Welcome to the 97th 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 7 companies across 4 industries.
Software Services
HCL Technologies
IBM India
Financial Services
RBL Bank Limited
Canara Bank
Anand Rathi Wealth Limited
Manufacturing
Zetwerk
Retail
IKEA India
Software Services
HCL Technologies Limited | Large Cap | Software Services
HCL Technologies is one of India’s largest IT services companies and the third-largest India-headquartered listed IT-services company by FY26 consolidated revenue, offering software services, infrastructure management, and engineering and R&D services to global enterprises. It also develops and sells enterprise software through HCLSoftware.
[Concall]
HCLTech’s advanced AI business is now large enough to show up in the overall numbers, with an annualised run rate of $876 million, closing in on $900 million. Management says this is how the company plans to grow despite AI shrinking the value of traditional IT contracts.
“Advanced AI revenue reached $219 million this quarter, up 28.4% sequentially and 78% year-on-year, and annualised advanced AI revenue is now $876 million. This quarter’s performance validates our strategy and advances our ambition to become the leading AI solutions company for global enterprises. You can also see that we are able to offset AI-driven deflation by gaining market share in our core services and through our advanced AI offerings, which is helping us capture a share of the rapidly expanding AI spend across the technology ecosystem. This is the growth template we aim to consistently replicate going forward.”
— C Vijayakumar, CEO & Managing Director
New deal wins were the second-highest in the company’s history, and management said AI was central to every large deal it won. Management also reiterated that the previously announced mega deal will start contributing only from Q1 FY28, not in the second half of FY27.
“New deal bookings reached $3.3 billion, up 27% year-on-year and 35% sequentially. This is the second-highest bookings quarter we have ever recorded and gives us our strongest first-half booking performance. Clients are working with us on more strategic programs and are choosing us to shape their technology agenda. AI was a central theme in every large deal we won.”
— C Vijayakumar, CEO & Managing Director
Operating margin rose to 19% once one-time restructuring costs were excluded, up from 17.5% in the previous quarter. Most of the gain came from internal cost programmes (Project Ascent), operating leverage from faster growth and higher-margin AI work; foreign exchange contributed a smaller 23 basis points.
“Our EBIT was $377 million, representing 18.2% of revenue. Adjusting for restructuring expenses of 84 basis points during the quarter, our Q2 EBIT margin was 19%, compared with 17.5% in the previous quarter. The margin bridge is as follows: Project Ascent, including AI-driven efficiencies, gave us 73 basis points; superior margin of services offerings under our advanced AI revenue gave us 32 basis points; operating leverage at the SG&A level due to growth acceleration gave us 50 basis points; and foreign exchange gave us 23 basis points. On the headwinds, there was a 22-basis-point impact on account of higher restructuring costs in this quarter compared to the previous quarter, and a 25-basis-point impact due to the HPE Telco Solutions acquisition.”
— Shiv Walia, Chief Financial Officer
Management says advanced AI offerings currently achieve better margins than traditional services, with particularly high gross margins in IP and platforms. A growing contribution from these offerings could support overall margins, although HCLTech intends to reinvest operational gains in capabilities, IP and talent.
“There are two components to this. One is the services component, and the second is the IP and platform component. For the IP and platform component, the margins will be very high, very similar to a software business. The gross margins will be upwards of 70%. For the services component, I think the margins will be at least 7% to 10% higher than traditional services. At least so far, in all the deals we have been able to secure, we have generally achieved better realisation and margins.”
— C Vijayakumar, CEO & Managing Director
HCLTech announced a global premier partnership with Anthropic on the day of the call, adding to its existing tie-up with OpenAI. Management said some of its products, such as AI Force, already have native integrations with OpenAI, and it now plans to build similar integrations with Anthropic, with pricing that includes token costs.
“Today, we announced a global premier partnership with Anthropic to accelerate enterprise adoption of agentic AI, with a focus on safety, cybersecurity, and governance. We will establish a dedicated Anthropic business unit and a centre of excellence to accelerate deployments of Claude in enterprise environments. HCLSoftware will become an Anthropic ISV partner, embedding Claude and Claude Code into select enterprise products with frontier safety guardrails. … With Anthropic … it is largely a services model. But I think the biggest non-linearity is coming from the fact that some of our products, such as AI Force, are being integrated, and a number of software products are having native integrations into OpenAI. We now propose to build them with Anthropic as well. There, I think, we have pricing that includes the token costs as well. So, there, I think the equation will be a little less people-centric and will be non-linear.”
— C Vijayakumar, CEO & Managing Director
Software revenue fell 11.2% year-on-year. Management attributed the decline largely to fewer multi-year licence renewals falling due this year, since a large share of a multi-year licence’s revenue is recognised upfront. Annual recurring revenue (ARR) grew 7.6%, though excluding the JasperSoft acquisition it grew only 2.6%.
“This year, and particularly in Q2, we had fewer multi-year licenses that were due for renewal compared to last year. You would notice that the revenue recognised from multi-year subscription licenses has gone down from $81 million in Q2 FY26 to $39 million in Q2 FY27. Revenue recognition for an on-premises term license varies based on the term of the license. Typically, upfront revenue recognition is as much as 60% to 70% of the entire term for a two- to three-year license, with the balance recognised over the contract term. The reported revenue decline does not accurately reflect the underlying health of the software business. The same is evident in the healthy ARR growth that we have witnessed even in this quarter.”
