Welcome to the 93rd edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.
We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.
In this edition, we have covered 5 companies across 5 industries.
Energy
Adani Power Ltd
Financial Services
Motilal Oswal Financial Services Ltd
Automobile
Ather Energy
Telecom
HFCL
Real Estate
Lodha Developers
Energy
Adani Power Ltd | Large Cap | Energy
Adani Power is India’s largest private-sector thermal power producer with a current operating capacity of 18 GW and a targeted expansion to 45 GW by FY36. The company operates a diversified fleet across India and is transitioning from a pure-play thermal generator into a broader base-load power platform including hydro and nuclear energy.
[Concall]
Adani Power is executing a lifetime asset ownership strategy, with 95% of its operating 18 GW fleet locked into long-term contracts to ensure revenue and fuel cost visibility toward a 45 GW capacity target by FY36.
“Adani Power Ltd currently has an operating capacity of 18 gigawatts of thermal power plants and an upcoming capacity of another 27 gigawatts, which would take us to 45 gigawatts by FY36. We follow a lifetime asset ownership strategy. We set up power plants, acquire power plants, and then own and operate them for their entire life cycle, rather than following a development and churning philosophy. We currently have 18 gigawatts operating, of which 95% of the capacity is tied up in long-term and medium-term contracts, primarily with state DISCOMs and with a few private-sector DISCOMs as well. This gives us very long-term visibility in terms of our future revenues, with very efficient fuel cost recovery and very good visibility in terms of our profitability.”
— Nishit Dave, Head of IR
By pre-ordering key boilers, turbines, and generators for its 24 GW expansion from BHEL and L&T, the company has secured a 20–30% capex advantage over current market setup costs.
“Another very important thing that we have done is to order the entire boilers, turbines, and generators the key equipment required for setting up these power projects in advance. Therefore, for the entire 24-gigawatt capacity, we already have an assured supply of equipment. We have contracted with BHEL and L&T, from which we are sourcing the boilers, turbines, and generators. This gives us a high degree of supply-chain assurance and an advantage when it comes to rapid project capacity expansion. Along with that, it also gives us a cost advantage because we tied up these assets and equipment earlier than the rest of the market and were able to lock in lower prices compared with current market prices. All these factors together give us an advantage in terms of our project cost per megawatt. Currently, the market is setting up projects at around 12-14 crores per megawatt, while we enjoy a cost advantage of approximately 20-30% over their project costs.”
— Nishit Dave, Head of IR
The company has captured a 67% win rate in recent revised thermal PPA tenders, securing long-term contracts for nearly 14 GW of its 24 GW pipeline under construction.
“So far, around 22 gigawatts of thermal power bids have been issued under the revised regime for thermal power PPAs by various state governments, and Adani Power has won nearly 14 gigawatts of these bids. This represents a strike rate of nearly two-thirds, or around 67%, and we have been able to book a large part of our existing capacities in this way... Out of the 24 gigawatts of capacity that we are building, we have already won PPAs for nearly 14 gigawatts. There are enough PPAs in the market to give us a high degree of confidence that we will be able to book the untied capacities within a short period of time, within the next year or so.”
— Nishit Dave, Head of IR
Management plans to fund its ₹2.2 trillion capital expenditure program using an equity-first model, deploying ₹1.2–1.4 trillion in internal operating cash flows and raising only gap debt.
“Our plan is to deploy all this cash flow directly into our capacity expansion. We will follow an equity-first model of capex, which means that we will primarily deploy equity in our capex and resort to debt funding only to the extent required to meet the cash flow gap between annual cash flow generation and the capex requirement during the year. Over the next 6 years, we are projecting cash generation of around 1,20,000-1,40,000 crores from current operations. This will go toward funding the capacity expansion. The balance, which would be around 60,000 crores, would be raised through debt from domestic banks and financial institutions and from the domestic capital market in the form of corporate debt, typically with a duration of 3-7 years. This would also be used to fund our capex.”
