Hi, I’m Kashish and I work on Plotlines.

It builds on Chatter, but with a more structured lens. Instead of looking at management commentary from earning concalls in isolation, we track a single theme across companies and over time to connect the dots. The goal is to piece together how narratives evolve, and surface the deeper structural shifts shaping industries.

Today, we cover how AI is changing the rules of Indian IT services industry. This edition couldn’t have happened without the help of my colleague, and in-house IT sector expert, Pranav Manie, so a huge shoutout to him.

For nearly three decades, the Indian IT services pitch was simple to draw on a whiteboard. Take work that costs $150 an hour in New York, route it to engineers who cost a fraction of that in Bengaluru, keep the spread, and scale by adding more engineers. The model was so durable that the listed Indian IT industry — TCS, Infosys, Wipro, HCL, Tech Mahindra and the next tier — grew into a $250-billion-plus export machine on the back of it.

FY26 was the year that loop got publicly disowned by the people running the companies. Not because clients stopped buying services — bookings, by and large, held up — but because management itself began naming the model’s mortality on earnings calls. Some called it deflation. Some called it accretive. Some called it disruption they were inflicting on themselves before someone else did it to them. The vocabulary varied. The shape underneath did not. What follows is FY26 in the words of the operators, across five fractures in the old way of doing business.

[1] Revenue and headcount come apart

The first fracture is the load-bearing one. For three decades, headcount was a leading indicator for revenue at every Indian IT major. In FY26, the link visibly broke. Here is HCL’s CEO C. Vijayakumar, in plain numbers:

“If you see our revenue in the last couple of years, we have grown 4%-5% and our headcount has not grown. So, that gives you a sense there is some non-linearity playing out. Even this quarter, in revenue growth and headcount, there is at least 1.5% or 1% difference.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q2 FY26

Two years of growth without bodies. The word the industry has started using is “non-linearity” — a clean piece of jargon that translates to: the old equation, where one more engineer billed one more set of hours, no longer governs how revenue is made. Mphasis says the same thing in its own language:

“This naturally means that there is certain amount of de-linkage between revenue growth and headcount growth, which, again, we’ve been seeing for the last few quarters.”

— Nitin Rakesh, CEO, Mphasis | Q2 FY26

The most uncomfortable version of the same point came earlier in HCL’s year, when Vijayakumar was asked what happens to the people whose work is now being automated:

“Of course, we have had a good amount of people released due to the productivity improvements. Now, not all of them are readily redeployable because the requirements for some of the entry level or lower end skills are being addressed through Automation and other elements.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q1 FY26

“Released” is the operative word. So is “not readily redeployable.” The Indian IT majors employ a combined two million people. Even small percentage shifts in redeployability translate to large absolute numbers of careers that have to find a new direction.

Infosys is the outlier — but the way it’s framed is the more interesting part. CEO Salil Parekh confirmed Infosys had added 13,000 people through the first three quarters and would keep adding:

“For the year, we have added ~13,000 net headcount for the first three quarters. My sense is, we will continue to add headcount as we go through. And it sort of comes back a little bit to an earlier discussion we were having, which is there is a macro element and there is an AI element.”

— Salil Parekh, CEO & MD, Infosys | Q3 FY26

Read carefully, that’s not a defence of the old model — it’s a hedge that the macro is still hungrier for engineers than AI is yet capable of replacing them. The decoupling is happening at HCL and Mphasis already. At Infosys it is, for the moment, being absorbed.

The cleanest data point on the decoupling, though, comes from a company that didn’t appear in this set of calls. Coforge — a mid-cap that has had the strongest growth print in the listed Indian IT universe this year — grew revenue roughly 30% in FY26 while its employee cost base grew only around 20%. The gap between the two lines is the entire thesis of this section, expressed in a single income statement. Coforge management hasn’t framed this on a call the way HCL’s Vijayakumar has, but the numbers describe the same phenomenon: the unit of revenue is detaching from the unit of labour.

[2] The margin paradox — same phenomenon, two stories

The strangest thing about FY26 is that the same productivity gain shows up on one CFO’s slide as a discount the company is forced to give clients, and on another’s as a price premium the company is finally able to charge. The cleanest illustration of the dichotomy is that Infosys’s own CFO articulated both views on the same earnings call.

On the accretive side, Jayesh Sanghrajka pointed out that Infosys’s pricing has actually firmed up — and credited AI for it:

“In terms of pricing, I think pricing environment for us has remained stable. On the contrary, actually, most of our growth this year has been pricing-led because the volumes have been softer. And that in a way corroborates with the fact that the AI revenue are coming at a better pricing.”

— Jayesh Sanghrajka, CFO, Infosys | Q4 FY26

And then, a few questions later on the same call, on the deflationary side:

“Market is competitive. As I said, the competitive intensity in the market has gone up and the productivity will get passed back to the client largely.”

— Jayesh Sanghrajka, CFO, Infosys | Q4 FY26

Both statements are true. New AI-led work commands premium pricing because clients are still figuring out what it’s worth. Existing services, where the productivity savings are quantifiable and the competition can match the offer, give the savings back. The phrase “AI is accretive” and “AI is deflationary” describe the same underlying economics applied to two different parts of the book.

HCL has taken the most explicit deflationary view in the industry — to the point of pre-announcing the revenue it expects to lose:

“I think we are being very transparent. We are telling the clients, if you allow us to use AI Force and use all the recipes that we’ve created, we will showcase to you the optimization that is possible. And it will mean some reduction in revenue for us. And we are okay with that.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q1 FY26

By the end of the year, Vijayakumar had put numbers to it. A $100-million deal in the old shape, he said, was now closing for closer to $80 million:

“I mean, $100 million deal would be much lesser today - maybe 80 million, just on a rough ballpark. So, deal TCV is flat. But technically, it does require at least 25%, 30% more effort to convert and get to the same number.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q4 FY26

And, taking a longer view, he sized the structural drag on HCL’s own portfolio:

“If we look at the industry today and categorize it, 40% of the industry runs the risk of being disrupted by AI and can shrink 3% to 5% CAGR for a few years and can eventually be 25% of the enterprise spend... The 3% to 5% deflation that I mentioned in the AI disrupted services, based on the mix of services that we have, it would translate to 2% to 3% for our portfolio.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q4 FY26

To make room for that pivot, HCL ran a restructuring program through the year. The cost showed up plainly on the Q4 P&L: a reported operating margin of 16.5%, against an underlying 17.7% — a 120-basis-point drag the company chose to absorb in a single year.

Mphasis sits in the accretive camp, and Nitin Rakesh has been the most forceful about why:

“The good news though is that because we have this approach, we are at least not playing the pricing game alone when it comes to winning business. We are playing the Savings-Led Transformation game, and while we win business, we don’t have to sacrifice profitability of those deals because we are using this as a leverage.”

— Nitin Rakesh, CEO, Mphasis | Q2 FY26

TCS, predictably more measured, made the same point on revenue productivity but flagged the timing wrinkle — early-stage AI delivery still carries investment costs that distort margin comparisons:

“On the AI and data part, the revenue productivity is definitely much better than the TCS average or the traditional business, both at onsite and offshore. Margins, I will not call out because there would be investments which would be temporary or in the initial phase, so it wouldn’t be like-to-like for comparison.”

— Samir Seksaria, CFO, TCS | Q4 FY26

The two camps are not actually contradicting each other. They are describing different ends of the same portfolio: new AI work prices well because it’s scarce and unmeasured; old work that has been re-priced under AI savings clauses gives margin back. The companies whose CFOs say “accretive” are the ones whose mix is tilted, today, toward the new end. The ones who say “deflation” are sizing the headwind from the old end. FY27 will tell us which dominates as the new work scales and the old work gets re-papered.

There is, however, a related move that two of the larger players have begun making — and it is the most concrete signal yet that they are willing to defend pricing with the one lever services firms rarely pull: walking away from deals. HCL’s Vijayakumar disclosed in Q4 that the company had voluntarily declined to chase a meaningful share of available pipeline:

“We have lost some deals which are voluntary losses. We have walked away from some deals which will not make sense and that would have easily contributed at least $1 billion more to this number. It’s only prudent to be a little bit more careful about this...”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q4 FY26

A billion dollars of foregone TCV is a serious admission for an industry that has measured its quarterly press releases in TCV growth for two decades. Tech Mahindra has been making the same call, and saying so explicitly:

“We have stayed extremely disciplined in large deals. So we have stayed disciplined so that large deals don’t end up creating a problem for us in the future, or doing large deals that don’t make business sense. Clients don’t want us to do deals that don’t make sense either, right?”

— Mohit Joshi, MD & CEO, Tech Mahindra | Q4 FY26

Tech Mahindra’s CFO Rohit Anand confirmed the same posture, in CFO language:

“We’re extremely conscious on what margins and the risk profile we sign it up... [we’ve] been very selective not just on the two large deals that we’ve announced but even on the deals that we’ve been ramping up for the last 3-4 quarters. Our as-sold margins on each of these deals from a portfolio perspective are accretive.”

— Rohit Anand, CFO, Tech Mahindra | Q4 FY26

Notably absent from this chorus is Infosys, which spoke of “financial discipline” and a “margin protection programme” through FY26 but did not, on its Q4 call, name any deals it had walked away from. The question this raises is not whether HCL and Tech Mahindra are bluffing — both have given up real TCV to make the point — but whether either of them can keep doing it through FY27. Walking away from a billion dollars of deals is a luxury in a year where reported growth was already supported by macro tailwinds and currency. If FY27 starts with softer demand and the competitive set begins matching whatever pricing HCL refused, the discipline will be tested in a way it wasn’t this year. Investors should watch quarterly TCV disclosures with that filter on: is the deflation in deal sizes coming because AI is shrinking the work, or because HCL and Tech Mahindra are choosing not to take it? Through FY26, both stories have been true. They may not stay true together.

[3] The pricing reframe

If the labor-hours model is in retreat, what replaces it? The honest answer from FY26 is: no one knows yet, but everyone is auditioning a candidate. The sharpest reframe came from Tech Mahindra’s CEO Mohit Joshi — the most transparent any large-cap Indian IT services chief executive has been about the pricing logic of the AI era:

“The way of thinking about running an AP function for our client, for instance, in the age of AI, is thinking about the work overall in terms of the number of service tokens that you will deliver to a client. So a service token in the context of an AP could be a sub-process of AP that you need to deliver for a telco. And as the combination of human labour and digital labour changes over time, and as the pricing for digital labour changes over time, the result is very transparent to the client.”

— Mohit Joshi, MD & CEO, Tech Mahindra | Q4 FY26

The “token” framing is borrowed, deliberately, from how large language models are priced. A unit of work, abstracted from how it gets done. Whether the work is performed by a human in Pune, an agent on a GPU, or some blend of both, the client buys outcomes by the token. Notice what it strips away: the offshoring rate-card. There is no longer a “billing rate” in the traditional sense.

Mphasis has taken a different route to the same destination — selling the savings, not the hours:

“Clients are also asking us to not just show me on a PPT or tell me but actually show me in a live sandbox environment in many cases. So, think of this as ‘RFPs are turning into hackathons’, and that’s their yardstick of who can deliver on what they’re promising versus not. So, it has in a way become a lot more about the ability to showcase through execution.”

— Nitin Rakesh, CEO, Mphasis | Q2 FY26

That sentence is worth pausing on. RFPs — request for proposals — have been the industry’s procurement language for thirty years. A multi-hundred-page document goes out, vendors respond with a multi-hundred-page document back, the decision is made on the document. If RFPs are being replaced by live sandbox demonstrations, the selling motion itself has changed: showing the working AI agent in the room beats describing it. The salesforce that wins is the one with engineering in the field, not slideware in the back office.

Infosys, more cautiously, hinted that pricing is in transition without committing to where it lands:

“Over a longer period of time, on the back of AI, etc., we may expect some part of newer pricing models emerging. It could be outcome-based pricing model. It could be pod-based or studio-based pricing model, etc. So there are various new pricing models that are emerging as we speak. I do not think over the next year or so the entire model is going to change.”

— Jayesh Sanghrajka, CFO, Infosys | Q1 FY26

“Pod-based” and “studio-based” are worth unpacking briefly. A pod is a small dedicated team — sometimes ten people, sometimes three plus an agent stack — billed as a unit rather than per head. A studio is a longer-running engagement priced on capacity and outcomes. Both share a common property: the client never sees an hourly rate.

[4] From labour to platforms and IP

If the work is no longer priced by the hour, where is the leverage? Every CEO in the brief converged on roughly the same answer: stop being a pure services firm, start owning intellectual property and platforms that get embedded into client environments. HCL’s Vijayakumar said it most directly:

“We believe this industry will have to evolve from being a pure labor-based service provider to people plus IP and platform-based service provider. When you have the platform as a third-party platform, there is very little leverage, very little stickiness that we can build. And we can really deliver very good quality vertical IP solutions, which can be replicated across customers.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q2 FY26

The argument is structural. A consultancy that uses someone else’s platform — Microsoft’s, Salesforce’s, ServiceNow’s, OpenAI’s — is renting leverage. A consultancy that builds its own platform, even a narrow vertical one, captures the leverage. HCL’s AI Force is the lead exhibit; by the end of FY26, the company reported $155 million in quarterly Advanced AI revenue, up from a $100-million annual milestone just two quarters earlier.

Wipro, in the most explicit organizational signal of the year, set up a separate business unit around the same thesis:

“As intelligence becomes industrialized and widely accessible, we are making a deliberate strategic pivot to stay ahead. We have launched a dedicated AI-native business and platforms unit to expand beyond a services-only model to a services-as-a-software approach. This unit will operate with dedicated leadership, focused investments and a distinct operating model to accelerate enterprise-grade agentic AI solutions.”

— Srini Pallia, CEO & MD, Wipro | Q4 FY26

“Services-as-a-software” is the phrase to watch. It is the inverse of “software-as-a-service” — instead of subscription software that requires services around it, the service itself is delivered as software that runs continuously. The CEO described the resulting structure as a “dual engine”: traditional services on one side, AI-native platforms on the other.

Tech Mahindra is making the same move under a different label — rebranding entire service lines rather than spinning up a new unit:

“We are repurposing our application development and maintenance services to agentic development and modernization services and it’s not just a name change, right. It’s not just a name change because it’s about how are we driving value to the customers. Now, how are we bringing that experience in the agentic form to our customers for building application agentic development is something that we are very, very focused on...”

— Atul Soneja, COO, Tech Mahindra | Q4 FY26

TCS has stated the destination in the largest terms:

“With AI, TCS aspires to be the World’s largest AI-led Tech Services company. This aspiration is powered by capitalizing on AI-led renewals, vendor consolidation and cost optimization deals resulting in market share gains; using new-age services and adjacencies that enable enterprises to ‘Get ready for AI’; becoming a full-stack AI services player — Infrastructure to Intelligence — thereby delivering maximum ROI to clients on their AI investments; and building new revenue streams such as building AI infrastructure.”

— K. Krithivasan, CEO & MD, TCS | Q4 FY26

The most provocative version of the labour-to-IP thesis, though, came from Infosys’s co-founder and chairman Nandan Nilekani, in a line that pointed at something even further out — the threat to the SaaS industry the IT services companies have spent twenty years serving:

“As AI becomes a bigger part of the spend, the balance of advantage is moving towards ‘build’ rather than ‘buy’. If you see some of the concerns about what will happen to SaaS companies and all that, it is because of this, that building applications has become so simple that very often you may just build, or you may replace something that you have, which you bought, with something to be built.”

— Nandan Nilekani, Chairman, Infosys | Q3 FY26

If Nilekani is right, the next chapter is not just IT services repricing labour. It is enterprise software being eaten by the same wave — and the consultancies that ride it being the ones that own the new application stack, not the old one.

[5] Where the new money is

The closing fracture is the most underappreciated one in the brief. The growth pocket nobody had on their bingo card eighteen months ago has turned out to be the building, running, and feeding of AI itself — what HCL calls “Day-1 services”:

“The real acceleration in what we are seeing is not necessarily in deploying AI within enterprises, but really ‘Day-1’ services, which are foundational for enabling AI, like a lot of work in our engineering services. Like I mentioned about custom silicon for edge inferencing, it is a big area with a lot of companies across multiple industry verticals. This is not restricted to semiconductor industry.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q3 FY26

Edge inferencing is the act of running AI models on the device — a car, a sensor, a factory floor controller — rather than in a centralized data center. Custom silicon is the chip designed to do that efficiently. Both used to be niche semiconductor specialties. In HCL’s telling, they have become mainstream IT services work because every industrial company building AI capability now needs both. By Q4, HCL had a concrete deal to point to:

“A global technology major selected HCLTech for another AI Factory program worth over $100 million. The HCLTech solution will fast-track the client’s requirements of building and operating next-generation AI data centers to support cutting-edge AI workloads using the latest GPU technologies. A global semiconductor major selected HCLTech’s AI engineering services to support ASIC development across multiple advanced node chips, strengthening its position in Physical AI.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q4 FY26

TCS made the most striking infrastructure announcement of the year — a move into the data centre business itself:

“The promise we see in our HyperVault Business — which has made significant progress this quarter on its journey to build out 1 GW of capacity. This includes winning customer commitments, land parcel finalizations and partnering agreements.”

— K. Krithivasan, CEO & MD, TCS | Q4 FY26

One gigawatt of data centre capacity, for context, is a serious number. Indian data center capacity in early 2026 totals roughly 1.4 GW. TCS, a services company, has signalled it intends to build something approaching the size of the entire existing Indian colocation industry — and intends to sell that capacity to AI workloads.

The more interesting move underneath HyperVault, though, is what TCS is positioning around it. The company’s stated aspiration of being a “full-stack AI services player — Infrastructure to Intelligence” reads, at first, like investor-day boilerplate. Read against the HyperVault build-out, it describes a sequence no other Indian IT firm is set up to deliver: an AI lab buys compute from TCS, then turns to TCS again for GPU operations, then cloud management, then the model fine-tuning and red-teaming work that Wipro and Tech Mahindra are doing on a project basis. Each successive layer is more services-intensive and more margin-rich than the layer below it. Owning the data centre at the bottom of the stack gives TCS a contractual reason to be in the conversation at every layer above it. That is structurally accretive in a way that running someone else’s GPUs cannot be — and, for now, no other Indian IT firm has the balance sheet, the customer book, and the infrastructure muscle to attempt the full stack the way TCS is.

Wipro and Tech Mahindra are working a different end of the same picture — getting paid to run models for the model-makers themselves:

“In my first example, a leading global technology company has engaged Wipro to help run and improve its frontier AI models. Wipro will manage the end-to-end operation of these AI models from training, governance and evaluation to domain-specific validation. In fact, this engagement will be done through a specialized global delivery platform.”

— Srini Pallia, CEO & MD, Wipro | Q4 FY26

“When we look at our BPS services, for example, close to one-tenth of our current business in BPS is working with technology players, high-tech players creating their AI models, continuously fine-tuning them and managing them over a period of time. And more and more work we are doing on the BPS side is actually towards that now.”

— Atul Soneja, COO, Tech Mahindra | Q4 FY26

For a layer of context here: BPS — Business Process Services — used to be the lowest-margin, most automatable layer of the Indian IT stack. The fact that one-tenth of Tech Mahindra’s BPS book is now training and fine-tuning AI models for hyperscalers is a sentence that would have read as nonsense three years ago. The hyperscalers, ironically, have become the buyers that need the most armies of humans — to label data, evaluate outputs, and red-team models.

HCL has put the cleanest framework on what comes next — a three-bucket split of its own portfolio:

“We will see differential growth rates in all the three different categories: AI disrupted, AI amplified, and AI native or Advanced AI services. We really look forward to growing our AI-native services in the 25% to 30% range. And that will truly be the validation of how we are evolving as a company.”

— C. Vijayakumar, CEO & MD, HCL Technologies | Q4 FY26

Three buckets, three growth rates. AI disrupted shrinks. AI amplified grows in line with the business. AI native compounds at 25-30%. The whole question for FY27 is whether the third bucket gets big enough, fast enough, to outrun the drag from the first.