— Shiv Walia, Chief Financial Officer
Despite a strong quarter, management trimmed the top end of its FY27 revenue growth guidance from 4.5% to 4%, setting the range at 2.5%–4%, and declined to raise it, citing geopolitical volatility. The guidance now also includes about 87 basis points of contribution from acquisitions.
“We had a strong quarter on multiple fronts, and obviously Q3 will be a strong quarter due to the software step-up. However, the environment remains fluid. Last year in February, we thought we were in a normal situation, and I met a lot of investors. The day after that is when the Middle East conflict happened, and then a lot of things went in a different direction. We are in a volatile world, and we do not want to increase our guidance. Things can change quickly, both on the positive and negative side. We definitely feel confident that services will be slightly above the midpoint.”
— C Vijayakumar, CEO & Managing Director
Management retained FY27 EBIT margin guidance at 17.5%–18.5% and reiterated an 18%–19% desired band. The company’s priority remains investing in AI capabilities and differentiation rather than maximising margins during the transition.
“Our earlier aspiration was 18% to 19%. Last year, and specifically this year, we called out the restructuring charges, and then we reduced the guidance to 17.5% to 18.5%. However, 18% to 19% is our desired band. I would not want to comment on it now because the industry is changing significantly, and we would always want to invest to gain more capability and differentiation rather than optimise margins during this phase of the industry.”
— C Vijayakumar, CEO & Managing Director
IBM India MD | $4.5 billion AI impact | Productivity gains | Next big shift
IBM India provides high-value IT services including AI-driven automation, hybrid cloud infrastructure, and enterprise consulting. The company is currently scaling its Sovereign AI initiatives in India to help regulated industries manage data security and operational control.
IBM exceeded its cost-saving targets by focusing on process redesign rather than just basic automation. This suggests that the company’s AI strategy is delivering much higher financial returns than initially projected.
“I do not think that is a valid argument; in fact, I do not think we can build fast enough. What matters is whether we are building the right capabilities around the right use cases, and doing so to genuinely move the needle on business outcomes. As with any technology throughout history, the critical question is how you put it to work and develop it to drive true business value. When adopting AI, enterprises must evaluate whether they are picking the right use cases, executing with sound economics, and fundamentally reimagining core business processes before automating or infusing AI into them. To illustrate this with real-world examples: IBM recently conducted a State of AI Adoption survey, which revealed that roughly 58% of surveyed companies are actively deploying AI solutions, while others are still testing the waters or evaluating adoption timelines. AI technology today is fully ready to scale, and organisations should be far more deliberate in building with it. Within IBM, we embarked on an internal transformation journey three years ago to apply AI to our own core operations. Our initial objective was to take $2 billion out of our bottom line over a three-year period through process automation and AI infusion. We exited that three-year cycle having delivered $4.5 billion in bottom-line value. Achieving that required redesigning core workflows, automating where appropriate, and embedding AI to drive higher productivity.”
— Sandip Patel, Managing Director, IBM India and South Asia
The company developed an internal AI tool that significantly improves the speed and efficiency of its software engineers. This tool is now being sold to external clients, creating a new potential revenue stream from internal innovations.
“Another internal initiative is an internal software engineering tool we developed called “IBM Bob”. Beyond basic code completion, we used AI to enable the entire software development lifecycle. Today, over 80,000 IBM engineers use IBM Bob, delivering productivity gains of up to 45% in development functions, allowing us to build better software faster. Furthermore, external clients like ISG (Inspirage Solutions Group) in India have implemented IBM Bob across their developer teams, achieving similar productivity gains and changing how they solve client problems. The core question is not whether the industry is building too fast, but whether we are building the right tools to drive tangible business value for enterprises.”
— Sandip Patel, Managing Director, IBM India and South Asia
Many businesses are finding that their AI projects fail because their internal data is messy and unorganised. Investors should realise that spending on data infrastructure must happen before AI can generate any real value.
“Our research indicates four primary reasons why organisations hesitate to move beyond pilot stages. First is information architecture and data readiness, as organisations have historically hoarded data in disconnected silos. Today, data types are shifting—such as sensor data or real-time data in motion—which requires immediate availability at the point of decision-making. We often say there is no AI without Information Architecture, because if an enterprise has not invested in structuring its data for readability and usability, AI initiatives stall.”
— Sandip Patel, Managing Director, IBM India and South Asia
The industry is moving away from massive, expensive AI models toward smaller, specialised models that are cheaper to operate. This shift helps enterprises control costs while still getting high-quality results for specific business needs.
“Second is AI economics and ROI, where enterprises must architect solutions that deliver sustainable return on investment rather than spending immense capital running massive frontier language models. While large frontier models serve specific purposes, enterprise adoption favours targeted, domain-specific small language models that are agile, faster, use significantly less compute, and cost less to run. IBM actively open-sources small language models to foster developer innovation.”
— Sandip Patel, Managing Director, IBM India and South Asia
Successful AI adoption requires senior leaders to understand where the technology can actually help their specific business. A lack of executive training is currently a major bottleneck for scaling AI across large organisations.
“Third is executive and organisational skilling, where beyond developer capabilities, C-suite leaders require the education and domain context to identify high-value AI use cases across their business operations.”
