The Chatter: Bajaj, Mahindra, Persistent, Indian Hotels & More
Q4FY26 | Edition #66
Welcome to the 66th edition of The Chatter — a weekly 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 9 companies across 5 industries and 2 podcasts.
Auto Ancillary
Bajaj Auto Limited
Mahindra & Mahindra Limited
Precision Camshafts
Software Services
Persistent Systems Limited
Tourism & Hospitality
Indian Hotels Company Limited
Engineering & Capital Goods
Astral Limited
Thermax
Sterlite Technologies
Retail
Timex Group India
Interviews/Podcasts
Zohra Khan
Brad Setser
Auto Ancillary
Bajaj Auto Limited | Large Cap | Automobiles
Bajaj Auto Limited is one of India’s leading automobile manufacturers with a strong presence across motorcycles, three-wheelers, and electric vehicles, along with a significant footprint in global export markets. In this interview, Rakesh Sharma, Joint Managing Director, discusses the company’s outlook for FY27, export demand recovery, electric vehicle growth, premiumisation trends, domestic market dynamics, and the factors expected to drive Bajaj Auto’s growth in the coming quarters.
The company advocates for emission-based regulations rather than mandates for specific technologies like electric vehicles. This suggests a strategic focus on a diversified fuel mix, including CNG and ethanol, alongside their EV investments.
“Our position has always been that it is very very important to define the standards of emissions and the environmental burden. But then one must be technology agnostic and actually use the multiple technologies which are available.”
— Rakesh Sharma, Joint Managing Director
The company reveals that nearly 30% of its domestic revenue is already generated from electric vehicles, highlighting their leadership in the transition. This high revenue contribution proves that Bajaj is not merely experimenting but is fundamentally shifting its business model.
“A company like ours already has 30% of our domestic revenues are electric you know we are at the forefront of the electric development so I’m not making these comments from a parochial way. But if one has to really balance all these issues out, then we must use the array of options which are available to us and have a solution drawn from that.”
— Rakesh Sharma, Joint Managing Director
Management clarifies that their electric vehicle division has already achieved profitability, which is a rare feat in the current EV market. For investors, this eliminates concerns that EV growth is dragging down the company’s overall margin profile.
“But of course we are at the forefront of electric. We are now a profitable electric company. I think with 30% share of our domestic revenues, it’s probably one of the highest in the automotive industry.”
— Rakesh Sharma, Joint Managing Director
Export performance was dampened by vendor manpower shortages and logistics bottlenecks rather than a lack of international demand. This suggests that the reported growth numbers are actually below the business’s true potential capacity.
“Yes, actually we were hampered by supply chain issues both on the availability side which is there were interruptions because of the availability of manpower across our vendors and some of our plants as well and logistics for exports the shipping opportunities declined. So I would say exports should have been in an ideal situation closer to 300 thousand units rather than the 250 odd which we have recorded.”
— Rakesh Sharma, Joint Managing Director
Management expects a strong second quarter driven by new product launches and increased production capacity for EVs. The resolution of supply chain issues is expected to boost Chetak and e-three-wheeler volumes by at least 10%.
“But it’s a very very busy quarter for us in quarter two because there are many new launches lined up and I think that will sparkle the business for us and we are finally hoping that there’ll be some unlock in capacity in our electric three-wheers and the jetak electric scooters which also could have done I would say about 10% odd better but got sort of restricted because of the supply chain issues.”
— Rakesh Sharma, Joint Managing Director
The company is planning to double its current electric vehicle production capacity to reach 100,000 units monthly. This aggressive expansion signals management’s high conviction in the pace of consumer adoption for electric two and three-wheelers.
“We are taking all measures to progressively double our capacity which is right now 50,000 units per month. We are looking over a period of time to double this capacity because we think that this segment is set to grow very fast.”
— Rakesh Sharma, Joint Managing Director
Strong demand for AI-related electronics is driving up component costs for the automotive sector, leading to anticipated inflation. The company has already mitigated half of this cost increase, suggesting a proactive approach to protecting the bottom line.
“There is this whole suckup which is taking place on the AI side which is driving up the cost of electronics and we are looking our outlook is that there is going to be strong inflation this quarter. We have already taken mitigating actions. We have sort of covered up at least 50% of the inflation.”
— Rakesh Sharma, Joint Managing Director
The company reiterates a very high shareholder payout ratio of 90% of profits once cash reserve targets are met. This disciplined capital allocation provides high yield visibility for long-term investors through both dividends and buybacks.
“No, no, no. We’ve already got a policy which is there and it is in practice and that policy says you know 90% of our given a certain level of cash reserves 90% of our profits are distributed through a combination of dividend and buyback. So it’s pretty spelled out pretty much in detail.”
— Rakesh Sharma, Joint Managing Director
Mahindra & Mahindra Limited | Large Cap | Automobiles
Mahindra & Mahindra Limited is one of India’s leading automotive manufacturers with a strong presence across SUVs, commercial vehicles, tractors, and electric mobility. In this interview, Nalinikanth Gollagunta, CEO, Automotive Division, discusses the company’s June sales performance, demand trends across urban and rural markets, electric vehicle adoption, production capacity expansion, pricing outlook, supply chain normalization, and the key factors expected to drive growth through the festive season and the rest of FY27.
The company has successfully resolved the labor and supply chain disruptions that were previously affecting production. This fix allows the company to fully capitalize on the strong 28% growth seen in their SUV segment.
“The labor areas we talked about earlier those been largely solved by end of this end of June. So we don’t expect that to be an issue going forward for us as well at this point in time. demand continues to be quite robust and that kind of reflects in the numbers that we’ve had 60,393 SUVs in the domestic business for us which is 28% growth so robust growth.”
