The Chatter: LTM, HCL, L&T, ICICI Prudential & More
Q1FY27 | Edition #68
Welcome to the 68th edition of The Chatter — a weekly newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.
We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.
In this edition, we have covered 9 companies across 4 industries.
Software Services
LTM Ltd
HCL Technologies
Tata Elxsi
Financial Services
L&T Finance Limited
ICICI Prudential Asset Management Company Limited
Bank of Maharashtra
Anand Rathi Wealth Limited
FMCG
Bajaj Consumer Care Limited
Engineering & Capital Goods
Elecon Engineering
Software Services
LTM Ltd. | Large Cap | IT Services & Consulting
LTM Ltd. is a global technology services company specializing in AI-led digital transformation, modernization, and infrastructure operations. The company operates through three core business lines—iRun, iTransform, and Business AI—servicing large enterprises across financial, consumer, and industrial sectors.
[Concall]
The company has successfully restructured its operations around artificial intelligence and is already generating significant revenue from AI-specific projects. This confirms that their AI strategy is moving beyond experimentation and contributing meaningfully to the bottom line.
“Three lines of business, four types of AI work, one ecosystem—this is how we outcreate with AI. I am happy to share that our AI revenue across Creative, Industrial, and Business AI together contributed approximately $150 million on a quarterly run-rate basis.”
— Venu Lambo, Chief Executive Officer and Managing Director
Large clients are firing smaller competitors and moving that work to LTM to simplify their vendor lists. While this temporarily increases costs, it secures a larger, more stable share of the client’s total spending.
“Ashwin, it is essentially related to a vendor consolidation exercise happening with some of our customers. In deep relationships across a couple of verticals, clients are asking us to transition the tail vendors to be part of a leading vendor. As part of that, the approach is usually to transition from the tail vendors and then convert that into our end-state model over time.”
— Venu Lambo, Chief Executive Officer and Managing Director
LTM is positioning itself to fill a massive talent gap in the global market for specialized AI deployment engineers. Being an early mover in training this workforce could give the company a significant competitive advantage.
“We have moved from AI creation to AI deployment. As conversations get real, there is a strong demand for FDE engineers globally. Currently, there are only a few thousand available. The market needs a large population of them to accelerate adoption.”
— Venu Lambo, Chief Executive Officer and Managing Director
The upcoming acquisition of Randstad’s tech business was done directly, saving on transaction fees. This deal is expected to start contributing to revenue immediately in the second quarter.
“Our organic margin is expected to grow due to initiatives like the New Horizon program. There was no investment banking cost for the Randstad transaction as it was a direct deal. The IT services part of that relationship has already started ramping up and should contribute from Q2.”
— Vipul Chandra, Chief Financial Officer and Whole-time Director
HCL Technologies | Large Cap | Software Services
HCL Technologies provides IT, business, engineering, and R&D services along with software products. The company serves various verticals including finance, manufacturing, healthcare, public services, retail, technology, telecom, media, and entertainment through its three business units: IT and Business Services (ITBS), Engineering and R&D Services (ERS), and Products and Platforms (P&P).
[Concall]
Management outlined HCLTech’s AI strategy, explaining how the company intends to capitalize on AI-native opportunities while staying ahead of pricing pressure in traditional IT services.
“Our intent is very clear: benefit disproportionately from the AI-native and AI-amplified opportunities, which together represent the fastest-growing pool of enterprise spend. While in AI-disrupted services, we intend to innovate faster than the market to stay ahead of the deflationary curve, rather than be defined by it.”
— C. Vijayakumar, CEO & Managing Director
Management highlighted the strong momentum in its Advanced AI business, with AI revenues continuing to grow significantly both sequentially and year-on-year.
“Advanced AI revenue for the quarter stood at $172 million, marking 10.3% QoQ and 62.1% YoY growth.”
— C. Vijayakumar, CEO & Managing Director
Management highlighted record Q1 deal wins, noting that the reported bookings exclude a recently signed mega deal announced after the quarter ended.