— Nishit Dave, Head of IR
Adani Power is diversifying into non-coal base-load power by acquiring domestic hydro assets and executing a 5,000 MW hydropower MOU with Bhutan’s Druk Green Power Company.
“We are now looking at other modes of power generation that also fall within the base-load power supply segment, including hydropower and nuclear power. These plans are still at a very early stage. Overall, in terms of our exposure, we currently own 24% of Jayprakash Power Ventures Limited, which has a 400-megawatt hydropower project and two thermal power plants with a combined capacity of 1,820 megawatts. Therefore, there is existing exposure to hydropower through that investment. We have also received a letter of intent in relation to our resolution plan for GVK Energy. This is another company that has the 300-megawatt Alaknanda hydropower plant. In this way, we are going to increase our exposure to hydropower projects in India through inorganic growth. On the organic side, we are currently in the process of setting up a hydropower project in Bhutan under a joint venture. Overall, under the joint venture agreement, or the memorandum of understanding, that we have with the Bhutanese government-owned renewable energy company, Druk Green Power Company, we have an MOU covering 5,000 megawatts of potential development.”
— Management
The company is targeting 10 GW of nuclear power capacity over a 10-year horizon, pending the finalisation of private sector regulatory frameworks under the Shanti Act and single-window clearance policies.
“Our target is 10 gigawatts. We are looking at a timeline of roughly 10 years to achieve this target, or to bring all these projects under construction within that timeframe. This, of course, assumes that all the required permissions, as well as the formulation and finalisation of the rules and regulations, will take place over the next year or so. Once the rules and regulations are finalised, we can proceed with obtaining permissions for the different sites that we have chosen or where we are currently acquiring land. We are also working with the government, both as an industry and as an organisation, to help formulate policies that can enable investment in the sector. For example, we are advocating a single-window clearance policy covering technology, site clearance, and related matters, which would help accelerate the development process.”
— Management
Strict enforcement of the Praapti portal and Late Payment Surcharge rules has reduced state DISCOM payment cycles to ~70 days, significantly improving operating cash flows.
“Over the last few years, we have seen the states become responsible and regular in making payments against the long-term PPAs that we have with them. The reason is that the Praapti portal has now been established, where all power generators have to upload their receivables from the states, and the central government monitors the level of overdue amounts. Second, with the promulgation of the Late Payment Surcharge rules, the states have to pay a significant penalty in case of any delays in payment. As a result, the states have become quite regular in making payments. We receive payments within approximately 70 days of raising the bill. This has resulted in our cash flows improving and our fund-based working capital utilisation declining.”
— Management
Adani Power plans to cap merchant spot market exposure at 1–2% over the long term to shield revenues from renewable-driven spot market price volatility.
“In the long term, only around 1-2% of our capacities would remain open or untied. Currently, 95% is tied up. The incremental capacities that we are setting up are also coming up with PPA tie-ups. Sometimes, a plant may come up first and the PPA may commence 6 months or 1 year later, so there may be some temporary open capacity. However, in the long term, almost all these capacities will be tied up. Even for the current open capacities, to the extent that we can obtain medium-term PPAs with good tariffs, we would like to tie them up under those arrangements. Over time, we will reduce our exposure to the merchant market. The reason is that, with increasing solar power penetration and gradually increasing battery storage penetration, there will be greater volatility and, to some extent, a limitation on the upside in the merchant market over the longer term.”
— Management
Financial Services
Motilal Oswal Financial Services Limited | Mid Cap | Financial Services
Motilal Oswal is a diversified financial services group with a strong presence in asset management, private wealth, retail broking, and housing finance. The company is distinct for its large treasury book, which reinvests retained earnings into its own equity-focused investment products.
[Concall]
The company has successfully shifted its revenue mix from volatile transaction fees to steady, recurring annuity income. This transition provides a more predictable earnings profile and supports management’s confidence in maintaining a 20% long-term growth rate.