— Sandip Patel, Managing Director, IBM India and South Asia
Concerns about AI mistakes and data privacy are preventing many companies from fully launching AI products. Establishing clear rules for how AI makes decisions is necessary to reduce legal risks and build user trust.
“Fourth is trust, governance, and risk, where concerns surrounding hallucinations, data privacy, and legal liabilities make executives cautious. Overcoming this requires robust governance frameworks built on four structural pillars: data provenance, explainability of AI outputs, operational transparency, and continuous model governance.”
— Sandip Patel, Managing Director, IBM India and South Asia
The software services business is changing as AI speeds up development and shifts how contracts are written. This evolution allows companies to deliver advanced solutions faster, potentially leading to more frequent, high-value projects.
“The software services industry operates in a hybrid environment across on-premises infrastructure, SaaS models, and cloud-delivered services. As AI-driven productivity tools expand across the software development lifecycle, software services will naturally evolve. While contract structures adapt to shorter integration projects alongside large transformational deals, AI enables faster development of new capabilities, providing enterprises with access to advanced software solutions.”
— Sandip Patel, Managing Director, IBM India and South Asia
Governments and highly regulated industries are demanding more control over where their data is stored and how it is managed. This trend toward technological sovereignty is creating a massive demand for localised and private AI infrastructure.
“Sovereignty has become a central conversation across global jurisdictions, driven by geopolitical shifts and a growing emphasis on technological independence—or what can be described as digital swaraj. Organisations are re-evaluating what infrastructure they control versus what they outsource. Sovereignty encompasses two primary dimensions: infrastructure data residency and technological operational control. Beyond basic data residency, regulated industries demand assurances that external parties cannot access sensitive data through foreign legislation or third-party platforms, while requiring direct operational control over their operating environments so they are not held hostage to external jurisdictions.”
— Sandip Patel, Managing Director, IBM India and South Asia
IBM is working with telecom providers like Airtel to build secure cloud environments specifically for Indian industries with strict data rules. This partnership expands IBM’s reach into sensitive sectors like banking and government services.
“To address these requirements in India, IBM partnered with Airtel to combine their data centres and network infrastructure with IBM’s software stack, delivering a secure, private cloud-like environment for regulated industries.”
— Sandip Patel, Managing Director, IBM India and South Asia
New software tools are being launched to allow Indian companies to manage their cloud operations entirely within their own borders. This helps clients meet local compliance laws while still using modern AI and automation features.
“We also introduced Sovereign Core, a software stack that enables client and partner data centre environments to run cloud capabilities—including FinOps, automated provisioning, continuous compliance, and an agentic control plane—entirely within their local jurisdiction, which we are deploying in India in partnership with Yotta and NextGen.”
— Sandip Patel, Managing Director, IBM India and South Asia
IBM has created a blueprint for government AI systems that can be reused across different states and countries. This standardised approach makes it easier and cheaper for public sector clients to adopt advanced technology securely.
“Furthermore, IBM collaborated with the Government of Andhra Pradesh, NextGen, and BharatGen to create SWAM, a reference architecture for a fully sovereign AI stack designed for government entities and scalable across global jurisdictions. Replicability and fungibility are essential so solutions can be built once and deployed securely across diverse regulatory environments.”
— Sandip Patel, Managing Director, IBM India and South Asia
Financial Services
RBL Bank Limited | Mid Cap | Financial Services
RBL Bank is a Mumbai-headquartered private sector bank offering corporate, commercial, retail and rural banking services. In June 2026, Emirates NBD completed a roughly $2.75 billion investment for a 60% stake, making the Dubai-based lender RBL’s majority owner.
[Concall]
The capital raise and the special foreign-currency (FCNR) deposit scheme together brought in funds equal to 35% of RBL’s balance sheet as of 31 May 2026. The bank is using the money first to repay costlier borrowings and bulk deposits, then to lend to highly rated corporates and in secured retail, with the rest parked in short-term investments and loans.
“We have generated a large amount of liquidity on our balance sheet between the capital raise and the deposits raised during the FCNR(B) scheme. For context, between the two, we have added 35% of our balance sheet as of 31 May 2026. This liquidity is deployed as follows. First, we prepaid or chose not to renew borrowings and bulk term deposits that were at a higher cost. Second, we are growing our business across both wholesale and secured retail, where we have seen demand and business conditions continue to remain fairly stable. Wholesale lending is to highly rated corporates where we want to start or deepen the relationship. The balance liquidity is tactically deployed in a combination of short-term investments and short-term loans given to our wholesale customers.”
— R. Subramaniakumar, MD & CEO
The bank crossed several size milestones this quarter, and its cost-to-income ratio fell sharply. A lower cost-to-income ratio means more of each rupee earned is left over as operating profit.
“The balance sheet crossed 2 lakh crore to end the quarter at 2,22,344 crore, more than doubling from financial year 2022. Term deposits crossed 1 lakh crore to reach 1,15,746 crore. Operating profit crossed the 1,000 crore mark to reach 1,396 crore for Q2 FY27. The cost-to-income ratio for the quarter was 56.5% versus 70.7% in Q2 FY26.”
— R. Subramaniakumar, MD & CEO
With better credit ratings and the Emirates NBD network behind it, RBL says it is going after large corporate relationships that were out of reach earlier, as well as trade flows in the corridors where Emirates NBD operates. It also says it will keep building granular, stable liabilities to narrow its cost-of-deposit gap with larger banks.
