Welcome to the 84th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.
We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.
In this edition, we have covered 5 companies across 4 industries and a special feature with Dr. Rohit Chandra on Indian Energy History.
Subtext by Zerodha
Dr. Rohit Chandra: Indian Energy History
Software Services
Tata Consultancy Services
Hexaware Technologies
Financial Services
Max Financial Services
Engineering & Capital Goods
Tempsens Instruments (India) Limited
Textiles
Gokaldas Exports Limited
Subtext by Zerodha
Dr. Rohit Chandra | Subtext by Zerodha | Indian Energy History
Dr. Rohit Chandra is an economic historian and Assistant Professor of Public Policy at IIT Delhi, specialising in the political economy of India’s energy infrastructure. In this deep dive into India’s power architecture, he unpacks the historical decisions that shaped the modern grid—from the Soviet-backed origins of opencast coal mining to the complex bureaucratic realities of running massive public sector enterprises. The conversation challenges conventional narratives around the ongoing renewable energy transition, exploring the fiscal tug-of-war between state DISCOMs and generators, the roots of the 2010s NPA crisis, and why India’s highly centralised approach to solar power may be hitting structural limits.
The shift to large-scale opencast mining in India was enabled by Soviet technology transfer rather than traditional British methods. This technical transition allowed for the massive production volumes that define the company’s current operations.
“I remember talking to someone who retired from Coal India who said, we never thought that we could do a million tonne per annum mining in India, right? Until the Soviets came and showed us how it was possible. In some ways, underground mining, British style underground mining was harder to scale in a very big way, at least in the Indian context where you have fractured seams and other kinds of things. I think Soviet mining stuck, it was also much cheaper as petroleum and fuel availability took off. So diesel was a game changer in that sense. Diesel and explosives.”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
India’s national power grid standards were developed primarily to support the electrification of the railways rather than industrial demand. Understanding this historical link explains why the grid infrastructure followed transport corridors rather than decentralised clusters.
“So about a year ago, I was having a question, a conversation with S.K. Soonee, who retired as the chairman of POSOCO, which is now Grid India. Right. And he told me this exact thing that actually the driving of open access and grid connectivity in India was partly driven by the expansion of Indian railways, right? Because very few consumers actually needed continuous power across regions, right? Railways did, right? If you’re moving from Eastern India to Central India, you can’t, you’re switching to a different grid, but the power can’t stop all of a sudden just because you’ve moved into another region. But that’s how islanded and isolated our grids were. So I think a lot of the harmonisation standards and all of those kinds of things, frequency, kind of the fact that you have continuous frequencies across the region, all of that actually came with the expansion in electrification of Indian railways, and so very much in lockstep with the expansion of the power sector.”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
The nationalisation of coal in the 1970s was driven by the need for operational scale, labour reform, and meeting national energy security. These founding mandates still dictate the company’s social obligations and its massive scale of operations today.
“There were a lot of motivations behind coal nationalisation, but the minister who nationalised the coal industry, Mohan Kumaramangalam, actually wrote like almost a hundred page monograph justifying it, right? Which is rare. Ministers writing a hundred page papers to justify policy is not something we see very often in any country, right? And so what were the three things he mentioned? Unscientific mining, right? So you have this kind of small scale mining, not mining at scale, using big equipment, poor treatment of labour, which was definitely true, right? A lot of the Gangs of Wasseypur kind of mining labour, story mining mafias, and all, right? And then the third one was just kind of being unable to feed the kind of national energy demand in various ways, right?”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
For public sector companies like Coal India, navigating political and bureaucratic environments is more critical than internal operational efficiency. Investors should recognise that leadership stability and political alignment are key factors in the company’s financial health.
“Part of the focus of my PhD was trying to figure out which of the PSUs are able to survive this and not, right. I interviewed a minister of Power once who told me that the most important characteristic of a chairman of a PSU is to manage his external environment, right? So it’s not actually just operational efficiency and all of those kinds of things. That will come from having decent engineers and paying salaries on time. But the political environment, international markets, domestic politics, labour politics, a hundred things are going to assault you on a daily basis. And managing that external risk is easily the biggest problem. So I don’t think anyone, at least in the seventies to nineties, was really worried so much about operational efficiency and all of these kinds of things. It was more, do I have the right political and bureaucratic connections so that I can make sure I get paid on time eventually.”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
State distribution companies often choose load shedding over buying expensive power because there are no legal penalties for failing to supply electricity. This behaviour limits the market for high-cost generators and creates a ceiling on short-term power pricing.
