said that I think there is no room for com comfort or complacency. The fragility of the world, the military wars, the financial wars, the tariff wars, and the bond vigilance in terms of raising global interest rates. They are all still continuing, and there is no moving away from this. Therefore, this is not a time for us to declare victory too early. In fact, I genuinely believe we as one India need to sit together and stand with a sense of paranoia because it is truly a very fragile world out there.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

India must enforce stricter fiscal consolidation, noting that its consolidated fiscal deficit exceeding 7% remains higher than that of heavily leveraged developed economies.

“So I will not dwell more on it other than saying that at 7 plus% consolidated fiscal deficits we need to get tighter. I understand the pressures which we all have across different states and the center but we have to be clear that the United States which is supposed to be the most uh leveraged state in the world is at a fiscal deficit of give or take around 6%.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

While India is successfully transitioning toward capital market financing, policymakers must guard against excessive financialization that prioritizes speculative trading volumes over core capital formation.

“One, as we move towards financing of the Indian economy, the markets model uh runs at times the risk of excessive financialization of the Indian economy. For example, the purpose of stock exchanges or capital markets is to provide liquidity and price discovery for capital formation. At times when the objective of capital formation gets lost and we focus on just markets volumes and trading we at times run the risk of missing the key reason why we have financial markets.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

Highlighting the scale of global market competition, the U.S. accounts for 70% of global market capitalisation, with Nvidia’s profits alone exceeding all Indian listed companies combined.

“Friends, if you take the entire world’s capital market, 70% 70% of the global market capitalisation is one country, the United States of America. 70% of the world market cap. And the largest company, one company in America called Nvidia has market cap and profits more than the combined profits of all Indian listed companies and more than India’s total market cap.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

To eliminate structural current account vulnerabilities, India must form a specialised committee to financialise unproductive household gold imports, which are projected to reach $88–$90 billion in FY27.

“The estimates I’ve got for FI27 with oil at give or take around 90 a current account deficit of $60 billion for India. gold imports expected to be 88 to90 billion. So Indians individually and their gold is something we have to find a way to break this puzzle and uh I would strongly recommend madam across this some sort of a committee which can be created to find an answer which satisfies the needs of the people at the same time the challenges of a country from a capital account and current account point of view.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

Financial regulators must strike an operational balance between risk mitigation and market development, ensuring systemic guardrails do not impede overall economic growth.

“However, regulators from time to time face a dilemma between their dual function which is the regulation function and the development function. ... I think we must get this balance right and it reminds me about cars on a highway. We must ensure that more and more cars drive, better signal systems are there. But should there be an accident, a quick retrieval of the accident, but not stopping cars from driving freely.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

Established Indian conglomerates must shift from conservative growth to aggressive innovation while embracing creative destruction to phase out inefficient legacies and compete globally.

“If you see many of our younger smaller businesses, they are in the Brahma mode. But most of our traditional businesses are still in the Vishnu mode, wanting to grow more in the areas they are comfortable rather than venturing out to change the landscape the way global companies are doing whether it’s in the field of AI, technology and others. And it is time for us to get more Brahma in the big boys as well including in the states and get going. At the same time I would also never underestimate the role of Mahesh. Maheshwar has the power of creative destruction.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

To build true economic sovereignty, India must establish global trade leverage by manufacturing and exporting goods and services that international markets actively demand rather than relying strictly on domestic consumption.

“This is something I think which each of us in India need to focus on. And we as Indians need to create leverage where we produce things, goods and services which the world wants from us. Our dependence on goods and services from others exposes us. The more we can produce and create goods and services which the world wants from us will make us competitive.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

Drawing a historical parallel to the rise of the East India Company, Kotak warns that dominant Western technology giants present a modern risk to national economic sovereignty through their control over mobile ecosystems, platforms, and AI infrastructure.

“If you look at the technology companies from the West and each of us with our mobiles, our Instagrams, our WhatsApps, our Googles and everything else, we have been used to a certain particular use of technology in our lives. We are seeing the kind of power these technology companies have developed as private businesses with significant challenges to sovereignty of nations.”

Uday Kotak, Founder & Non-Executive Director, Kotak Mahindra Bank Limited

Engineering & Capital Goods

Hy-Tech Engineers | Micro Cap | Auto Ancillary

Hy-Tech Engineers Limited is engaged in the design, manufacture and supply of hydraulic fittings catering to diverse industrial applications, with over four decades of operational experience in the hydraulics industry.

[Concall]

Management is pairing capacity expansion with new OEM wins and higher exports, with a stated ambition to double the business over three years.

“Today, we are manufacturing around 35 lakh fittings every month. With the proceeds we have received from the IPO, we are going to increase this to 70 lakh per month. We are going to double the turnover over the next three years. This is our plan; this is our growth plan.”

— Hemant Mohonkar, Chairman & Managing Director

Management put an explicit number behind its longer-term growth ambitions, linking the target to a 20–25% growth trajectory.

“Five years from now, we will reach ₹500 crore—₹500 crore. Calculate it on the basis of 20–25% growth, and you will arrive at the figure.”

— Management

Higher exports and operational efficiencies from Kaizen are expected to drive gradual margin expansion.

“It will increase by 1% year-on-year. There are two reasons for this. First, as I told you, we will increase exports, which will give us better pricing. Second, we have implemented all our Kaizen activities, so our operational efficiencies will continue improving. We are planning to increase our EBITDA margin year-on-year by about 0.5–1%, so that we will reach 25% over a period of 2–3 years.”

— Management

Exports are central to the margin-expansion thesis. They currently represent around 30% of business and generate materially better economics than domestic sales.

“We are doing around 30% of our business through exports, where we receive better margins. We get almost 10% additional margin. With the rupee declining against the dollar, we are also getting that advantage.”

— Management

Management sees Europe as an important diversification opportunity, particularly given its manufacturing-cost advantage over European suppliers.

“In Europe, we have plenty of opportunities to grow. The cost of manufacturing in Europe is very high, and we are almost 25% cheaper on a landed-price basis in Europe. This gives us an advantage, and many people are coming from Europe to India and approaching us.”

— Hemant Mohonkar, Chairman & Managing Director

Hy-Tech is already approved across John Deere’s US plants, but supplies have started at only a fraction of them, leaving significant wallet-share potential.

“John Deere has 47 plants in the USA. We have been approved at all their plants, and business from around 6–7 plants has already started coming to us. They are insisting that we supply all the fittings from the USA. Therefore, we are opening a company in the USA, and that has also been approved by the board today.”

— Hemant Mohonkar, Chairman & Managing Director

Despite the US opportunity, management is consciously limiting geographic concentration and wants incremental export growth to come from Europe and other markets.

“In the future, this will remain at 25% as our turnover increases because we do not want to increase that share. The philosophy and policy of Hy-Tech Engineers Ltd. is to spread the business across different markets. We cannot afford to have too much business from the USA.”

— Management

Hy-Tech has spent roughly two years developing stainless-steel fittings that can be used in data centres as well as oil and gas. Commercial customer development is only beginning.

“Data centers require stainless-steel fittings, and there is tremendous scope for these stainless-steel fittings. Over the last two years, we have already developed the range required for data centers, but it is also applicable to oil and gas. We have just started manufacturing these fittings, and we will enter the data-center opportunity over the next one year, positively.”

— Management

Beyond scaling its existing fitting portfolio, management is exploring adjacent products that could increase value addition.

“We do not have to spend too much money on R&D. One percent is more than sufficient for us. Unless we enter additional products such as valves, which we are also considering, we do not need to increase it. I am not committing to anything, but we are going to upgrade our product range with higher-value-added products such as valves, which are also related to hydraulics.”

— Management

Despite long-standing relationships with large OEMs, Hy-Tech has deliberately diversified its customer base to limit concentration risk.

“From a business point of view, we do not depend entirely on a single source. We do not have a single customer that contributes more than 15% of our business. We have spread the business across many customers because anything can happen to anybody.”

— Management

Management highlighted the stickiness of its OEM relationships, including one customer that has remained with Hy-Tech since the company’s earliest years.

“A few customers have been working with us for the last 40 years. We still have a customer called Windsor Machines, which is 48 years old. We started with them, and they were our first customer. They are still buying 100% from us.”

— Management

Management doesn’t see large international players such as Parker as meaningful price competitors in the domestic market because of Hy-Tech’s substantial cost advantage.

“Parker is not really a competitor... Locally, the price of Parker fittings is exactly double our price. Therefore, there is no price competition from Parker for us.”

— Management

Interestingly, Chinese equipment manufacturers operating in India can themselves become Hy-Tech customers rather than competitors in hydraulic fittings.

“There is no Chinese company here. In fact, Chinese equipment manufacturers are also buying fittings from us. Therefore, there is no Chinese competition.”

— Management

Management sees product breadth as part of its competitive moat, alongside long OEM relationships and technical capability.

“Nobody else in India manufactures the entire variety of hydraulic fittings that we manufacture. That much I can tell you.”

— Management

Hy-Tech doesn’t have a traditional fixed order book. OEMs instead provide annual schedules under ongoing relationships, creating repeat B2B demand.

“Regarding the order book, we have annual schedules from all OEMs. They do not give us a conventional order book. They give us a contract order with a price and continue sending us schedules. In that sense, we are booked.”

— Management

Healthcare

Symbiotec Pharmalab Ltd. | Small Cap | Pharmaceuticals

Symbiotec Pharmalab is a research-led pharmaceutical company specialized in the manufacturing of steroid and hormone active pharmaceutical ingredients. The company is vertically integrating into complex injectables and biotechnology-based CDMO services for global markets.

[Concall]

The company positions itself as a manufacturing partner for Western biotech firms that struggle to produce their discoveries at a commercial scale. By providing regulated, low-cost manufacturing capacity, Symbiotec aims to capture a large share of the growing synthetic biology market.

“For any new synthetic biology company, especially one coming from the Western world, the journey from a successful laboratory innovation to a commercially viable product is often where the real challenge begins. They may have solved the science, but they still have to cross what the industry calls the valley of death. This is the gap between proving that something can be made and proving that it can be made competitively and profitably at a commercial scale. We help these companies cross this valley of death by offering our capacity and capability in fermentation biotechnology. We have been running this fermentation under FDA and EU GMP inspection for years. We engineer our own plants, where we are already running our molecules successfully. This combination of regulatory experience, process know-how, and engineering capacity is why our partners come to us rather than investing years of their own development time and substantial capital to build that capability themselves. This is where our scale and cost advantage become important.”

— Anil Satwani, Chairman & MD

Symbiotec is moving from simply supplying ingredients to selling finished drug-device products that are safer and easier for hospitals to use. These specialized dual-chamber systems command higher prices and represent a significant move up the value chain.

“Our third vertical is the so-called complex injectable business, which is part of our forward integration from APIs into finished products. This is where we have built a highly differentiated, proprietary drug-device combination platform called dual-chamber vials and bags. This platform is typically referred to as ready-to-use and ready-to-dispense, or RTUs. The elegance of this format lies in what it eliminates. Traditionally, administering any drug powder requires reconstitution with a separate diluent. It is a multi-step process that takes time and involves handling. When you switch to a ready-to-use, ready-to-dispense product, it reduces the risk of errors at every stage. It reduces contamination, reduces dosing errors, and reduces time pressure, particularly in emergency and critical-care settings. Our dual-chamber system integrates the drug and diluent in a single, sealed device, enabling reconstitution within the device with fewer preparation steps and less handling.”

— Anil Satwani, Chairman & MD

Customer demand for the company’s biomanufacturing services is so high that existing capacity is already mostly booked. To meet this demand, the company is planning to expand its manufacturing facilities to four times their current size over several phases.

“The agreements that we have already signed on the biomanufacturing side, together with the visibility we are receiving from customers with whom we have already shared or signed term sheets, indicate that if everything comes through, including the opportunity that is already at an advanced stage, we will have to build capacity approximately 4 times larger than the capacity we currently have. For simplicity, let me divide this into Phase 0, Phase 1, and Phase 2. This is what we have included in our agreements so far. In Phase 0, our customers have to utilize our existing capacity. Because this capacity is not sufficient, we will have to proceed with Phase 1 and eventually Phase 2. Phase 0 is not sufficient for our customers, given the nature of their products and the nature of the demand in the biomanufacturing sector that I was discussing. A large part of our capacity is already booked by some of these customers with whom we have signed agreements or term sheets.”

— Anil Satwani, Chairman & MD

The company has plenty of new injectable products ready for launch, but they are already worried about not having enough factory capacity to meet demand. This suggests that growth in the injectable segment will depend on how quickly they can add new production lines.

“We are not worried about the number of products. We are more concerned about capacity because the traction we are seeing and the estimates we are receiving from the partners who will distribute our products in this advanced market indicate that we may need to establish our second line very soon. The capacity we have is already very limited, while the traction is substantial. Therefore, there are 5-6 products that have already been developed and will enter validation in the coming quarters. We may have to establish another line, which is a good problem to have once we begin selling and see how the brownfield expansion will take place. This is where we remain confident that once the product is launched, we will need more capacity. Based on our estimates, the constraint at this stage is capacity, not the number of products. We are already ready with our product portfolio.”

— Anil Satwani, Chairman & MD

Symbiotec expects to spend between 200 and 250 crore rupees annually on capital projects to support its expansion. Management may even increase this spending if they continue to win new long-term customer contracts.

“Our capex is a function of the visibility we have from our customers and our contracts. We already have visibility for Phase 1, and as soon as we complete Phase 1, Phase 2 is already visible. Based on the visibility we already have, we believe that we will continue to invest approximately Rs.200-250 crores each year. If more opportunities come our way, we will have to be more innovative in determining how to fund those very large and optimistic capex requirements. We want to reach that point, but given the traction we are seeing, we may have to accelerate our capex spending. The visibility I can currently provide, based on our operating cash flows, is a minimum of Rs.200-250 crores each year for the next 2-3 years.”

— Anil Satwani, Chairman & MD

Logistics

Skyways Air Services Ltd. | Small Cap | Logistics Solution

Skyways Air Services is a premier Indian air freight forwarder providing integrated logistics solutions across air, ocean, and express cargo modes. The company leverages a strong technology-driven platform and an expanding international footprint to serve diverse sectors including pharmaceuticals, textiles, and automotive.

[Concall]

The Indian government’s goal to nearly triple air cargo volumes provides a massive tailwind for established players. Management believes their history of growing faster than the overall market positions them to capture a large portion of this new capacity.

“The Ministry of Civil Aviation has set out a strong vision of reaching 10 million metric tons from last year’s 3.96 million metric tons over the next 5 years. As the air cargo segment continues to grow on the back of new airports and enhanced capacities at existing airports, and as airlines bring in new aircraft supported by a strong order book, there is going to be substantial growth in India’s aviation sector. This, ladies and gentlemen, will mean significant opportunities for us to obtain a larger share of the expanded air cargo market. Skyways has consistently outgrown market growth by a significant margin over the last 10 years, and we feel confident that this trend will continue in the period ahead.”

— Yashpal Sharma, CMD

A new digital booking platform is being launched to simplify how customers book freight services. By targeting smaller cities through technology, the company can reach new customers without needing a massive physical presence in every town.

“Our objective is to combine the strengths of a traditional logistics network with the speed, visibility, and scalability of a technology-enabled logistics platform. We are soon launching a one-of-a-kind platform called ASAP, which will significantly enhance customer acquisition and bring greater ease of transacting for customers across the country, especially in tier-2 and tier-3 markets, where customers currently have limited access to competitive pricing and carrier capacity.”

— Yashpal Sharma, CMD

A portion of the recent revenue spike was driven by higher shipping costs rather than just new business. Investors should monitor volume growth as the truest measure of business health, as pricing can fluctuate with fuel markets.

“Mr. Maheshwari, thank you for your question. Firstly, as you can see, we have had very consistent volume growth over the years. Even in this quarter, we have had significant volume growth across all our products. There has also been an increase in per-unit costs, whether in air or ocean, due to the increase in the fuel index during this period. Overall, when you look at revenue, approximately 23-25% comes through volumes, while the rest comes through the increase in per-unit logistics costs.”

— Yashpal Sharma, CMD

The company protects its margins by passing all changes in fuel and freight costs directly to the end customer. This mechanism insulates the business from sudden spikes in energy prices that might otherwise hurt profitability.

“The fuel index and fuel cost are always passed through by us. Whatever fuel index is globally available can be easily accessed and tracked across the world. These costs are fully passed through to customers, whether in air or ocean, and even in trucking, fuel cost is fully passed through. Therefore, if fuel prices increase, this yield increases slightly. If fuel prices decline, the yield also declines slightly.”

— Yashpal Sharma, CMD

The Middle East and Vietnam are identified as high-growth markets due to massive infrastructure spending and manufacturing shifts. Establishing a presence here now allows the company to benefit from long-term regional development cycles.

“We see a substantial opportunity in the Middle East for the organisation to expand its solutions because significant infrastructure development will be required in that region. Saudi Arabia has been expanding significantly over the last 5-6 years, and we feel very bullish about that market. The UAE continues to be the gateway to the entire Middle East market, and Vietnam has also been growing significantly. We already have a very strong presence in Vietnam. We feel that all 3 of these markets will add substantial value to us as an organisation over the next 2-3 years.”

— Yashpal Sharma, CMD

By not owning aircraft or ships, the company avoids the high fixed costs and risks associated with underused assets. This flexibility allows them to shift resources to profitable routes instantly whenever global trade patterns change.

“The strength of our business is that we have a very asset-light business model. We can pivot between markets very quickly because we are not asset owners. We do not face the challenge of positioning our customers’ business or, for example, running an asset from point A to point B in the world and then facing an impact if there is a disruption. That is the strength of our business. We can navigate very quickly into different trade lanes and markets.”

— Yashpal Sharma, CMD

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Meher, Srusti and Shahid.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 90th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 5 industries and a Regulator’s Speech.

Regulator

• Chairman, SEBI

Defence

• Mazagon Dock Shipbuilders Limited

Software Services

• Mphasis Limited

Trading

• Redington Limited

Retail

• P N Gadgil Jewellers Limited

Logistics

• TVS Supply Chain Solutions Limited

Regulator

Securities and Exchange Board of India | NaBFID Annual Infrastructure Conclave

The Securities and Exchange Board of India is the primary regulatory body overseeing the country’s capital markets and securities industry. It establishes frameworks for equity, debt, and alternative investment vehicles to ensure investor protection and efficient capital formation.

[Speech]

The corporate bond market has grown to ₹61 trillion, reflecting a significant shift toward market-based debt for long-term projects. Regulatory changes like lower investment thresholds and retail incentives are intended to make these bonds more accessible to individual investors.

“The growth in the corporate bond market has been substantial. During FY27 so far, companies have raised more than ₹4.3 trillion through the corporate bond market. Outstanding corporate bonds have increased from around ₹20 trillion in FY16 to ₹61 trillion, as at the end of August 2026. To strengthen this ecosystem, we have been taking several measures. To broaden the overall debt market, the threshold for the electronic book mechanism has been reduced. We have permitted incentives in public issues of debt securities to encourage retail participation and reduced the minimum investment size for privately placed bonds.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

SEBI is planning to simplify the process for small-value private debt issues by removing the need for a middleman merchant banker. This reduction in administrative costs will help smaller companies access the debt market more efficiently.

“We are also looking at the next layer of efficiency. For small-value debt private placements, we have proposed relaxing the mandatory requirement to appoint a merchant banker, subject to certain conditions. The objective is to reduce cost and delays while retaining investor protection.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

A new colour-coded risk rating system is being introduced to help retail investors quickly assess the safety of different bonds. Better risk transparency is expected to prevent mis-selling and encourage broader participation in the fixed-income market.

“At the same time, easier access must be accompanied by better investor understanding. We have proposed changes to the Advertisement Code for Online Bond Platform Providers and intend to introduce a standardised, colour-coded Credit Risk-o-Meter for debt securities. This will help investors — especially retail investors — better understand the credit risk of debt instruments and make more informed investment decisions.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

SEBI is testing the use of blockchain technology to issue corporate bonds as digital tokens. This pilot aims to modernise market infrastructure, potentially reducing transaction times and operational costs for issuers and investors.

“There is also scope to make the underlying market infrastructure more technology-driven. Our recent pilot for tokenised corporate bonds explores issuing a corporate bond as a native digital token on a private, permissioned DLT network operated by the Depositories. These initiatives are part of a broader objective — to make the bond market deeper, more efficient and more accessible, without weakening safeguards.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

The Alternative Investment Fund sector has seen commitments reach ₹17 lakh crore, serving as a critical source of patient capital. By lowering the entry threshold for Large Value Funds to ₹25 crore, the regulator aims to pull in more sophisticated private capital.

“The AIF ecosystem has emerged as an important source of alternative capital. As of the end of FY26, Category I Infrastructure AIFs had commitments of over ₹20,000 crore and investments of over ₹7,000 crore. Across all AIFs, cumulative commitments were about ₹17 lakh crore, while investments made stood at around ₹7.1 trillion (as of July 2026). For AIFs, our approach has been to provide flexibility while maintaining appropriate safeguards. To facilitate greater participation in this segment and support long-term investments, we have reduced the minimum investment threshold for Large Value Funds from ₹70 crore to ₹25 crore.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

Regulatory requirements for AIFs are being streamlined through digital unit holdings and simplified compliance for dormant funds. These operational changes are intended to reduce the administrative burden on fund managers and improve overall capital efficiency.

“We have also enabled flexibility for accredited-investor-only schemes and permitted encumbrance structures in infrastructure investments to support long-term financing. At the operational level, we have introduced lighter compliance for inoperative funds, flexibility in retaining liquidation proceeds in specified circumstances, and dematerialisation of AIF units and investments. We are also simplifying processes and reducing documentation, while exploring ways to further widen the accreditation framework.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

REITs and InvITs have successfully mobilised ₹2 lakh crore, becoming essential tools for recycling infrastructure capital. Their nearly ₹10 lakh crore in assets shows their growing importance as a stable, income-generating asset class for public investors.

“REITs and InvITs have introduced an important dimension to the infrastructure financing ecosystem. They provide a mechanism through which completed, income-generating assets can be monetised and brought within the investment universe of a wider set of investors. The growth is visible. There are currently 6 SEBI-registered REITs and 27 InvITs. Together, they have mobilised more than ₹2 lakh crore over the last seven years, with assets under management of around ₹9.2 lakh crore at the end of FY26.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

The reclassification of REITs as equity for mutual funds allows for significantly higher institutional investment into these vehicles. This shift is expected to improve liquidity and help stabilise valuations for infrastructure trusts.

“We have taken several measures to support this evolution. The scope of strategic investors has been expanded to facilitate wider participation. REITs have been reclassified as equity for investment by mutual funds. We have also permitted REITs and InvITs to invest in liquid mutual funds with minimum credit risk for managing short-term liquidity, and expanded the EBP framework to these instruments to strengthen price discovery.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

Local city governments are starting to tap capital markets, though the municipal bond market remains in its early stages. For this segment to grow, local bodies must improve their financial reporting and demonstrate reliable cash flows to investors.

“Municipal bonds can connect these infrastructure requirements with the capital market. The segment is still relatively small, but progress is visible. As of end-FY26, 22 urban local bodies had raised more than ₹4,500 crore through 31 municipal bond issuances. The next phase will require continued focus on municipal creditworthiness, governance, disclosure and predictable project cash flows. If these foundations strengthen, municipal bonds can become an increasingly important source of funding for India’s urban infrastructure.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

SEBI’s roadmap focuses on broadening the pool of investors for infrastructure assets and improving trading liquidity in the bond market. A key upcoming change is the expansion of the ‘Accredited Investor’ definition to unlock more domestic risk capital.

“Looking ahead, I see specific areas where further progress can deepen this ecosystem. First, widening participation in REITs and InvITs. There is scope to bring in more domestic institutional capital, global long-term investors and retail participation. Second, deepening the corporate bond market. We need a wider issuer base, greater participation and better secondary-market liquidity. Third, continuing to evolve the AIF framework. We have proposed to review the Accredited Investor Framework to widen access for sophisticated investors, deepen the pool of domestic and foreign risk capital, and strengthen the market ecosystem.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

The regulator aims to create a ‘capital engine’ where funds are continuously recycled from mature projects into new infrastructure builds. This systemic approach is intended to ensure that capital is available at every stage of an asset’s lifecycle.

“This brings us to fundamental questions: Can we mobilise capital to build? Can we provide the right form of capital as the project develops? Can we unlock capital from mature assets? And can that capital be deployed again into the next generation of infrastructure? If we can do this well, the securities market becomes more than a financing channel. It becomes a continuous capital engine for infrastructure. This, I believe, is the opportunity before us — to build an infrastructure financing ecosystem where banks, equity markets, bond markets, AIFs, REITs, InvITs, municipal bodies, institutional investors and regulators each contribute to different parts of the same journey.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

Defence

Mazagon Dock Shipbuilders Limited | Mid Cap

Mazagon Dock Shipbuilders is India’s leading defence public sector shipyard, specialising in the construction of warships and submarines for the Indian Navy. The company is currently diversifying its operations by establishing greenfield commercial shipbuilding clusters to expand its scale.

[Interview]

Management is planning a significant investment of roughly 15,000 crore for their upcoming greenfield expansion project. This massive spending plan indicates the company’s commitment to scaling up its manufacturing capacity for the next decade.

“Our preliminary feasibility study estimates a total investment of approximately ₹15,000 crore. Following our internal DPR and consultant recommendations, we will seek formal approvals from our Board and the government.”

— Ruchir Agrawal, Director of Finance

The company is targeting double-digit margins for its new commercial shipbuilding venture, supported by government policy frameworks. This guidance helps investors understand the profitability expectations for this new, non-defence business segment.

“Under the Maritime Amrit Kaal framework, supported by central and state incentives, we target a return on equity/revenue return profile of 15% to 17% for investors. ... Yes, 15% to 17% represents our targeted margin profile. The exact top-line revenue potential will depend on order inflows and annual vessel construction throughput, which will be calculated upon completion of our internal DPR.”

— Ruchir Agrawal, Director of Finance

The long-awaited submarine project with German partners is in the final stages of government approval. Winning this major contract would provide a massive boost to the company’s order book and long-term revenue visibility.

“To clarify, the project is Project 75(I), conducted in partnership with ThyssenKrupp Marine Systems (TKMS) Germany. Commercial negotiations and bid submissions are complete; the decision rests with the Government of India, and we expect contract finalisation soon. ... While the government determines the exact timing, we anticipate approval very shortly—and certainly within the current fiscal year.”

— Ruchir Agrawal, Director of Finance

Mazagon Dock is actively bidding for several high-value naval defence projects, including a 70,000 crore frigate contract. A strong pipeline of naval orders suggests continued dominance in the domestic warship manufacturing market.

“The MCMV project remains in the pipeline. Additionally, the Indian Navy issued the Request for Proposal (RFP) for Project 17B (Next-Generation Frigates) valued at approximately ₹70,000 crore, for which we plan to bid. We also expect order placement for additional Destroyer-class vessels (Project 15B / 15C variants) during this financial year, as we have already demonstrated construction capability.”

— Ruchir Agrawal, Director of Finance

The company is managing to keep current project costs stable despite potential market volatility in raw material prices. This cost control helps protect the firm’s profitability during the lengthy manufacturing cycles of warships.

“We are closing our half-yearly accounts as of September 30th and will share specific figures post-audit. However, our ongoing order execution faces no inflationary headwinds on raw materials, as domestic inflation remains well-controlled. All active projects are proceeding within projected costs.”

— Ruchir Agrawal, Director of Finance

Despite the shift toward competitive bidding in defence contracts, Mazagon Dock believes its technical experience will allow it to maintain strong margins. This suggests the company has enough operational efficiency to compete effectively against other shipbuilders.

“Competitive bidding requires higher operational efficiency. However, as an experienced shipbuilder, our accumulated technical competency and construction efficiency allow us to protect margin profiles despite competitive bidding structures set by the Indian Navy.”

— Ruchir Agrawal, Director of Finance

Software Services

Mphasis Limited | Mid Cap

Mphasis is a global information technology solutions provider specialising in cloud and cognitive services. The company primarily serves the banking, financial services, and insurance (BFSI) sectors with a focus on digital transformation.

[Interview]

Management believes that while the global economy remains unpredictable, it is stable enough for them to focus on winning specific client deals. This suggests the company’s growth depends more on its own sales execution than on a broad market recovery.

“Over the last four to six quarters, we have maintained that the macroeconomic environment would remain uncertain. Themes across geopolitics, interest rates, and inflation have not changed significantly over the past 12 to 18 months. While the macro hasn’t improved, it hasn’t meaningfully deteriorated either. Our performance thesis is driven primarily by micro-level execution—focusing on deal flow, account-level activity, and pipeline closures across specific verticals and clients. From that standpoint, our stance remains unchanged from our earnings commentary six weeks ago. We are not calling out any shift in performance, given our focus on closing opportunities currently in the pipeline.”

— Nitin Rakesh, CEO

The company is prioritising spending on its own technology platforms and training its staff to use them effectively. Investors should see this as a move to offer higher-value services that are harder for competitors to replicate.

“We deploy capital across three core vectors: 1. Internal IP & Platform Build: Investing heavily in our proprietary platform and asset strategy, which we announced in Q1. This involves combining IP assets, platforms, and re-skilled teams to drive outcomes for enterprise clients.”

— Nitin Rakesh, CEO

The company uses its cash to buy specific client contracts or grow its share of work within its current customer base. This provides a low-risk way to increase revenue without the complications of integrating an entirely new company.

“3. Contract Acquisitions: Deploying capital to expand wallet share within existing accounts or acquire customer contracts that allow creative entry into new enterprise clients. This three-pronged strategy represents a disciplined use of capital without introducing excessive operational risk to the business.”

— Nitin Rakesh, CEO

While management is open to major deals, they are currently avoiding large and potentially risky acquisitions. This disciplined approach suggests they want to avoid the integration headaches that often plague big IT mergers.

“Never say never, but we remain focused on our three stated vectors. If a compelling, highly value-accretive opportunity arises that does not introduce disproportionate risk, we will evaluate it. However, we are not actively pursuing a “big bang” M&A deal at this time.”

— Nitin Rakesh, CEO

Management clarifies that their growth is coming from their own sales and operations rather than just buying other companies. This gives investors more confidence that the business is fundamentally healthy and not just buying growth.

“The vast majority of our growth is organic. Contract acquisitions are primarily deal-structuring mechanisms—a vendor consolidation playbook to secure client opportunities—rather than traditional inorganic corporate acquisitions. They represent a very small percentage of revenue. Therefore, the bulk of our guided revenue growth is organic.”

— Nitin Rakesh, CEO

Although high interest rates hurt the mortgage business, they actually help large banks earn more, which keeps their spending budgets stable. This balance protects the company’s largest business segment even when some parts of the economy are struggling.

“While interest-rate-sensitive segments like mortgages face headwinds, the broader BFS sector remains structurally strong. Elevated yields enhance net interest income for large banking institutions, keeping their balance sheets healthy. Furthermore, BFS clients are early adopters of the AI technology cycle, creating significant opportunities for us to help them modernise infrastructure and deploy new capabilities.”

— Nitin Rakesh, CEO

The gap between new AI tools and how companies actually use them is large, which means there is a lot of work left for IT services firms. Mphasis stands to benefit from helping companies build the basic infrastructure needed to actually run these AI tools.

“Tool development has outpaced enterprise adoption by a wide margin. A deceleration in foundational AI tool R&D will not slow enterprise adoption, as enterprises are currently focused on building the underlying software, physical, and intellectual infrastructure required to deploy AI at scale. Enterprise focus centres on technology transformation and measurable outcomes, which strongly aligns with our platform-first strategy.”

— Nitin Rakesh, CEO

Trading

Redington Limited | Small Cap

Redington Limited is a leading technology integrator and distributor providing supply chain solutions for global brands in IT and mobility. The company is transitioning from traditional hardware distribution to a high-margin technology orchestrator focusing on AI, cloud, and managed services.

[Interview]

Redington is seeing a shift where Indian consumers are increasingly choosing high-end smartphone models over base versions. This premiumization trend helps the company by increasing the average selling price and tapping into demand for new features like AI and health tech.

“In India, premiumization is an active trend. The premium customer segment constantly seeks new, best-in-class devices. Pro and Pro Max models are accounting for a larger percentage of total sales globally, and even in India, premium buyers are shifting toward Pro and Pro Max variants. Consumer focus is moving to new features like camera technology, AI capabilities, and health monitoring. All new product introductions have received a strong market response. While the base product will attract significant attention when launched later, we are very pleased with the initial demand for the iPhone 17 line, alongside the 18 Pro, Pro Max, and Duo models.”

— V. S. Hariharan, Managing Director and Group CEO

Management explains that they are positioned across the entire AI hardware and software value chain, from cloud hyperscalers to local data centres. This broad presence allows them to act as an orchestrator for businesses that need complex, hybrid AI setups.

“AI infrastructure is complex, with multiple operational layers: 1. Hyperscalers: Cloud-based AI compute offerings and AI control planes (e.g., Bedrock, Foundry, Vertex) have experienced strong growth. 2. Enterprise Hardware: Enterprise hardware transitions from CPU to GPU compute platforms. 3. Non-Hyperscaler Cloud & Data Centres: Specialised AI compute data centre operators serving sovereign and non-sovereign workloads. 4. Edge & Private Cloud: Edge data centres and private cloud infrastructure. Redington operates across all four layers, bridging hardware brands, hyperscalers, local operators, and partners to deliver integrated solutions. Above this infrastructure, we deliver Software-as-a-Service (SaaS), platform software, application software, and managed services. Enterprises deploy hybrid configurations across on-premises servers, cloud platforms, and colocation facilities, and Redington orchestrates solutions across these environments.”

— V. S. Hariharan, Managing Director and Group CEO

The company plans to double its revenue from software and services to $5 billion over the next few years. This shift is critical because this segment is more profitable than its traditional hardware distribution business.

“Historically, our baseline Profit After Tax (PAT) margin has ranged between 1.4% and 1.5%. Our Software Solutions and Services Group (SSG)—which carries higher gross margins and profitability—currently contributes about 17% to revenue in India and 30% to 35% globally. We previously communicated a public target to expand our SSG revenue from $2.3–$2.4 billion currently to $5.0 billion within two to three years. As AI infrastructure, solutioning, and managed services expand, SSG growth will drive our transition from traditional distribution to technology orchestration.”

— V. S. Hariharan, Managing Director and Group CEO

Redington is focusing on helping companies move from just testing AI to actually getting financial benefits from it. By providing pre-built AI agents and training partners, they aim to standardise and scale the deployment of AI solutions across various industries.

“While 90% of enterprises are experimenting with AI, only 30% to 40% have achieved measurable bottom-line returns. Realising ROI depends on deploying specific enterprise use cases, applications, and AI fluency. Redington is positioning itself in enterprise use case deployment through several initiatives: AI Exchange Platform: We launched a platform hosting nearly 500 pre-built AI agents across 20 Independent Software Vendors (ISVs), designed for rapid vertical and horizontal deployment or enterprise customisation. ISV Partnerships: Partnering with hundreds of technology providers to deliver comprehensive AI solutions. Partner Academy: Training our channel partner network to build AI fluency across the sales ecosystem. Centres of Excellence (COEs): Establishing physical and virtual demonstration centres—starting with Singapore, and adding Bengaluru, Dubai, and Saudi Arabia—to demonstrate standardised, “cookie-cutter” AI use cases.”

— V. S. Hariharan, Managing Director and Group CEO

The company is moving away from labour-intensive individual consulting toward a scalable model of distributing ready-to-use AI solutions. This transition marks a fundamental change in their business model from a logistics-heavy distributor to a technology solution provider.

“Rather than solving problems enterprise-by-enterprise via bespoke consulting, our strategy enables the ISV, brand, and partner ecosystem to deploy standardised AI solutions at scale. We are moving beyond pure hardware distribution into use-case solutioning and solution distribution.”

— V. S. Hariharan, Managing Director and Group CEO

New AI-focused services are intended to make relationships with clients more permanent and less likely to be disrupted by competitors. This strategy layers high-margin service revenue on top of their existing high-volume distribution network.

“That is a fair assessment. While it is early days, this strategy creates customer stickiness and establishes a new high-margin revenue line that sits atop our distribution scale.”

— V. S. Hariharan, Managing Director and Group CEO

Management is aiming to increase their operating profit margin to 2.5% from the current level of around 2.1%. While they acknowledge higher targets might be difficult, they are committed to this steady improvement through a better mix of products and services.

“To clarify the metrics: our overall PAT margin target is 2.0% (up from 1.4%–1.5%). At the operating level, our EBITDA margins currently sit between 2.1% and 2.2%. While reaching a 3.0% EBITDA margin may be overly aspirational, we are actively targeting an EBITDA margin expansion toward 2.5%.”

