The Chatter: Dixon, Motherson, Biocon, Glenmark & More

Q1 FY27 | Edition #77

Aug 07, 2026

Welcome to the 77th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.

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

In this edition, we have covered 6 companies across 5 industries.

Engineering & Capital Goods

Dixon Technologies (India) Limited

Auto Ancillary

Samvardhana Motherson International Limited

Healthcare

Biocon Limited
Glenmark Pharmaceuticals

Automobile

Ather Energy Limited

Chemicals

Deepak Nitrite Limited

Mausam Kumar | India’s Industrial Policy

Mausam is a postdoctoral researcher at Princeton and the former Industrial Policy Fellow at the Harvard Kennedy School. His work explores India’s industrial policy, manufacturing, development finance, and the role of states in driving economic growth. He breaks down the evolution of India’s industrial policy, the PLI scheme, Centre-State coordination, and the opportunities and challenges in building a globally competitive manufacturing ecosystem.

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When global giants Apple and Foxconn decide to set up shop in India, the central government’s PLI scheme gets much of the credit. But Mausam argues that these national incentives are only the second-order driver. The first-order driver is what happens at the state level. Without the local bureaucratic architecture to reduce transaction costs, secure land, and provide infrastructure, the central money has nowhere to land. The real competition is between states building the capacity to absorb this capital.

“So when you come up with a scheme the PLI scheme, it provides enough fiscal incentives for firms Foxconn and these suppliers of Apple to come to these geographies of manufacturing. But the moment these decisions have already been decided, then when you think of why Apple would go to Tamil Nadu, that decision is completely and solely contingent on state institutions and how they create initial policy ecosystems. That is the driver of how this attraction actually happens. The pitching of Tamil Nadu... goes to incredible lengths for investment promotion to go out of their way and provide enough information for these firms to make decisions.”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

If there is a core distinction between the successful industrial policies of East Asia and India’s historical efforts, it is the concept of market discipline. In places like South Korea and Japan, state support came with strict export conditionalities that forced firms to compete on the global technological frontier. In India, import substitution created a captive domestic market, allowing incumbents to capture demand and remain profitable without ever having to learn how to swim in global waters.

“Indian markets were super protected that these firms had captured demand and that made sure that they could really be profitable and create value for shareholders and ensure that they can still function well without having to compete. You would never see an Indian car in US simply because India never produced a car for the US market. And that’s the challenge. Unless you find ways to force firms to compete globally, you will never have global champions. So it’s a bit of a chicken and egg problem... is it policy or is it firms not having the appetite to do it?”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

A persistent trope in development economics is that the East Asian miracle was contingent on authoritarianism — that only strong, centralised states can effectively discipline firms and execute long-term industrial strategies. Mausam pushes back on this framing, arguing that the mechanics of successful industrial policy rely more on institutional design and credit policy than on regime type. The lesson for democratic nations isn’t to mimic autocracies, but to build autonomous institutions capable of setting and enforcing conditionalities.

“A lot of people see this idea that authoritarianism is central in industrial policy as deeply problematic. At least for someone me, I do not think the successful cases of industrial policy in South Korea, Japan, and even for China, has been argued that it’s simply because of this idea of authoritarian tendencies. This ability for these institutions of authoritarianism to discipline firms is high. We understand that... But what I would point out is that it’s not so much about making sure that you can discipline firms through these techniques of authoritarianism, but techniques of credit policy, techniques of export policy, techniques of incentives, which then lead to contingent project requirements.”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

Mausam highlights a structural tension in India’s industrial approach: while the central government controls the purse strings, the actual execution and coordination must happen at the state level. The true measure of successful industrial policy isn’t just about handing out fiscal incentives, but building the subnational institutions necessary to land those investments effectively.

“Unless you build state capacity at the subnational level, unless you have these regional ideas of industrial policy and how you can practise that, it would be impossible to reconcile this. So the tension here, which is that if the fiscal space is at the central level, but if the coordination is happening at the subnational level, then how do you reconcile this? This is a puzzle where I keep coming back to... you have to find a way to say that you can practise industrial policy across these fiscal incentives at the central level, but also make sure that you have these state institutions which then tap into it.”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

While much of the global green transition relies on Chinese supply chains, India has been aggressively building its own capacity. Mausam points to the solar sector as a prime example of how a mix of strategic financing and protective policies—like the Approved List of Models and Manufacturers (ALMM)—can successfully foster domestic champions and rapidly scale up renewable capacity.