— Nalinikanth Gollagunta, CEO, Automotive Division
The current sales growth is not limited to a single product or region but is happening across both city and country buyers. This broad demand suggests a healthy and resilient consumer base for their entire vehicle lineup.
“Overall we are quite enthused with what we have seen the growth is broad-based across the portfolio the growth is broad-based across rural and urban as well for us so quite a good set of numbers uh in June.”
— Nalinikanth Gollagunta, CEO, Automotive Division
The company has reaffirmed its yearly growth targets of 15-19% for SUVs and over 10% for commercial vehicles. This indicates that management believes the current sales momentum is stable and predictable.
“For the overall year, we are targeting mid to high teams growth in the SUV business and double digit growth on the um CV business as well or light commercial vehicle business. So that’s in line with what we had originally projected for the year and all the trends we are seeing give us confidence that we’ll be able to hit these numbers.”
— Nalinikanth Gollagunta, CEO, Automotive Division
New electric vehicle launches are bringing in fresh customers rather than just taking sales away from existing internal combustion models. This category expansion is helping the company significantly increase its total monthly sales volume.
“Firstly, EVs and category creation in the sense that anytime a new product comes in, it adds new volumes to the industry doesn’t necessarily cannibalize the existing products in the market as well. So, we see that happening when we put out our 9S. We were averaging around 4,000 vehicles per month before that. And with the 9S coming in, we are now close to 7,000.”
— Nalinikanth Gollagunta, CEO, Automotive Division
State-level incentives like road tax waivers are becoming a major driver for electric vehicle adoption across India. Continued government support is essential for lowering the total cost of ownership and boosting EV sales.
“The seminal government policies have been very supportive for the industry and now most of the state governments are starting to support this as well with road tax benefits and a few other things coming in depending on which state you’re looking at. So the Delhi government policy is definitely a welcome step in that direction and we see most of the state governments that we are talking to align with a similar set of policies.”
— Nalinikanth Gollagunta, CEO, Automotive Division
The company expects its monthly electric vehicle sales to stabilize between 7,000 and 8,000 units for the current fiscal year. This establishes a baseline for investors to track the company’s progress in the green energy transition.
“Right now we’re projecting somewhere in the 7,000 to 8,000 range is what we’re projecting on a monthly basis. 7,000 to 8,000 EVs per month is what you’re projecting at least in this fiscal.”
— Nalinikanth Gollagunta, CEO, Automotive Division
Management plans to raise vehicle prices soon to offset the cumulative cost increases experienced over the last half-year. This move is intended to protect the company’s profit margins as other competitors in the industry do the same.
“While some of the commodity um costs have come down but a lot of some the costs that we have seen build out in the last 6 months um we have passed some of it as an industry to customers but we’ll have to go take a price hike. We have seen some of the OEMs announced it as well and we’re looking at seriously taking a price hike in the next couple of weeks or so.”
— Nalinikanth Gollagunta, CEO, Automotive Division
Waiting periods for most vehicles have been reduced to a manageable 3 to 5 weeks, reflecting better production efficiency. Investors should note that these wait times may increase as the high-demand festive season approaches.
“We are on average anywhere from 3 to 5 weeks is what we see. There could be one or two variants odd variants which might be higher than that but we’re largely where we want to be in the 3 to 5 week range. My sense is as we get closer to festive it can tighten a little bit.”
— Nalinikanth Gollagunta, CEO, Automotive Division
Precision Camshafts | Micro Cap | Auto Ancillary
Precision Camshafts Limited is one of the world’s leading manufacturers and supplier of camshafts, a critical engine component, in the passenger vehicle segment based on its estimated global market share by volume. The company supplies several varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications from its manufacturing facilities in Solapur, Maharashtra.
[Concall]
While discussing business visibility, Karan Shah highlighted the company’s recent order wins from leading OEMs and said they significantly extend revenue visibility over the coming years.
“As highlighted in our previous earnings call, PCL has secured multiple new business awards from leading OEMs, including Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors, Renault-Nissan and some other international customers as well. These programs extend our business visibility well into the next decade and represent a cumulative lifetime revenue of approximately ₹1,500 crores over and above our existing order book.”
— Karan Shah, Whole-Time Director, Business Development
Management outlined its medium-term capex plans to support recently won orders and future growth.
“Over the next three years, PCL plans to invest over ₹100 crores in foundry and machine shop capacity expansion, advanced manufacturing technologies as well as automation. These investments are expected to support incremental revenues of more than 2x the capex, which will be incurred in the coming years.”
— Karan Shah, Whole-Time Director, Business Development
Along with capacity expansion, the company is investing in automation to improve efficiency and lower costs.
“In addition to the capacity expansion, we are undertaking significant automation initiatives across the foundry and the machine shop. These projects are expected to generate significant cost savings while improving quality, productivity and efficiency.”
— Karan Shah, Whole-Time Director, Business Development
The company announced an important milestone in its EV business.
“I am pleased to share that we have successfully developed our electric heavy commercial vehicle platform and have already delivered the first vehicle to our customer in this quarter. This agreement marks an important milestone in our electrification journey and validates our capabilities. The vehicle is undergoing customer evaluation and field trials with initial feedback being encouraging.”
— Karan Shah, Whole-Time Director, Business Development
Responding to a question on EMOSS, management said European demand remains weak despite operational stability.
“The Europe situation is very volatile right now. There are two wars happening and there are several constraints, a lot of issues on subsidies and so on. Right now, we are stable at the rate at which we are operating. We don’t see a great amount of growth this year or perhaps even next year. But we are actively working on a lot of new customers and new applications, where any scale-up would happen over the next one-and-a-half years or so.”
— Karan Shah, Whole-Time Director, Business Development
When asked about inorganic growth, management ruled out overseas acquisitions.
“Not at all internationally, but we are actively looking in India.”