— V. S. Hariharan, Managing Director and Group CEO

Retail

P N Gadgil Jewellers Limited | Small Cap

P N Gadgil Jewellers Limited is a leading Indian jewellery retailer with a centuries-old legacy, primarily focused on the Maharashtra market. The company designs and sells a wide range of gold, silver, and diamond jewellery through various retail formats, including large-format legacy stores and lightweight-focused ‘U by PNG’ outlets.

[Interview]

Consumer demand has recovered after a slow start to the quarter, with a clear shift from investment products toward actual jewellery. This trend is beneficial for the company because jewellery sales typically carry higher profit margins than gold bars or coins.

“As you noted, August started somewhat slowly due to policy announcements regarding gold purchases, but demand picked up as Shravan began. At PNG Jewellers, we hosted the Mangalsutra Festival during Shravan, followed by Ganesh Chaturthi, and market footfalls remain healthy. Notably, consumer preference over the quarter shifted toward jewellery buying rather than investment products like gold bars and coins. Silver demand also saw a noticeable surge during Ganesh Chaturthi. Overall consumer sentiment remains positive, and as the industry heads into Navratri and Diwali, we are well-positioned for strong festive sales.”

— Saurabh Gadgil, Chairman and Managing Director

The company is seeing a regional shift where customers in North India are becoming more comfortable with lower-purity gold options like 14-carat. This allows the business to offer a wider variety of price points and designs to younger and budget-conscious shoppers.

“In Maharashtra, plain gold jewellery demand continues to be dominated by 22-carat gold, while diamond jewellery is crafted in 18-carat. However, as we expand northward into Central and North India, 14-carat plain gold jewellery is gaining broader consumer acceptance. We are also experimenting with 9-carat jewellery in select markets—specifically targeted at younger demographics and online shoppers for items like chains, bracelets, and rings. Consumer purchasing is shifting from strict caratage requirements toward design and budget preferences. While lighter-carat options (18-carat, 14-carat, and 9-carat) are expanding, 22-carat remains our core offering alongside lower-carat collections.”

— Saurabh Gadgil, Chairman and Managing Director

Management is executing a multi-year plan to transition from a regional Maharashtra player to a national jewellery brand. Expansion is specifically targeting high-growth corridors in Central and North India to diversify the company’s geographical revenue base.

“As outlined during our investor calls, our 3-year strategic framework focuses on expanding from our core base in Maharashtra into a nationwide footprint. We currently operate across seven states, with targeted expansion along the Maharashtra, Goa, Madhya Pradesh, Uttar Pradesh, Bihar, and Delhi-NCR belts.”

— Saurabh Gadgil, Chairman and Managing Director

The company uses a dual-store strategy to capture both high-value bridal purchases and high-frequency impulse buys. Reaching the target of 103 stores by the end of the fiscal year will be a significant milestone for its retail scale.

“Our retail approach utilises two distinct store formats: 1. PNG Legacy Stores: Large-format flagship stores offering traditional and heavy bridal jewellery. 2. U by PNG: A specialised retail format focused on lightweight, non-occasion, lower-caratage impulse-purchase jewellery. Both retail formats operate cohesively, and we plan to close the current financial year with a network of 103 operational stores across a mix of legacy and U by PNG locations.”

— Saurabh Gadgil, Chairman and Managing Director

Diamond and studded jewellery are growing much faster than the core gold business, posting 40% annual growth. Investors should watch this segment closely as its increasing share in the product mix will likely drive higher overall corporate margins.

“Studded jewellery performance has been exceptionally strong at PNG Jewellers, with our diamond segment growing at over 40% year-over-year. While diamond jewellery currently accounts for 12% to 13% of our overall sales mix, it remains a rapid-growth category.”

— Saurabh Gadgil, Chairman and Managing Director

Jewellery now accounts for the vast majority of gold revenue, while lower-margin bullion has dropped to just 20%. This healthy revenue split suggests that the company is effectively capturing value-added design margins rather than just acting as a commodity trader.

“In terms of gold, consumer purchases are heavily skewed toward jewellery rather than bullion; bullion sales currently account for roughly 20% of total revenue, while jewellery represents the remaining 80%. This strong tilt toward jewellery—supported by customers exchanging old gold for new designs—bodes very well for long-term sector profitability.”

— Saurabh Gadgil, Chairman and Managing Director

Logistics

TVS Supply Chain Solutions Limited | Mid Cap

TVS Supply Chain Solutions provides technology-driven integrated supply chain services to enterprise customers across the automotive, industrial, and consumer sectors. The company operates a global network focusing on specialised logistics, including manufacturing support and spare parts maintenance.

[Interview]

The company has formed a strategic alliance with Sankyu Corporation involving a small equity stake to ensure long-term commitment. This partnership helps the company enter high-growth sectors like smart manufacturing and semiconductors in India.

“There are two key dimensions to the partnership we are entering into with Sankyu Corporation: 1. Business & Commercial Association: We will collaborate operationally on the business side to offer the specialised supply chain solutions and services Sankyu has provided to its Japanese clients for decades, bringing them to multinational and domestic customers in India. 2. Equity Investment: To bring seriousness, responsibility, and ownership to the alliance, Sankyu has decided to acquire a 0.5% equity stake in the company, subject to regulatory approval. This brings together two 100-year-old organisations with shared values around employee focus and customer-centricity. It will significantly broaden the scope of solutions supply chain companies offer Indian customers, especially given the government’s strong impetus toward manufacturing, smart manufacturing, and advanced semiconductors.”

— Vikas Chadha, CEO

The company is partnering with global experts to bring specialised aerospace and defence logistics capabilities to India. These high-barrier sectors provide access to long-term contracts with major global aerospace manufacturers.

“Our goal is to deliver high-speed, high-quality services to Indian customers by partnering with global market leaders: ALA Group brings 35 years of aerospace and defence logistics experience alongside partnerships with OEMs like Boeing and Airbus to India. Sankyu Corporation: Leverages over a century of experience serving Japanese clients, introducing specialised engineering supply chain services to strengthen our portfolio.”

— Vikas Chadha, CEO

Despite global logistics headwinds like rising fuel prices and route delays, the company can pass these costs to customers. Additionally, clients are increasing inventory buffers in India, which is actually driving higher volumes for the business.

“Global supply chains face two primary headwinds: rising costs driven by higher fuel prices, and extended transit times caused by container unavailability and route blockages. However, this environment also presents significant commercial opportunities. Many of our multinational Fortune 500 clients are building parallel supply chain hubs and increasing inventory buffers in India to protect customer delivery schedules. Because our priority is ensuring supply continuity for enterprise clients, inventory volumes across our network are rising. While input prices are escalating, our contractual structures allow us to pass these cost increases directly through to customers while capturing incremental volume growth.”

— Vikas Chadha, CEO

Most client contracts include clauses that protect the company’s profit margins from fluctuations in shipping and fuel costs. This stability in the freight forwarding business is a key pillar of their overall margin protection strategy.

“Yes, the majority of our contracts are structured with cost-pass-through mechanisms that allow us to pass cost increases on to clients, as reflected in our freight forwarding business delivering a 4% EBITDA margin.”

— Vikas Chadha, CEO

Management is guiding for mid-to-high teen revenue growth in FY27 with a focus on improving operational efficiency. The expectation that profits will grow faster than revenue indicates that the company is reaching a stage of strong operating leverage.

“Over the last two quarters, we added ₹500 crore in new annualised revenue, supported by a robust deal pipeline and very low customer churn. For FY27, I am confident we can deliver mid-to-high teen consolidated revenue growth, with consolidated EBITDA expanding at a significantly faster rate than top-line revenue.”

— Vikas Chadha, CEO

The company maintains a large deal pipeline and expects a consistent conversion rate of around one-fourth of these opportunities. This consistent win rate provides a clear path to adding ₹2,000 crore in new revenue annually.

“Conversion rates should remain in the vicinity of 20% to 25%. Our solutions involve complex, long-gestation enterprise projects requiring extensive consultation with clients to structure. A 20% to 25% conversion rate will allow us to close the year with over ₹2,000 crore in new annualised revenue additions to build our base.”

— Vikas Chadha, CEO

The company is targeting a 4% PBT margin by shifting its service mix toward higher-value verticals and optimising costs. Management believes this goal is achievable regardless of volatility in global freight rates.

“Yes, we are progressing toward a 4% PBT margin target. This margin trajectory is driven by our product mix, the addition of higher-margin specialised verticals, internal cost optimisation, and active pricing levers. Global freight rate volatility will not impact our execution ability or our path toward reaching our 4% PBT margin target.”

— Vikas Chadha, CEO

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Shahid Barmare.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 89th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 5 industries.

Chemicals

• Solar Industries India Ltd

Fintech

• PhonePe

Software Services

• Coforge Ltd

Healthcare

• IOL Chem & Pharma

Retail

• Senco Gold

Chemicals

Solar Industries India Ltd | Large Cap | Explosives

Solar Industries is a leading global manufacturer of industrial explosives and initiating systems used in mining, infrastructure, and defense. The company operates across multiple continents and is a key supplier to India’s defense sector through its ammunition and missile manufacturing capabilities.

Note: This information is from the Solar Industries India analyst call.

[Concall]

Solar Industries is acquiring Omnia Holdings to transform into a global leader in mining solutions and explosives. This move provides the company with advanced digital blasting technology and an entry into the sustainable agriculture market.

“Building on this foundation, the proposed acquisition of Omnia by Solar South Africa represents the next strategic step in Solar Group’s SADC journey, significantly expanding its operations, manufacturing, and distribution capabilities across the world. The proposed transaction marks a transformational milestone in Solar Group’s strategic ambition to become a leading global explosives and mining solutions provider by enhancing its scale, market access, and competitive positioning across Africa and other international markets. Omnia’s mining business, operating under the well-established BME brand, brings significant expertise in open-cast mining, bulk explosives, electronic detonation systems, digital blasting solutions, and mining chemicals, alongside a strong presence across Africa and international markets. The combination will serve Omnia’s agriculture segment, which provides a compelling platform that promotes sustainable agriculture and biological solutions. Leveraging its proprietary Nutriology model and agribiosolutions, the business delivers science-based crop nutrition products and services to customers across multiple geographies.”

— Manish Nuwal, MD & CEO

The acquisition gives Solar access to the largest nitric acid and ammonium nitrate production facilities in the SADC region. This backward integration ensures a secure raw material supply and improves the company’s long-term cost position in international markets.

“A key strategic attraction of the transaction is Omnia’s integrated manufacturing infrastructure. The agriculture segment operates nitric acid and ammonium nitrate production facilities, which are the largest, most reliable, and most sustainable in the region. In addition, Omnia has recently expanded its ammonium nitrate storage infrastructure through a new 5,000-ton storage tank, which has doubled its storage capacity. These capabilities are expected to significantly strengthen vertical integration, enhance security of supply, improve raw material availability, increase operational flexibility, and reinforce Solar Group’s long-term cost competitiveness across the explosives value chain.”

— Manish Nuwal, MD & CEO

The company expects total debt to peak at around 11,000 crores following the acquisition. Management is committed to maintaining a conservative leverage profile with a net debt-to-EBITDA ratio of less than 2 times.

“Based on this EBITDA projection that we are trying to achieve, and if you factor in the acquisition debt plus the regular debt that we have, it should be around 10,000-11,000 crores by FY28. In any situation, if you take the EBITDA and debt position, the ratio will always be lower than 2. That is the current estimate based on the work we have done as of now.”

— Manish Nuwal, MD & CEO

The acquisition significantly scales Solar’s global footprint, increasing its manufacturing presence from 11 to 25 countries. This expanded network is intended to drive higher exports of specialized products from India into new international markets.

“If you add Omnia’s and BME’s current distribution network to Solar’s distribution network, our distribution presence will increase to more than 100 countries. Our manufacturing presence, which is currently in 11 countries, will expand to 25 countries. We have been saying for many years that this kind of geographical diversity and presence across the globe is helping our company. That is the belief we have as of now, and the same reason led us to pursue this acquisition opportunity. With the kind of facilities they possess, this definitely gives Solar Group a strategic advantage to position itself as one of the strongest players in that region. That is the basic rationale, and it is going to help us increase exports from India to that region and to other parts of the global market as well.”

— Manish Nuwal, MD & CEO

The 1.35 billion dollar deal will be funded entirely through debt and internal cash flows without any equity issuance. This strategy avoids diluting existing shareholders and signals management’s confidence in the company’s cash-generating capacity.

“We are not planning to raise any equity through any kind of dilution in either the parent company or any subsidiary. We are quite comfortable managing this acquisition through internal accruals and debt that can be made available to Solar.”

— Manish Nuwal, MD & CEO

Solar plans to push its industry-leading packaged explosives and initiating systems through Omnia’s established global distribution channels. This cross-selling strategy is a key driver for expected revenue growth in newly entered territories.

“Solar is the largest producer of packaged explosives in the world. With BME’s strong distribution presence, we would be able to leverage Solar’s strength and Solar’s products in this market. Having a presence across the world will help us increase sales of these products, including packaged explosives and initiating systems.”

— Manish Nuwal, MD & CEO

Fintech

PhonePe | Fintech

PhonePe is one of India’s largest digital payments and financial services platforms, best known for its UPI-based payments app. It allows users to make money transfers and merchant payments, while also offering services such as insurance, lending, investments and other financial products through its platform

[Interview]

Nigam argues that zero-MDR UPI masked the substantial capital invested by banks, payment companies and the broader ecosystem to scale the network to roughly 500 million users.

“Over the last decade, the industry has invested almost $5 billion of equity capital, or just balance-sheet losses, to grow UPI into the behemoth it is. Almost 500 million Indians have been using UPI, and it continues to be free for all of them. We want to get another 500 million Indians on UPI. This requires, obviously, a pretty serious amount of capital investment.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam says merchant-funded payment economics are standard globally. In his view, India’s zero-MDR regime was unusual compared with other large digital-payment markets.

“World over, across 200-plus countries, the standard norm has been that the merchants who are the beneficiaries of a cashless economy absorb this cost through MDR. In fact, India was the outlier until yesterday. It was the only market in the world where there was no MDR on the largest payment network.”

— Sameer Nigam, Founder & CEO, PhonePe

The cost of digital payments goes well beyond processing a transaction. Nigam points to chargebacks, fraud prevention, regulatory compliance and infrastructure as significant ongoing expenses.

“People don’t necessarily appreciate enough the different kinds of expenses that players like us, payment aggregators, banks and NPCI incur. There are chargeback costs by regulation that apply on the payment aggregators. There’s a lot of risk and fraud-mitigation expense that goes in.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam highlighted the physical infrastructure behind UPI, arguing that handling hundreds of millions of transactions every day requires continuous investment.

“At PhonePe, we’ve invested—we now have almost 30,000 servers. We’re talking several thousand crores of just capex that has gone in. Just please recognize, we celebrate UPI all the time, but when you’re doing 700-800 million transactions a day at a network level, that’s very, very serious investment.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam says the industry’s technology bill isn’t stabilising as UPI matures. AI-era cybersecurity threats, network risks and rising compliance requirements are forcing payment companies to keep investing.

“You now have the AI era with all of its attendant madness in terms of cybersecurity risk, network risk. So we are all investing more than ever. Compliances have gone up more than ever.”

— Sameer Nigam, Founder & CEO, PhonePe

Requirements such as re-KYC of merchants add banking-level compliance costs on top of the infrastructure required to process rapidly growing transaction volumes.

“A couple of years ago, the regulator made it mandatory for all merchants to be re-KYC’d. This is banking-level KYC. So the costs have just been escalating linearly as UPI grows.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam says the proposed MDR is still very low by global standards, but India’s enormous transaction base means it could nevertheless generate meaningful revenue for the ecosystem.

“Even a 0.4% MDR—which, by the way, is still the lowest of all MDR regimes in the world—even this number at India’s population base should hopefully generate meaningful revenue, which will help offset a lot of our expenses.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam sees MDR as more than a new revenue stream for PhonePe. He argues that the entire payments industry needs viable economics if companies are expected to continue investing.

“I don’t see why digital payments should be different than any other sector. The fact is, any economist will tell you, for a sector to thrive in any country, market economics have to play out. And this is the digital payments industry’s moment after a long, long time.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam says PhonePe thinks about the two sides of its platform as independent businesses. Scale on the consumer side shouldn’t be used to permanently mask losses in merchant payments.

“For a player of our scale, it is important that we run the merchant business in a viable manner independent of anything we do on the consumer side. I know a lot of people think that our consumer side might subsidize our merchant side. It doesn’t work that way. We’re large on both sides, and both P&Ls have to run independently and in a profitable manner.”

— Sameer Nigam, Founder & CEO, PhonePe

His argument is that larger merchants already routinely absorb much higher payment charges on credit cards, so a smaller UPI MDR shouldn’t fundamentally change their willingness to accept digital payments.

“In India now there are almost 6 million, or 60 lakh, merchants which are accepting credit cards across networks on POS devices. So they are used to paying an interchange of anywhere between 1.7% to 2.25% on all card transactions. That is really the set of merchants that I believe are going to be having to pay the UPI MDR as well, because we’re talking about large transactions.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam points to RuPay credit cards as a real-world example of merchants already absorbing payment charges on the same QR infrastructure.

“I can tell you with confidence that over 95% of our merchants today who are accepting UPI payments also accept RuPay credit card on UPI, and they do absorb this cost.”

— Sameer Nigam, Founder & CEO, PhonePe

One reason Nigam expects merchants to absorb MDR rather than push customers back to cash is that physical cash carries its own hidden operating costs.

“The reason that they absorb this cost and don’t transfer it to customers is that customers who come in and do cash transactions also result in secondary costs to the merchant themselves. Today, merchants have pilferage in the shop. Merchants have cash collection and processing costs that they understand.”

— Sameer Nigam, Founder & CEO, PhonePe

One concern is that merchants could break a ₹10,000 payment into five sub-₹2,000 transactions to remain below the MDR threshold. Nigam doesn’t think such behaviour will work at scale.

“People are immediately jumping to this thing of merchants will suddenly take a ₹10,000 transaction and divide it by five. Life doesn’t work like that. Customers won’t go to merchants who actually try and do that.”

— Sameer Nigam, Founder & CEO, PhonePe

Most smaller UPI transactions remain outside MDR, while charges on larger payments and certain sectors are capped. Nigam sees that as limiting the burden on merchants.

“I actually think that the government’s been very measured. On the one hand they’re saying below ₹2,000, which is 95-96% of transactions, there’s no MDR. On the other side, for large-ticket transactions, they’re saying that we’re putting a cap of ₹300. For petrol they’re putting a ₹5 cap. So even OMCs will absorb that.”

— Sameer Nigam, Founder & CEO, PhonePe

Nigam pushes back against the idea that zero MDR was essential to UPI’s adoption, pointing to the network’s early years when merchant charges existed alongside rapid growth.

“I’d like to remind people that UPI had MDR. In fact, it used to be almost 0.65%, not 0.4%, when UPI launched 10 years ago. And UPI was growing very, very rapidly even between the period of 2016 and 2020.”

— Sameer Nigam, Founder & CEO, PhonePe

The introduction of merchant monetisation matters beyond near-term revenue. As India’s largest UPI player prepares for a potential listing, Nigam says it helps demonstrate that digital payments can become economically sustainable.

“It definitely helps. I think being the largest player in the sector, especially on the consumer side, it helps when we talk to investors to be able to explain to them that we’re not subsidizing UPI, that we will finally make money on digital payments. So that’s always welcome.”

— Sameer Nigam, Founder & CEO, PhonePe

Software Services

Coforge Ltd. | Mid Cap | IT Services & Consulting

Coforge is a global digital services and solutions provider specializing in the insurance, banking, and travel sectors. The company leverages AI-led transformation and deep industry expertise to deliver high-growth technology consulting and outsourcing services.

Note: This information is from the Coforge analyst call, which was held to address recent board resignations and corporate governance.

[Concall]

The interim chairperson is explaining that the recent removal of two directors was a necessary action based on internal audit findings. This reassures investors that the current board is acting as responsible guardians of the company’s interests and following strict rules.

“As board members, we are duty-bound as fiduciaries of the firm to act upon observations shared with us by the internal auditor. All communications exchanged with our two former directors with regard to the observations made by the internal auditor have been conducted with the sole aim of discharging our obligations as fiduciaries and with the sole intent of keeping the interests of Coforge first. All seven of us on the board today take our governance obligations extremely seriously, and we will always discharge them faithfully as custodians of the firm on behalf of our shareholders.”

— Vivek Sharma, Interim Chairperson

An internal audit discovered that the former chairman and a committee head withheld a report showing the chairman had received poor performance ratings. This transparency is crucial for investors as it explains the specific governance breach that led to the leadership resignations.

“The internal auditor reviewed the video recordings and minutes of the relevant NRC and board meetings, then went through the actual board evaluation report document. In the third week of August 2026, the auditors sought clarifications relating to differences observed between what was presented at the NRC and board meetings and the information contained in the actual board evaluation report. The internal auditor observed that the relevant reports were available only to the NRC chair and the chairman of the board. Departing from best practices, they were not made available to other members of the board, including the independent directors. They observed that the manner in which the evaluation findings were presented, without sharing copies of the report, by the chairman of the board and the NRC chair did not cover all relevant aspects and findings. In particular, while the chairman’s performance category received the lowest rating in the reports, this finding was not disclosed or discussed before the NRC or the board by the NRC chair and the chairman of the board.”

— John Spate, Director

The board has been highly unified on major strategic moves since the company became professionally managed rather than owner-led. This track record suggests that despite recent personnel changes, the core business strategy and AI focus remain stable.

“Since 2024, as Coforge transitioned from private ownership to a company with no promoter, the board has worked productively with a high degree of alignment. Key strategic and governance decisions have been approved unanimously, including the acquisition of Encora, the divestment of AdvantageGo, and the Sabre contract engagement. During this period, Coforge has delivered exceptional growth and created significant shareholder value despite challenging industry conditions. We have strengthened our global scale and capabilities and, as we discussed at Investor Day, we continue to build a more integrated, AI-led business around the industries that we know very well. This combination of our technology capabilities and deep industry expertise is central to where we believe Coforge can continue to differentiate and grow.”

— Beth Boucher, Independent Director & NRC Chair

Despite the board-level changes, the company is maintaining all its previous financial targets for margins and cash flow. Investors can remain confident that the core business performance and growth trajectory are not being negatively affected by administrative issues.

“I would like to reiterate that the matters discussed today have no bearing on the company’s financial reporting, business operations, performance, or outlook. Our near-term, medium-term, and long-term outlook remains unchanged, and our FY27 guidance remains intact. We continue to expect a consolidated EBITDA margin of 20.5%-21% for FY27, a consolidated EBIT margin of at least 15.5%, and free cash flow conversion of above 100% of PAT in the current financial year. The four-year guidance of close to 5 billion dollars also remains intact. There is no impact on, and no change in, any outlook that we have set so far. The management team remains fully focused on execution, with no disruption to our business or client engagements.”

— Saurabh Goyal, CFO

Management confirmed that the audit concerns were isolated to the two directors who left and did not implicate the rest of the leadership. This limits the scope of potential liability and suggests that no further surprise resignations are expected from this specific issue.

“Vibhor, I want to take a first stab and then request Mr. Chanana, our audit committee chair, to step in. The questions were posed only to our two departed transition directors who are no longer with the firm. Those are the facts. I am going to request Mr. Chanana also to talk about the audit process, please. ... Since this is a very specific matter relating to the board evaluation process, this has been fully covered by KPMG, which is the internal auditor. There have not been any other observations so far as this part of the audit is concerned.”

— Sudhir Singh, CEO

The audit committee uses a risk-based approach to decide which parts of the business to inspect each year. By adding new areas like AI governance, the company is trying to stay ahead of modern technology risks that could impact future performance.

“Typically, there are very standardized core processes, as I call them, which we try to cover perhaps every alternate year. Some are covered from time to time. It basically starts with risk profiling. First, we look at the risk profile, and based on that, we start working out the internal audit plan. If we find any area where the risk is high, we typically select it. What is happening is that new risks are emerging. For example, AI governance. Our focus will continue to include some of these newer risks that are emerging.”

— Anil Chanana, Independent Director & Chairperson of the Audit Committee

The board does not see a need for an additional investigation into the recent events because the initial findings came from a trusted third-party auditor. This indicates management believes the current governance issue is fully understood and resolved through existing channels.

“To answer your question, in this particular case, the matter arose as a result of an internal audit by an external party. We do not believe that there is anybody who is going to sit on top of it and determine whether it was done correctly or incorrectly. It has already been conducted by an external party, based on which the explanation was sought. Therefore, I do not believe there is any need for another review by an external advisor.”

— Anil Chanana, Independent Director & Chairperson of the Audit Committee

The interim chair highlighted Coforge’s strong competitive position in the airline industry as a reason for his personal commitment to the role. His focus on loyalty and care aims to soothe investor fears regarding his independence and dedication to the firm.

“I serve on the board of an airline in the United States, and Coforge dominates, literally dominates, the airline sector. There is not an airline I could speak to without finding that Coforge is already serving it. There is extraordinary feedback on the delivery, client orientation, and the work they do and that we do. I want to reassure you that when you join the board, and when I joined the board, like all my fellow independent directors, I am a fiduciary to Coforge. The defining aspect of being on the board is that you have a duty of loyalty and a duty of care to the company. I reassure you that I have both.”

— Vivek Sharma, Interim Chairperson

Healthcare

IOL Chem & Pharma | Small Cap | Healthcare

Established in 1986, IOL Chemicals & Pharmaceuticals Ltd. is a leading generic pharmaceutical company in India, also playing a significant role in the Organic chemicals space. The company manufactures and sells APIs/bulk drugs and specialty chemicals across various therapeutic categories like Pain Management, Anti-diabetic, Anti-hypertensive, Anti-convulsants, catering to both domestic and international markets.

[Concall]

The ₹495 crore investment won’t contribute meaningfully in FY27 and won’t be fully ramped even in FY28. Once all three projects are operational and utilised, IOL expects a sizeable addition to its existing revenue base.

“Considering the full operationalization and utilization of these assets, which will probably happen in FY29, they will contribute approximately 25% to 30% to the top line.”

— IOL Chemicals & Pharmaceuticals Management

IOL’s decision to expand Ibuprofen isn’t based solely on expected industry growth. Existing capacity is nearly exhausted, while the company is seeing opportunities from domestic, international and CDMO customers.

“Considering the current scenario, we have some developments with our domestic as well as international customers, so we are trying to cater to those requirements. Additionally, our current capacity is exhausted to the extent of 90% to 95%. The third point is that we are also looking at some numbers in our CDMO business. Considering all these factors, we are planning to increase the overall capacity of Ibuprofen.”

— IOL Chemicals & Pharmaceuticals Management

IOL explicitly denied that the capacity addition is based on information about another European plant shutting down. Instead, it points to underlying market growth and new customer development.

“It is not only for formulations. It is also due to customer development for the API. The global growth rate for Ibuprofen is 3% to 4% every year, and that also supports our decision to expand our Ibuprofen capacity.”

— IOL Chemicals & Pharmaceuticals Management

IOL’s move downstream from supplying APIs into finished formulations wasn’t purely internally driven. Existing customers asked the company whether it could supply bulk tablets instead.

“They came back to us and asked why we should supply them bulk tablets instead of sending the API. So, this is probably a mutual agreement in both directions, and we entered into this arrangement.”

— IOL Chemicals & Pharmaceuticals Management

IOL expects the formulation contracts to resemble its API arrangements, potentially providing medium-term revenue visibility and some protection against changes in costs.

“We are in discussions with various customers; this is not the only customer we can talk about. We expect the contracts to be similar to the contracts we have for the API. These range from 3 to 5 years, with escalation clauses and other provisions as well.”

— IOL Chemicals & Pharmaceuticals Management

IOL says its customer contracts contain price-adjustment mechanisms, while its backward-integrated Ibuprofen operation gives it another layer of protection against input-cost swings.

“Every contract contains a price-adjustment clause. Under the price-adjustment clause, prices can move downward or upward within a certain range. That provision is included in the contracts.

Also, our Ibuprofen facility is fully backward integrated. Therefore, in our case, raw material price fluctuations are controlled by us to the maximum extent.”

— IOL Chemicals & Pharmaceuticals Management

Raw-material prices have softened from their wartime peak while Ibuprofen selling prices have remained broadly stable. Asked directly whether this combination could translate into higher margins, management agreed.

“Since the peak, the prices of many products have softened, but Ibuprofen prices have remained more or less the same. There has not been much change in Ibuprofen prices; they are hovering around the same level.”

— IOL Chemicals & Pharmaceuticals Management

Retail

Senco Gold | Small Cap | Retail

Senco Gold Limited is a leading pan-India jewellery retail player with over 50 years of experience in the industry. It is renowned as the largest organized jewellery retailer in eastern India and has a wide presence in other regions as well. The company specializes in gold and diamond jewellery, while also offering silver, platinum, precious and semi-precious stones, as well as other metal-based jewellery and accessories.

[Interview]

Recent moves in gold prices have made customers hesitant about when to buy. Sen expects footfalls to improve once consumers get greater clarity on the direction of prices.

“If you look at the last seven days, consumers at the stores are actually a little confused. They’re not very sure whether the prices will fall further or not. Though currently the focus for the industry is to prepare for the festive season, and customers would want to make the best use of these lower gold prices and give the advance, I think everyone is waiting to understand whether the prices will fall further or not.

Maybe in a week or so, once the trend sets in, the footfalls at the stores will start improving again. But yes, as of now, consumers are a little confused.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

September has been relatively slower after a robust August, but customer enquiries and interest in new designs suggest demand is being deferred rather than disappearing.

“The expectation for October and November, which is the Navratri and Dhanteras season, is very positive. Consumers have been inquiring, looking at the new designs, discussing with our sales staff at the ground level, and they are very sure that they will be buying something for the festive season. It is a question of when is the right time to fix the gold price and to buy the jewellery.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

Sen believes the major festive buying period is still ahead, with customers likely to start finalising purchases around the beginning of October.

“August was looking extremely positive and robust. September—around the 15th of September—people are busy with their advance taxes, and generally it’s a pre-festive season. Ganesh Chaturthi was there, which is leading to some amount of sales, but the major part of it, I think, people will start finalising from the end of September and the beginning of October for the season.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

Jewellery demand could extend well beyond Dhanteras and Diwali because a heavy wedding calendar runs from November through March.

“As far as the preparation goes and the expectation goes, we’re all very positive that we’ll have a very good season ahead. The weddings—November, December, January, February, March—there are a lot of weddings ahead. So it’s all a question of when the consumers will start buying for the wedding, which we expect to happen during the festive season.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

High gold prices are changing how consumers finance jewellery purchases. A much larger share of transactions now involves customers exchanging old gold for new jewellery.

“This is a new reality. Initially it was 25–30%; now it has gone from 25–30% to 45–50%.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

The shift towards recycled gold creates an operational challenge because exchanged jewellery needs to be processed before the gold can return to Senco’s manufacturing system.

“The whole objective is to ensure that the gold that we are procuring from the consumers is recycled as fast as possible. But obviously, it gets to that six-seven days of more days added to process that particular gold and to ensure that it goes to the factory as fast as possible.

So it is impacting a little bit. We need to plan from before in order to compensate for this extra five-six days that we are losing to process the recycled gold.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

With high gold prices making fresh purchases more expensive, Senco is actively encouraging customers to recycle existing jewellery.

“The challenges are there in terms of consumption of gold, promoting old-gold recycling to ensure that the sales continue to happen. But again, there is enough and more gold in the households that can be exchanged for the new designs.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

High gold prices are shifting demand towards lighter pieces and products that fit within customers’ budgets, while traditional jewellery remains important for weddings and festivals.

“We’ve launched titanium jewellery, any kind of new innovative designs, everyday wear, lightweight—that is what is more in demand in terms of numbers. But at the same time, we have these traditional jewellery pieces that people will buy for the festive season or weddings, and we need to be ready with that as well.

Lightweight jewellery within the budget of the consumer is the name of the game as of now.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

The business is still operating from a small base, but younger consumers are experimenting with lab-grown diamonds and newer designs, supporting rapid growth.

“Sennes, which is focusing on lab-grown diamonds and the other lifestyle products—the base itself is so low that we are seeing a very substantial growth of 40–50% year-on-year. People are trying out and experimenting with these new exclusive designs. We are launching new collections every quarter.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

Senco remains overwhelmingly a mass and mid-market jewellery business despite expanding premium offerings through its Designia range.

“Designia, which is focused on slightly high-end premium designs that we are keeping in certain stores and across the stores, we have seen that in the overall sales and scheme of things, it’s around 5–7% that we are doing in terms of premium sales.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

The company’s sales mix remains concentrated in accessible price bands, with only a relatively small proportion of purchases exceeding ₹5 lakh.

“Around 80–85% is largely what we are selling in a wide price range of ₹10,000–20,000 up to ₹4–5 lakh. It is only around 7–10% where products are above ₹5 lakh.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

Sen sees digital gold and other savings mechanisms as part of a broader shift in consumer behaviour that established jewellery companies cannot ignore.

“The young generation, the new-age consumer, looks at various ways and means to invest in gold. I think we, as a jeweller that has been there for more than 80 years, need to keep on innovating and ensuring that the consumer can easily buy jewellery from us or save in any schemes and offers.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

To overcome hesitation caused by volatile gold prices, Senco’s festive advance scheme allows customers to lock in whichever gold rate is lower—today’s rate or the rate when they finally purchase.

“For the festive season, we ourselves are giving this Flexi Advance Gold, where consumers are giving their advances. Whether it be the rate today or the rate during the time of buying, whichever is the lower rate, the consumer will enjoy the benefit of the lower rate.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

Sen says elevated duties make it harder for organised jewellery companies to compete against unorganised channels.

“The duty is impacting in a negative manner because the parallel economy is coming into the picture, and that is impacting the organised sector and making it a little difficult for us to compete with the unorganised. So that is a challenge that we are facing.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

Despite the competitive impact, Sen acknowledged the macroeconomic rationale for higher duties given geopolitical uncertainty and pressure on India’s current account.

“At the same time, we are very much aware that when the war is on and the current account deficit pressure is on the economy, we need to accept this high duty for the sake of the economy and the growth of the economy.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

The industry remains in discussions with the government, but Sen doesn’t expect much relief until the global backdrop improves.

“While we are in talks with the government, unless the war is settled and crude oil prices come down, we need to live with these high duty rates. Once there is peace in the world, crude oil prices come down and the economy is doing better, then we can all request the government to consider reducing the duty once again.”

— Suvankar Sen, Managing Director & CEO, Senco Gold & Diamonds

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Meher and Srusti.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 88th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered the RBI Governor, Deputy Governor’s Address & 3 companies across 4 industries.

Regulator

• RBI Governor

• RBI Deputy Governor

Defence

• Cochin Shipyard

Engineering & Capital Goods

• KEI Industries

Consumer Durables

• Symphony

Regulator

RBI Governor Sanjay Malhotra | Shaping the Next Decade of Finance – Technology, Trust and Innovation

RBI Governor Sanjay Malhotra, speaking at the Global Fintech Fest, outlined his views on the evolving role of fintech in the financial system. His address focused on fintech as a partner in financial inclusion, the importance of building trust, India’s global fintech ambitions, and the RBI’s efforts to support innovation.

[Reference]

Despite India’s digital-finance success, Malhotra said the biggest opportunity remains bringing savings, insurance, pensions and credit to underserved people in villages and smaller towns.

“Financial inclusion or ensuring financial well-being remains, to my mind, the single most important purpose that fintech can serve. Reaching the last mile via savings products for the informal sector, micro-insurance, small pensions, small-ticket credit, credit for women entrepreneurs, small and marginal farmers, in India’s villages and tier-3 and tier-4 towns, is a task that traditional banking and financial service providers alone struggle to accomplish economically.”

— Sanjay Malhotra, Governor, Reserve Bank of India

Malhotra cautioned that commercial incentives naturally pull fintechs towards banked and digitally literate customers, while the harder problem of reaching those outside the system remains under-addressed.

“Yet, too much of the industry’s efforts, understandably, gravitates toward customers who are already banked, already digitally literate, already visible to a credit bureau, just because the underlying cost-benefit justifies it. The harder work of reaching those still outside the system is where ‘potential to impact’ is least realised today, and where it matters the most.”

— Sanjay Malhotra, Governor, Reserve Bank of India

The Governor identified four major areas where AI can contribute to financial services, while also pointing to quantum computing and tokenisation as emerging technologies.