“Our net new TCV booking for the quarter was $2.4 billion, the highest ever Q1 booking. This excludes the recent mega deal that we announced which was signed in early July and not in Q1.”
— C. Vijayakumar, CEO & Managing Director
Management discussed a landmark Fortune Global 50 engagement that showcases HCLTech’s ability to deliver AI-led workplace and network transformation at scale.
“We have been selected by a Europe-headquartered Fortune Global 50 firm as a technology partner to accelerate AI-led transformation and management of their digital workplace and enterprise networks. We will leverage our AI Force platform, software-defined solutions and digital employee experience frameworks to implement an AI-first workplace and intelligent connectivity fabric, thus elevating employee experience and productivity for the company at a global scale.”
— C. Vijayakumar, CEO & Managing Director
Management said investments in AI are already translating into measurable productivity gains across the organization.
“Our AI strategy shows evident returns as seen in the 3.3% year-over-year increase in revenue per employee, which has gone up every quarter for the last five quarters.”
— C. Vijayakumar, CEO & Managing Director
Management shared the scale of adoption of its proprietary AI Force platform across customer engagements.
“AI Force is now deployed across 92 distinct client accounts, enabling organizations to realize the benefits of AI within existing engagements at scale.”
— C. Vijayakumar, CEO & Managing Director
Management highlighted a major AI Factory expansion that reflects growing enterprise investments in AI infrastructure.
“A global technology major expanded its partnership with HCLTech for an AI Factory program with an incremental scope of over $180 million for AI data center build-out.”
— C. Vijayakumar, CEO & Managing Director
Management explained why enterprises increasingly want AI architectures that keep their data and intellectual property within their own environments.
“Enterprises are realizing that their data and their know-how, which gives them their competitive edge, are their most valuable assets and they do not want that value disappearing into someone else’s models.”
— C. Vijayakumar, CEO & Managing Director
Management explained how customer preferences are evolving from public AI models to enterprise-controlled AI environments.
“The demand is moving towards solutions that can enable clients to have complete sovereign assurance with custom models and controls, rather than just renting the models from the big providers.”
— C. Vijayakumar, CEO & Managing Director
Management explained the strategic rationale behind its investment in Sarvam AI and how it fits into its broader AI strategy.
“This reinforces HCLTech’s position as an AI innovator, not just an adopter, underscoring our commitment to building, co-innovating and shaping the next wave of AI.”
— C. Vijayakumar, CEO & Managing Director
Management believes enterprise AI adoption will increasingly be driven by specialized models tailored to specific industries and workflows.
“While the world’s attention has been captured by ever-larger general-purpose models, the real value for enterprises often lies in smaller, specialized models trained deeply on the language, data and workflow of a single industry or a client.”
— C. Vijayakumar, CEO & Managing Director
Management identified AI-driven data centre investments as one of HCLTech’s biggest structural growth opportunities.
“Global data center demand is set to triple by 2030, with AI driving roughly 70% of that growth. We believe this will be a new growth vector for HCLTech.”
— C. Vijayakumar, CEO & Managing Director
Management outlined its long-term vision of participating across the AI infrastructure value chain rather than just providing services.
“The biggest opportunity is not to rent AI but to own the full stack: the data centers, the compute, and the models built to address client-specific needs.”
— C. Vijayakumar, CEO & Managing Director
Management reiterated that large transformational deals continue to be a structural driver of growth while maintaining execution discipline.
“We see large deals as a growth vector and our risk management framework and execution rigor ensure we do not compromise on margins.”
— C. Vijayakumar, CEO & Managing Director
Management explained that AI is expanding opportunities in some service lines while driving efficiency in others.
“We are seeing a clear divergence across different segments of the AI landscape. On one side, we are seeing strong sustained growth both in AI-native and AI-amplified services. On the other side, AI-disrupted services—the more traditional commoditized work—continues to be optimized further as AI-enabled automation takes hold.”
— C. Vijayakumar, CEO & Managing Director
In his closing remarks, management expressed confidence in the company’s pipeline and AI-led positioning despite a seasonally weak first quarter.