“Our total annuity revenues as a proportion of operating revenue are now at 66%. This number has been growing rapidly. As the share of annuity revenues continues to rise, our profit growth has become qualitatively much better because of the higher mix of annuity revenues, and these are more sustainable profits. That is why we believe that a minimum base case of 20% plus CAGR can be easily achieved, given our annuity-led assets and flow growth.”
— Shalibhadra Shah, Group CFO
A large portion of the company’s mutual fund lineup is just reaching the three-year performance track record required by many distributors and investors. This expansion of ‘mature’ funds is expected to drive significant new inflows and market share gains in the asset management business.
“We previously had only six active schemes that had completed three years, so our growth journey so far has been based on those schemes. However, we will now have 10 more funds completing three years over the course of the next 15 months. These will be growth drivers for us, and further market share gains through flows will happen through these funds because almost all of these products rank first over the last three years.”
— Shalibhadra Shah, Group CFO
Motilal Oswal is aggressively expanding its alternative investment offerings by entering the private and commercial credit markets. These new funds diversify the product suite and create new streams of fee-based income beyond traditional equity markets.
“We have now recently launched a private credit business line. We launched the first fund and received 2,500 crores of commitments. The fund will close in Q3 at 3,000 crores. The fourth line of business we are going to launch there is the commercial credit fund, which is planned for launch in Q3 of this year. It is also going to be about a 2,000 crore fund and will be the first of our credit offerings.”
— Shalibhadra Shah, Group CFO
The acquisition of a custody license allows the company to offer a full end-to-end service suite to institutional investors, a rare capability for a non-banking firm. This regulatory milestone removes a major hurdle for scaling their institutional equities and capital markets business.
“We have now also received the custody license. This completes our entire institutional offering to clients because that was the only missing piece. We are the first to receive this license after almost 15 years, when Edelweiss had received the license. No non-bank player has been allotted this license so far. We are the first to receive it, and soon we will make further announcements for this business.”
— Shalibhadra Shah, Group CFO
Management believes their integrated model gives them a unique advantage by allowing them to offer exclusive, large-scale investment deals to high-net-worth clients. Using the company’s own balance sheet to co-invest alongside clients helps build trust and secure larger mandates in the wealth management space.
“There is no other player in the industry that has a very strong retail broking business, a retail AMC business, and a private wealth business. In alternatives, we have track records in equity growth, credit, and real estate. These are niche products available only to our private wealth clients. I also spoke about private credit as a new line, where we are co-investing in many of these deals with the fund. If the fund size is 3,000 crore, the fund can write a 300 crore cheque. But if we are investing, say, a 1,500 crore cheque, we have a balance sheet and a private wealth business. Those family office clients need a lot of this capital, and I think that is where we are very much present.”
— Shalibhadra Shah, Group CFO
The company is less exposed to recent regulatory crackdowns on derivative trading than many of its competitors. Because high-risk F&O trading only accounts for a tiny fraction of total group revenue, investors should see less volatility from policy changes in that segment.
“Within that pool, brokerage contributes only 40% from F&O. The industry has a higher proportion of F&O. We have always been more focused on cash advisory than F&O, so the impact of the regulation is relatively lower on us. Even within F&O, if you look at brokerage in the overall pool, retail brokerage represents only about 15-16% of the Group’s revenues. Within that, F&O is only about 40%, so only 5-6% of Group revenue comes from F&O.”
— Shalibhadra Shah, Group CFO
Management has ruled out spinning off the asset management business into a separate listed entity, arguing that the synergies between departments are too valuable. They believe that as long as the businesses perform well, the market will value the combined group fairly without a discount.
“We do not view AMC separately as a segment to be listed on its own. If the business is performing well and outperforming the industry, there should not be any holding-company discount. If the businesses grow, they will always be valued without any holding-company discount. There is therefore no point in viewing it as a demerger. In fact, the players that have tried to demerge have done so because they diluted a subsidiary through an investor, because of large ESOP pools in the subsidiary, or because of a capital requirement. From our perspective, we do not see a need for such a demerger.”