“At the FIBAC last month, I had spoken of four other broad areas, apart from financial inclusion, where AI can be of use, viz., consumer service, meeting unmet credit and other financial needs, enhancing operational efficiency of banks and other financial intermediaries, and reducing fraud. These are some areas where fintechs can contribute using advanced technologies such as AI, quantum computing and tokenisation.”

— Sanjay Malhotra, Governor, Reserve Bank of India

RBI isn’t looking at AI only through the lens of efficiency. Malhotra flagged a broad set of risks that financial institutions need to mitigate to maintain consumer trust.

“At the FIBAC last month, I had mentioned risks pertaining to opacity, bias and exclusion, concentration and herding, cybersecurity, data privacy and security, and erosion of human judgement, among others, while adopting AI. I would again emphasise that mitigating these risks is important for maintaining consumer trust.”

— Sanjay Malhotra, Governor, Reserve Bank of India

This was one of the strongest regulatory messages in the speech. Malhotra said fintechs should treat customer data as something held in trust rather than something primarily available for monetisation.

“Second, treat data as a fiduciary responsibility, not a business asset. Every fintech in this room holds something more valuable than capital: it holds the data - financial and non-financial - of real people. This data must be treated the way a trustee treats assets held for a beneficiary: collected with clear purpose, used strictly within the consent given, and protected as though it were one’s own.”

— Sanjay Malhotra, Governor, Reserve Bank of India

RBI’s message is that regulatory responsibility should increase with scale. Even fintechs outside prudential regulation acquire wider obligations once their payments, lending or user base becomes systemically significant.

“But as a firm’s payment volumes, lending book, or user base grows to a point where its disruption could meaningfully affect the financial system, that firm acquires a responsibility that goes beyond its balance sheet or its shareholders. I would describe this as the obligation to be not just ‘too big to fail’ but ‘too significant to be careless.’”

— Sanjay Malhotra, Governor, Reserve Bank of India

Once a financial platform reaches meaningful scale, RBI doesn’t view resilience and cybersecurity spending as optional compliance costs.

“Operational resilience, business continuity, and cybersecurity are not burdens to be minimised; they are the price of the scale a firm has achieved.”

— Sanjay Malhotra, Governor, Reserve Bank of India

Malhotra explicitly cautioned against regulatory arbitrage and the “scale first, ask permission later” approach sometimes associated with technology companies.

“I would gently caution against a mindset of structuring a business around the gaps between regulatory categories, or of scaling first and seeking clarity or forgiveness later.”

— Sanjay Malhotra, Governor, Reserve Bank of India

After a decade largely spent developing solutions for India’s domestic financial system, Malhotra wants Indian fintechs to take their technology and institutional know-how global.

“India’s first decade of fintech was largely about building for India. The next decade presents an opportunity to build for the world. Many emerging economies face challenges similar to those we face in India. As a result, our solutions for financial inclusion, affordable payments, digital identity, interoperable infrastructure and trusted innovation can be appropriately repurposed for wider global adoption.”

— Sanjay Malhotra, Governor, Reserve Bank of India

Malhotra stressed that RBI wants to work with fintechs across AI, quantum technology and tokenisation to build a more stable, efficient and inclusive financial system.

“The Reserve Bank does not view fintech merely as an industry we regulate. We view it as a strategic partner in leveraging the latest technologies including the three technological pillars around which this year’s programme is built - AI, quantum technology and tokenisation - in fulfilling our own core mandate - a stable, efficient, and inclusive financial system.”

— Sanjay Malhotra, Governor, Reserve Bank of India

RBI announced recognition of the United FinTech Forum as the sector’s second SRO, intended to develop standards, promote responsible conduct and facilitate engagement with regulators.

“For a regulated development of the fintech industry, we have implemented the Self-Regulatory Organisation framework for this sector. It shall promote responsible conduct, develop industry-led baseline standards, build capacity and facilitate constructive engagement with the regulator, policy makers and other stakeholders. Two years ago, we gave recognition to the first SRO for Fintechs at this very forum. Today I am pleased to announce the recognition of United FinTech Forum as the second SRO in FinTech sector.”

— Sanjay Malhotra, Governor, Reserve Bank of India

Programmability is becoming an important part of RBI’s CBDC experimentation, including potential use in government benefit transfers.

“Our ongoing pilots on programmable CBDC are exploring targeted government benefit transfers, such as the Pradhan Mantri Garib Kalyan Anna Yojana, and other innovative use cases.”

— Sanjay Malhotra, Governor, Reserve Bank of India

RBI has already experimented with tokenised certificates of deposit using wholesale CBDC. It is now extending those experiments into corporate bonds jointly with SEBI.

“Our tokenisation initiatives including Certificates of Deposit issued through the Unified Markets Interface using wholesale Central Bank Digital Currency (CBDC) are helping us understand the potential future architecture of financial markets. Today, we take the next step in our tokenisation journey as we unveil the tokenisation of corporate bonds with settlement through CBDC as a joint initiative with SEBI and with the involvement of other stakeholders.”

— Sanjay Malhotra, Governor, Reserve Bank of India

Malhotra laid out RBI’s broader regulatory philosophy: regulate the activity according to its risk, while avoiding unnecessary intervention when innovation remains small and contained.

“Underlying all of this is a regulatory philosophy: proportionate, activity-based regulation-same activity, same risk, same regulatory treatment, regardless of who performs it, calibrated to capacity across the diverse spectrum of institutions. We keep regulation light-touch where innovation is nascent and risk contained, and step in only when activity grows to scale so as to become a systemic risk or for reasons of consumer conduct.”

— Sanjay Malhotra, Governor, Reserve Bank of India

RBI Deputy Governor Rohit Jain | Emerging Technologies in Finance: The Imperatives of Purpose, Prudence, and Policy

RBI Deputy Governor Rohit Jain, speaking at the Global Fintech Fest 2026 in Mumbai, shared his views on how emerging technologies are reshaping finance. His address focused on AI, tokenisation, distributed technologies and quantum computing, framed around three key imperatives (Purpose, Prudence and Policy) and the need to balance innovation with resilience, accountability and customer protection.

[Reference]

Jain sees the current technological wave as fundamentally different from earlier ones because AI isn’t merely processing information faster—it is increasingly influencing interpretation, prediction and decision-making.

“Artificial intelligence is not only helping us process information faster; it is increasingly helping us interpret information, identify patterns, make predictions and support decisions. In that sense, AI is beginning to augment something especially consequential for finance: human judgment.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Alongside AI, RBI is closely watching tokenisation, distributed technologies and quantum computing—each of which could reshape financial infrastructure while introducing new risks.

“Artificial intelligence, however, is only one part of a much wider technological transformation. Tokenisation is creating new possibilities for how financial assets are represented and settled. Distributed technologies are reshaping elements of market infrastructure. Quantum computing holds promise for solving complex problems, while also raising new questions about digital security and cryptographic resilience.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Jain framed technological progress as a trade-off: finance can become cheaper, more accessible and responsive, but resilience and accountability need to keep pace.

“Taken together, these developments present enormous possibilities. They can lower costs, widen access, strengthen risk management, and make finance more responsive. They also raise important questions about resilience, accountability, and the choices we make as these technologies scale.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Jain used UPI as an example of how an architectural choice—allowing transactions across banks and apps rather than closed networks—can widen participation and create an ecosystem for further innovation.

“UPI offers a clear illustration. It was built around interoperability, allowing customers to make payments across participating banks and applications rather than remain within closed networks. That design choice widened convenience for users and created a common payment infrastructure on which banks, fintechs and other service providers could innovate.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Jain identified three areas where technology can amplify familiar financial risks and transmit their effects more quickly and broadly through the system.

“I see three key concerns as emerging technologies become more deeply embedded in finance: speed, concentration and opacity. None of these risks is entirely new, but technology can amplify them and allow their effects to travel through the financial system in ways that are faster, wider and sometimes harder to detect.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Technology concentration can turn a single vendor or infrastructure failure into a problem affecting multiple financial institutions simultaneously.

“Financial institutions may increasingly depend on a relatively small number of cloud providers, technology vendors and model providers, often using overlapping datasets and similar technological infrastructure. The concern is therefore not simply the failure of one institution, but the possibility that a common dependency could transmit disruption or error across many institutions at the same time.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

RBI’s stance on AI accountability is clear: financial institutions remain responsible for decisions even when sophisticated external models or algorithms are involved.

“Advanced models can identify relationships and arrive at decisions in ways that may be difficult to explain. Greater sophistication, however, cannot mean weaker accountability. An institution may outsource the computation, but it cannot outsource the consequence. A customer affected by an important financial decision deserves something more meaningful than being told that ‘the model said so’.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Credit, liquidity, leverage and operational risks remain. Emerging technology primarily changes how quickly and widely those risks can propagate.

“Borrowers can still default, liquidity can still disappear, leverage can still magnify losses, and operational failures can still disrupt financial services. Technology does not make these risks vanish. Instead, what it can change, sometimes significantly, is their speed, scale and transmission.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Quantum computing could eventually undermine current cryptographic systems. Jain argued that financial institutions and regulators need to prepare for such vulnerabilities before they become immediate threats.

“Quantum computing offers a useful example. It holds significant promise, but it also raises questions about the resilience of current cryptographic systems. Preparing in advance reflects a broader principle: we should not wait for a future vulnerability to become a present crisis before responding.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Jain acknowledged the central dilemma regulators face: premature rules may constrain technologies that are still evolving, while delayed intervention can allow risks to become deeply embedded.

“Regulate too early, and we risk writing detailed rules for a technology we do not yet fully understand, or for an architecture that may change before the rules take effect. Regulate too late, and the technology may already be deeply embedded before its risks are fully understood and addressed. There is no perfect point between these two outcomes.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

RBI wants regulation to focus on outcomes and accountability rather than prescribing specific technologies. Outsourcing technology doesn’t mean outsourcing responsibility.

“The first is to remain clear about outcomes and accountability rather than attempt to prescribe every technological choice. The obligation to treat customers fairly does not change because an algorithm influences the decision. Similarly, responsibility for managing risk does not disappear because a model or technology is supplied by a third party.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Jain advocated proportional regulation: using AI to summarise an internal document shouldn’t face the same governance burden as autonomous credit approval or financial transactions.

“Different uses of the same technology can present very different risks. A tool used to summarise an internal document cannot be treated in the same way as a system that autonomously approves credit or executes financial transactions. The greater the consequence of the use case, the stronger the expectations should be around governance, validation, oversight and intervention.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Regulatory sandboxes remain important to RBI’s approach because controlled experimentation can reveal risks and benefits that aren’t obvious beforehand.

“The third element is to create space to experiment and learn within appropriate safeguards. Emerging technologies are often understood better through carefully controlled use than through speculation alone. Regulatory sandboxes can play an important role here by allowing genuinely new applications to be tested within defined boundaries before they are deployed more widely.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Jain’s closing regulatory principle was that policy shouldn’t simply restrict technology. It should create room for useful innovation while strengthening safeguards as adoption grows.

“The objective of policy, therefore, is to create the conditions in which useful innovation can develop responsibly. This requires clear guardrails where the risks are understood, room for experimentation where they are still emerging, and the ability to adapt the framework as technology and its uses evolve. Good policy should give innovation room to grow, while ensuring that accountability and resilience grow with it.”

— Rohit Jain, Deputy Governor, Reserve Bank of India

Defence

Cochin Shipyard | Mid Cap | Defence

Cochin Shipyard excels in constructing and repairing vessels, including defence, commercial, and offshore ships. It pioneers innovative shipbuilding techniques and handles maintenance for Aircraft Carriers, Bulk Carriers, and specialized oil exploration vessels. Committed to indigenous solutions, it strengthens national security through advanced defence ship development.

[Reference]

Cochin Shipyard already has substantial revenue visibility from its existing order book. The company has also emerged as L1 for five Next Generation Survey Vessels for the Indian Navy.

“Our current unexecuted order book stands at around ₹22,000 crores, which continues to provide us with good revenue visibility. We have also been declared L1 for five Next Generation Survey Vessels for the Indian Navy, valued at approximately ₹5,000 crores. Once this contract is concluded, the order book will be around ₹27,000 crores.”

— Jose V J, Chairman & Managing Director, Cochin Shipyard

Beyond the existing order book, CSL highlighted three major upcoming Navy programmes—LPD, MCMV and P17 Bravo—where it intends to participate.

“In defense, many programs are running in the order book. As you are aware, there is the LPD, then the mine sweeper. From the defense side, the major order we are expecting soon is the LPD, four vessels, which will be approximately ₹32,000 crores. Then there are the MCMVs, approximately ₹6,000 crores. Then there is P17 Bravo, seven vessels, which will be approximately ₹49,000 crores.

These are the major orders we are expecting from the defense side in response to the RFPs. Since there are other competitors as well, we will also participate in the bids.”

— Cochin Shipyard Management

CSL sees a significant domestic commercial shipbuilding opportunity developing alongside defence. Government-led demand aggregation is expected to support hundreds of vessel orders over the coming decade.

“On the Indian commercial side, because of the demand aggregation being conducted by the Government of India, there is a requirement for around 432 vessels over a period of 10 years. SCI and the newly formed joint venture company DCSL have already issued three or four tenders. We are participating in those, and other companies are also participating. The pipeline is good for all companies and shipyards in India.”

— Cochin Shipyard Management

Despite the large expansion programme and order pipeline, management is retaining a relatively conservative growth assumption, formally guiding for around 12%.

“Normally, we achieve turnover growth of around 12% to 15%. We are still maintaining that expectation. Normally, we guide for around 12%, but we may finally achieve somewhere between 12% and 15% every year. Conservatively, we guide for around 12%.”

— Cochin Shipyard Management

Ship repair carries significantly better economics than shipbuilding, but shipbuilding accounts for roughly 70% of turnover. That mix leads management to guide for a mid-teens consolidated margin.

“We normally guide for 14% because, in shipbuilding, margins are normally around 10% to 12%, while in ship repair we achieve around 20% to 22%. Shipbuilding constitutes around 70% of the business and ship repair around 30%. Therefore, the blended margin will be around 14% to 15%.”

— Cochin Shipyard Management

Management attributed historical profitability partly to high-margin nomination orders such as the indigenous aircraft carrier and aircraft-carrier refits. Future defence contracts are increasingly tender-based.

“The higher margins over the last 3 years were mainly because we had some nomination orders, such as the aircraft carrier, or indigenous aircraft carrier, in shipbuilding. In ship repair also, there were two aircraft-carrier refits. Margins were high in those projects.

Going forward, we cannot expect such margins from commercial or defense orders because all defense tenders are now also on a tender basis.”

— Cochin Shipyard Management

Negative operating cash flow has largely resulted from the payment structure of European export orders, where CSL receives only about 30% during construction and most of the balance on delivery. Several vessels are now approaching delivery.

“The vessels from orders taken during 2023, 2024, and so on are now scheduled for delivery. We have already completed approximately 80% to 85% to 90% of the construction, but we have received only 30% of the money. This year, we are targeting the delivery of around 10 vessels during the current financial year.

Once we start delivering the vessels, we will receive the remaining 70% or 60% from the owners, and the cash flow will become positive.”

— Cochin Shipyard Management

CSL is entering a sizeable investment cycle across shipbuilding and repair facilities. Management provided a clear return threshold for the new investment base.

“ROCE will be around 14% to 15%.”

— Cochin Shipyard Management

CSL expects to spend heavily on expansion over the next five years, but government incentives could materially lower the effective funding burden.

“This capex will be spent over the next 5 years, and we will grow primarily through a debt-equity ratio of around 20:80. There is also a Shipbuilding Development Scheme announced by the Government of India through which we will receive a 25% capex subsidy for all these projects, as well as interest subvention of around 3%.

We want to take advantage of all these benefits while executing this capex.”

— Cochin Shipyard Management

After failing to agree definitive JV terms with HD KSOE, CSL decided to develop the block fabrication facility independently, albeit at a smaller scale than originally planned.

“Presently, our block fabrication facility at the CSL main facility has a capacity of around 12,000 tons per year. However, after commissioning the new dry dock, we will need greater steel throughput. With Hyundai, we were planning to have a block fabrication facility with a throughput capacity of 1 lakh tons. Since we are proceeding alone now, we are planning a capacity of around 60,000 tons per annum.

The new block fabrication facility will provide 60,000 tons, and our existing facility provides 12,000 tons. Therefore, our total throughput will be around 72,000 tons.”

— Cochin Shipyard Management

Electric tugs currently cost almost twice as much as conventional diesel vessels. Management nevertheless sees the transition as inevitable as environmental standards tighten.

“We believe it will take some time for mass adoption, primarily because electric-propelled tugs would cost almost twice as much as conventional diesel-propelled tugs. However, with environmental requirements becoming increasingly stringent, there is definitely no other way to go but to move forward on this front.

The Government of India also wants to see 50% of our tugs become green by around 2035 to 2040. Therefore, volumes will emerge. However, I think the real movement will probably happen 3-4 years from now.”

— Cochin Shipyard Management

Management sees localisation as more than import substitution. Domestic manufacturing should reduce logistics and duties while improving availability during global disruptions.

“There will be multiple advantages. The first is cost reduction. Local production will significantly reduce transportation costs and import duties. This will obviously lead to lower costs.

There will also be supply-chain resilience. Especially during periods of crisis, indigenous manufacturing will improve supply-chain resilience and disruptions can be addressed more effectively.

Delivery will also be faster if we produce these batteries in India.”

— Cochin Shipyard Management

CSL’s indigenous hydrogen fuel-cell vessel was primarily a technology demonstration rather than a near-term commercial opportunity. Management wants to develop expertise before the broader hydrogen ecosystem matures.

“Worldwide, hydrogen fuel cells are still at the initiation stage. People are just starting out. There are many factors that will come into play. One is the development of a hydrogen fuel-cell-propelled vessel, but there is also the land-side infrastructure, hydrogen availability, bunkering facilities, and many other systems that have to come into play. The ecosystem will take time to develop.

We wanted to be present in the technology and see how it develops so that we have a first-mover advantage and the technical and technological capabilities, which is what we have demonstrated. Converting that into a business and generating returns will take some time, but what I can assure you is that we will be there when the time comes.”

— Cochin Shipyard Management

Engineering & Capital Goods

KEI Industries | Mid Cap | Engineering & Capital Goods

Established in 1968, KEI Industries Limited is a leading manufacturer of cables and wires in India. They offer a wide range of products from housing wires to Extra High Voltage cables, and also provide EPC services for power and transmission projects. KEI is renowned for being one of the few manufacturers of EHV cables in India.

[Reference]

Gupta acknowledged that UltraTech brings a strong brand and deep pockets, but believes concerns around its entry are overdone given KEI’s established brand and dealer relationships.

“I think UltraTech’s entry is a little bit hyped by the media and the markets. I do agree that strong competition has come in, with a very strong brand and deep pockets, but we also have an established business for the last several decades, and we have built up our brand and loyalty with the dealer network for a pretty long time.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Rather than viewing a large new entrant purely as a threat, Gupta believes competition could push KEI to improve efficiency, brand management and engagement with dealers and channel partners.

“When a large competition or a strong competition comes, it is definitely going to teach us some better things in terms of efficiencies, in terms of better brand management, and going more closely to the dealers and our channel partners so that they demonstrate larger possibilities of business transactions, even at an increased level of competition.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Gupta argues that KEI’s exposure to residential wires isn’t large enough for UltraTech’s entry to materially affect the overall company. KEI currently has around 7% share of the house-wire market.

“Our exposure to residential wire is not that great. We only command around 7% of the market share in the total house-wire market, which is not a very significant business of our company. I’m 100% sure that it will not be impacted in any manner.

You will see in the next five to six quarters what happens, and we will be able to maintain our share of business, our share of market, and we’ll continue to grow faster than what I am predicting.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Gupta divides the house-wire market into project sales and retail trade. He expects UltraTech to focus heavily on trade, but only around half of KEI’s wire business falls into this segment.

“There are two types of markets in house wire. One is the project-based market, where we supply to large projects, which includes builders and commercial projects. Second is trade, where we supply to retailers.

I think their strategy will be to hit more towards trade, which is through retailers. Our total market in that trade segment is just 50% of the total wire segment that we do.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Even if UltraTech aggressively targets the project market, Gupta believes pricing disruption will be difficult because these are already tightly negotiated B2B contracts.

“The project segment will not be impacted because that is always done on a pricing basis, and deals are done on a B2B negotiated basis through the distributors.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

UltraTech could potentially use aggressive launch pricing to gain market share, but KEI already operates at a discount to established peers, limiting the scope for a major price gap.

“Even if they reduce the prices by 4% to 5%, our pricing is already the lowest among all our peers in the trade market.”

“Around 3% to 4% lower than the other brands.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Gupta said his initial channel feedback suggests UltraTech’s pricing is broadly near KEI’s, although the impact of launch discounts and dealer schemes is not yet clear.

“What I am hearing is that their pricing is almost nearing ours, which they have launched. But I’m not very clear about what schemes and discounts they are going to operate, which may be a launching price.

Eventually, they will also have to adjust their prices with respect to copper, and the moment they get established, they will understand the costs also.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

This is one of Gupta’s clearest comments on competitive strategy. Despite UltraTech potentially matching KEI’s pricing, KEI doesn’t intend to sacrifice margins by cutting prices further.

“We are already a very established brand, and we don’t intend to bring down our prices in the face of competition. We already have our dedicated customer base, our dedicated electrician and retailer base, and we will continue to hold on to our prices in terms of this competition from UltraTech.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Gupta clarified that he isn’t assuming UltraTech will avoid project business. Rather, he believes project pricing is already so competitive that gaining share through price cuts would require additional P&L investment.

“First of all, I have not said that they will not target the project business. Definitely, they will target the project business. But I have said that project business is already done at a very, very competitive price historically, and there is hardly any room for cutting down the prices in that business because these are negotiated deals on a B2B basis through the distributors.

If they cut down the prices, that means they are going to put some more investment in their profit and loss account to bring down their prices.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Even if UltraTech causes some disruption in the trade channel, Gupta believes KEI’s diversified product portfolio and geographic exposure can compensate for it.

“We will be adequately compensated from our other businesses and our other geographies in the markets world over, even if there is a minor impact on the trade turnover. But I’m sure that it will not happen. We should wait and watch.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Extra-high-voltage cables are becoming a more important part of KEI’s revenue mix. Management expects their contribution to increase meaningfully over the next year.

“Our contribution from the EHV business is around 6% at the moment in our total sales, and we intend to take it up to 8% to 10% over a period of the next one year. I think that should happen.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Unlike residential wires, EHV has significant entry barriers. Gupta doesn’t expect competitive intensity to materially change in the near term because new players need a long gestation period to enter the segment.

“I think competitive intensity will remain similar for the next one to two years because no more players are entering this field, and it is a long gestation period before a new entrant comes into this business.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

The interviewers questioned whether UltraTech could benefit from sourcing copper from group company Hindalco. Gupta argued related-party rules make preferential pricing unlikely.

“Unless Hindalco sells UltraTech at a cheaper price, which is unlikely because these are two separate companies and it triggers related-party transactions and compliance issues, I’m sure that they will not sell cheaper to UltraTech.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Gupta also dismissed concerns that UltraTech’s location near Hindalco could create a structural raw-material cost advantage.

“So far as distance is concerned, in the copper business, in a ₹1,500-a-kilo product, if 50 paise is the extra freight cost—our factory is 300 kilometres from Hindalco—it will not impact even 0.001% of the margins due to the distance.”

— Anil Gupta, Chairman & Managing Director, KEI Industries

Consumer Durables

Symphony | Small Cap | Consumer Durables

Symphony, an Indian Multi-National Company with presence in over 60 countries is the world’s largest manufacturer of air-coolers. From inventions to innovations, energy responsibility to environment stewardship, Symphony is a market leader which has been cooling customers for generations. The massive supremacy of Symphony coolers in the residential, industrial and commercial segments has made the brand synonymous with ‘cooling’.

[Reference]

The move into room ACs, BLDC fans and air purifiers is part of a broader strategy that began several years ago. Symphony calls this its “Beyond India Summer” portfolio, which also includes international revenue.

“Over the last several years, we have been expanding into what we call the ‘Beyond India Summer’ products, by which I mean products which are not entirely dependent on the Indian summer, or as dependent as air coolers are.

We diversified into tower fans to begin with about five years ago, and a couple of years ago into water heaters. We also consider our revenue outside India as part of the ‘Beyond India Summer’ revenue.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Bakeri doesn’t see the new categories as unrelated diversification. Symphony considers itself an air-and-water company and believes the new products fit naturally within that positioning.

“In keeping with that theme, we are going to be expanding into room air conditioners, air purifiers and BLDC fans. These are all adjacencies as far as Symphony is concerned.

We define ourselves as an air and water company, and these are natural extensions of our product portfolio.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Rather than setting up factories for ACs, fans and purifiers, Symphony plans to rely on India’s established third-party manufacturing ecosystem, keeping the expansion asset-light.

“We will not be investing in capex or incurring any capex on these categories. Fortunately, the ecosystem of manufacturing is very well established over the last several years in India. So we don’t really have to get into manufacturing and reinvent the wheel.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Outsourcing manufacturing doesn’t mean Symphony intends to compete purely on price. Bakeri said the same product differentiation, innovation and service proposition used in coolers will be carried into the new categories.

“Symphony’s brand promise has always been a differentiated product—something innovative, a quality premium product—and backed by wide distribution and after-sales service. All of those will also hold true for these categories.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Bakeri stressed that diversification needs to create profits, not just revenue. That’s important because margins in ACs and fans could structurally be lower than Symphony’s existing cooler business.

“We are not going to be chasing numbers. We are not here for merely topline growth. This will certainly add to the bottom line.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Symphony accepts that ACs, fans and purifiers may not match the margin profile of its core portfolio. Management is willing to accept lower percentage margins as long as the businesses add absolute profit.

“While the margins in terms of percentages may not be the same as in our current product portfolio, because these are more competitive and we are sort of Johnny-come-lately, we believe that these would be, all in all, EBITDA accretive.

We are sort of ignoring the percentages as long as they add to the overall bottom line. That is how we are approaching these products.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Symphony is entering established markets from a small base, making virtually all revenue and profit incremental. Bakeri believes even modest penetration could therefore materially move the needle.

“These are large categories and the upside, because we are just beginning, is that for us everything is incremental. Everything is additional, whether it’s topline or bottom line.

We believe that because these are large categories, even a small fraction of that for us, to begin with, should be fairly significant.”

— Achal Bakeri, Chairman & Managing Director, Symphony

This was the strongest long-term statement in the interview. Bakeri believes the sheer size of the categories Symphony is entering could eventually make their combined revenue comparable to or larger than its core cooler business.

“I wouldn’t be surprised if, going forward, the revenue from these categories is equivalent to or even exceeds the core cooler business, merely because air conditioners, at least, are a high-ticket item and a much larger category than air coolers.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Fans have a lower ticket size than room ACs, but Bakeri still sees the size and growth of the category as sufficient to create a meaningful opportunity for Symphony.

“Fans, of course, are a lower-ticket item, but again the market is fairly large and expanding too.”

— Achal Bakeri, Chairman & Managing Director, Symphony

Unlike ACs and fans, air purifiers represent a relatively undeveloped market. Symphony sees room for the category to become more significant over time.

“Air purifiers are an absolutely, I would say, nascent category in the country, and we believe that too has significance.”

— Achal Bakeri, Chairman & Managing Director, Symphony

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Meher.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 87th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 5 industries.

FMCG

• Hindustan Unilever Limited

Financial Services

• Asset Reconstruction Company (India)

Healthcare

• Fortis Healthcare Limited

Information Technology

• Shiprocket

Auto Ancillary

• Sandhar Technologies

FMCG

Hindustan Unilever Limited | Large Cap | FMCG

Hindustan Unilever is India’s largest consumer goods company, reaching 9 out of 10 households with its portfolio of 21 brands exceeding 1,000 crores in turnover. The firm operates across Home Care, Beauty & Well-being, Personal Care, and Foods segments, leveraging a distribution network of 9 million outlets.

Note: This information is from the HUL Capital Markets Day analyst call.

[Concall]

HUL’s market share is significantly higher in premium segments than in mass, positioning it to gain overall share as India’s middle class grows. This structural advantage means the company naturally captures more value as consumers upgrade their spending habits.

“India is at an incredible inflection point where the Premiumizers we discussed are now at a household income of 3,500 to 4,000. At that point, we have seen premiumization begin to inflect in many markets. Compared with other markets in the world, the 60% of our population we discussed is in exactly the right position. Our portfolio is structurally advantaged in premium. We have 1.3x the relative market share in premium compared with our mass business. We have 1.3x market share in premium compared with mass. We therefore have a structural tailwind. As the market premiumizes, HUL will grow market share. Very simply, if we stand still, we grow market share.”

— Priya Nair, CEO & MD

The Home Care segment sees a massive growth runway as per capita spending in India is still less than half that of similar developing markets. HUL plans to capture this by driving higher usage volume and converting households from traditional bars to more expensive liquid formats.

“I want to put a statistic before you. If you look at Home Care spending per capita in a comparable market such as Vietnam, it is 2.5x India’s Home Care spending per capita. This is our headroom for growth and the runway we have for taking the Home Care business forward. What does winning in New India look like? Today I will walk you through the 4 pillars Priya discussed. The first is consumption, which means more usage. The second, which we have not discussed before, is grams per usage. The third is premiumization, which is something Surf Excel has done well and which you have heard about before. The fourth is market making. Even today, across all Home Care liquids, penetration remains relatively low, leaving a huge opportunity for us to move forward.”

— Vandana Suri, Executive Director

The Horlicks brand is being fundamentally repositioned from a childhood health drink to a ‘lifestyle nutrition’ product for adults. This pivot aims to rejuvenate the legacy brand and expand its relevance across a wider age demographic using science-backed functional ingredients.

“That is why a major strategic pivot for us is to move away from presenting Horlicks only as a health food drink and toward lifestyle nutrition. We are bringing science and nutrition back to the core of Horlicks with superfoods. What do I mean by superfoods? We have added oats, almonds, and millets. These are foods we know in India and tastes we have grown up with. We are bringing this together with Nutri-Max technology, which allows us to provide these nutrients in a condensed form to all Indians. It is everyday nutrition, with 6x fiber and no added sugar.”

— Rajneet Kohli, Head of Foods & Beverages

HUL is modeling India’s tea and coffee evolution on China’s past trajectory, moving toward premium, ready-to-drink, and functional formats. This strategy focuses on extracting more value per cup rather than simply selling higher volumes of commodity tea.

“Here is the one-page strategy for Beverages. We are going to lead the evolution of Beverages over the coming decades through 3 simple steps: mass to premium, kettle to cup, and hot to cold. Each of these is about increasing value per cup. Let me elaborate. We are a tea-drinking nation, and when we wanted inspiration, we looked at how China’s tea evolution took place. Please bear with me through a few figures and charts. This is what unpackaged tea was in China: 25%, with packaged tea at around 15%, while premium was only 15%. Add another functionality, ready-to-drink, at around 20%. Over 15 years, China moved from 25% premium, ready-to-drink, and functional products to 50%. That is the revolution that will happen in India as well—not in the Chinese way, but in our own Indian way.”

— Rajneet Kohli, Head of Foods & Beverages

The company believes the body wash segment is reaching a ‘real point of inflection’ similar to the liquid detergent market a decade ago. Being the current market leader, HUL is well-positioned to dominate this high-margin category as consumer habits shift away from soap bars.

“We are at that moment. We believe body wash will now inflect because it is beginning to reach critical mass. We are the leaders in body wash in the country today. In liquid body wash, I am happy to share that we are also the leaders of the segment, and we will drive market development. ... We have that understanding, and we are beginning with younger consumers through a sampling program at scale. We will deploy our playbook at scale and drive multiyear market development of body wash. ... As Vibhav mentioned, we are now also taking Stratos into our premium brands because we are fully convinced that it provides skin benefits across our portfolio.”

— Priya Nair, CEO & MD

The CEO is doubling down on brand ‘desirability’ to attract younger, Gen Z consumers who value contemporary aesthetics and science-backed benefits. This overhaul of the existing brand portfolio is seen as the primary fundamental driver for future volume-led growth.

“What gives me confidence that we will deliver competitive volume-led growth is the deepening of our fundamentals. There are 3-4 things that matter in consumer products. The first is desirable brands. Our brands need to be relevant not only to our existing consumers but also to new consumers. I hope you saw the focus today on bringing new trialists into our brands. We are making our brands more desirable and more contemporary. We are conscious that the portfolio we had yesterday is not the portfolio we need in the future. By portfolio, I mean both our existing brands and how they need to appear, as well as our new brands. That is the transformation journey we are on.”

— Priya Nair, CEO & MD

Financial Services

Asset Reconstruction Company (India) | Financial Services

Asset Reconstruction Company (India) acquires and securitizes financial assets, primarily focusing on managing and resolving stressed assets acquired from banks and financial institutions. The company operates across three main business verticals: corporate loans, SME and other loans, and retail loans.

[Interview]

Kakarla highlighted the role ARCs have played in India’s credit ecosystem. Arcil itself has returned more than ₹30,000 crore to banks and NBFCs through recoveries.

“The ARC industry has been an invisible but critical part of the credit cycle. This being the first ARC to list will give visibility to the whole industry. The industry has been around for 25 years, starting with Arcil itself.

Over this period, the industry has given back about ₹2.5 lakh crore to the banking and NBFC industry through recoveries, and we ourselves have given over ₹30,000 crore back to the lending industry.”

— Phanindranath Kakarla, MD & CEO, Asset Reconstruction Company (India) Ltd. (Arcil)

Arcil buys stressed loans from banks and NBFCs and works to maximise recoveries. Corporate assets account for around 69% of its AUM and remain the company’s largest segment.

“How Arcil works is that we buy stressed assets from banks and NBFCs and work to recover as much value as possible and return capital and liquidity back to the original lending organisations—that is, primarily banks and NBFCs.

At the core was corporate. Like the rest of the industry, we also started with corporate, and we’ve been doing this now for close to 25 years with large, complex cases, which we help turn around, sell unproductive assets and bring them back onto a productive basis. That forms the bulk of our business, which is about 69% of our AUM.”

— Phanindranath Kakarla, MD & CEO, Arcil

While corporate stressed assets dominate AUM, Arcil has spent nearly two decades building a sizeable retail stressed-loan franchise backed by technology and analytics.

“The retail business—we started this in 2008 itself in anticipation of the household wealth creation which is happening through credit. Over the years, we have developed expertise and experience in handling this.

We currently handle about 35 lakh NPA accounts of individuals and small businesses. It is done with the help of a technology backbone and analytics. We have invested heavily into this.”

— Phanindranath Kakarla, MD & CEO, Arcil

Retail stressed assets are emerging as an important growth engine alongside Arcil’s traditional corporate resolution business.

“We have grown about 56% over the last three years in our retail business.”

— Phanindranath Kakarla, MD & CEO, Arcil

Asked whether the business is inherently cyclical because strong economic conditions produce fewer bad loans, Kakarla argued that India’s sheer credit-market size means even a low stressed-asset ratio creates a substantial addressable market.

“I think that’s a fair question, and that is how everybody looks at it. But what we now need to realise is that India, as a systemic credit market, is very, very large.

India’s systemic credit market is over ₹200 lakh crore. Fresh systemic credit being added is about ₹30 lakh crore a year. Given that, even a small percentage of that, irrespective of the cycles—whether it is bad or not—even at 1%-2%, is a very, very large number.”

— Phanindranath Kakarla, MD & CEO, Arcil

Management believes penetration, rather than merely the direction of the NPA cycle, is important to Arcil’s long-term growth opportunity.

“The ARC industry is currently only handling a small part of it. So the market is very large in a growing economy.

While the cycles do help us, I think that’s only a small part of the whole picture which is out there. We just need to realise that India is a very, very large credit market at this moment, and a small percentage of NPAs is still large enough for the entire ARC industry to grow.”

— Phanindranath Kakarla, MD & CEO, Arcil

ARCs operate under RBI regulation and regulatory changes are common. Kakarla said Arcil hasn’t identified anything on the horizon that it believes could materially disrupt operations.

“We’ve been there for 25 years. There are regular changes which are made in the regulatory environment by the Reserve Bank of India. They give us enough warning for us to prepare ourselves. That’s been our experience in the past, and thereby I do not see anything which could seriously disrupt our business.”

— Phanindranath Kakarla, MD & CEO, Arcil

Arcil’s managed asset base has expanded meaningfully, providing a larger pool from which future resolutions and recoveries can be generated.

“Our AUM is over ₹20,000 crore. We were close to ₹17,000 crore the year before. That’s been the growth in the AUM.”

— Phanindranath Kakarla, MD & CEO, Arcil

This is one of the most useful operating metrics disclosed in the interview. Management said its annual resolution rate has consistently remained in the 22–25% range over the past two years.