“The problem was not power demand. There’s always power demand, but it was at what price they were generating, right? The problem in the Indian power sector is that state governments are very price sensitive and this is why they don’t buy from the short term market very often. They do more now than they did 15 years ago, but if you have to buy 10, 12 rupee power, I’d rather not buy because historically, there isn’t any legal consequence for me not supplying power, right? I can just turn the feeder off and people will have power cuts for four hours and that’ll save me a lot of grief rather than actually buying very expensive power and then screwing my state’s fisc, right? Which is the other consequence, which is already bankrupt probably, right? So it’s tough decisions all around. There’s no easy decisions around these kinds of things.”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
Coal India protects its margins by requiring upfront payment before shipping coal to state-owned power plants. While this secures Coal India’s cash flows, it shifts the financial burden of energy production onto the state governments’ balance sheets.
“Coal India is a publicly listed company. It cares about its bottom line. And so it has what’s called a cash and carry policy, which means that I’m not even gonna put the coal on the train until I get the payment, right? If you have a bankrupt state, which is unable to pay for, or a generator which is unable to pay for coal on time, then it leads to weird incentives where you have a public sector company, but it’s functioning as a profit making financial entity, which will not send the coal until you pay them, right? So should the stress be on Coal India’s balance sheet or the state government’s balance sheet, or the generator’s balance sheet? This is the constant question, right? And in some senses, I think this is the public policy question for the next decade.”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
India’s renewable energy strategy has favoured massive centralised solar parks over decentralised production. This approach is now hitting a wall due to severe transmission bottlenecks that take years to resolve.
“The advantage of renewable energy, especially solar and wind, is its decentralisation, right? That you can produce close to the source. And so the tyranny of distance has decreased because as long as you have some battery storage available, you can do it close to you. ... India did the exact opposite, right? It built hulking central power plants and Gujarat and, Rajasthan, as if we were recreating coal plants, but with solar in these places, right? And at the time that land was more easily available, the investment capital is available. Okay, that’s fine. But you’re starting to reach those limits partly because of transmission-related problems, right? Where even if you build a solar plant, it may take you a year or two to get a grid connection. Right? And you can’t even throw money at this problem anymore.”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
The economic promise of job creation in renewable energy hubs is currently overblown compared to traditional coal towns. Unlike coal mining, large solar and power installations have not yet sparked secondary local consumer economies.
“A lot of this green job stuff is highly oversold, partly because we’ve only started manufacturing some of the panels domestically in the last few years. We’re still not making the silicon wafers and all of those things ourselves at scale. Adani is just starting to do that in the last year or two. And so, there was this assumption, to go back to these enclaves that you were talking about, that energy economies would be generative, that they would create other kinds of jobs that businesses would come up around them. You go to one of these power plants in Barh and Korba and all, and you tell me what’s going on there, right? It’s not like there’s some massive consumption. There’s nothing there. No one’s opening a Tanishq near those power plants, right?”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
Renewable energy production is currently concentrated in just six states, failing to democratize energy access across India. The government is beginning to intervene to push for a more geographically diverse energy footprint to avoid regional imbalances.
“This is something the Ministry of Power is starting to wake up to in a big way as well, where they’ve actually started putting out advisories on locating power plants away from the usual suspects. Six states are responsible for 97% of India’s grid-connected renewable energy, right? That’s just reproducing previous economic geography, right? That’s not some renewable energy revolution as far as I’m concerned.”
Prof. Rohit Chandra, Assistant Professor, School of Public Policy, IIT Delhi
Software Services
Tata Consultancy Services Limited | Large Cap | IT Services
Tata Consultancy Services is a global leader in IT services, consulting, and business solutions, operating as part of the Tata Group. It provides a vast range of digital transformation services across diverse industries including finance, retail, and manufacturing.
TCS is establishing a Centre of Excellence for mobility by merging MHP’s automotive consulting expertise with its own large-scale AI and digital capabilities. This strategy aims to capture new business from major European automotive and manufacturing clients beyond their existing work with Porsche.