— Shalibhadra Shah, Group CFO
The group maintains a significant portion of its capital in liquid, high-performing equity assets to ensure it can act quickly on new business opportunities. This strategy turns the company’s balance sheet into a profit centre while providing a safety net for its brokerage operations.
“Treasury is approximately 60% invested in our AMC, 25% in alternative private market funds, which are equity growth funds consisting of unlisted investments, and 25% in direct equities. These investments have generated more than 20% IRRs and are growing well. We will continue to maintain a large proportion of approximately 50% in AMC assets, which are public market listed assets, because we want good liquidity on our balance sheet. We should be able to redeem money on a T+2 basis if we need capital for our brokerage business, for any inorganic opportunity that we may decide to pursue in the future, or for similar requirements.”
— Shalibhadra Shah, Group CFO
Automobile
Ather Energy | Mid Cap | Automobile
Ather Energy is a leading EV company in India that specialises in selling electric two-wheelers (E2Ws) along with a comprehensive product ecosystem including software, charging infrastructure, and smart accessories. They offer two product lines, the Ather 450 and the Ather Rizta, with a total of seven variants.
[Concall]
Ather believes the recent acceleration in EV adoption is more than a temporary spike, helped by policy support, fuel costs and broader consumer sentiment.
“From the perspective of what is happening with the US-Iran war, how crude has behaved, and how fuel has become a concern overall in terms of availability and cost, we are seeing consumer sentiment move towards EVs. This appears to be more of a structural move rather than a short-term move.”
— Abhinav, VP Finance
Electric penetration is rising much faster within scooters than the overall two-wheeler market.
“We have been able to move E2W penetration closer to 11%, which is 44% higher year-on-year. From the perspective of scooter penetration, it is close to 25%. One out of every four scooters being sold right now is electric.”
— Abhinav, VP Finance
Ather is seeing demand accelerate sharply, with both the top of the funnel and paid pre-orders growing substantially.
“From the perspective of Ather inquiries, we have seen a 95% year-on-year increase. From a pre-order perspective, we have seen an increase of approximately 160%. That is a significant uptick in demand.”
— Abhinav, VP Finance
Monthly pre-orders have risen from roughly 19,000–20,000 a year ago to around 50,000, while the existing Hosur plant can supply only about 35,000 units a month.
“Unfortunately, we are behind from a supply perspective. We have been able to supply approximately 30,000 units, and therefore we have unserved demand of around 15,000 units... our supply is restricted to around 35,000 units a month from our current Hosur plant.”
— Abhinav, VP Finance
The Aurangabad plant should roughly double monthly capacity initially, with another expansion already being contemplated.
“Our capacity through the new plant in Aurangabad... will improve our capacity from 35,000 per month to approximately 70,000–77,000 per month. On an overall basis, we are increasing it to approximately 9.2 lakh units on an annualised basis... reasonably, within a year to a year and a half, we should be able to increase our capacity further to approximately 1.4 million units.”
— Abhinav, VP Finance
Q1 marked an important profitability milestone, but management cautioned that commodity inflation could reverse some of the improvement.
“For the entire first quarter, we also saw EBITDA at approximately 0.8% positive for the first time. While EBITDA is positive at this point, there could be challenges from commodities... Therefore, we do not consider this to be sustainable EBITDA at this stage.”
— Abhinav, VP Finance
Management sees two structural shifts occurring simultaneously: scooters taking share from motorcycles and buyers moving toward more premium scooters.
“Scooters have increased from a 30% contribution to the market to a 40% contribution over approximately the last 5–6 years... Within scooters, there is also significant premiumization. The market share of scooters with 125cc and above has increased from approximately 20%–25% to close to 54%–55% in recent times.”
— Management, Ather Energy
Battery degradation is one of the biggest concerns around EV resale value and longevity. Ather says its oldest fleet provides evidence that degradation can be relatively modest.
“Our Gen 1 vehicles, which are now 8.5–9 years old, continue at a fleet level to retain approximately 83% charge. This means that even after nine years, the battery is retaining its capacity.”