“We have this capacity for about 256 gigawatts of renewables right now, which is mostly driven through solar panels, solar manufacturing, and going forward... India is very well placed to think of solar as the driver for all renewable demand... and there is a very coherent mix of industrial policies, which is at play here. So think of the ALMM, the approved list of models and manufacturers in India, which is a huge industrial policy in India, which is making sure that specific, domestic incumbents can only participate in the sector and build productive capacity.”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

As India attempts to scale its green transition, particularly in solar and battery manufacturing, it faces a structural bind: the technical know-how and capital are largely concentrated in China. While geopolitical tensions have made Chinese Foreign Direct Investment (FDI) highly controversial, Mausam suggests we need to separate state-driven initiatives from private capital. Developing economies have historically absorbed technology through FDI, and shutting it out completely might stall critical structural transformations.

“The risk for FDI is always on the books of the firms which are bringing these investments. If you think of a Chinese firm goes to say Morocco, a Chinese firm goes to say DRC, and brings these FDI, then the risk is essentially broadly on the books of these firms. And so even though your concerns around enclaving are very bright, the historical pathway for this transition has always been through FDIs, which is that FDI are much less risk prone compared to other forms of financing. At least the empirical evidence... would point that out. And so even though we have these enclaving problems, what really happens is that it creates a project for foreign enterprises to understand their potential to come into new markets.”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

For decades, developing nations climbed the income ladder by capturing low-value, labour-intensive manufacturing. But the current landscape is shifting. Instead of vacating these sectors as it moves up the value chain, China continues to dominate them, creating a severe policy squeeze for countries such as India and Vietnam that are trying to absorb those jobs. This phenomenon forces a rethink of how late developers can carve out space in a crowded global market.

“Historically we have had debates about this China shock and this China shock has functioned very differently across, say, in the American context. A lot of manufacturing jobs which went out because of this China shock... are not functioning anymore. This new spin on this China shock, which impacts developing countries and countries which have the potential to do this low value manufacturing, but also create jobs which can then drive the agenda for structural transformation is very real. Especially if you think of countries India, Vietnam, and Cambodia... these countries have been trying to do this catch up approach in manufacturing and there have definitely been pockets of manufacturing which have emerged across these arenas that are doing reasonably well.”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

The success of Japan’s post-war industrial policy is often attributed to the overarching authority of the Ministry of International Trade and Industry (MITI). Mausam highlights how establishing a central, autonomous institution capable of overriding even the Ministry of Finance was crucial for coordinating credit policy and reducing inter-departmental friction.

“The Japan Development Bank, postwar Japan was essentially. The Ministry of Finance in a lot of ways was actually subservient to the decisions from MITI as to how the create policy functioned. And so the eventual dispersals from the Development Bank of Japan would actually be routed not through the Ministry of Finance, but through MITI. And this is the autonomy I’m trying to point out, that when you try to do industrial policy, you have to create an overarching institution which has this legitimacy to make these decisions, which would eventually drive whatever goals that you have been able to lay out.”
— Mausam Kumar, Postdoctoral Researcher at Princeton University

Engineering & Capital Goods

Dixon Technologies (India) Limited | Mid Cap | Engineering & Capital Goods

Dixon Technologies is India’s largest electronic manufacturing services (EMS) company, providing design and manufacturing solutions across smartphones, consumer electronics, home appliances, lighting, telecom, IT hardware, and wearables. The company is rapidly expanding its backward integration, component manufacturing, and export capabilities through strategic partnerships and acquisitions.

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India’s electronics manufacturing opportunity continues to expand rapidly, and Dixon believes its scale, government policy support, and China+1 tailwinds position it to double revenue over the next few years.