“The deep capabilities MHP has in digital advisory and transformation, and operations in the automobile segment, and now also the client base MHP has in Europe—now you combine it with the AI capability, the scale, the depth that TCS brings. Now these two put together, we are envisaging what we call a Center of Excellence for mobility transformation. So we will be able to provide services across the entire value chain of mobility in terms of product engineering, manufacturing, and of course, customer experience. We’ll be able to transform it not only for Porsche as customer zero; we’ll be able to approach and provide more services to other automobile companies and manufacturing companies in Europe. So the opportunity to do more, the opportunity to transform mobility using AI, are the motivations for us.”
— K Krithivasan, CEO and Managing Director
Porsche is divesting MHP to TCS because the business unit can scale more effectively within a dedicated global IT services infrastructure. While MHP is profitable with a double-digit margin and €700 million in revenue, Porsche views it as a non-core asset that will perform better under TCS ownership.
“First of all, it’s not only focusing on the core business. That’s a very important part, but it’s also that we believe that MHP, with a new partner like TCS, now has much better potential for the future by using the depth and the breadth of TCS. And I think there will be a huge opportunity for MHP to grow, and for us as Porsche to get through TCS even better services and better performance by MHP. So I think that is also a very important part of that deal. We are talking about a revenue of around €700 million per year. That is for a double-digit—around double-digit—margin. That is a good part of the business for Porsche, but it’s not as important—I was saying it’s not core. It’s important, but again, I think with a new partnership now with TCS, we can get much more out of MHP with this deal.”
— Michael Leiters, CEO, Porsche (Partner Management)
Porsche accounts for approximately 30% of MHP’s revenue, leaving a significant majority derived from other external automotive clients. This diversification provides TCS with immediate access to a broader client network within the shifting European automotive landscape.
“I would say around 30%, something around that. It depends a little bit on the year. But I think, as Krithi said, it’s also very important to mention that MHP has many customers, mainly obviously in the automotive industry, but I think there’s a lot of know-how and knowledge in MHP regarding our industry and also, therefore, in the transformation of our industry which is happening now.”
— Michael Leiters, CEO, Porsche (Partner Management)
TCS sees massive growth potential in moving beyond MHP’s current IT-only focus to provide engineering services to Porsche. By introducing offshore delivery to the unit, TCS expects to improve cost-competitiveness and significantly widen the project scope within the account.
“So Sajeet, again, I don’t want you to focus on the €1.25 billion. I look at it more as a partnership commitment, but the potential is huge. Currently, MHP operates only in the IT space for Porsche. For instance, TCS brings in capabilities in engineering. MHP doesn’t do any engineering work. So now this opens up opportunities for us to put our engineering capabilities in front. MHP doesn’t do much offshoring work. So we’ll be able to offshore the work and provide them the ability, one, to be more competitive. The moment you are more competitive, it again expands the horizon for us in Porsche and increases the scope of what we can do.”
— K Krithivasan, CEO and Managing Director
Management intends to introduce its global business services and supply chain management expertise to Porsche’s operations. This expansion represents a move into high-value operational consultancy that was not previously addressed by the MHP unit.
“So I see it across all lines, like it could be in the IT space, it could be in the engineering space. I would also look at how we can bring in TCS capabilities in the area of GBS and supply chain transformation. So many other new areas also come into play.”
— K Krithivasan, CEO and Managing Director
TCS plans to operate MHP as a standalone independent entity rather than merging it fully into the parent company. This strategy focuses on providing MHP with global resources and scale while allowing it to maintain its specialised European operational identity.
“We are not looking to do any hard integration. We actually want MHP to thrive. Our idea is to let MHP be a standalone entity and support it with scale from TCS, support it with offshore, support it with other capabilities at the larger TCS. So we are not planning to do any hard integration or merge it with TCS. Actually, we will support them to grow on their own operations in France, Germany, and the Netherlands. So we’ll keep it as an independent entity and support it to grow.”
— K Krithivasan, CEO and Managing Director
The European automotive sector is currently navigating significant geopolitical and competitive pressures that demand internal transformation. Porsche management views this divestiture as a critical step in refocusing its internal efforts on core automotive excellence during these difficult times.
“You’re talking in general about the European automobile industry, basically. So I think obviously we are experiencing challenging times. It’s driven by geopolitics. It’s driven by more competition in the industry. And obviously, we also have to do our homework. Specifically for Porsche, I’m very positive. Again, we have a lot to do. We just started our transformation. I see a good reaction in my organization to transform, to change, which is not always easy. But I think in the first year of 2026, we achieved already a lot, and again, this deal is part of this change—refocusing on the core business.”