— Management, Ather Energy
Some states are already seeing roughly one-third of scooter sales electrified, which Ather views as a sign of where the broader market could eventually move.
“In states such as Karnataka and Kerala, and in parts of Odisha and Rajasthan, electrification has already reached one in every three scooters. That trend should continue. We can expect it to reach 50%–60% at some point in the future.”
— Management, Ather Energy
Ather imports cells but retains control of battery design and pack manufacturing. Its ability to use NMC, NCA and LFP provides sourcing and technology flexibility.
“From a battery perspective, we currently own the entire battery design. That is our critical USP. Cells are a commodity, and we import them... we work with multiple chemistries, including NMC, NCA, and LFP chemistries. This gives us fungibility and flexibility regarding the chemistry we use in our vehicles.”
— Management, Ather Energy
The company says its defensibility comes less from patenting broad feature concepts and more from protecting the specific algorithms and implementation behind them.
“We have approximately 790 patents from the last few years... These patents cover hardware, software, and processes... What can be patented is the unique algorithm or the unique method through which Ather implements it, and we have a patent for that.”
— Management, Ather Energy
Management views detachable batteries as a compromise on vehicle dynamics, usability, reliability and safety—and says they aren’t part of Ather’s future roadmap.
“Because it is a removable battery, the contacts between the battery and the vehicle itself have a higher chance of failure. That can cause safety issues as well as maintenance issues. Therefore, we prefer to have the battery permanently installed in the vehicle... We are not looking to adopt any type of removable battery in our roadmap.”
— Management, Ather Energy
Ather plans to eventually expand beyond scooters through its Zenith motorcycle platform, but the launch isn’t imminent.
“We are working on, for example, a motorcycle on the Zenith platform, but that is at least two years away. There could be further products on the EL platform that we recently introduced... Beyond that, we can add more product lines on the EL platform as market demand becomes more concrete.”
— Management, Ather Energy
Despite Hero being a major shareholder, Ather says the two companies don’t share R&D, IP or distribution. Management prefers building its own retail network and says it has already doubled stores from roughly 350 to more than 700.
“Hero has been an investor for more than a decade. They continue to operate independently of us, and we continue to operate independently of them. It is essentially a financial investment. We share no R&D, technology, IP, design, or downstream sales-channel distribution, service, or sales operations.”
“We would rather establish our own distribution. We have demonstrated this over the last year by increasing our network from approximately 350 stores to more than 700 stores. That is effectively one store a day.”
— Management Ather Energy
Management sees charging infrastructure as one of its key ways of reducing range anxiety and differentiating the ownership experience.
“Ather has India’s largest DC fast-charging network for two-wheelers. We have more than 6,000 fast-charging stations across the country, where customers can add approximately 30 kilometres of range in 10 minutes. That provides a day’s worth of driving in just 10 minutes.”
— Management, Ather Energy
Resale value remains a major barrier to EV adoption. Ather is directly underwriting part of that risk through buyback guarantees.
“In the third year, we will give customers 60% of the value back, and in the fourth year, we will give them 50% of the value back if they want to sell the scooter back. These programs are available. In addition, we are running programs through which we want to extend this to six years, seven years, eight years, and so on.”
— Management, Ather Energy
Rather than keeping its charging architecture proprietary, Ather wants its LEX standard adopted more widely across the two-wheeler EV ecosystem.
“Our charging standard, LEX, has been adopted by BIS as India’s two-wheeler charging standard. We have also applied to IEC for a similar international certification. The standard itself is open-source and can be licensed at no cost by any CPO or other OEM. Several other OEMs also use it.”
— Management, Ather Energy
This is one of the more important near-term risks management highlighted. Aluminium, copper, steel and polymers remain inflationary, and Ather hasn’t taken another price increase in Q2.
“Based on the current trends in aluminium, copper, steel, and polymers, they are still inflationary. We could see further margin contraction... Regarding further price increases, we have not taken any in Q2. Given that we are already at a reasonable price point from an ASP perspective, we will wait and watch how demand develops before deciding whether to take any price increases.”