“We are very happy that we have started the year on a good note despite a seasonally weak Q1. We are also very encouraged by our bookings and also the potential bookings in Q2. We have a strong pipeline and we continue to evolve very strongly as an AI-native and AI-amplified services player.”
— C. Vijayakumar, CEO & Managing Director
Tata Elxsi | Small Cap | Software Services
Tata Elxsi is a global leader in design and technology services, helping clients innovate through digital solutions like IoT, Cloud, Mobility, Virtual Reality, and AI. The company serves industries such as Automotive, Broadcast, Communications, Healthcare, and Transportation, enabling them to reimagine products and services with design thinking and cutting-edge technologies.
[Concall]
Manoj Raghavan opened the call by highlighting the company’s record quarterly revenue and the drivers behind the growth.
“I’m pleased to announce that Tata Elxsi has passed a key milestone of crossing more than ₹1,000 crore of quarterly operating revenues by delivering ₹1,021.1 crore in the first quarter. In constant currency terms, our revenue grew by 6.5% year-on-year and 1.3% quarter-on-quarter. The growth was led by our major verticals—Transportation and Media & Communication.”
— Manoj Raghavan, Managing Director & CEO
Management explained the turnaround in the Media & Communication vertical.
“The Media & Communication vertical has been underperforming for quite some time, and some of the deals that we closed in previous quarters have finally been able to ramp up and achieve a full ramp-up situation. As we speak, there are deals that we are chasing, including some pretty large consolidation deals in the media and telecom space. We are very confident that we should be able to swing some of these in our favor.”
— Manoj Raghavan, Managing Director & CEO
Management discussed regional trends in the transportation business.
“From the transportation vertical, the Europe situation is a little bit ‘wait and watch’ given the challenges in the German market. We have not been affected as much, and the deals that we have closed, we continue to execute. There is some slowdown in new deals, but in the US we were able to significantly grow not just the automotive revenues but also adjacency revenues including off-road and farm equipment, as well as aerospace and defence.”
— Manoj Raghavan, Managing Director & CEO
Responding to concerns about AI-driven pricing pressure.
“In product engineering, companies are taking a very careful and measured approach to AI. We are seeing measured, calculated adoption. I don’t see deflation or shrinkage. We see opportunities. The larger perspective is that some of the spend earmarked for AI might be curtailing generic R&D spend.”
— Manoj Raghavan, Managing Director & CEO
Management explained why AI will not materially disrupt ER&D services.
“While AI can help write C++ code 20–30% faster, software coding is not the biggest part of the work. Product planning, architecture, requirements mapping and regulatory alignment are much larger portions of the lifecycle. Customers are less focused on cost savings than they are on quality and productivity.”
— Manoj Raghavan, Managing Director & CEO
Management discussed the strategic value of its platform portfolio.
“Platforms like TETHER and Neuron go into customer products to transform their services. Investments in platforms like Vital are focused on accelerating the customer’s software development lifecycle. The traction is fantastic, but adoption will be thoughtful and calibrated because these are long-term decisions for customers.”
— Manoj Raghavan, Managing Director & CEO
On the commercial impact of AI investments.
“It definitely makes a positive impact on our win ratios and winnability. It has a definite halo effect on what we offer and what customers believe we are capable of.”
— Manoj Raghavan, Managing Director & CEO
Management discussed demand for Software Defined Vehicle programmes.
“A lot of the deals we are discussing and our pipeline are based on SDVs. We are seeing good deal pipeline and conversion in the US and APAC. Europe is moderated right now given the troubles OEMs are facing, but overall we see growth in subsequent quarters.”
— Manoj Raghavan, Managing Director & CEO
On customer relationships following mergers.
“In many cases, our customers were the acquirers. In others, our customers were acquired by companies that did not have an India footprint. They looked at our operations and realized Tata Elxsi is a valuable partner they want to engage with.”
— Manoj Raghavan, Managing Director & CEO
Management discussed hiring trends despite moderation in industry attrition.