“We believe we are sitting on a very large opportunity. India’s electronics market, currently around $135 billion, is expected to grow nearly three times by 2030. Within this, the EMS industry is estimated to reach around $35–40 billion. With our scale, supportive government policies, the China+1 opportunity, and geopolitical tailwinds favouring India, we believe the opportunity ahead is significant. We hope to double our revenues over the next couple of years.”
— Saurabh Gupta, Group CFO

Management believes future expansion can be funded through internal cash generation and disciplined working capital, eliminating the need for equity dilution despite aggressive growth plans.

“We’ve grown from around ₹2,000 crore in revenue to ₹50,000 crore without compromising cash flows, the balance sheet or return ratios. We believe we can grow from ₹50,000 crore to ₹1 lakh crore without raising additional equity. At this stage, internal accruals and efficient working capital management should fund our capex. In fact, we expect to generate meaningful free cash flow from this year onwards.”
— Saurabh Gupta, Group CFO

Management expects margins to improve through greater component manufacturing, higher-margin ODM businesses, and operating leverage as volumes increase.

“There are three key drivers. The first is backward integration. Following our acquisition of Q Tech India for camera modules, we’re expanding manufacturing capabilities further. Our JV with HKC for displays across automotive, mobile and IT hardware should be operational by Q4 and ramp up next year. These initiatives should contribute meaningfully to margins. The second driver is increasing the share of our ODM business across washing machines, lighting and refrigerators, where margins are structurally higher. The third is operating leverage. As revenues grow, fixed costs get absorbed over a larger base.”
— Saurabh Gupta, Group CFO

Management believes investor concerns around profitability are short-term and expects margins to recover steadily as new businesses and acquisitions scale up.

“Investors appear concerned about margins, but I believe this is temporary. Margins should begin recovering from the next financial year, with significant improvement expected through FY28 and FY29. We’re also evaluating acquisition opportunities in precision components, which offer margins of over 20%. We’re also looking at high-end speciality EMS opportunities through acquisitions.”
— Saurabh Gupta, Group CFO

The company is shifting beyond assembly towards component manufacturing and exports, which should improve competitiveness and profitability over the long term.

“It will be largely component-led and export-led. Our partnerships and joint ventures will start contributing meaningfully. Exports will continue increasing across multiple verticals. Backward integration in displays, camera modules, SSDs, power supplies and mechanical components will also become major growth drivers.”
— Saurabh Gupta, Group CFO

Despite an industry slowdown caused by higher memory prices, Dixon expects to maintain volumes by increasing market share.

“Absolutely. This is especially relevant for low- to mid-range smartphones, where prices have increased by nearly 30–35% because memory prices have risen five to six times. Since memory is a major component of smartphones, this is affecting demand. Industry reports suggest that the Indian smartphone market could contract by around 10–15% this year, from about 153 million units. Despite that, we expect to maintain—and even increase—our market share. We should broadly deliver similar volumes this year, which means we would have performed well even in a declining market.”
— Saurabh Gupta, Group CFO

Auto Ancillary

Samvardhana Motherson International Limited | Large Cap | Auto Ancillary

Samvardhana Motherson International manufactures and supplies components to automotive OEMs through its divisions: Wiring Harness, Vision Systems, and Polymer Products. The company aims to be a globally preferred sustainable solutions provider, offering diverse products and services to strengthen its market presence.

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The company is facing temporary margin pressure due to higher prices for raw materials like copper and polymers. Management expects margins to recover as commodity prices stabilize and new high-margin business segments like aerospace gain scale.

“There is always a lag in passing on increases in commodity prices such as copper and other raw materials. At the moment, commodities remain elevated, not just copper but also polymer prices because of higher crude oil prices. We expect these commodity prices to normalize during the year. As they normalize, our margin trajectory should improve. At the same time, our new businesses are growing well. Our aerospace business and consumer electronics business are performing strongly, and our efforts to build these capabilities are playing out well.”
— Pankaj Mittal, Whole-Time Director and President

The recent acquisitions of Utaka Giken and Nexen Auto Electric will start contributing to the financial results from the second quarter. These deals are expected to immediately add to earnings and provide new growth opportunities in the coming years.