What it adds up to

The Indian IT services industry spent FY26 publicly admitting that its core business is changing shape — and putting numbers, language, and organisational decisions behind that admission. The vocabulary fractured into deflation and accretion, tokens and pods, disrupted and native — but the underlying movement was a single one. The companies that used to sell engineering hours by the thousand are now trying to sell platforms by the licence, savings by the contract, and infrastructure by the gigawatt. None of them have completed the pivot. All of them have started it. FY27 is the year the math becomes legible — when the new revenue mix is large enough to either validate the bet or expose the gap.

What to Watch

• HCL’s 2-3% portfolio deflation forecast: Vijayakumar has put a number on the headwind; track whether reported FY27 revenue mix bears it out, and whether AI-native services growth (targeted at 25-30%) is fast enough to offset it.

• TCS HyperVault execution: 1 GW is a number large enough to reshape the Indian data centre market. Watch for customer commitments converting to live capacity, partnership announcements with GPU vendors, and the first revenue disclosure.

• Tech Mahindra’s “service tokens” pricing: No client has yet been named signing a token-priced contract. The first concrete deal at a stated token rate will be the signal that the reframe is real.

• Infosys headcount additions in FY27: Salil Parekh hedged “we will continue to add” — but the gap between Infosys’s hiring posture and HCL/Mphasis’s de-linkage narrows with every quarter of productivity gain. Watch the net adds in Q1 and Q2.

• Whether any IP/platform business crosses 10% of group revenue: HCL’s Advanced AI sits around 4-5% on a $13-billion run-rate; Infosys put its AI Hexagon at 5.5% in Q3. The 10% line is when “we’re pivoting” becomes “we have pivoted.”

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

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Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes & narratives so there maybe 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.

Hi, I’m Kashish and I work on Plotlines.

It builds on Chatter, but with a more structured lens. Instead of looking at management commentary from earning concalls in isolation, we track a single theme across companies and over time to connect the dots. The goal is to piece together how narratives evolve, and surface the deeper structural shifts shaping industries.

Today, we cover evolution of India’s E-waste rules.

Every year, India throws away the equivalent of a small mountain of electronics. In FY 2024–25, the Central Pollution Control Board counted 13.97 lakh tonnes of e-waste — discarded phones, televisions, refrigerators, cables, batteries — generated across the country. That’s up from 7.08 lakh tonnes in 2017–18. Almost double in seven years. By total volume, India is now the third-largest e-waste generator in the world, behind only China and the United States.

The rules to handle this have technically existed since 2012. But having rules and enforcing them have been, for most of that time, entirely different propositions. The story of India’s e-waste framework is the story of a government that kept tightening its grip — through mandatory targets, customs enforcement, a digital certificate trading platform, and now a minimum floor price contested in court — until the industry, reluctantly, started moving. What follows is that story, told through the people building and paying for the new system.

The Paper Tiger (2012–2016)

The first iteration of India’s e-waste rules arrived in 2012 and operated on an optimistic principle: that producers of electronics would voluntarily take responsibility for what happened to their products at end of life.

It did not work.

“In India, the EPR policy first came into picture in 2012 where it was voluntarily compliance. Not taken very seriously, right, so no producer essentially wanted to do anything.”

— Nitin Gupta, Founder and CEO, Attero Recycling | Aug 2025

Extended Producer Responsibility is the idea that the company which profits from selling a product should bear responsibility for what happens to it when the consumer is done. As a principle, it’s intuitive. As a regulatory mechanism, it requires enforcement. The 2012 rules provided the principle without the enforcement.

Four years later, the government upgraded from voluntary to mandatory.

“And then the government actually made it mandatory compliance in 2016. Still nobody did anything...”

— Nitin Gupta, Founder and CEO, Attero Recycling | Aug 2025

The 2016 rules set escalating collection targets — 10% of historical sales in the first year, stepping up to 70% by 2022–23. But the rules had a structural gap: verification. Producers self-reported their compliance. Penalties were modest. The informal sector — hundreds of thousands of waste pickers, kabadiwalas, and crude dismantling units operating across Indian cities — continued to handle the overwhelming majority of e-waste, exactly as it always had.

Enforcement finds its teeth (2016–2022)

The breakthrough came not from environmental enforcement but from trade logistics.

“...then the checking of EPR compliance was handed over to customs. So as an OEM, you could not import a product or a subassembly or a component without EPR compliance. That’s when a lot of OEMs started taking it seriously...”

— Nitin Gupta, Founder and CEO, Attero Recycling | Aug 2025

India’s electronics industry runs on imported components. A company that couldn’t clear customs couldn’t sell. Tying EPR compliance to import clearance was the enforcement lever that actually worked — because the cost of non-compliance was no longer an abstract penalty. It was a supply chain shutdown.

The rules continued tightening. In 2019, the scope of products covered under EPR expanded from 21 categories to 30. The E-Waste Management Rules 2022 — notified in November 2022, effective April 1, 2023 — expanded that further to over 100 product categories, adding tablets, GPS devices, modems, air purifiers, medical equipment, solar PV panels and modules, and laboratory instruments, among others.

“So back in 2019 it was 30 products covered under EPR, then they made it 100 products. Then they introduced a platform for trading of these EPR certificates as well and now they’ve introduced the minimum floor pricing right which is in contention in the courts because some OEMs have opposed it.”

— Nitin Gupta, Founder and CEO, Attero Recycling | Aug 2025

The trajectory is worth pausing on: from 21 to 30 to 100+ products; from voluntary to mandatory to customs-enforced; from self-reporting to a digital certificate trading market with a government-set price floor. Each step was a tightening of the system.

What the rules actually ask for?

Before getting into how industry has responded, it’s worth explaining the mechanics — because EPR certificates are doing a lot of work in this story and the concept is less intuitive than it sounds.

An EPR certificate is proof that a certain quantity of e-waste has been collected and scientifically processed by an authorized recycler. Under the E-Waste Management Rules 2022, every producer — any company that manufactures or imports electronics — must meet annual recycling targets based on what it sold in prior years. The current target is 60% of historical sales volume, stepping up to 70% by FY 2025–26 and 80% by FY 2027–28.

A producer can meet its target one of two ways: run its own collection and recycling program, or buy EPR certificates from authorized recyclers who have already done the processing. This certificate-trading mechanism transforms a compliance obligation into a market. CPCB launched its EPR Electronic Trading and Settlement Platform (EPRETP) to host it. Certificates are denominated in kilograms, priced by category, and valid for two years.

As of 2024–25, EPR certificate prices for e-waste range from roughly ₹10 to ₹50 per kilogram, with a minimum floor price of ₹22/kg established by government amendment in March 2024.

The floor price is the live controversy in the system. The logic: without a price floor, certificates could collapse toward zero, making it economically irrational for formal recyclers to invest in infrastructure. The counterargument, advanced by several of the country’s largest electronics brands, is that the floor distorts the market and constitutes an unfair financial burden.

In April 2025, a group of major OEMs — Daikin, Samsung, LG, Havells, and Voltas among them — challenged the floor pricing mechanism in the Delhi High Court. The case is ongoing. It captures the central tension in the system: the government is trying to make formal recycling economically viable; the brands whose products create the waste are pushing back on what that costs them.

What compliance looks like in practice?

For appliance and consumer electronics brands, the shift from theoretical compliance to actual accounting showed up in earnings calls from around FY 2023–24 — roughly when CPCB moved from accepting broad industry data to issuing specific, company-level targets.

“You would be aware that the government had brought out the E-waste regulation particularly consumer durables a few years back but at that time there was no clarity on how that should be treated. Now the government / CPCB has come out with a lot of clarity and we all the industry players have submitted all sort of data so they have come out with the specific number which every company needs to comply with.”

— Rajiv Goel, Executive Director, Havells India | Q3 FY24

This is the moment the rules became real for companies. Until CPCB issued company-specific numbers, the obligation existed but the liability was undefined. Once defined, it had to be provisioned. And the quantum is not small — nor is it stable.

Bajaj Electricals, whose lighting and appliance business generates significant e-waste obligation under the Consumer Electrical and Electronics Equipment category, gave a clean accounting of where it stands.

“So EPR for this year is about Rs. 9.5 crores and last year also was similar. Going forward next year it will be a charge of about Rs. 18 crores.”

— E.C. Prasad, CFO, Bajaj Electricals | Q4 FY25

The cost is essentially doubling. And this isn’t an anomaly — it’s arithmetic. EPR targets step up every two years; the compliance cost scales accordingly. For Havells, a company with broader product categories and a larger sales base, EPR has graduated into a named line item alongside commodity inflation and energy efficiency regulation changes.

“I think it is consumed, and we are hoping for better contribution margins. It’s not comparable as against last year because EPR liabilities have also increased in the current year, which obviously when the season comes, when we are in a position to pass on that price to the market, we’ll have to do that. But right now, because of low season, we’ve also been restrained to do so.”

— Anil Rai Gupta, Chairman and MD, Havells India | Q2 FY26

“We remain optimistic about a gradual recovery in demand. However, we are cognizant of the industry headwinds such as cost increases on account of commodity inflation, BEE changes, e-waste, etc. We are in the process of taking calibrated price hikes and enhancing operational efficiency.”

— Anil Rai Gupta, Chairman and MD, Havells India | Q3 FY26

The ‘BEE changes’ reference is to Bureau of Energy Efficiency star rating upgrades for appliances, which impose their own compliance costs. Companies are now managing a convergence of regulatory cost pressures — and e-waste is clearly one of them. The costs will eventually move into product prices. The question is timing.

Amara Raja’s ₹700 Crore bet

The producer-side response of absorbing costs, buying EPR certificates and timing price increases is one approach to the new compliance reality. Amara Raja Energy & Mobility chose a different one.

Battery companies operate under a parallel framework to the E-Waste Rules: the Battery Waste Management Rules 2022, notified in August 2022 and effective from February 2023. The structure mirrors the e-waste system — EPR registration, collection targets, certificate trading — but the targets are steeper. For automotive and EV batteries, the requirement is 90% collection and recycling by FY 2026–27, with minimum recycled content mandates in new batteries from FY 2027–28 onwards.

Amara Raja is one of India’s two largest lead-acid battery manufacturers. For a company whose entire business runs on lead — buying it, forming it into batteries, selling those batteries, and now bearing regulatory responsibility for what happens when they die — in-house recycling isn’t just a compliance option. It’s a raw material strategy.

“The refining operations... are expected to commence the commercial production in the month of September or October. And then we’ll be using that lead coming from that factory for our purposes. And the battery breaking operations are expected to commence the production, maybe about four, five months after the refining operations are completed.”

— Y. Delli Babu, CFO, Amara Raja Energy & Mobility | Q1 FY25

Lead-acid battery recycling runs in two stages: battery breaking — shredding spent batteries to separate lead plates, plastic casings, and acid — and lead refining, which smelts the recovered material into usable metal. Amara Raja’s facility, called ARCSPL, was being built in phases. Refining came first; battery breaking would follow. This sequencing matters because a refinery without its own breaking operation still buys pre-processed lead from the market. Only once both stages are integrated does the company control the full loop.

The investment rationale is direct.

“...once we do the entire 1,50,000 tons, that is what is being envisaged in that particular location, that should give us close to about 30% of our overall requirement from our own internal recycling sources. So that’s the objective of that investment.”

— Y. Delli Babu, CFO, Amara Raja Energy & Mobility | Q1 FY25

Phase 1 is approximately ₹500 crore; the board approved an additional ₹200 crore for Phase 2. At full scale, the plant would supply 30% of Amara Raja’s lead from recycled material — insulating that portion of its raw material from London Metal Exchange (LME) price volatility and from the margins lost when sending scrap to outside smelters.

By Q3 FY25, the refining phase had commenced commercial operations.

“Then on the recycling plant in this quarter, we have commenced the 1st Phase of commercial operations of the refining capacity of 50,000 tons, we have started the commercial operations in the current quarter, and it will continue to operate at a full capacity for the next quarter as well. And then we are expecting to start the smelting operations, that is the battery breaking operations, sometime towards the end of Q1 of next financial year.”

— Y. Delli Babu, CFO, Amara Raja Energy & Mobility | Q3 FY25

Then came the harder math.

“Amara Raja is running a battery collection program over a period of years. And today, we are able to collect 75% to 80% of the batteries sold. As per the BWMR regulations from the current financial year, we have an obligation to collect 90% of the batteries sold 3 years ago. This percentage was 70% till last financial year, and we met our obligations.”

— Swajitha Rapeti, Head, Corporate Finance, Amara Raja Energy & Mobility | Q2 FY26

A 10–15% shortfall in collection means buying EPR certificates. And buying EPR certificates means provisioning for a cost that is uncertain today and likely to rise.

“We are also buying our EPR credit wherever there is a shortfall, and we anticipate the demand for this EPR certificate may go up in future. Hence, on a prudent basis, we have provided for EPR credit cost in our books based on our revised estimates on scrap collection program. Going forward, as we ramp up our collections, provided the scrap recycling price is competitive with the LME rates, these provisions may come down or even may not be required.”

— Swajitha Rapeti, Head, Corporate Finance, Amara Raja Energy & Mobility | Q2 FY26

The clause ‘provided the scrap recycling price is competitive with the LME rates’ contains the whole economics of formal battery recycling in one sentence — and it’s worth unpacking, because it explains why regulation alone can’t fix the supply problem.

The LME — London Metal Exchange — is the global price benchmark for industrial metals. Lead trades on the LME the same way oil trades on Brent: it sets the reference price that every buyer and seller in the world uses to negotiate. When Amara Raja buys lead as a raw material, it pays something close to LME spot. When it processes scrap through ARCSPL, the value of the lead it recovers is also measured against LME. So the economics of recycling are simple: if your cost to process scrap into usable lead is lower than the LME price, recycling makes sense. If it’s higher, you’re better off just buying virgin lead at market price.

The problem is what this does to scrap collection. A formal recycler — paying GST, running compliant acid disposal, employing workers with safety equipment, maintaining regulatory certifications — carries significant overhead. That overhead limits how much it can afford to pay for used batteries at the collection point and still turn a profit after processing. The informal sector carries almost none of these costs. No GST. No compliant disposal. Often no safety equipment at all. Their lighter cost structure means they can offer battery sellers — auto repair shops, retailers, consumers — a higher price for scrap than formal recyclers can while still making money.

This is the outbidding problem. Batteries flow to whoever pays more. In most parts of India, that is still the informal operator. Amara Raja’s collection program falls short because the scrap it needs is being outbid at the source. The gap then has to be closed with EPR certificate purchases — which is a financial cost, not a recycling solution.

Amara Raja’s own recycling plant partially changes the equation. When you process your own scrap, you capture the full value of recovery without paying a middleman. You also have more control over what you pay to collect — because you’re not relying on an external recycler’s pricing. The question, as Delli Babu frames it, is whether the plant’s recovery ratios are good enough to make in-house processing cheaper than buying lead at LME prices. That’s the real test still ahead.

That said, by Q3 FY26, the recycling plant was contributing to margins — modestly, but measurably.

“Our lead recycling plant led to a margin accretion of around 0.6% at EBITDA level during the quarter. At a LAB level, we are able to sustain the operating margins of about 12% despite cost pressures at raw material levels.”

— Swajitha Rapeti, Head, Corporate Finance, Amara Raja Energy & Mobility | Q3 FY26

The battery-breaking phase — when Amara Raja begins shredding its own scrap rather than buying pre-processed material — was expected in Q4 FY26.

“The battery breaking is going to start from Q4. And as Swajitha has articulated earlier, the refining operations are providing that additional margin comfort at this point of time. But we hope after the battery breaking gets into full shape, I think we should see some mitigation of the lead cost that we are currently incurring. But of course, recycling operations are always kind of lower margin business. So we hope with the technology, what we have put in place, our recovery ratios will be better, and then we’ll be able to improve our overall operating margins for the lead acid business.”

— Y. Delli Babu, CFO, Amara Raja Energy & Mobility | Q3 FY26

The last sentence is an important acknowledgment. Recycling is structurally a lower-margin business than manufacturing. The economics work through volume, through recovery ratios — how much usable metal you can extract from each kilogram of scrap — and through the avoided cost of buying virgin material at market prices. This is a margin improvement story, not a margin transformation.

The informal sector refuses to die

For all the progress on the formal side — certificate trading, customs enforcement, company-level EPR targets — the informal sector remains the dominant physical reality.

“...four years ago 99% of e-waste was being recycled in the informal sector and 1% in the formal sector. Today that number is 75% in the informal sector and 25% in the formal sector. That shift is happening...”

— Nitin Gupta, Founder and CEO, Attero Recycling | Nov 2024

Moving from 1% to 25% formal in four years is real progress. It is also a reminder of how far the system has to go. Studies have found that 76% of workers in informal e-waste units suffer from respiratory ailments. An estimated 4,00,000 to 5,00,000 children between ages 10 and 15 are engaged in e-waste handling across India. They work with lead, mercury, cadmium, and arsenic, typically with no protective equipment, in conditions that cause permanent health consequences.

The informal sector persists not because of ignorance of the rules but because of a structural economic advantage. Informal operators pay cash, carry no GST overhead, have no compliance costs, and can outbid formal recyclers for scrap at the street level. The 18% GST on e-waste and metal byproducts falls only on registered businesses — giving the informal sector an embedded cost advantage before any other factor enters the calculation. The minimum EPR floor price of ₹22/kg was partly designed to help formal recyclers compete; informal operators aren’t bound by it.

“Indian policy today is good from a regulation standpoint on EPR angle which is basically shifting the industry from informal to formal, but there has to be a lot of emphasis on capacity creation. There’s a lot of emphasis on sustainability and critical minerals aspect and probably a lot more financing is required for the sector to be able to develop the capacity and the speed that the capacity needs to develop.”

— Nitin Gupta, Founder and CEO, Attero Recycling | Nov 2024

The ask from the formal recycling industry isn’t a change in tax rates. It’s a structural fix to make the market traceable.

“Majority of the supply chain is shifting from informal to formal, there has to be some sort of GST rationalization that is required here and not because of rates. In the metal scrap industry or e-waste or lithium battery, the government should introduce a reverse charge mechanism. We are not saying change the tax rate of stuff but bring in RCM for better transparency in the sector.”

— Nitin Gupta, Founder and CEO, Attero Recycling | Nov 2024

A note on what Reverse Charge Mechanism would actually do here — because it sounds technical but the logic is simple.

Start with how GST normally works. When a kabadiwala sells scrap batteries to a recycler, the kabadiwala is supposed to collect 18% GST from the buyer and remit it to the government. But the kabadiwala is almost certainly not GST-registered. He’s a street-level collector working in cash — there are hundreds of thousands like him across India. Enforcing GST registration at that level is practically impossible. So in practice, the transaction happens with no tax collected, no receipt issued, and no record of it anywhere. The e-waste just moves and disappears into the informal system.

Reverse Charge Mechanism flips who is responsible. Under RCM, the buyer — in this case, the registered formal recycler — pays the GST directly to the government, instead of collecting it from the seller. The kabadiwala doesn’t need to be GST-registered. The formal recycler, who is already in the system, simply includes the purchase in their GST return and pays the tax on it.

Here’s what that changes: every time Attero or Amara Raja buys scrap from any source — registered or not — the purchase becomes a line in their GST filing. CPCB can then see, at any point, exactly how much material is flowing through the formal recycling system, where it’s coming from, and at what volumes. Today, none of that is visible. The informal supply chain leaves no paper trail.

Crucially, the total amount of tax paid doesn’t change — RCM is not a rate hike. The economic cost of the transaction stays the same. What changes is that it becomes legible. This matters enormously for EPR compliance, because right now the government cannot reliably verify whether the recycling claimed on EPR certificates actually happened. RCM would attach a paper trail to every purchase at the point where the informal supply chain meets the formal one — which is the only point where it’s practical to enforce. That the formal sector has been asking for this for years, while the government hasn’t acted, says something about how low administrative traceability sits on the priority list.

The urban mine

India’s e-waste rules were designed primarily as an environmental compliance framework. They’re increasingly becoming something else: a resource security mechanism.