“Our attrition is around 16% today. It is not just about the overall number; it is about ensuring critical talent is taken care of. With Global Capability Centers coming into India and hiring aggressively for AI-ready talent and those with domain expertise, there is still high demand for niche talent.”
— Manoj Raghavan, Managing Director & CEO
Management highlighted the company’s customer mix in automotive.
“We continue to strengthen our pivots towards the OEM and today 78% of our automotive revenues is from our OEM customers.”
— Manoj Raghavan, Managing Director & CEO
Management explained where the current growth is coming from and what gives them confidence for the coming quarters.
“We’ve seen some very good deals closed over the last couple of quarters and these ramp-ups are happening now. I believe for both our Media & Communication and Transportation segments, we should see growth over the next two to three quarters. That visibility is coming.”
— Manoj Raghavan, Managing Director & CEO
Management differentiated between AI investments and traditional R&D budgets.
“Some R&D is strategic and some is discretionary. When companies prioritize AI as the flavor of the day, it can have a short-term impact on the budget allocated to other R&D areas. This is more about a shifting of budgets rather than a perpetual deferment.”
— Nitin Pai, Chief Marketing & Chief Strategy Officer
Financial Services
L&T Finance Limited | Large Cap | Financial Services
L&T Finance is a leading Indian non-banking financial company that provides a wide range of retail and wholesale financial services. The firm is currently executing its ‘Lakhya 2031’ strategy, which emphasizes a digital-led retail focus and technology-driven credit underwriting.
[Concall]
The company intentionally sacrificed over 1,000 crores in new loans to maintain strict credit standards during a period of economic volatility. This conservative approach suggests management is prioritizing the long-term health of the loan book over short-term volume targets.
“While these numbers are robust, I would like to emphasize that we could have grown even faster. However, given the volatility in the economy, we chose prudence over aggressive expansion, maintaining our emphasis on responsible growth, disciplined underwriting, and superior portfolio quality. We proactively tightened our credit guardrails during the quarter, deliberately letting go of about 1,000 to 1,200 crores in potential disbursements, foregoing a few percentage points of additional growth to firmly protect our asset quality.”
— Sudipta Roy, Managing Director and CEO
Rural business collection rates have returned to normal levels, allowing the company to start growing this segment again with renewed confidence. The rollout of the ‘Cyclops’ AI tool to this segment is expected to further enhance underwriting quality by the end of the year.
“Notably, one of the most important developments during the quarter has been the continued collection efficiency normalization of our rural business finance portfolio to pre-crisis levels, which has given us the confidence to resume the growth trajectory of the business, albeit within the MFIN guardrails and our proprietary risk administration frameworks. We have started the work of implementing Cyclops in our Rural Business Finance (RBF) book vertical, and it is expected to be completed before the conclusion of FY27.”
— Sudipta Roy, Managing Director and CEO
The company achieves high yields of over 16% in personal loans by focusing on cross-selling to existing customers rather than relying on external agents. This strategy reduces acquisition costs and leverages internal data for better pricing and risk assessment.
“For us, we operate on our own customer base through cross-selling to our credit-seasoned customers. We also operate marginally through DSAs; our DSA volumes are only 10% of our overall volumes. ... Our average yield remains at about 16% plus. While the DSA channel might operate between 12% to 13% for prime salaried customers, some of our digital channels will operate at about 19%.”
— Sudipta Roy, Managing Director and CEO
The company has budgeted for potential interest rate hikes due to global geopolitical uncertainty. If the interest rate environment remains stable or improves, there could be an upside to their current cost-of-funds guidance.
“We have set a range of 7.35% to 7.4%, but if things normalize, we may see a more favorable number over the next few quarters. ... Geopolitical situations lead to global changes, and if international yields rise, the Indian regulator may have to keep yields competitive. ... We have been conservative and assumed one or two rate increases might happen.”
— Management, Senior Management Team
Management is committed to bringing credit costs down toward 2% by the end of the fiscal year. Success in this area would lead to more predictable earnings and improved profitability in the following years.