“We are very pleased that both acquisitions have been completed, and from July onwards they will be consolidated into our financial results. These acquisitions are accretive, and we believe there is significant scope to create additional value. In the coming years, you will see substantial growth from both Utaka Giken and Auto Electric.”
— Pankaj Mittal, Whole-Time Director and President

The company is positioning itself to benefit from the global expansion of Chinese automakers while maintaining its strong European presence. Recent restructuring in Europe and a strategy of supplying all types of engines helps the company remain stable during market shifts.

“We cater to all customers. We operate in both China and Europe. In Europe, we primarily support our European customers, while in China we also support Chinese OEMs through our local presence and long-standing relationships. As Chinese OEMs expand outside China, they will increasingly require global suppliers, and that creates an opportunity for us. As for Europe, there are multiple model launches underway, so the market remains dynamic. We are a powertrain-agnostic company and are working closely with all our customers on their new vehicle platforms. We also restructured our European footprint over the last one and a half years to align with our customers’ future plans, and that has contributed to the resilience visible in our results today.”
— Pankaj Mittal, Whole-Time Director and President

Motherson is exploring entry into high-tech sectors like robotics and data centers to stay aligned with its existing customers’ diversification. This move marks a pivot toward becoming a broader industrial supplier rather than just an automotive specialist.

“We actively evaluate all emerging industries because many of our customers are entering these areas and want us to support them as suppliers. These businesses are still at an early stage for us, but we are proud to already be associated with several customers, even if only in a small way today. Over time, whether it is humanoid robotics, data centres or other emerging industries, we believe we can become a significant supplier. Our objective is to continue supporting our customers wherever they expand.”
— Pankaj Mittal, Whole-Time Director and President

The company envisions a radical shift where nearly half of its revenue comes from new, non-automotive business lines. This massive diversification target aims to de-risk the company from the cyclicality of the global vehicle market.

“A vision always involves assumptions, and reality can evolve differently. Broadly, we believe around 40-45% of revenue could eventually come from new businesses, while the remainder would come from our core transportation-related businesses and adjacent industries.”
— Pankaj Mittal, Whole-Time Director and President

Motherson is putting its capital toward future growth by allocating a significant portion of its budget to new business ventures. This clear spending plan highlights management’s commitment to transforming the company’s revenue profile.

“What we said was that if annual capex is around ₹6,000 crore, then roughly 50% would be growth capex, and around 60% of that growth capex would be allocated toward new businesses.”
— Pankaj Mittal, Whole-Time Director and President

The aerospace division is emerging as a major growth driver with a rapidly expanding multi-billion-dollar order book. Strong customer acquisition in this segment suggests it will outpace the growth of the traditional automotive business.

“It could grow even faster. Our aerospace order book remains very strong. It was around $1.6 billion previously and has since increased by roughly another 17-18%. We are seeing strong traction, adding new customers, and expect this segment to grow significantly faster going forward.”
— Pankaj Mittal, Whole-Time Director and President

Healthcare

Biocon Ltd | Large Cap | Healthcare

Biocon is a leading global biopharmaceutical company focused on biosimilars, generics, and innovative research. It has a diversified presence across North America, Europe, and emerging markets, with a growing portfolio of complex biologics and speciality pharmaceutical products.

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Management is now seeing the expected financial benefits from combining their biosimilar and generic business units. This integration has led to a significant jump in net profit due to better operational efficiency and lower interest expenses.

“What we wanted to achieve through this integration was operating synergies, and that’s exactly what you are seeing in the numbers. We delivered strong top-line growth in both biosimilars and generics, which was encouraging. We also maintained a clear focus on profitability, which was critical for the turnaround we were targeting. Another positive was the reduction in interest costs that we had expected, which translated directly into the bottom line and resulted in a four-fold increase in reported profit.”
— Shreehas Tambe, CEO & MD

The CEO views the latest quarterly results as the beginning of a recovery rather than a finished success. Investors should expect gradual improvements in business performance over the next two fiscal years.

“Overall, I would say it has been a very strong start. However, I would refrain from calling it a complete turnaround. I would describe it as a resilient start, and we expect performance to progressively improve through FY27.”
— Shreehas Tambe, CEO & MD

North America is currently the fastest-growing market for Biocon, leading to a temporary shift in their revenue mix. Investors should expect the U.S. market to remain the dominant growth driver as new products are launched in the coming months.