“Our resolution varies between 22% to 25% and has been in that range over the last two years. That is, of the beginning-of-the-year AUM, how much do we resolve during the year? That varies between 22% to 25%, and that has been consistent and is something which we aim at.”

— Phanindranath Kakarla, MD & CEO, Arcil

Asked about the rapid growth of private-credit funds in India, Gupta differentiated their role from ARCs: private credit provides financing, whereas Arcil typically enters after the underlying exposure has already become stressed.

“We come in once the asset becomes stressed. Our ability revolves around the asset’s recoverability, the potential of the asset, its future potential, sustainable debt, etc. We work around that and put a lot of effort into resolving the assets.”

— Pramod Gupta, CFO, Arcil

Arcil’s role isn’t necessarily to liquidate a stressed company immediately. Depending on the underlying business and sustainable debt level, it can give borrowers time to revive operations.

“For us, the resolution strategy would be case-specific. Depending upon that, we give a very long rope to potential borrowers to revive, and that is where we help businesses come back into the mainstream and help the economy.”

— Pramod Gupta, CFO, Arcil

Healthcare

Fortis Healthcare Limited | Mid Cap | Healthcare Services

Fortis Healthcare is a leading integrated healthcare provider in India, operating a multi-specialty hospital network and diagnostic services. The company is currently under the majority ownership and management control of the global healthcare group IHH Healthcare.

[Concall]

The forensic audit ordered by the Delhi High Court will investigate historical promoter actions, IHH’s stake acquisition, and the roles of various banks. Understanding this scope helps investors identify which specific transactions and entities are under legal review.

“The scope of the audit covers a few things, as mentioned in the order. One is the reconstruction of the complex evolution of FHHPL, which is the promoter entity, the erstwhile promoter entity, and which has nothing to do with FHL. Through this entity, they were holding shares in FHL. So, during the period from 2011 to 2018, they would look at this. The second part of the forensic audit is the examination of the acquisition of a controlling stake in FHL by IHH and TK, including approvals, filings, and so on related to such acquisition, and the subsequent utilization of the investment amounts towards the acquisition of healthcare assets from RHT Health Trust in Singapore. The third thing in the scope is the examination of any role, if any, of FHL and its officers and key managerial personnel in processing and approving the unencumbered share dissipation transaction of the erstwhile promoters. The last part of this scope is the examination of the role of all 17 banks and financial institutions in the dissipation of the said assets. That is the larger scope that has been ordered.”

— Dr. Ashutosh Raghuvanshi, MD & CEO

Management reiterates the goal of increasing IHH’s stake in Fortis to over 50% and supporting all necessary capital expenditures. This long-term intention suggests that the shareholder sees significant value in the platform regardless of temporary legal hurdles.

“Our commitment to take our stake up to 50% and above continues. As I said, in terms of investment into Fortis, we are fully committed. Any capex or capital expenditure need that Fortis might have, we are happy to infuse money, of course within the purview of the law in terms of what we can do on a year-on-year basis. We are fully committed to taking our shareholding up to 50%, as outlined previously by Dr. Prem, and we are also happy to infuse money into the company for its growth needs as and when required. Nothing changes for us.”

— Dilip Kadambi, IHH Group CFO

Management argues that the company cannot be held responsible for historical share transfers between private parties because it had no legal role in those transactions at the time. This defense is intended to distance the current corporate entity from the legal liabilities of its previous promoters.

“The company has no role in share transfers. We are a publicly listed company. Shares are transferred between the parties through the registrar, and the company plays no role. The rules at that time did not require the compliance officer to provide any kind of clearance. The rules now state that if a promoter is transferring shares, they must obtain permission from the compliance officer. However, at that time there was no such rule, and therefore no permission was sought from the company. The company was not really aware that these kinds of transactions were taking place, or whether they should or should not take place. The company had absolutely no role to play in that entire process.”

— Dr. Ashutosh Raghuvanshi, MD & CEO

Information Technology

Shiprocket | Small Cap | IT

Shiprocket, incorporated in 2011, is an e-commerce enablement platform providing technology-driven logistics and merchant solutions. The company operates in the e-commerce enablement segment, offering domestic and cross-border shipping, fulfilment, checkout, payments, marketing, and merchant solutions.

[Concall]

Shiprocket positions itself as the infrastructure layer for off-marketplace/D2C commerce. Its scale gives it access to transaction, merchant and consumer data that can subsequently be monetised across shipping, payments and marketing.

“Shiprocket is becoming the one-stop shop for MSMEs to run and digitize their businesses end-to-end. To give you an idea of our scale, as of FY26, we powered over 32,000 crores in GMV and 20 crores in transactions, and we served about 15 crore consumers. In a way, this represents off-marketplace sales, largely through D2C channels, for various lakhs of sellers in the country through Shiprocket.”

— Sahil Goyal, MD & CEO

Management sees Indian e-commerce penetration as still being at an early stage, particularly outside metros. Shiprocket already derives a majority of its GMV from Tier-2 and Tier-3 cities.

“Today, India has about 8% retail penetration, which is fairly low compared with the US and China. India is at the beginning of its digitization journey, particularly in tier 2 and 3 cities, where half of India’s e-commerce today is already in tier 2-plus cities. Shiprocket has a majority of its GMV coming from tier 2 and 3 cities, so there is a lot of growth happening in that segment.”

— Sahil Goyal, MD & CEO

Shiprocket’s mature shipping business is demonstrating operating leverage. Management says every incremental core transaction becomes margin-accretive once overheads are covered.

“The core business has been profitable for quite some time now. We saw its operating leverage grow from 6% EBITDA about 3 years ago to about 12% in FY26. The business is scaling, continuing to add merchants, and continuing to add new transactions.”

— Sahil Goyal, MD & CEO

Shiprocket no longer necessarily needs shipping to be the first product a merchant adopts. Marketing or another emerging product can bring the merchant onto the platform before Shiprocket cross-sells shipping.

“We also see merchants depending on where they are in their life cycle. For example, someone may be using a direct courier, but their immediate problem may be marketing. They may choose the marketing solution first, which then creates an opportunity to sell shipping over time.

As a company, at the first-principles level, we think about enabling orders. Ultimately, we want to enable merchant orders and power more and more margin pools on the same order, irrespective of the merchant’s entry point.”

— Sahil Goyal, MD & CEO

Shiprocket is using generative AI to remove the agency/design bottleneck faced by smaller merchants. The larger opportunity is to combine content generation with its proprietary commerce data.

“AI Ads produces ad creatives in minutes. It provides multiple formats out of the box. It can provide static banners for every placement, editable templates that merchants can change, short-form videos from product images, 360-degree product views, and so on.

The differentiator versus a generic AI tool is the context. Shiprocket can see a brand’s own ad performance through its connected ad account, and we can see category-level performance overall. The intention is to make all of this easier for merchants while also personalizing it.”

— Tanmay Kumar, CFO

Management’s martech thesis rests on combining advertising with actual transaction, RTO, inventory and consumer data—rather than optimising merely for clicks or ad-platform conversions.

“We bring a delivered return-on-ad-spend model to the table. We help merchants look at their net return on ad spend, manage RTO in the middle, and generate creatives grounded in purchase data.

Unlike the ad platforms, Shiprocket sits on actual purchase data. We have catalog data, consumer data, and inventory data. We know how many times consumers have bought and where they live. Therefore, we can model what types of products are sold in which locations, and that information also feeds into the creation of ads.”

— Sahil Goyal, MD & CEO

Rather than competing with quick-commerce platforms, Shiprocket wants to become the infrastructure layer that allows smaller D2C brands to supply them.

“The larger businesses can do it, but for smaller businesses there is a lot of work happening through email, spreadsheets, WhatsApp, and other channels. Our system is integrated with quick-commerce platforms. When the dark store places an order, we are notified automatically, a truck is assigned for pickup, the delivery slot is booked, and the goods reach the dark store.

This offering effectively aggregates purchase orders across many D2C brands into slots and gives the brand visibility into what is arriving and where the truck is. This enables brands to participate in the overall quick-commerce growth story.”

— Sahil Goyal, MD & CEO

As logistics companies increasingly target D2C merchants directly, Shiprocket’s defence is that its value proposition isn’t simply cheaper shipping—it is routing shipments across 42 couriers using years of network data.

“As an aggregator, we can use multiple contracts across 42 courier partners to select the right quality and the right SLA for each shipment that goes through the Shiprocket system. We have over 70 crore shipment data points accumulated over many years, which allows us to understand the network. We also have a predictive model that allows us to route shipments.

That is the real value the shipping platform brings to the table. Suppose there is spillover demand and certain parts of the network are constrained. No matter how large the brand is, the information, instant routing, and ability to route across different partners become more valuable as brands become larger.”

— Sahil Goyal, MD & CEO

Management argues that standalone software competitors may solve individual problems, but Shiprocket’s advantage comes from connecting checkout, shipping, RTO, advertising and consumer data.

“There are providers offering solutions for individual points in the stack, but I believe data scale makes a significant difference. With over a decade of consumer behavior data, 15 crore consumers served, and approximately 30 crore online shoppers in the market, we see about 93% of our checkouts having the address filled automatically.

We are able to fraud-score RTOs using consumer and address data. All of this creates outcomes for merchants because it is connected.

Having independent vertical software is different from having a connected and integrated stack that shares data across the stack. That is what drives outcomes.”

— Sahil Goyal, MD & CEO

This is an important modelling nuance. Larger D2C merchants tend to shift marketing and inventory towards marketplaces during festive-season sales, which makes Q3 relatively weaker for Shiprocket’s direct-commerce business.

“There is one seasonal factor built into the business every year. We predominantly work with businesses selling outside marketplaces through their direct channels. When the Q3 e-commerce season generally arrives, many of our merchants withdraw from marketing and redirect inventory to marketplaces, at least the larger merchants.

Therefore, Q3 tends not to be the best quarter for our company, unlike the broader e-commerce trend. That is the only seasonal factor I would point out. Other than that, there is no other meaningful seasonality built into our business.”

— Sahil Goyal, MD & CEO

This is perhaps the clearest articulation of Shiprocket’s long-term strategy. Management would rather bring more commerce onto the platform first because every transaction creates opportunities to monetise shipping, payments, checkout, advertising and other services later.

“The current focus of the company is to continuously add transactions, rather than necessarily expand every unit of margin at this point, because the transaction is more valuable. If you think about the 30,000 crores in GMV last year, approximately 25-30% goes into marketing.

The objective is to bring the transaction into the company and then monetize it across the stack. Therefore, although there are several value-added services that we are building and can build, whether and how we monetize them depends on what we want to do at that point in time and on how the overall business is performing.”

— Sahil Goyal, MD & CEO

Auto Ancillary

Sandhar Technologies | Small Cap | Auto Ancillary

Sandhar Technologies Limited has established itself as a manufacturer of automobile accessories, safety locks, door hardware, etc.

[Interview]

Davar remains constructive on India’s EV transition, arguing that geopolitical uncertainty and dependence on fossil fuels strengthen the case for alternative energy. Unlike Western markets, India’s EV adoption is developing from the mass-market end.

“I believe that, with whatever is happening in the world in terms of uncertainty—whether it is fossil fuels or the geopolitical scenario—dependence on alternate fuels makes a lot of sense.

We have seen that traction come in India and, fortunately for us, unlike the Western world where EVs are more relatable to high-end vehicles, in India this has taken shape in the form of adoption in EVs and commercial vehicles. So I think it’s a bottom-up approach. With the numbers that we see in terms of sales, I believe the adoption acceleration will continue at least into the near- and medium-term future.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

The expected jump from around 70,000 units last year to 200,000 isn’t based on anticipated demand; management says the volumes are backed by orders already received.

“This is not any anticipation. This is out of pure orders that we have for the year, and there is no reason why anything should change. At this time, as we sit, the orders that have been given to us are being delivered as per schedule, and there is no change that I have seen from the customers in terms of anything likely to happen for this particular year.

So yes, you’re absolutely right. From 70,000 last year, we look at that number to be close to 200,000 this year.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

The facility originates from Sandhar’s Sundaram-Clayton acquisition. The previous operation generated roughly ₹300 crore, while the new plant is being built for approximately three times that scale.

“This is actually a by-product of the acquisition that we had done from Sundaram-Clayton. Once we bought that, we had to move into a new facility. At that time, Sundaram-Clayton and this facility were doing about ₹300 crore of revenue.

In the new facility, we are building that facility to have three times that. So we anticipate that at full capacity it should give us about ₹800–900 crore of revenue.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

The new facility combines multiple manufacturing processes under one roof, spanning die-casting, machining, tooling and alloy production.

“It will be the most integrated aluminium plant in the country, which will have both high-pressure die-casting and low-pressure die-casting. It’ll have all kinds of machining, tool building, as well as alloy making.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

While current customer schedules support Sandhar’s growth outlook, management acknowledges that a broader auto slowdown in H2 could alter the trajectory.

“Of course, there is always the likelihood of an industry slowdown which could happen overall. So we’ll have to wait and see as to how the second half of the year goes. But at this time, I don’t see any changes that we need to think of or announce for the balance part of the year.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

Labour availability and rising wage costs were among the Q1 pressure points. Sandhar’s response is a major automation programme across its sheet-metal operations.

“There were two or three things that happened where we thought we needed to take pre-emptive action. One was, like I said, the biggest challenge was availability of manpower, and to that end I think we have decided to automate as much as possible.

From a level of less than 20 robots that we had within our sheet-metal facilities, by the end of this year we will have 500.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

The Middle East crisis contributed to the Q1 energy-cost spike. Sandhar is responding by diversifying its energy sources, including a shift towards PNG.

“Similarly, with the availability of LPG, we’ve started to move from LPG onto other energy sources, whether it be PNG or others. So there are some measures that we are taking which we are trying to ensure take away the risk factors as we go forward.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

Davar doesn’t expect Sandhar to eliminate commodity volatility altogether. Instead, the auto-component industry’s established price-reset mechanism should continue adjusting for movements in subsequent quarters.

“In terms of re-triggering and pricing, commodities are something that happens all the time, and you’re aware of the cycle that we run within the auto-component industry. That’s something that will continue to happen, up or down, and those will be adjusted in subsequent quarters.”

— Jayant Davar, Chairman & CEO, Sandhar Technologies

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Meher and Srusti.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 86th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered the SEBI Chairman’s Address & 5 companies across 5 industries.

Regulator

• SEBI Chairman

Automobile

• Maruti Suzuki India Limited

FMCG

• United Breweries Limited

Financial Services

• Indian Bank

Defence

• Zen Technologies Limited

Engineering & Capital Goods

• Lumino Industries Limited

Regulator

SEBI Chairman | 30 years of NSE Clearing Limited

Marking 30 years of NSE Clearing Limited, SEBI Chairman Tuhin Kanta Pandey reflects on India’s shift from T+14 paper cycles to a T+1 settlement architecture. He highlights key safeguards, like the Core Settlement Guarantee Fund and direct payouts, that make India’s segregated structure uniquely resilient compared to global omnibus models. Looking ahead, he challenges MIIs to move beyond traditional default risks to tackle complex, network-level operational and AI-driven vulnerabilities.

[Reference]

The regulator highlights how the clearing process converts private trades into guaranteed obligations to eliminate counterparty risk. This structural certainty is the foundation that allows Indian capital markets to scale and attract global institutional trust.

“Through novation, netting, margining and risk management, it transforms individual promises into obligations that can be settled with certainty. Thirty years of Clearing and settlement operations is therefore not simply a story about an institution. It is part of the story of how India built trust into its securities market.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

The transition to shorter settlement cycles like T+1 has significantly limited the duration that capital is exposed to potential market defaults. This shift increases capital efficiency for investors and reduces the likelihood of systemic contagion during high-volatility periods.

“The settlement cycle moved from T+3 to T+2 and eventually to T+1. Each of these measures addressed a different vulnerability. But together, they reduced the time for which risk remained open. They made risk measurable. And they made settlement more predictable.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

India’s market architecture has moved from assuming member solvency to actively preparing for potential defaults. For investors, this means the exchange has built ‘firewalls’ to prevent a single broker’s collapse from freezing the entire trading system.

“We are no longer relying only on the assumption that members will meet their obligations. We have built a system that is prepared for the possibility of failure. These may sound like technical mechanisms. Their purpose, however, is very simple. A problem at one point in the system should not become a problem for the entire market.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

Interoperability allows investors to use the same pool of collateral for trades across different exchanges, significantly lowering their capital requirements. This flexibility reduces the overall cost of trading and simplifies the operational burden for large institutional players.

“This is where interoperability among clearing corporations became significant. It enabled market participants to consolidate their clearing and settlement functions and collateral, even when trades were executed on different exchanges. It improved capital efficiency. It reduced costs and operational complexity. More importantly, it added to the resilience by providing greater flexibility in clearing arrangements.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

SEBI is introducing new rules to simplify compliance and create standard procedures for handling settlements during unexpected market holidays. These reforms aim to improve liquidity by allowing investors to reuse capital more quickly after completing security deliveries.

“To enhance operational efficiency, we have recently proposed to rationalise settlement, margin and risk-management provisions for Clearing Corporations. We are working to rationalise certain periodic filings and simplify the processes even further. We are also proposing to formulate an SOP for operational activities related to settlement on unscheduled holidays. We are examining a proposal on margin rationalisation for subsequent buy or sell transactions following acceptance of Early Pay-In of securities in the cash segment.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

The regulator is enforcing stricter governance and accountability for clearing houses to ensure they act as stable public utilities rather than profit-seeking entities. Investors benefit from this because it prioritises market stability and long-term security over short-term exchange profits.

“A clearing corporation is a systemically important financial market infrastructure. Its decisions can affect the functioning of the market well beyond its own balance sheet. That is why we have progressively strengthened the governance framework for Market Infrastructure Institutions. We have strengthened the role of public interest directors and specialised committees. We have clarified commercial and regulatory responsibilities. And we have strengthened accountability of key management personnel.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

India’s unique model of tracking assets at the individual level prevents brokers from pooling or misusing client funds, a common risk in many Western markets. This transparency offers retail investors a much higher level of protection against broker-level fraud or insolvency.

“One important feature is our segregated market structure, as opposed to an omnibus model followed in many developed markets. In India, every trade is traceable to the ultimate investor, and each client’s assets and obligations are handled individually. This creates greater transparency and investor protection. It also provides stronger asset security and helps contain risk at the client level.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

Management emphasises that as trading volumes explode, the financial ‘cushion’ protecting the market must grow at the same pace. This ensures that the system remains solvent and can absorb massive shocks without requiring government or taxpayer bailouts.

“The principle is important: market growth must be accompanied by commensurate growth in the financial resources available to absorb stress. No financial market can eliminate risk. What we can do is build multiple layers of defence so that risk can be identified, contained and absorbed before it becomes systemic.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

Regulatory focus is shifting from purely financial risks to ‘interconnected’ risks where a single technology vendor’s failure could halt the entire market. Investors should be aware that operational and technological uptime is now as critical to market stability as capital adequacy.

“The next set of risks is more interconnected. A participant may be financially sound, but its technology may be outdated and risk-prone. A market may be liquid, but a sudden liquidity shock may affect several participants at the same time. A clearing member may be safe on its own, but common exposures can create concentration across the system. A technology service provider may appear peripheral, yet a failure there could affect multiple market institutions simultaneously.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

The strategy is moving toward a ‘predictive’ model that looks at how risk travels through the entire financial network rather than just individual firms. This system-wide approach is intended to provide a more durable and stable environment for long-term equity investing.

“We must move from measuring risk to anticipating risk. We must move from entity-level risk management to network-level and system-wide risk management. And we must look at financial resilience together with operational resilience.”

— Shri Tuhin Kanta Pandey, Chairman, SEBI

Automobile

Maruti Suzuki India Limited | Large Cap | Automobile

Maruti Suzuki is India’s largest passenger vehicle manufacturer, maintaining a dominant presence across various price segments. The company is currently pivoting its strategy toward hybrid, CNG, and biogas technologies to complement its entry into the electric vehicle space.

[Reference]

Strong sales performance in regional markets like Kerala during Onam indicates healthy underlying demand ahead of the national festive season. This provides a positive signal for volume growth and market appetite across different vehicle categories.

“For Maruti, every day is a festive season now. But just to give you a perspective on Onam, in the previous month, we saw very strong retail sales in the Kerala market. For the first time in Maruti’s history, our van market share in Kerala reached 60%. That clearly shows vehicles are in high demand—be it in Kerala or across the country—and we are expecting that during the festive season, there will be a further surge in sales.”

— Partho Banerjee, Senior Executive Officer, Marketing & Sales

The company is actively scaling up its new production lines to meet high demand, with full capacity expected within a few months. Low factory inventory suggests that production is being efficiently converted into channel sales without significant lag.

“As you are aware, we have already commissioned two assembly lines with a capacity of 2.5 lakh units each. The ramp-up is ongoing and will take another 2 to 3 months to reach full capacity. Nevertheless, whatever vehicles we produce—like in July, when we produced two lakh vehicles—nothing remains at the factory. All vehicles are dispatched to our channel partners, and retail remains very strong.”

— Partho Banerjee, Senior Executive Officer, Marketing & Sales

Maruti is absorbing some input cost increases to keep prices competitive, even though it creates short-term margin pressure. The decision to skip festive promotions and the low 16-day inventory level reflect very tight supply-demand conditions.

“Danish, while there is commodity cost pressure, our organisation believes we should not pass the full cost burden onto customers. Thanks to our production and supply chain teams, we are working to pass on as little as possible. Nevertheless, there is margin pressure because we are absorbing a portion of commodity price increases. We do not intend to run special sales promotions this festive season, simply because doing so would require raising prices first, which we do not intend to do right now. There is such strong demand in the market that vehicles are not sitting in inventory; we are operating at just 16 days of network stock.”

— Partho Banerjee, Senior Executive Officer, Marketing & Sales

Management attributed the recent dip in wholesale volumes to fewer working days in August rather than a cooling of consumer demand. This clarification helps investors distinguish between temporary calendar effects and structural shifts in the market.

“I will explain why you see that difference in numbers. Compared to July, the month of August had three fewer working days: one was Independence Day on August 15th, another was Raksha Bandhan, and there was an additional Sunday. For the domestic market, we produce around 8,000 vehicles per day. Across three days, that accounts for 24,000 vehicles, so you can do the calculation yourself. There is absolutely no demand issue; it was purely due to the lower number of working days.”

— Partho Banerjee, Senior Executive Officer, Marketing & Sales

While the company has delayed price hikes longer than its competitors, persistent commodity inflation makes future price increases likely. This suggests that protecting margins will become a priority if input costs do not stabilise soon.

“Fundamentally, as a marketer, I never like to increase car prices. But at the end of the day, when commodity prices rise, we must eventually pass on costs to customers. We cannot indefinitely absorb input cost increases. You will also appreciate that we were the last among OEM peers to raise prices. While there is cost pressure from elevated commodity prices and we try to minimise the burden on customers, in the near future, we may still need to pass on a portion of these costs.”

— Partho Banerjee, Senior Executive Officer, Marketing & Sales

Maruti is diversifying its green energy strategy by betting on biogas as a carbon-neutral alternative to electric vehicles. The conservative estimate for EV adoption suggests the company sees a much longer runway for internal combustion and gas engines.

“This is an excellent initiative approved by the Board, and we thank the Chairman and the Board. Combining Compressed Bio-Gas (CBG) with CNG results in a fuel profile that is as good as zero carbon—effectively as clean as an electric vehicle in India. We strongly believe that even by 2030, EV penetration in India will not exceed 16% to 17%. To reduce our overall carbon footprint, we look at our current portfolio, where CNG accounts for 42% of total Maruti sales.”

— Partho Banerjee, Senior Executive Officer, Marketing & Sales

FMCG

United Breweries Limited | Mid Cap | FMCG

United Breweries is India’s leading beer manufacturer and is part of the global Heineken Group. The company produces the iconic Kingfisher brand and manages an extensive portfolio of premium international labels including Heineken and Amstel.

[Reference]

Management is seeing massive volume growth in key states following favourable changes to how alcohol is distributed and sold. This confirms that the regulatory environment is becoming a tailwind for the industry rather than a hurdle.

“Number one, our confidence stems from policy reforms. The structural reforms in states like Karnataka, Jharkhand, and Maharashtra are driving explosive growth in the beer category. For instance, over the last three months, the beer category grew by more than 50% in Karnataka, and over 50% in Jharkhand following retail distribution changes. These figures reinforce our confidence in the massive long-term opportunity for beer in India.”

— Vivek Gupta, Managing Director and CEO

The company is focusing on high-end brands to offset rising raw material costs and difficult pricing regulations in some states. This shift toward premium products like Heineken Silver is intended to protect profit margins even if basic volume growth is uneven.

“The quality of our growth is extremely important because alcobev is a state-by-state business. In certain states, operations are currently not as sustainable or profitable, particularly as input costs have escalated following geopolitical conflicts in the Middle East. We are in active conversations with key state governments to improve operating profitability. That said, our top-line expansion will be driven primarily by premiumization. Our premium segment is growing at over 25%, anchored by strong momentum in brands like Heineken Silver and Kingfisher Ultra. Overall growth will be a balanced combination of premiumization, price-mix improvements, and underlying volume growth, supported by ongoing state-level policy reforms.”

— Vivek Gupta, Managing Director and CEO

The company is improving its profitability by selling more expensive beers and operating its existing factories more efficiently. By increasing production without spending more on new buildings, they aim to significantly improve the return on shareholder capital.

“Beer manufacturing is a capex-intensive business, so delivering strong returns on capital to our shareholders is paramount. The primary margin driver is our product mix, specifically premiumization. Unlike a couple of years ago, our premium portfolio is now margin-accretive. The second driver is optimising capacity utilisation across our own network of breweries and state mix, as gross margins vary significantly across states. The third driver is our internal productivity initiative. We have invested heavily in organisational capabilities, brewery infrastructure, and technology to do more with less. A key highlight of this program is maximising output from existing facilities at zero incremental capex.”

— Vivek Gupta, Managing Director and CEO

Management plans to maintain high levels of investment to capture India’s long-term potential as a top global market. They are aiming for a balance where they grow sales by double digits while slowly increasing their profit margins every quarter.

“We truly believe India will become the world’s largest beer market. Therefore, fueling category growth momentum is our primary objective. Whatever investment is required to sustain that structural momentum, we will commit. We are targeting balanced growth: double-digit net revenue growth alongside sequential margin expansion, rather than pulling back investments prematurely or over-investing ahead of demand.”

— Vivek Gupta, Managing Director and CEO

The steady influx of millions of new legal-age consumers every year provides a massive natural growth driver for the company. While state regulations are complex, this demographic trend supports the company’s goal of consistent double-digit revenue expansion.

“Double-digit revenue growth is not automatically guaranteed in a highly regulated state-by-state market. We must consistently deliver superior products in a competitive landscape. Our aim is to achieve double-digit net revenue growth while expanding operating margins year-on-year. Looking at macroeconomic drivers, 25 million young consumers reach legal drinking age every year in India. Kingfisher serves as the primary entry brand for the category, making us very buoyant about macro tailwinds.”

— Vivek Gupta, Managing Director and CEO

The company expects its high-end beer segment to continue growing at a very fast pace for several years. Reaching its target of a 20% premium sales mix by 2030 would fundamentally transform the company’s profitability profile.

“We expect 20% to 25% annual growth in our premium portfolio. Our premium volumes grew 34% in FY24 and 24% in the subsequent period, and we are running ahead of plan this year. By 2030, we expect premium products to represent close to 18% to 20% of our total sales mix.”

— Vivek Gupta, Managing Director and CEO

UBL has successfully gained significant market share in the premium beer category over the last year. This competitive success with brands like Heineken Silver shows they are effectively challenging rivals in the most profitable part of the market.

“Our number one priority remains overall category growth. We have already gained 300 to 400 basis points of market share in the premium segment, and we expect that share expansion to continue. However, driving the broader market pie is more important to us than competing solely for market share. Brand rollouts like Heineken Silver are performing very well and becoming top premium mild offerings in initial launch states.”

— Vivek Gupta, Managing Director and CEO

The company is launching new products specifically designed for longer social gatherings where consumers want a smoother taste and less smell. This focus on ‘sessionability’ and non-alcoholic options helps the company adapt to changing social habits and health trends.

“Sessionability is a major emerging consumer trend in India—consumers want beers that allow longer social occasions with a milder after-smell. Our innovation pipeline directly addresses this. For example, Kingfisher Strong Smooth was developed for enhanced sessionability with minimal after-smell. Heineken Silver is positioned as a natural product made strictly from barley, hops, and water. We are also educating consumers on lower-calorie natural beer profiles and plan to accelerate Heineken 0.0 to capture non-alcoholic beer occasions.”

— Vivek Gupta, Managing Director and CEO

Financial Services

Indian Bank | Large Cap | Financial Services

Indian Bank is a prominent Indian public sector bank offering a wide range of retail, corporate, and international banking services. The bank recently expanded its capital base through significant foreign currency deposit mobilisation to optimise its cost of funds and support aggressive credit growth.

[Reference]

The bank successfully raised $2.8 billion through international deposits and borrowings to fuel its next phase of expansion. These funds will be used to both support new lending and pay off existing, more expensive debt.

“We have mobilised $2.4 billion in Foreign Currency Non-Resident (FCNR) deposits and around $400 million in Overseas Foreign Currency Borrowings (OFCB), bringing the total to $2.8 billion. There are various deployment channels we are utilising. System credit growth remains healthy at around 18%, so part of these funds will be used directly to support credit growth. Another portion will automatically be deployed to substitute bulk deposits. Since we target loan growth of 14% to 15%, having this FCNR pool automatically allows a bulk of these deposits to replace higher-cost liabilities. Credit growth and bulk deposit substitution will be the primary deployment routes.”

— Binod Kumar, Managing Director and Chief Executive Officer

Management plans to use its newly raised international capital to replace high-cost bulk deposits. This move should help the bank maintain healthy credit growth while lowering overall interest expenses.

“System credit growth remains healthy at around 18%, so part of these funds will be used directly to support credit growth. Another portion will automatically be deployed to substitute bulk deposits. Since we target loan growth of 14% to 15%, having this FCNR pool automatically allows a bulk of these deposits to replace higher-cost liabilities. Credit growth and bulk deposit substitution will be the primary deployment routes.”

— Binod Kumar, Managing Director and Chief Executive Officer

Management clarified that raising large sums of foreign capital will not hurt profit margins because the new funds are cheaper than existing domestic deposits. Investors should expect stable interest margins as the bank replaces 6.6% cost debt with 6.4% cost alternatives.

“I do not expect any material negative impact if the funds are deployed judiciously. There will be minimal impact on Net Interest Income (NII) or NIM. While a portion will go toward credit lending, we remain disciplined with surplus liquidity and are not chasing loan volume at unviable rates. When analysing the cost dynamics, the average cost of our bulk deposits is around 6.5% to 6.6%. The total cost of the FCNR deposit pool—including swap costs—is approximately 6.4% to 6.5%, as our base offering rate is around 6%. Therefore, there will be no major negative impact on NIMs—perhaps just a positive or negative variance of one or two basis points.”

— Binod Kumar, Managing Director and Chief Executive Officer

The bank significantly exceeded its fundraising targets, raising $2.4 billion primarily from high-net-worth individuals in the Middle East and Singapore. This strong appetite from international investors suggests high confidence in the bank’s stability and growth prospects.

“We initially set an FCNR target of $1.5 billion, which was subsequently revised upward to $2.0 billion. We ultimately achieved $2.4 billion, so the outcome exceeded our expectations. Regarding deposit quality, I maintained strict criteria; otherwise, we could have easily raised up to $3.0 billion. We remained cautious and prioritised high-net-worth customers, carefully verifying source funds even for large deposits ranging from $50 million to $100 million. Inflows came from both existing and new clients, with ticket sizes starting as low as $100,000. Geographically, these deposits primarily originated from two key markets: the Middle East and Singapore.”

— Binod Kumar, Managing Director and Chief Executive Officer

Management is prioritising deposit quality by ensuring that 60% of their new foreign capital is unencumbered and not tied to internal loans. This conservative approach improves the bank’s liquidity profile and reduces the risk of sudden capital withdrawals.

“We explicitly discouraged leveraged deposits and evaluated them very selectively—primarily extending leverage only to high-quality existing relationships, such as clients who already held ₹600 crore in deposits with us. Net-net, around 40% of the $2.4 billion represents leveraged structures, while 60% consists of unencumbered deposits.”

— Binod Kumar, Managing Director and Chief Executive Officer

The bank has transparently shared the interest rates for its new deposit pool and the corresponding loans being offered to clients. These specific figures allow investors to accurately model the profitability and spreads of the bank’s international business.

“We offered 6.0% on the FCNR deposits, while the pricing for foreign currency loans against these deposits was set in the range of 5.5% to 5.6%.”

— Binod Kumar, Managing Director and Chief Executive Officer

Strong capital inflows have led management to raise their full-year loan growth forecast from 14% to as high as 17%. This aggressive upgrade signals that the bank has ample liquidity to capture market share in a high-demand credit environment.

“We initially guided for credit growth between 13% and 14%, but given these inflows, we are revising our full-year credit growth target to between 16% and 17%. FCNR deployment is a temporary dynamic; as these balances normalise over the coming quarters, funding will transition back to a standard mix of CASA, term deposits, and bulk deposits. Specifically, roughly 30% of the $2.4 billion will directly fund credit growth, while approximately 70% will be utilised for bulk deposit management and retirement.”

— Binod Kumar, Managing Director and Chief Executive Officer

The bank is pivoting its lending strategy toward high-growth infrastructure like data centres and green energy rather than low-margin general corporate loans. This focus on specialised sectors suggests the bank is prioritising yield protection and long-term structural growth trends.

“We see strong project demand in green energy sectors, including battery energy storage systems, solar panel manufacturing, and solar cell manufacturing. We are also seeing significant traction in data centres, driven by interest from the Middle East, where both established and emerging sponsors with strong track records are entering the space. We will continue lending to these high-growth sectors while actively refraining from participating in overly price-sensitive corporate lending segments where yields are squeezed.”

— Binod Kumar, Managing Director and Chief Executive Officer

Defence

Zen Technologies Limited | Small Cap | Defence

Zen Technologies is a leading Indian defence firm specialising in the design and manufacture of advanced combat training simulators and anti-drone systems. The company serves both domestic and international military and security forces with indigenous technology solutions.

[Reference]

Recent government policy changes have consolidated export approvals into a single category, reducing the time and paperwork required for international sales. This removal of operational friction allows the company to service international clients and spare parts requests much faster than before.

“To recap, even the time to export is now shortened because export permissions were previously taking longer. Even after we sold equipment, dispatching AMC spare parts involved multiple approvals, and any minor changes during transactions required additional sanctions. Now, all these aspects have been clubbed into a single category. This helps us avoid multiple approval cycles with the government, and the number of touchpoints has been reduced. Excluding UN-embargoed or blacklisted nations, we can now export to all other countries, which previously was a major operational challenge.”

— Ashok Atluri, Chairman and Managing Director

The company has provided a specific revenue guidance range for the current financial year that implies significant growth over previous periods. This target serves as a key benchmark for investors to track execution progress through the remaining quarters.

“We have indicated that full-year revenue is expected to be between ₹1,300 crore and ₹1,500 crore.”

— Ashok Atluri, Chairman and Managing Director

Management explains that recent revenue softness was caused by the military diverting funds to emergency operational needs, which delayed simulator purchases. The resumption of simulator ordering, including 600 crore rupees in new contracts, suggests a return to normalised purchasing behaviour.

“It is driven by order book execution visibility. Our order book previously moderated because prospective order awards got delayed—specifically simulator orders, as defence procurement temporarily shifted toward emergency operational requirements under Operation Sadbhavana. While we received emergency equipment orders, simulator orders were deferred. Now, simulator order inflows have resumed. We have received over ₹600 crore worth of simulator orders recently, with additional orders expected.”

— Ashok Atluri, Chairman and Managing Director

The military is increasingly adopting simulators because they can cut training times from nearly two years down to just three months. This efficiency gain provides a structural long-term incentive for the government to keep investing in the company’s simulation technology.

“Simulators already constitute a significant portion of our current order book. We expect a few hundred crore rupees worth of additional simulator orders in the forthcoming months. Defence authorities recognise that simulation training is the fastest way to maintain combat readiness. For instance, during Agnipath training programs, preparation timelines that previously took 100 weeks were compressed to 12 weeks through simulator integration.”

— Ashok Atluri, Chairman and Managing Director

The company still holds over 200 crore rupees in cash from its recent fundraising specifically for buying other companies. Investors should anticipate potential acquisitions that could broaden the company’s product portfolio or geographical reach.