— Michael Leiters, CEO, Porsche (Partner Management)
Hexaware Technologies | Small Cap | IT Services & Consulting
Hexaware Technologies is a global IT services and consulting firm specialising in digital transformation and automation. The company focuses on modernising legacy systems through AI-infused strategies and custom software development to replace traditional SaaS models.
Management is highlighting a young workforce as a core asset in their AI development efforts. This suggests a strategic focus on fresh talent to drive innovation and counter narratives about AI-driven job losses in the sector.
“What you see here is the output of what a lab creates, right? The lab itself is elsewhere on this campus but also in some other cities. It has got about 700 young, highly talented engineers. When I meet them, I get inspired. Even as you walk around here, you see that they’re all very young, right? So this whole narrative that AI is for older people and is going to shrink jobs for younger people, I think is wrong, because I get inspired when I meet our young people, seeing their talent and their creativity. This is the output of what they create.”
— R. Srikrishna, CEO
The company has established a $3 billion revenue target powered by five specific growth levers, including AI and high-tech market entry. Investors should view these pillars as the primary drivers of the company’s long-term expansion and acquisition strategy.
“See, it’s always good for any business to put out an aspiration number, which we did some time ago, right, saying we want to get to $3 billion. That includes our organic growth and includes acquisitions, but the most important levers for accelerating growth for us—there were four, but AI became the fifth. The four were: 1. Legacy modernization, which we are now calling “zero tech debt,” which is actually a part of AI. 2. We said we want to do better on private equity channels than we were before. 3. We were absent in the high-tech business. All of our peers have big business in tech. Last October, we hired a very talented leader to lead that business, and we’re already making solid progress. 4. The fourth was for us to do better in what we think is a great market, notwithstanding the current disturbances, which is the Middle East. And the fifth now, of course, is AI and all the new terms we’ve identified.”
— R. Srikrishna, CEO
Hexaware reports that over half of its current revenue is generated from projects that incorporate artificial intelligence. This high level of AI integration demonstrates the company’s rapid transition from traditional IT services to high-efficiency, technology-led solutions.
“See, our first mission that we set for ourselves in AI is that AI should positively impact every single client and the work we do for them every single day. So this 50% is a measure of that progress. What it means is that more than 50% of the work we do right now has AI, and it positively impacts customers either in reducing cost, improving service, or often both.”
— R. Srikrishna, CEO
Management is taking a realistic view of their addressable market, focusing on $30-40 billion in actionable legacy modernisation opportunities. This conservative targeting suggests a disciplined sales approach that prioritises high-conversion segments over broad market estimates.
“See, the way we define the Total Addressable Market (TAM) which you’re talking about—if you go by market estimates, the TAMs for each of the lanes are actually much higher. Let me take two examples. Zero tech debt: you know, there are 220 billion lines of COBOL code in production. There are estimates that just that TAM is greater than half a trillion dollars. I don’t think it’s actionable. We think about $30 to $40 billion of that is actionable. The SaaS market is $900 billion. It’s not all actionable. Many SaaS companies will survive and thrive. But there are many pockets that we think can be addressed. So we’ve done a smaller, best estimate of what we think is addressable within each of these spaces. Now, for us to get to high growth, we only need a fraction of this TAM to work for us.”
— R. Srikrishna, CEO
The CEO argues that AI has removed the cost barriers that previously made custom-built software more expensive than standardised SaaS. This structural shift creates a significant opportunity for Hexaware to offer bespoke software solutions that compete directly with major SaaS vendors.
“See, if you look at why SaaS grew in the first place, there were two promises. One was “processes encoded into my platform” and bringing standardization. But the truth is, most large enterprises don’t like standardization. They feel it’s being forced on them. The second promise, which was true, is that it’s too expensive and too time-consuming to custom-build software to replace SaaS. The second part is no longer true. The first part people never liked in the first place. So I think that’s the fundamental premise.”
— R. Srikrishna, CEO
Hexaware is avoiding high-compliance and core data SaaS segments where incumbents have strong defensive moats. By targeting non-core software archetypes, the company is focusing its resources on areas where displacement is technically and commercially more feasible.