“From a geographical perspective, we have always maintained a well-diversified business mix. Historically, North America contributed around 40%, Europe around 35%, and emerging markets around 25%. These proportions keep changing. During this quarter, growth was primarily driven by North America, so its contribution increased from about 40% to 45%. Europe’s contribution reduced from 35% to 32%, while emerging markets stood at around 23%. You will continue to see these quarterly shifts. As we launch new products, particularly those we have already discussed, North America may contribute a larger share in the near term.”
— Shreehas Tambe, CEO & MD

Management expects new, high-value product launches to protect overall profit margins from the falling prices of older drugs. This balancing act is essential for maintaining consistent earnings growth in a competitive pharmaceutical market.

“As we launch new products in high-margin markets, we naturally expect EBITDA contribution to improve. That is a fair expectation, and I believe it will happen. These launches will also help offset the price erosion that naturally occurs in older products as competition increases. Legacy products will continue to see price erosion, while new product launches should compensate for part of that impact.”
— Shreehas Tambe, CEO & MD

Biocon has successfully reduced its interest burden by 22% after paying off a portion of its dollar-denominated debt. This reduction in finance costs is a key part of management’s plan to boost bottom-line profits by ₹300 crore annually.

“Interest costs have reduced significantly. Even after accounting for rupee depreciation, interest costs have declined from around ₹280 crore to roughly ₹210 crore. This reflects the repayment of dollar-denominated debt when viewed from a rupee perspective. That is an absolute reduction of nearly 22% year-on-year, which is consistent with our earlier guidance of approximately ₹300 crore reduction in annual interest costs.”
— Shreehas Tambe, CEO & MD

The company has committed to keeping research and development costs steady at 7% of its total revenue. This financial discipline allows them to invest in future products while still aiming for overall profit margins in the 25% range.

“Regarding R&D investments, we have consistently maintained that R&D spending will remain around 7% of revenue. As revenues continue to grow at double-digit rates, the absolute investment in R&D will also increase. However, as a percentage of revenue, we do not expect it to change materially. It may fluctuate between quarters, but on a full-year basis it should remain around 7%. Therefore, we do not expect R&D spending to materially impact our expectation of achieving a mid-20s EBITDA margin.”
— Shreehas Tambe, CEO & MD

Glenmark Pharmaceuticals | Mid Cap | Healthcare

Glenmark Pharmaceuticals is a global pharmaceutical company focused on branded formulations, generics, speciality medicines, and active pharmaceutical ingredients (APIs). The company has a strong presence across India, the US, Europe, and emerging markets, with a growing respiratory and injectable portfolio.

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The company reported 18% organic revenue growth and maintained 20% margins despite rising raw material and logistics costs. This indicates strong operational efficiency as profit growth is currently outpacing revenue growth across all global regions.

“Let me first talk about the overall business this quarter. If you see, we delivered revenue growth of 23%, and even if I remove the licensing income, revenue growth was around 18% plus. It has been a very strong quarter for us. If you see, EBITDA has grown faster than revenue, which shows that the quality of our earnings is also improving. This growth has been broad-based. India continues to grow very strongly, the US has grown very strongly, emerging markets, especially Latin America and Russia & CIS, have all delivered double-digit growth, and Europe has also continued to grow. Across all geographies, we continue to perform well. Despite global cost pressures, including higher API costs, packaging material costs and logistics costs, we have been able to maintain EBITDA margins at around 20%. Overall, this quarter has been good.”
— Anurag Mantri, Executive Director & Global CFO

The company has set a formal revenue target of over $430 million for its US operations this fiscal year. This guidance is backed by multiple product launches, giving investors clear visibility into growth expectations for its largest international market.

“We expect the US business to generate more than $430 million in revenue this year, which is a significant increase compared to the previous year. We expect this momentum to continue because we have multiple launches planned across respiratory products and injectables. We continue to see a strong growth profile for the US business this year.”
— Anurag Mantri, Executive Director & Global CFO

Management highlighted the successful launch of a new respiratory drug and the restart of the Monroe manufacturing facility. The Monroe plant marks an important manufacturing milestone that should support future injectable revenues from FY28 onwards.