“We are working on putting together building blocks, which we will articulate in greater detail over the coming months. Briefly, these would focus on deepening and starting new relationships with large corporates that were not accessible earlier, either due to constraints related to credit rating, capital position, or our cost of funds. We are also working to target trade flows in the corridors where Emirates NBD is present, where we believe we have a competitive advantage because of the Emirates NBD network. We will continue to build granular and stable liabilities to progressively narrow the cost-of-deposit gap vis-à-vis the larger banks.”
— R. Subramaniakumar, MD & CEO
Credit card stress, one of RBL’s biggest pain points in recent years, appears to be easing. Card slippages for the quarter were still 600-plus, but September alone was 125–135, and management expects card credit costs to fall from the low double digits to about 6%.
“Card slippages are in line with expectations. While the quarter still had a 600-plus number, if I take the last month’s number of the quarter, we are already in the 125-135 zone. … We are quite happy to report that, while it took us a little more time to get this in order, we are now actually seeing it on the ground. Hopefully, we would expect card slippages to come down to a 400-plus-or-minus number for Q3 and Q4. Therefore, credit cost on cards should come down from the low double digits that we have seen to the 6% zone. The rest of the businesses will hold where they are, give or take, unless we see some very material deterioration in any of the rural businesses, which so far we have not seen at all.”
— Bhavin, Chief Financial Officer
Management expects margins to dip slightly next quarter. Much of the new money still sits in lower-yielding investments, and the full-quarter cost of the FCNR leverage will come through, partly offset by the repo rate hike. Margins should improve as the money moves into wholesale and then blended loans, but management says that will take more than a couple of quarters.
“The liquidity generated is currently sitting in investments, in non-SLR investments, which still yield less than the blended advances yield. Going forward, the first stage will be moving from the investment yield to the wholesale yield, and then from the wholesale yield to the blended advances yield. That is a journey, but it is not a one-quarter or two-quarter journey; it is going to take a little longer. The flip side is that you will see the full-quarter impact of the FCNR leverage given this year, because you see only a month and a half, or just a little more than a month, in this quarter. That full-quarter impact will be offset to some extent by the increase in the repo rate, which will flow through partly in this quarter and partly in the next quarter. … We are fairly confident in saying that you will see a little reduction in the next quarter simply because of where the mix is sitting right now on the balance sheet. As that moves forward, you will see an increase, but the pace of that increase will depend on the deployment of the available liquidity.”
— Management
The insurance regulator’s (IRDAI) draft circular could cut deep into RBL’s bancassurance fees. The CFO put the business at about ₹300 crore of income a year and said a 50–60% hit is the minimum to pencil in if the draft is implemented as proposed.
“We have approximately 300 crores, plus or minus, of income per annum. Based on a plain reading of this, I would imagine that it will be substantially impacted. I would imagine that a 50-60% impact should be the minimum to pencil in. … However, you would expect a substantial drop in fee income if nothing changes and the draft circular is implemented in the manner proposed.”
— Bhavin, Chief Financial Officer
Management says the new money is effectively fixed-rate funding in a higher-rate environment, which it expects to support both margins and growth. It declined to give a specific return-on-assets (ROA) target for FY28, saying it would come back with fuller details over the coming months.
“It is very interesting to have a situation where there is a significant amount of liquidity between FCNR and equity that is effectively fixed-rate in a high-interest-rate environment. There will therefore be a tailwind to margins and a tailwind to growth. Clearly, I think there is going to be material improvement. Our BAU business, excluding all this noise, is obviously trending much better in terms of growth, with cards and MFIs pretty much normalised. I think margins should also see significant tailwinds, but I do not think we should comment on a specific point at this stage.”
— Management
RBL is keeping its unsecured lending on a tighter leash. Microfinance will grow only as much as needed to meet priority-sector lending (PSL) targets. Card balances are still shrinking, but management expects the decline to stop within a quarter and then sees high single-digit to low double-digit growth, with a shift toward better-quality customers.
“For cards, we expect to stop the decline within a quarter. Hopefully, the coming quarter is the festive season, so we will see some balance build-up there. Given that we will also move towards better quality, and considering that the industry is not showing massive growth, I would imagine that we would be happy with low double-digit growth, or high single-digit to low double-digit growth, in cards. … The strategy for microfinance is very simple. We want to grow only to the extent required for PSL. We are not an NBFC that is going to add to the numbers; it is primarily for PSL.”
— Management
Canara Bank | Large Cap | Financial Services
Canara Bank is a major Indian public sector lender providing a wide range of retail, corporate, and agricultural banking services. The bank focuses on maintaining strong asset quality and driving credit growth through its retail and consumption-driven portfolios.
The bank saw strong lending demand in the retail sector during the first half and anticipates this trend will continue through the holiday season. While official targets remain conservative, management is internally aiming to surpass their 12% growth guidance.
“Following robust credit growth in Q1, we sustained momentum into Q2, supported by strong underwriting across retail and consumption-driven segments ahead of the festive season. We expect retail-driven demand to remain strong in Q3. Regarding credit guidance, our baseline full-year growth guidance was set at 11% to 12%. While we are keeping our official guidance range unchanged, our operational target is to outperform and exceed that 11% to 12% threshold.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
Management is focusing on gathering smaller retail deposits to fix the current imbalance between fast loan growth and slower deposit growth. They expect the credit-to-deposit ratio to improve as temporary foreign currency positions normalise and new marketing campaigns take effect.