— Karan Shah, Whole-Time Director, Business Development
Management explained why margins should improve over time.
“The new projects are all assembled camshafts. They are higher value-added products and therefore higher margin. Along with automation, we expect EBITDA margins to improve, although it would be difficult to quantify that right now.”
— Karan Shah, Whole-Time Director, Business Development
Management acknowledged near-term pressure on margins from commodity inflation.
“All raw materials, including steel, aluminium, LPG, cutting tools and oils, have increased over the last two to three months due to the Iran war situation. While customers do compensate us, they don’t fully compensate us immediately, and there can be a time lag between incurring the cost and receiving compensation. So, there will be some margin impact, although we hope this remains a short-term situation.”
— Karan Shah, Whole-Time Director, Business Development
Discussing the heavy commercial vehicle platform, management highlighted the opportunity from just one customer.
“The heavy commercial vehicle platform has been delivered to a customer and is undergoing testing. We hope to complete certification over the next six to eight months. We already have an MOU with one customer, where we are looking at an order book of ₹60–70 crores of annualized revenue from just one customer and one product. If we extrapolate this across other customers in similar applications, the opportunity is tremendous.”
— Karan Shah, Whole-Time Director, Business Development
Management explained why it chose medium and heavy commercial vehicles rather than mainstream logistics.
“There is a clear gap in the market. Today there are OEMs operating in the electric LCV space and OEMs operating in very large trucks and buses. But in the middle segment, from 10 tonnes to 30 tonnes, there are no OEMs present. We are targeting specialized customers where electrification provides immediate ROI and lower total cost of ownership, particularly in public services, infrastructure and utilities.”
— Karan Shah, Whole-Time Director, Business Development
When asked about diversification into defence and aerospace, management reiterated its core strategic focus.
“Our whole objective is to become the number one player in the shaft space that we operate in. In India, we are by far the largest. We aim to be the largest in the world and there is still significant headroom for us to grow. One thing is clear: in the camshaft business, we want to be the last man standing and the biggest player in this business.”
— Karan Shah, Whole-Time Director, Business Development
Management believes global OEMs have become less aggressive on electric vehicles, which supports the outlook for the company’s traditional camshaft business.
“Very clearly, we hear from our OEMs that the EV business direction that was very clear two years ago has reversed, as some of the largest American OEMs have taken a complete U-turn on their EV strategy. I think that helps us significantly.”
— Karan Shah, Whole-Time Director, Business Development
Explaining the company’s EV retrofit model, management highlighted both cost savings and customization benefits.
“If you buy a brand-new electric heavy truck today, it costs around ₹1.2–1.4 crores. Through retrofitting, because we use the existing chassis and body, we can do it at around 70–75% of that cost. In addition, we can customize battery capacity from 200 kWh all the way to 450 kWh depending on the customer’s application—something that a typical OEM does not offer. Also, in the category we operate in, there are currently no new electric trucks available.”
— Karan Shah, Whole-Time Director, Business Development
Management explained that commodity inflation will be recovered over time, although there could be timing differences.
“Most of our customers have agreed to compensate us for this increased cost, which is beneficial to us. However, there might be a time lag because of production cycles, exports and payment timelines.”
— Karan Shah, Whole-Time Director, Business Development
Management explained that it is avoiding direct competition with large truck OEMs.
“We are not trying to go after a logistics play or a transport-of-goods customer. We are targeting specialized customers where electrification has immediate benefits in terms of ROI and total cost of operation. These are niche applications related to public services, infrastructure and utilities.”
— Karan Shah, Whole-Time Director, Business Development
Responding to a question on future strategy, management distinguished the Indian market from its European operations.
“We do this in Europe, but I think the Indian market does not look like that at this point of time, at least.”
— Karan Shah, Whole-Time Director, Business Development
Software Services
Persistent Systems Limited | Large Cap | IT Services
Persistent Systems is a global technology services firm specializing in digital engineering, cloud transformation, and AI-led enterprise modernization. The company serves a diverse client base across software, healthcare, financial services, and industrial sectors.
[Concall]
Persistent has secured a massive $650 million multi-year contract with an existing US-based technology leader. This provides strong revenue visibility and reinforces the company’s ability to scale existing client relationships.
“From this deal perspective, this is a net new deal which will add roughly about $125 million plus on an annual basis. Overall, for the period of the contract, it will be roughly about $650 million plus over 6.5 years. This is a true testimony to the relationship and to what we have delivered for this customer over the years.”
— Sandeep Kalra, CEO
Persistent is paying a substantial premium to acquire Nagarro through a cash-based voluntary public takeover offer in Germany. The transaction represents a major capital allocation decision to secure a controlling stake in a high-growth asset.
“Persistent has agreed to acquire 100% of Nagarro shares at an enterprise value of €1.27 billion based on €81 per share in cash. This is a premium of 140% to the undisturbed closing price on June 25, 2026, and 94% to the 3-month volume-weighted average price.”
— Vineet, CFO
Nagarro has a large base of small-to-mid-sized clients with very little overlap with Persistent’s existing customer list. Persistent intends to apply its successful account mining techniques to significantly grow the revenue coming from these individual accounts.
“Nagarro has 180 logos that are $1 million plus, but their largest client is less than $50 million. There is very little customer overlap—less than 10 accounts. If we apply Persistent’s mining strategies to these high-quality logos, we don’t necessarily need to hunt for new ones.”
— Sandeep Kalra, CEO
The Nagarro acquisition is structured to be immediately beneficial to earnings per share after adjusting for non-cash accounting charges. This suggests the deal is financially sound and will not dilute shareholder value in the short term.
“We anticipate a 70-30 split for goodwill and intangibles, with the latter amortized over 8 years at an interest rate between 4.1% and 4.5%. When we say cash EPS accretive, we mean excluding amortization. If you remove the one-time transition expenses, it will be reported EPS accretive in year one as well.”