“Specifically in the US, we had a good respiratory launch. We launched Fluticasone Propionate Inhalation Aerosol USP, 44 mcg last quarter, and it has continued to perform very well during its exclusivity period. We also relaunched RYALTRIS through our own commercial franchise, which will contribute this year. Besides that, the Monroe facility has restarted operations. We relaunched Fulvestrant from Monroe, which is the first commercial launch from that facility. It will start contributing meaningfully from FY28 onwards.”
— Anurag Mantri, Executive Director & Global CFO

The company has brought RYALTRIS under its own commercial organisation in the US. This transition gives Glenmark greater control over commercialisation and could improve the product’s long-term revenue potential.

“In the US, Fluticasone 44 mcg, which we launched last quarter, continues to perform well. The RYALTRIS relaunch is also gaining traction. Last year, we were not generating meaningful revenue from RYALTRIS through our previous partner. We have now relaunched the product through our own commercial organisation, and we expect it to continue performing well in the US.”
— Anurag Mantri, Executive Director & Global CFO

The company expects two important respiratory approvals in the second half of the year, which should further strengthen its US product pipeline and support revenue growth.

“In the second half, we are expecting approvals for Fluticasone 110 mcg and Ipratropium. All these products should make a meaningful contribution to our US revenue this year.”
— Anurag Mantri, Executive Director & Global CFO

Automobile

Ather Energy Limited | Mid Cap | Automobile

Ather Energy designs and manufactures premium electric scooters, battery systems, and charging infrastructure in India. The company focuses on product innovation, expanding manufacturing capacity, and building a nationwide retail network to drive EV adoption.

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Management is prioritising production ramp-up to catch up with a significant surge in consumer demand for electric vehicles. This suggests that the primary bottleneck to revenue growth is currently supply rather than a lack of market interest.

“We’ve had a good quarter. Overall, EV demand has been inflecting upward quite strongly over the last several months, and we’re finally leaning into it. We delivered around 80% growth in Q1, and we believe that growth could have been significantly higher if we had been able to ramp up capacity faster. Right now, our entire focus is on ramping up supply and manufacturing capacity. We’ll also be supporting that with a new product launch later this month. So there’s a lot keeping us busy, and that’s essentially what we communicated yesterday.”
— Tarun Mehta, Co-founder and CEO

The recent volume surge is being treated as a permanent shift in consumer behaviour rather than a temporary or seasonal peak. With market penetration at just 11% and rising in smaller towns, the company sees a long runway for expansion beyond major metropolitan hubs.

“Q1 is actually the best quarter to answer that because it is not a festive quarter. In fact, Q1 is usually weaker than Q4 since March typically sees pre-buying in our industry. This year, however, Q1 witnessed a 40-44% surge across almost every industry metric. So no, I don’t believe this is cyclical. I believe this is a fundamental structural shift. One of the biggest drivers is the growing concern among consumers regarding fuel availability. Rising petrol prices have helped, but the larger concern is whether petrol availability could become uncertain in the future. Electricity is increasingly viewed as the more reliable energy source, and that is changing consumer behaviour. I believe this is a structural reset driven by stronger consumer confidence and consumer pull. Even after this growth, electric two-wheelers still account for only about 11% market penetration, meaning nearly 89% of vehicles sold are still petrol-powered. That leaves tremendous room for growth. Underlying demand is materially higher than before. We need to launch more products, build more capacity and expand our presence across the country because EV adoption is no longer limited to the top 10-20 cities. In fact, penetration is now significantly higher in Tier 2 and Tier 3 towns. This is a much larger structural trend that is currently underway.”
— Tarun Mehta, Co-founder and CEO

Ather is utilising an asset-light dealership model to double its retail footprint to 1,500 stores over the next two years. This strategy allows for aggressive national expansion without straining the company’s own capital or operating expenses.