“We have utilised over ₹700 crore, while ₹200+ crore remains available. A key portion of these funds is earmarked for inorganic growth through acquisitions. We are currently evaluating a couple of acquisition targets. If materialised, these acquisitions will expand our market footprint and utilise the remaining QIP capital, along with general corporate allocations over the coming months.”

— Ashok Atluri, Chairman and Managing Director

Management expects profitability to improve through operating leverage as revenue scales up during the year. They are maintaining high margin targets, including a 35% operating profit margin, which signals strong pricing power and cost control.

“Higher revenue turnover will automatically expand operating margins. We remain committed to our baseline target guidance of a 35% EBITDA margin and a 25% PAT margin. By year-end, our financial performance should match or slightly exceed these benchmark targets.”

— Ashok Atluri, Chairman and Managing Director

While defence contracting remains lumpy, the company’s order book is currently over 1,600 crore rupees and trending higher. The success of hitting fiscal year targets depends on whether the government completes fast-track procurement deals by the end of March.

“Order inflows in this sector remain inherently chunky rather than uniform monthly or quarterly increments. However, by the end of the financial year, our total order book position will be substantially higher. Many fast-track procurement (FTP) acquisitions carry a target conclusion deadline of March 31st. If those deadlines hold, order inflows will conclude within this fiscal year; if extended, they may spill into Q1 or Q2 of next year. Our current order book stands at over ₹1,600 crore, and we expect the overall order book trajectory to remain on an upward trend.”

— Ashok Atluri, Chairman and Managing Director

Engineering & Capital Goods

Lumino Industries Limited | Small Cap | Engineering & Capital Goods

Lumino Industries Limited is an integrated Indian manufacturer and EPC service provider operating in the power transmission and distribution sector. The company specialises in manufacturing overhead conductors, power cables, and transformer products, while also executing turnkey infrastructure projects for state utilities and private power operators across India.

[Reference]

The company is repaying ₹337 crore of debt from IPO proceeds, currently incurring an 8.5% interest rate. This repayment will make the company largely debt-free, significantly improving financial performance and PAT margins.

“Right now, we are paying an interest rate of almost 8.5%. This ₹337 crore of debt repayment from the fresh issue proceeds will be used to repay debt. Once we repay that, we will be largely debt-free. That is the financial advantage, which will help the company deliver better performance and also improve our PAT margins.”

— Devendra Goel, Managing Director

The company’s ₹3,200 crore order book includes ₹1,200 crore for products, expected to convert into revenue within the current financial year. This indicates strong short-term revenue visibility and a healthy order pipeline for the product segment.

“Out of our roughly ₹3,200 crore order book, ₹1,200 crore is for products and ₹2,000 crore is for EPC. The ₹1,200 crore for products will largely be converted into revenue within this financial year. As we are currently sitting in H1 of the financial year, we still have another 6 months to go. We do expect a lot of incoming orders and strong order flow. Whatever target revenue we are aiming to achieve on the product side, we will be able to achieve.”

— Devendra Goel, Managing Director

The ₹2,000 crore EPC order book will be executed over the next 3 to 4 years, providing longer-term revenue stability. Management aims to maintain a 70% product and 30% EPC revenue split, signalling a strategic shift towards higher-margin product sales.

“On the EPC side, we have an order book of ₹2,000 crore, which needs to be executed over 3 to 4 years. Our revenue split will always remain around 70% from products and 30% from EPC. As a management team, we will continue to focus on growing our product revenue while reducing our reliance on EPC revenues.”

— Devendra Goel, Managing Director

Product orders have short execution timelines of 3-4 months, limiting the product order book visibility to 1x-2x of capacity. This implies a steady, shorter-cycle business model for products compared to the longer-term EPC projects.

“When it comes to products, we don’t expect very large long-term orders to pile up because the timeline to execute most product orders is typically 3 to 4 months. So we can’t carry 2x, 3x, or 10x of our capacity in the order book; product order visibility will always remain between 1x, 1.5x, or 2x of capacity at the highest side. On the EPC side, yes, we can expect order book visibility spread across the next 3 to 4 years. So that is the range we expect.”

— Devendra Goel, Managing Director

The company is increasing capacity by 11,000 metric tonnes in H2 and establishing a new factory in Howrah for higher voltage cables (11kV-66kV). This expansion and focus on high-demand products like HTLS conductors are critical for future revenue growth and market share in advanced power transmission.

“Our base operations in Kolkata have that 40,000 metric tonne capacity you mentioned. Last year, we achieved a capacity utilisation of around 85%. In H2 of this year, we will be adding another 11,000 metric tonnes. Along with that, we are setting up a new factory in Howrah, West Bengal. Currently, we make low-voltage cables, but at the new facility, we will be manufacturing 11 kV, 33 kV, and 66 kV cables. We will also focus heavily on high-temperature low-sag (HTLS) conductors, which we feel will see massive demand in the country going forward. These are the main product lines where we will focus our growth.”

— Devendra Goel, Managing Director

While formal guidance will be issued after H1 results, the company expects to maintain historical trends of 10-11% EBITDA margins and 25-30% revenue CAGR. This indicates confidence in sustained profitability and strong top-line growth based on past performance.

“Regarding formal guidance, once we complete H1, we will be publishing our numbers, which will provide better visibility. Talking about specific future numbers right now would not be appropriate. However, looking at our past performance over the last 10 years, our EBITDA margin has consistently stayed in the 10% to 11% range, and our revenue CAGR has been between 25% and 30%. Going forward, we believe we should be able to maintain these historical trends.”

— Devendra Goel, Managing Director

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Shahid Barmare.

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 85th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 4 industries.

FMCG

• Milky Mist Dairy Food Ltd

• Avanti Feeds

Retail

• Bluestone Jewellery

Engineering & Capital Goods

• Leap India Ltd

Auto Ancillary

• Precision Camshafts

FMCG

Milky Mist Dairy Food Ltd. | Small Cap | FMCG - Dairy Products

Milky Mist is a prominent Indian dairy player focused on the value-added segment, producing high-margin products like paneer, cheese, and yogurt. The company distinguishes itself through an integrated manufacturing model and a massive, self-owned fleet of cold-chain logistics vehicles.

[Concall]

The company is executing a multi-pronged growth strategy involving capacity expansion, digital logistics, and aggressive retail infrastructure deployment. The planned addition of 50,000 cooling units is a key forward-looking indicator of their intent to dominate shelf space and maintain product quality.

“We intend to harness this sizeable opportunity through a few of our key strengths, which include strengthening our leadership position in the South while accelerating our strong presence across newer geographies; continuously expanding capacity and procurement capabilities at our Perundurai facility, including the addition of a new whey protein concentrate manufacturing unit, capacity expansion in yogurt and cream cheese, as well as new manufacturing lines for natural cheese; strengthening our brand visibility through increased advertising, influencer partnerships, and performance marketing; and pursuing disciplined inorganic growth by building on our recent Asal and Briyas acquisitions to make a meaningful contribution from the new product categories. We will leverage our technology, IoT-enabled logistics, data analytics, and automation to continuously improve our cost and operational efficiency. We will further expand our retail footprint through visi coolers, ice cream freezers, and chocolate coolers. We plan to deploy more than 50,000 visi coolers, ice cream freezers, and chocolate coolers over the next 3 fiscal years, as we indicated earlier.”

— Dr. K. Ratnam, Whole-time Director & CEO

Quarterly performance was driven by exceptional growth in high-margin categories like ice cream and yogurt, which grew by 60% and 153% respectively. This broad-based growth across multiple premium segments suggests the company is successfully capturing the emerging consumer demand for specialty dairy.

“Paneer remained our largest contributor, with both volumes and revenue growing by 34%, taking revenue from paneer alone to 248.29 crore. Paneer contributes approximately 26-27% of the top line. Cheese and curd also delivered very strong growth, with revenue increasing by 38% in cheese and 27% in curd. Ice cream delivered particularly strong growth because of the season as well as our brand equity, with volumes growing by 45% and revenue growing by 60% year-on-year. This is one of the most promising and fastest-growing categories for Milky Mist. Yogurt was another standout performer. This includes fruit yogurt, basic yogurt, and protein categories such as Greek yogurt and Skyr, with revenue growing by 153% on a quarter-on-quarter basis to rupees 84.5 crore from the yogurt category alone, reflecting the continued strength of this category. This is yet another strong category that will contribute to both the top line and the bottom line of the company.”

— Dr. K. Ratnam, Whole-time Director & CEO

Management explains their strategic pivot to include a long-term exclusive partnership with a private-equity-backed procurement network to secure high-quality milk. This arrangement provides a stable, high-grade milk supply for premium products like yogurt without the typical risks associated with middleman aggregators.

“A private equity-owned entity known as Innoterra, and its offshoot in India, in Tamil Nadu, Milklane, set up procurement activities in Tamil Nadu to procure good-quality milk and sell it at a premium to the players in the sector. While doing so, as you know, liquid milk procurement and selling is always based on demand and supply. They were in a difficult situation post-COVID, and they approached us to ask whether we would be in a position to take over the operations. That is when we explored the opportunity and said that, if given a choice, we would go ahead with a long-term contract with them on an exclusive basis. That is the reason we have included the private equity-owned procurement entity in the aggregate. In fact, they are also like us; they have been collecting milk directly from farmers. We have been monitoring their operations day in and day out, and their payment system is also like ours, with payments made directly into the farmers’ bank accounts. There are no aggregators pouring milk into the third party. It is an extension of our procurement activity going forward as well. Since this is a long-term contract of 5 years, their volumes will contribute to some of our product categories that require very good-quality milk, such as yogurt and UHT milk.”

— Management, Executive Leadership

The removal of GST and stricter regulatory action against imitation ‘analogue’ products have leveled the playing field for organized players. As the largest paneer manufacturer, the company is uniquely positioned to capture the massive shift of market share from unorganized to organized trade.

“In Q1, our paneer volume growth was 34%, and our sales growth was also 34%. This has come from two factors. First, GST on paneer became zero in September last year. With that, the pricing difference between organized and unorganized players became almost nil. This gave Milky Mist very strong growth momentum in paneer. Second, we have been informing, telling, and discussing at various forums and with the authorities the need to stop analogue products, particularly analogue paneer. Thanks to FSSAI and some of the key states that have banned analogue paneer, we are now seeing a significant volume uptake in our paneer business. Going forward, we also see very strong growth coming from paneer. This would help not only companies such as Milky Mist, because we are the largest manufacturer of paneer, but also consumers, who will have access to a better product rather than analogue products.”

— Management, Executive Leadership

Milky Mist achieves an 18-20% cost saving in logistics by owning its fleet and optimizing ‘reverse logistics’ by carrying third-party cargo on return trips. This integrated cold-chain model is a major competitive advantage, enabling faster market access and superior product preservation compared to competitors.

“In our case, the minimum shelf life of our products starts at 30 days. We have a very strong manufacturing unit in 1 location. The company owns and operates more than 375 transportation vehicles. This gives us the ability to load the products as they come out of the manufacturing lines and transport them without interruption to their respective destinations. Since we own the logistics, we operate every truck around the clock using artificial intelligence and IoT-based systems. They reach the destinations in approximately 75% or 60% of the time taken by other third-party operators. This gives us a faster turnaround in reaching the products to the market. While returning, these trucks carry return loads because we have established very effective and robust reverse logistics. When they return from Maharashtra, Gujarat, Delhi, Punjab, and other parts of the country, they bring back food products, fruits, vegetables, or grains for third parties to Bangalore, Hyderabad, or Chennai. They offload these goods and return. We save approximately 18-20% on logistics costs by using our own transportation and skillfully employing these trucks for reverse logistics.”

— Management, Executive Leadership

The company is planning to monetize its massive whey byproduct by building a protein extraction plant, scheduled for completion in 15-18 months. This move into high-value B2C protein products represents a significant future margin expansion opportunity for long-term investors.

“At present, we are selling only whey powder, which comes from cheese and paneer manufacturing. As you rightly said, we generate approximately 1 million liters of cheese whey every day. It contains good-quality protein. If you look at our DRHP or RHP, one of the projects is to extract protein from this cheese whey and market it for internal consumption as well as for B2B and B2C applications. This would give us a further expansion in margins as well as a contribution to the bottom line. Of course, this is going to happen 12-15 months down the line because we have placed the orders, and the plant is expected to be up and running in a minimum of 15-18 months from now. This is one of the areas we are looking at very optimistically. We already have a protein category in our system, including high-protein paneer, high-protein cheese, and high-protein yogurt. We have already built that category. We are also developing a few more high-protein ready-to-drink categories, which we will communicate when they are ready for launch. Whey protein concentrate will become an additional product and further improve the category in this regard.”

— Management, Executive Leadership

Management is expanding procurement into Maharashtra and plans to establish a manufacturing plant there within three years to decentralize supply risk. By building the procurement network before the factory, they aim to ensure 40% utilization from the start, accelerating the path to profitability in a new region.

“Milky Mist has been evolving various strategies to avoid depending on only 1 source or 1 region for milk. We have started expanding our procurement network in adjacent districts of Karnataka, and we are also setting up procurement activities in Maharashtra. We have taken land there and are planning to establish a new setup. We initiated procurement activities approximately 6-7 months ago and will continue to improve them and take them to a sizable volume before commissioning the plant. This will allow the plant to handle at least 40% capacity utilization from day one, which will help it reach the break-even point. Right now, the plant configuration and capacities are still at a very nascent stage. We are at the drawing-board level. As I told you earlier, all these factors depend on the kind of growth we see over the next 3-4 quarters. If we continue to have this kind of growth, we may have to accelerate implementation and bring it forward. Otherwise, as I told you, we will have a manufacturing capacity there approximately 3 years down the line.”

— Management, Expansion Strategy (Q&A)

Avanti Feeds | Small Cap | FMCG

Avanti Feeds Limited is a prominent manufacturer of prawn and fish feeds as well as a shrimp processor and exporter based in India. The company has formed a joint venture with Thai Union Frozen Products PCL, a renowned seafood processor from Thailand. With multiple manufacturing units and processing facilities certified with international standards, Avanti Feeds is a leading player in the aquaculture industry.

[Concall]

Management’s on-ground commentary on farming was encouraging, with favourable climate and higher farm-gate prices supporting cultivation. The biggest remaining concern is feed cost.

“At present, the shrimp culture activity is very good. The farmers are very happy that the culture is progressing very well with the climate is also favorable. Farm-gate prices have also been have gone up. That is also very attractive. The agriculture is going very progressive very smoothly.

We hope that throughout this year, that is till December, the completion of the second season also will be like this. But only concern is about the cost. Cost is the only concern because the cost of feed is going up. Simultaneously, the price of the farmer, cost of production also goes up. Hopefully, the farm-gate prices will support the farmers with the reasonable return. This keeps going.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

The magnitude of raw-material inflation explains the sharp compression in feed profitability. Fish meal’s average consumption cost was ₹93/kg in Q1 FY26 and ₹153/kg in Q1 FY27, while the current purchase price has climbed further to ₹225/kg.

“The average consumption price of fish meal increased in Q1 to INR 153 per kg from INR 123 per kg in Q4 FY26 and increased from INR 93 per kg in Q1 FY26. In price of soya bean meal, their prices increased to INR 58 per kg in Q1 FY27 from INR 49 in Q4 FY26 and increased from 40 in Q1 FY26.

However, the wheat flour price decreased to INR 28 per kg in Q1 FY27 from INR 31 per kg in Q4 and Q1 FY26. The present purchase price of fish meal is INR 225 per kg; soya bean meal is INR 71 per kg and wheat flour is INR 33 per kg.”

— B. Santhi Latha, Chief Financial Officer, Avanti Feeds Limited

Avanti says the industry hasn’t previously encountered inflation of this magnitude, making it difficult to simply pass costs through to farmers.

“But one thing is very important to note here that the prices have gone up so phenomenally that the increase should be something very, very high, which both the industry, the farmers, feed, government, everybody exporters are taking it very seriously how to organize this. For the first time perhaps, this thing has happened with such a steep increase.

They are trying to find some solution whereby balancing act takes place.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

One of the most interesting remarks from the call: stakeholders are exploring a mechanism where movements in fish meal, soybean meal and wheat flour could be reflected systematically in feed prices.

“There’s some price mechanism were determining on the major inputs like fish meal, soybean meal, and wheat flour, they take as that how whether there can be a mechanism by which the variance of the prices will take a way in the price feed price.

That’s what the government is very seriously working. Even the stakeholders are also acceptable to that kind of a formulation, which will help both the farmers as well as the feed manufacturers. I think that exercise is going on.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

The pricing issue has escalated beyond informal industry discussions, with the state government constituting a committee and bringing in an external consultant.

“The government has, in fact, constituted a committee with one of the big four consultants. They are working on that how to handle this at the price because we have to keep in view not only the feed manufacturers, but also to the farmers and also how it becomes a sustainable activity for the farmers. It is an ongoing process.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

This explains why margins can remain under pressure even after the 10% price hike: farmer economics and regulatory considerations limit Avanti’s pricing flexibility.

“These raw material prices are, as we have seen that they keep increasing phenomenally, particularly in the last one year, particularly like fish meal, soya bean meal, all these prices have gone up. It is not like just because the raw material prices have increased, so we keep increasing the prices of the feed.

There is a lot of work that has to be done before we take any increase in the feed. We are trying to balance Mr. Khanna these things, and I hope that we’ll come to some balancing figure where the prices are affordable to the farmers as well as it is sustainable for the feed industry also.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

Better realizations, forex and operational efficiency helped processing PBT rise sharply YoY even as Q1 volumes fell.

“The profit before tax in Q1 FY27 was INR 45 crore, an increase from INR 25 crores in the corresponding quarter in Q1 FY26, reflecting a significant increase primarily due to improved average selling price realization, favorable foreign exchange rates and higher other income recorded in Q1 FY27.”

— D. V. S. Satyanarayana, CFO, Avanti Frozen Foods Private Limited

India’s export mix is diversifying: US volumes fell nearly 18%, while China and EU volumes grew 24% and 36%, respectively.

“On a YoY basis, export volume to the U.S. declined by 17.9%, whereas exports increased by 24% to China, 36% to EU and 5% to Japan in metric tons. Frozen shrimp continued to be the major item of export in terms of quantity and value, accounting for a share of 40% in quantity and 67% of the total U.S. earnings.”

— B. Santhi Latha, Chief Financial Officer, Avanti Feeds Limited

Avanti argues that policy cannot address feed makers, farmers and exporters independently because economics at each stage directly affect the others.

“Therefore, there is a need for a meticulous balance between the interest of the farmers, feed manufacturers and exporters to ensure the long term and sustainable growth of the aquaculture industry.

At this juncture, the industry looks to government for appropriate policy support to address these emerging challenges. It may be necessary to view the shrimp industry as an integrated value chain rather than treating shrimp farming, feed manufacturing and seafood exports as separate activities.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

Management suggested that exports of critical feed ingredients could be worsening domestic shortages and contributing to the extraordinary inflation in shrimp-feed costs.

“Some of the policy interventions that could be considered include: one, monitoring the availability and prices of key raw materials, particularly fish meal, fish oil, soybean meal and meat plots. Examining whether the excessive exports of critical feed ingredients like fish meal are affecting the domestic availability and contributing to price pressures creating an appropriate mechanism to monitor abnormal increases in the prices of essential feed raw materials, encouraging greater market diversification so that India’s shrimp exports industry is less exposed to price pressures, trade barriers and other levies imposed by any single market.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

This was perhaps management’s clearest assessment of the industry’s paradox: production and exports are strong, yet profitability across farmers, feed producers and processors is under stress.

“To conclude, India’s shrimp industry is currently in a paradoxical situation. The sector has never been so strong in terms of production and exports. However, the economics at different stages of shrimp value chain are becoming increasingly fragile, creating challenges for the long-term sustainability of the industry.

That said, I would like to share with you that state and central governments along with various stakeholders across the value chain are actively engaged in addressing these challenges and exploring long-term solutions for sustainable growth of the shrimp industry in the country.”

— C. Ramachandra Rao, Joint Managing Director & Company Secretary

Avanti has declared the refund entries, but US Customs will not process them until the anti-dumping and countervailing-duty review suspension is lifted.

“Regarding reciprocal tariff, particularly for seafood industry, that too for India, so now the entries are under ADD and the CVD review, which are under suspension status. Unless the suspension is lifted, the CBP will not process the reciprocal tariffs. As of now, they’re all under pending status.”

“What CBP said, you can declare the entry, but we will not process it. That’s what our legal counsel and even the customs broker said. Accordingly, we have declared the entry.”

— D. V. S. Satyanarayana, CFO, Avanti Frozen Foods Private Limited

Retail

Bluestone Jewellery | Small Cap | Retail

BlueStone is a leading omni-channel jewellery brand in India with stores across multiple cities. Offering diverse collections, it serves customers aged mid-twenties to mid-forties via online and offline channels. Backed by strong tech, design, and nationwide presence.

[Interview]

BlueStone ended FY26 with around 340 stores across 110+ cities. Strong same-store sales growth is giving management confidence to more than double the network over the next four years.

“We closed the last financial year with around 340 stores, and these are spread across over 110 cities. The expansion plan is what we had shared a couple of months back with the market and all our investors—that we intend to grow these numbers to almost double, to 700-plus stores over the next four years.

What is very encouraging is the very strong same-store sales growth that we are observing year over year, and that gives us the confidence that it is possible to open 700 to 800 stores across, let’s say, 300-plus cities in the country.”

— Gaurav Singh Kushwaha, CEO, BlueStone

BlueStone believes jewellery demand is already deeply penetrated across India. The opportunity in smaller cities is therefore less about creating demand and more about offering consumers greater design variety.

“India is a vast country, and jewellery is a category which is very well penetrated, not only in the bigger towns but even in the smaller towns. So the category and the demand are already there.

I think what we need to bring to the table is our design-first approach and our omnichannel-first approach. What we’re seeing is that as we go lower down the tiers, into Tier-2 and Tier-3 cities, the design unavailability is even higher there. So our stores typically tend to perform very well in Tier-2 and Tier-3 cities as well.”

— Gaurav Singh Kushwaha, CEO, BlueStone

BlueStone isn’t seeing structurally lower spending in smaller cities. Younger stores initially attract more first-time customers, while repeat customers tend to buy more frequently and at higher values as stores mature.

“Not quite. Typically, what happens is when our stores are in their initial years, they start with a lower ticket size because a lot of the demand is actually coming from new customers. But as those stores mature in a particular catchment, in a particular city, a lot of repeat also picks up, and repeat in a category typically happens at a higher frequency and higher value as well.

So in the blended numbers, you would see that the older stores have slightly higher ASPs or AOVs. In Tier-2 and Tier-3 cities, our stores are typically relatively younger, so because of that there is an ASP difference. But it’s not a Tier-2/Tier-3 phenomenon. In general, the ticket sizes continue to remain more or less in the same range.”

— Gaurav Singh Kushwaha, CEO, BlueStone

BlueStone has close to 11,000 designs but doesn’t need to replicate that entire inventory across every location. Its data backbone allows individual stores to stock designs relevant to their local catchment.

“We are an omnichannel jewellery brand. We started as online-only in 2012, and we remained an online-only jewellery brand till around 2019, when we started moving into omnichannel, and we saw the benefit in conversions from that.

On our website and at a catalogue level, we have close to 11,000 designs. Now, we don’t need to keep all those designs in every store. We have a very strong backbone of data. For all the designs, we know which area a design works in, what are the designs which are being browsed more in a particular catchment, and so on. Based on that, a typical store would contain around 1,200 to 1,300 out of those 10,000 to 11,000 designs.”

— Gaurav Singh Kushwaha, CEO, BlueStone

Higher gold prices are pushing customers towards lower-weight jewellery, but BlueStone says the shift doesn’t materially hurt percentage profitability because lower pricing is accompanied by lower input costs.

“In terms of percentage profitability, it does not impact much. You lose a little on the pricing, but then you gain that much on the supply side also. So it’s not margin dilutive going down lower in weight or going down lower in caratage. It’s not margin dilutive.”

— Gaurav Singh Kushwaha, CEO, BlueStone

Consumers have fixed jewellery budgets, so the doubling of gold prices cannot simply translate into twice the spending. Instead, buyers are adjusting weight and caratage.

“A lot of people have their budgets fixed, especially in the lower price points. It’s not that just because gold has doubled, you can spend double the money on jewellery this year. That is the case with most buyers—they have budget constraints.

Hence, the kind of jewellery that they can buy will either have to have lower weight or lower caratage and so on. I think people are opening up to that. Over the last 10 to 12 years, we’re seeing a gradual move towards lighter-weight jewellery rather than big, heavy pieces that you generally just keep in the locker.

A lot of people are actually moving to more wearable, more frequent, lighter-weight jewellery, and I think that move is just accelerating with these gold-price movements.”

— Gaurav Singh Kushwaha, CEO, BlueStone

Just as Indian consumers gradually moved from 22-carat towards 18-carat jewellery, BlueStone is now seeing a similar acceptance curve develop for 14-carat products.

“That 22-carat to 18-carat move had been happening over the last 15–20 years or so. Till around 20–30 years back, India was almost a 100% 22-carat jewellery market. But the move from 22 to 18 had been happening because diamond jewellery just can’t be made in 22-carat. For it to have strength, 18-carat was required. So 18-carat had already become kind of mainstream.

Now I’m seeing the same movement happening between 18 and 14 as well. Where 14-carat is right now, 18-carat used to be around 10–15 years back. People would have a lot of questions and queries around it, but a lot of people are starting to open up to that as well. So I think 14-carat is gaining ground.”

— Gaurav Singh Kushwaha, CEO, BlueStone

Education and affordability are reducing resistance to 14-carat jewellery, particularly as consumers realise that lower gold content is reflected in the price they pay.

“People are getting educated that if it’s 14-carat, it just means that the ratio of gold in the overall product is lesser, and correspondingly you also pay less. So it’s not that you’re taking less pure gold or any such thing.

It’s just that in order to get that strength, in order to get that thickness within a specific gold value in the product, caratage is something that can definitely be played around. So people are opening up a lot to it.”

— Gaurav Singh Kushwaha, CEO, BlueStone

While 14-carat is gaining acceptance, the industry is already experimenting further down the purity spectrum. BlueStone itself hasn’t tested 9-carat jewellery yet.

“There are some rumours about 9-carat as well. We have not tried that. But I think people are trying that in the industry.”

— Gaurav Singh Kushwaha, CEO, BlueStone

While higher gold prices change the gold-to-diamond ratio within a piece, BlueStone believes the broader migration from plain gold towards studded jewellery predates the recent gold rally.

“Higher gold prices definitely change the ratio of gold and diamond in a particular studded piece. But I don’t see the move towards studded jewellery coinciding with the gold-price increase.

I saw that move happening anyway because a lot of the newer generation is looking for very differentiated designs. They’re looking for something that is a lot more personal, a lot more aspirational and a lot more design-oriented.”

— Gaurav Singh Kushwaha, CEO, BlueStone

BlueStone sees the growing role of diamonds and gemstones as a consequence of consumers prioritising design, personalisation and aspiration over traditional plain-gold pieces.

“Typically, what tends to happen is, as you try to play around a lot with design, the role that diamonds play and the role that gemstones play just increases.

Hence, I think there is a general secular move in the category from plain gold to studded jewellery, though I don’t personally think that it is being driven by higher gold prices. I think it is driven more by aspirations. It is driven more by the changing lifestyle trends in today’s generation.”

— Gaurav Singh Kushwaha, CEO, BlueStone

BlueStone’s historical experience suggests jewellery demand is often deferred rather than permanently destroyed when customers pause purchases during periods of sharp gold-price volatility.

“Historically, what we have seen is whenever people have held back their purchases, they would actually then come back to the market over subsequent months. Along with gold volatility, there is sometimes some patchiness in demand.”

— Gaurav Singh Kushwaha, CEO, BlueStone

Despite elevated prices, management isn’t seeing any structural weakening in gold’s appeal as an asset. If anything, conversations with customers suggest the opposite.

“I think what’s happening over the long term is that people’s belief in gold as a fundamental value—the fundamental asset value that gold carries—I think that belief has only strengthened. That shows up in our conversations as well. So I think people’s belief in gold is stronger.”

— Gaurav Singh Kushwaha, CEO, BlueStone

Engineering & Capital Goods

Leap India Ltd. | Small Cap | Logistics

Leap India is India’s leading supply chain asset pooling company, managing over 14 million assets including pallets, containers, and material handling equipment. The company operates an on-demand service model that connects suppliers, manufacturers, and retailers through a network of over 10,500 touchpoints.

[Concall]

The company highlights how transitioning from manual labour to palletised loading increased a beverage client’s truck throughput by 500%. This massive productivity gain demonstrates the critical value proposition that drives long-term customer stickiness in the supply chain.

“The first example I would like to quote is a leading global beverage company that was able to move only 50-60 trucks in a day from one plant using the conventional method of loading everything into the truck manually through labor. After using our pallets and forklifts, the number of trucks released from the plant has gone to more than 300 per day.”

— Sunu Mathew, Chairman, MD and CEO

The company maintains perfect customer retention since its founding and uses a formulaic pricing model linked to the German wood price index. This index-linked pricing serves as a built-in hedge against inflation, ensuring sustainable margin protection.

“Our business is also very sticky, as we have not lost any customer since inception. We may have decided not to service a customer due to various reasons, but otherwise we have not lost a single customer. As we have demonstrated in the past, we take a price increase of nearly 5-9% every year, based on the wood price index listed on the German Stock Exchange. Therefore, for the next couple of years, we could easily beat inflation with price increases.”

— Sunu Mathew, Chairman, MD and CEO

Management is intentionally limiting new container purchases because raw material costs have nearly doubled, which would hurt return on capital (ROCE). Instead, the strategy has shifted to increasing asset retrieval speed and pooling efficiency to meet high demand without expensive new capex.

“As far as component manufacturing companies ask for 4 units of crates, we are able to deliver only 1.5-2 units. Why? Because the cost of raw materials has increased tremendously over the last several months. If I was getting a crate for 650 rupees, it now costs 1,200 or 1,000 rupees. My entire ROCE is adversely affected if I acquire new assets. Therefore, we are going slowly on that, and that is one reason why, in the first quarter, compared with an investment of 110 crores last year, we invested only 76 crores this year. We are going slowly on this. We are asking our asset management team to retrieve the assets faster so that we can pool them.”

— Management, Executive Team

Despite a temporary slowdown in textile sector movements, Leap India increased its per-pallet yield from 1.45 to 1.54 rupees through successful price hikes. This demonstrates the company’s ability to drive revenue growth through pricing power even when specific industry volumes are subdued.

“The Movement Hire business, as I mentioned, was 711,000 pallets last year, and this year it was 766,000 pallets, which is an 8% increase on a quarter-on-quarter basis, even though overall revenue grew by 21%. This is not a desirable situation. It happened because of the slow performance of the textile industry. The cost of all raw materials, whether for plastic crates or textiles, has increased significantly. Companies in these industries therefore did not undertake as much transfer and movement... In the future quarters, we will continue improving our Movement Hire numbers. As far as price increases are concerned, we have taken a 5-6% price increase compared with last year. You need to understand that in the same quarter last year, our per-pallet yield was 1 rupee 45 paise, whereas this quarter it is 1 rupee 54 paise. That is an excellent increase, and this is how we look at our business.”

— Management, Executive Team

The lack of standardized truck sizes in India is the primary bottleneck preventing faster adoption of pallet movement services. Management is actively lobbying for standard container sizes, which would unlock significant logistics efficiencies and lower national supply chain costs.

“The reason Movement Hire is not increasing faster is the highly fragmented transportation system. We have approximately 1,000 different truck sizes. To standardize this, we have given recommendations to the relevant body that the number should be curtailed to at least 10. Then palletization and movement become very feasible, and we will be able to reduce supply chain costs by 5-6% of GDP. If you look at any developed country, it is not possible to make arbitrary changes to the truck body. In India, however, you can make almost any change to the truck body. We are now also speaking with OEMs, and they understand that one standard container size is the way forward. This is one reason why our supply chain costs will decline.”

— Management, Executive Team

Leap India is actively evaluating new acquisition targets both domestically and internationally to supplement its organic growth. Investors can expect more concrete details on these potential deals in the second or third quarter of the current fiscal year.

“In our last board meeting, which was conducted only yesterday, among a few other matters, we informed our shareholders and board members—and this is now also public—that we have examined a few acquisition opportunities. We are at a nascent stage, and we are looking at opportunities in India and elsewhere as well. As you have seen, we grow both organically and inorganically. We have certain acquisitions in mind. In Q2 or Q3, we will see more clarity on them, and we will inform investors and board members as we move forward.”

— Sunu Mathew, Chairman, MD and CEO

Auto Ancillary

Precision Camshafts | Micro Cap | Auto Ancillary

Precision Camshafts Limited is one of the world’s leading manufacturers and supplier of camshafts, a critical engine component, in the passenger vehicle segment based on its estimated global market share by volume. The company supplies several varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications from its manufacturing facilities in Solapur, Maharashtra.

[Concall]

This is probably the most important disclosure from the call. The ₹1,500 crore order book comprises incremental business from existing and new customers and is expected to be executed over four to five years.

“Actually, during our previous con-calls as well as our AGM, we have disclosed this. I think a cumulative order book of approximately INR1,500 crores is what we have over and above the existing businesses from existing as well as new customers. And this is of course not an annualized order book. This will be spread over four to five years, and that is what we can share at this point of time. And beyond this, we are still working on newer opportunities.”

— Karan Shah, Whole-Time Director – Business Development

Several customer programmes have moved from development and validation into commercial production, creating a new source of incremental volumes as OEM production ramps up.

“The Indian PV market has continued to demonstrate strong growth, and we are seeing this momentum reflected directly in our customer programs. Several new programs with our key customers, including Mahindra, Tata Motors, Maruti Suzuki, have started production during this quarter. These programs are an important milestone for us as they move from development and validation into commercial production. We expect volumes for these programs to progressively ramp up as our customers increase production.”

— Karan Shah, Whole-Time Director – Business Development

Acquisitions could become an important diversification route, allowing PCL to move beyond camshafts into new products, customers and markets.

“No, there are several new opportunities we are looking at. As I mentioned during the call that our focus right now remains on our Indian standalone business as well as our subsidiary MEMCO through which we are doing several new products.

We are also actively looking at acquisition opportunities within India, and that will be a way for us to grow into new products, new markets, new customers, and so on. So, it’s not necessarily only camshafts, but we will focus on our India operations, that is for sure.”

— Karan Shah, Whole-Time Director – Business Development

Management sees a clear divergence between the growth opportunity in India and the weakness in European EV commercial vehicles, and is directing investment accordingly.

“Looking ahead, we remain extremely confident about the long-term outlook for Precision Camshafts Limited, and we see a clear difference between the outlook within our different businesses. Our standalone Indian business is entering a period of significant opportunity, supported by strong growth in the Indian passenger vehicle market, increasing investments by our customers, several new orders already secured, and a healthy pipeline of new programs. We are therefore continuing to invest in capacity, automation, and technology to take advantage of this growth.”

— Karan Shah, Whole-Time Director – Business Development

EMOSS is now the clearest weak spot in the group. Q1 revenue fell to ₹13.8 crore from ₹29 crore in Q4, prompting a more cautious stance on the subsidiary.

“Coming to our e-mobility subsidiary, EMOSS, in the Netherlands, the business reported a revenue of INR13.8 crores during the quarter compared to INR29 crores in the previous quarter. We have seen a slowdown in the EMOSS business, and we are currently taking a cautious view on its future outlook.”

— Karan Shah, Whole-Time Director – Business Development

Management attributed part of EMOSS’s weakness to the slow penetration of electric trucks in Europe, alongside insufficient infrastructure and reduced subsidies.

“While electrification of European passenger cars continues to progress, the situation in the electric commercial vehicle space remains considerably more challenging. In the first half of 2026, electrically chargeable trucks only accounted for 4.8% of all new EU truck registrations. The European Automobile Manufacturers’ Association also continues to highlight insufficient enabling conditions and pullback of subsidies as a constraint on adoption.”

— Karan Shah, Whole-Time Director – Business Development

Beyond weak EV adoption itself, restructuring across Europe’s auto industry is causing OEMs to delay decisions and rationalise investments.

“The broader European automotive industry is also going through a period of significant restructuring with OEMs under pressure to improve competitiveness, reduce costs, and rationalize investments. Against this backdrop, customer decision-making in the EV segment has become slower and program visibility has reduced. As a result, we remain cautious about the near-term outlook for EMOSS Europe.”

— Karan Shah, Whole-Time Director – Business Development

Asked directly whether EMOSS could eventually be wound down, PCL didn’t rule it out. Instead, management said the immediate objective is to make the subsidiary self-sustaining.