— Vineet, CFO
Tourism & Hospitality
Indian Hotels Company Limited (IHCL) | Large Cap | Hotels & Hospitality
Indian Hotels Company Limited (IHCL) is India’s largest hospitality company, with a portfolio spanning luxury, premium, mid-scale, and leisure brands across domestic and international markets. In this interview, Puneet Chhatwal, Managing Director & CEO, shares his outlook on the hospitality sector, discusses the impact of geopolitical developments on travel demand, explains why domestic demand continues to remain resilient, highlights India’s untapped tourism opportunity, and outlines how IHCL is building a diversified, capital-light portfolio to sustain long-term growth.
Management attributes the current high growth rates to a weak comparable period last year and strong underlying demand. The company is confident in achieving its 12-14% growth guidance for the full year, with potential for further upside if external conditions remain stable.
“The base was much lower and the demand continues to stay robust so if the base is lower demand is robust then you see exponential growth uh but it’s not that um that this is going to be like 20% plus every month going forward what we have guided for we believe in the 12 to 14% for sure and if none of the crisis come our way in the rest of the financial year then it could go even north of 14%.”
— Puneet Chhatwal, Managing Director & CEO
While geopolitical issues are temporarily reducing international visitors, surging domestic travel is more than filling the gap. This shift highlights the resilience of the Indian market and its ability to sustain occupancy despite global travel disruptions.
“Of course, the number of foreign tourist arrivals, whether business delegations or tourismdriven demand, that is declining. At the same time, the domestic demand continues to increase both on leisure as well as business front. So I think a lot of that has shifted the demand temporarily.”
— Puneet Chhatwal, Managing Director & CEO
The company is relying on its broad mix of brands and contract types to protect against economic shocks and rising costs. This diversification is a core part of their strategy to maintain stable earnings regardless of volatility in specific travel segments.
“I think we remain relatively confident that we have diversified enough by brand, by geography, by various kinds of contracts that we’ll be able to mitigate the challenges that come whether through crude prices or through you know increase in costs or lesser number of foreign travel, more domestic more home stays, more you know a lot of that is happening but I think at some point it will also settle down but we are very well prepared and geared for any of these crisis.”
— Puneet Chhatwal, Managing Director & CEO
The company plans to operationalize one new hotel every single week during the current financial year. This aggressive pace of openings is a key driver for market share expansion and top-line growth.
“Our not like forlike growth remains very strong. We are well poised to open 50 hotels this year. This is also what we have already you know conveyed to the market and 50 hotels means opening a hotel a week not signing a hotel a week.”
— Puneet Chhatwal, Managing Director & CEO
IHCL has successfully scaled its non-Taj brands like Ginger and Vivanta to substantial sizes within the portfolio. The ability to grow these differentiated brands at scale creates a more balanced revenue stream across various price points.
“Each of these new offerings under selections vivanta and gateway have scaled up to more than 50 hotels. Ginger itself is scaled up to almost 250 plus portfolio. So I think what we were not able to achieve in the past as well maybe 20 years ago maybe 15 years ago was scaling up of newer brands.”
— Puneet Chhatwal, Managing Director & CEO
New business segments are delivering high growth and superior profit margins compared to the core business. As these high-margin segments represent a larger share of the total revenue, they should drive overall profitability higher.
“And our new businesses are doing fairly well in terms of a keer of 25% on topline and a 35% plus ebita margin. They are very small percentage of the portfolio but our pi is becoming larger. So if I say 12 to 14% growth of our uh top line, we are talking about at an enterprise level of almost like 1,700,800 crores”
— Puneet Chhatwal, Managing Director & CEO
Management identifies international tourism as a major untapped opportunity that has not yet returned to its full potential. Any recovery in global travel to India would provide a significant boost to luxury brand occupancies and rates.
“Foreign tourist arrivals in India is at an absolute low amount compared to any other country whether in the region or of the size of our country or of a country which has so much to offer. So I think that is the hidden upside for the sector. Uh and you know our number of foreign tourist arrivals is sub 10 million when a city of Paris alone gets 25.”
— Puneet Chhatwal, Managing Director & CEO
IHCL is increasingly using management contracts rather than asset ownership to expand its footprint. This capital-light approach reduces the company’s financial risk while allowing it to scale rapidly across all segments of the market.
“We have carried the same ethos forward and today we have an offering for all Indians for all customers at all price points. So there was a challenge 2 years ago very few believed that this would be possible and if we were getting distracted but we’ve been able to build scale and on a capital light model so that we don’t have huge value at risk.”
— Puneet Chhatwal, Managing Director & CEO
Small, strategic capital investments in key locations are yielding outsized returns for the Ginger brand. This suggests that IHCL can drive significant growth without requiring massive amounts of new capital.
“Yes, we can continue to grow exponentially in these businesses because the investment level if we were to invest our own money to secure you know flagship destinations trophy assets for a ginger like we have done with Ginger Mumbai airport if we were to do four five of those it’s not a huge capital investment but it gives exponential growth to the brand. So these brands in this segment are very well positioned to benefit with little capital infusion, little talent infusion to keep growing exponentially.”
— Puneet Chhatwal, Managing Director & CEO
The Ginger brand is targeted to reach over 250 hotels within the next year, illustrating the speed of the company’s current expansion. Scaling these mass-market brands alongside the luxury Taj brand creates a robust and diverse earnings engine.
“Having a brand like Taj which is getting close to 150 hotels portfolio being the pride of the nation and a very strong brand now at the same time we have built Ginger as a brand which should get to 250 plus hotels by not 5 years but in the next 12 months. I think that is a very solid representation of what is possible with the other brands that are following um in our brandscape and are very well poised to make a difference in terms of contribution to the sector to the nation and to our P&L.”