— Management Ather Energy
This reinforces how acute the current capacity constraint is: management says adding distribution today would accomplish little because existing stores themselves aren’t adequately stocked.
“Even if we were to use Hero stores today, we would not have enough supply to provide them because we do not have sufficient supply to keep our own stores stocked in the first place. Therefore, we will continue to add distribution over the next few quarters and beyond as supply increases.”
— Management Ather Energy
Telecom
HFCL | Small Cap | Telecom
HFCL Limited (formerly known as Himachal Futuristic Communications Limited), established in 1987, is a leading Technology Enterprise connecting the world with fully integrated communication network solutions and specialised services. The company is a diverse telecom infrastructure enabler with active interest spanning telecom infrastructure development, system integration, and manufacture and supply of high-end telecom equipment, optical fibre and optical fibre cable (OFC).
[Concall]
Historically, OFC demand surged with each telecom generation and then entered a lean period. Management believes AI hyperscalers and data centres have fundamentally changed this cycle.
“Historically, we have seen that OFC has always been cyclical in nature. With every new application, such as 2G, 3G and 4G, we have seen a sharp increase in demand, and after 2–3 years, the industry has gone through a lean period. However, this time, we are witnessing structural changes in the industry, mainly driven by demand from hyperscalers and data centres. We believe that this time the demand is more structural, and we see a long runway ahead of us.”
— Amit Agarwal, Investor Relations
Of roughly 750 million fibre-km of current global demand, management estimates 400–450 million fibre-km is coming from hyperscaler data centres.
“Of this 750 million fibre kilometres, approximately 400–450 million fibre kilometres of demand is coming from hyperscaler data centres. Around 200 million fibre kilometres is coming from telecom companies.”
— Amit Agarwal, Investor Relations
Management highlighted defence as a completely new demand driver. Fibre used in certain drones is effectively consumable, creating potential repeat demand.
“There is also a new demand use case coming from the defence segment. These days, drones are using approximately 40–45 kilometres of fibre in a single drone, and this is used only once. Once the drone is down, the entire fibre is wasted. This new demand driver has generated approximately 100 million fibre kilometres of demand.”
— Amit Agarwal, Investor Relations
HFCL expects hyperscalers, telecom capex, 6G and defence to sustain the cycle, with demand broadening beyond the US into Europe, Asia and the Middle East.
“With demand from hyperscalers, demand from telecom companies, the 6G rollout, and demand from defence applications, there is significant potential for this demand cycle to continue for a minimum of 7–8 years.”
— Amit Agarwal, Investor Relations
Tight supply and AI infrastructure demand have sharply lifted fibre realisations, particularly for the A2 fibre supplied to hyperscalers.
“The fibre supplied to hyperscalers is called A2 fibre. It used to trade at around $7–8 per fibre kilometre, and it has now reached $25 per fibre kilometre. We have seen a sharp increase in prices, and consequently, realisations have improved sharply.”
— Amit Agarwal, Investor Relations
This is the strongest financial guidance from the call. After initially guiding for 20% growth and then raising it to 40% following Q1, management has now lifted the aspiration again.
“Considering the current strong demand and the strong tailwinds in the industry, we believe that we will exceed 40%, and we will grow by a minimum of 60% over the FY26 numbers.”
— Management
The scale of HFCL’s exposure to the AI infrastructure build-out is particularly notable. Management says most of this business is export-led and earns better realisations.
“Currently, approximately 85–90% of our revenue is coming from AI and data centre hyperscalers. Most of this is export revenue, and margins are relatively better because of the cable construct, the shortage of fibre, and the significant increase in demand.”
— Management
This is perhaps the clearest evidence behind management’s argument that the current AI-driven fibre cycle is different from previous telecom cycles. Data-centre cables also contain more fibres than traditional telecom cables.
“This cycle appears to be quite long. In addition, customers are willing to book capacity for a longer period, possibly 5–7 years. In some cases, you may have seen capacity being booked for 10 years.”