“However, if you look at it, there are many types of SaaS that I think will have a moat that we can’t cross, right? If they have core data about the enterprise, if they’re running processes that impact compliance, let’s say reporting processes, that’s not our target. But it’s a $900 billion market, close to a trillion dollars. There are many pockets. We’ve identified four or five archetypes that we think are good.”
— R. Srikrishna, CEO
Management has identified four specific software categories where they believe AI-driven custom builds can replace traditional subscriptions. This targeted approach provides a clear framework for how the company intends to capture market share from the $900 billion SaaS industry.
“Archetype one: easy-to-replace software, workflow stuff. Archetype two: where people are paying for double licenses. There’s a Salesforce license, and there’s a Veeva license on top as an example. Archetype three: the SaaS companies themselves decide they’re going to sunset that product, right? For a client, what is the choice? I go and find another SaaS, or now there’s a new choice: you can custom-build it. Basic research shows there are 150 companies that have said they’re not going to support sunset products. The fourth, by the way, is customers giving their data and renting intelligence. They give 10 years’ worth of transaction data and they just get PDF reports back. They don’t even have access to their own data. So I think there are good archetypes for us to target.”
— R. Srikrishna, CEO
The legacy modernisation segment is showing strong momentum with multiple double-digit million-dollar deals already secured this year. This traction validates the demand for Hexaware’s core transformation services and signals likely revenue acceleration in the near term.
“Regarding “zero tech debt,” I’m not sure where you got the number 40 from, but it’s more than the four “zero license” deals. We only started “zero license” in Jan. “Zero tech debt,” its earlier avatar was “legacy modernization,” which we started last Jan. So that has more revenues right now, and it will have more meaningful revenues in the near term. In “zero tech debt,” we actually announced earlier in the year that we got our first double-digit million-dollar deal. Last quarter, we said we got our second double-digit million-dollar deal on legacy modernization. And I think we’ll have more double-digit million-dollar deals on “zero tech debt” before this year is out. So that’ll be first off the bat in being more meaningful.”
— R. Srikrishna, CEO
The “zero license” strategy uses automated AI agents to quickly analyse and propose custom replacements for existing SaaS expenditures. Successful pilot projects could lead to larger-scale consolidations of client software budgets into Hexaware’s custom service agreements.
“I think for “zero license,” a lot of the deals right now—clients love the concept first, though they don’t believe it. But once we show them, they like the concept, then we pick up one software or one small pool and say, “Let’s prove it”. I think with some of these clients, once we prove it, they’re going to say, “Hey, my total SaaS spend is whatever—$40 million a year, $80 million a year. Give us a full list”. We have a platform where you put in the name of a SaaS platform, and in about two minutes, because it has eight AI agents working in the background, it’ll tell you what we can do with it.”
— R. Srikrishna, CEO
Financial Services
Max Financial Services Limited | Mid Cap | Life Insurance
Max Financial Services Limited is the holding company for Max Life Insurance, one of India’s leading private life insurers. The company focuses on a multi-channel distribution strategy with a strong emphasis on protection and annuity products.
SEBI has dropped its proceedings against the company and its partners without imposing any penalties. This resolution removes a significant regulatory cloud and confirms the company’s internal governance standards to investors.
“Absolutely. We welcome the final orders given by SEBI. It provides ample clarity and reaffirms that we have been conducting business with high standards of governance. It is a reaffirmation of the same, and we are very pleased to receive this order.”
— Amrit Singh, Director and Chief Financial Officer
Management clarifies that the long-standing legal case regarding legacy transactions did not materially impact their credit standing or day-to-day operations. Investors should view this as a formal closure of a historical issue rather than a trigger for immediate financial upgrades.
“Not really. We have been indicating that we adhered to the associated laws around these matters, and we were fairly confident about it. These transactions being examined went back to 2010. In terms of credit ratings or any tangible relief, we don’t expect anything specific here, as there was not necessarily such an overhang on this topic.”
— Amrit Singh, Director and Chief Financial Officer
The company reported margin expansion in the first quarter due to higher protection sales and favourable interest rates. Management intends to maintain margins between 25% and 26% over the long term, prioritising the expansion of their distribution network over further margin growth.