India has 100% import dependency on several critical minerals — lithium, cobalt, nickel — that underpin the EV and electronics supply chains it is simultaneously trying to build. China dominates global rare earth supply and, as of 2025, has imposed export restrictions on several of them. Every tonne of e-waste processed formally is a tonne that partially offsets that dependency.

“The government of India is also considering a significant sort of incentive mechanism for incentivizing the rare earth industry in India to ensure that India becomes self-reliant on the rare earth material supply chain and is not dependent on China. So from that perspective, we will definitely benefit — as the industry will benefit — from the current geopolitical shifts that China has announced.”

— Nitin Gupta, CEO, Attero Recycling | Q1 FY26

A printed circuit board contains roughly 0.02–0.20% gold, 0.01–0.45% silver, and trace amounts of palladium and platinum. The value embedded in India’s 14 million tonnes of annual e-waste is estimated at approximately USD 6 billion — most of which is currently being captured by informal operators through crude acid-bath processes, or exported as raw scrap to processors elsewhere.

The formal sector’s response has been to build digital supply chains capable of competing with informal networks on transparency and traceability, if not always on price.

“Over the last few quarters we have very successfully transitioned our entire supply chain to a complete digital supply chain based on an AI-based pricing engine. Our supply basically is through Metal Mundy which is an online aggregator collection network — completely digital, completely transparent and traceable.”

— Nitin Gupta, CEO, Attero Recycling | Q1 FY26

Attero claims over 30% market share in the EPR certificate market — more than three times its nearest competitor. That concentration reflects how new and fragile the formal sector still is. A market where one player holds 30%+ of volumes is not a mature market. It is one in early formation, which is exactly what makes the next few years consequential.

“Completely aligned — in fact, in the EPR business, we are a leader in the country today. Our market share is more than 30%, the next best player is less than one-third of our size, and there is significant benefit that we are deriving from the government of India’s EPR policy.”

— Nitin Gupta, CEO, Attero Recycling | Q1 FY26

India’s e-waste rules have traveled a long distance since 2012 — from voluntary to mandatory, from self-reported to customs-enforced, from no market to a digital certificate trading platform with a government-set floor price now being challenged in court. The formal sector’s share of physical e-waste processing has moved from 1% to 25% in four years. Companies that once treated EPR as a footnote now provision for it as a growing line item.

But the numbers also show how much distance remains. Three-quarters of India’s e-waste still flows through an informal system that rules alone cannot reach — not because enforcement has failed, but because informality has a structural economic advantage that compliance mandates haven’t closed. The formal sector needs more than rules. It needs GST architecture, financing, and the infrastructure to compete on price.

And the next wave is already in the pipeline. Solar PV panels are now covered under the E-Waste Management Rules 2022, but India’s standalone solar waste management framework remains unfinished. By 2030, projections suggest India will generate approximately 340 kilotonnes of solar panel waste, concentrated in five states. EV batteries — governed by the Battery Waste Management Rules — will test the recycling infrastructure that companies like Amara Raja are just beginning to build. The rules that found their teeth over the last decade will need to grow a new set.

What to watch?

• Delhi High Court ruling on EPR floor pricing:

  If the court strikes down the minimum price mechanism, formal recyclers lose their margin buffer and the economics of certificate trading shift. The outcome will tell you whether the government can hold the line on making formal recycling financially viable.

• Amara Raja’s battery-breaking operations (Q4 FY26):

  Full vertical integration of its ₹700 crore recycling plant comes online this quarter. The recovery ratios it achieves — how much usable lead it can extract per kilogram of scrap — will determine whether formal recycling in India can compete on economics, not just compliance.

• GST Reverse Charge Mechanism for e-waste scrap:

  Attero has been advocating for this for multiple quarters. Any indication from the Finance Ministry or GST Council signals whether the government is willing to address the structural cost disadvantage of the formal sector.

• Solar Waste Management Rules finalization:

  MNRE and CPCB have the roadmap; standalone solar waste rules haven’t arrived. When they do, EPR obligations will land simultaneously on Adani Green, Tata Power Solar, Waaree Energies, and Premier Energies — companies whose panels are already aging in the field.

• India’s National Critical Minerals Mission linkage to e-waste:

  Whether the government ties urban mining incentives to formal e-waste processing will determine if the sector gets the financing it needs to scale fast enough to matter for the rare earth supply chain.

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

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Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes & narratives so there maybe 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.

From “not expecting any known risks” to “the issues are clearly behind the industry” — eighteen companies, eight quarters, and a credit cycle that rewrote the rules of Indian microfinance, told entirely through the words of the people who lived it.

The Goldilocks Trap

In March 2024, the Indian microfinance industry was in a celebratory mood. Asset quality had recovered from the pandemic. Growth was strong. Guidance was ambitious. The sector had disbursed record volumes and the worst of COVID-era stress was firmly in the rearview.

Satin Creditcare’s HP Singh called FY24 a “momentous chapter” in the company’s 33-year journey. Muthoot Microfin’s CEO saw a clear path to 4.5% ROA. CreditAccess Grameen, the country’s largest pure-play microfinance NBFC, set its sights on numbers that would have seemed outlandish just two years earlier.

“Assuming a stable operating environment, we look forward to achieving loan portfolio growth of 23% to 24% in FY25. We are anticipating credit cost of 2.2% to 2.4%... Overall, we aim to achieve ROA of 5.4% to 5.5% and ROE of 23.0% to 23.5% in FY25.”

— Udaya Kumar Hebbar, Managing Director, CreditAccess Grameen | Q4 FY24

Bandhan Bank, which had spent three painful years cleaning up pandemic-era stress in its microfinance book — the “Emerging Entrepreneurs Business” in Bandhan parlance — declared the legacy behind them. Its SMA-0 pool had halved. Slippages were trending down. The technical write-off of the old book was done.

SMA-0 pool is the set of loan accounts that are overdue by up to 30 days, indicating the earliest stage of repayment stress.

Slippages are loans that move from standard (performing) to NPA status during a period.

“So I think as Rajeev said, we believe that decisively, we are out of the pandemic problem. In fact, all the parameters, as you see, you can clearly see that practically the slippages has come down significantly. Recovery rates have improved. DPD pool has dried down.”

— Ratan Kesh, Executive Director and COO, Bandhan Bank | Q4 FY24

When analysts asked CreditAccess’s managing director what risks he saw on the horizon, his response carried the confidence of a man who had navigated COVID, demonetization, and the Andhra Pradesh crisis — and come out the other side each time.

“We are not expecting any known risks actually. Known risk if you see the last 10 years or 15 years, the risks which have come to this industry are unknown. Whether it is COVID or demonetization, the second COVID, all are unknown. The industry has not lost because of any known risks.”

— Udaya Kumar Hebbar, Managing Director, CreditAccess Grameen | Q4 FY24

It was a reasonable statement grounded in history. Every previous microfinance crisis — Andhra Pradesh in 2010, demonetization in 2016, COVID in 2020 — had been triggered by an external shock that no one could have modelled for. The sector’s risk management frameworks were built around this assumption: the threats come from outside, and when they pass, business returns to normal.

Not everyone agreed. A few voices struck a different note that quarter. Kotak Mahindra Bank’s new CEO Ashok Vaswani looked at the same data and saw a warning sign rather than an all-clear.

“If you look at what is happening in the industry and look at loss rates and stuff like that post the COVID provisions, it has really been a Goldilocks period for the last 2-3 years at least since COVID. Now, all of us know that credits go through cycles. At this point in the cycle, to go out and get aggressive on credit, I don’t think it is a smart thing to do.”

— Ashok Vaswani, MD & CEO, Kotak Mahindra Bank | Q4 FY24

HDFC Bank was quietly building buffers while the sun was shining — creating what it called “countercyclical provisions,” essentially setting money aside during good times for the bad times it expected would eventually come.

“We have, as a part of prudent risk management, created a countercyclical provision, which is a provision in good times.”

— Sashidhar Jagdishan, MD & CEO, HDFC Bank | Q4 FY24

IndusInd Bank, one of the largest MFI lenders through its subsidiary BFIL, was even more specific about where it saw cracks. Its CEO Sumant Kathpalia said the bank had spotted stress building in Punjab eleven months before the rest of the industry acknowledged it.

“We saw Punjab coming 11 months ago. We saw the waves of Punjab coming and even some parts of Odisha and Bihar also coming and some parts of UP also. We started exiting those portfolios at that point.”

— Sumant Kathpalia, MD & CEO, IndusInd Bank | Q4 FY24

Whether the early detection translated into early protection would become one of the more revealing questions of the cycle.

• • •

Something Breaks

The first tremors arrived in Q1 FY25 — the April-June quarter of 2024. A brutal heatwave across northern India made fieldwork difficult for loan officers accustomed to collecting repayments door-to-door. General elections in April and May disrupted collection schedules — in several states, political activists ran “Karj Mukti Andolans,” loan forgiveness campaigns that encouraged borrowers to stop repaying.

“Majority of that activity has stopped. It was almost linked with the election activity that was going on during that period in Q1. So now we don’t have too much of activism.”

— Sadaf Sayeed, CEO, Muthoot Microfin | Q1 FY25

These were plausible, temporary explanations. Heat waves pass. Elections end. But underneath the seasonal noise, something structural was breaking. At IDFC First Bank, the JLG collection efficiency — the percentage of current-bucket borrowers who pay on time — slipped from 99.7% to 99.2%. Half a percentage point sounds trivial. In microfinance, where the entire model depends on near-perfect repayment discipline, it was a red alert.

“Normally, pre the floods, our credit loss in the JLG book used to be around 1.6%. Now our estimate of credit cost for this year on the joint liability group, because we are 60% concentrated in Tamil Nadu, it is expected around 5% or a little short of it.”

— V. Vaidyanathan, MD & CEO, IDFC First Bank | Q1 FY25

A brief detour is useful here to understand what was actually going wrong. Microfinance in India works primarily through the Joint Liability Group model — small groups of borrowers, typically 5-10 women, who collectively guarantee each other’s loans. The model’s genius is that it replaces traditional collateral with social pressure: if one borrower defaults, the group faces consequences. It works remarkably well in normal times, keeping credit costs at 1.5-2.5% despite lending to some of the most economically vulnerable households in the country.

But the model has a critical weakness. It doesn’t control how many groups — or how many lenders — a single borrower joins. And since 2022, something had quietly shifted. Credit bureau data showed that borrowers were taking on loans from more and more institutions simultaneously. Ticket sizes were creeping up. Total indebtedness per borrower was rising fast.

Fusion Finance, a mid-sized NBFC-MFI, laid this out in stark numbers.

“I would like to draw your attention to Slide #8 on our customer leverage. As you can see, our outstanding per customer is mostly below INR 40,000. But 33% of these customers have outstanding greater than 1 lakh across micro finance loans. This increased from 23% in March to 32% March ’24.”

— Devesh Sachdev, MD & CEO, Fusion Finance | Q1 FY25

In twelve months, the share of borrowers carrying more than Rs 1 lakh in microfinance debt had jumped by 10 percentage points. And these were just the loans visible on credit bureaus. Equitas SFB’s veteran founder P.N. Vasudevan — who had been in microfinance for nearly two decades — identified another layer that was harder to track.

“What is not really understood or clear is also there’s some kind of a parallel lending happening to the same set of borrowers by so called app loan companies.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q3 FY25

Spandana Sphoorty’s data quantified the damage from overleveraging: borrowers with five or more lenders were just 12% of the company’s AUM but contributed 21% of its arrear bucket. The more lenders a borrower had, the more likely they were to default — and the industry had spent two years adding lenders to each borrower’s profile.

The most important observation of Q1 came from Vasudevan, who named what nobody else was willing to say clearly: for the first time in living memory, this crisis wasn’t caused by something that happened to microfinance. It was caused by microfinance itself.

“For a change, the crisis or it’s not the word crisis, but at least a stress levels in microfinance for a change is not induced by an external one. This is the first time, I think, in the last 15 years that I know or 17 years that I have been in this business that I’m saying that it’s not an external event trigger, but it’s something inherently coming up from the sector itself.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q1 FY25

Not everyone agreed with this framing. Spandana’s MD Shalabh Saxena pushed back on the idea that overleveraging was systemic.

“I personally do not believe there is a systemic over-leverage issue across the industry. I firmly believe that. There could be a few pockets, a few institutions here and there.”

— Shalabh Saxena, MD & CEO, Spandana Sphoorty | Q1 FY25

Within two quarters, the data would prove him wrong.

• • •

The Guardrails

In July 2024, MFIN — the Microfinance Institutions Network, which functions as the sector’s self-regulatory organization — rolled out what became known as the Guardrails. These were a set of industry-wide lending norms, agreed upon by members representing roughly 87% of the microfinance market, aimed at curbing the overleveraging that was now clearly driving the stress.

The key rules: no borrower should have loans from more than four microfinance lenders. Total unsecured indebtedness, including microfinance, should not exceed Rs 2 lakh. Lenders were required to check bureau data before every disbursement, not just at onboarding.

The guardrails were a significant step, but they were forward-looking — they could prevent new overleveraged loans from being created, but they couldn’t fix the existing book. Borrowers who already had five or six lenders would continue to struggle. The stress already embedded in portfolios would need to be absorbed through provisions, write-offs, and time.

The impact on new business was immediate. At Muthoot Microfin, about 11% of loan applications that would previously have been approved were now being rejected under the new rules. Satin Creditcare reported that at the time the guardrails kicked in, just 1% of their existing clients exceeded the four-lender cap — a sign that some companies had been more disciplined than others.

Fusion stopped disbursements entirely in 104 of its branches. CreditAccess tightened credit filters. Spandana paused new member acquisition in 230 branches and stopped sourcing new-to-credit customers altogether. The industry was simultaneously trying to fix the new pipeline while absorbing damage from the old one.

The CreditAccess team tried to quantify the timeline.

“We however, expect the delinquency trend to stabilise in the coming quarter and credit cost within the guided range of 2.2% to 2.4% for the year.”

— Udaya Kumar Hebbar, Managing Director, CreditAccess Grameen | Q1 FY25

That guidance would not survive the next ninety days.

• • •

Into the Storm

By September 2024, the scale of the problem was undeniable. What had started as “stress in some pockets” was now a full-blown industry credit cycle. The heat waves and elections were months behind, but collection efficiencies were still deteriorating. Equitas’s Vasudevan captured the moment of realization.

“The industry and us included were quite caught by surprise when the collection efficiency dipped further in Q2 for no apparent external reasons. In our case, it dropped from 98.9% of Q1 down to 98.2% in Q2. And when this happened across geographies, it was clear that an important reason for the stress was as much internal as external.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q3 FY25

CreditAccess Grameen, which six months earlier had guided for 23-24% portfolio growth and 5.4% ROA, rewrote its entire outlook.

“In light of the current industry landscape and short-term challenges encountered, we have revised our estimate for FY25 annual performance guidance. We anticipate loan portfolio growth of 8-12%, NIM of 12.8-13.0%, credit cost of 4.5-5.0%, ROA of 3.0-3.5%, and ROE of 12.0-14.0%.”

— Udaya Kumar Hebbar, Managing Director, CreditAccess Grameen | Q2 FY25

Growth guidance halved. ROA guidance cut by nearly 40%. Credit cost guidance doubled. And CreditAccess was among the better-positioned players — it had been conservative relative to its peers, with a diversified geographic footprint and a long track record. For the more concentrated and leveraged players, the numbers were far worse.

Fusion Finance reported a quarterly credit cost of Rs 693 crore — a number large enough to trigger covenant breaches with lenders. This is worth pausing on: Fusion’s borrowing costs and credit lines depended on maintaining certain financial ratios. When its losses blew through those thresholds, its own access to capital came under threat. The stress wasn’t just flowing from MFI borrowers to MFI companies — it was threatening to flow from MFI companies to their lenders, creating a potential second-order shock.

“I would like to mention that post the review of our auditors, our actual credit cost for Q2 FY25 has been determined at Rs. 693 crore. The elevated provisioning has been due to us proactively taking accelerated provisions... Looking at our portfolio performance and challenges faced by the sector, our auditor wants to bring to the attention that there are covenant breaches that will require waivers.”

— Devesh Sachdev, MD & CEO, Fusion Finance | Q2 FY25

IDFC First Bank’s V. Vaidyanathan, who had spent the previous quarter framing the Tamil Nadu floods as a one-off episode, acknowledged the broader reality and took an aggressive provisioning stance.

“Now, what we have done this quarter is because microfinance is an issue and we cannot wish it away because the microfinance portfolio is disturbing in many parts of India. So, what we have done is that in SMA-1 and SMA-2, we have taken provisions and therefore... almost 99% of SMA-1 plus SMA-2 has been provided for by the Bank, fully.”

— V. Vaidyanathan, MD & CEO, IDFC First Bank | Q2 FY25

Ujjivan Small Finance Bank, one of the larger microfinance-focused SFBs with a significant presence in southern states, saw its PAR — the portfolio at risk, measuring any loan that’s even one day overdue — climb sharply.

“On asset quality, as mentioned earlier, we are observing stress in the microfinance segment, due to which our PAR has increased to 5.1% in September 24 vs 4.2% in June 24. PAR 0 for our group loan portfolio has increased to 5.5% in September 24 versus 4.1% in June 24.”

— Sanjeev Nautiyal, MD & CEO, Ujjivan SFB | Q2 FY25

IndusInd Bank’s CEO Sumant Kathpalia — who had claimed to spot the trouble eleven months early — was now projecting confidence that the worst would be over within weeks.

“In my opinion, if everything goes well, within two months we should start seeing the flow rates coming down in this business... I am very bullish on the microfinance segment, and I think you will see the stability coming in very soon.”

— Sumant Kathpalia, MD & CEO, IndusInd Bank | Q2 FY25

That timeline would prove wildly optimistic. Kathpalia himself would not see it through — within months, he would exit the bank amid a governance crisis triggered in the bank’s derivative portfolio.

Vasudevan, characteristically more measured, offered the hardest truth of the quarter.

“This is the first time I’m seeing where an extended period of nearly 9, 10 months, we have been seeing high slippages and it’s by all of us and in many markets. So it’s very difficult to tell you within what time frame we expect it to come back to normalcy.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q1 FY25

• • •

The Darkest Quarter — and the Turn

Q3 FY25 — October through December 2024 — was when the stress peaked for most companies. Bandhan saw microfinance slippages of Rs 1,196 crore in a single quarter. Its collection efficiency outside West Bengal dropped to 96.3%. Satin Creditcare’s PAR-1 rose to 6.8%. RBL Bank described conditions on the ground as being “in a flux.”

But this quarter also contained the single most important inflection point of the entire cycle: December 2024.

For months, the data had been uniformly grim. Then, almost simultaneously, company after company reported the same thing — the first material improvement in the current bucket, the pool of borrowers who are not yet overdue. When this pool stops deteriorating, it means fewer borrowers are falling into trouble for the first time. It doesn’t fix the existing NPAs, but it signals that the pipeline of future stress is narrowing.

CreditAccess’s MD, who had initially expected the peak in September, acknowledged the delay but confirmed the reversal.

“Our initial assessment of the current delinquency cycle being transitory in nature has come true as we see the new delinquency addition rate slowing down across various geographies in mid-November 2024... The new delinquency trend reversal was materially visible across various markets beginning mid-November, getting further stronger in December and January.”

— Udaya Kumar Hebbar, Managing Director, CreditAccess Grameen | Q3 FY25

RBL Bank saw the same inflection.

“In the JLG segment, the situation on the ground has been in a flux for most of the past months, but December has seen the first material uptick in collection efficiency and the recoveries of old NPAs.”

— R. Subramaniakumar, MD & CEO, RBL Bank | Q3 FY25

Fusion’s Devesh Sachdev, whose company had been among the hardest hit, was watching a different metric — the new loans disbursed under tighter guardrails since August.

“Even I can tell you one more data, that the new sourcing which we are doing, which we changed in the middle of August. And now when I look it’s a five-month MOB, though it is too early, it’s just a 5 months MOB, but I believe the numbers are infant or early delinquency is clearly showing trends which we have seen in year 2022, ’23.”