“The demand is significant and is entirely new demand, unlike the telecom sector. The cable requirement is also completely different. Cables for data centres start at 864 fibres, and currently go as high as 6,912-fibre cables. This compares with the cables previously supplied to telecom operators, where the maximum was 288 fibres.”
— Management
Hyperscalers are driving the current cycle, but management expects telecom companies that delayed capex while waiting for fibre prices to fall—to eventually return to the market.
“Over the last 1–1.5 years, since prices have moved up so sharply, telecom companies did not undertake capex because they were under the impression that prices would soften and that this trend would not sustain. However, that has not been the case.”
“We have also started receiving inquiries from large telecom companies across the world, and we strongly believe that the next phase of demand will also be driven by telecom companies because they will have to densify their networks and will soon have to start their capex programs.”
— Amit Agarwal, Investor Relations
Even as competitors add substantial capacity, management expects demand growth to be strong enough to keep the market relatively tight.
“Against the current supply of 600 million fibre kilometres, everyone in the industry is adding capacity. In parallel, we expect the 750 million fibre kilometres of demand to reach 900 million fibre kilometres by FY29. Therefore, we still anticipate that there will be some shortage in the demand-supply equilibrium.”
— Amit Agarwal, Investor Relations
Management believes HFCL is insulated from Chinese competition in AI/data-centre cables, while scale and purchasing power help it compete against other global suppliers.
“We are very well protected because of the scale of our capacities and production. We have bulk-buying capability, purchasing power, and economies of scale. We are very competitive and comparable with suppliers globally.”
“The buyers of AIDC products, namely the hyperscalers, do not purchase Chinese products for this segment. Therefore, in this particular segment, there is effectively no competition from China.”
— Management
This provides an interesting lead indicator for HFCL. The large global data-centre capex announcements being made today may translate into physical cable demand only several quarters later.
“When a company announces that it is setting up a data centre, demand for cables and accessories generally arises 5–6 quarters later, once the civil infrastructure or other infrastructure is ready. Only then does the requirement for cables and accessories arise.”
— Management
Real Estate
Lodha Developers | Large Cap | Real Estate
Lodha Developers is one of India’s largest residential real estate developers with a dominant presence in the Mumbai Metropolitan Region and growing operations in Pune and Bangalore. The company is diversifying its portfolio into high-growth segments including industrial warehousing, digital infrastructure, and large-scale data centre parks.
[Concall]
Management has set a target to more than double profits by FY31 while achieving a 20% Return on Equity. This trajectory is supported by a strategy to turn the core development business net cash positive within three years, significantly reducing financial risk.
“As we stand today and look ahead to the next 5 years, the company is planning to grow its profits by a 20% CAGR over the next 5 years. This essentially means reaching more than 8,500 crores by FY31, from about 3,450 crores, which is the end of the decade. ROE should be very close to 20%. Right now, it is about 16% or thereabouts, and we should be very close to 20% by the end of the decade. During this period, we will have very conservative leverage. In fact, our Devco business, which is the development business, will become net cash positive in the next 2 to 3 years. Any remaining debt on the corporate balance sheet will be backed by rental assets in the form of LRDs.”
— Anand Kumar, Head of Investor Relations
The company plans to push price increases slightly higher while keeping them below wage inflation to ensure sustained demand. This pricing power is expected to drive EBITDA margins from the current low-30s to the mid-30s by the end of the decade.
“Generally, we aim for 5% to 6% price growth, which is well below the 10% to 12% salary growth seen in white-collar jobs. However, we feel that we can take it slightly higher, perhaps to 6% to 7% or 7% to 8% price growth, while still remaining below white-collar salary growth. It is important to maintain affordability if price growth remains below white-collar salary growth. This will help us drive slightly better margins consistently and raise the margin thresholds. Currently, we are in the early 30s in terms of EBITDA margin for the Devco business, and we feel that by the end of the decade, we should be close to the mid-30s or slightly ahead of the mid-30s.”