“Incremental deposit growth is picking up, driven by granular retail deposits across individual savings accounts and retail term deposits. Excluding foreign currency deposits (FCNRB), underlying deposit growth stands at approximately 11%. A portion of recent advance growth was expanded by leveraged FCNRB mobilization, which will normalize in upcoming quarters. Supported by targeted deposit mobilization campaigns, we expect deposit growth to catch up and narrow the gap with credit expansion, bringing the CD ratio down.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
Rising interest rates in the bond market have caused paper losses on the bank’s investment holdings, which weighed on operating profits this quarter. Every small move in market yields has a significant financial impact, though the bank is using specific trading strategies to reduce these losses.
“Bond yield hardening impacted operating profits, even as net profit maintained strong growth. Every basis point shift in benchmark yields impacts our treasury book by approximately ₹30 crore to ₹38 crore. Benchmark yields rose 44 basis points during the quarter, creating MTM headwinds. We anticipate partial yield offset through RBI open market operations (OMO) arbitrage.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
New rules limiting the commissions banks can earn from selling insurance and mutual funds will reduce annual fee income by roughly 200 crore rupees. Additionally, stricter cash reserve requirements are creating a small but steady monthly drag on profit margins.
“Regarding regulatory shifts, proposed insurance distribution commission caps will impact our bancassurance earnings by around ₹150 crore in life insurance, with total fee income reduction across mutual funds and wealth distribution capped at roughly ₹200 crore. Additionally, maintaining average CRR balances at 99% impacts margins by approximately ₹8 crore per month.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
Strong growth in core lending profits has been enough to offset the financial pressure from lower fee income and treasury losses. This suggests the bank’s primary business model is resilient enough to handle external regulatory and market shocks.
“These fee and treasury impacts remain small relative to our core business earnings, where net interest income grew 20.39% year-on-year and 7.73% sequentially to reach record highs, easily absorbing non-interest income pressures.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
Management clarified that selling third-party financial products like mutual funds is only a tiny part of their business compared to their main insurance partnership. The expected 200 crore rupee hit to fees is very small when viewed against the bank’s massive 10,000 crore rupee half-year profit.
“Third-party wealth distribution represents a small portion of our fee income, with primary earnings derived from our life insurance bancassurance franchise. The net income impact across life insurance, general insurance, and mutual fund distribution will be contained around ₹200 crore annually. This is minimal relative to Canara Bank’s overall profitability, having generated over ₹10,000 crore in net profit during the first half of the fiscal year.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
The bank has successfully kept its profit margins stable by carefully managing loan pricing and costs while other banks saw their margins shrink. Management expects to stay within their guided margin range because they do not foresee any interest rate cuts in the near future.
“We protected margins over the past three quarters through calibrated portfolio underwriting, disciplined asset repricing, and strict cost controls, whereas peers experienced NIM compression. With policy stances shifting toward calibrated tightening and no rate cuts on the horizon, asset repricing will provide margin support. We maintain our full-year NIM guidance of 2.50% to 2.60%, operating currently around 2.53% to 2.55%.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
The bank has approximately 16,000 crore rupees in loans exposed to drought-hit farming areas, mainly in Karnataka. While they will offer flexible repayment options to these farmers, they do not expect this to result in a major increase in bad loans.
“Regarding agricultural asset quality, Canara Bank has minimal credit exposure in drought-affected regions of Maharashtra, though we maintain agricultural exposures in Karnataka. Across all drought-impacted states, our total exposed agricultural credit portfolio stands at roughly ₹15,000 crore to ₹16,000 crore. We will follow standard State Level Bankers’ Committee (SLBC) dispensation guidelines to support affected borrowers without experiencing material asset quality degradation.”
— Brajesh Kumar Singh, Managing Director and Chief Executive Officer
Anand Rathi Wealth Limited | Small Cap | Financial Services
Anand Rathi Wealth is one of India’s largest non-bank wealth managers, serving HNI and ultra-HNI families mainly through mutual fund distribution and structured products. It also runs a digital wealth business and a SaaS platform for independent financial advisors.
[Concall]
The firm’s profit after tax has grown by more than 20% year-on-year in every quarter since listing in December 2021. In the first half of FY27, it achieved 52% of its full-year profit guidance of ₹460 crore (H1 profit is stated before non-business items, fair value gains and ESOP expenses), and management says it is not worried about meeting its guidance.
“This is our 20th quarterly result since we got listed in December 2021, and in every quarter since listing, with God’s grace, PAT growth year-on-year has been greater than 20%. Excluding the impact of non-business-related items, fair value gains, ESOP expenses, and related tax effects, after-tax PAT for the first half of FY27 grew by about 23% year-on-year to 238 crores, while revenue increased 17% year-on-year to 693 crores. In the first half of FY27, the company delivered 49% of the full-year revenue guidance, which stands at 1,415 crores. We have achieved 52% of the PAT guidance of 460 crores.”
— Feroze Azeez, Joint CEO
Net inflows hit a record in what management called one of the worst quarters for the Nifty. Management puts this down to clients trusting that their portfolios hold up in bad markets.