“Distribution was our strongest growth lever in FY26. We expanded from 350 stores to 700 stores, which itself contributed roughly 30-35% growth as part of our overall 60-70% growth last year. We believe a healthy scooter portfolio can eventually support 1,400-1,500 stores across the country. Currently, we’re only about halfway there. Financially, this expansion requires no capex or opex from our side because we operate entirely through a dealership model. Dealers invest in the stores, carry inventory and bear operating costs. Right now, we’re deliberately slowing new store additions because we don’t have enough manufacturing capacity to supply them. Once our new plant starts operations around the festive season, we expect to begin opening hundreds of new stores very quickly. Over the next two years, we believe a doubling of our store count is realistically achievable.”
— Tarun Mehta, Co-founder and CEO

The company has hit its current production limit of 35,000 units per month as demand has unexpectedly doubled to nearly 60,000 units. The activation of the new Maharashtra facility by Diwali is the key catalyst needed to resolve these immediate supply constraints.

“As a startup operating alongside much larger companies, we’ve always maintained strict cost discipline. We can’t afford aggressive spending experiments. We’ve carefully managed capacity investments, supplier capacity and overall expansion. Our existing plant capacity increased from around 15,000 units per month to 30,000 units, with a maximum capacity of 35,000 units. Eight months ago, we expected monthly demand to reach around 25,000-27,000 units, but demand has moved onto a completely different trajectory. Today, we’re seeing demand of around 50,000-60,000 units per month, so we’ve clearly hit our capacity limits. Fortunately, we had already begun constructing a new manufacturing facility using IPO proceeds. Phase 1 of our new 100-acre plant at Chhatrapati Sambhajinagar, Maharashtra, will go live by Diwali this year, with production ramping up during Q4 (January-March).”
— Tarun Mehta, Co-founder and CEO

Manufacturing capacity is set to more than double to 77,000 units per month by early next year to meet current demand levels. Management has also secured land to add even more capacity if the market continues to outpace their current growth projections.

“This plant will add 42,000 units per month of incremental capacity. Our expansion isn’t linear. Capacity will jump from 35,000 units per month to around 77,000 units per month within four to five months after the plant ramps up. That should fully address current demand. If demand remains even higher, we’ve already secured additional land and could add another 42,000 units per month over the following year.”
— Tarun Mehta, Co-founder and CEO

The company is raising ₹2,500 crore to ensure it has enough liquidity for both future manufacturing expansion and faster product development. Securing this capital provides a financial cushion to compete aggressively with larger established incumbents.

“Phase 1 at Chhatrapati Sambhajinagar is fully funded using IPO proceeds. For Phase 2, we may require additional capital, which is why we initiated a ₹2,500 crore fundraise about a month ago. We’ve already raised ₹1,300 crore through a QIP and are awaiting shareholder approval to raise another ₹1,200 crore. With the full ₹2,500 crore available, we believe we’re well-capitalised for future capacity expansion as well as accelerated product launches.”
— Tarun Mehta, Co-founder and CEO

A significant portion of the upcoming capital raise is being led by Hero MotoCorp, signalling strong strategic backing from one of India’s largest automakers. This continued investment by a key industry player and the founders themselves highlights confidence in the company’s long-term value.

“Yes. This has already been announced. Out of the proposed ₹1,200 crore preferential issue, Hero MotoCorp will invest ₹960 crore. The India-Japan Fund will invest ₹200 crore, while the founders, including myself and Swapnil Jain, will together invest ₹40 crore.”
— Tarun Mehta, Co-founder and CEO

Ather has achieved a massive 1,600 basis point improvement in EBITDA margins over the past year, bringing the company to the brink of operational break-even. This rapid improvement demonstrates strong execution in cost control and pricing power amid inflationary pressures.

“We’ve delivered a very strong improvement in our EBITDA trajectory over the last four to five quarters. Compared to Q1 last year, our EBITDA margin improved by 1,600 basis points, moving from negative 16% to positive 1% including other income. Excluding other income, margins improved from roughly negative 20% to around negative 2-3%. This improvement came from effectively managing commodity inflation.”
— Tarun Mehta, Co-founder and CEO

Management expects to reach sustainable recurring EBITDA profitability within the next three to four quarters. By shifting the product mix toward higher-margin models and growing non-vehicle revenue, the company is building a more resilient and profitable business model.