“My first port of call is to reach the 2% to 2.2% range. Cyclops has been effective and delivering results. ... If you ask me in the middle of Q4, I can give a far more cogent answer. ... If we reach 2% to 2.2% by Q4, we must maintain that or go lower in FY28.”
— Sudipta Roy, Managing Director and CEO
L&T Finance is using government-backed guarantee schemes to protect nearly 40% of its new microfinance loans against regional risks like floods. This provides an additional layer of protection for the balance sheet against unpredictable local economic shocks.
“We are taking CGFMU coverage for certain sections of our portfolio that we believe are more prone to economic shocks or event risks, such as regions prone to floods. ... This year, we will cover approximately 35% to 40% of the total disbursements in the microfinance business. Our objective is to provide optimum protection with the least addition to Opex.”
— Management, Senior Management Team
ICICI Prudential Asset Management Company Limited | Large Cap | Asset Management
ICICI Prudential Asset Management Company is one of India’s largest asset management companies, offering a broad range of investment solutions across mutual funds, portfolio management services (PMS), and alternative investment funds (AIFs). The company is a market leader in equity and hybrid funds, serving retail, institutional, and high-net-worth investors across India.
[Concall]
The company has successfully held onto its top spot in the highly profitable active equity market segment. Sustaining this high market share is critical for maintaining overall margins in a competitive industry.
“In active schemes, we continue to maintain the highest market share of 13.5% with a quarterly average AUM of 9.25 lakh crores. As of June 30, 2026, we continue to maintain our leadership position in equity and equity-oriented schemes with a market share of 14% and a quarterly average AUM of 6.31 lakh crores.”
— Harshil Sanghavi, Lead Investor Relations
The company is aggressively using artificial intelligence to handle the majority of its customer service emails and renewal calls. This automation is expected to lower operating costs and improve the scalability of the business as it grows.
“On the operational efficiency front, 60% of our customer queries over email are replied to through AI. We are actively expanding such capability by transitioning outbound SIP renewal calling to an AI-driven process.”
— Harshil Sanghavi, Lead Investor Relations
While retail investors are sticking with their monthly plans, institutional investors have started pulling money out of debt funds. This shift shows that retail flows are providing a stable foundation even as corporate liquidity remains tight.
“Monthly SIP inflows remained largely stable throughout Q1 despite volatile market conditions, demonstrating the resilience and stickiness of retail investor participation. In the debt segment, the overall quarter witnessed redemptions by institutional investors and tighter liquidity conditions.”
— Nimesh Shah, MD and CEO
Large companies are withdrawing cash from debt mutual funds to fund their day-to-day business operations during uncertain global times. This trend suggests that debt fund assets will remain under pressure as long as corporate cash needs are high.
“The reduction in debt AUM is largely due to institutional investors redeeming amidst tighter liquidity conditions. Corporates are investing more in working capital due to the geopolitical situation. When they invest more in working capital, their surplus liquidity decreases.”
— Nimesh Shah, MD and CEO
Management is focusing on products that automatically shift between stocks and bonds to protect investors from market swings. This strategy is helping the company retain customers who might otherwise leave the market due to high volatility.
“We have created categories in dynamic asset allocation, such as balanced advantage funds, multi-asset funds, and asset allocator funds, which mix equity and debt. Indian customers are feeling the pain of volatility. Looking at the last 2 years... His reply was, “No sir, it is fine in your funds,” because he was referring to our dynamic asset allocation.”
— Nimesh Shah, MD and CEO
The company is leveraging its alternative platforms to offer more concentrated, high-conviction portfolios that aren’t allowed in regular mutual funds. This strategy targets sophisticated investors willing to accept higher risk for the chance of better returns.
“In PMS and AIF, we can play with concentration risk—having 30 stocks instead of 50+. The customer understands they are taking a higher risk for potential incremental returns.”
— Nimesh Shah, MD and CEO
Rising commission costs are actually a sign of growth in the high-margin alternatives and portfolio management business. These costs are handled differently from regular mutual funds, making the overall expense line look larger as the business expands.