“We achieved the highest net flow ever in the history of Anand Rathi Wealth over the last 20 years in the quarter that has just ended. We collected new money of 4,186 crores, which is up 39% from the corresponding number for the quarter ending September in FY26. Thanks to our clients’ trust, when clients realised that their portfolios could hold up during bad times, they shared more money with us. Second, we recorded our highest-ever quarterly equity mutual fund net flow. … we achieved 2,867 crores, up 39%. It is easy to say, ‘Buy equities low and sell high,’ and clients have pragmatically bought more equity, which shows up in IRRs over long periods of time. Courage translates into IRRs, but not in the short term; it does so over a few years.”
— Feroze Azeez, Joint CEO
The firm’s long winning streak in structured products broke this year: some products delivered 6–7% instead of the expected 14–15%. Management stressed that none of its issuances since December 2012 has lost money at maturity, which matters because structured products (market-linked debentures, or MLDs) are a core offering.
“We had 1,190 consecutive products from December 2020 until as late as May-June this year. That was the longest streak of wins that any product in the history of Anand Rathi Wealth, or in the history of India, would have had while delivering the expected returns. That streak broke this year, and some products did not deliver the full 14-15%, but delivered 6-7%. None of them, in the history of Anand Rathi Wealth’s issuances since December 2012, has ever lost money at maturity.”
— Feroze Azeez, Joint CEO
Management says it sees no reason to cut its 20–25% profit growth guidance. It argues there is plenty of room in structured products: it puts the market at ₹1.66 lakh crore against its own issuance of about ₹3,000 crore.
“If I do not see growth of 20-25% over these 2 quarters, for example, if that is what you mean by the near term, I would have revised my guidance downward. One thing you can expect from us as professionals is courage. We make mistakes, but we have generally been taught to own them. If I were worried, I would change the guidance. … Market share does not determine growth; market potential does. The total market is 1.66 lakh crores, and our current issuance is 3,000 crores. Even if the market drops to 50,000 crores, we still have a long way to go. … So, in the near term, am I worried about achieving 20-25% PAT growth? The answer is no.”
— Feroze Azeez, Joint CEO
The firm says it builds ultra-HNI clients by growing existing relationships, taking clients with ₹5–10 crore up to hundreds of crores, instead of chasing people who have just sold a business or listed a company. Management also highlights that it does not compete on fees.
“How do we acquire Ultra HNIs? We do not acquire Ultra HNIs; we build Ultra HNIs. That is the key difference. Today, newspapers can tell you who sold the largest property, who sold the largest business to a private equity investor, and who conducted an IPO. Most wealth management organisations go to those people and say, ‘I will do it at a low cost; come to me.’ We say that we do not operate at a low cost. If I do not deserve my 1%, I do not want to be at that table. We take a client with 5 crores, 7 crores, or 10 crores and build that client to hundreds of crores.”
— Feroze Azeez, Joint CEO
Management says it targets a pre-tax profit above 40% and a post-tax margin above 30%, and treats this as an unbreakable rule. If margins climb well above that, it would rather reinvest in the business than show higher efficiency to shareholders.
“My target is 40%. I have to have my PBT above 40%, and I have to have my PAT above 30%. This is what my boss has told me, so we try to treat it as an unbreakable rule. We do not become flamboyant when things are good. For example, we hired 4 IITians who are designing algorithms for my research activities. … in good times, when your PBT is going to increase beyond what you expected, 43%, 44%, or 45% is acceptable; it is of the same order of magnitude as 40%. If it becomes 48%, I do not want to impress shareholders by saying that I have operating efficiencies. I would bring it back down by investing in things that I believe would keep my business operating and consistently running 20 years from now.”
— Feroze Azeez, Joint CEO
The firm has received approval to operate in GIFT City but will use it only to bring foreign money into India, not to invest Indian money abroad. Management describes this as choosing focus over new opportunities.
“In the short term and in the long term, our current thought process is to look only at inward flows. India itself currently requires a great deal of research. We were conducting a study on 213 derivative stocks, and there is still so much to understand. Without beating around the bush, it will be inward, and even in the long term it will be inward. We want to miss some opportunities in order to maintain focus. Focus is underrated, and opportunities are overrated—that is our belief. We want to master India as much as possible, and I think we have only scratched the surface.”
— Feroze Azeez, Joint CEO
The firm is about to apply for a mutual fund licence, which would let it make its own products instead of only distributing other fund houses’ schemes. Management says it will not launch plain long-only funds that copy what others already sell.
“We will submit the mutual fund license application by the end of this month. We are already prepared, or nearly prepared. We should be able to file it by around October 20.”
— Rajesh Bhutara, CFO
Manufacturing
Zetwerk | Manufacturing
Zetwerk is a Bengaluru-based, tech-led manufacturing company that builds products such as transformers, solar modules and precision components, using its own plants and a large network of partner factories. Founded in 2018, it opens its ₹5,012 crore IPO, which includes a fresh issue of ₹2,830 crore, on October 15, 2026.
We recently wrote about the upcoming IPO for Zetwerk in our newsletter, The Daily Brief.
Most of the money from the fresh issue will go towards repaying debt, which should leave the company as close to debt-free as possible after listing. The rest of the ₹5,012 crore IPO is an offer for sale. Management stresses that the company is still in growth mode, with revenue and the order book both rising about 40% last year.