— Puneet Chhatwal, Managing Director & CEO
Engineering & Capital Goods
Astral Limited | Large Cap | Plastic Products
Astral Limited is a leading Indian building materials company specializing in chlorinated polyvinyl chloride (CPVC) piping systems and adhesives. The company is currently reorganizing its operations to separate its piping and chemical businesses into two distinct listed entities to improve focus and capital allocation.
[Concall]
The company is expanding its specialty chemical business via DSS to replace expensive imports and drive higher internal margins. Investors should note the potential for export growth in this segment with relatively low additional capital expenditure.
“Now that we have a commercial setup and have started commercial production at DSS, at some stage, we would like to scale up the production facilities at DSS and establish a state-of-the-art chemical facility. Actually, the capex cycles are not very heavy here, but there are significant benefits from using the product in-house, and there is huge potential for export.”
— Sandeep Engineer, Chairman and Managing Director
The demerger logic is based on the distinct business models and manufacturing processes of the two divisions. Separating them allows the adhesive and paint brands to leverage their consumer-facing synergies more effectively.
“Adhesives is completely B2C, whereas pipe has a B2B project component. Secondly, the manufacturing is different—one is polymer-related and the other is chemical-related. Thirdly, adjectives and paints go hand-in-hand in terms of sales, uses, and the commonality of the applicators.”
— Sandeep Engineer, Chairman and Managing Director
The company is targeting specialized, high-margin sectors like defense and green energy for its chemical business. This strategy focuses on import substitution, which offers a competitive moat in the Indian industrial market.
“Segment-wise, we are focusing on adhesives for renewable energy (wind and solar) and products for defense. Our focus is on making these chemistries in India rather than importing them.”
— Hiranand Savlani, Chief Financial Officer
The newly formed chemical entity will benefit from lower effective tax rates due to past losses and amortization. This should lead to better cash retention and post-tax profitability during the initial years of the demerger.
“The adhesive tax rate will be low initially because of the write-offs we do every year. Plus, we have the accumulated losses of the paint division from the last couple of years. This will provide a benefit, so the tax rate for that entity will be lower than for pipes.”
— Hiranand Savlani, Chief Financial Officer
Thermax | Mid Cap | Engineering & Capital Goods
Thermax offers a wide range of products and solutions for industrial heating, cooling, water management, and pollution control. They design and build boilers, power plants, wastewater treatment systems, and waste heat recovery solutions.
Speaking about India’s energy transition and the government’s increasing focus on energy security, Ashish Bhandari said the Bio-CNG industry is nearing an inflection point and could witness rapid growth once the remaining policy decisions are announced.
“There’s a very strong realization all around that the pace of energy security development needs to increase. There was a time when it was expected that India could have more than 3,000 biogas plants. Today, we are not even at one-tenth of that number because some of the initial projects struggled to achieve commercial viability, the economics were marginal, and there were policy decisions that the government was still working on. As I understand, in the next couple of months there are some very significant policy decisions expected that can put this industry on a growth path like never before. I expect Bio-CNG to become India’s next ethanol story, with hundreds of plants coming up across the country.”
— Ashish Bhandari, Managing Director & CEO, Thermax
Explaining the long-term market potential, Bhandari highlighted India’s dependence on imported natural gas and how Bio-CNG can substitute a meaningful portion of demand.
“India today imports more than 50% of its natural gas requirements. Natural gas demand is growing rapidly across city gas distribution, industrial applications and transportation. It is one of the fastest-growing components of India’s energy mix, and Bio-CNG plants directly address this requirement. Done well, this industry is worth several billion dollars in India—perhaps even a $10–20 billion annual opportunity. Overall, I believe as much as 20% of India’s natural gas needs can eventually be met through domestic Bio-CNG deployment.”
— Ashish Bhandari, Managing Director & CEO, Thermax
Discussing execution, Bhandari said the company has significantly improved plant performance after learning from its first set of projects.
“We took orders for 14 plants about three years ago. During the first year, it was all about learning—every day we wondered whether we would really master this technology. But over the last year, our stability has improved tremendously. All our plants are now going through commissioning and performance tests. This plant has successfully completed its performance test, and another large plant in Punjab is currently undergoing the same process. We now understand the technology very well, and we believe the economics are getting very close to making these projects commercially viable.”
— Ashish Bhandari, Managing Director & CEO, Thermax
While Thermax has achieved technological maturity, management believes supportive policy will determine how quickly the industry scales.
“With the last couple of policy decisions expected from the central government, that is really the only thing this industry needs to break out into something special. Hopefully, those decisions will come very soon.”
— Ashish Bhandari, Managing Director & CEO, Thermax
Asked about the potential revenue contribution for Thermax, Bhandari outlined both EPC and recurring revenue opportunities.
“Our revenue has two parts. One is constructing the plant itself. A typical 20-ton-per-day plant involves a project size of around ₹100–150 crore. Then there is a recurring annuity from operations and maintenance—running the plant and maintaining it. Going forward, there could also be additional service revenues from sourcing biomass, managing digestate and other related activities. With the right policy decisions that are expected, this could easily become a ₹1,000–2,000 crore business for Thermax.”
— Ashish Bhandari, Managing Director & CEO, Thermax
On the timeline for industry growth, management expressed optimism that the sector is approaching an important inflection point.
“We will have to see when the policy decisions come, but I do believe the next two to three years will be very exciting for this industry.”
— Ashish Bhandari, Managing Director & CEO, Thermax
Responding to a question on profitability, Bhandari explained that margin expansion will depend on industry growth as well as Thermax’s ability to differentiate its technology.