— Devesh Sachdev, MD & CEO, Fusion Finance | Q3 FY25

This was quietly one of the most significant data points of the cycle. Loans written under the new guardrails weren’t just marginally better — they were performing like pre-crisis vintage. The guardrails were working.

But Bandhan’s new MD Partha Pratim Sengupta — who had replaced Ratan Kesh in yet another leadership change during the crisis — offered a note of caution that tempered the optimism. The SMA-0 book was improving, but the backlog of loans already deeper in arrears still needed to work through the system.

“So, maybe the level of slippage could not be 1,196 in EEB book, what we have witnessed in Q3, but it will be substantial... But slippages, we are seeing the trend, but at the same time as you are witnessing, you see that our SMA-0 book is improving... But the trend is reversing.”

— Partha Pratim Sengupta, MD & CEO, Bandhan Bank | Q3 FY25

The green shoots were real. But the cleanup was far from over.

• • •

The Reckoning

Q4 FY25 — January through March 2025 — became the quarter of reckoning. The turn in collection efficiencies was confirmed, but the damage from the preceding three quarters had to be absorbed. Companies took massive write-offs to clear the decks. The numbers were staggering.

Equitas SFB revealed the full toll. Its microfinance credit cost went from 2.3% in FY24 to 11.37% in FY25 — a nearly fivefold increase that wiped away Rs 630 crore of profit and dragged the bank’s overall ROA down to 0.32%.

“Last year turned out to be a tough year. We had credit cost in Microfinance portfolio moving up from 2.3% in FY ’24 to 11.37% in FY ’25, wiping away about INR 630 crores of profit of the bank.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q4 FY25

“In response to these headwinds, the bank slowed down its fresh disbursements in Microfinance, leading to a drop in the MFI advances from INR 6,265 crores in March ’24 to just around INR 4,500 crores in March ’25.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q4 FY25

Spandana Sphoorty posted a net loss of Rs 1,035 crore for the full year. CreditAccess wrote off Rs 1,124 crore, including Rs 479 crore in accelerated write-offs of non-paying 180+ DPD accounts. Muthoot Microfin saw its GNPA climb to 4.84% — but its CEO called this the peak.

“So our GNP levels are at 4.84%, which is at an elevated number. But this is the peak of these GNPAs. We feel that in coming quarters, these numbers will only come down because we are seeing better collection efficiency.”

— Sadaf Sayeed, CEO, Muthoot Microfin | Q4 FY25

RBL Bank took perhaps the most aggressive provisioning step of the entire cycle — writing its JLG net NPA to zero in a single quarter.

“In the JLG business, we normally take 25% provisioning each quarter on NPAs, but we have now taken 100% provisioning on the NPA as at March 31, 2025. This means we have a nil net NPA in the JLG business. We have also taken 75% provisioning amounting to INR 283 crores on SMA-0, 1 and 2.”

— R. Subramaniakumar, MD & CEO, RBL Bank | Q4 FY25

And then there was IndusInd Bank. In an industry already reeling from credit stress, IndusInd disclosed something that went beyond a credit cycle — it was a governance failure. An internal review found that microfinance loans at its subsidiary BFIL had been misclassified, concealing Rs 1,885 crore in under-provisioning and unrecognized NPAs.

“The review has also identified the misclassification of certain microfinance loans has resulted in under-provisioning and non-recognition of NPAs aggregating to Rs 1,885 Crores. The Bank has addressed the underlying cause and is in the process of taking actions for staff accountability.”

— Sunil Mehta, Chairman, IndusInd Bank | Q4 FY25

The disclosure triggered a leadership overhaul. Rajiv Anand replaced Kathpalia as MD & CEO. The microfinance subsidiary’s governance framework was restructured for “greater transparency.” It was a stark reminder that credit cycles don’t just stress balance sheets — they expose operational weaknesses that good times had papered over.

Meanwhile, the industry’s aggregate footprint was shrinking. This is a number that didn’t get much attention in individual earnings calls but told a dramatic story at the sector level.

“The overall loan outstanding at the sector, which was about INR 4.4 lakh crores in March ’24, came down to about INR 3.75 lakhs in March ’25 and further down to INR 3.5 lakh crores in June ’25.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q2 FY26

From Rs 4.4 lakh crore to Rs 3.5 lakh crore in fifteen months — the entire Indian microfinance industry shrank by 20%. That’s roughly Rs 90,000 crore of credit that was withdrawn from some of the poorest households in the country. The human cost of an industry correcting its own excesses.

IDFC First Bank’s Vaidyanathan, whose bank had taken provision hits early and heavily, offered a framing that captured what this quarter was — not the start of a new problem, but the crest of a wave.

“You think of this 2025 as a year that this has happened because of microfinance. You think of it that 2026, we will stage a smart recovery. And FY 27, FY 28, FY 29, we should be back winning ways.”

— V. Vaidyanathan, MD & CEO, IDFC First Bank | Q4 FY25

• • •

The Proof

The first sign that the recovery was real — not just hoped for — came from CreditAccess Grameen’s Q1 FY26 results. The company that had slashed guidance a year earlier now reported its highest-ever first-quarter disbursement.

“Our Q1 FY’26 performance has created a new benchmark, achieving the highest ever 1st Quarter disbursement in our history. This is a testament to our resilience and agility that define us given that we are coming off the back of a challenging credit cycle.”

— Ganesh Narayanan, CEO and MD Designate, CreditAccess Grameen | Q1 FY26

Note the leadership change here too — Ganesh Narayanan had taken over from founding MD Udaya Kumar Hebbar, whose guidance had shaped the company through both the confidence of Q4 FY24 and the crisis that followed. CreditAccess wasn’t alone. Bandhan had moved from Ghosh to Kesh to Sengupta in the span of two years. Spandana’s MD Shalabh Saxena — who had pushed back on the overleveraging thesis — had exited, replaced by Ashish Damani as interim CEO. Fusion brought in Sanjay Garyali. The cycle had churned leadership across the sector.

But the data was now more important than the names on the door. The deleveraging that the MFIN guardrails had set in motion was showing up in every company’s investor presentation with striking consistency. The overleveraged borrower pool that had caused the crisis was being systematically drained.

“GLP of borrowers with greater than 3 pre-lenders stood at 11.1% in June 2025 versus 25.3% in August 2024. GLP of borrowers with greater than 2 lakh unsecured indebtedness stood at 9.5% as of June 2025 compared to 19.1% in August 2024.”

— Ganesh Narayanan, CEO and MD Designate, CreditAccess Grameen | Q1 FY26

Muthoot Microfin saw the same pattern from the industry-level data.

“If you look at the overall industry, the leverage customers were around 20%. They have come down to around 8%, which is more than 4 loans.”

— Sadaf Sayeed, CEO, Muthoot Microfin | Q1 FY26

And the proof that the guardrails were producing a fundamentally better book — not just a smaller one — came from Equitas.

“We had implemented the MFIN Guardrail 2.0 from Jan ’25. Out of the portfolio created between Jan to June of ’25, the X-bucket efficiency is about 99.6%, which is more or less what we used to have before this whole crisis started sometime in the first quarter of last year.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q1 FY26

New loans, written under new rules, were performing at pre-crisis levels. Spandana’s data was even more definitive — its FY26 disbursements were tracking at 99.9% collection efficiency. The problem had been in the origination standards, the guardrails had fixed the origination standards, and the new book was proving it.

Fusion Finance, which less than a year earlier had reported covenant breaches and a Rs 693 crore quarterly credit cost, showed a steady trajectory of decline.

“Credit costs have steadily declined QoQ from Rs. 571 Cr in Q3 FY25 to Rs. 253 Cr in Q4 FY25 and further to Rs. 178 Cr in Q1 of FY26. GNPA improved from 7.92% in Q4 FY25 to 5.43% in this quarter.”

— Devesh Sachdev, Managing Director, Fusion Finance | Q1 FY26

Muthoot Microfin, which had posted a loss-making FY25, reported a small but symbolically significant quarterly profit — Rs 6.2 crore. Modest. But the direction mattered more than the magnitude.

“Though it’s a very modest profit, more importantly, it indicates a firm ushering of a turnaround within the operation and the financial performance of the company.”

— Sadaf Sayeed, CEO, Muthoot Microfin | Q1 FY26

• • •

The Industry Exhales

In April 2025, Guardrail 2.0 kicked in — tightening the lender cap from four to three, and further restricting indebtedness limits. Some companies, like Spandana, had already implemented stricter rules from January. The immediate effect was another spike in rejection rates and a temporary pause in the recovery of collection sentiment. Utkarsh Small Finance Bank’s CEO noted the disruption.

“From 1st of April 2025, they changed it to 3 lender caps. Because of that, we saw some more slippages or little elevated credit cost during this quarter. And you must have seen that is more or less industry phenomena.”

— Govind Singh, MD & CEO, Utkarsh SFB | Q1 FY26

But by Q2 FY26, the adjustment was absorbed. And the tone in earnings calls shifted from cautious optimism to something closer to relief. IDFC First’s Vaidyanathan, who had spent five quarters absorbing microfinance losses, said what many were feeling.

“Looking ahead, our own sense is that this microfinance issue is behind us. It’s really taken a lot out of us in the last 5 or 6 quarters. Many of you may have almost begun to lose confidence in us.”

— V. Vaidyanathan, MD & CEO, IDFC First Bank | Q2 FY26

By Q3 FY26 — December 2025 — the normalization was broad-based. Collection efficiencies across the sector had returned to 99.4-99.7%, close to or at pre-crisis levels. Monthly PAR accretion — the rate at which new loans fall overdue — had collapsed. CreditAccess reported the number at 18 basis points in December, down from 47 bps in September.

Fusion Finance returned to profitability — a PAT of Rs 14 crore. Its new CEO described it as an inflection point.

“Q3 represents an important inflection point for Fusion. The business has now entered a phase of controlled stabilization and disciplined execution. I’m pleased to share that we have returned to profitability this quarter.”

— Sanjay Garyali, MD & CEO, Fusion Finance | Q3 FY26

Lenders who had pulled back from the sector during the crisis were returning. Fusion noted that “several banks have freshly opened up” and institutions that were in “wait-and-watch mode” had started actively re-engaging. The wholesale funding squeeze — the second-order effect of the credit cycle — was easing.

RBL Bank’s JLG disbursals had crossed Rs 700 crore monthly, with early bucket collection efficiency at 99.5%.

“The disbursal in the JLG segment is at a run rate of INR 700 crores per month versus INR 550 crores in the previous quarter. The good news is that the early bucket collection efficiency is 99.5%. This is as good as one has got in this segment for a long time.”

— Jaideep Iyer, Head of Strategy, RBL Bank | Q3 FY26

Bandhan declared the de-growth phase in its microfinance book over. Muthoot was back to normalized disbursements of Rs 850 crore a month. Ujjivan SFB reported bucket-X collection efficiency of 99.7% in December — its highest in the current fiscal — with 10 out of 10 states at 99.6% or above.

Satin Creditcare’s HP Singh, who a year earlier had been deploying 1,100 dedicated collection staff to manage overdue buckets, offered a simple verdict.

“The headwinds are practically over. You can see green shoots now coming in. I think overall it bodes well for the industry as well as for us.”

— Dr. HP Singh, CMD, Satin Creditcare | Q3 FY26

And Equitas’s Vasudevan, who had been the first to diagnose this crisis as self-inflicted, delivered the closing line for the cycle.

“As we sign off, I can only reiterate that I think the issues of microfinance is clearly behind not just us but the industry. And going forward, let’s hope for better times for all of us.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q3 FY26

While the MFI players had been fighting for survival, the large diversified banks had watched from a very different vantage point. HDFC Bank’s microfinance exposure was less than 1% of its total book. SBI’s chairman noted their MFI portfolio of Rs 10,000-11,000 crore “does not really add up to anything.” By Q3 FY26, HDFC Bank’s deputy MD was using language that felt like it belonged to a different industry entirely.

“The banking industry right now to borrow a term is going through a Cinderella phase where you’ve got very strong balance sheets... We have the lowest accretion of gross NPAs and net NPAs are at decadal lows.”

— Kaizad Bharucha, Deputy MD, HDFC Bank | Q3 FY26

A Cinderella phase for large banks. A near-death experience for several MFIs. The same economic cycle, experienced at entirely different altitudes depending on how much microfinance a company carried on its books.

• • •

What Changed

The industry that emerged from this cycle was not the one that entered it. The changes were structural, deliberate, and in some cases, permanent.

Every major player shrank its microfinance portfolio as a share of total assets. Equitas took its MFI mix from 20% to 8.5% and intended to stabilize at 10%. IDFC First expected its microfinance book to bottom at Rs 7,500 crore — half its peak. Bandhan’s non-microfinance book now accounted for 63% of advances, up from 45% two years earlier. RBL shrank its JLG book by 23% and targeted keeping it at 6-7% of advances, down from 9%. The consensus: microfinance at 7-10% of the balance sheet, not 20%+.

Companies were also insuring against the next cycle. CGFMU — the Credit Guarantee Fund for Micro Units — had existed before the crisis but was lightly used. Now it was becoming standard.

“The intent is to take that to 100% and thereby eliminating the tail risk on the microfinance business. So, if you are able to do that and manage the proportionality of the business somewhere between 7% - 8% of the asset side, I do believe that we can build a more predictable and profitable microfinance business going forward.”

— Rajiv Anand, MD & CEO, IndusInd Bank | Q3 FY26

RBL reached 80%+ CGFMU coverage on its standard JLG book. IDFC First had been insuring since January 2024 — one of the earliest movers.

Kotak Mahindra went further than portfolio caps and insurance. It did something more fundamental — it replaced the joint liability group model itself.

“What we have done is that we have replaced the joint liability group model with individual underwriting risk-based models. And therefore, the way we are dispersing and where we are not dispersing has a lot to do with what the model says are the propensity for repayment.”

— Ashok Vaswani, MD & CEO, Kotak Mahindra Bank | Q1 FY26

It was a quiet admission that the JLG model — the foundational innovation of microfinance — had weakened. Social pressure among group members was no longer enough to ensure repayment in an environment where borrowers had loans from five different institutions. Individual credit assessment, powered by bureau data and machine learning, was being layered on top of or replacing the group guarantee.

And the baseline expectations for the business had permanently shifted. The “old normal” of 1.5-2% credit costs was gone. Vasudevan was explicit about what the “new normal” looked like.

“Post corona, we thought around 3% is a normal credit cost for microfinance. Now post this 2024 overleveraging crisis, probably anywhere between 3% to 4% could be a normal credit cost for microfinance.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q1 FY26

Three to four percent, not two. The industry had recovered, but to a worse steady state than before. The premium for lending to this segment had been repriced — not by a regulator, but by experience.

Vasudevan also offered the most honest structural assessment of the sector — one that explained why every company was simultaneously declaring the crisis over while also reducing its exposure to the business that had built them.

“And in spite of that, we have been seeing a series of crisis in the Microfinance sector time and again for various reasons. The reasons change, but the repetitiveness of the crisis doesn’t change.”

— P.N. Vasudevan, MD & CEO, Equitas SFB | Q4 FY25

The industry had survived. The cycle had turned. But the companies that came out the other side were building for a different future — one where microfinance remained in the portfolio but never again dominated it. Smaller books, government guarantees, individual underwriting, tighter guardrails, higher steady-state credit costs. The cycle didn’t just create losses. It created a new architecture.

• • •

What to Watch

• The “new normal” credit cost. Most companies guide for BAU credit costs of 2.5-3.5% going forward, up from the pre-crisis expectation of 1.5-2%. Whether this holds through FY27 will confirm the repricing is real and not just post-crisis caution.

• Karnataka. The last major geography to stabilize. Several companies still flag it as lagging behind the rest of the country. CreditAccess expects Karnataka’s PAR accretion to normalize by end of Q1 FY27.

• CGFMU as industry standard. IndusInd targeting 100%, RBL at 80%+, IDFC First already covered. If credit guarantee becomes universal, the tail risk profile of microfinance changes permanently — but it also adds ~1% to the cost of lending, which has to be passed on somewhere.

• Guardrail 2.0’s growth ceiling. The 3-lender cap is structurally limiting the addressable borrower pool. Several managements now expect industry growth to settle at 10-15% — a far cry from the 25%+ that was standard before the crisis. Whether this is a temporary adjustment or a permanent reset will shape the sector’s economics.

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

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Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes & narratives so there maybe 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.

Birla Opus entered the paint market with aggressive pricing and a deep wallet. Three quarters of earnings calls later, here’s what the incumbents have been saying — and doing — as they adjusted.

— — —

When Birla Opus launched in FY25 — backed by Aditya Birla Group’s balance sheet, priced well below the market, and offering extra grammage on top — it was the first serious new entrant the Indian paint industry had seen in decades. The working assumption, among analysts and investors, was that this would force a race to the bottom. Incumbents would match the discounts, margins would compress, and the sector’s premium valuations would need rethinking.

Three quarters of earnings calls have produced a different, messier picture. What follows is what the managements of five listed paint companies said — and, at points, what Birla said about itself — quarter by quarter, as the industry figured out what the entry actually meant.

— — —

Q1 FY26: “The initial euphoria is over”

By Q1 FY26, Birla Opus had been in the market for roughly a year. The first thing incumbents wanted to talk about was what was happening at the dealer counter.

Berger’s Abhijit Roy was the most direct:

“The initial euphoria is over completely. That’s gone. You know that initially, that curiosity, the enthusiasm that was there, something new, something great is happening — that is completely gone.”

— Abhijit Roy, MD & CEO, Berger Paints | Q1 FY26

The reason, he said, was straightforward economics. More Birla dealers meant more competition between them — which meant thinner margins for each.

“Once with the network expansion happening heavily and inter-dealer competition increasing, that margin of profit has reduced considerably. And as a result of that there is a little bit of a loss of interest from the dealers. People might be feeling that some of these dealers might be coming back to the legacy companies with whom they have been dealing in the past, because once they see that there is no great margin, and the movement of the product is nothing great.”

— Abhijit Roy, MD & CEO, Berger Paints | Q1 FY26

Akzo Nobel was seeing something similar and had launched a formal program for it. Rohit Totla, Akzo’s Whole-time Director, described the counter-offensive:

“Wherever we saw an action, we were very quick in talking to our retailers and bringing them back to the fold, what we call a program called ‘Ghar Wapsi’. And that is where within a quarter we were able to bring back. In the last five quarters, this aggressive competition was there but we were able to do better than the market.”

— Rohit Totla, Whole-time Director, Akzo Nobel India | Q1 FY26

Nerolac’s Pravin Chaudhari reported the same:

“In fact, we are seeing the reversal now. Many dealers of ours who started batting with competition has now started coming back to us. I think they are realizing power of Nerolac brand as well as groundwork that our team does as well as consumer and painter activity that we’re doing.”

— Pravin Chaudhari, MD, Kansai Nerolac Paints | Q1 FY26

Birla, for its part, had a different reading of the same quarter. Rakshit Hargave, CEO of Birla Opus, pointed to a starker picture of the industry without his company in it:

“On a QoQ annual basis, the market has grown only at 5%. And if you remove Birla Opus, then the market is actually minus one or zero. So, obviously, Birla Opus has taken a lion’s share of the growth, which has happened on an annual basis.”

— Rakshit Hargave, CEO, Birla Opus (Grasim Industries) | Q1 FY26

But the impact wasn’t uniform. Akzo’s Rajiv Rajgopal mapped the disruption geographically — and the pattern was uneven:

“If I break India into four regions, the impact of the new competition was highest in South, followed by a bit in West, Punjab and North largely, and East has been very minimal.”

— Rajiv Rajgopal, Chairman & MD, Akzo Nobel India | Q1 FY26

Nerolac confirmed. South was the pressure point, particularly for players already weak there:

“South continues to be a problem for us because as such, we are weak there. And given the onslaught of competition and extra focus on South by most of the leading player, there has been the issue for us.”