“We partially offset higher input costs through calibrated price increases that the market accepted, while also maintaining tight control over fixed costs. Looking at the broader picture, most manufacturing industries are currently facing significant raw material inflation due to geopolitical events and semiconductor-related disruptions. However, every crisis creates opportunities. We’ve responded by increasing prices where possible, improving our product mix with higher-end SKUs and increasing non-vehicle revenue, which has grown from 13% to 14% of total revenue. These are structural improvements. Commodity inflation should moderate over the next four to five quarters, but these structural gains should remain, allowing our gross margins to improve further. Combined with continued discipline on fixed costs, we believe we’re heading toward sustainable recurring EBITDA profitability over the next three to four quarters.”
— Tarun Mehta, Co-founder and CEO

Chemicals

Deepak Nitrite Ltd | Small Cap | Chemicals

Deepak Nitrite is a leading Indian speciality and performance chemicals manufacturer with integrated operations across basic chemicals, intermediates, phenolics, and advanced materials. The company is executing a large capex program to expand into high-value downstream products and application-driven chemicals.

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Deepak Nitrite’s strong Q1 performance was driven by years of supply chain preparation rather than a temporary geopolitical windfall. Management believes this operational discipline should continue supporting growth even after market conditions normalise.

“One thing I can say is that the entire sector experienced the same weather. The question is who was able to build a roof beforehand. In any such situation, companies that are able to secure both their raw material supplies and their customer base generally perform better than those that cannot.”
— Maulik Mehta, Deputy Managing Director

The company expects future growth to be driven primarily by higher volumes rather than elevated selling prices. With raw material availability secured and customer offtake improving, management believes earnings should remain resilient even as pricing normalises.

“What we expect going forward is a normalisation of consumption patterns. Over the last six weeks, we have already seen consumption normalising. Going forward, volumes will drive both the top line and the bottom line. While realisations on a per-kilogram basis may moderate, we are already seeing moderation in raw material prices as well. Since we have secured raw material availability, we are able to avoid short-term volatility whenever geopolitical tensions in the Middle East intensify or ease. Our supplies are secure, our customer base is increasing its volume off-take compared to Q1, and our assets remain ready to support that demand.”
— Maulik Mehta, Deputy Managing Director

Deepak Nitrite is executing one of the largest expansion programmes in its history, with over ₹3,500 crore already invested. The projects move the company into higher-value downstream materials while strengthening integration across its chemical value chain.

“We have already announced a total capex outlay of approximately ₹11,000 crore over the next three years. Out of this, we have already spent over ₹3,500 crore. The first phase covered upstream integration projects, including nitric acid, MIBK, MIBC, nitration and hydrogenation. These assets are already operational. The downstream projects include the Polycarbonate plant, the Bisphenol-A plant and several specialty chemicals projects. During this year, most of the expenditure will be towards construction and licensing fees.”
— Maulik Mehta, Deputy Managing Director

Management expects return ratios to recover meaningfully once the current capex cycle is completed. As new assets become operational by the second half of FY29, the company is targeting sustainable returns above 20%.

“As you rightly pointed out, the return ratios currently include investments that are under construction and are not yet generating revenue. A large part of the investments we are making are integrated projects. All of them are expected to be online by the second half of FY29. As these assets are commissioned and gradually ramp up, we should comfortably achieve returns in excess of 20% on a regular basis, and continue building from there.”
— Maulik Mehta, Deputy Managing Director

Management emphasised that today’s lower return ratios reflect an investment phase rather than weaker business economics. The focus remains on disciplined capital allocation while pursuing long-term growth opportunities.

“I would also point out that the 40% return was achieved during a period when we were not undertaking a major capex programme. While return ratios are important, they should be viewed differently for a growth-oriented organisation. Our objective is to maintain a minimum return above 20%, while continuing to invest whenever attractive growth opportunities arise.”
— Maulik Mehta, Deputy Managing Director

Deepak Nitrite is repositioning itself from a commodity chemical producer to a higher-value materials and application chemistry company. This strategic shift has the potential to improve margins and reduce cyclicality over the long term.

“We have firmly established ourselves in both the ammonia chain and the propane chain. Going forward, we see ourselves evolving from being an intermediate chemicals manufacturer to a materials manufacturer, and from an intermediate chemical supplier to an application chemistry company.”
— Maulik Mehta, Deputy Managing Director

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Quotes in this newsletter were curated by Shahid Barmare.

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