“It has two parts. First, it depends on the external environment. If the expected pricing changes and policy support come through, and the industry grows rapidly, the ability to make money also improves. Second, it depends on Thermax’s ability to build differentiation into the solution. These plants have taught us a tremendous amount, and we are working on at least three major areas of innovation that we believe can provide significant differentiation in Bio-CNG. If both these factors come together, the opportunity to generate attractive margins is significant.”
— Ashish Bhandari, Managing Director & CEO, Thermax
Management cautioned that while policy support can drive volumes, sustainable profitability will require technological differentiation.
“If the external environment improves but we fail to build differentiation, the volumes will come. However, we will still have to see how profitable that business becomes. We are certainly working towards achieving both.”
— Ashish Bhandari, Managing Director & CEO, Thermax
Sterlite Technologies | Small Cap | Engineering & Capital Goods
Sterlite Technologies, formerly known as Sterlite Optical Technologies, is an industry-leading manufacturer of telecommunication cables. The company has diversified its portfolio to include a range of products such as Optical Fibers, Power Transmission Conductors, and Telecom Cables. It caters to sectors like telecom, defense, oil and gas, and aviation.
On the post-QIP balance sheet, management outlined its leverage target while highlighting the need for a stronger financial position to pursue growth opportunities.
“A big part of the focus for the QIP had been strengthening our balance sheet. We definitely see strong opportunities for growth for the company, both on the telecom side and definitely on the data center side. We are seeing strong growth in opportunities in the US, Europe and increasingly in India. To capture these opportunities, we felt strongly that we need to have a very strong balance sheet. We have close to about ₹1,100–1,200 crores of net debt on our balance sheet and, with this fund raise, we will be in a much stronger position. Going forward, we want to have a net debt-to-EBITDA ratio of about 1 to 1.2 times, and with this QIP I think we are well placed within that.”
— Ankit Agarwal, Managing Director
Discussing investment priorities, management said capex will focus on expanding capabilities for both telecom and data center customers.
“We’ve been very clear that we are looking at a good mix of our customers from both the telecom side as well as the data center side. Geographically, we continue to believe that 80% to 85% of our sales will come from the US and Europe, with the balance coming from India. To cater to this growth, we are investing in upgrading our equipment to make sure that we can provide end-to-end solutions. More and more of what we will serve is through the portfolio we have developed called Neurales, and we’re very excited by how those opportunities are panning out. Currently, we are looking at about ₹500 crores of capex for this year and probably similar numbers over the next couple of years.”
Providing an update on the order book, management highlighted a major new order win from the US.
“The order book that we had last shared was in the range of about ₹7,000 crores. Since then, we’re very happy to share that we have announced a north of ₹10,000 crore order from a large hyperscaler in the US. We continue to see good interest from both the telecom sector as well as the data center segment, and we are continuously upgrading our product portfolio to make sure that we can serve this segment even better going forward.”
Management explained why it remains optimistic about global fiber demand despite the industry’s recent inventory correction.
“There’s definitely strong demand in the market, both on the telecom side and especially from the data center side. There are also new applications where fiber optics are required in good volumes, such as drone applications and first-person-view applications. What’s also happening is that the amount of fiber required within data centers is increasing because of the shift to higher-capacity requirements, as you’re moving from 10-kilowatt to 100-kilowatt structures and from 400-gig speeds to 800-gig speeds and even 1.6 terabit speeds. All of this requires a significant increase in fiber optics within data centers.”
Alongside AI-driven demand, management cited government-led broadband programs as additional growth drivers.
“Going forward, we do see strong demand for fiber optics. In India, we have projects like BharatNet, and in the US there are large government projects being rolled out. Overall, we feel positive about the demand for the fiber optic market.”
On profitability, management linked margin improvement to better capacity utilization and an increasing contribution from higher-value connectivity solutions.
“Historically, when we operate at about 70% utilization, we have been able to demonstrate EBITDA margins of around 20%. In addition to that, as we build on our connectivity portfolio, we do see that margins can even be better than that. One thing that we are mindful of is that the current tariffs from India to the US are broadly in the 10% range, which could go up towards around 18% in the near term based on the bilateral discussions that are going on. But, net-net, as we continue to scale up our capacity utilization, the EBITDA margins can be north of 20%.”
Responding to a question on the commercialization of the Neurales portfolio, management shared its revenue mix target.
“The Neurales portfolio is getting good interest from customers, both in India as well as globally. We’ve broadly guided that our enterprise and data center portfolio will move towards 30% of our revenue towards the end of this year. Going forward as well, we see a good mix of our sales between the telecom segment and the data center segment.”
Management highlighted its technology pipeline and the timeline for commercialization.
“There are three or four very interesting technologies such as hollow-core fiber, multi-core fiber, G654E long-haul fiber, etc., which we are working on. Broadly, over the next one to two years, we do see that some of these solutions will start becoming more meaningful for the company.”
Management reiterated its geographical strategy despite growing opportunities in India.
“Geographically as well, we continue to believe that a strong portion of our sales—close to 80% to 85%—will be from the US and Europe, and the balance will be in India.”
Management emphasized that deleveraging is about enabling future growth rather than simply reducing debt.
“To capture these opportunities, we felt strongly that we need to have a very strong balance sheet, and that gives us options for growth going forward.”
Management explained one of the structural demand drivers for optical fiber.
“The amount of fiber required within the data centers is increasing because of the shift to higher-capacity requirements, moving from 400-gig speeds to 800-gig speeds and even 1.6-terabit speeds. All of this requires a significant increase in fiber optics within data centers.”
Management expects the evolving product mix to support profitability over time.
“As we build on our connectivity portfolio, we do see that margins can even be better than 20%.”