— Anand Kumar, Head of Investor Relations
The company is leveraging strategic land assets and government policy to create a data centre hub with industry-leading low power costs. This significant cost advantage is expected to attract major global operators and drive high-value land monetisation.
“This 660-acre park has been approved under the Green Data Centre Policy of the Maharashtra government. Among many other things, this provides us with several fiscal incentives, including tax waivers. However, the most important aspect is that any operator operating from this park can tie up power with any power producer in the country because we have 5 different transmission lines passing through our land. This gives us access to power from anywhere in the country and allows it to be delivered to the park. This means that the landed power cost in the park will be among the lowest in the world, if not in India. Power can essentially be delivered here at about 6 to 7 rupees per unit, compared with the 10 to 12 rupees that is often seen in industrial tariffs across Maharashtra.”
— Anand Kumar, Head of Investor Relations
Lodha is developing a self-funded model for its massive 1 gigawatt data centre project, using land sales to finance construction. Once operational by FY32, this segment is projected to contribute up to 2,500 crores in high-margin recurring rental income.
“The 1 gigawatt of powered shell will entail incremental capex of 10,000 to 11,000 crores. This capex will be funded by the sale of the remaining 140 acres in Phase 1, which will generate between 9,000 and 10,000 crores. This will fund the capex for the build-out of the 1 gigawatt of powered shell, which will be on our own balance sheet. This will generate more than 2,000 to 2,500 crores of rental income by FY32. This is going to be a very strong growth driver for us in terms of rental generation. Given that there is a significant amount of demand for data centres, especially for land where power and water connectivity is already in place, and that is what we have, this is going to be one of the most lucrative land parcels for setting up data centres.”
— Anand Kumar, Head of Investor Relations
The company follows a disciplined two-phase expansion model, prioritising local team building and low-risk joint ventures before full-scale growth. They are currently applying this pilot approach to the NCR market with an initial project pipeline of 4,000 crores.
“Every 2 to 3 years, we enter a new city. Whenever we enter a new city, we first enter it through a pilot phase. Therefore, our entry is always a 2-phase entry. The first phase is the pilot phase, where we initially attempt to build our local empowered team because this business cannot be run from headquarters. It needs a local empowered team that can make decisions on a day-to-day basis. ... Whenever we enter the growth phase in a city, that is when we look for the next city to enter in the pilot phase. We have now entered NCR in the pilot phase. It will remain in the pilot phase for the next 2 to 3 years. We have added 2 small projects with a combined GDV of about 4,000 crores in NCR. These are also JDA projects.”
— Anand Kumar, Head of Investor Relations
Management balances high-margin outright land purchases with high-return joint development agreements to optimise overall performance. This mix is designed to maintain a steady 20% profit margin and return on equity across the portfolio.
“For JDAs, when we underwrite them, we underwrite them with IRRs of more than 30% and profit margins, or PBT margins, in the high teens, around 18% to 19%. For outright land, where we acquire the land outright, the economics reverse. The PBT margin will be 28% to 30%, but the IRRs will be 18% to 19%. The combination of the two gives us a 20% PAT margin and 20% ROE, which is what we are aiming to achieve at the company level. To a large extent, we have already achieved that.”
— Anand Kumar, Head of Investor Relations
Management dismisses fears of interest rate hikes impacting their core segments due to low loan-to-value ratios among their buyers. Since luxury and premium buyers rely more on savings than mortgages, the company expects demand to remain resilient despite macro shifts.
“In the premium segment, LTVs are generally 20% to 30%. Even in the mid-income segment, which is above 1.5 crore, LTVs will not be more than 40% to 50%. This segment has sufficient savings. Therefore, even if loan eligibility comes down slightly, buyers have enough savings to deploy, and demand does not suffer as much. ... As you move up the value chain from mid-income to premium to luxury, hardly anyone in the luxury segment takes a mortgage. Therefore, there is no question of interest-rate sensitivity in that segment.”
— Anand Kumar, Head of Investor Relations
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