— Pravin Chaudhari, MD, Kansai Nerolac Paints | Q1 FY26

Asian Paints, the market leader, framed the disruption differently. Amit Syngle argued that Birla’s discounting was pulling in the trade — contractors and dealers — not the end consumer:

“Sometimes it is the intermediary who benefits a little bit more in terms of looking at what extra the person is getting because that might result in a higher margin for the intermediary which could be a contractor, which could be a dealer. So, to some extent it is like a discount... and not too much of a consumer proposition.”

— Amit Syngle, MD & CEO, Asian Paints | Q1 FY26

One thing all five companies agreed on: the disruption was playing out at the bottom of the market, not the top. Berger’s Roy:

“In the luxury, premium segment, brand plays a far bigger role there. It is difficult to change a customer in this particular area. However, at the lower end or at the mid-lower end, it is relatively possible, with the effort of the influencers to change customer preferences.”

— Abhijit Roy, MD & CEO, Berger Paints | Q1 FY26

And then there was Indigo Paints — the niche player that had spent Q1 pushing back on the doomsday narrative:

“The prediction of outsiders was that this will devastate the margins of the paint industry. And we were all collectively saying that, that is not going to happen. Everybody’s gross margin is more or less the same as what it was a year ago or 1.5 years ago.”

— Hemant Jalan, Chairman & MD, Indigo Paints | Q1 FY26

That was Q1. Dealers reportedly drifting back. Regional variation. Premium holding. Margins intact. The tone across boardrooms was cautious but composed.

— — —

Q2 FY26: “Let’s not kid ourselves”

By Q2, the composure started showing cracks. Not because anything dramatic happened — but because growth hadn’t.

“The overall industry would not be growing more than about 3.5 to 4%. Therefore, we were very clear that we need to really shift our gear in terms of how we really galvanize the market, how do we look at playing to our strengths in a very strong manner.”

— Amit Syngle, MD & CEO, Asian Paints | Q2 FY26

Akzo’s Rajgopal dropped the most candid assessment of the quarter:

“There is a fight happening in the market between a market leader and a very strong challenger. Let’s not kid ourselves in saying that it has had impact on the profitability of the industry and also the market shares of all the players, maybe lesser on some of us, more on a few others. But the reality is it has had an impact.”

— Rajiv Rajgopal, Chairman & MD, Akzo Nobel India | Q2 FY26

He also mapped where, specifically, the new entrant had gained ground:

“80% of the growth has come from mass market, economy, putty, textile, construction chemicals. And these are segments where some of the established players found it too difficult to react because it would be hugely dilutive to the margin and the profitability of the business.”

— Rajiv Rajgopal, Chairman & MD, Akzo Nobel India | Q2 FY26

Something else had changed at Akzo between quarters. The Jindal family had taken a controlling stake, and the mandate from new ownership was unambiguous:

“The brief from Mr. Parth Jindal has been very clear to us as a team — let’s get after revenue and get back to high growth and get back to market share gain. So our endeavor starting from September has been to look at where are we significantly premium. And that’s where we’ve been taking some price corrections to make sure we are far more competitive.”

— Rajiv Rajgopal, Chairman & MD, Akzo Nobel India | Q2 FY26

Those corrections were already underway — cumulative price cuts of 1.5-2% across the portfolio.

On the other side, there were signs that Birla’s initial sprint was flattening. Berger’s Roy:

“By stabilization, I mean, the sales figure is not jumping upwards, as was happening in the past few quarters. The numeric reach is not expanding at a very fast clip. It’s improving, but at a normal pace, as would happen for any industry player.”

— Abhijit Roy, MD & CEO, Berger Paints | Q2 FY26

Indigo’s Jalan was blunter:

“New player is now stagnating. They were taking a 5%, 6% market share in the first year. Now they are more of a status quo.”

— Hemant Jalan, Chairman & MD, Indigo Paints | Q2 FY26

Birla’s own filings suggested otherwise. By Q2, all six manufacturing plants were operational — 1,332 million litres of annual capacity. Himanshu Kapania, Birla Opus’ business head:

“This makes Birla Opus the second largest decorative paints company commanding 24% of the industry capacity, a feat unmatched around the globe for speed and cost. Now we focus all our energies to bridge the gap between our volume market share and capacity share.”

— Himanshu Kapania, MD & Business Head, Birla Opus (Grasim Industries) | Q2 FY26

The extra grammage scheme — where Birla offered 10% more paint per can — was also being scaled back:

“For most products, this extra grammage that they were giving, originally in 4-liter, 10-liter and 20-liter cans, I believe that they have discontinued it in the 4-liter and 10-liter cans. And there are rumors in the trade that this extra grammage even in the 20-liter cans may get discontinued before the end of the fiscal.”

— Hemant Jalan, Chairman & MD, Indigo Paints | Q2 FY26

Nerolac, meanwhile, was making a deliberate choice — pulling back from the segments where the fight was fiercest:

“We are reducing our exposure on all the ancillaries and parties, which is actually getting into commodity play and people are using it as more of an entry kind of product. Despite reducing our inputs on these products, there was no major impact as far as the network defection is concerned.”

— Pravin Chaudhari, MD, Kansai Nerolac Paints | Q2 FY26

And Berger flagged an asymmetry that defined the competitive dynamic — in the ad spend war, the new entrant was outspending its position:

“The new entrant, their share of voice is much higher compared to their market share. In our case, we used to be similar to our market share, but now it is slightly below that.”

— Abhijit Roy, MD & CEO, Berger Paints | Q2 FY26

Q2 was where the industry moved from acknowledging the disruption to responding to it. Growth was tepid. The mass market had been conceded to a degree. Price corrections had begun. And Birla’s growth curve was bending.

— — —

Q3 FY26: “It will still take 2-3 quarters”

By Q3, the language across the sector had shifted from “disruption” to something more settled — a recognition that the new competitive landscape was now simply the competitive landscape.

“From a point of view of competitive intensity, it is bound to remain now. We have obviously newer competition; we have also amalgamation of two players which is coming in the market. So, I think we will have the competitive environment continue as we go ahead.”

— Amit Syngle, MD & CEO, Asian Paints | Q3 FY26

Akzo’s Rajgopal, still the most forthcoming voice in the room, laid out the pricing gap in full:

“You are talking of a new entrant which has come at prices which are anywhere up to 12% lower than the prices at which we operate, in addition to additional discounts, and then there was the 3-litre which while you say it’s been called off, it’s still there in a few markets. So, you are talking of a band between 12% and 18% lower pricing which is not a small sort of a negate.”

— Rajiv Rajgopal, Joint MD & CEO, Akzo Nobel India | Q3 FY26

And then a striking admission. Akzo had been benchmarking its own pricing and found it wasn’t just Birla undercutting them — they’d been off-market for a while:

“We looked at our pricing across our premium brands and some of our other offerings versus some of the lead players. And we did see that we were usually overpriced between 5% and 9%, which is what had led to volume erosion. We have addressed some of those.”

— Rajiv Rajgopal, Joint MD & CEO, Akzo Nobel India | Q3 FY26

His timeline was sober:

“I would love to believe that the worst is behind us, but I think the reality is that it will still take 2-3 quarters for it to really play out.”

— Rajiv Rajgopal, Joint MD & CEO, Akzo Nobel India | Q3 FY26

Berger’s Roy offered the clearest picture of market share movement across the industry:

“Market leader has also lost market share. It has gone mostly to Birla. If you take Birla also into one of the categories — given that whatever they say, we assume that this is what they have done — then there is a slight gain in market share for them, and losses for everyone else in the system.”

— Abhijit Roy, MD & CEO, Berger Paints | Q3 FY26

Birla’s own numbers quantified the gain. Kapania claimed revenue market share had expanded by over 300 basis points year-on-year:

“Birla Opus accelerated its market share gain with revenue growth of nearly 3x the Indian decorative paints industry growth rate, inclusive of Birla Opus.”

— Himanshu Kapania, MD & Business Head, Birla Opus (Grasim Industries) | Q3 FY26

He also named the asymmetry at the heart of the spending war:

“The player that you spoke about is much in excess of the market share that they hold, and that’s their entry strategy, which they don’t have to worry about their profitability. We do, and we are very conscious about it.”

— Abhijit Roy, MD & CEO, Berger Paints | Q3 FY26

One area where the incumbents remained secure: the premium end had held.

“In premium, I don’t think that the order is really reversed. While people have tried — one of the faster growing newer emerging players, when they got into the project business, they started getting consumer complaints and we started getting some of those businesses back.”

— Rajiv Rajgopal, Joint MD & CEO, Akzo Nobel India | Q3 FY26

Birla had started nudging prices upward — two increases totaling 2-2.5%. But starting from 5% below market, the incumbents were unmoved.

“The price change about Birla Opus is not very significant. 2%, 3%, I don’t think is going to really change much as far as industry is concerned. As such, Opus was lower by 5%.”

— Pravin Chaudhari, MD, Kansai Nerolac Paints | Q3 FY26

Though in some segments, the gap was genuinely narrowing:

“They were at 5% discount in DPL itself. Now, they have taken price increase — two price increases totaling 2 to 2.5% approximately. Some of them are now almost matched in the luxury category.”

— Abhijit Roy, MD & CEO, Berger Paints | Q3 FY26

Birla’s explanation for the increases was matter-of-fact:

“We always want to maintain a particular distance from the market leaders, and we felt the distance was slightly more than what was necessary and we are bridging that gap. That is the objective of price increase and there is no other objective.”

— Himanshu Kapania, MD & Business Head, Birla Opus (Grasim Industries) | Q3 FY26

Indigo’s Jalan, who had spent three quarters arguing the disruption was overstated, delivered his closing assessment:

“Time has borne itself out that we were right. Nobody’s profitability has been impacted. Yes, a new entrant may have taken some market share at a significant cost to itself — that is their business.”

— Hemant Jalan, Chairman & MD, Indigo Paints | Q3 FY26

He also hinted at Indigo’s own next move — using the highest gross margins in the industry as ammunition:

“Why should we not think of going even more aggressively on trade discounts and maybe sacrifice a percentage point from our gross margin — we’ll still be the highest. But if sales can grow disproportionately higher, then our EBITDA margins will not be impacted.”

— Hemant Jalan, Chairman & MD, Indigo Paints | Q3 FY26

Meanwhile, the elevated competitive intensity hadn’t eased:

“Ending Q3, we have not seen any change in the intensity on all the fronts — whether it is influencer, whether it is dealer discounting, or investment in the manpower.”

— Pravin Chaudhari, MD, Kansai Nerolac Paints | Q3 FY26

— — —

— — —

Over three quarters, the conversation in Indian paint boardrooms moved from cautious first reactions to active recalibration to a quieter acknowledgment: this is how the industry works now. The extra grammage is being wound down. Birla’s growth has flattened. But the spending hasn’t come down, and the pricing gaps remain wide in the segments that matter most.

What to watch

• Birla’s price trajectory. Two increases so far, totaling 2-2.5%. They’re still meaningfully below market in most segments. Whether that gap keeps narrowing will shape the next phase.

• Akzo under Jindal ownership. The most visible recalibration underway — price corrections, a revenue-first mandate, market-by-market repricing. The results start showing in Q4.

• Mass and economy margins across FY27. This is the segment Birla’s entry actually reshaped. Whether incumbents can compete here without eroding their margin profile is the open question.

• The dealer homecoming. Three companies have reported dealers returning. The painting season will test whether that’s a structural shift or a seasonal blip.

• The next entrant. Asian Paints flagged the JSW-Nippon amalgamation. Another variable entering an already crowded field.

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

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Quotes in this newsletter were curated by Kashish.

Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes & narratives so there maybe 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.

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On Chatter, we curate some of the most insightful comments from the earnings calls of Indian companies. However, a lot of context still gets left out. So we are experimenting with a new segment under Chatter called ‘Plotlines’.

Most financial analysis focuses on quarterly results and near-term guidance changes. Plotlines takes a different approach. We analyze executive commentary from earnings calls and investor presentations to identify long-term structural shifts that will shape industries over the coming years. Rather than chasing headline news, we look for strategic pivots, evolving competitive dynamics, and fundamental changes in how companies allocate capital.

Each week, we highlight the most significant "plotlines" from recent corporate communications—the unscripted moments and strategic insights that reveal where businesses are heading, not just where they've been. We focus on comments that signal permanent changes in market structure, technology adoption, or business models, and provide specific metrics to track whether these trends are materializing as expected.

What makes these shifts particularly significant is their permanence. These aren't tactical adjustments or pandemic hangovers. They represent irreversible changes in how value is created and captured. The companies recognizing these shifts first are positioning for sustained competitive advantages, while those clinging to legacy models face existential challenges.

This edition of Plotlines is covering 24 distinct plotlines across sectors like housing finance, construction vehicles, entertainment, meat/poultry, seafood, and life insurance

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Housing Finance Companies

HomeFirst: Co-lending becomes a second growth rail

Source

The Signal: HomeFirst is institutionalizing co-lending (not a pilot), explicitly steering it toward ~10% of disbursements while keeping yields steady.

“Our disbursement on the co-lending increased by 87.5% y-o-y and 43.3% q-o-q to ₹78 crores for Q1, taking the co-lending book to ₹434 crores or 3.2% of the total AUM [Asset under management]. Co-lending will continue to be an important part of our strategy… We aim to take co-lending contribution to 10% of disbursements as we scale. With recent rate cuts and an improved long-term rating, we expect the cost of borrowing to improve in Q2… June and July marginal COB [Cost of Borrowing] is sub-8%.” — Nutan Gaba Patwari, CFO

Why It Matters:
Co-lending lets HomeFirst move up-ticket without compressing origination yields: partner balance sheets fund a slice of every loan while HomeFirst keeps the origination engine and customer relationship. With sub-8% marginal COB and AA rating momentum, the spread math works even as disbursement scale rises. This is a structural funding/product architecture choice, not quarterly noise.

Watch For:

• Co-lending share of disbursements sustaining near/above 10%

• AUM from co-lending > 5% with no NIM slippage

• Average ticket size rises while yield holds ~13%+

Aavas: “Realization-based” disbursement recognition = governance moat

Source

The Signal: Aavas has shifted to recognizing disbursements on cash realization (not on sanction), trading short-term optics for long-term fidelity.

“We have undertaken a historic step to move to a realization-based model for disbursement recognition. This strengthens governance, aligns revenue recognition with actual cash flows, and reduces volatility from sanction-to-disbursement timing.” — Sachinder Bhinder, MD & CEO

Why It Matters:
Affordable housing has intrinsic sanction→disbursement lags (title checks, stage payments). By reporting only realized cash, Aavas removes quarter-end bunching and “sanction gaming.” That tightens the link from origination to P&L and should lower earnings volatility. It’s a cultural tell: quality over pace.

Watch For:

• Sanction→disbursement volatility compresses on the new base

• The Street re-bases growth to ~18–20% with spreads intact

• More granular disclosure on realization lags / milestones

Aptus Housing: A branch-light, app-heavy origination flywheel

Source

The Signal: Digital referral + construction-ecosystem + social channels already drive ~21% of originations; management wants to “scale significantly.”

“About 21% of our Q1 FY26 business originated through our referral app, construction-ecosystem app and social media. Our mobile-first lead management platform… is streamlining ops, enhancing compliance and boosting collections productivity.” — P. Balaji, MD

Why It Matters:
In Tier-3/4 markets, owning a referral/app funnel cuts CAC, speeds TAT, and filters risk earlier than DSA-only models. With NIM ~13%+ and ROE ~20%, digitizing the top-of-funnel is the cleanest way to add velocity without opex bloat. This looks like a durable second pipe, not an experiment.

Watch For:

• Digital-led originations ≥25–30% through FY26

• Opex/Assets trending ≤2.6–2.7% despite growth

• Faster approval-to-disbursal TAT vs branch/DSA cohorts

Aadhar Housing: “Urban vs Emerging” barbell + 75% floating on both sides

Source

The Signal: Aadhar has formalized a two-speed GTM (Urban vs Emerging) and built a floating-on-both-sides balance sheet (~75% of assets and borrowings).

“Q1, the direct mix has jumped to 61%… Our ‘Urban and Emerging’ strategy is now live — ~130 branches in top-15 cities classified as Urban; the rest Emerging, with separate focus on ticket size, potential, yield and manpower.”
— Rishi Anand, MD & CEO

“About 75% of both our assets and borrowings are floating in nature… exit spread 5.8%.”
— Rajesh Viswanathan, CFO

Why It Matters:
Direct sourcing + geographic price/mix segmentation builds control over unit economics. Pair that with symmetrical floating-rate transmission and AA+ momentum, and Aadhar is positioned to keep spreads resilient while leaning into the rate-cut cycle to stoke demand.

Watch For:

• Direct channel > 65%; Emerging outgrowing Urban with stable DPD

• Spread stability (~5.7–5.9%) even as MCLR cuts transmit

• Salaried mix inching up with no GNPA drift

Can Fin: Purity play — in-house origination, no co-lending, no construction finance

Source

The Signal: Can Fin is saying no to co-lending and no to construction finance while scaling its own salesforce and contiguous branches.

“DSAs are only sales enablers; the core work will be done by our organization. We’re adding our own sales team… and plan 15 new branches in H1.”
— Suresh Iyer, MD & CEO

“We will not be doing co-lending with banks and we will not be doing construction finance.”
— Management

Why It Matters:
Owning the funnel tightens underwriting loops and keeps asset quality predictable; skipping co-lending/CF removes two common sources of complexity and tail risk. Short-term, growth might be slower; full-cycle, this is a clean, bank-like compounding posture.

Watch For:

• In-house sourced disbursals rising as DSA share falls

• 15+ new branches with stable GNPA / ~15 bps credit cost

• Zero exposure to co-lending/CF sustained

Construction Vehicles Companies

Ajax Engineering: Emission Transition Stress Test

Source

The Signal: CEV-5 emission norms have raised costs and squeezed margins, but Ajax insists long-term demand remains intact.

"The shift from CEV-4 to CEV-5 emission standard effective 1st of July 2025 has had a notable impact… The transition to CEV-5 standards has led to an increase in the material cost, leading to an impact on the gross margin… Our pricing strategy will be very carefully calibrated after taking into account the market response and elasticity."
— Shubhabrata Saha, MD

Why It Matters: India is forcing its construction equipment industry to meet global emission standards overnight. This raises costs by 400 bps, but Ajax’s disciplined response—holding pricing until the market digests the change—could help it preserve share. The long-term story is clear: mechanization in construction is non-negotiable. Emission shocks test financial resilience and execution discipline; Ajax’s ability to absorb near-term pain without discounting sets it apart.

Watch For:

• Price hikes in CEV-5 machines by late Q2 FY26

• Market share in self-loading concrete mixers reverting to historical 30%+

Action Construction Equipment (ACE): Defense & Export as Structural Growth Pillars

Source

The Signal: ACE is embedding defense and exports as recurring 10–15% revenue contributors, moving beyond cyclical construction demand.

"Exports contributed close to around ₹27 crores… This year it appears it can easily go up to 6–7%. Coupled with defense, about 10% contribution can come from both of these put together… and like generally in the past our median term target was about 10%-15% from these two segments put together. So, hopefully we should be hitting a 10% mark this year."
— Sorab Agarwal, Executive Director

Why It Matters: ACE is signaling that construction demand alone cannot drive sustainable growth. By anchoring defense (multi-year orders with Ashok Leyland, Army, BRO) and exports (Europe dealer expansion, Bauma orders), ACE is building annuity-like revenue streams. If executed, this derisks the business from India’s monsoon and capex cycles while raising margins, since exports/defense carry better pricing.

Watch For:

• Defense order execution exceeding ₹250 crores in FY26

• Exports rising above 7% of revenue with EU dealer wins

TIL Limited: From Survival to Strategic Expansion

Source

The Signal: Under Gainwell’s ownership, TIL has rebuilt management, secured capital, and is re-focusing on defense, exports, and IP-led crane categories.