— Ankit Agarwal, Managing Director
Retail
Timex Group India | Small Cap | Watches & Accessories
Timex Group India is a prominent player in the Indian watch market, specializing in the design, manufacturing, and distribution of a wide range of timepieces. The company operates a dual model of local production for mass-market brands and importing high-end luxury labels like Versace and Guess.
[Concall]
Management is expanding its manufacturing footprint in Baddi to nearly double its current production capacity. This flexible infrastructure setup allows the company to scale supply rapidly in response to seasonal demand spikes.
“We decided on a long-term plan with a separate building on our land in Baddi. The separate building will take our capacity from 6 million to 10 million in a single shift, with a total potential for 15 million. The physical infrastructure will be ready, and I can add assembly lines within 30 to 45 days when needed.”
— Deepak Chhabra, Managing Director
Timex is moving toward localizing production for its higher-volume licensed brands like Guess to improve margins and supply chain efficiency. This transition marks a shift from a pure import model to localized value creation for international brands.
“All our luxury and fashion brands are imported from our subsidiaries because the current volume in those brands does not justify local manufacturing. You need a width of 250 to 350 SKUs per brand, and until you sell half a million units per brand, local supply chain is not beneficial. However, we plan to start making Guess in India next year.”
— Deepak Chhabra, Managing Director
E-commerce has rapidly become a major revenue driver, growing from a negligible share to nearly half of the business in just four years. The reliance on a direct-to-portal model suggests high operational efficiency in reaching the digital consumer.
“Four years ago, online was only 5%. Today it is 40%. We use four models. 1P (First Party) involves selling directly to portals like Flipkart, Amazon, and Myntra. This is our biggest contribution because it is operationally easy.”
— Deepak Chhabra, Managing Director
Management highlights that Timex is the only global competitor to Titan in the massive sub-10,000 rupee market segment. Their significantly higher growth rate relative to the market leader suggests they are capturing substantial market share.
“The watch market is a pyramid, and at the bottom, it is just Titan and Timex. There are no global brands selling for less than 10,000 rupees. Titan is roughly 4.5 times our size, but we are growing at a 35% CAGR while they are at 13-14%.”
— Deepak Chhabra, Managing Director
Timex is expanding its portfolio into the bridge-to-luxury segment with a new Swiss-made brand while maintaining its core strength in mass-market watches. This multi-tiered brand strategy aims to capture both the high-volume bottom and high-margin top of the market pyramid.
“We will also launch a new entry-price Swiss brand in January, our own brand made in Lugano, priced between 29,999 and 70,000 rupees. The largest share of the Indian market will always be for watches under 10,000 rupees.”
— Deepak Chhabra, Managing Director
The company is integrating AI into its core business processes to speed up design and optimize marketing spend. These technological investments are intended to sustain growth without further increasing overhead costs.
“We are now investing in AI, specifically for product design and marketing. We identify 52 use cases that can be automated through AI to improve turnaround times and analytics. This will help with better capital allocation and efficiency.”
— Deepak Chhabra, Managing Director
Interviews/Podcasts
Zohra Khan | Indian EV infra | Subtext By Zerodha
India’s EV adoption is now less dependent on the vehicles, and more on everything it plugs into — the charger, the connector, the software, the protocols that charging networks use to talk to one another, and, most importantly, the ageing Indian electricity grid beneath all of it. To make sense of all this, we spoke to Zohra Khan, founder & CEO of IPEC, which designs and manufactures EV chargers for India’s leading two- and three-wheeler OEMs, to understand what it actually takes to build charging infrastructure at scale in India.
[Interview]
The biggest friction in public EV charging isn’t the hardware — it’s the three invisible layers beneath it that have to work in sync for a user to have a seamless experience.
“The first one is the actual physical connector. The second thing is a protocol or software layer — even if the connector matches, you usually need to also have software interoperability. The third is the actual power grid — the grid conditions and quality. And this is a very underappreciated topic, because a charger that works very well in other areas like Germany or China might not work well here.”
— Zohra Khan, Founder & CEO, IPEC
Two-wheeler and three-wheeler charging still lacks the connector and software standardisation that four-wheelers have, partly because India is leading this segment globally with no existing standard to borrow from.
“Countries like India are leading the two-wheeler, three-wheeler EV revolution. So a lot of people are looking at us to define the way forward in terms of what the connectors will be and what the protocols will be.”
“Standardization cannot be done in isolation. You need EV OEMs, you need charger OEMs, you also need network operators and infrastructure players. So we’re trying to bring everybody together.”
— Zohra Khan, Founder & CEO, IPEC
India is technically a power surplus country — the generation and transmission layers are largely fine. The real problem is in the last mile, and it has been building for years.
“India has a distribution problem. This distribution layer, which is mainly the 11 kV and the 415 volt lines — a lot of these lines are overloaded. Transformers which are serving these residential areas were probably installed with requirements from ten years ago.”
— Zohra Khan, Founder & CEO, IPEC
The evening peak load problem is where EV charging, air conditioning, and household demand all converge at once — and where residential transformers are most exposed.
“Everybody comes back in the evening and everybody puts on their ACs, chargers, everything. It happens at the same time. So the peak happens all at once. That’s when the transformer will run hotter, the insulation will age faster, and it’ll fail prematurely.”
“Dynamic load management — where you have a cloud-based management system onto which multiple chargers are connected, and this system knows what the available load or capacity is, and based on that dynamically decides how much power to distribute — this is something that has to be done if we don’t want to be stressing our power grids.”
— Zohra Khan, Founder & CEO, IPEC
The grid that Indian EV chargers have to work with is far more volatile than what most imported chargers are designed for — and that constraint, counterintuitively, becomes a competitive advantage.
“You can see voltages going less than 200 volts also. It’ll go up to 300 volts also, even though the nominal voltage should be 240 volts. A lot of the products which are designed for Europe and China do not have a wide input voltage range, because they have more stable grids. So those products come here and they will easily fail.”