“The bulk of the fresh issue that we’re doing is for retiring debt, so in that sense we should become as close to debt free as possible after the IPO. We are a young company, we are in the growth stage of the business. We are an 8-year-old business. In 8 years we have scaled from 0 to 16,000 crores of revenue, which is why the IPO is largely a primary IPO. It is largely designed for growing the business from here onwards. If you look at our headline numbers, we grew 40% last year. If you look at our order book, which is a lead indicator, that also grew by 40-odd percent last year.”
— Amrit Acharya, Co-founder & CEO
Zetwerk’s net loss widened to ₹1,606 crore in FY26 from ₹371 crore in FY25, even as revenue grew 40%. Management says the higher loss is largely due to non-cash accounting adjustments, linked to capital restructuring and the exit from a business, and points to adjusted EBITDA as the better measure of the business.
“There are two metrics here. One is the operating profit of the business, which is adjusted EBITDA. That number was roughly 420 crores last year, and compared to two years back, it has grown by almost 4 times. Operating profit is a measure of the underlying health of the business. The headline losses are higher; those are largely non-cash adjustments related to capital restructuring. The promoters increased their stake in the business. We formally exited a business, so we have taken some provisions against that exit. Those are all non-cash accounting adjustments which make the headline loss higher, especially when you compare it on a year-on-year basis.”
— Amrit Acharya, Co-founder & CEO
About a sixth of Zetwerk’s order book is for a single product, the transformer, which is in short supply because of AI data centres and grid expansion. The CEO says these orders give Zetwerk a way into the global AI supply chain, which he says India has so far been largely missing from.
“Approximately 2,000 crores of the 12,000-odd crore order book is for this one product called a transformer. Transformers go into data centres, grids and power plants in India and in the US. In the US, the whole narrative is around AI. If you look at all the large model companies, OpenAI, Anthropic, time and again it keeps coming up that there is so much demand and they are not able to produce as much compute and power as they need. The lead time for this one product has gone into years now. If you place an order for a transformer today, you’ll get delivery in 3 to 4 years. So we are shrinking those lead times, which is why we have won so many orders.”
— Amrit Acharya, Co-founder & CEO
International markets already make up close to 30% of manufacturing revenue, with a sizeable chunk from the US, and management expects that share to grow.
“If you look at our international business, it was close to 30% of our manufacturing business revenue last year, and a sizeable chunk of that is from the US. We do more than transformers; we do solar modules, we do wind turbines, we do grid equipment, which is transformers, switchgear, etc. So it’s a diversified business with multiple product lines. In the US, the whole AI stack is growing exponentially, and so far India has been somewhat cut off from that. We are a business which has one foot in India and one foot in the US. So going forward, we can expect an increase in the international business as well.”
— Amrit Acharya, Co-founder & CEO
Zetwerk runs two businesses with very different economics. Manufacturing is the main profit engine, while the lower-margin ecosystem business sources materials for customers. Its model combines its own plants with thousands of partner factories, all run on in-house software.
“The manufacturing business is close to a 19% gross margin, 6% EBITDA margin business. The ecosystem business is in the 1 to 1.5% EBITDA margin range. The manufacturing business is the dominant economic engine of the company. It operates as a combination of in-house and third-party capacity, which is what makes us unique. We have 26 in-house plants across India and internationally, but we also have 7,000 partners who are mostly SME suppliers. We combine both into what we call a universal factory. When you’re working with 7,000 partners and combining them with your own plants, you need a very robust technology stack, which has been completely built in-house. The software layer does pricing, matchmaking, project management and quality.”
— Amrit Acharya, Co-founder & CEO
The top 10 customers contribute a rising share of revenue, which is a concentration risk. Management answers that these are very large companies that keep spending more with Zetwerk every year.
“We work with very large customers, including 100 of India’s Fortune 500 companies. When you compare the size of our customers with our size, we are very small. We measure revenue retention as a metric, and our revenue retention is close to 128% over the last three to four years. So not only are we working with large customers, but they are spending more money with us each year. Our average order value is also around 9.5 crores today, and it has grown materially in the last two to three years. That has led to some increase in the top 10 customers’ contribution. Yes, it is a risk; it is higher than what it was two years ago. But if you’re a meaningful partner to companies like Siemens, it’s a very good thing.”
— Amrit Acharya, Co-founder & CEO
The CEO says Zetwerk’s core edge is reliability, which he argues comes from speed. Its heavy spending on software and design is meant to shorten delivery times, though he admits these investments may not make sense over a one-year horizon.
“Customers in manufacturing want three things: on-time delivery, quality and price. Ultimately, large companies want reliability, and that’s the core USP of the business. In today’s world, reliability comes from speed. A traditional manufacturing company spends zero rupees on software; they buy software, they don’t build software. The reason we have built 100% of our software is to optimise for time. If you can be 10% or 20% faster than your competition, there is immense value in that. If you look at it from a one-year lens, it may not seem to make sense, because R&D investments take a long time to return. Our software and hardware design teams put together are almost 25% of our workforce.”
— Amrit Acharya, Co-founder & CEO
Retail
IKEA India | Retail
IKEA India is the Indian business of the Swedish home-furnishing retailer, part of Ingka Group, the world’s largest IKEA retailer. Since opening its first Indian store in Hyderabad in August 2018, IKEA has expanded into Mumbai, Bengaluru, Delhi NCR and Pune, combining large-format stores with smaller city stores and online sales.