“The fee and commission number is the distribution fees we pay for our alternate PMS and AIF. Unlike mutual funds, distribution fees for PMS and alternatives are routed through the AMC. The increase you see is because of growth in the underlying business.”
— Naveen Agarwal, Chief Financial Officer
A spike in employee costs this quarter was primarily due to the start of new stock option expenses rather than a sudden increase in headcount. Investors should treat these higher costs as the new normal baseline for the company’s quarterly expenses.
“The sequential increase was largely on account of employee expenses. As you would recall, we mentioned in our previous call that the ESOP-related expenses have been debited from this quarter, while in the previous year’s P&L there was no such charge.”
— Naveen Agarwal, Chief Financial Officer
Bank of Maharashtra | Mid Cap | Public Sector Bank
Bank of Maharashtra is a premier public sector bank in India, providing a wide range of retail, MSME, agricultural, and corporate banking services. Headquartered in Pune, the bank has a strong regional presence and is aggressively expanding its national footprint through both physical branches and digital platforms.
[Concall]
The bank is prioritizing high-quality, profitable growth over simply increasing loan volumes at any cost. This disciplined approach helps protect net interest margins and ensures the bank is not taking on excessive risk to achieve its numbers.
“Profitability, rather than mindlessly increasing the top line, has always been a conscious element in our growth journey. We focus on growth that is profitable without compromising asset quality, looking at the medium to long term. To ensure good interest income and overall profitability, we have implemented several initiatives that are pioneering in the industry for our review mechanisms with field leadership.”
— Nidhu Saxena, Managing Director and CEO
While the bank’s international business unit is growing fast, the domestic book is also seeing healthy double-digit growth across all segments. This diversified growth profile reduces dependence on any single sector and supports a balanced balance sheet.
“Regarding your question on advances, we have 27% growth. 3% of that contribution comes from the IBU, which has become a sizable book for us at 8,200 crores in about 8-9 months. 24% is the healthy growth we are seeing across all verticals—retail, agri, MSME—and even corporate is growing at a decent rate.”
— Nidhu Saxena, Managing Director and CEO
Rapid adoption of the bank’s mobile application is helping to acquire more digital-savvy customers and increase account balances. Strengthening the digital channel is a key driver for long-term customer retention and lower operational costs.
“Our new products and technology, such as our revamped mobile banking application, are providing differentiated options. In 9 months, the active registered users on our mobile platform have grown from 2.75 lakhs to over 14 lakhs and counting. As more people are onboarded digitally, we see the balances in those individual accounts increasing.”
— Nidhu Saxena, Managing Director and CEO
By using refinance options instead of expensive bulk deposits, the bank is keeping its funding costs low while managing its credit-to-deposit ratio. This strategy optimizes the balance sheet for better margins without requiring aggressive deposit pricing.
“However, for the last 6 quarters, we have focused on refinance. We have almost 19,000 crores in refinance, which brings the CD ratio to 81.99%. We chose refinance over high-cost bulk deposits because the blended cost is in the range of 6% to 6.5% and doesn’t have CRR and SLR loading.”
— Nidhu Saxena, Managing Director and CEO
The bank is seeing explosive growth in the gold loan segment, which offers high yields and strong collateral security. Expanding into high-margin niches like gold loans helps improve overall portfolio returns while diversifying risk.
“Corporate growth in Q1 was 30%. One differentiator for us is that we open 200 branches annually. Our branch expansion is a 5-year plan, so you will continue to experience this credit growth for the next 2-3 years. We are focused on specific products as well, such as gold loans, which grew 75% year-on-year to 13,000 crores.”
— Nidhu Saxena, Managing Director and CEO
Anand Rathi Wealth Limited | Small Cap | Wealth Management
Anand Rathi Wealth is an Indian wealth management company focused on serving high and ultra-high-net-worth individuals. It provides investment advisory, portfolio management, distribution of financial products, and wealth planning services through a relationship-driven model.
The CEO breaks down AUM growth into three pillars: fresh inflows, market movement, and alpha generation. This highlights that the firm’s growth is not purely dependent on market performance but also on active sales and portfolio outperformance.