"TIL is the only company in the country which has got an IP registered by Government of India for pick and carry crane… This product is going to be reintroduced in the country probably by the third quarter… Today’s Board has decided that TIL has decided to set up a separate SBU for defense, just to bring sharper focus on our defense business."
— Sunil Kumar Chaturvedi, CMD

Why It Matters: A company once written off is now using fresh capital and a clean slate to re-enter high-value niches—defense, IP-protected cranes, exports. By reintroducing proprietary products and leveraging synergies with Gainwell’s mining IP, TIL is positioning for 10x growth from a tiny base. The defense SBU move is especially telling: management sees structural opportunity in supplying custom cranes to Army/Navy/Air Force, not just commercial buyers.

Watch For:

• Launch of IP-protected pick-and-carry cranes by Q3 FY26

• Defense contributing 20%+ of order book within 2 years

BEML: From Platform Supplier to Systems Integrator

Source

The Signal: BEML is pivoting from vehicle platforms to full defense/rail systems, while doubling down on “sustenance” (aftermarket spares & services) to reach 30% of revenues.

"One of the major shifts in our strategy is from high mobility vehicle platforms to the systems… We are executing mechanical minefield marking equipment as a complete system… Sustenance business contributed around 26% to the top line. This year, sustenance will again add… Ultimate aim is to see sustenance contributes more than 30% to the top line."
— Shantanu Roy, CMD

Why It Matters: BEML is explicitly breaking from its legacy as just a defense vehicle supplier. By moving into complete systems and embedding long-term maintenance contracts (15–35 years), it locks in recurring revenue. This is a structural margin shift: sustenance revenues are higher-margin, less cyclical, and defensible. Coupled with metro/rail expansion (Bangalore, MRVC, high-speed), BEML is evolving into India’s integrated rail-defense systems house.

Watch For:

• Sustenance revenue share crossing 30% within 2–3 years

• Metro/rail annual capacity expanding to 700–800 cars with new Bhopal facility

Entertainment

PVR INOX: From Asset-Heavy Exhibitor to Brand Platform

Source

The Signal: PVR is pivoting from lease-driven expansion to asset-light FOCO and co-investment models, targeting hospitality-style economics where growth is decoupled from capital intensity.

"127 screens have already been signed under FOCO/asset-light… [This is] part of our strategy to sweat the brand now, the way it has been done in hospitality for a long time, but I think it's the first time a cinema company has basically gone on this path."
— Ajay Bijli, MD

Why It Matters: This marks the biggest structural reset in India’s exhibition industry. By shifting to management-fee and shared-capex models, PVR can expand screens without expanding debt, boosting ROCE and reducing leverage. It also positions PVR as a brand platform rather than just a landlord of screens, creating optionality for global expansion and non-linear growth.

Watch For:

• FOCO/asset-light share of new screen additions crossing 50%

• Management fee income scaling beyond INR 50–100 cr annually

PVR INOX: Manufacturing Footfalls with Blockbuster Tuesday

Source

The Signal: PVR has engineered a structural weekday demand lever through INR99 “Blockbuster Tuesday,” pulling in price-sensitive cohorts (students, housewives, seniors) and creating habit-based attendance.

"The idea was to get new customers on a specific day, and it's working brilliantly well. We don’t see the need for extending it beyond one specific day… This day has been marked out for people which are time-rich, cash-poor and still have the ability to walk into a PVR INOX cinema."
— Gautam Dutta, CEO – Revenue & Ops

Why It Matters: This is less a discounting tool and more a demand-generation strategy. By concentrating value on a single day, PVR avoids margin erosion while structurally expanding weekday audiences. If sticky, this program can smooth attendance volatility and create new revenue from previously underpenetrated demographics.
Watch For:

• Weekday occupancies stabilizing >25%

• Repeat-frequency data after 6 months of the program

PVR INOX: OTT Fatigue Brings Viewers Back to Cinemas

Source

The Signal: Management sees a clear consumer swing away from streaming toward cinemas, citing “OTT fatigue,” demand for unadulterated experiences, and a shift from star power to storytelling.

"There is an OTT fatigue… Consumers are saying the best and the only way perhaps to enjoy an unadulterated movie experience is at the cinema… One big move is this whole shift from stars to stories."
— Gautam Dutta, CEO – Revenue & Ops

Why It Matters: This is a reversal of the pandemic-era narrative where OTT was seen as existential to theaters. If durable, it strengthens the economics of theatrical-first releases, stabilizes windows, and makes box office less dependent on mega-blockbusters. Pan-India storytelling further raises the baseline for distributed successes across languages.

Watch For:

• Growth in films crossing INR100 cr per quarter

• OTT platforms paying less for early-release rights

PVR INOX: Cinemas as Multipurpose Entertainment Hubs

Source

The Signal: PVR aims to repurpose its theaters beyond movies—into live sports, concerts, conferences, and rereleases—turning cinemas into multi-entertainment infrastructure.

"Our long-term view is… [to] use our existing cinema infrastructure for multipurpose entertainment out of home, including movies, live events, IPL matches, comedy shows, conferences, rereleases."
— Gaurav Sharma, CFO

Why It Matters: This evolution smooths volatility and deepens monetization of fixed assets. By layering alternative content on top of film schedules, PVR can attract new cohorts, capture advertising opportunities, and build community stickiness. It’s a structural pivot from being a “cinema exhibitor” to an “experience orchestrator.”
Watch For:

• Non-film revenues exceeding 10% of total

• Regular partnerships for live sports/event screenings

Meat Products / Poultry Companies

HMA: From Regional Exporter to Global Meat Platform

Source

The Signal: HMA has entered Cuba, marking the first-ever Indian meat export approval into Latin America, expanding beyond its historic strongholds in GCC, Southeast Asia, and Africa.

"This was the first initiative which was not happened before for the Indian product and we hope, slowly, we will build a good clientele from Latin America side also. This was the first step entering into the American continentals."
— Gulzeb Ahmed, CFO

Why It Matters: This isn’t just a new geography; it’s India’s entry into the Americas meat trade. Latin America is both competitor and customer—establishing a beachhead here could structurally diversify demand away from volatile Middle East/SE Asia markets and give HMA global positioning.

Watch For:

• Further approvals in Brazil/Chile or other Latin markets

• Americas share in exports crossing 5–10% within 3 years

• Brand partnerships or local distribution tie-ups

Venky’s: From Poultry Supplier to Consumer Brand

Source

The Signal: Venky’s is shifting from commodity poultry to branded processed food (ready-to-eat/cook), leaning on e-commerce and QSR channels, with 25–30% growth expected.

"Post-COVID, a lot of consumers are looking for the e-commerce chain… We concentrated our efforts for marketing our products through e-commerce… We expect the increase in our sales for this sector to more than 25% to 30% in next year… currently 10% of poultry revenue."
— P.G. Pedgaonkar

Why It Matters: This pivot de-risks margins from maize/soya cycles and recasts Venky’s as a consumer food brand. Success would structurally reposition the company alongside FMCG peers rather than commodity producers.

Watch For:

• Processed food share rising above 20% of poultry revenue

• Tie-ups with leading e-commerce/QSR chains

• Marketing/brand spends ramping up in disclosures

Venky’s: Building a Biotech Moat with SPF Eggs

Source

The Signal: Venky’s is investing ₹70 crore in expanding Specific Pathogen Free (SPF) egg capacity, critical inputs for vaccine manufacturing, with exports already doubling.

"Export business has doubled from ₹7 crore last year to ₹20 crore. Expansion of ₹70 crore is underway… our product is mainly to be supplied to the vaccine manufacturer for human as well as the poultry."
— J.K. Handa, CFO

Why It Matters: This is Venky’s most strategic pivot—moving into pharma-grade biotech inputs with high entry barriers. If scaled, SPF eggs could transform Venky’s from cyclical poultry into a critical node in vaccine supply chains.

Watch For:

• SPF exports crossing ₹50 crore+ in 3 years

• Partnerships with vaccine majors like Serum/Bharat Biotech

• Utilization of SPF facilities rising above 75%

Venky’s: Chasing Northern India’s Protein Boom

Source

The Signal: Venky’s is rebalancing geographically, with 65–70% of poultry revenues now from Northern India, especially UP, Bihar, and Punjab.

"65% to 70% turnover comes from Northern India and balance 30% to 35% from Western India… UP is a consumption center, Haryana a production center. We are deliberately spreading across states to balance margins."
— J.K. Handa, CFO

Why It Matters: India’s protein consumption is shifting northward. By embedding early in UP/Bihar, Venky’s aligns with long-term demographic demand. This diversification reduces cyclicality tied to Maharashtra-centric production.

Watch For:

• North India share of poultry revenues rising beyond 75%

• New facilities in Bihar/UP

• Stabilized realizations despite seasonal disruptions

Seafood Companies

Kings Infra: From Exporter to Fully Integrated Protein Company

Source

The Signal: Kings Infra is moving beyond shrimp farming and exports to build India’s first fully integrated aquaculture-to-retail chain, spanning probiotics, farming, processing, and branded retail under Frigo and Bento.

“We will have a fully integrated chain of activities—the entire value chain from farm, probiotics, processing, to retail marketing and distribution… this will be one of the first fully integrated seafood companies in the country.”
— Shaji Baby John, CMD

Why It Matters: This is a structural shift from commodity export margins to branded food economics. By controlling the entire chain, Kings can deliver traceability and sustainability—features global buyers now demand—while capturing downstream retail margins that are higher and less volatile than exports. It positions Kings closer to global integrated protein players like CP Foods and Tyson, a first for Indian seafood.

Watch For:

• Expansion of Frigo/Bento retail footprint beyond Kerala and Bengaluru

• Retail margins sustaining above 20%

• Probiotics and inputs adoption across leased farm network

Kings Infra: From Contract Farming to Lease Farming

Source

The Signal: Kings Infra has abandoned contract farming, shifting to long-term lease farming to gain full control over ponds, enforce sustainability protocols, and secure supply chain traceability.

“Earlier, we wanted to scale by contract farming, but that model failed… [Now] we take farms on lease, put our own team, and give farmers fixed rent plus 2–5% of profits. This way, we have much better control and traceability.”
— Shaji Baby John, CMD

Why It Matters: Traceability and biosecurity are emerging as non-negotiables for export buyers. The lease model locks in control without heavy land CapEx, giving Kings an edge in certification-led exports. While more labor-intensive, it sets them apart from peers who remain dependent on farmer goodwill and spot markets.

Watch For:

• Share of leased farms crossing 70% of total capacity

• Certifications tied to leased-farm traceability

• Crop cycles per pond increasing from 2.5 to 4–5 annually

Apex Frozen Foods: Hedging Away from U.S. Dependence

Source

The Signal: Apex is structurally reducing reliance on the U.S., with non-U.S. revenue rising to 45% (from 30% two years ago), aided by long-awaited EU approval for its second facility.

“We have been strategically working to diversify… non-U.S. business now accounts for 45% of revenue, up from 30% in the same quarter two years ago. Our second facility has finally received EU listing approval.”
— Chowdary Karuturi, MD

Why It Matters: With U.S. tariffs destabilizing exports, Apex is repositioning itself as a diversified supplier, with Europe emerging as the growth anchor. The EU facility approval also opens the RTE category, further insulating Apex from U.S. policy swings. Over time, this shift could reset geographic risk for the company and re-rate its valuation multiple.

Watch For:

• Non-U.S. sales crossing 50% of revenue mix

• RTE contribution rising beyond 20%

• AMR compliance readiness ahead of EU’s 2026 norms

Apex Frozen Foods: RTE Shrimp as the Growth Engine

Source

The Signal: Apex is scaling its ready-to-eat (RTE) shrimp products, now 15% of revenue, leveraging EU approval to target high-margin demand pools.

“This approval paves the way for new opportunities… we can now sell our ready-to-eat products into the EU. RTE products stood at 15% of Q1 FY26 revenue.”
— Chowdary Karuturi, MD

Why It Matters: Shrimp as a commodity has volatile pricing, but RTE products align with global trends of convenience and premiumization. By scaling RTE, Apex can structurally expand margins and reposition itself from bulk processor to branded, value-added food supplier. This could be its moat against Ecuador and Indonesia, who dominate low-value segments.

Watch For:

• RTE sales share rising above 20–25% of revenues

• EU-specific contracts for RTE supply

• Gross margins sustaining above 30%

Life Insurance Companies

LIC: From Agent Monopoly to Multi-Channel Insurer

Source

The Signal: LIC’s bancassurance and alternate channels doubled YoY, now 7% of individual premiums vs. 3.7% last year.

“Bancassurance and alternate channels… account for nearly 7% of individual new business premium, up from 3.7% last year.”
— R. Doraiswamy, CEO

Why It Matters: LIC is slowly breaking its dependence on agents. Digital, banca, and web aggregators will bring stickier, urban customers, narrowing the efficiency gap with private peers.

Watch For: Banca/alternate share crossing 10% by FY27; expense ratio trending below 10%.

LIC: Women-Led Rural Distribution via Bima Sakhi

Source

The Signal: LIC has mobilized nearly 2 lakh women as “Bima Sakhis,” embedding them across Gram Panchayats to sell insurance and expand rural penetration.

“As of June 30th, 2025, a total of 1.99 lakh women have been designated as Bima Sakhis, successfully selling 3.26 lakh policies and generating ₹429 crore of new business premium. Our objective is to appoint one Bima Sakhi in every Gram Panchayat.”
— Management

Why It Matters: This program transforms distribution by tapping women-led community networks, especially in rural India. It aligns with the national goal of “Insurance for All by 2047,” while also providing LIC a grassroots moat private players can’t easily replicate. Beyond sales, it strengthens financial literacy and trust at the village level — crucial for persistency.

Watch For: Coverage of 100% Gram Panchayats in major states; premium contribution from Bima Sakhis crossing 5% of LIC’s rural new business.

HDFC Life: Tier 2/3 Expansion as Core Growth Driver

Source

The Signal: HDFC Life is aggressively expanding its physical presence in smaller towns, with 117 new branches opened in FY25 and Project Inspire aimed at deepening penetration beyond metros.

“We added 117 branches last year, largely in smaller towns, and Project Inspire is designed to build capabilities to serve Tier 2/3 markets.”
— Management

Why It Matters: This reflects a structural bet that India’s insurance penetration story will be driven by Bharat, not just metros. Tier 2/3 markets provide long runway for growth, higher ticket sizes as incomes rise, and less competition from digital-first players. By embedding early in these markets, HDFC Life is positioning itself to capture future middle-class savings and protection demand.

Watch For: Annual branch additions >100 in smaller towns; rising share of non-metro APE contribution; persistency rates improving in Tier 2/3 cohorts.

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

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Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes so there maybe 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.

On Chatter, we curate some of the most insightful comments from the earnings calls of Indian companies. However, a lot of context still gets left out. So we are experimenting with a new segment under Chatter called ‘Plotlines’.

Most financial analysis focuses on quarterly results and near-term guidance changes. Plotlines takes a different approach. We analyze executive commentary from earnings calls and investor presentations to identify long-term structural shifts that will shape industries over the coming years. Rather than chasing headline news, we look for strategic pivots, evolving competitive dynamics, and fundamental changes in how companies allocate capital.

Each week, we highlight the most significant "plotlines" from recent corporate communications—the unscripted moments and strategic insights that reveal where businesses are heading, not just where they've been. We focus on comments that signal permanent changes in market structure, technology adoption, or business models, and provide specific metrics to track whether these trends are materializing as expected.

The earnings calls from India's leading companies this quarter revealed something more profound than quarterly numbers. They exposed fundamental business model transformations happening beneath the surface. From QSR chains abandoning dine-in heritage to pharma giants pivoting entire R&D strategies, management teams are openly acknowledging that their foundational assumptions about markets, customers, and competition no longer hold.

What makes these shifts particularly significant is their permanence. These aren't tactical adjustments or pandemic hangovers. They represent irreversible changes in how value is created and captured. The companies recognizing these shifts first are positioning for sustained competitive advantages, while those clinging to legacy models face existential challenges.

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The Great Reallocation

India's business landscape is witnessing massive capital, operational, and strategic reallocation as companies abandon what worked yesterday for what will work tomorrow.

Devyani International: The Dine-In Death Spiral

The Signal: India's largest QSR franchisee has slashed KFC store formats by over 50% and completely repositioned Pizza Hut from dine-in to delivery-focused operations.

Key Quote: "We have kind of over a period of time, moved from a dine-in-centric brand to a delivery brand. We are also moving in that direction. We need to continue to optimize the formats for the dine-in channel. And as you know, over the last few years, we have reduced the store format sizes. So, KFC format used to be 3,000 square feet. We are down to about 1,400 to kind of catch up with the delivery trends and the lower dine-in. Similarly, for Pizza Hut also, we have moved away from a dine-in-first brand to a delivery focused format. And this needs to be continuously optimized. At the same time, we also need to be cognizant of the fact that there is a category of consumers who prefer a good dine-in experience." — Manish Dawar, CFO

Why It Matters: Devyani is admitting the Western QSR model doesn't work in India. Traffic jams, tiny apartments, and food delivery apps have killed the old formula. The company had to cut store sizes by more than half just to survive. Smaller stores cost less but need way more customers per square foot to make money. This puts Devyani ahead of competitors still building huge stores that nobody visits anymore. The move should give them a real cost advantage when expanding to smaller cities where delivery makes even more sense.

Watch For:

• Store sizes dropping below 1,400 sq ft for new locations

• Dine-in sales falling under 40% of total sales within 12 months

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/19ad61f8-1489-4693-b3ce-b9fb4696fe3f.pdf

Devyani International: Tier-2 City Gold Rush

The Signal: Expanding to 280-290 cities while aggregators serve 800+, revealing massive white space opportunity in smaller cities.

Key Quote: "Coming to your point on the brands being urban-centric, if you look at the overall QSR market, Jubilant is there in 400-plus cities. We are also in about 280-290 cities. If you look at the penetration of the food aggregators, they are currently in more than 800 cities. So, therefore, we are straddling much beyond what are historically understood as urban centers. The growth opportunity lies in the Tier-2 segment, because the awareness and the aspiration is there; but the income levels need to go up further. We have started to have a presence beyond the urban centers. That's how we managed to cover almost about close to 280 to 290 cities." — Manish Dawar, CFO

Why It Matters: Devyani has quietly built presence in 300 cities while food delivery apps cover 800. That's 500 cities with delivery infrastructure but no major QSR chains. People in these places know KFC and Pizza Hut from TV and want them, but they need different prices and products. Success here could unlock thousands of new stores before competitors figure out the smaller city playbook. The challenge is that tier-2 expansion requires fundamental business model adaptation for different income profiles, taste preferences, and consumption occasions.

Watch For:

• Store count in sub-1 million population cities growing 25%+ annually

• Average transaction values in tier-2 stores reaching 80% of metro levels within 18 months

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/19ad61f8-1489-4693-b3ce-b9fb4696fe3f.pdf

Bajaj Finance: The MSME Market Reality Check

The Signal: The business loan market has contracted from ₹11,000 crores to ₹9,500-10,000 crores after unsustainable 4x expansion from pre-COVID levels.

Key Quote: "We principally track 17 key industries in MSME, out of which 13 that we are seeing are exhibiting signs of slowdown, and 3, actually. So in a way, it's all 17. But so from a longer-term standpoint, it will give lessons to everybody. Some lessons we'll also learn in the process. But I must make a point that the market is not that large, especially for business loans to grow from pre-COVID, market used to be INR 2.5 crores - 3,000 crores, has grown to INR 11,000 crores. Right now, it's at INR 9.5 crores – INR 1,000 crores. So it's contracting." — Rajeev Jain, Managing Director

Why It Matters: The business loan market grew 4x in a few years then crashed 15%. That's not normal growth, that's a bubble. With 16 out of 17 industries they track in trouble, small businesses are broke and banks won't lend to them. This forces everyone to completely rethink who gets loans and at what price. The companies that stayed conservative during the boom now have huge advantages. The structural adjustment forces all players to fundamentally reassess risk pricing, underwriting standards, and target segments.

Watch For:

• Business loan interest rates jumping 100+ basis points across the industry

• Monthly loan disbursements staying under ₹7,000 crores for multiple quarters

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/6594e53b-4085-487c-bf57-005b291a8237.pdf

UltraTech: Infrastructure Mega-Projects Drive Cement Demand

The Signal: Massive infrastructure projects like Vadhavan port will drive sustained cement demand through direct consumption and secondary economic development effects.