“Look, I will not comment upon specific short-term quarterly outcomes; we will have to wait for the results to come through. But in the first quarter, the improvement you saw was driven by a healthy lift in protection volumes and a favorable yield curve environment, which helped boost the margin profile. Philosophically, we want to maintain a healthy margin trajectory in the 25% to 26% range over longer horizons. More important for us is consolidating distribution buildup and demonstrating a growth differential relative to the market. Margin is something we prefer to keep range-bound rather than working solely to enhance it. It is an overall holistic business expansion where distribution buildup is critical for us.”
— Amrit Singh, Director and Chief Financial Officer
The company will prioritise reinvesting any excess profits into business growth rather than allowing margins to spike beyond their target. This approach ensures that sales growth is not achieved by sacrificing the baseline profitability of the products.
“Look, our philosophy centers on profitable and sustainable growth—that is our strategic priority. We like to keep margins range-bound. If margins run higher—say, an outlook of 28% to 29% for the full year—we would rather reinvest that extra margin into building and accelerating distribution. But at no point will we allow margins to fall off merely to chase top-line growth.”
— Amrit Singh, Director and Chief Financial Officer
Axis Bank is currently considering a proposal to increase its ownership stake in Max Life to 30%. A higher stake from a primary bank partner would likely strengthen the bancassurance relationship and provide greater long-term stability for shareholders.
“Firstly, this is an internal matter pertaining to Axis Bank, and they have provided clarity to the market. There is no conversation from our end on this. However, the bank has publicly stated that they are evaluating the opportunity to increase their stake from upwards of 20% up to 30%. It remains a matter of their internal deliberation, and as and when they have further updates, the market will hear from them and subsequently from us.”
— Amrit Singh, Director and Chief Financial Officer
Management confirms that there has been no formal or informal communication regarding a stake increase yet. Investors should consider this a bank-led internal process that has not yet reached the execution stage at the corporate level.
“No, it is currently an internal topic under deliberation at the bank.”
— Amrit Singh, Director and Chief Financial Officer
The high-margin protection segment grew by 44% and now contributes 15% to total business value. This shift toward protection products is expected to continue as rising incomes drive demand for basic life insurance in an underinsured market.
“Regarding protection momentum: we have identified protection and annuity as our two focus segments where we want to outperform. In Q1, protection accounted for 15% of our business volume and value, growing at a healthy 44% year-on-year—a trend consistent across recent quarters. We see a significant long-term opportunity due to the low sum assured per capita in India, indicating deep underpenetration and underinsurance. As per capita income rises, pure protection products become increasingly relatable and understandable to consumers. We remain focused on leading in this space, building data, and managing risk effectively.”
— Amrit Singh, Director and Chief Financial Officer
Management reaffirms that selling insurance through banks remains their most critical method for reaching customers. Maintaining the core relationship with Axis Bank while diversifying with other banking partners is central to their growth strategy.
“Regarding bancassurance: it remains a vital distribution channel for reaching life insurance consumers. We are fortunate to have Axis Bank as a promoter providing a strong bancassurance franchise. Additionally, over past years, we have expanded partnerships with multiple other banks to sell across their platforms. Bancassurance will remain an essential channel in the overall distribution mix.”
— Amrit Singh, Director and Chief Financial Officer
Engineering & Capital Goods
Tempsens Instruments (India) Limited | Small Cap | Electrical Equipment
Tempsens Instruments is a leading manufacturer of temperature sensors, specialised cables, and electrical heating systems for industrial applications. The company serves diverse sectors including oil and gas, petrochemicals, and defence, with a growing presence across international markets like the UAE, Korea, and Poland.
Management is targeting a revenue milestone of ₹550 crores while maintaining its current mid-20s margin profile. This suggests that growth will come from market expansion rather than aggressive price competition or cost-cutting.
“No, I think we will be moving forward with a similar kind of growth and maintaining similar margins. However, we are exploring a lot of newer territories and newer customers. So that is what would push margins and growth in the right direction. We think revenue will be around ₹550 crores in the coming years.”
— Vinay Rathi, Director
The company anticipates that international subsidiaries established two years ago are now entering a high-revenue contribution phase. This international scale-up is expected to be a primary driver for the company’s next phase of growth.
“Yes, yes, it looks like we are heading in that direction. Also, the companies we started outside India about two years ago will be kicking in a lot of revenue. So, we see a good growth possibility for Tempsens in the future.”