“See, there are two parts—or rather three parts—to the AUM movement. One is the net money that you bring in fresh from customers. That’s been in the range of 2,500–3,000 crore per quarter. The second is the market increase. The index goes up by some percentage. That’s not done too well, which is fair. The third is the return that you can make for your client over and above the index.”
— Rakesh Rawal, CEO
Management highlights that client portfolios grew nearly double the rate of the index during the quarter. This significant outperformance is a key driver for client retention and the company’s ability to command premium positioning in wealth management.
“For example, in this quarter itself, the index has gone up about 6–7%, whereas the mutual fund portfolios of our clients have grown by about 11–12%. So, the value that you create, the net money, and the market are the three constituents of AUM growth. Fortunately, they’ve all worked for us in the last quarter, resulting in 20% growth.”
— Rakesh Rawal, CEO
The company maintains a positive outlook for the coming year, betting on a combination of market recovery and steady new client acquisitions. This suggests management has high confidence in the durability of their current business model.
“Over the next 12 months, I expect markets to push AUM higher. Our efforts in net mobilisation continue to remain strong, and the strategy we follow has been adding value for the last 10–12 years. I see a very bright future over the next 12 months for the company.”
— Rakesh Rawal, CEO
Management explains that net inflows during volatile or flat market periods are a truer test of their sales capability than inflows during bull markets. This indicates that the company’s distribution engine remains effective even when investor sentiment is cautious.
“When markets are down, and fear is high, clients are reluctant to invest. So the 2,700 crore we mobilised in these conditions is more valuable than 3,500 crore in good times. When conditions improve, those numbers should be crossed very easily.”
— Rakesh Rawal, CEO
The company is maintaining a disciplined asset allocation strategy focused on providing steady returns through a mix of mutual funds and structured products. This consistency helps protect the firm against sudden shifts in market performance and ensures a stable revenue stream from fees.
“Broadly, our asset mix has remained constant, with around 27–28% in structures, 15–16% in other assets, and the balance in equity mutual funds. Our objective continues to be delivering 14–15% returns using a strategy of roughly 65% in mutual funds and 35% in structures. Since that objective hasn’t changed, the allocation hasn’t changed either.”
— Rakesh Rawal, CEO
Management expects profit margins to continue expanding over the next two years despite ongoing investments in growth. This signals to investors that the company is reaching a stage of scale where incremental revenue carries lower incremental costs.
“I think there will be a moderate increase in operating leverage over the next couple of years. We will continue pursuing growth opportunities, but despite those investments, I still expect some improvement in operating leverage.”
— Rakesh Rawal, CEO
FMCG
Bajaj Consumer Care Limited | Small Cap | Personal Care
Bajaj Consumer Care is an Indian FMCG company focused on personal care products, with a strong presence in the hair care segment. Its flagship brand, Bajaj Almond Drops Hair Oil, is one of India’s leading light hair oil brands, and the company continues to expand its portfolio across domestic and international markets.
The company’s flagship hair oil brand remains the primary growth engine and is outperforming the rest of the business. This highlights a heavy reliance on a single product category, which currently shows strong momentum.
“Around 80% of our portfolio is Almond Drops Hair Oil, and we’re seeing an exceptional run in its performance. It is growing slightly ahead of the company’s overall revenue growth.”
— Naveen Pandey, Managing Director
Management is seeing broad-based demand across all distribution channels and a preference for smaller, affordable packs. This suggests that the company’s distribution strategy is effectively capturing diverse consumer segments.
“The growth is being driven by strong transaction and volume growth across channels—urban, rural, general trade, modern trade, e-commerce, wholesale—as well as across pack sizes, with smaller packs performing particularly well.”
— Naveen Pandey, Managing Director
Management is setting realistic expectations for the future as current high growth rates normalise. Investors should prepare for a shift from aggressive expansion to more stable, double-digit growth figures.
“As the base becomes larger, growth will gradually taper to the teens over time. We don’t expect high-20% growth to continue indefinitely.”