“Very hard to say right now, sir, because I think the markets are very dynamic. Things are changing rapidly. We have seen certain situations unfold in Europe which were unprecedented in the last eight to nine months, which have, you know, caused a lot of stir-up within the system there.

Of course, we have tremendous headwinds for this business. But we are trying our best to see what we can do to sustain it and to let it be a standalone business by itself without really requiring any support from India side. So, hard-hard to answer that question right now.”

— Karan Shah, Whole-Time Director – Business Development

The difficulties at EMOSS appear to have reinforced a more disciplined approach towards capital allocation, with the company prioritising returns over headline growth.

“At the same time, we take a cautious approach towards EMOSS, given the slowdown that we have experienced and the uncertain outlook for the electric commercial vehicle market. We will remain disciplined on cost and capital allocation and not pursue growth for the sake of growth.”

— Karan Shah, Whole-Time Director – Business Development

Despite caution around EMOSS Europe, PCL hasn’t abandoned e-mobility. Its India-developed EHCV platform has reached the customer-testing stage.

“Our own e-mobility business in India with our electric heavy commercial vehicle platform continues to progress. We have developed the EHCV platform and delivered the vehicle to a customer, and the customer is still undergoing evaluation and field trials at this point.”

— Karan Shah, Whole-Time Director – Business Development

Management summed up its capital-allocation framework clearly: scale the profitable Indian core, invest selectively elsewhere and maintain discipline across subsidiaries.

“Overall, our strategy remains clear: strengthen and scale our core Indian business, invest selectively in high-conviction opportunities, execute our new programs, and maintain financial and operational discipline across the group.”

— Karan Shah, Whole-Time Director – Business Development

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Meher and Srusti.

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 84th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 4 industries and a special feature with Dr. Rohit Chandra on Indian Energy History.

Subtext by Zerodha

• Dr. Rohit Chandra: Indian Energy History

Software Services

• Tata Consultancy Services

• Hexaware Technologies

Financial Services

• Max Financial Services

Engineering & Capital Goods

• Tempsens Instruments (India) Limited

Textiles

• Gokaldas Exports Limited

Subtext by Zerodha

Dr. Rohit Chandra | Subtext by Zerodha | Indian Energy History

Dr. Rohit Chandra is an economic historian and Assistant Professor of Public Policy at IIT Delhi, specialising in the political economy of India’s energy infrastructure. In this deep dive into India’s power architecture, he unpacks the historical decisions that shaped the modern grid—from the Soviet-backed origins of opencast coal mining to the complex bureaucratic realities of running massive public sector enterprises. The conversation challenges conventional narratives around the ongoing renewable energy transition, exploring the fiscal tug-of-war between state DISCOMs and generators, the roots of the 2010s NPA crisis, and why India’s highly centralised approach to solar power may be hitting structural limits.

[Reference]

The shift to large-scale opencast mining in India was enabled by Soviet technology transfer rather than traditional British methods. This technical transition allowed for the massive production volumes that define the company’s current operations.

“I remember talking to someone who retired from Coal India who said, we never thought that we could do a million tonne per annum mining in India, right? Until the Soviets came and showed us how it was possible. In some ways, underground mining, British style underground mining was harder to scale in a very big way, at least in the Indian context where you have fractured seams and other kinds of things. I think Soviet mining stuck, it was also much cheaper as petroleum and fuel availability took off. So diesel was a game changer in that sense. Diesel and explosives.”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

India’s national power grid standards were developed primarily to support the electrification of the railways rather than industrial demand. Understanding this historical link explains why the grid infrastructure followed transport corridors rather than decentralised clusters.

“So about a year ago, I was having a question, a conversation with S.K. Soonee, who retired as the chairman of POSOCO, which is now Grid India. Right. And he told me this exact thing that actually the driving of open access and grid connectivity in India was partly driven by the expansion of Indian railways, right? Because very few consumers actually needed continuous power across regions, right? Railways did, right? If you’re moving from Eastern India to Central India, you can’t, you’re switching to a different grid, but the power can’t stop all of a sudden just because you’ve moved into another region. But that’s how islanded and isolated our grids were. So I think a lot of the harmonisation standards and all of those kinds of things, frequency, kind of the fact that you have continuous frequencies across the region, all of that actually came with the expansion in electrification of Indian railways, and so very much in lockstep with the expansion of the power sector.”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

The nationalisation of coal in the 1970s was driven by the need for operational scale, labour reform, and meeting national energy security. These founding mandates still dictate the company’s social obligations and its massive scale of operations today.

“There were a lot of motivations behind coal nationalisation, but the minister who nationalised the coal industry, Mohan Kumaramangalam, actually wrote like almost a hundred page monograph justifying it, right? Which is rare. Ministers writing a hundred page papers to justify policy is not something we see very often in any country, right? And so what were the three things he mentioned? Unscientific mining, right? So you have this kind of small scale mining, not mining at scale, using big equipment, poor treatment of labour, which was definitely true, right? A lot of the Gangs of Wasseypur kind of mining labour, story mining mafias, and all, right? And then the third one was just kind of being unable to feed the kind of national energy demand in various ways, right?”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

For public sector companies like Coal India, navigating political and bureaucratic environments is more critical than internal operational efficiency. Investors should recognise that leadership stability and political alignment are key factors in the company’s financial health.

“Part of the focus of my PhD was trying to figure out which of the PSUs are able to survive this and not, right. I interviewed a minister of Power once who told me that the most important characteristic of a chairman of a PSU is to manage his external environment, right? So it’s not actually just operational efficiency and all of those kinds of things. That will come from having decent engineers and paying salaries on time. But the political environment, international markets, domestic politics, labour politics, a hundred things are going to assault you on a daily basis. And managing that external risk is easily the biggest problem. So I don’t think anyone, at least in the seventies to nineties, was really worried so much about operational efficiency and all of these kinds of things. It was more, do I have the right political and bureaucratic connections so that I can make sure I get paid on time eventually.”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

State distribution companies often choose load shedding over buying expensive power because there are no legal penalties for failing to supply electricity. This behaviour limits the market for high-cost generators and creates a ceiling on short-term power pricing.

“The problem was not power demand. There’s always power demand, but it was at what price they were generating, right? The problem in the Indian power sector is that state governments are very price sensitive and this is why they don’t buy from the short term market very often. They do more now than they did 15 years ago, but if you have to buy 10, 12 rupee power, I’d rather not buy because historically, there isn’t any legal consequence for me not supplying power, right? I can just turn the feeder off and people will have power cuts for four hours and that’ll save me a lot of grief rather than actually buying very expensive power and then screwing my state’s fisc, right? Which is the other consequence, which is already bankrupt probably, right? So it’s tough decisions all around. There’s no easy decisions around these kinds of things.”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

Coal India protects its margins by requiring upfront payment before shipping coal to state-owned power plants. While this secures Coal India’s cash flows, it shifts the financial burden of energy production onto the state governments’ balance sheets.

“Coal India is a publicly listed company. It cares about its bottom line. And so it has what’s called a cash and carry policy, which means that I’m not even gonna put the coal on the train until I get the payment, right? If you have a bankrupt state, which is unable to pay for, or a generator which is unable to pay for coal on time, then it leads to weird incentives where you have a public sector company, but it’s functioning as a profit making financial entity, which will not send the coal until you pay them, right? So should the stress be on Coal India’s balance sheet or the state government’s balance sheet, or the generator’s balance sheet? This is the constant question, right? And in some senses, I think this is the public policy question for the next decade.”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

India’s renewable energy strategy has favoured massive centralised solar parks over decentralised production. This approach is now hitting a wall due to severe transmission bottlenecks that take years to resolve.

“The advantage of renewable energy, especially solar and wind, is its decentralisation, right? That you can produce close to the source. And so the tyranny of distance has decreased because as long as you have some battery storage available, you can do it close to you. ... India did the exact opposite, right? It built hulking central power plants and Gujarat and, Rajasthan, as if we were recreating coal plants, but with solar in these places, right? And at the time that land was more easily available, the investment capital is available. Okay, that’s fine. But you’re starting to reach those limits partly because of transmission-related problems, right? Where even if you build a solar plant, it may take you a year or two to get a grid connection. Right? And you can’t even throw money at this problem anymore.”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

The economic promise of job creation in renewable energy hubs is currently overblown compared to traditional coal towns. Unlike coal mining, large solar and power installations have not yet sparked secondary local consumer economies.

“A lot of this green job stuff is highly oversold, partly because we’ve only started manufacturing some of the panels domestically in the last few years. We’re still not making the silicon wafers and all of those things ourselves at scale. Adani is just starting to do that in the last year or two. And so, there was this assumption, to go back to these enclaves that you were talking about, that energy economies would be generative, that they would create other kinds of jobs that businesses would come up around them. You go to one of these power plants in Barh and Korba and all, and you tell me what’s going on there, right? It’s not like there’s some massive consumption. There’s nothing there. No one’s opening a Tanishq near those power plants, right?”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

Renewable energy production is currently concentrated in just six states, failing to democratize energy access across India. The government is beginning to intervene to push for a more geographically diverse energy footprint to avoid regional imbalances.

“This is something the Ministry of Power is starting to wake up to in a big way as well, where they’ve actually started putting out advisories on locating power plants away from the usual suspects. Six states are responsible for 97% of India’s grid-connected renewable energy, right? That’s just reproducing previous economic geography, right? That’s not some renewable energy revolution as far as I’m concerned.”

Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi

Software Services

Tata Consultancy Services Limited | Large Cap | IT Services

Tata Consultancy Services is a global leader in IT services, consulting, and business solutions, operating as part of the Tata Group. It provides a vast range of digital transformation services across diverse industries including finance, retail, and manufacturing.

[Reference]

TCS is establishing a Centre of Excellence for mobility by merging MHP’s automotive consulting expertise with its own large-scale AI and digital capabilities. This strategy aims to capture new business from major European automotive and manufacturing clients beyond their existing work with Porsche.

“The deep capabilities MHP has in digital advisory and transformation, and operations in the automobile segment, and now also the client base MHP has in Europe—now you combine it with the AI capability, the scale, the depth that TCS brings. Now these two put together, we are envisaging what we call a Center of Excellence for mobility transformation. So we will be able to provide services across the entire value chain of mobility in terms of product engineering, manufacturing, and of course, customer experience. We’ll be able to transform it not only for Porsche as customer zero; we’ll be able to approach and provide more services to other automobile companies and manufacturing companies in Europe. So the opportunity to do more, the opportunity to transform mobility using AI, are the motivations for us.”

— K Krithivasan, CEO and Managing Director

Porsche is divesting MHP to TCS because the business unit can scale more effectively within a dedicated global IT services infrastructure. While MHP is profitable with a double-digit margin and €700 million in revenue, Porsche views it as a non-core asset that will perform better under TCS ownership.

“First of all, it’s not only focusing on the core business. That’s a very important part, but it’s also that we believe that MHP, with a new partner like TCS, now has much better potential for the future by using the depth and the breadth of TCS. And I think there will be a huge opportunity for MHP to grow, and for us as Porsche to get through TCS even better services and better performance by MHP. So I think that is also a very important part of that deal. We are talking about a revenue of around €700 million per year. That is for a double-digit—around double-digit—margin. That is a good part of the business for Porsche, but it’s not as important—I was saying it’s not core. It’s important, but again, I think with a new partnership now with TCS, we can get much more out of MHP with this deal.”

— Michael Leiters, CEO, Porsche (Partner Management)

Porsche accounts for approximately 30% of MHP’s revenue, leaving a significant majority derived from other external automotive clients. This diversification provides TCS with immediate access to a broader client network within the shifting European automotive landscape.

“I would say around 30%, something around that. It depends a little bit on the year. But I think, as Krithi said, it’s also very important to mention that MHP has many customers, mainly obviously in the automotive industry, but I think there’s a lot of know-how and knowledge in MHP regarding our industry and also, therefore, in the transformation of our industry which is happening now.”

— Michael Leiters, CEO, Porsche (Partner Management)

TCS sees massive growth potential in moving beyond MHP’s current IT-only focus to provide engineering services to Porsche. By introducing offshore delivery to the unit, TCS expects to improve cost-competitiveness and significantly widen the project scope within the account.

“So Sajeet, again, I don’t want you to focus on the €1.25 billion. I look at it more as a partnership commitment, but the potential is huge. Currently, MHP operates only in the IT space for Porsche. For instance, TCS brings in capabilities in engineering. MHP doesn’t do any engineering work. So now this opens up opportunities for us to put our engineering capabilities in front. MHP doesn’t do much offshoring work. So we’ll be able to offshore the work and provide them the ability, one, to be more competitive. The moment you are more competitive, it again expands the horizon for us in Porsche and increases the scope of what we can do.”

— K Krithivasan, CEO and Managing Director

Management intends to introduce its global business services and supply chain management expertise to Porsche’s operations. This expansion represents a move into high-value operational consultancy that was not previously addressed by the MHP unit.

“So I see it across all lines, like it could be in the IT space, it could be in the engineering space. I would also look at how we can bring in TCS capabilities in the area of GBS and supply chain transformation. So many other new areas also come into play.”

— K Krithivasan, CEO and Managing Director

TCS plans to operate MHP as a standalone independent entity rather than merging it fully into the parent company. This strategy focuses on providing MHP with global resources and scale while allowing it to maintain its specialised European operational identity.

“We are not looking to do any hard integration. We actually want MHP to thrive. Our idea is to let MHP be a standalone entity and support it with scale from TCS, support it with offshore, support it with other capabilities at the larger TCS. So we are not planning to do any hard integration or merge it with TCS. Actually, we will support them to grow on their own operations in France, Germany, and the Netherlands. So we’ll keep it as an independent entity and support it to grow.”

— K Krithivasan, CEO and Managing Director

The European automotive sector is currently navigating significant geopolitical and competitive pressures that demand internal transformation. Porsche management views this divestiture as a critical step in refocusing its internal efforts on core automotive excellence during these difficult times.

“You’re talking in general about the European automobile industry, basically. So I think obviously we are experiencing challenging times. It’s driven by geopolitics. It’s driven by more competition in the industry. And obviously, we also have to do our homework. Specifically for Porsche, I’m very positive. Again, we have a lot to do. We just started our transformation. I see a good reaction in my organization to transform, to change, which is not always easy. But I think in the first year of 2026, we achieved already a lot, and again, this deal is part of this change—refocusing on the core business.”

— Michael Leiters, CEO, Porsche (Partner Management)

Hexaware Technologies | Small Cap | IT Services & Consulting

Hexaware Technologies is a global IT services and consulting firm specialising in digital transformation and automation. The company focuses on modernising legacy systems through AI-infused strategies and custom software development to replace traditional SaaS models.

[Reference]

Management is highlighting a young workforce as a core asset in their AI development efforts. This suggests a strategic focus on fresh talent to drive innovation and counter narratives about AI-driven job losses in the sector.

“What you see here is the output of what a lab creates, right? The lab itself is elsewhere on this campus but also in some other cities. It has got about 700 young, highly talented engineers. When I meet them, I get inspired. Even as you walk around here, you see that they’re all very young, right? So this whole narrative that AI is for older people and is going to shrink jobs for younger people, I think is wrong, because I get inspired when I meet our young people, seeing their talent and their creativity. This is the output of what they create.”

— R. Srikrishna, CEO

The company has established a $3 billion revenue target powered by five specific growth levers, including AI and high-tech market entry. Investors should view these pillars as the primary drivers of the company’s long-term expansion and acquisition strategy.

“See, it’s always good for any business to put out an aspiration number, which we did some time ago, right, saying we want to get to $3 billion. That includes our organic growth and includes acquisitions, but the most important levers for accelerating growth for us—there were four, but AI became the fifth. The four were: 1. Legacy modernization, which we are now calling “zero tech debt,” which is actually a part of AI. 2. We said we want to do better on private equity channels than we were before. 3. We were absent in the high-tech business. All of our peers have big business in tech. Last October, we hired a very talented leader to lead that business, and we’re already making solid progress. 4. The fourth was for us to do better in what we think is a great market, notwithstanding the current disturbances, which is the Middle East. And the fifth now, of course, is AI and all the new terms we’ve identified.”

— R. Srikrishna, CEO

Hexaware reports that over half of its current revenue is generated from projects that incorporate artificial intelligence. This high level of AI integration demonstrates the company’s rapid transition from traditional IT services to high-efficiency, technology-led solutions.

“See, our first mission that we set for ourselves in AI is that AI should positively impact every single client and the work we do for them every single day. So this 50% is a measure of that progress. What it means is that more than 50% of the work we do right now has AI, and it positively impacts customers either in reducing cost, improving service, or often both.”

— R. Srikrishna, CEO

Management is taking a realistic view of their addressable market, focusing on $30-40 billion in actionable legacy modernisation opportunities. This conservative targeting suggests a disciplined sales approach that prioritises high-conversion segments over broad market estimates.

“See, the way we define the Total Addressable Market (TAM) which you’re talking about—if you go by market estimates, the TAMs for each of the lanes are actually much higher. Let me take two examples. Zero tech debt: you know, there are 220 billion lines of COBOL code in production. There are estimates that just that TAM is greater than half a trillion dollars. I don’t think it’s actionable. We think about $30 to $40 billion of that is actionable. The SaaS market is $900 billion. It’s not all actionable. Many SaaS companies will survive and thrive. But there are many pockets that we think can be addressed. So we’ve done a smaller, best estimate of what we think is addressable within each of these spaces. Now, for us to get to high growth, we only need a fraction of this TAM to work for us.”

— R. Srikrishna, CEO

The CEO argues that AI has removed the cost barriers that previously made custom-built software more expensive than standardised SaaS. This structural shift creates a significant opportunity for Hexaware to offer bespoke software solutions that compete directly with major SaaS vendors.

“See, if you look at why SaaS grew in the first place, there were two promises. One was “processes encoded into my platform” and bringing standardization. But the truth is, most large enterprises don’t like standardization. They feel it’s being forced on them. The second promise, which was true, is that it’s too expensive and too time-consuming to custom-build software to replace SaaS. The second part is no longer true. The first part people never liked in the first place. So I think that’s the fundamental premise.”

— R. Srikrishna, CEO

Hexaware is avoiding high-compliance and core data SaaS segments where incumbents have strong defensive moats. By targeting non-core software archetypes, the company is focusing its resources on areas where displacement is technically and commercially more feasible.

“However, if you look at it, there are many types of SaaS that I think will have a moat that we can’t cross, right? If they have core data about the enterprise, if they’re running processes that impact compliance, let’s say reporting processes, that’s not our target. But it’s a $900 billion market, close to a trillion dollars. There are many pockets. We’ve identified four or five archetypes that we think are good.”

— R. Srikrishna, CEO

Management has identified four specific software categories where they believe AI-driven custom builds can replace traditional subscriptions. This targeted approach provides a clear framework for how the company intends to capture market share from the $900 billion SaaS industry.

“Archetype one: easy-to-replace software, workflow stuff. Archetype two: where people are paying for double licenses. There’s a Salesforce license, and there’s a Veeva license on top as an example. Archetype three: the SaaS companies themselves decide they’re going to sunset that product, right? For a client, what is the choice? I go and find another SaaS, or now there’s a new choice: you can custom-build it. Basic research shows there are 150 companies that have said they’re not going to support sunset products. The fourth, by the way, is customers giving their data and renting intelligence. They give 10 years’ worth of transaction data and they just get PDF reports back. They don’t even have access to their own data. So I think there are good archetypes for us to target.”

— R. Srikrishna, CEO

The legacy modernisation segment is showing strong momentum with multiple double-digit million-dollar deals already secured this year. This traction validates the demand for Hexaware’s core transformation services and signals likely revenue acceleration in the near term.

“Regarding “zero tech debt,” I’m not sure where you got the number 40 from, but it’s more than the four “zero license” deals. We only started “zero license” in Jan. “Zero tech debt,” its earlier avatar was “legacy modernization,” which we started last Jan. So that has more revenues right now, and it will have more meaningful revenues in the near term. In “zero tech debt,” we actually announced earlier in the year that we got our first double-digit million-dollar deal. Last quarter, we said we got our second double-digit million-dollar deal on legacy modernization. And I think we’ll have more double-digit million-dollar deals on “zero tech debt” before this year is out. So that’ll be first off the bat in being more meaningful.”

— R. Srikrishna, CEO

The “zero license” strategy uses automated AI agents to quickly analyse and propose custom replacements for existing SaaS expenditures. Successful pilot projects could lead to larger-scale consolidations of client software budgets into Hexaware’s custom service agreements.

“I think for “zero license,” a lot of the deals right now—clients love the concept first, though they don’t believe it. But once we show them, they like the concept, then we pick up one software or one small pool and say, “Let’s prove it”. I think with some of these clients, once we prove it, they’re going to say, “Hey, my total SaaS spend is whatever—$40 million a year, $80 million a year. Give us a full list”. We have a platform where you put in the name of a SaaS platform, and in about two minutes, because it has eight AI agents working in the background, it’ll tell you what we can do with it.”

— R. Srikrishna, CEO

Financial Services

Max Financial Services Limited | Mid Cap | Life Insurance

Max Financial Services Limited is the holding company for Max Life Insurance, one of India’s leading private life insurers. The company focuses on a multi-channel distribution strategy with a strong emphasis on protection and annuity products.

[Reference]

SEBI has dropped its proceedings against the company and its partners without imposing any penalties. This resolution removes a significant regulatory cloud and confirms the company’s internal governance standards to investors.

“Absolutely. We welcome the final orders given by SEBI. It provides ample clarity and reaffirms that we have been conducting business with high standards of governance. It is a reaffirmation of the same, and we are very pleased to receive this order.”

— Amrit Singh, Director and Chief Financial Officer

Management clarifies that the long-standing legal case regarding legacy transactions did not materially impact their credit standing or day-to-day operations. Investors should view this as a formal closure of a historical issue rather than a trigger for immediate financial upgrades.

“Not really. We have been indicating that we adhered to the associated laws around these matters, and we were fairly confident about it. These transactions being examined went back to 2010. In terms of credit ratings or any tangible relief, we don’t expect anything specific here, as there was not necessarily such an overhang on this topic.”

— Amrit Singh, Director and Chief Financial Officer

The company reported margin expansion in the first quarter due to higher protection sales and favourable interest rates. Management intends to maintain margins between 25% and 26% over the long term, prioritising the expansion of their distribution network over further margin growth.

“Look, I will not comment upon specific short-term quarterly outcomes; we will have to wait for the results to come through. But in the first quarter, the improvement you saw was driven by a healthy lift in protection volumes and a favorable yield curve environment, which helped boost the margin profile. Philosophically, we want to maintain a healthy margin trajectory in the 25% to 26% range over longer horizons. More important for us is consolidating distribution buildup and demonstrating a growth differential relative to the market. Margin is something we prefer to keep range-bound rather than working solely to enhance it. It is an overall holistic business expansion where distribution buildup is critical for us.”

— Amrit Singh, Director and Chief Financial Officer

The company will prioritise reinvesting any excess profits into business growth rather than allowing margins to spike beyond their target. This approach ensures that sales growth is not achieved by sacrificing the baseline profitability of the products.

“Look, our philosophy centers on profitable and sustainable growth—that is our strategic priority. We like to keep margins range-bound. If margins run higher—say, an outlook of 28% to 29% for the full year—we would rather reinvest that extra margin into building and accelerating distribution. But at no point will we allow margins to fall off merely to chase top-line growth.”

— Amrit Singh, Director and Chief Financial Officer

Axis Bank is currently considering a proposal to increase its ownership stake in Max Life to 30%. A higher stake from a primary bank partner would likely strengthen the bancassurance relationship and provide greater long-term stability for shareholders.

“Firstly, this is an internal matter pertaining to Axis Bank, and they have provided clarity to the market. There is no conversation from our end on this. However, the bank has publicly stated that they are evaluating the opportunity to increase their stake from upwards of 20% up to 30%. It remains a matter of their internal deliberation, and as and when they have further updates, the market will hear from them and subsequently from us.”

— Amrit Singh, Director and Chief Financial Officer

Management confirms that there has been no formal or informal communication regarding a stake increase yet. Investors should consider this a bank-led internal process that has not yet reached the execution stage at the corporate level.

“No, it is currently an internal topic under deliberation at the bank.”

— Amrit Singh, Director and Chief Financial Officer

The high-margin protection segment grew by 44% and now contributes 15% to total business value. This shift toward protection products is expected to continue as rising incomes drive demand for basic life insurance in an underinsured market.

“Regarding protection momentum: we have identified protection and annuity as our two focus segments where we want to outperform. In Q1, protection accounted for 15% of our business volume and value, growing at a healthy 44% year-on-year—a trend consistent across recent quarters. We see a significant long-term opportunity due to the low sum assured per capita in India, indicating deep underpenetration and underinsurance. As per capita income rises, pure protection products become increasingly relatable and understandable to consumers. We remain focused on leading in this space, building data, and managing risk effectively.”

— Amrit Singh, Director and Chief Financial Officer

Management reaffirms that selling insurance through banks remains their most critical method for reaching customers. Maintaining the core relationship with Axis Bank while diversifying with other banking partners is central to their growth strategy.

“Regarding bancassurance: it remains a vital distribution channel for reaching life insurance consumers. We are fortunate to have Axis Bank as a promoter providing a strong bancassurance franchise. Additionally, over past years, we have expanded partnerships with multiple other banks to sell across their platforms. Bancassurance will remain an essential channel in the overall distribution mix.”

— Amrit Singh, Director and Chief Financial Officer

Engineering & Capital Goods

Tempsens Instruments (India) Limited | Small Cap | Electrical Equipment

Tempsens Instruments is a leading manufacturer of temperature sensors, specialised cables, and electrical heating systems for industrial applications. The company serves diverse sectors including oil and gas, petrochemicals, and defence, with a growing presence across international markets like the UAE, Korea, and Poland.

[Reference]

Management is targeting a revenue milestone of ₹550 crores while maintaining its current mid-20s margin profile. This suggests that growth will come from market expansion rather than aggressive price competition or cost-cutting.

“No, I think we will be moving forward with a similar kind of growth and maintaining similar margins. However, we are exploring a lot of newer territories and newer customers. So that is what would push margins and growth in the right direction. We think revenue will be around ₹550 crores in the coming years.”

— Vinay Rathi, Director

The company anticipates that international subsidiaries established two years ago are now entering a high-revenue contribution phase. This international scale-up is expected to be a primary driver for the company’s next phase of growth.

“Yes, yes, it looks like we are heading in that direction. Also, the companies we started outside India about two years ago will be kicking in a lot of revenue. So, we see a good growth possibility for Tempsens in the future.”

— Vinay Rathi, Director

Management highlighted that their international ‘seeding’ strategy is yielding results, with the UAE business growing threefold in the past year. Investors should monitor Korea, Poland, and Mexico as these regions are expected to mirror this aggressive growth trajectory.

“Right. Regarding the export market, over the last few years, we started three companies outside India. Those will be growing much faster because the initial years were just the seeding years, and now we are going to see the fruit. For example, especially in the UAE, revenue 3xed last year. We expect to see similar growth in the geographies we’ve started in, such as Korea, Poland, and Mexico. They will be adding to this kind of growth.”

— Vinay Rathi, Director

The company is positioning itself to benefit from a recovery in the petrochemical sector and is diversifying its client base by targeting original equipment manufacturers (OEMs). Moving beyond heavy industry end-users could lead to more stable and recurring revenue streams.

“Regarding petrochemicals, we see that it is going to be a big booster once the geopolitical situation settles down. So this will add to the company’s work in that direction. I would also say the company is adding a lot of OEM-based customers to its original base of heavy industry end-users.”

— Vinay Rathi, Director

Specific technical approvals in the oil and gas sector are expected to drive growth in the electrical heating segment above the corporate average. While the inorganic growth spike from a previous merger won’t repeat, the organic demand from large customers remains strong.

“The margins are similar to everywhere else. We received some specific approvals in the oil and gas segment from some large customers, so we will be moving in that direction for those kinds of products, and that segment will grow significantly. I would not say it will see the kind of initial growth we saw last year—that was mainly because of the amalgamation of a heater company—but it will grow, I would say, a little bit faster than the regular growth rate at Tempsens.”

— Vinay Rathi, Director

The recent spike in working capital was attributed to the timing of acquisitions rather than a fundamental deterioration in cash flow efficiency. Management expects the business to revert to its historical efficiency levels as the integration of these new entities stabilises.

“Actually, last year the working capital days, as I told you last time, increased because we acquired some companies. Those acquisitions were done in the last days of March, so when the balance sheet was consolidated, it artificially increased the working capital days. But if you look at the year before that, those were the normalized working capital days which will continue in the future.”

— Vinay Rathi, Director

Management clarified that the business is not heavily seasonal, with a fairly balanced revenue split between the first and second halves of the fiscal year. This stability is positive for investors seeking to avoid the sharp quarterly volatility often seen in industrial project-based companies.

“No, I would not say the revenue is highly seasonalized. I would say the ratio is about 45:55 for the first half and the second half. So it is not strictly seasonal. Obviously, there are some project orders that lead to more shipments at the end of the year, but overall, it is quite normalized. It might be around 20% to 20% for the first two quarters, and then 30% to 30% for the second half of the year.”

— Vinay Rathi, Director

Textiles

Gokaldas Exports Limited | Small Cap | Textiles & Apparel

Gokaldas Exports is one of India’s largest apparel manufacturers and exporters, specialising in complex outerwear and fashion garments for leading global brands. The company operates an integrated manufacturing network across India and international locations like Kenya to serve major retail markets in the US and Europe.

[Reference]

Tariffs in the US market have stabilised at 10%, while the company’s Kenyan operations provide a unique duty-free cost advantage. This transition away from previous punitive 50% tariffs significantly improves the company’s competitive positioning and pricing power.

“Among the big markets—both Europe and the US—the US tariff is leveling off, which means we have a level playing field in terms of having the Section 301 tariff of 10% across the board in most countries. Our operations in Kenya, where it is 0%, actually bestow a favorable advantage on us. So on the tariff front as far as the US is concerned, it looks good for us for the moment, especially coming out of that 50% penal tariff that we encountered in the second, third, and fourth quarters of last year. So, it’s a good scenario on that front.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

The recent Free Trade Agreement with the UK has eliminated tariffs, allowing the company to secure new high-volume clients in the region. Management is also anticipating a similar agreement with the EU next year, which would remove significant economic barriers to their largest potential market.

“The UK tariff being rated to zero is helping us gain ground in that market. We are in advanced discussions with a new customer based out of the UK, in addition to growing our existing customers. So that side is also going well. We are eagerly waiting for the European FTA, which would open up access to a very large market. If that happens sometime next calendar year, that would be great. Then most of the economic constraints for India would be lifted, and we would have very favorable access to major markets.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

Inventory levels at US retailers are currently very low, which usually triggers higher ordering activity to restock shelves. This low inventory environment, combined with a healthy order book, provides management with a margin of safety against potential macroeconomic headwinds.

“Now we have to see how the holiday season goes. Most of our production for those seasons is getting over as we speak, and we’ll be starting summer. Our order books have been full, so most of our customers think that they will have good demand. But I’m really looking at 2027 and seeing how macroeconomics will pan out. It’s a bit too early to say. The US market has always pleasantly surprised us rather than the other way around, so I’m cautiously optimistic about retail demand. However, if I look at the inventory with the retailers, that seems to be very, very low. So I’m not particularly worried because most of the ecosystem has been prepared. From a demand standpoint, it should not be a challenge at all, and it’s evidenced in our order books, which seem to be pretty healthy as well.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

The company operates a pass-through model for raw material costs, effectively shielding margins from fluctuations in cotton prices. If prices become too volatile, the business can pivot its product mix toward synthetic fibres or blended fabrics to maintain cost competitiveness.

“Any runaway increase in raw material prices does impact, depending on whether the supply chain is able to pass it on to customers. For us, raw materials are generally a pass-through, and we factor in the higher raw material costs. By the time cotton prices factor into the fabric that we consume, it peters down quite a bit. So far, we have been able to price it into our orders. But if there’s a runaway inflation, there could also be a switch between cotton and polyester. These kinds of dynamics also play out. If one fiber peaks in terms of pricing, there could be an offset in terms of demand for another fiber, blending increases, and so on and so forth.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

Management expects profitability to improve in the second half of the year as the company stops offering discounts that were previously needed to offset high tariffs. This shift toward full-price orders should drive margins back toward the company’s 12% target range.

“There should be growth. Usually, the second half is better than the first half, number one. Number two, even in this first half, most of the orders were secured when we were going through a 50% tariff, so we did have some bit of discounts we had offered to our customers, which are not there in the second half. The second-half margins should be above the first-half margins for us.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

The company is targeting nearly ₹6,000 crores in revenue by FY28 through a combination of 15-20% organic growth and the integration of the BRFL acquisition. The BRFL merger alone is expected to add over ₹1,200 crores to the top line once fully operational next year.

“So, Gokaldas itself is growing at about 15% to 20%, and that’s the trajectory that we will have this year. Last year we did ₹4,000 crores in revenue, so you could estimate the growth for this year. BRFL will merge towards the end of this calendar year, somewhere around November, so we will have only one quarter of revenue. That may not add much; it may add about ₹400 crores of revenue this year. But next year, BRFL will yield about ₹1,200-plus crores of top line, in addition to another 15-plus percent growth for Gokaldas. So we are looking at a revenue trajectory, including BRFL, approaching about ₹5,800 or above—around ₹6,000 crores in that trajectory next year, which is FY28.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

Return on capital employed is expected to stabilise in the 20% range by FY28 as major capital investments and acquisitions begin to contribute to earnings. Management believes the current suppression of returns is temporary and will reverse once the newly added manufacturing capacities are fully utilised.

“Obviously, our investments in BRFL are not fully borne out in our books yet because we’re not consolidating those numbers. If you look at apparel, return on investment should be of the order of 20% or higher, and that’s the trajectory we’ve always held—we’ve been in the range of 27-odd percent in the past. With these new acquisitions playing out this year, next year we should be in that 20%-plus trajectory. The fabric investments may be in the teens, but fabric’s contribution to overall revenue will be sub-20%. Overall, I think the return on capital employed should hover in the high teens to 20%, and it should only keep on improving going forward. I’m talking of FY28 and further ahead, because a lot of investments have already happened and those capexes will start playing out in the quarters ahead.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

Total debt is expected to reach a peak of approximately ₹850 crores following the formal merger of BRFL later this year. The company plans to use its strong operational cash flows to aggressively pay down this debt in subsequent quarters.

“At peak, once the merger of BRFL happens, BRFL’s debt will also come onto us, and I think we will peak at about ₹800-plus to ₹850-odd crores. Then it will start falling because this year also we’ll be generating a good amount of cash flow. That will help towards retiring debt. The peak debt will start falling from that level downwards going forward.”

Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Shahid Barmare.

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 83rd edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 6 companies across 6 industries

Consumer Durables

• Borosil Limited

Healthcare

• Orchid Pharma Limited

Building Materials

• Welspun Corp

Engineering & Capital Goods

• KRN Heat Exchanger

Retail

• Khazanchi Jewellers Limited

Auto Ancillary

• RACL Geartech

Consumer Durables

Borosil Limited | Small Cap | Consumer Durables

The company is engaged in the business of manufacturing and trading of Scientific and Industrial Products (SIP) and Consumer Products (CP). SIP consist of laboratory glassware, instruments, disposable plastics, liquid handling systems and explosion proof lighting glassware. CP consist of microwavable and flameproof kitchenware, glass tumblers, tableware and dinnerware, Appliances and Storage products

[Concall]

The bulk of Borosil’s price hikes hadn’t flowed through in Q1, creating scope for margin recovery as higher realizations kick in.

“If we compare this with respect to the West Asia conflict impact probably, so the price that has compensated in the first quarter is very less. That’s about a couple of crores versus the overall impact of about INR12 crores in the overall affairs of the sales. So I think we have to wait and watch probably once the price is passed on. So there will be some lag that we will see. In the coming quarters, I think you will see the impact.”

— Anand Sultania, Chief Financial Officer

After several years of heavy manufacturing and renewable-energy capex depressed returns, management expects higher utilisation and margins to materially lift ROCE.

“Borosil has been investing heavily into capex in the last 3, 4 years. If you look at maybe the last 3 years, we have increased our capacity on Opalware furnace. We have invested into borosilicate glass furnace. We have been heavily investing into solar. So all of this is a subset of that. I think going forward, as we enhance our capacity utilization and improve our margins, I think we should definitely look at basically 20% to 24% ROCE margins on the business.”

— Anand Sultania, Chief Financial Officer

BIS-related disruptions forced Borosil to both hold additional inventory and invest in domestic manufacturing, temporarily inflating capital employed.

“So just to add to Anand’s point, if you notice over the last 1.5, 2 years, a lot of inventory we had to build on account of BIS challenges, which happened in Hydra also, which happened in our appliances business also. And in both the cases, we have ensured to move production to India manufacturing.