[Interview | Interview 2 | Article]
IKEA India lost ₹1,325 crore in FY25 on revenue of about ₹1,750 crore, but management believes the business could become profitable by FY28 if global conditions stabilise. The plan is to quadruple revenue by 2030, expand the store network from eight to 30 and increase total investment in India to more than ₹21,000 crore.
“If the world is stable by FY28, we believe we can achieve profitability. As of now, it’s a bit difficult to know what’s happening, but in two-three years, it should be clearly possible because we will have a lot more stores up at that time. So, the more stores we get, the better.”
— Patrik Antoni, Chief Executive Officer, IKEA India
Management says the losses are an expected part of the IKEA model, which needs heavy upfront spending to reach scale before it can lower prices. It is the classic scale-first retail playbook, where volume comes first, and profits follow.
“Our starting point is to reach big volumes in order to reach many people. And that’s a bit of a different business model, so we have quite high startup costs to build up the stores, build up the right fulfilment, and so on. For us, when we breach a certain level of volume, the profitability comes. And with that profitability, it gives us even more opportunities to lower prices and reach more of the many. We call it the IKEA spiral: you lower the prices, you reach more of the many, you can produce more products, and you can again reduce prices. At the moment, we are still in the phase where we are having high initial investments. So losing money for a good purpose is not a problem really.”
— Patrik Antoni, Chief Executive Officer, IKEA India
IKEA has cut prices in Europe, but management is holding off on a price revision in India amid volatility following the Iran conflict. The CEO says the company is trying not to react to fluctuations it believes may be temporary, even though the volatility has lasted longer than expected.
“We expected the volatility to last a month or so, but the bubble has been very long. It’s been six months, but we still try to avoid reacting to fluctuations we think are temporary.”
— Patrik Antoni, Chief Executive Officer, IKEA India
IKEA is moving away from relying only on giant out-of-town stores. Smaller city stores in malls will sit alongside large metro-connected mixed-use developments in Delhi NCR, a change in strategy driven by e-commerce and quick commerce.
“Traditionally, IKEA builds large stores, but consumer behaviour has changed dramatically over the past 10- 15 years with the introduction of e-commerce, now quick commerce and all these things. We need to come closer to consumers, and the city store is really the answer to that question. In Gurugram and Noida, IKEA is building shopping centres with about 200 other stores and a large-sized IKEA store as an anchor, plus offices and, in Noida’s case, also a hotel. Both are located directly on metro stations. The Gurgaon one should be up at the end of 2027 and Noida at the end of 2028.”
— Patrik Antoni, Chief Executive Officer, IKEA India
IKEA offers around 7,000 of its roughly 15,000 global products in India and arranges its stores around how Indian homes actually work. Management sees this localisation as important.
“Globally, IKEA has about 15,000 products, and we’ve chosen the 7,000 best matching Indian needs, after studying many, many homes. Then we put them together differently in each market. In Mumbai, there are very small flats where we have to go much more vertical and use the walls to create space. Take shoe storage. In India, most people store their shoes almost outside the house; in Sweden, you would always store them inside. Take the washing machine. In Sweden, it’s always in the bathroom; in Portugal, it’s always in the kitchen. In India, many times it’s on the balcony. So, we are a store in India that looks radically different from a store in Sweden.”
— Patrik Antoni, Chief Executive Officer, IKEA India
Food accounts for about a tenth of the business, according to Antoni, and has evolved from a way to keep shoppers in stores longer into part of IKEA’s brand identity. In India, local dishes such as biryani and vada pav sit on the menu alongside the Swedish classics.
“There is a saying that food is the best sofa seller. It was discovered very early, when IKEA opened its first store; the founder noticed that customers started to leave after one hour maybe, because they got hungry, and they didn’t come back. So he bought cinnamon buns and coffee to feed the customers to make them stay longer. Today, about 10% of the business is food. It has really become a part of the brand now. People go to IKEA just to eat sometimes. We create a Swedish identity with meatballs, salmon and the hot dog at the exit, but depending on the market, we bring in local foods as well. So in Hyderabad, you would have biryani, and in Mumbai, vada pav.”
— Patrik Antoni, Chief Executive Officer, IKEA India
India is a much bigger supplier to IKEA than a market: IKEA exports far more from India than it sells here. It aims to as much as double sourcing from India over the next four years and expand into wood furniture.
“India has, for about 50 years, been an important sourcing destination for IKEA. Today, we’re exporting around 4,000 crores worth of goods abroad, so we export a lot more than we import to the Indian market. Typically, it’s textiles, plastic and metal that have come from India, and now we want to get more into wood furniture. If you go to the store here, you will see some mango wood products already, step stools and coffee tables that are unique to India because we’re using Indian woods. We’re looking at up to doubling sourcing from India over the coming four years.”
— Patrik Antoni, Chief Executive Officer, IKEA India
Management is counting on India’s young, globally exposed consumers to drive demand. Antoni believes their exposure to international lifestyles could make them more receptive to IKEA, while acknowledging that not all young consumers will have the means to shop there.
“There are 400 million Gen Zs coming in, and not all of them may have the financial means. But the big thing is that they are brought up differently from the generations before them in terms of global exposure, and that is likely to make them shop at IKEA. We don’t want to have a Swedish museum here where you go and look at how Swedish people live.”
— Patrik Antoni, Chief Executive Officer, IKEA India
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Quotes in this newsletter were curated by Zarieus Namirian & Shahid Barmare.
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