“A product that is developed for India can work anywhere in the most reliable way — it’s massively stress tested. Whether it’s a Chinese charger or a German-made charger, I would say we’ll do it better and cheaper.”
— Zohra Khan, Founder & CEO, IPEC
Semiconductors and microcontrollers remain the hardest components to localise — and despite strong progress on other fronts, this bottleneck will persist for at least another three to five years.
“The semiconductors and microcontrollers — these are currently being imported. India does not have a mature semiconductor ecosystem. That’ll still take maybe three to five years to reach the kind of industrialization and the kind of price points that exist in the industry today.”
“Our DVA is already more than 55%, which means 55% of whatever we build is already localized in India. The remaining is because of these bottlenecks.”
— Zohra Khan, Founder & CEO, IPEC
The next frontier for EV chargers in India isn’t faster charging — it’s bidirectional charging, which turns a vehicle battery into a backup power source, with particular relevance for tier two, tier three, and rural India.
“The bidirectional charger is one product which I’m especially excited about — I’m not only able to use the charger to charge the vehicle, but I can also use this charger to use the energy that’s stored in the battery to power a small load.”
“That’s a use case that can be used not only in tier one cities, but in tier two, tier three and rural India also, where they might have power outages.”
— Zohra Khan, Founder & CEO, IPEC
Brad Setser| Global Dollar Cycle|Subtext By Zerodha
The role of the dollar, and its influence on global trade, is a complicated story that has constantly changed over time. To make sense of all this, we spoke to Brad Setser, a senior fellow at the Council on Foreign Relations and former US Treasury official, to understand the forces actually driving global capital flows. Our conversation dives deep into why the dollar is currently so strong, how the manufacturing surpluses of China, Korea, and Taiwan quietly finance the American deficit, what China would have to do to rebalance, and what an AI bust would do to the currency.
Dollar strength today has little to do with reserve currency status or safe-haven demand — it is being driven by investors chasing exceptional returns in US equities, a pattern that only emerged in the last year.
“For most of the period after 2014, through the COVID crisis, the bulk of the flow into the US was not a net flow into the equity market. Think much more Asian insurance companies — Taiwanese insurance companies, Japanese insurance companies, German insurance companies, Swedish pension funds — looking for higher returns on bonds.”
“Over the past year there have been quite significant flows — two, three percentage points of GDP, on net, into the US equity market, obviously chasing the run-up in the price of the tech platforms.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
If the AI bubble bursts, the dollar has a long way to fall — and the current level of dollar strength only makes the potential reversal more severe.
“If the bubble bursts, there’ll be a big fall-off in new equity inflows, and you’ll have a bunch of existing investors possibly hedging their existing exposure, which creates additional downward pressure on the dollar.”
“We’re still at levels of the dollar, on a broad basis, that were last seen in the dot-com era — historically strong dollar levels against the yen, against the yuan on an inflation-adjusted basis, against the Taiwan dollar. The higher you go, the more room there is to fall — and the dollar is pretty high.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
The biggest source of dollar accumulation in the global economy today is not oil exporters — it is the manufacturing economies of Northeast Asia, and that will remain true until oil crosses roughly $130 a barrel.
“China’s running a $1.2 trillion trade surplus. Korea and Taiwan are going to run a surplus of 400 to 500 billion. These are big, big numbers.”
“There are a lot more dollars in these manufacturing exporters — DRAM dollars, chip dollars, Chinese-unwillingness-to-let-your-currency-go-up dollars — than there are petrodollars.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
Major U.S. tech giants have shifted from saving cash to borrowing heavily for AI infrastructure. This massive capital spending is creating a global boom for chip manufacturers and hardware suppliers.
“The second risk, which right now in the US is viewed as an opportunity, is the extent to which the big US technology companies have gone from being net savers to being net borrowers to fund their enormous investments in AI and data centres. That’s really having a profound impact on the US and the global economy. You look at Korea’s surplus, you look at the price of memory chips — you’re really seeing upward pressure on a bunch of manufacturing sectors globally.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
China’s current reliance on exports is not a permanent feature — it is the direct consequence of the property bubble bursting, and investment and exports have historically traded off against each other.
“Periods of strong investment have been periods of less reliance on exports. The current period of much weaker investment, driven by property, has been associated with more reliance on exports.”
“What’s unique now is the extent to which China is back to relying on exports — how it’s different when an economy as big as China is relying on exports.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
China’s export machine has proven far more resilient to US tariffs than Washington expected — and that asymmetry has handed Xi the upper hand in negotiations.
“Xi took the tariff punch, absorbed it better than expected. China was ready. Chinese firms were ready. They knew how to set up assembly operations in Vietnam, and China’s global trade didn’t suffer.”
“The US discovered it was really dependent on China for some critical minerals. China’s supply controls have been effective. So the US is negotiating from a position of weakness.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
What makes China’s manufacturing dominance particularly difficult for the rest of the world is that success at the high end has not translated into any retreat from the low end — leaving every other country squeezed at both levels simultaneously.
“China’s managed to be competitive at both. That’s partially because China’s used a lot of technology and automation in some of the low-end manufacturing sectors, so they’re no longer as low-end.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
Taiwan’s level of external accumulation has reached numbers normally associated with oil exporters at peak prices — a scale that is historically unprecedented for a manufacturing economy.
“Taiwan has roughly 200% of its GDP invested abroad. Two-thirds of the assets that Taiwan has for the retirement of Taiwanese workers are invested in foreign bonds. That’s a crazy-high number. And now TSMC is just accumulating dollars on its own balance sheet.”
— Brad Setser, Senior Fellow, Council on Foreign Relations
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Quotes in this newsletter were curated by Shahid, Meher, & Srusti.
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.