So on the one side, we had to build inventory. On the other side, we had to also invest in manufacturing. So that’s one of the major factors which is contributing to a lower ROCE.”

— Rituraj Sharma, Chief Executive Officer

The newly commissioned 20 MWp Bikaner solar plant with battery storage materially increases Borosil’s renewable-energy penetration.

“Building on this momentum and with the introduction of Green Energy Open Access Regulations 2025, we commissioned a third captive solar power plant in Bikaner during Q1 FY27 with a capacity of 20-megawatt peak integrated with battery energy storage systems. As a result, solar power now meets about 61% of our overall energy requirement.

We are further evaluating opportunities to set up an additional 6.5 megawatt peak captive solar plant at Borosil Limited and another 3 to 4-megawatt peak plant at Stylenest India Limited to meet the power demand of our Hydra facility.”

— Rituraj Sharma, Chief Executive Officer

Competition from Chinese borosilicate glassware remains a structural challenge, with the anti-dumping investigation still underway.

“You’re right. Actually, this is what last quarter also we had shared. And unfortunately, this continues to happen. And despite depreciation of the rupee as well as the shipping freight rates going up, I would say, in the market, we are not seeing much of a difference as far as the Chinese dumping is concerned. If that answers the question.”

— Rituraj Sharma, Chief Executive Officer

Management defended continued capital allocation by pointing to the company’s long-term growth track record and the time required to create new categories and domestic manufacturing capacity.

“And if you look at our journey, we have been having a CAGR of more than 21% over the last 10 years. The business has shown this kind of a growth. And then we also like in the call itself, we said one of the challenges was the BIS, for example, and we had to now put up a manufacturing plant for the double wall vacuum bottles, etc. So this does need capital. And in terms of production, the ramp-up happens, it has its own cycle.”

— Rituraj Sharma, Chief Executive Officer

Apart from solar savings and higher-value products, portfolio rationalisation is another lever management is using to lift margins.

“So there are a number of factors actually. Like Anand mentioned, one of the things was on the solar savings, which has come in. The other is we have high realization SKUs we have sold and we have better in glassware, Opalware both. I think some of these things have also contributed to our efforts.”

“So in terms of cost reductions also like typically, when you sell a portfolio, then items contributing to a lower gross margin and all getting discontinued is also part of the process. So that’s also part of the cost reduction effort which goes on.”

— Rituraj Sharma, Chief Executive Officer

Healthcare

Orchid Pharma Limited | Mid Cap | Pharmaceuticals

Orchid Pharma is a vertically integrated Indian pharmaceutical company specialized in the development and manufacture of cephalosporin antibiotics and APIs. Following its merger with Dhanuka Laboratories, the company is focusing on complex molecules, backward integration through its 7-ACA project, and high-value drug commercialization.

[Concall]

Orchid chose Jammu for its 7-ACA plant to leverage specific regional cost advantages like cheap electricity, water, and tax benefits. These structural cost savings are designed to make the company’s production globally competitive even against large-scale Chinese manufacturers.

“Yeah, I would say, rather than having plan B, we decided to have a good plan A. And that’s the reason we went to Jammu, get some GST benefit, go into -- go to a state where the electricity cost is the cheapest in India, water is abundantly available, the boiler steam cost is lower due to available of abundant agricultural waste. So, and obviously, we are working aggressively towards improving our overall tighter concentration so that our yields can improve. Our pilot team, pilot plant team, is working towards that. I think the best you can do is use all your resources to improve efficiencies, and that is what our target is.”

— Manish Dhanuka, Managing Director

Management argues that the nature of Chinese competition has shifted from market flooding to profit-seeking, as seen in the recent pricing trends of Pen G. This perspective suggests a more rational competitive environment for Indian players entering the API and intermediate space.

“What he is trying to say is that even in Pen G, the Chinese have not dropped the prices to below pre-PLI s level. If you look at the prices of Pen G, the current prevailing prices are same as they were in 2019 or ‘20. So, because of the PLI, they had increased to probably create a war chest. They were preparing themselves to fight when the PLI companies start their production. And they brought it back to the normal level. Like Mridul said earlier also, now these companies are largely privatized, and we don’t know what future holds for us, but the intent is not as it used to be 20 years back to just flood the market. They want to work on a profitable model. That -- that’s the general belief now for the Chinese companies, and we have seen in other products also.”

— Manish Dhanuka, Managing Director

Scaling fermentation from a pilot plant to a commercial facility involves an 800x increase in capacity, which carries inherent technical risks. Investors should monitor the early 2027 window for the first successful commercial batch to validate the project’s technical success.

“We’ve been successfully been able to commercial -- scale up our existing pilot plant by 20x, and we have to another do about 800x from there to Jammu, but it’s a little unpredictable. We still remain hopeful that we’ll be able to reach full utilization in one year, by the end of one year. Yeah, the first batch, yes [in February/March 2027].”

— Mridul Dhanuka, Whole-Time Director

The company reaffirmed its massive $1.1 billion to $2 billion lifetime sales potential for its new antibiotic asset while emphasizing the long-term nature of the rollout. This clarifies that while the opportunity is large, it will not reflect as a sudden revenue spike in the immediate quarters.

“I would not guide on Advanz Pharma specific -- specifically becoming 10% of our revenue, although I would be happy to see that. So, our long-term guidance on this is remaining the USD 1.1 billion to USD 2 billion that we came up with in 2021. And looking at even the Russia numbers, we remain optimistic that the partners continue to believe that it’s a viable asset. But to actually sell a product and get value out of it is a long-term thing, and things can change over time. So, it would be difficult to say the answer to your question.”

— Mridul Dhanuka, Whole-Time Director

Management is pivoting away from high-volume, low-margin generic APIs toward specialized products where they can be the sole manufacturer. This structural shift toward higher-value injectables and backward integration is designed to insulate the company’s margins from future industry downturns.

“Yes, I mean, we are trying to work on other products, and we have couple of other products that we manufacture in Dhanuka. We are trying to create a situation where we remain the sole player of those products. Our focus, our strategy is completely different from our competitors, who are more focused on the volume business. We are more focused on the value-based business and more of a diversified portfolio. ...We could see that the generic business of cephalosporin API is going to become a low-margin business, and that is the reason we sought to go for a backward integration and a forward integration. And in that mission only, we decided to set up 7-ACA and the injectable facilities. So, we think we are trying to de-risk ourselves from the traditional API business, which is becoming more competitive.”

— Manish Dhanuka, Managing Director

Orchid intends to supply the raw 7-ACA to domestic competitors rather than competing with them in the finished sterile product market. This B2B strategy allows for faster volume offtake and avoids the lengthy regulatory delays associated with getting sterile product approvals from hundreds of end customers.

“Yes, absolutely. I would not say our sterile can completely consume our 7-ACA capacity, but we are re-engineering our non-sterile capacity so that we are able to convert the product and supply the non-sterile. I think that is a better model rather, you see, I mean, selling a sterile product needs an approval process, which is more long drawn. So, it would make more sense to work with our other players in India. Then there are three, four players, they can take large part of your volume production, rather than getting approval process in 200, 300 customers. It’s better to collaborate with these four manufacturers of sterile who already have the capacity and who already have worldwide approvals. So, I don’t see much benefit of competing and creating overcapacity. We would rather collaborate with them.”

— Manish Dhanuka, Managing Director

Building Materials

Welspun Corp | Mid Cap | Building Materials

Welspun Corp Limited is a leading welded line pipe manufacturing company globally, offering various solutions in line pipes including LSAW, HSAW, and ERW pipes. The company is part of Welspun Group and provides services like coating, bending, and double jointing.

[Concall]

The $1.8 billion order, combined with Welspun’s ongoing US capacity expansion, provides strong volume visibility through FY29.

“With our new capacities coming into place, we are definitely looking forward to close to half a million tons of volume from the next calendar year onward. By the time this order comes into execution, which is in FY28, in the latter part of FY28, we are looking at close to 600,000-700,000 tons of capacity and volume. These are expected to be the peak volumes. From current volumes of 350,000 tons, we are looking at close to 700,000 tons, which is almost 2 times the current volume over the next 2 years.”

— Vipul Mathur, MD & CEO

The order is tied to growing US gas production and the need for additional pipeline infrastructure to evacuate gas from the Permian basin.

“This order is for transporting gas from the Permian field to the Gulf Coast. That is the particular segment to which this order pertains. It is carrying a large volume of gas, in excess of almost 3 billion BC, 3, 3 Bcf of gas, from point A to point B. There is significant demand at this point in time to evacuate the gas because a great deal of drilling is taking place in the Permian. A large amount of gas is therefore coming out, and there is significant demand for pipelines to evacuate this gas from the Permian to the Gulf Coast, for other utility companies, for data centers, or for whatever purpose it might be used.”

— Vipul Mathur, MD & CEO

The $1.8 billion order may not be a one-off. Welspun sees additional large projects developing, although they remain some distance from finalisation.

“To your point about whether there are more such projects, it looks like there are 1 or 2 more projects of this nature, but they are still some distance away from being finalized. That is our assessment of the situation. The underlying fact is very simple: the market is extremely buoyant, and demand is very strong. The right companies will definitely benefit from this. We are at the right place, at the right time, with the right partners, and doing the right things.”

— Vipul Mathur, MD & CEO

Debottlenecking, augmentation and the new greenfield facility should leave spare capacity even after accommodating the mega order.

“These 3 factors together will not only enable us to service this order but will also leave enough capacity for us to accommodate further orders. We have done this analysis, and we still have considerable flexibility in terms of accommodating any future business that is crystallizing and that we want to pursue. Therefore, capacity is not going to be a constraint. If tomorrow we want to pursue a project and like that particular project, I do not think capacity will be a constraint.”

— Vipul Mathur, MD & CEO

Strong demand and higher capacity utilisation give Welspun the ability to prioritise customers, partners and projects rather than chasing volumes.

“We have always been selective. It is not that there is a shortage of business here; there is enough business in the market. We have always been very selective, and this project has also been worked on for a very long time. We were very determined and focused on pursuing it for 2 reasons. Number one, it is a very prestigious project. Number two, the partners involved in this particular project are companies with whom we have worked very closely in the past.”

— Vipul Mathur, MD & CEO

Fixed-price contracts are backed by raw-material arrangements, while US orders and raw materials are dollar-linked, protecting profitability from commodity and currency swings.

“All these are negotiated contracts, and they are all fixed-price contracts. They are duly and ably supported by the raw material. In any case, these are dollar-to-dollar indexed orders, dollar-to-dollar orders, and US orders to be executed by our US entity. Therefore, in terms of inflation, since all these orders are fixed-price and the raw material is on a back-to-back basis, the possibility of any inflationary factor disturbing the situation is negligible.”

— Vipul Mathur, MD & CEO

The US opportunity effectively needs to be served through Welspun’s local manufacturing footprint because tariffs make exports from India unattractive.

“The second part of your question is whether we can produce something in India and supply it to the US. The answer is no. Given the tariff regimes applicable globally, and especially in the US, that is not feasible at this point in time, nor is it likely to be feasible in the near future.”

— Vipul Mathur, MD & CEO

Management clarified that the win reflects a long bidding and engagement process rather than a sudden spike in US pipeline spending.

“First and foremost, it was not sudden. This has been under discussion for a fairly long time. If you recollect, I have consistently said over the last 2 quarters that we were in discussions regarding some key projects, and this was definitely one of the key projects we had been discussing. So, it was not sudden.”

— Vipul Mathur, MD & CEO

Engineering & Capital Goods

KRN Heat Exchanger | Small Cap | Engineering & Capital Goods

KRN Heat Exchanger and Refrigeration was incorporated on August 25, 2017 and the registered office of the company is located in Rajasthan, India. The company is engaged in the activity of manufacturing and sale of heating ventilation & Air conditioning part & accessories.

[Concall]

Data centers are emerging as a major growth engine for KRN. Q1 revenue from the segment jumped from roughly ₹20 crore last year to around ₹65 crore this year, with exports beginning to contribute meaningfully.

“Regarding data centers, if you look at last year, our Q1 data center business was around 20 crore, whereas in the last quarter we achieved around 65 crore. Therefore, you can say that we increased it almost 3 times. Of the 65 crore, I think approximately 20-30% came from exports. Therefore, around 20% of the 65 crore came from exports.

Exports will now increase, and domestic business will also increase. If we assume only the first quarter, then for the full year, I think our total revenue from data centers, including domestic and exports, will be almost 3-3.5 times higher.”

— Santosh Kumar Yadav, Chairman & Managing Director

The company is preparing for the shift towards liquid cooling in AI data centers, while management believes conventional air cooling will continue to remain relevant.

“Basically, air-liquid cooling may be a major segment in AI data centers, but it will not be the case that air cooling will be discontinued. Air cooling will continue, and liquid cooling will be added. The primary cooling may be liquid cooling, while secondary cooling will only be air cooling. Therefore, our products will continue.

Regarding micro-channel, we are already developing it, and within approximately 1 year from now, this product will be included in our portfolio and we will begin mass production. As of now, we are working on ordering the machinery.”

— Santosh Kumar Yadav, Chairman & Managing Director

Management sees micro-channel as a relatively untapped domestic opportunity, with potentially better initial margins because there is currently no local manufacturer for large commercial applications.

“In terms of total product value, micro-channel will be lower, but the margin will remain the same or be slightly higher because it is a new product for the Indian market. As of now, there is no manufacturer of micro-channel products for commercial applications.

Of course, there are many manufacturers for automobile applications, but for commercial applications, the length is quite high, at around 3 metres, and the width is approximately 1.5 metres. Therefore, there is no manufacturer currently. I think we will be the first manufacturer as of now.”

— Santosh Kumar Yadav, Chairman & Managing Director

Despite geopolitical uncertainty and pressure on HVAC OEM margins, KRN expects its existing margin band to sustain, helped by operating leverage, product mix and incentives.

“I think it will remain the same. In addition, if you consider the other factors, such as the PLI incentive, margins will increase next year for sure.

The main reasons why we maintained our margins this quarter are operating leverage, the product mix from bar and plate and bus air conditioning, and exports. If you look at our main customer in the old facility, it is primarily Daikin. With Daikin, our bottom line is almost fixed, so there is no percentage-based impact on costing.

However, our new customers provide sufficiently better margins compared to our old margins. Therefore, as we add new customers and new products, our margins are slightly higher. This will continue.”

— Management

Middle East disruptions have affected UAE business, but KRN expects North America and Europe to more than compensate.

“This year, the total amount we achieved from the UAE last year will definitely decline. However, we will generate more revenue, particularly from North America, followed by Europe, with the balance coming from the UAE.

Compared to last year, we are going to achieve almost double the revenue. Therefore, the main growth will come from North America.”

— Management

Rapid data-center growth has stretched local manufacturing capacity, giving KRN an opening to win orders despite import duties.

“Globally, particularly in North America, data center growth is very strong, and there is a shortage of heat exchangers. When the same manufacturers are supplying to data centers, they are unable to supply to other applications. Therefore, we have good forecasts and good orders, especially from North America, and this is visible in our export revenue.

I think that for the next 2-3 years, there will be continued strong growth from data centers as well as from other applications. Therefore, this is the right time for us to expand our capacity, and we already have the capacity. Of course, we will benefit from this, and our top line will continue to grow.”

— Santosh Kumar Yadav, Chairman & Managing Director

Management believes existing North American manufacturers cannot immediately meet booming data-center demand, creating a window for KRN to gain customers.

“However, there is a gap between their manufacturing capacity and the market requirement because data center demand has increased significantly over the last year. They have to supply other applications and are able to supply only a certain quantity to data centers.

That is why we have a good opportunity. We already have 2-3 customers on board, and we started working with them approximately 3-4 months ago. If these manufacturers decide to add new capacity, it will take time, perhaps 1-2 years, for their local manufacturing capacity to become available.”

— Management

KRN is setting up capacity closer to South Indian customers, partly at their request, to reduce logistics costs and support further growth.

“For South India, we have received requests from our existing customers because of logistics and the size of the products. They are asking us to establish a facility in South India. That is why we are planning a new facility in South India, particularly to control their logistics costs.

Of course, large OEMs have certain requirements regarding procurement. Once purchases cross certain amounts, they ask vendors to be located nearby. We already have approximately 100 crore of business from Bangalore alone.

The new facility will take at least 1 year from now. By that time, our capacity utilization at this facility will also be almost 80%.”

— Management

KRN expects its recently acquired bus air-conditioning business to scale rapidly, driven particularly by electric buses.

“The bus AC business is currently a 1,000 crore market in India. This year, we are planning to achieve around 10-15% of the total market share through this new venture, and we are on track to achieve that.

The total industry growth is around 20-30%, particularly in electric bus air conditioning. Therefore, I think we will be able to achieve 30-40% year-on-year business growth, particularly from the bus air-conditioning segment.”

— Santosh Kumar Yadav, Chairman & Managing Director

KRN is making progress with Indian Railways and other OEMs, with substantially larger installed capacity available as the business ramps up.

“For bar and plate, we are expecting the main revenue to come from the Indian Railways and other OEMs. I think we are now on the right track. This year, we may achieve approximately 40-50 crore of top-line revenue, and growth will continue at perhaps 22% or 30-40% for the bar and plate business. We have capacity of approximately 150-200 crore.”

— Management

KRN has received development orders for locomotive cab AC and plans to use vendor approval as the entry point into larger railway opportunities.

“Last week, we received 1-2 development orders for complete cab air conditioning from BLW. We expect to complete that process within the next 2-3 months. Once we become an approved vendor, we will be able to supply the complete HVAC system, starting with cab air conditioning, followed by the complete HVAC system for Indian Railways.

After that, we will gradually enter Vande Bharat and metro projects, but that will take approximately 1.5 years from now. This new facility will be a complete assembly setup for bus air conditioning and Indian Railways.”

— Management

Retail

Khazanchi Jewellers Limited | Small Cap | Gems, Jewellery & Watches

Khazanchi Jewellers is a legacy jewelry house with over 50 years of experience operating across both wholesale B2B and retail B2C segments. The company is currently executing an aggressive retail expansion strategy to increase its presence in South India and transition its business mix toward higher-margin consumer sales.

[Concall]

The company plans to open up to 10 new retail stores over the next few years to shift its focus toward direct consumer sales. This move is designed to make retail a much larger part of the total business, aiming for 40% of all sales by 2030.

“Regarding the growth outlook for our B2C segment, the B2C business will be the key growth driver going forward, and we have a very aggressive plan to launch 8-10 stores over the next 3-4 years across geographies. These stores will be a combination of our flagship stores and premium boutique minimal jewelry stores offering minimal jewelry and the latest lightweight designs. Our retail expansion is aimed at accelerating our B2C growth and increasing the B2C contribution to approximately 40% of overall revenue by FY2030.”

— Rajesh Mehta, Chairman & JMD

The company is moving forward with its plan to transfer its stock listing from the SME exchange to the main boards of the BSE and NSE. Management expects this transition to be finished within the next two months.

“We are in the process of submitting the application and all the documentation, and we are going to submit the documents very shortly. We believe that the migration process would be completed in another 2 months.”

— Management

The new flagship retail store is currently generating between 30 and 35 crores in sales every month. Management says the store is currently hitting about 80% to 85% of its long-term annual sales target of 500 crores.

“We are matching the target. We had already defined that this showroom would generate revenue of around 500 crores, and we have been working towards and achieving approximately 80%-85% of that. If you are asking for the approximate monthly figure, it is around 30-35 crores.”

— Management

A new digital management system is helping the company track which jewelry items are popular and manage inventory more effectively. This system is intended to be the blueprint for all future stores to ensure efficient operations as they scale.

“We have had a great experience with regard to the ERP implementation in our new showroom. We are able to understand which products are moving fast and what the average customer demand is. Based on that demand, we are modifying our product requirements, reordering levels, and everything else. We are creating a robust ERP system so that it can be replicated for the upcoming showrooms.”

— Management

More customers are trading in their old jewelry for new pieces, which now accounts for up to 20% of total sales. Management is also seeing strong advance demand as they head into the peak wedding and festival seasons.

“Old gold exchange accounts for approximately 15%-20% of total sales. It has increased; last year it was lower. It increased after Mr. Modi’s statement. As the season starts, within 15 days, all the order books are already in execution. There are also upcoming shows in which we are planning to participate. In that case, we have good demand, and the demand is quite feasible.”

— Management

To increase profits in its wholesale division, the company is introducing more expensive items like diamond and high-end traditional jewelry. They are balancing this push for higher margins with the need to keep volumes high for their manufacturing partners.

“We have been improving the B2B segment as well. We are expanding our higher-margin products. We have added Kundan Jadau jewelry and diamond jewelry for our B2B segment as well. We have been working to improve B2B margins. We have been working on both sides because volume growth is also very important for the B2B segment, so that we can provide work to all our contract manufacturing units. Accordingly, we have been working on both sides to improve our top line and bottom line in B2B.”

— Management

Bridal jewelry is the main driver of the company’s business, making up about 60% of total sales. Their inventory is heavily focused on specialized traditional designs that are popular for weddings in South India.

“We do not maintain that exact split. However, on a broader basis, approximately 60% of sales come from bridal and related products because we have a large collection of designer, antique Nakash, temple, and other types of jewelry that are intended for bridal use. We also have a large collection of minimal jewelry. Therefore, our overall turnover comes from a blended selection. On a broader basis, we can say that 60% of sales come from the bridal collection.”

— Management

Auto Ancillary

RACL Geartech | Small Cap | Auto Ancillary

RACL Geartech Limited is a leading provider of automotive components in India and is a globally renowned enterprise. It is the auto part suppliers catering as Tier 1 to the biggest Original Equipment Manufacturers (OEMs) and major system manufacturers, who are functioning as Tier 1 manufacturer. Its client domain is spread across the world with dominance presence in Europe, Asia-Pacific and North America.

[Concall]

RACL believes its larger revenue base can now scale faster, with management targeting sustained 15–20% annual growth and another doubling over the next few years.

“Regarding revenue, we always say that we have an ambitious growth plan to grow by 15-20% per year.

Consider that 15% of 100 crores is 15 crores, while 15% of 500 crores is 75 crores. You can understand that, over the next 3-4 years, we will again be targeting a doubling of what we are doing today.

We will definitely grow at a much faster pace. Initially, scaling up a business is always very painful and slow. Once the business becomes stable, however, it can be scaled up much faster.”

— Gursharan Singh, Chairman & Managing Director

After KTM’s financial troubles hurt RACL’s volumes, management says the customer has recovered and its 2027 production plans look strong.

“I already explained that KTM has bounced back and has almost reached pre-COVID levels. In fact, their Model Year 27 means that the vehicles they start producing from September will be classified as Model Year 2027. They have very good plans for 2027, and the business is back to normal or slightly above normal.”

— Management

Bajaj’s ownership of KTM hasn’t disrupted RACL’s longstanding relationship with the Austrian business; new model opportunities are already coming through.

“We are already exporting to KTM. For sourcing from India, we are already exporting to Austria, and we have been exporting to Austria for the last 15 years. Our relationship is already very well established with them.

For all their new models being launched in Austria, now under the management ownership of Bajaj, we are already receiving new business opportunities from KTM Austria. You are right that, for Bajaj India, if there are any such opportunities, we would be happy to work with them.”

— Management

Commercial supplies began in January, and RACL has quickly ramped towards its initial nomination of roughly 10,000 motorcycle sets per month.

“Regarding Royal Enfield, we conveyed that commercial supplies started from January. We have already completed approximately 8 months of turnover. As we said, we have been nominated for roughly 10,000 sets per month. When I say sets, I mean motorcycles. We are working at that level. We were ramping up earlier and reached a level of 7,500 to 8,000. We are sustaining that level.”

— Prabh Mehar Singh, Chief Operating Officer / Management

RACL sees structural outsourcing opportunities as Indian OEMs move into higher-performance motorcycles requiring more sophisticated transmission components.

“We are now creating a niche of our own through the premiumization of the entire product portfolio of these companies. For example, TVS is now launching motorcycles above 350 cc, which is more than what they did in the past. We are the single source for the entire gear train for all their motorcycles, including the platforms for Norton and the Apaches that are now being introduced.

Similarly, KTM has always been with us. Royal Enfield also took a cue from this and decided to approach suppliers like us. One or two other large motorcycle OEMs that want to expand their presence in the premium segment are also approaching us.”

— Management

As OEMs focus their capital on vehicle assembly and expansion, RACL expects more component manufacturing to shift towards specialised suppliers.

“You are right. Eventually, an OEM would like to focus on making the assembly. Assembly is the king of the supply chain, so the OEMs want to retain that commanding position.

If they invest in people and costs to manufacture the components as well, they lose the scale at which customers now want to grow. Earlier, gears and other critical products had to be sourced in-house because there was no credible and established supply chain capable of meeting the requirements for such specific, moderate-volume, batch-type products. I can speak at least in terms of gears.

Therefore, outsourcing is becoming an increasingly important factor. Royal Enfield is investing approximately 6,000-7,000 crores in setting up a new plant near Andhra Pradesh, so its focus will be on manufacturing motorcycles, not individual components. That is the shift you are witnessing.”

— Management

ZF is discussing a similar product with another OEM for China; management says it is early-stage but potentially significant.

“In parallel, although it is still at a very early stage, the customer is discussing a similar product with another OEM for the Chinese market. If that opportunity materializes, it could significantly change everything we have discussed here, but these are still very early updates.”

— Management

RACL is already investing for an electric power-steering programme through ZF that management describes as another potentially large project.

“The other ZF project, which you already know about, is in the electric power steering segment, for which we are now investing. That project is on track, and commercial supplies should start from the end of 2027 or the middle of 2028. It is for an American OEM and is also expected to be a large project for us through ZF.”

— Management

With automotive visibility already established for the next few years, RACL is looking at areas where its precision-manufacturing and traceability capabilities can be redeployed.

“The first area we have identified is aerospace for civil aviation. We feel that this area is growing very rapidly, and the indications are very strong, particularly for Airbus. Boeing does not yet have such a large forecast, but Airbus is progressing in a significant way.

We are therefore considering this as an area where we can utilize our skills because we have well-established capabilities in precision, traceability, ESG compliance, and related areas. We can probably use the same technologies for civil-aviation aerospace applications.”

— Management

RACL believes some of its existing manufacturing technologies can be adapted to emerging robotics and actuator applications, with Europe as the initial target market.

“The second area we are identifying is a degree of diversification in the area of actuators, as you mentioned. We are also trying to diversify to some extent into small micromotors, actuators, and related products. We believe this area also has significant potential.

The third area you mentioned is humanoid technology and robotics. This area clearly has huge demand for gears. Technically, these are still mechanical components, but they involve gears with different concepts and different designs. Some of the technologies we already have are capable of producing components for humanoid and robotic applications.

There is, however, a challenge in this field. Not many Indian manufacturers have entered the humanoid and robotics space, and those that have entered are still at an early stage. Chinese companies would be difficult to compete with because China has a well-established supply chain of its own. Europe is our target area, and we are exploring this opportunity within the European continent.”

— Management

Single-sourcing is a key strength of RACL’s export business and gives it strong revenue visibility once it wins a programme.

“This is the strength of our export business. Leaving BMW aside, in any export business, wherever we supply a component, we remain the sole supplier of that component until the end of the product’s life cycle. This is part of our formal agreement.”

— Management

Management confirmed the sharp increase in European sourcing enquiries, linking it to geopolitical disruption and China+1 diversification.

“Your feedback is correct. There has been a surge in RFQs. However, many times they are not only RFQs; they are also RFIs. Geopolitical conditions are very volatile. Supply chains are being rewritten, and supply and logistics routes are being rewritten. Therefore, there has been a sudden surge.

We are also witnessing this. How far it translates into serious business will become clear only with time. However, it is a positive sign. I should not make this statement, but we can still see that people are looking at India very seriously. We generally refer to this as the China-plus-one policy. Many business realignments are taking place, and we are witnessing the same thing you have described.”

— Management

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Meher and Srusti.

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 82nd edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 5 companies across 4 industries and RBI’s Deputy Governor’s Keynote Speech.

Regulator

• Reserve Bank Of India

Diversified

• 3M India Limited

Consumer Durables

• Blue Star Limited

Financial Service

• KFin Technologies Limited

Engineering & Capital Goods

• HEG Limited

• Ramkrishna Forgings Limited

Regulator

RBI Deputy Governor | A Vision for Responsible AI, Resilient Banking

The Reserve Bank of India is the nation’s central bank, responsible for monetary policy and the regulation of the banking system. It focuses on maintaining financial stability, managing inflation, and promoting inclusive economic growth through digital transformation and prudent oversight.

[Reference]

The Deputy Governor highlights the current financial strength of Indian banks while shifting the focus from balance sheet size to the quality of financial inclusion. This suggests that future regulatory oversight will increasingly prioritise how effectively credit reaches underserved segments rather than just volume growth.

“India’s banking system today is well capitalised, with a capital-to- risk-weighted-assets ratio of 17.7 per cent. It is profitable, with profit after tax exceeding ₹ 4 lakh crore. And it is healthy, with gross non-performing assets down to 1.8 per cent. Stress tests suggest that the system is well placed to absorb adverse shocks. Why does this matter? Because this strength is not an end in itself — it is the capacity that allows the system to support a larger and more complex economy. And here I would enter a caution. The contribution of banking to growth should not be measured only by the expansion of aggregate credit, or by the size of balance sheets. It must also be judged by whom finance actually reaches, whether rising consumer expectations are met, and how banks support the wider economic activity.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

There is a concerning trend where a smaller percentage of new businesses are entering the formal credit system despite overall credit growth. Investors should note that analytical intelligence is currently failing to bridge the information gap for new-to-credit borrowers, potentially limiting long-term market expansion.

“In 2022-23, 52 per cent of fresh businesses entered the formal credit system. By 2025-26, that figure had fallen to 42 per cent — even as outstanding commercial credit grew by fourteen per cent over the year. This did not happen for want of information: lenders today have access to richer data, and to materially stronger analytical capability, than at any point before. It points to something more structural — that our data and our technology may be getting better at serving those the system already understands, faster than they are developing the capacity to understand those it has never served.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

The RBI is pushing banks to use alternative data to stop penalising borrowers who lack traditional credit histories. Investors should monitor how well banks adapt their credit models, as those who successfully interpret alternative data will likely capture the next wave of credit growth.

“Where a lender genuinely lacks reliable information about a borrower, the absence of information should not, by itself, be mistaken for adverse information. Treating ‘we don’t know’ as though it meant ‘we know it’s bad’ leads to credit being denied where it need not be. This is precisely where banks must put their technological capabilities to work. So where is that intelligence to come from? Traditional lending leaned heavily on collateral, financial statements and credit bureau history. That world has expanded considerably. Cash flows, GST filings, utility payments, e-commerce records, mobile usage, agricultural and geospatial data — this alternative data offers a genuine opportunity to bring ‘credit invisibles’ into the formal system, and AI can help close that gap.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

The central bank defines true banking productivity through improved risk pricing and customer reach rather than just lower cost-to-income ratios. This indicates that banks focusing solely on cost-cutting through AI without expanding their addressable market may face regulatory pressure.

“Productivity in banking is not merely output per employee or the cost-to-income ratio; it is whether the same institution, with the same resources, reaches a borrower it could not reach before, resolves a grievance that would earlier have remained pending, prices risk more accurately. If AI compresses costs without widening reach or improving the customer’s experience, we shall have automated the existing system rather than improved it.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

The central bank expects institutions to maintain robust human-in-the-loop systems to mitigate risks when automated models behave unpredictably. For investors, this implies that banks will need to continue investing heavily in skilled personnel, potentially limiting the immediate margin gains expected from AI.

“As adoption of AI increases, banks must retain the judgement, the capability and the alternative arrangements needed to intervene when systems fail or behave in ways that were not anticipated. The ability to remain resilient in such circumstances is itself a critical organisational capability, form of intelligence — the ability to recognise, adapt and respond when the unexpected occurs.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

The Deputy Governor warns that operational resilience must be integrated into growth strategies rather than added as an afterthought. This suggests that the RBI will scrutinise rapid expansion plans more closely to ensure underlying tech infrastructure can handle high transaction volumes.

“As banks grow — as their reach, their transaction volumes and their delivery arrangements expand — their capacity must keep pace. Systems that perform well at today’s volumes may behave quite differently at tomorrow’s scale, and that calls for timely upgrades: in technology, in processes, in oversight — all of which innovation can help deliver. Banks should focus, in particular, on the functions critical to their resilience and on those that matter most directly to their customers. Resilience, I would argue, should be built into the design of growth — not bolted on after the expansion has already happened.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

The RBI is identifying systemic risks arising from the concentration of many banks using the same third-party technology and data providers. This could lead to future regulations mandating provider diversification, which may increase operational costs for banks heavily reliant on a single tech stack.

“Where several institutions lean on the same data sources, the same models, the same technology providers or the same infrastructure, a single error or disruption can affect them all together. Prudence, in such a world, requires effective challenge, limits on undue concentration, and credible alternatives. The intelligence needed here cannot be assembled within any one institution— it has to be pooled.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

The regulator is mandating clear human accountability for all automated decisions that negatively impact customers. This move ensures that banks cannot use black box algorithms as an excuse for poor conduct, reinforcing the need for transparent AI frameworks.

“Wherever a decision materially affects a customer — a loan declined, a limit reduced, an account restricted, a claim denied — there must be a route to a person with the authority to look again. A machine may reach the decision; a person must own it. If a bank cannot say who that person is, it has not deployed a model — it has delegated its accountability.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

The RBI emphasises that boards must have the technical literacy to oversee complex AI systems and aggregate risks across the organisation. Investors should assess board compositions to ensure they possess the necessary expertise to manage the convergence of technological and financial risks.

“The Board and the top management carry the ultimate accountability — for the decisions taken, for the assumptions those decisions rest on, and for the consequences that follow. Governance intelligence lies in their ability to convert the information flowing in from across the institution into a coherent strategic view. Its purpose is not to pull governance into day-to-day execution. It is to see where institutional capability or risk appetite is falling behind changing needs, and where separate weaknesses, each individually manageable, might combine into something larger.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

Mandating the disclosure of automated interactions is a step toward maintaining consumer trust in the digital ecosystem. For banks, this requires careful management of customer perceptions as they transition from human-led to machine-led service models.

“A customer dealing with an automated system is entitled to know that this is what they are dealing with. Disclosure of that fact is not a courtesy; it is the basis on which a customer decides how much weight to place on what they are told, and what to do next. Second, wherever a decision materially affects a customer — a loan declined, a limit reduced, an account restricted, a claim denied — there must be a route to a person with the authority to look again.”

— Shri Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India

Diversified

3M India Limited | Mid Cap | Diversified

3M India is a subsidiary of the global science-based technology company 3M, specialising in diversified segments such as industrial, automotive, healthcare, and consumer goods. The company operates three manufacturing facilities in India and focuses on leveraging its global R&D expertise to serve the domestic market.

[Reference]

The company achieved a 19% revenue increase, marking over a year of consistent quarterly growth across its entire business portfolio. This indicates robust underlying demand for its products despite a challenging macroeconomic environment.

“Look, first of all, the revenue growth that we’ve seen this past quarter—about 19%—is very strong. It is now five consecutive quarters of growth that we’ve demonstrated, and it’s across all our business groups. So the demand is there, and it’s a reflection of the work that our teams have been doing.”

— Aseem Joshi, Managing Director

Profit margins were squeezed by rising raw material costs and unfavourable foreign exchange movements due to a high reliance on imports. Management has implemented price hikes to offset these costs, with the full benefit expected to appear in upcoming quarters.

“Now, as far as margins are concerned, yes, we have been impacted by raw material inflation, a little bit by the labour portion as well, but also by FX. Keep in mind, we do import a lot of the raw materials that we use in our products manufactured in India, and FX has been a large driver of impact. We do think that over time this will stabilise. We have taken pricing actions, and those are starting to flow through. Already in this quarter, we’ve seen some impact of that, and we’ll see the full pricing impact flush through in following quarters.”

— Aseem Joshi, Managing Director

Instead of using financial derivatives to manage currency risk, the company is shifting toward local manufacturing to reduce its dependence on imports. Investors should note that this transition is a long-term project that will take several quarters to meaningfully impact the bottom line.

“Currently, as a company, we do not hedge. Our strategy is to look at doing more local production and local sourcing as a way to reduce exposure to FX. That work is already underway, and we anticipate that—while it’s not something that will happen immediately—it will take a few quarters before we start seeing results. In the meantime, we’ll continue to work with our customers and suppliers to try and mitigate the impact of this cost increase.”

— Aseem Joshi, Managing Director

Roughly 60% of the company’s cost base is currently tied to imports, making it highly vulnerable to currency fluctuations. Management plans to use its three Indian factories to increase local content over the next two years to provide more margin stability.