— Vinay Rathi, Director
Management highlighted that their international ‘seeding’ strategy is yielding results, with the UAE business growing threefold in the past year. Investors should monitor Korea, Poland, and Mexico as these regions are expected to mirror this aggressive growth trajectory.
“Right. Regarding the export market, over the last few years, we started three companies outside India. Those will be growing much faster because the initial years were just the seeding years, and now we are going to see the fruit. For example, especially in the UAE, revenue 3xed last year. We expect to see similar growth in the geographies we’ve started in, such as Korea, Poland, and Mexico. They will be adding to this kind of growth.”
— Vinay Rathi, Director
The company is positioning itself to benefit from a recovery in the petrochemical sector and is diversifying its client base by targeting original equipment manufacturers (OEMs). Moving beyond heavy industry end-users could lead to more stable and recurring revenue streams.
“Regarding petrochemicals, we see that it is going to be a big booster once the geopolitical situation settles down. So this will add to the company’s work in that direction. I would also say the company is adding a lot of OEM-based customers to its original base of heavy industry end-users.”
— Vinay Rathi, Director
Specific technical approvals in the oil and gas sector are expected to drive growth in the electrical heating segment above the corporate average. While the inorganic growth spike from a previous merger won’t repeat, the organic demand from large customers remains strong.
“The margins are similar to everywhere else. We received some specific approvals in the oil and gas segment from some large customers, so we will be moving in that direction for those kinds of products, and that segment will grow significantly. I would not say it will see the kind of initial growth we saw last year—that was mainly because of the amalgamation of a heater company—but it will grow, I would say, a little bit faster than the regular growth rate at Tempsens.”
— Vinay Rathi, Director
The recent spike in working capital was attributed to the timing of acquisitions rather than a fundamental deterioration in cash flow efficiency. Management expects the business to revert to its historical efficiency levels as the integration of these new entities stabilises.
“Actually, last year the working capital days, as I told you last time, increased because we acquired some companies. Those acquisitions were done in the last days of March, so when the balance sheet was consolidated, it artificially increased the working capital days. But if you look at the year before that, those were the normalized working capital days which will continue in the future.”
— Vinay Rathi, Director
Management clarified that the business is not heavily seasonal, with a fairly balanced revenue split between the first and second halves of the fiscal year. This stability is positive for investors seeking to avoid the sharp quarterly volatility often seen in industrial project-based companies.
“No, I would not say the revenue is highly seasonalized. I would say the ratio is about 45:55 for the first half and the second half. So it is not strictly seasonal. Obviously, there are some project orders that lead to more shipments at the end of the year, but overall, it is quite normalized. It might be around 20% to 20% for the first two quarters, and then 30% to 30% for the second half of the year.”
— Vinay Rathi, Director
Textiles
Gokaldas Exports Limited | Small Cap | Textiles & Apparel
Gokaldas Exports is one of India’s largest apparel manufacturers and exporters, specialising in complex outerwear and fashion garments for leading global brands. The company operates an integrated manufacturing network across India and international locations like Kenya to serve major retail markets in the US and Europe.
Tariffs in the US market have stabilised at 10%, while the company’s Kenyan operations provide a unique duty-free cost advantage. This transition away from previous punitive 50% tariffs significantly improves the company’s competitive positioning and pricing power.
“Among the big markets—both Europe and the US—the US tariff is leveling off, which means we have a level playing field in terms of having the Section 301 tariff of 10% across the board in most countries. Our operations in Kenya, where it is 0%, actually bestow a favorable advantage on us. So on the tariff front as far as the US is concerned, it looks good for us for the moment, especially coming out of that 50% penal tariff that we encountered in the second, third, and fourth quarters of last year. So, it’s a good scenario on that front.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
The recent Free Trade Agreement with the UK has eliminated tariffs, allowing the company to secure new high-volume clients in the region. Management is also anticipating a similar agreement with the EU next year, which would remove significant economic barriers to their largest potential market.
“The UK tariff being rated to zero is helping us gain ground in that market. We are in advanced discussions with a new customer based out of the UK, in addition to growing our existing customers. So that side is also going well. We are eagerly waiting for the European FTA, which would open up access to a very large market. If that happens sometime next calendar year, that would be great. Then most of the economic constraints for India would be lifted, and we would have very favorable access to major markets.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
Inventory levels at US retailers are currently very low, which usually triggers higher ordering activity to restock shelves. This low inventory environment, combined with a healthy order book, provides management with a margin of safety against potential macroeconomic headwinds.