Key Quote: "And once the infrastructure growth comes, the big incentive is all around the development of newer town cities, social infrastructure, commercial spaces, etcetera, which will get developed. Let me delve into one project example, Vadhavan port. It's 300 million ton cargo handling capacity. Do you know what is the peak cargo handling by JNPT, it maybe less than 100 million tons. Somewhere around that. It's a huge project. Whilst it consumes cement, but the ancillary industry growth that takes place, the employment opportunities, the increase in housing income that takes place opens up the floodgates of growth for companies like us. And there are going to be several such projects in the country. I think we will be busy producing and selling cement." — Atul Daga, CFO

Why It Matters: India is building infrastructure at a scale it's never attempted before. One port project alone will be 3x bigger than the country's current largest port. These projects don't just use cement during construction. They create entire new economic zones with factories, offices, and housing that need cement for years. UltraTech sees this creating permanent demand rather than just a construction boom. The multiplier effects from employment, housing, and industrial development could sustain cement demand for decades.

Watch For:

• Number of projects over ₹10,000 crores announced annually

• Secondary industrial development around major infrastructure hubs

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/562742ca-eb96-4dfb-83eb-ea414a04f1bf.pdf

Platform Wars Intensify

Technology adoption has crossed the chasm from experimental to operational core, reshaping entire industries around new competitive moats.

Tata Motors: The Confidence Revolution

The Signal: Lifetime battery warranties triggered 55% booking surge for Nexon.ev, fundamentally shifting EV purchase psychology from anxiety-driven to confidence-based decision making.

Key Quote: "We also saw traction for the rest of our portfolios in EV particularly towards the end of the quarter especially for Nexon.ev. We were really surprised that once we offered the lifetime warranty for both Nexon and Curvv.ev that there was a sharp increase in retail as well as bookings in July 2025. Nexon.ev particularly saw strong consumer interest especially after the announcement of lifetime warranty and booking went up in July by 55% over quarter one. And Harrier EV we have had a blockbuster launch. I talked about this. We achieved the highest ever retail also in July 25, it was 40% more than quarter one levels." — Shailesh Chandra, MD

Why It Matters: Tata figured out the real problem with EVs isn't range anxiety, it's battery fear. Nobody wants to buy a ₹15 lakh car that might need a ₹5 lakh battery replacement in five years. The lifetime warranty eliminates that fear completely. Now buying an EV feels safer than buying a petrol car. Other companies can't match this unless they're 100% confident their batteries won't fail, which most aren't. This forces Tata to achieve battery technology confidence levels that competitors cannot match while managing warranty economics.

Watch For:

• Tata's EV market share hitting 50%+ by Q2 FY26

• Competitors trying to copy the lifetime warranty model

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/2a91a004-4cbd-440e-93d3-2ca8967ff37b.pdf

SBI Cards: Beyond Plastic

The Signal: Credit cards are transforming from physical payment instruments into digital financial tools integrated within mobile ecosystems, with UPI-on-Credit usage growing 20% quarter-over-quarter.

Key Quote: "India's payments ecosystem is undergoing a transformation—powered by the rapid scaling of digital infrastructure, real-time rails like UPI, and now RuPay credit card on UPI. The convergence of credit and digital is creating a new model: one where credit cards are no longer just plastic instruments, but digital financial tools integrated into mobile apps. Credit cards today are serving more nuanced roles—powering high-ticket, EMI-led, and reward-driven spending for an increasingly aspirational and digitally savvy customers." — Salila Pande, CEO

Why It Matters: Credit cards are becoming invisible. People don't want to carry plastic anymore, they want credit built into their payment apps. The companies that figure out how to embed credit into everyday mobile payments win. Traditional card networks become less relevant when everything runs through QR codes. Customer acquisition shifts from physical card delivery to digital onboarding, while data from embedded transactions provides richer behavioral insights than standalone card usage ever could. But execution speed versus fintech disruptors remains critical.

Watch For:

• Digital-only card launches

• Partnerships with major mobile payment platforms

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/dea9e020-f677-4e54-b6c3-137b73e50981.pdf

SBI Cards: Account Aggregator Revolution

The Signal: Consent-based financial data access through Account Aggregator networks is becoming the primary method for credit assessment, replacing traditional credit scores.

Key Quote: "For example, we are now focusing on at least getting an account aggregator access from most of our customers. Now this is not going to help us today, it's going to help us even in future because if we get consent from the customer, we will be able to access the customer account even two years, three years down the line and help in portfolio management. So, some of those long-term thinking processes are also being put into acquisition today. Account aggregator is a good method of assessment because we are able to see the cash flows over a period of time, and that gives us greater confidence in underwriting. So, we started leveraging it two years back, and we have increased the proportion of sourcing going through the account aggregated channels." — Girish Budhiraja, Chief Sales Officer & Nandini Malhotra, Chief Credit Officer

Why It Matters: Credit scores are becoming obsolete. Instead of guessing if someone can pay based on their past, banks can see their actual cash flow in real time. This is way better for making loan decisions but only works if customers agree to share their bank data. SBI started doing this two years ago while competitors are still using old credit bureau data, giving them a huge advantage in picking good customers. The consent-based refresh capability means continuous portfolio monitoring throughout the relationship lifecycle.

Watch For:

• Percentage of new customers evaluated using Account Aggregator data

• Default rate differences between AA-sourced vs traditional customers

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/dea9e020-f677-4e54-b6c3-137b73e50981.pdf

SBI Cards: Portfolio Stress Recognition

The Signal: Customer over-leverage is becoming the dominant risk factor, requiring fundamental changes in acquisition and portfolio management strategies.

Key Quote: "For the full year, I would not like to give guidance at this point because there are certain external factors as well, especially the leverage that we are seeing. Although in terms of the early delinquencies and in terms of the new onboarding that we are doing, we are being cautious. But we are also seeing that there are customers who have been with us for many, many years, who also get stressed. And that happens due to some lifetime events happening, which we are witnessing, and we have that in our portfolio." — Salila Pande, CEO

Why It Matters: Even customers who paid perfectly for years are starting to struggle. That's not normal credit risk, that's systemic overleveraging. People have too many loans and credit cards and can't handle them all. This means traditional ways of picking customers don't work anymore. Everyone looks risky when the whole system has too much debt. This drives strategic shift toward quality over quantity in new acquisitions and increased focus on existing customer portfolio optimization.

Watch For:

• Industry credit growth slowing down significantly

• Regulatory interventions around consumer leverage ratios

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/dea9e020-f677-4e54-b6c3-137b73e50981.pdf

Ather: India's EV Premiumization Wave

The Signal: The Indian two-wheeler market is undergoing permanent premiumization as rising incomes drive upgrade purchases rather than first-time acquisitions.

Key Quote: "We started Ather about 12 years back, and there are two big bets that we have taken in this business that have come to really represent Ather over the last decade. The first bet has been on the premiumization of our industry and the bet on the upgrading Indian buyer. We believe that the two-wheeler industry, particularly the scooter industry, is going through a fantastic phase of premiumization and will continue to do so as per capita incomes go up. Majority of households already have a scooter or a bike and are buying one increasingly that is of an upgrade to them and their families." — Tarun Mehta, CEO

Why It Matters: India has crossed a critical point where most people already own a scooter. Now they're buying better ones instead of just any scooter. This is a massive shift from a first-purchase market to an upgrade market. Premium brands like Ather should make way more money as people pay up for features and quality instead of just buying the cheapest option. This mirrors mature market evolution patterns and indicates India's consumer base is fundamentally maturing.

Watch For:

• Industry average selling prices growing faster than inflation for 8+ quarters

• Premium segment (>₹100k) market share hitting 25%+ by FY27

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/1192fed1-60d2-45ba-bd22-b4d1d2e446f5.pdf

Ather: Supply Chain Nationalism

The Signal: Geopolitical tensions are forcing EV manufacturers to fundamentally restructure supply chains around resilience rather than efficiency.

Key Quote: "I think this is a little bit of a high-level response. I believe we are now in an era where the number one priority for the supply chain has got to be derisking and hedging. We want to now ensure that our supply chains have alternates at a country level, alternates definitely at a supplier level. And I'm saying Tier 1, Tier 2 of suppliers also. So, we focus on that in a big way even in the past. In our prospectus, we had called out how expanding the number of suppliers has been a very big strategic imperative at Ather in the past, with the vast majority of our bill of material being dual or even triple sourced." — Tarun Mehta, CEO

Why It Matters: China's rare earth export restrictions just ended the era of global supply chains optimized purely for cost. Now companies have to build multiple backup suppliers in different countries, which costs more but prevents catastrophic shutdowns. The companies that build robust supply chains now will have huge advantages when the next trade war hits. This represents the end of "efficiency-first" globalization and beginning of "resilience-first" supply chain design.

Watch For:

• Ather's supplier count growing 25%+ annually

• India-based component sourcing rising to 70%+ of total materials

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/1192fed1-60d2-45ba-bd22-b4d1d2e446f5.pdf

Ather: EV Mainstream Adoption Inflection

The Signal: Indian EV adoption is transitioning from early adopters to mainstream customers, requiring fundamental shifts in marketing strategy and value proposition communication.

Key Quote: "And for these customers, I believe the key focus has to now move on to really giving them assurance, really giving them comfort that electric is a very good, safe choice. I believe that now that EV penetration is starting to get in the 20% range in scooters, we've gone beyond early adopters and even maybe early majority, sorry innovations and early adopters. I think we are now getting into the early majority crowd, which is the 20% to 50%, 20% to 60% kind of market opportunity." — Tarun Mehta, CEO

Why It Matters: EVs have hit the 20% tipping point where they go from niche to mainstream. The next buyers aren't tech enthusiasts who want the latest gadget, they're regular people who want something reliable. This completely changes how you market and sell EVs. Instead of talking about innovation, you need to prove the thing actually works and won't break down. Companies that adapt messaging and service infrastructure to address mainstream concerns will capture the massive 20-60% market segment.

Watch For:

• EV market share accelerating above linear growth, hitting 35%+ by FY27

• Marketing spend shifting from performance features to reliability messaging

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/1192fed1-60d2-45ba-bd22-b4d1d2e446f5.pdf

The Wellness Revolution

Consumer consciousness around health, natural products, and wellness is creating permanent shifts in product positioning and portfolio strategies.

Radico Khaitan: The Vodka Opportunity

The Signal: India's vodka consumption sits at 3.5-4% of spirits market versus 28% globally, with Radico controlling 60% market share as the category expands.

Key Quote: "And what is happening, like even if you see, we control 60% of the vodka market in the country. And globally, vodka is 28%. Whereas in India, it will be only about 3.5% to 4%. So, we are seeing a gradual shift happening to vodka, where Radico is in the biggest advantage space. And vodka always gives you a higher margin than any other product. So, I think if God willing everything goes well, and we do not experience any major [raw material] shortages which happened last to last year, we feel that 125 to 150 basis points is possible." — Abhishek Khaitan, Managing Director

Why It Matters: India drinks way less vodka than the rest of the world, creating massive room for growth. Vodka makes up 28% of global spirits but only 4% in India. As Indian consumers get richer and more westernized, they'll likely drink more vodka. Radico owns 60% of the tiny Indian vodka market and makes better margins on vodka than other spirits. If vodka grows to even half the global average, Radico's business transforms completely. Unlike whisky, which faces cultural and regional preferences, vodka's versatility appeals to younger, urban demographics.

Watch For:

• Vodka's share of Indian spirits hitting 6-7% within two years

• Magic Moments brand crossing 10 million cases annually

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/449c88b5-7f8a-44ac-9055-344898a6426c.pdf

Radico Khaitan: UK-India Trade Deal Game Changer

The Signal: Trade liberalization will fundamentally reshape India's premium whisky economics, creating sustainable cost advantages for importers.

Key Quote: "Before we begin discussions on Q1 FY26 results, I would like to provide a brief update on the UK-India FTA. The negotiations between the two governments have been finalized and a Comprehensive Economic and Trade Agreement has been signed. In line with expectations, duty on bulk scotch has been reduced from 150% to 75%. We have estimated our Scotch requirements valued at over Rs. 250 crores in FY26 and we expect significant cost advantages from this development. Thereafter, the duty will be reduced in nine equal installments to settle at 40% in the 10th year. In three years, we expect the import of scotch of Radico to cross Rs. 400 crores." — Abhishek Khaitan, Managing Director

Why It Matters: Import duties on scotch whisky just got cut in half and will keep dropping for 10 years. This makes imported spirits way cheaper and changes the whole premium alcohol market in India. Radico can now price their scotch-based products much more competitively against domestic brands. They're planning to import ₹400 crores of scotch within three years, turning them into a major spirits importer. This creates permanent competitive moat that will reshape pricing dynamics across the premium whisky segment.

Watch For:

• Gross margins on scotch brands expanding 300-400 basis points within two years

• Royal Ranthambore hitting 2+ million cases annually with better pricing

Radico Khaitan: Margin Expansion Strategy

The Signal: Premium brand portfolio is achieving escape velocity, driving structural margin expansion that exceeds industry benchmarks.

Key Quote: "If you see, last year our margins were 13.8%, for the quarter and now, it is 15.3%. So, I think for the next three years, we expect, unless something very drastically happens on the commodity side, a margin expansion of 125 to 150 basis points year-on-year for the next three years. So, we come to the late teens. Yes, that is correct. Because our premium brands are doing exceptionally well. Plus, you have seen with the volume growth and with everything, the operating leverage comes into play because you do not need to increase so much of manpower, other fixed costs." — Abhishek Khaitan, Managing Director

Why It Matters: Radico just upgraded their margin expansion target and expects to hit "late teens" EBITDA margins within three years. That would make them one of the most profitable consumer goods companies in India. This isn't happening by accident. Their premium brands are growing fast, the vodka business has better margins, and the scotch duty cuts improve profitability on imported blends. Multiple vectors are converging simultaneously to create compounding benefits.

Watch For:

• EBITDA margins hitting 17%+ within two years

• Premium products exceeding 20% of total IMFL revenue

Dabur: The Herbal Acceleration

The Signal: Herbal segment growth outpaced non-herbal by 440 basis points, reinforcing permanent consumer preference shift toward natural products.

Key Quote: "The quarter witnessed sequential improvement in domestic and international markets, despite challenges posed by unseasonal rainfall and geopolitical headwinds. The Toothpaste portfolio delivered a growth of 7.3% led by a strong growth in the Red franchise. The Herbal segment growth accelerated and outpaced the non-herbal segment by 440 bps, reinforcing the growing consumer preference for Ayurvedic, Herbal, and Natural Oral Care offerings. In line with the above trend, we outperformed the Toothpaste category growth, leading to sustained market share gains." — Mohit Malhotra, CEO

Why It Matters: People are permanently switching to herbal toothpaste and rejecting chemical ingredients. The herbal segment is growing 4.4% faster than regular toothpaste, and this gap is widening. Dabur has a 150-year head start in herbal products that Colgate and other multinationals can't easily copy. This trend goes way beyond toothpaste to skincare, healthcare, and other categories where natural positioning creates real pricing power. The shift transcends oral care with implications across Dabur's entire portfolio.

Watch For:

• Herbal segment maintaining 300+ basis points growth premium for four straight quarters

• Dabur's herbal toothpaste business hitting ₹200+ crores within 18 months

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/2db33836-8d86-4a06-8eb9-da569e865fe7.pdf

Dabur: Rural Renaissance

The Signal: Rural markets are experiencing a structural transformation in purchasing power and consumption patterns, permanently altering India's demand geography.

Key Quote: "The quarter witnessed sequential improvement in domestic and international markets, despite challenges posed by unseasonal rainfall and geopolitical headwinds. In India, rural markets continue to outperform urban for the fifth consecutive quarter, sustaining its strong growth momentum. Even the urban markets witnessed sequential recovery vis-a-vis last quarter." — Mohit Malhotra, CEO

Why It Matters: Rural India is outgrowing cities for five straight quarters, flipping the traditional wisdom that urban markets drive FMCG growth. This suggests rural incomes are rising faster than expected and consumption patterns are changing permanently. Dabur's rural distribution network and natural product positioning give them huge advantages in these markets where people prefer traditional remedies and have different price points. The sustained momentum despite macroeconomic challenges suggests deep-rooted drivers beyond temporary fiscal stimulus.

Watch For:

• Rural growth beating urban for eight consecutive quarters by Q2 FY27

• Rural contribution to total Dabur revenue rising to 45%+ within three years

Dabur: Wellness M&A Transformation

The Signal: Dabur is fundamentally repositioning from a traditional FMCG company to a premium wellness ecosystem through strategic acquisitions.

Key Quote: "All the same, I think whatever gaps in the portfolio are that we want to plug through M&A, and we are continuously scouting for targets for M&A. So, we are basically looking at wellness. Wellness foods, wellness health, that kind of M&A is what we are intending to look at. But M&A is very chance based, depending upon what is available. But definitely premium, which is margin accretive to our base business, so that it improves our margins going forward. We understand for a couple of years there may be investment, but there should be a path to profitability." — Mohit Malhotra, CEO

Why It Matters: Dabur wants to buy wellness and health food companies to transform from an Ayurvedic heritage brand into a modern wellness platform. They're specifically targeting "margin accretive" premium businesses that can boost profitability. This could completely change their business mix over 3-5 years, moving them upmarket into higher-margin wellness categories. The strategy acknowledges that organic growth alone may be insufficient to capture the full wellness opportunity.

Watch For:

• At least one major wellness acquisition (₹200+ crores) within 12 months

• Premium wellness products contributing 15%+ of revenue within 36 months

HUL: Beauty & Wellbeing Ecosystem Strategy

The Signal: HUL is transforming from a traditional personal care company into a comprehensive beauty and wellness ecosystem through acquisitions and digital-native brand development.

Key Quote: "With the completion of Minimalist acquisition and acceleration in performance of OZiva, we have now further added an annualized Rs. 1,000 crore portfolio in high growth demand spaces. This Rs. 3,000 crore portfolio, which is digital first, organized trade indexed is growing at more than 25%. OZiva, as you mentioned, is almost three times the business now what we had a year ago. The innovations that we have done in the business has driven the growth that we have seen." — Ritesh Tiwari, CFO

Why It Matters: HUL has built a ₹3,000 crore digital-first beauty and wellness business growing at 25%+ annually. OZiva alone has tripled in size in one year. This isn't about traditional FMCG anymore, it's about becoming a wellness lifestyle platform. The business model is completely different, optimized for digital marketing, premium pricing, and direct consumer engagement rather than mass market distribution. The ecosystem approach combines traditional brands with acquisitions and global imports for comprehensive coverage.

Watch For:

• Beauty & Wellbeing contributing 25%+ of total HUL revenue within three years

• At least two more strategic wellness acquisitions by FY27

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/a09d1d2b-2f6b-4b73-a607-6f61164694af.pdf

Innovation Waves

R&D strategies and product development are being fundamentally restructured around new therapeutic opportunities and market realities.

Dr. Reddy's: India Strategy Pivot

The Signal: Fundamental shift from branded generics to innovative product licensing as primary growth engine in India.

Key Quote: "But what can help us sustain double digit, or even outperforming the market? And if you could also give us some data points around what our field force is? So, Shyam, we decided, and I know you are fully aware of it and appreciate it, that we will not focus on branded generics. At the time, we believe that the growth in India will come primarily by introducing innovative products which are better than the standard of care that is used today in the market. And the growth that you see now, it is a part of that. So, we are launching innovative products, in addition to the branded generics." — Erez Israeli, CEO

Why It Matters: Dr. Reddy's is abandoning the low-margin generic drug game in India and betting everything on licensing innovative drugs from global pharma companies. Instead of competing on price, they want to offer genuinely better treatments that doctors and patients will pay premiums for. This completely changes their business model from manufacturing scale to product curation and clinical superiority. The strategy assumes Indian physicians and patients will pay premiums for clinical benefits, which remains unproven at scale.