“That’s right, Alex. About 60% of our costs are imports, and we are very cognizant that this exposes us to FX variations. There is a thought process on figuring out which products we can localise. We operate out of three factories in India: one in Pune, one in Bengaluru, and one in Ahmedabad. In each of these, we have identified products where we can increase the level of localised content. Now, that will take time, but we do expect that 60-odd per cent to start coming down substantially in a couple of years. We don’t have a specific target number, but we do expect it to reduce.”

— Aseem Joshi, Managing Director

Localisation efforts are limited by the local availability of high-grade raw materials required for 3M’s specialised products. Management is evaluating localisation on a product-by-product basis to ensure quality standards are not compromised.

“As far as whether it’s a conscious effort, yes. As I mentioned, we have specific products that we’ve identified, and we’re working on reducing our dependency on imports for those. Keep in mind, in some cases those raw materials aren’t easily available in India or aren’t of the grade that we require. So it has to be evaluated case by case, but we do have a focused program to reduce this dependency.”

— Aseem Joshi, Managing Director

Beyond its traditional markets, the company is targeting high-growth sectors like electronics, data centres, and the emerging semiconductor industry in India. These segments are viewed as critical drivers for the company’s growth over the next three years.

“Now we see increasing opportunities in new areas. You mentioned electronics; we also see data centers as an upcoming opportunity, and down the road, semiconductors should pick up as well. So there is a lot of excitement in terms of what is possible in India.”

— Aseem Joshi, Managing Director

A new lab and sampling centre have been established in Bengaluru to support the rapid growth of the electronics manufacturing sector in India. This infrastructure allows the company to partner more closely with tech clients and speed up the product adoption cycle.

“To talk about electronics for a moment: when you think about electronic products, each of them requires adhesives, films, temperature management solutions, and abrasives. Those are all products that 3M makes, many of which are produced in India. So we are very excited about those prospects, and we are putting our teams and lab capabilities in place to support that growth. For instance, in electronics, we’ve set up a new lab in Bengaluru that allows customers to come in, view our products, and sample them quickly. We also have a sampling center set up to respond to customer requirements very fast.”

— Aseem Joshi, Managing Director

While material cost volatility makes exact forecasting difficult, the management expects pricing adjustments to lift margins in the very near future. The next quarter will be a key test of the company’s ability to successfully pass costs on to the market.

“It’s hard to predict exact timelines because of the uncertainty in material costs. However, I would expect the pricing actions we’ve taken to start fully flowing through by the following quarter, which should start nudging margins upward.”

— Aseem Joshi, Managing Director

Consumer Durables

Blue Star Limited | Small Cap | Consumer Durables

Blue Star is a leading Indian provider of cooling solutions, including residential air conditioners and commercial refrigeration systems. It also maintains a significant presence in mechanical, electrical, and plumbing (MEP) services for large-scale industrial and commercial infrastructure projects.

[Reference]

Management dismisses the idea that high heat alone can drive air conditioner sales if rural income is hit by a bad monsoon. Investors should watch for potential consumption weakness in Tier 3-5 towns despite the rising temperatures.

“I have stated this earlier: going by history, India is an agricultural and rural economy. A poor monsoon will result in weak demand across Tier 3, Tier 4, and Tier 5 towns. While temperatures shooting up may create some demand, that will not compensate for the overall slowdown in the economy if the monsoon forecast shortfall of 15% holds true. So, I am not a believer that a delayed monsoon is going to help the cooling industry at all.”

— B Thiagarajan, Managing Director

The company faced significant input cost pressure and initially lost market share while trying to protect profitability. Management has since shifted focus back to volume growth to prevent inventory buildup, showing the delicate balance between price and volume in the AC sector.

“We had a delayed onset of summer, coinciding with rupee depreciation and an unprecedented escalation in commodity prices calling for a price hike of over 13%. We could pass on only around 5%. We were trying to hold on to margins at the cost of market share, and we played that strategy in April, losing tertiary sales market share by 50 basis points. We corrected that because we didn’t want to be saddled with inventory, gaining 10 basis points in May and 50 basis points in June.”

— B Thiagarajan, Managing Director

Profitability in the core cooling segment saw a sharp decline during the quarter due to competitive and cost pressures. Management has set a challenging full-year target of 6.5% EBIT, which relies heavily on efficiency gains and portfolio adjustments in the second half of the year.

“However, as the summer season ended, I think we fell short of expectations. Our margins shrunk, and with a revenue growth of just 13% in Segment 2 (Unitary Cooling Products), EBIT dropped from 5.8% to 2.9%. So, our focus is going to be on how to regain our margins. Q2 will indeed be a short quarter, and nothing much can be done. It is about Q3 and Q4—getting our portfolio right and getting our costs under control so that we are able to deliver around a 6.5% EBIT margin for the full year. That is a Herculean task, but a lot of actions are underway.”

— B Thiagarajan, Managing Director

While consumer AC margins are under pressure, the company is pivoting toward B2B growth sectors like data centres and advanced manufacturing. This strategic diversification into high-tech infrastructure may provide more resilient growth than the retail consumer segment.

“Blue Star has a lot of work to do regarding Unitary Cooling Products. Our focus there is clear: get back margins, even at the cost of market share. On the other hand, we have to look at sectors providing growth. Right at the moment, those are data centers and advanced manufacturing sectors such as EV, solar, and semiconductors. These are our focus areas where we are doing well.”

— B Thiagarajan, Managing Director

Despite a collapse in margins, management maintains that the underlying volume growth for air conditioners remains robust. Investors should distinguish between the industry’s strong long-term growth trajectory and the current short-term profitability challenges.

“The growth story continues. For example, volume growth this summer season (Q1: April, May, June) was 21%, and we grew by around 18% in room air conditioners. The revenue growth for the market was around 25%. It is just that profitability collapsed. I don’t think there is a growth issue at all, and I still maintain that between now and 2030, an 18% CAGR will definitely be maintained. There is absolutely no doubt about it.”

— B Thiagarajan, Managing Director

Management admits that the industry has seen a structural decline in profit margins over time. The expectation for steady-state EBIT has been lowered to 7.5%, reflecting a more competitive and cost-sensitive market environment.

“It is a question of running the business profitably. This is a growing category and not a plug-and-play product like a refrigerator or washing machine, so margins should be attractive. I have mentioned to you a number of times that this was a double-digit EBIT industry, but it keeps coming down. I am still hopeful that it will become a 7.5% EBIT industry.”

— B Thiagarajan, Managing Director

The air conditioning industry is currently facing a situation where manufacturing capacity is twice the size of existing demand. This oversupply is a key reason for the pricing pressure and may lead to prolonged margin compression for all players.

“Right now, there is more supply than demand, with manufacturing capacity available today being double the demand. So growth is not an issue at all. Even for this summer season, as I mentioned, there was 21% volume growth and 25% revenue growth. In fact, these figures could go up when we get final numbers.”

— B Thiagarajan, Managing Director

The company needs significant price hikes to restore profitability, but consumer demand appears sensitive to cost increases. Current sales are being driven by lower-than-average pricing, making future price adjustments difficult to implement.

“As far as price increases are concerned, it is important for us to pass on an additional 6% to 8%—that is the truth. However, I don’t think the market is going to absorb that easily. As I mentioned earlier, this volume growth happened at lower prices. In fact, if you look at consumer invoices, customers purchased air conditioners at prices lower than last April, having absorbed the GST benefit as well.”

— B Thiagarajan, Managing Director

Improving margins will require a shift in product mix because entry-level products dominate the current market. The high reliance on consumer financing and promotional offers further complicates the company’s ability to raise prices directly.

“Right now, passing on a price increase is a difficult task. You have to work on the product portfolio. 80% of products sold are entry-level products, close to 40% are consumer finance-led sales, and freebies like free installation and extended warranties are ongoing. Therefore, you have to figure out ways to rejig the product portfolio to improve margins. This is an aberration due to an unprecedented hike in commodity prices. We are confident that prices will be passed on at some point, but we have work to do to get our portfolio right.”

— B Thiagarajan, Managing Director

Financial Service

KFin Technologies Limited | Small Cap | Financial Service

KFin Technologies is a leading technology-driven financial services platform providing comprehensive services to asset managers and corporate issuers across multiple asset classes. The company operates as a major registrar and transfer agent (RTA) for mutual funds, AIFs, and IPOs, with a growing international footprint in Southeast Asia.

[Reference]

General Atlantic has reduced its stake to 14% but remains a promoter after leading a multi-year product transformation. Investors should note that while the PE firm continues to support the board, further divestment will be driven by their standard investment cycles.

“General Atlantic now holds around a 14% stake after the recent block deal. They continue to remain promoters of the company, and they are long-term players. They actually laid the foundation for the transformation of the company starting from 2020. They invested in 2018 but became very active in 2020. From there, it has been a journey where 36 new products have been launched, and the company is now recognized as a fintech innovation leader in the BFSI sector. General Atlantic has played a key role in handholding the board and management and partnering with us for growth. As for the remaining 14% stake, being a private equity firm, divestment timing depends on their LP/GP cycles. However, they have provided great support, guidance, and direction to the company.”

— Vivek Mathur, CFO

The company emphasises that it operates as a professionally managed entity despite its private equity promoter background. This independent structure ensures that management has the operational freedom to pursue long-term shareholder value without promoter interference.

“It is already a company run by an independent board of directors and professional management. There are only two General Atlantic directors on the board who participate in committee meetings, while day-to-day affairs are handled by management. There is no dependence on General Atlantic regarding the exit or operational freedom of any KMPs or board members. It is run professionally, giving us the freedom to create value for shareholders.”

— Vivek Mathur, CFO

Management clarifies that the promoter’s holding is through evergreen funds, which offers more flexibility in timing their eventual exit. While the exact timeline remains uncertain, the promoter’s current stance is one of continued support for the company’s growth.

“They hold evergreen funds, so divestment timing is up to them. Their stated position is that they are long-term players and continue as promoters. That is a question best directed to General Atlantic, but in our discussions, they remain fully supportive.”

— Vivek Mathur, CFO

The company is maintaining its long-term revenue growth guidance of 18% to 20%, supported by strong performance in international markets. This suggests that recent acquisitions and new vertical expansions are effectively compensating for any domestic market volatility.

“Deals remain active in the pipeline. Overall, including the Ascent acquisition, our revenue guidance remains at an 18% to 20% CAGR. We have seen strong wins across verticals. For instance, non-domestic mutual fund revenue in Q1 expanded significantly year-on-year. International business growth has been strong at 25% to 30%, with Ascent itself growing at 30%. Other segments like AIF and NPS, though smaller, are growing rapidly.”

— Vivek Mathur, CFO

KFintech is aggressively launching global platforms to capture high-value international mandates, particularly in pension and wealth management. The company expects these value-added services to double their share of total revenue, which should drive better profitability over time.

“We have also developed our platform business, launching the global wealth platform, global pension platform, and mFund for global fund administration. The primary window for participating in major international RFPs is between January and March, which should open up larger mandates. We have already secured wins, including a pension mandate in the Philippines and wealth platform implementations domestically and abroad. Our goal is to expand value-added services from 5.5%–6% to 10%–12% of revenue over the next 3 to 5 years.”

— Vivek Mathur, CFO

Domestic mutual fund revenue was briefly impacted by investors shifting focus away from equity toward commodities. However, the record-high SIP inflows provide a strong foundation for steady revenue growth as capital flows return to the Indian equity market.

“There are two key factors. First, mark-to-market dynamics in domestic mutual funds moderated as investor focus temporarily shifted toward gold, silver, and commodity ETFs over the last 6 to 9 months. However, SIP inflows remain robust at over ‡31,000 crore monthly, reflecting strong underlying equity appetite. FII flows that temporarily shifted to East Asian markets are returning to India.”

— Vivek Mathur, CFO

The company maintains a dominant 80% share of mainboard IPO issue value, positioning it as a primary beneficiary of the resurgent primary market. Management projects steady double-digit growth in both its issuer solutions and domestic mutual fund segments despite sector-specific headwinds in IT.

“Second, regarding Issuer Solutions and IPOs: while geopolitical uncertainty deferred some activity earlier, momentum has returned. We hold a two-thirds market share in mainboard IPOs and handle 80% of mainboard issue value. While lower corporate action activity (dividends, bonus issues) in the IT sector impacts corporate action fees, fundamentals remain intact. We expect domestic mutual fund revenue to grow at 11%–12% and Issuer Solutions at 12%–15%.”

— Vivek Mathur, CFO

KFintech plans to diversify its revenue mix toward international markets, where fee yields are more than double those of the domestic market. This strategic shift toward higher-margin global fund administration is expected to significantly improve the company’s overall profit margins within two years.

“International business is growing at 30% across our Southeast Asian RTA operations and new platform lines. Currently, domestic mutual funds contribute ~55% of fee-based revenue, value-added services contribute 5.5%–6%, and international business accounts for ~20%. Over the next 3 to 5 years, international business should expand to 30% of revenue, while domestic mutual funds will proportionately shift to ~45%, despite continuing to grow at 11%–12%. This international expansion is margin-accretive because global fund administration yields 6 to 7 bps on AUM compared to ~3 bps in India (and 2 to 2.5 bps in domestic AIFs). Synergies with Ascent will drive scale and enhance overall profitability over the next two years.”

— Vivek Mathur, CFO

Engineering & Capital Goods

HEG Limited | Small Cap | Engineering & Capital Goods

HEG Limited is a leading global producer of graphite electrodes, operating one of the world’s largest integrated manufacturing facilities. The company is currently diversifying into advanced carbon materials for the lithium-ion battery supply chain through a strategic corporate demerger.

[Reference]

Management has provided a clear timeline for the upcoming demerger and listing of its two business segments. This transparency helps investors understand when the graphite and advanced materials businesses will begin trading as separate entities.

“So, the first listed entity—the new company—would be listed, I would say, by the first week of September, and thereon, the graphite company would have to go in for a fresh listing, which would be anywhere between 45 to 60 days.”

— Riju Jhunjhunwala, Vice Chairman

The company is transitioning toward becoming a key supplier for the lithium-ion battery market with an anode plant ready by Q1 FY26. The existence of letters of intent and plans for graphene commercialisation indicates a strategic move toward high-growth green energy materials.

“So Nigel, like I said earlier, I think we are really on the cusp of a bigger energy transition. Now, that can be played in many ways, whether it is renewable energy or lithium-ion battery cells. We’ve taken a position over there of being a leading supplier in the supply chain for the lithium-ion battery space. For that, we are putting up this anode plant, which should be operational by the first quarter of next financial year. Things are progressing well over there; we have a lot of LOIs in place, so we are expecting a good order book starting with the plant itself. Whatever we’ve been talking about so far, we are already discussing internally on how to increase everything in terms of scale over there. When I say Advanced Materials, we are also looking at many other materials such as graphene, things that we have been working on behind the scenes very well in the last two years, and now we are seeing a time when we can actually commercialize those.”

— Riju Jhunjhunwala, Vice Chairman

HEG is consolidating its hydro-power assets into the new Advanced Materials entity to provide cheap, green energy for manufacturing. Because these plants are already fully paid off, they will provide a low-cost power source that boosts the profitability of new battery material projects.

“Just to clarify on the Bhilwara Energy vertical, which is going to be housed under this Advanced Materials business: the listed company currently holds around 40%, but that company will merge with the HEG new entity, and then the HEG new entity would own 100% of that. So that’s a huge backbone support of 20-year-old hydroelectric plants which are supplying green power to us and are fully depreciated plants. So there is a lot of backend support from there as we go along building these new businesses for the future.”

— Riju Jhunjhunwala, Vice Chairman

Management expects its new anode facility to reach full capacity utilisation within just two years of starting operations. This rapid ramp-up suggests strong underlying demand from global battery and car manufacturers who have already tested their products.

“Because of strong confidentiality agreements—since we are working with battery manufacturers and Tier-1 OEMs, and for the last two years, we’ve been doing a lot of supply to them from our pilot plant—the way we see it, in the first year, we should be able to do at least 50% to 60% capacity utilization. Going forward in the second year, we expect 100% capacity utilization for the first 20,000-tonne capacity.”

— Riju Jhunjhunwala, Vice Chairman

The company has committed to a large capital expenditure plan of 6,000 crore rupees over three years to capture the battery material market. By targeting Western markets looking for non-Chinese suppliers, the company aims to derisk its revenue stream and capitalise on global supply chain shifts.

“In the next three years, I think we’ll be making a capex of around ₹6,000 crore. That would be funded—I mean, today we are already well funded with around ₹1,500 crore of equity that is there with us, and the balance equity will come from running projects. Around 60% to 70% will be funded out of debt. A lot of these are long-term projects, and we are really seeing a lot of good work on that front. In India, the way it’s growing in the lithium-ion battery space, a lot of companies are putting up cell plants, as you can see. Apart from that, we are quite hopeful that at least 70% of our revenues in the first few years are going to come from exports—exports to the US, Europe, and non-China-based countries where they want product supply from a source outside China. We are going to fulfill that quite substantially.”

— Riju Jhunjhunwala, Vice Chairman

HEG believes the market for anode materials has bottomed out and is positioning itself as a premium, niche alternative to Chinese suppliers. Expecting a price premium and healthy margins indicates confidence in their product quality and competitive advantage in a crowded market.

“20,000 tonnes in the larger scheme of things is a very small capacity if you look at overall Chinese capacities, and we are looking at only four or five customers who will be needed to fill up this kind of capacity. In terms of pricing, yes, prices did come off in the last two years, but now we are seeing all raw material prices strengthening. I think we’ve reached a bottom at which even China is not supplying material today. We, of course, expect to get at least an 8% to 10% premium over Chinese products being supplied, simply because ours will be a more niche, smaller base, and companies looking to buy anode material and other battery materials like graphene are showing a lot of traction and readiness to buy from us. So yes, at today’s levels, we are seeing healthy EBITDA margins on paper.”

— Riju Jhunjhunwala, Vice Chairman

The core graphite electrode business is entering a recovery phase with price hikes planned for late 2024. Tight global supply and a shift toward cleaner steelmaking methods in the West create a favourable long-term environment for existing producers like HEG.

“The graphite electrode space is more cyclical in nature, and what we’ve seen in the last two years is really the bottoming out of a very low cycle. Going forward, as we saw in the first quarter itself, prices are hardening. September onwards, we will start taking some price increases. Going forward, with electric arc furnaces being set up in the US and Europe, and no extra graphite capacity created globally in the last 20 years, I think we should see a very comfortable demand-supply situation for us.”

— Riju Jhunjhunwala, Vice Chairman

Despite rising raw material costs for needle coke, the company expects to maintain its margins by raising prices for its customers. Management believes their competitive cost structure will allow them to outperform global peers who are forced to raise prices even more aggressively.

“More than that. Needle coke prices would move up by around 20%, and the effect of that for us would start coming in the third quarter. But we will comfortably pass on those prices because that applies to all graphite companies globally. If you look at overseas companies leading in the graphite space, they have no option but to go in for price increases, and HEG will be a clear winner out of that.”

— Riju Jhunjhunwala, Vice Chairman

Management is open to international acquisitions but remains focused on its superior low-cost production model in India. Their primary growth driver remains expanding domestic capacity to 115,000 tonnes to capture a larger market share organically.

“I can’t say anything about that right now. When the time comes, we’ll look at that. Really, the cost at which we sit to produce graphite electrodes in India is far superior to theirs. But as and when the situation arises, one can look at such an option. We are more than happy with the way we’ve grown from 80,000 to 100,000 tonnes and now moving to 115,000 tonnes—that itself should take us a long way ahead.”

— Riju Jhunjhunwala, Vice Chairman

Ramkrishna Forgings Limited | Small Cap | Engineering & Capital Goods

Ramkrishna Forgings Limited is a prominent manufacturer of forged products serving global commercial vehicle, railway, and industrial markets. The company is currently executing a strategic shift to diversify its revenue through expansions into passenger vehicles, oil and gas, and aerospace.

[Reference]

The company is leveraging its long-standing expertise in commercial vehicles to break into the precision-heavy passenger vehicle market. This move allows them to use existing manufacturing strengths to capture a new, large-scale customer base.

“Ramkrishna Forgings has prominently been in the CV (Commercial Vehicle) space in a very strong way. Today, we are suppliers to all the truck and CV brands across the globe, as well as the Tier-1s who are serving the North American and other markets. So we have already done a lot with CVs, and at the same time, we are trying to expand our base with regard to more products within the CV space. That has always been our core, but as a company, we have also been investing a lot in new technologies and more precision manufacturing. This is one of the primary reasons we have already received very good traction in terms of orders from the passenger vehicle space today.”

— Milesh Gandhi, Whole Time Director

Management is setting realistic timelines for its new ventures, noting that aerospace contributions are several years away while passenger vehicle sales are more immediate. This clarity helps investors understand that the company’s revenue mix will shift gradually rather than overnight.

“Let me start with aerospace. Aerospace is a journey that takes time because of validation and various other processes. That journey has already started for us, and we are on the verge of receiving orders, but it will take at least 2 to 3 years down the line before revenue takes shape. Apart from that, coming to the passenger vehicle segment, we have already received orders from big OEMs in North America. In terms of revenue contribution, we are looking forward to a high single-digit percentage of our total revenue coming from the passenger vehicle segment—whether from North America or India—in the coming years.”

— Milesh Gandhi, Whole Time Director

The company has pushed back its major revenue milestone by one year to account for previous market volatility in North America. This conservative adjustment suggests management is prioritising the quality of growth and operational readiness over meeting aggressive deadlines.

“Basically, there are two things. Last year was not a great year because of the tariff situation in North America, where the market had really slowed down. I think the market has since recovered well and is showing very strong momentum. But when you have a tough year, it forces you to concentrate on what you really aim at. With all our capacities coming online, we want to take a more cautious approach while simultaneously expanding into various sectors. That is the primary reason: we remain optimistic, but we are being cautious and taking an extra year to achieve the  8,000 crore revenue target we are aiming for.”

— Milesh Gandhi, Whole Time Director

The company is currently operating at roughly two-thirds capacity, leaving significant room for volume growth without needing new factories. As more orders come in, fixed costs will be spread over more units, which should lead to improved profit margins.

“Currently, we are utilizing about 68% of our capacity. As we sweat our assets and capacity utilization increases alongside strong market demand, our margins will naturally go up. We are looking forward to better margins and achieving the guidance we have provided for the future.”

— Milesh Gandhi, Whole Time Director

Management aims to reduce the business’s dependence on the cyclical truck market by growing the non-automotive share of revenue to 30%. A more balanced portfolio typically reduces earnings volatility and makes the company more resilient during economic downturns.

“Currently, we are heavily tilted toward the CV side within automotive. We are entering various non-CV sectors, passenger vehicles being one of them, but we should not forget railways. Railways has been a major focus for RKFL (Ramkrishna Forgings), and we have done well there. Currently, railways accounts for around 4% to 5% of our total turnover, and that is an area where we will continue to grow. To answer your question, as our business mix evolves, we expect automotive to account for around 70% of revenue, while non-automotive segments will contribute the remaining 30% in the coming years.”

— Milesh Gandhi, Whole Time Director

The company has completed its major building phase and is now using its cash to pay down debt significantly. Reducing the debt load by 500 crore rupees annually will lower interest expenses and boost the company’s bottom line.

“First, regarding debt: our heavy capex phase is over, and current expenditure is largely routine maintenance capex. In Q1, we reduced debt by at least  100 crore, and for the full financial year, we are targeting around  500 crore in debt reduction.”

— Milesh Gandhi, Whole Time Director

Strong demand in the North American heavy truck market is providing a major boost to the company’s order book. Higher demand for Class-8 trucks directly correlates to more business for the company, helping them fill their newly built production capacity.

“The biggest driver is the strong Class-8 truck market in North America, which we serve. Order bookings in the first 7 months alone reached 223,000 trucks, compared to 218,000 trucks for the entire 12 months of last year. So demand is very strong, and we have robust order schedules coming in from our customer base across North America. At the same time, we are seeing good traction in Europe, and the domestic market also remains healthy. All of this will help us sweat our newly created capacities effectively.”

— Milesh Gandhi, Whole Time Director

Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.

Join us

That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!

Share

Quotes in this newsletter were curated by Shahid Barmare.

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes, so there may be some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human, and mistakes are AI.

Welcome to the 81st edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.

In this edition, we have covered 6 companies across 5 industries.

Financial Services

• YES Bank Limited

FMCG

• Colgate-Palmolive (India)

• Apex Frozen Foods

Logistics

• Allcargo Global Ltd

Automobile

• Olectra Greentech

Packaging

• Uflex

Financial Services

YES Bank Limited | Large Cap | Private Sector Bank

YES Bank is a full-service commercial bank that has transitioned into a stable growth phase following a significant 2020 reconstruction. It focuses on retail, MSME, and corporate banking, supported by strategic global partnerships and a massive digital transaction footprint.

[Concall]

A strategic partnership with Sumitomo Mitsui Banking Corporation has established the Japanese giant as the bank’s largest shareholder. This provides the bank with enhanced global corporate banking capabilities and a more robust risk management framework.

“FY26 was also the year of our alliance with one of the world’s leading financial institutions, SMBC, the Sumitomo Mitsui Banking Corporation. As the largest shareholder in the bank, SMBC opens new doors for growth, bringing deep capabilities in corporate banking, risk management and cross-border business that will strengthen our positioning in the years ahead.”

— Vinay M. Tonse, Managing Director & CEO

Management has successfully raised over $1 billion through foreign currency deposits, significantly outperforming its standard market share. This influx provides the bank with long-term liquidity and helps fulfill regulatory priority sector lending targets more efficiently.

“Regarding FCNR, which is currently being discussed and reported in the media, the amount we have raised is much more than our current market share of deposits. We have raised more than a billion dollars. We also see benefits from FCNR through free reserves and PSL benefits, as well as access to long-term financing. We have a pipeline of half a billion dollars or more in FCNR deposits as of today. We appreciate that only a few days remain for us to continue mobilizing these deposits, but we will see how the momentum develops.”

— Vinay M. Tonse, Managing Director & CEO

The bank is aggressively expanding its physical footprint with a focus on high-potential business clusters across India. These new branches are designed to act as centers for multiple financial products while bringing in low-cost deposits to improve margins.

“In FY26, the bank added 82 new branches, taking the total to 1,334 branches across India. We plan to continue expanding the distribution network, focusing on strategically important business clusters, districts and geographies, while also trying to densify our presence in existing key geographies. This aligns with our broader strategy of leveraging branches as multi-product profit hubs and enhancing low-cost liability mobilization.”

— Vinay M. Tonse, Managing Director & CEO

There is a strategic shift toward retail and MSME loans that offer higher interest rates compared to traditional corporate lending. By using partnerships and digital ecosystems to find these customers, the bank aims to drive higher overall portfolio yields.

“We are now focusing on increasing the share of high-yielding product categories such as personal loans, used vehicles, affordable home loans, unsecured business loans, micro-LAP loans and education loans. Our expansion plan is through co-lending partnerships, ecosystem-based origination, and deeper integration with supply-chain and MSME networks. A key priority is to increase the proportion of the priority-sector-lending segment in the loan book through both organic and inorganic routes.”

— Vinay M. Tonse, Managing Director & CEO

The bank currently processes approximately 33% of all digital transactions in India and is expanding its platform for small businesses. This massive digital scale provides a competitive edge in customer acquisition and embedded finance opportunities.

“Our key priorities include scaling our Iris and Iris Business platforms across retail and MSME ecosystems; strengthening API banking to deepen embedded-finance partnerships; and continuing to build our API capabilities. It is noteworthy that we already have more than 1,500 APIs. We are also looking at end-to-end digital onboarding journeys for both liability and asset products... The bank aims to sustain its leadership in digital payments, processing nearly 1 in every 3 digital transactions in India today, and to continue leveraging digital as a core driver of growth.”

— Vinay M. Tonse, Managing Director & CEO

The bank is implementing AI to speed up credit decisions and lower operating costs while maintaining strict fraud controls. This technological push is expected to improve pricing accuracy and create new ways to generate revenue from current customers.

“While we are looking at faster operations through automation, we also have adequate fraud-detection and risk controls. On one side, we have hyper-personalized customer experiences and quicker and more accurate credit decisions, which lead to lower costs and improved efficiency ratios. At the same time, we are maintaining a strong focus on enhanced cybersecurity and threat monitoring, supported by very strict responsible-AI governance. Through all of this, we are looking at new revenue opportunities and better pricing.”

— Vinay M. Tonse, Managing Director & CEO

FMCG

Colgate-Palmolive (India) | Mid Cap | FMCG

Colgate-Palmolive (India) Limited, a rapidly growing company in the personal care industry, offers a diverse range of products including oral care products like toothpaste and toothbrushes, personal care items such as skin and hair care products, as well as household care products like dishwashing paste. The company has recently expanded its product line to cater to dentists with offerings that include treatments for gingivitis, tooth sensitivity, whitening, fluoride therapy, mouth ulcers, and specialized cleaning.

[Concall]

Only ~19% of India’s toothpaste category is currently premium, substantially below categories such as soaps and shampoos. Management believes this leaves significant room to upgrade consumers.

“Our premiumization percentage as a category, in the toothpaste category, is about 19%, or about a fifth of the category, above the 140 index. If you look at toilet soap and shampoo, those numbers are in the order of magnitude of 2x and 3x. As a community of toothpaste brands, we certainly have an opportunity to do more, and Colgate can be at the forefront of this. Being at the forefront is an exceptionally important pillar for us.”

— Prabha Narasimhan, MD & CEO

Visible White Purple is one of the three brands at the centre of Colgate’s premiumization strategy. Management describes its performance as unprecedented within the Indian business.

“Then we have Colgate Visible White Purple, which is the newest launch. This launch is now a little under 2 years old; it will be 2 years old in the next quarter. It is the single most successful innovation of Colgate-Palmolive India.”

— Prabha Narasimhan, MD & CEO

Colgate says its revamped communication strategy and premium brands are translating into significantly faster growth versus competition.

“The outcome is that we now grow 5x faster than our key competitor in premium toothpaste. The fun, or the magic, does not stop there.”

— Prabha Narasimhan, MD & CEO

Digital channels are becoming increasingly important for Colgate, particularly for premium products and new-product discovery. Management sees e-commerce as structurally beneficial rather than merely another distribution channel.

“Coming to e-commerce, the ability and the desire to win on screen are supercritical for a brand like ours. I am really happy to say—I have said this before, and I am going to say it again—that e-commerce for us is growth-accretive, margin-accretive, premiumization-accretive, and share-accretive. It is a channel that is pure goodness on absolutely every count.”

— Prabha Narasimhan, MD & CEO

Quick commerce is helping Colgate sell premium and differentiated products while improving growth, margins and market share within its digital business.

“As we look at quick commerce, we then say that quick commerce is growth-accretive, margin-accretive, premiumization-accretive, and share-accretive to our e-commerce business. As channels evolve, we are in a really strong position.”

— Prabha Narasimhan, MD & CEO

While e-commerce represents roughly 6% of the overall category, Colgate materially over-indexes the channel. Digital channels are also being used as testing grounds for differentiated products.

“The 6% e-commerce contribution is for the market, not for us. Our contribution is actually in the double digits, just a little above the early double-digit level. That is why it is share-accretive, growth-accretive, and so on. The expansion in e-commerce and quick commerce is largely as I mentioned. We are in a good position and are driving this forward.”

— Prabha Narasimhan, MD & CEO

Colgate remains the challenger in sensitivity but is investing behind Sensitive Active and therapeutics. Early growth from the revamped proposition has been exceptionally strong, albeit from a small base.

“Colgate Sensitive Active has some exceptional technology that works to provide instant relief as well as 24-hour sensitivity protection. A lot of work has been done on repackaging this, as well as on creating demand. As a result, since we started in January this year, we have, on a very small base, been growing 10 times faster than the sensitivity category.”

— Prabha Narasimhan, MD & CEO

The company wants to build a dentist-led therapeutics business around Periogard and other products. It is increasing sampling and the number of oral-care experts visiting dentists.

“We are using this, along with the fact that we have an outstanding regimen of paste, brush, and mouthwash, to ensure that we drive prescriptions. For this, we are making a massive investment in both sampling and increasing our feet on the street, or increasing our oral care experts who visit dentists.”

— Prabha Narasimhan, MD & CEO

Management was unusually candid about its personal-care business. Despite leadership in premium handwash, Palmolive overall has not met expectations.

“Lastly, I come to personal care. I must confess that this has been an area of disappointment. We have not done a great job with Palmolive. There are some green shoots. One of them is that we now lead the premium handwash segment, which is great, but it is a relatively small segment and we have an opportunity to grow it.”

— Prabha Narasimhan, MD & CEO

Premium toothpaste has increased materially as a share of the portfolio. Management says incremental advertising is translating directly into stronger incremental sales.

“We have invested significantly behind our premium business, and you can see that it is up 2.5x in terms of its percentage contribution to overall toothpaste sales. We are seeing a high level of elasticity here: the more we invest, the greater the uptick we are seeing in incremental sales.”

— Jacob, Whole-time Director & CFO

Colgate’s EBITDA margin is around 500 bps above its nearest competitor, giving it room to reinvest. Management has decided to use that cushion to accelerate growth.

“Our EBITDA is 500 basis points higher than that of the nearest competitor, if you look at the chart. This allows us to choose between investing and going faster or continuing to grow at a higher level of profitability. Right now, we are making the call that we will invest more and grow the business faster. We are accelerating.”

— Jacob, Whole-time Director & CFO

Higher A&P spending could pressure near-term operating margins. Colgate says it will prioritise attractive investment opportunities rather than manage the business to a predetermined EBITDA percentage.

“As I mentioned, there would be an upward bias even on the currently reported quarter’s advertising numbers. Therefore, in the short term, we are not going to be constrained by EBITDA levels or target a specific level. If we think spending X more on Total and Visible White will give us Y growth, then we are open to doing that. We are not going to be constrained because we truly believe that this is how we build brands.”

— Jacob, Whole-time Director & CFO

Management says premium demand is no longer restricted to large cities. Digital advertising and e-commerce are allowing Colgate to reach premium consumers even where physical distribution is limited.

“What is interesting is that unlike earlier, when everything in India started in the metros and then percolated downward, what we are seeing now is quite democratic. We are seeing an uptick in premium in tier-2 towns. We are seeing an uptick in premium in rural villages. This is aided by the fact that physical reach no longer needs to be present in a town for consumers to access these benefits. The phone, or digital, allows us to communicate with people almost on a one-to-one basis. We do not have to cover an entire state to reach a particular audience. We can reach the audience that is more likely to buy premium. We are therefore seeing a more democratized desire for premium, which we are then able to fulfill through some of these channels.”

— Prabha Narasimhan, MD & CEO

Apex Frozen Foods | Micro Cap | FMCG

Apex Frozen Foods Limited is a leading exporter of processed L. Vannamei and Black Tiger shrimp, with a strong presence in the value chain. The company has strategically focused on backward integration and value addition, positioning itself as a premier supplier of high-quality shrimp.

[Concall]

Despite a weak Q1 due to labour and logistics disruptions, Apex maintained its FY27 volume target of around 12,000 MT.

“For now, we have estimated the current year’s production at around 12,000 metric tons. We are working in that direction. Q1 was affected mainly by labor shortages during the summer. There were also some supply and maintenance issues related to labor and logistics.

We should be able to achieve that. That is what we expect as of now. We will continue to work toward 12,000 metric tons for the current year, by the end of this year.”

— Management

Beyond FY27, Apex sees FTAs and geographical diversification creating a path towards significantly higher production volumes.

“Going forward, into FY28 and FY29, it would be too early to comment at this time. However, our next target is definitely to reach between 14,000 and 15,000 metric tons, as you asked. We should be looking forward to that with all these improvements in the global scenario relating to the FTAs, subject to no new issues arising regarding trade or related matters.

Hopefully, we should be looking at a diversified market and a diversified market environment. I think we should be moving in that direction toward 15,000 tons.”

— Management

Management says the Q1 volume miss was largely operational rather than demand-driven, with the labour issue now resolved.

“We definitely had issues during FY24 and FY25, and we have been coming out of those issues, particularly in FY26. The main issue was on the labor front. This was unexpected for many industry players during the summer of this year and was a setback.

Otherwise, we should have achieved at least 3,000-plus metric tons of volume in Q1 itself. There was an issue that we had not anticipated. That issue was resolved toward the end of Q1, and there are no issues relating to it now.

There has also been some shortage of raw material supply, but that will be overcome as the new crop comes in, including the second crop from different farmers and producers across the state and the country.”

— Management

War-related disruptions remain one of the biggest near-term risks to profitability, although Apex does not expect a significant margin decline.