“Now we have to see how the holiday season goes. Most of our production for those seasons is getting over as we speak, and we’ll be starting summer. Our order books have been full, so most of our customers think that they will have good demand. But I’m really looking at 2027 and seeing how macroeconomics will pan out. It’s a bit too early to say. The US market has always pleasantly surprised us rather than the other way around, so I’m cautiously optimistic about retail demand. However, if I look at the inventory with the retailers, that seems to be very, very low. So I’m not particularly worried because most of the ecosystem has been prepared. From a demand standpoint, it should not be a challenge at all, and it’s evidenced in our order books, which seem to be pretty healthy as well.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
The company operates a pass-through model for raw material costs, effectively shielding margins from fluctuations in cotton prices. If prices become too volatile, the business can pivot its product mix toward synthetic fibres or blended fabrics to maintain cost competitiveness.
“Any runaway increase in raw material prices does impact, depending on whether the supply chain is able to pass it on to customers. For us, raw materials are generally a pass-through, and we factor in the higher raw material costs. By the time cotton prices factor into the fabric that we consume, it peters down quite a bit. So far, we have been able to price it into our orders. But if there’s a runaway inflation, there could also be a switch between cotton and polyester. These kinds of dynamics also play out. If one fiber peaks in terms of pricing, there could be an offset in terms of demand for another fiber, blending increases, and so on and so forth.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
Management expects profitability to improve in the second half of the year as the company stops offering discounts that were previously needed to offset high tariffs. This shift toward full-price orders should drive margins back toward the company’s 12% target range.
“There should be growth. Usually, the second half is better than the first half, number one. Number two, even in this first half, most of the orders were secured when we were going through a 50% tariff, so we did have some bit of discounts we had offered to our customers, which are not there in the second half. The second-half margins should be above the first-half margins for us.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
The company is targeting nearly ₹6,000 crores in revenue by FY28 through a combination of 15-20% organic growth and the integration of the BRFL acquisition. The BRFL merger alone is expected to add over ₹1,200 crores to the top line once fully operational next year.
“So, Gokaldas itself is growing at about 15% to 20%, and that’s the trajectory that we will have this year. Last year we did ₹4,000 crores in revenue, so you could estimate the growth for this year. BRFL will merge towards the end of this calendar year, somewhere around November, so we will have only one quarter of revenue. That may not add much; it may add about ₹400 crores of revenue this year. But next year, BRFL will yield about ₹1,200-plus crores of top line, in addition to another 15-plus percent growth for Gokaldas. So we are looking at a revenue trajectory, including BRFL, approaching about ₹5,800 or above—around ₹6,000 crores in that trajectory next year, which is FY28.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
Return on capital employed is expected to stabilise in the 20% range by FY28 as major capital investments and acquisitions begin to contribute to earnings. Management believes the current suppression of returns is temporary and will reverse once the newly added manufacturing capacities are fully utilised.
“Obviously, our investments in BRFL are not fully borne out in our books yet because we’re not consolidating those numbers. If you look at apparel, return on investment should be of the order of 20% or higher, and that’s the trajectory we’ve always held—we’ve been in the range of 27-odd percent in the past. With these new acquisitions playing out this year, next year we should be in that 20%-plus trajectory. The fabric investments may be in the teens, but fabric’s contribution to overall revenue will be sub-20%. Overall, I think the return on capital employed should hover in the high teens to 20%, and it should only keep on improving going forward. I’m talking of FY28 and further ahead, because a lot of investments have already happened and those capexes will start playing out in the quarters ahead.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
Total debt is expected to reach a peak of approximately ₹850 crores following the formal merger of BRFL later this year. The company plans to use its strong operational cash flows to aggressively pay down this debt in subsequent quarters.
“At peak, once the merger of BRFL happens, BRFL’s debt will also come onto us, and I think we will peak at about ₹800-plus to ₹850-odd crores. Then it will start falling because this year also we’ll be generating a good amount of cash flow. That will help towards retiring debt. The peak debt will start falling from that level downwards going forward.”
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director
Join us on WhatsApp, where we share interesting soundbites from concalls, articles, and everything else we come across throughout the day. You’ll also get notified the moment a new video or article drops, so you can read or watch it right away.
That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!
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.