Watch For:

• Innovative product launches exceeding 30% of total new launches

• India business EBITDA margins expanding beyond the historical 15-20% range

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/2ee525c4-6c8e-421d-80dd-83d134febfad.pdf

Dr. Reddy's: GLP-1 Decade Vision

The Signal: Views GLP-1s not as a 2-year opportunity but as a decade-long platform for building a differentiated diabetes/obesity franchise.

Key Quote: "Just broadly, you think this is like, sort of, a 2-year opportunity, one year, opportunity, or much more than that? First of all, I see that as many, many years of opportunity. Actually, we are entering a decade of GLP-1 products. Obviously, it's going to change and evolve. And at the beginning it will be more like to start to be in the market, to try to get in those markets that will be first, or among the first; for certain premium selling our capacity. We believe that this segment will grow significantly. We will add capacity, there will be more volume, obviously, lower prices. And we are going to see brands - branded play, whether consumer care play like in the obesity, or you know, differentiated devices and stuff like that. So, actually, just the beginning of the journey. More products will be added by the way. The full portfolio of GLP-1 for the company is 26 products." — Erez Israeli, CEO

Why It Matters: Most companies see GLP-1 drugs like Ozempic as a short-term generic opportunity. Dr. Reddy's sees it as a 10-year platform spanning 26 different products, device innovation, and consumer brands. They're not just making copycat drugs, they're building an entire diabetes and obesity ecosystem. This could become as foundational to chronic disease treatment as cholesterol drugs were for heart disease. The vision encompasses drug manufacturing, device differentiation, consumer health applications, and brand development.

Watch For:

• GLP-1 revenue exceeding 20% of total company revenue by FY28

• Successful launches of 10+ GLP-1 products beyond Semaglutide by FY30

Torrent Pharma: Semaglutide Global Positioning

The Signal: Positioning to capture significant market share in the generics wave of GLP-1 diabetes/obesity drugs across key emerging markets.

Key Quote: "Saion Mukherjee: Got it. And also, Sanjay, on the Semaglutide launch in Brazil, so, what is your expectation at this point in terms of timing for approval?

So, Semaglutide is two products, right? Ozempic and Wegovy, right? Ozempic has been in the market for a while in Brazil. But since Wegovy launched in middle of 2024, Ozempic has been in a decline... And Wegovy is currently running at $150 million a quarter. So, in the space of one year, it has reached a run rate of $150 million... So, we are working on both the products without giving you more specificities. And we are trying to be in the wave one of launches." — Sanjay Gupta, Executive Director International

Why It Matters: Wegovy hit $600 million annual sales in Brazil alone within one year, proving massive demand for obesity drugs in emerging markets. Torrent is conducting Phase III trials for oral versions while partnering for injectable versions across both Brazil and India. This dual-market strategy targeting 1.7 billion people could capture meaningful share of the post-patent genericization wave. The cross-geography consistency suggests coordinated global strategy rather than opportunistic regional plays.

Watch For:

• Phase III trial completion milestones for oral Semaglutide

• Combined Brazil-India regulatory filing announcements within 6-9 months

Source: https://www.torrentpharma.com/pdf/investors/Q1-FY25-26_Earnings-Call-Transcript.pdf

Market Structure Evolution

Traditional industry boundaries and value chains are being redrawn as companies adapt to new competitive realities.

Tata Elxsi: OEM Software Takeover

The Signal: Automotive OEMs are fundamentally restructuring the value chain by taking direct control of software development, permanently displacing traditional Tier 1 suppliers.

Key Quote: "Debashish, one of the reasons Tata Elxsi used to report a very strong set of margins because they are focused on offshore centric deals, but over the last 2 to 3 quarters, what we have seen is a consistent fall in margins. So, is it like we have shifted our focus more into on-site focused deals. Almost 72% to 75% of our revenues now come from OEM, which is the passenger car makers. The Tier 1s have sort of reduced which is in line with what we see in the industry, moving forward... OEMs are becoming more like Tier 1, like OEMs are really wanting to own software." — Manoj Raghavan, MD & CEO

Why It Matters: Car companies have figured out that software is too important to outsource. Tata Elxsi's revenue mix shifted from 60% to 75% direct OEM work in just a few quarters because car companies are bypassing traditional parts suppliers and taking control of software development. This completely reshapes the auto industry value chain and kills the traditional system integrator model. In an era of software-defined vehicles, controlling the software stack is essential for competitive advantage, customer experience, and margin capture.

Watch For:

• Tier 1 supplier R&D spending falling below 5% of revenue

• OEM software engineering headcount growing 20%+ annually

Tata Elxsi: Media's Structural Decline

The Signal: The media and communications industry has entered a permanent structural decline following an unsustainable COVID boom.

Key Quote: "And what needs to change for this segment to really revive in terms of growth? I know that you're expecting growth to come back in Q2. But really, where do you see the industry going in the medium-term? During COVID, this industry grew very rapidly. But after COVID, all of a sudden, you see that most operators, whether it's media services operators or telecom operators globally have not been able to add net new subscribers. Subscriber numbers are actually coming down, the ARPUs are coming down. So, there's a little bit of an issue structurally in this industry." — Manoj Raghavan, MD & CEO

Why It Matters: The media industry is in permanent decline, not a temporary slump. Subscriber numbers and revenue per user are both falling because the COVID streaming boom created artificial demand that's now reversing. Companies are splitting their digital and legacy businesses into separate entities and focusing on "doing more with less" instead of growth. This cuts through typical cyclical explanations to identify genuine structural break in the media industry's growth model.

Watch For:

• Global media services ARPU declining 5%+ annually for three consecutive quarters

• Industry consolidation deals exceeding new expansion investments by 3:1

Tata Elxsi: Tariff-Driven R&D Disruption

The Signal: Trade policy uncertainty and tariff regimes are forcing multinational companies to fundamentally restructure their R&D investment patterns.

Key Quote: "And the second question is on healthcare. Can you give more color on the two client specific issues? Is this cancellation of projects? Or was something ramped down, which should come back in the second half? Our Healthcare & Life Sciences segment declined 6.7% quarter-on-quarter in constant currency primarily affected by tariff-related impact on medical devices with two key customers in the U.S., which is the primary market for this vertical. This has impacted R&D and discretionary spend in the short term. However, we expect that to get started in the coming quarters... some of the new projects that we are expecting to ramp up in the quarter, that was put on pause primarily because of lack of clarity, given all the uncertainties in their own business." — Manoj Raghavan, MD & CEO

Why It Matters: Trade wars aren't just affecting manufacturing, they're disrupting R&D spending and new product development. Companies are pausing innovation projects because they don't know where to build products or how to price them. This breaks the assumption that R&D networks would remain globally integrated regardless of trade policy. The impact spans from medical devices to automotive, suggesting broad-based shift rather than sector-specific challenges.

Watch For:

• Corporate R&D spending shifting toward "nearshoring-compatible" projects

• R&D service contracts including geopolitical risk clauses

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/cb73cece-f44a-4dba-a33e-148184e21f00.pdf

Tata Elxsi: AI Integration Reality Check

The Signal: Engineering services face unique adoption barriers that limit AI's transformative impact compared to other industries.

Key Quote: "So actually, what I want to know is what is the impact of this AI on your head count? In other words, if you were using one head count earlier, has it brought down the number to 0.9 or 0.8, what is the number that you want to see? But unlike IT or the BPO or some other industries, the impact of AI is not going to be very dramatic as we speak, right? There are a lot of legal issues, customers are talking of open-ended liabilities. There are a number of legal issues to be sorted off before you can see uptick of usage of AI in the engineering today... Yes, for certain tasks, it is possible. For a certain type of projects, it is possible. But it is not generic for all projects." — Manoj Raghavan, MD & CEO

Why It Matters: Everyone assumes AI will transform every industry the same way, but engineering services are different. When AI makes a mistake in software code, you fix it. When AI makes a mistake in bridge design, people die. Legal liability and safety requirements mean engineering will adopt AI much slower and more carefully than other industries. Unlike software development or business processes where AI can operate in controlled environments, engineering involves physical systems and complex liability structures.

Watch For:

• Engineering services companies reporting AI-driven revenue expansion rather than cost reduction

• Development of industry-specific AI liability insurance products

Infosys: Europe as the New Growth Engine

The Signal: Early investment in Europe is creating sustainable competitive advantage as the region emerges as a major outsourcing market.

Key Quote: "On a year-on-year basis, Europe grew 12.3%, which is over 3x the company average. We are one of the first companies a few years back to call out Europe as an opportunity. We have made, on back of that hypothesis, investments in Europe. And that has helped us win some of the very, very large and mega deals in Europe. There are consolidation deals that we have won as well in Europe. So that has helped. And over a period of time, Europe is also opening up from outsourcing perspective." — Jayesh Sanghrajka, CFO

Why It Matters: Infosys made a contrarian bet on Europe when nobody thought Europeans would outsource IT work. Now European companies are finally embracing outsourcing and Infosys is ahead of the competition. Europe grew 12.3% versus 3% company average, and this is probably just the beginning as European enterprises catch up to American outsourcing adoption. The early positioning has secured large deals and established relationships before competition intensified.

Watch For:

• Europe revenue growth consistently beating company average by 50%+

• European deals contributing 25%+ of quarterly large deal wins

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/10c91fa1-f133-476d-ada3-0143acdd9846.pdf

Infosys: AI Productivity Paradox

The Signal: AI-driven productivity gains are fundamentally changing client expectations around cost structures, creating permanent shift where discretionary spending must be self-funded through operational efficiencies.

Key Quote: "Enhanced interest in AI is resulting in budget reallocation with discretionary spend expected to be self-funded through AI-led productivity benefits. We are seeing between 5% and 15% through AI programs where we are working with clients, where typically there are disparate systems. Typically all productivity benefits, a part of that is shared with clients and a part of that is shared with us." — Salil Parekh, CEO

Why It Matters: The old model of IT services growth through hiring more people is dead. Clients now expect 5-15% productivity improvements from AI and want to use those savings to fund new projects rather than pay more money. This creates deflationary pressure on traditional services while opening new opportunities for companies that can actually deliver efficiency gains. Traditional growth through headcount expansion is being replaced by productivity-sharing model where efficiency gains fund new capabilities.

Watch For:

• Traditional FTE-based contracts declining 20%+ annually

• Outcome-based contracts growing to 30%+ of new large deals

Wipro: AI Transformation Core

The Signal: AI has evolved from pilot programs to mission-critical infrastructure, fundamentally reshaping how enterprises operate and compete.

Key Quote: "We saw a clear trend of mini-air projects moving to scale and production. We quickly aligned with these priorities, deepened our partnerships, and secured key deals. In fact, these examples highlight a clear trend. AI is no longer a niche. It's becoming essential to how businesses operate at scale. At Wipro, we see AI as a force reshaping industry and amplifying human potential. We at Wipro are building an AI-first, AI-everywhere enterprise focused on solving complex challenges, accelerating delivery, and reimagining operations at scale." — Srini Pallia, CEO

Why It Matters: AI just crossed the line from experimental to essential for big companies. Wipro has over 200 deployed AI agents and describes AI as rewiring how enterprises operate, not just automating tasks. This means massive shifts in IT spending from traditional application maintenance to AI-powered business transformation. The crossing of enterprise AI chasm means AI moves from IT curiosity to business necessity.

Watch For:

• AI services exceeding 25% of total bookings by FY27

• Average deal sizes increasing 40%+ as AI projects scale beyond pilots

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/ea1716d9-c63b-46b0-91f8-549a98c742f6.pdf

Wabag: Saudi Vision 2030 Infrastructure Catalyst

The Signal: Saudi Vision 2030 and FIFA World Cup 2034 are creating unprecedented structural demand for water infrastructure across the Middle East.

Key Quote: "Wabag's future in MEA is focused, strategic and growth driven with client development at the heart of our approach. The regional transformative agenda led by Saudi Vision 2030 and the upcoming FIFA World Cup 2034 is creating an unprecedented demand for sustainable large-scale water and wastewater infrastructure. In parallel, Africa's rapid urbanization and industrial growth are driving significant opportunities for advanced water solutions across the continent." — Rohan Mittal

Why It Matters: Saudi Arabia is spending $500+ billion to diversify away from oil, creating a decade-long infrastructure build-out that goes way beyond typical project cycles. Water infrastructure becomes essential for economic transformation, urban development, and industrial diversification. Success in Saudi Arabia creates reference credentials for other GCC markets with government payment guarantees. This transcends typical project-based opportunities to structural transformation driven by government-mandated diversification.

Watch For:

• Saudi region revenue exceeding 30% of total company revenue by FY28

• Order book visibility extending beyond three years from Saudi projects alone

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/08bee464-2a1b-49cd-8a56-3146e83d2d36.pdf

Mahindra: Brand-Building Export Strategy

The Signal: Prioritizing long-term brand equity and market development over short-term export revenue, fundamentally changing how emerging market OEMs approach global expansion.

Key Quote: "Why M&M is behind in exports as we have world-class SUVs? What steps are you taking to increase export sales? I think it's not fair to compare exports of ours with other global players. For other global players, they don't need to build either a brand or a channel. India becomes, in a manner of speaking, white label for them into those countries. For us, we have to go country at a time because we have to establish dealer network, channels, spares network, logistics on the ground, most importantly, brand and goodwill. Our idea is not to be ad hoc about it and try and just look for short term deal based exports but to fundamentally invest in brand, channel and market creation." — Rajesh Jejurikar

Why It Matters: Most Indian companies export by making cheap products for other brands. Mahindra is building its own brand internationally, which takes way longer but creates much more value. They're proving this works in South Africa where they've become a top-10 automotive brand. This patient capital approach could provide a blueprint for other Indian brands going global. Rather than competing on the traditional Indian export model of low-cost manufacturing, Mahindra is building brand equity internationally.

Watch For:

• Export revenue per unit staying above $15,000 versus industry averages below $10,000

• International market share gains in premium segments rather than just volume

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/3152798e-bca7-4df3-97e9-1078ff0ce061.pdf

Capital Structure Evolution

Financial services and investment management are being restructured around new regulatory frameworks and changing client demands.

HDFC AMC: Strategic Platform Evolution

The Signal: Transforming from a traditional mutual fund company into a comprehensive investment platform spanning multiple asset classes and investment vehicles.

Key Quote: "So, I think I might have mentioned this earlier that our broader vision is very clear to serve as a comprehensive investment platform offering solutions across mutual funds, which includes both active and passive, portfolio management services and differentiated alternative strategies, which can meet the needs of a wide range of investors and a wide range of our partners. So, on SIF, we have secured the necessary approval from SEBI to set up a Specialized Investment Fund and that opens up an avenue for us to launch this product." — Navneet Munot, MD & CEO

Why It Matters: HDFC AMC is evolving from a single-product mutual fund house into a multi-asset investment platform. They got SEBI approval to launch Specialized Investment Funds, opening up alternative investments beyond traditional mutual funds. This addresses the shift in Indian wealth management toward more sophisticated investment needs and higher-net-worth client demands. Success would create multiple revenue streams with potentially higher margins, while failure risks resource dilution.

Watch For:

• SIF product launches within 12-18 months

• Alternative investment revenue reaching 15%+ of total revenue by FY27

HDFC AMC: Passive Investment Infrastructure

The Signal: Positioning for the structural shift toward passive investing by building comprehensive ETF and index fund capabilities.

Key Quote: "Over the last couple of years, we have significantly expanded our product offering both on index fund as well as on the ETF side, that includes market cap-based indices, smart beta, some of the sectoral/thematic funds. So, we've got the full product bouquet, we've got the best-in-class content and a seamless journey for investors to participate in that. We engage with partners who have been offering passive as part of their product bouquet." — Navneet Munot, MD & CEO

Why It Matters: HDFC AMC is building passive investment capabilities anticipating the shift toward low-cost indexing that transformed global markets. They started their first index fund in 2002 but are now significantly expanding the product range. This prepares for inevitable fee compression in asset management as investors become more cost-conscious. The emphasis on "seamless journey" and partner engagement indicates focus on distribution efficiency critical for success in low-margin passive products.

Watch For:

• Passive AUM growth exceeding 40% annually

• Passive products comprising 25%+ of new inflows by FY27

Source: https://www.bseindia.com/xml-data/corpfiling/AttachHis/b6be84ee-d5fc-44f3-b050-a6e6c5114ca5.pdf

Nippon India: SIF Business Launch

The Signal: Launching dedicated Specialized Investment Fund business as separate vertical, expanding beyond traditional retail mutual funds into institutional alternatives.

Key Quote: "Lastly, on the SIF front, we have the team in place, led by Industry veteran Andrew Holland, and we will launch products in due course. We are proud of our team, and what the kind of wealth they are creating for the investors. SIF is a different business vertical, and we want to take it very seriously. We do not want to be just one other product. We see that as a new business line for us... we see this vertical as a very, very critical separate line of business for us going forward. So, we are investing in it very differently." — Sundeep Sikka, Executive Director & CEO

Why It Matters: Nippon India appointed industry veteran Andrew Holland to lead SIF as a separate business line, not just another product. SIFs typically charge higher fees and target institutional investors, representing a move up the value chain from retail mutual funds to sophisticated alternative investments. The CEO's emphatic language indicates this isn't peripheral initiative but core to future growth strategy.

Watch For:

• SIF product launches within 6-9 months

• SIF AUM reaching ₹5,000+ crores within 18 months

Nippon India: Alternative Investment Platform Scaling

The Signal: Systematically building comprehensive alternative investment platform across multiple strategies, moving beyond traditional asset management.

Key Quote: "Starting off with AIF - Under, Nippon India AIF, we offer Category II and Category III AIFs and have raised cumulative commitments of INR 81.0 bn across various schemes, up by 25% YoY. In Q1 FY26, we raised ~INR 7 bn of commitment, being our highest quarterly fund raise ever. Fund deployment across all the strategies was robust in Q1 FY26, with 9 active investments in Performing Credit, and full deployment in our Venture Capital FoF, across 14 funds, with underlying exposure to 395+ startup companies." — Parag Joglekar, CFO

Why It Matters: Nippon raised ₹7 billion in one quarter, their highest ever, across real estate, credit, and venture capital. The platform spans ₹3 billion in real estate, active investments in performing credit, and exposure to 395+ startups through their fund of funds. This systematic scaling suggests they're positioning for the structural shift toward alternatives in Indian wealth management. The business model implications are significant as alternatives typically command higher fees and offer more stable capital commitments.

Watch For:

• AIF AUM crossing ₹100 billion within 24 months

• Successful exit monetization from current portfolio investments

https://www.bseindia.com/xml-data/corpfiling/AttachHis/a26d8cd1-938c-4c6c-a0e0-34fae30a52e6.pdf

Tata Power: Rooftop Solar Hypergrowth

The Signal: India's rooftop solar market is entering exponential growth phase, with Tata Power positioned to capture disproportionate share through integrated capabilities.

Key Quote: "Just to give you an idea that last year March, we supplied 1,000 units. This year, March, we supplied 8,000 units. This year, June, we supplied 20,000 units and hopefully later part of this year, we will supply 40,000 to 50,000 units per month. So, the demand is humongous. The country, you know PM Surya Ghar, has said 1 crore households. We have actually in the country 25 crore households. So, whatever we will do will be still very small compared to the total market opportunity which is there. So, I would leave it to you to guess and estimate that what sort of demand will be there for next 5-10 years. I think it is humongous." — Dr. Praveer Sinha, CEO & Managing Director

Why It Matters: Tata Power's monthly rooftop installations went from 1,000 to 20,000 in 15 months and they're targeting 50,000 monthly installations. The government wants to reach 10 million households but there are 250 million total households in India. This is just the beginning of India's distributed energy transition. The strategic differentiation lies in integrated approach combining domestic manufacturing, distribution partnerships, and installation capabilities unlike pure-play installers dependent on imported modules.

Watch For:

• Monthly installation run rate reaching 50,000+ units by Q4 FY26

• Market share in residential rooftop segment exceeding 8-10% nationally

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

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Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes so there maybe 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.

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