— Naveen Pandey, Managing Director
The company successfully implemented price hikes this quarter without losing customers to competitors. This ability to pass on costs demonstrates strong brand loyalty and pricing power in a competitive market.
“Historically, FMCG companies have been able to pass on fair price increases, and we have done the same. During Q1, we implemented price increases of around 5%, including MRP adjustments, and consumers have absorbed them well.”
— Naveen Pandey, Managing Director
The company believes raw material costs have peaked but remains cautious about global geopolitical risks. This flexibility indicates that management will use pricing as a tool to protect margins if costs rise again.
“From the current standpoint, we believe the worst of commodity inflation is behind us. If commodities soften, further price increases may not be required. However, if geopolitical developments keep commodity prices elevated, additional pricing actions may become necessary.”
— Naveen Pandey, Managing Director
The management team prioritises growing total cash profits over maintaining a specific profit margin percentage. This suggests they are willing to accept slight margin fluctuations to drive overall business expansion.
“Our operating philosophy is to maintain healthy margins while focusing on growing the absolute EBITDA pool rather than maximising percentage margins. If margins compress by 1–2% because of commodity movements, we’re comfortable as long as we continue growing absolute EBITDA.”
— Naveen Pandey, Managing Director
Engineering & Capital Goods
Elecon Engineering | Small Cap | Engineering & Capital Goods
Elecon Engineering Company Ltd is a leading provider of power transmission solutions and material handling equipment. They serve various industries such as steel, fertilizers, cement, coal, and power stations in India and globally. With a focus on gear manufacturing, the company operates through divisions that specialize in power transmission solutions and material handling equipment. Additionally, they manufacture wind turbines through a unit located in Gujarat.
[Concall]
Management highlighted that the sharp increase in the order book provides strong revenue visibility and reinforces confidence in the company’s growth trajectory over the coming quarters.
“Our open order book currently stands at ₹1,043 crore, up 47.9% year-on-year, providing strong revenue visibility and giving us confidence in our growth trajectory over the coming quarters.”
— Deepak Dalwadi, Head – Gear Division
Management said enquiry activity remains strong across both domestic and international markets, supported by improving demand across key end-user industries.
“As we look ahead, the business environment continues to remain encouraging. Enquiry activity has been healthy and order inflows are showing steady improvement across both domestic and international markets. Demand across our key user industries continues to strengthen, providing greater visibility for the rest of the financial year.”
— Deepak Dalwadi, Head – Gear Division
Management explained why record order inflows are not immediately translating into revenue growth.
“We are not talking about a minor increase; we are talking about a significant increase in the raw material price. With this kind of increase in price, the time taken for converting inquiries into orders has significantly increased. That is the reason that even if we had a good order book in Q1, we ended up with a very high order book and we could not convert the order book into revenue.”
— Management
Management expects business momentum to improve gradually over the next few quarters as customers accept revised pricing.
“We are expecting Q2 to show improvement, but not a stiff percentage improvement. We are expecting Q3 and Q4 to improve significantly when it comes to market acceptance of stabilized prices.”
— Management
Management attributed weaker MHE revenue to delays in design approvals rather than demand weakness.
“Design engineering is taking much time for the end customer, and we are not directly dealing with the end user. It is through the main contractor who is taking on the complete EPC. There are a number of hierarchies, and that is the reason it is taking time. Over the period in Q2, we will see some progress on it and we will get a good amount of revenue from those orders.”
— Management
Management said it has successfully passed on higher raw material costs in new orders.
“Most of the orders that we have accepted in Q1 are with a price increase. The moment we have an order acceptance, we have back-to-back strategic tie-ups with all our key raw material suppliers where we lock the raw material prices.”
— Management
Management explained that customers are renegotiating prices while competitors clear older inventory purchased at lower costs.
“Whenever there is a stiff price increase, the customer wants to revalidate the quote. There will be players in the market sitting on higher inventory at historical prices. Customers will try to squeeze Elecon by taking advantage of competitors sitting on high inventory.”
— Management
Management believes the industry is moving from a correction phase to a pricing acceptance phase.
“We saw Q1 as a quarter of corrections, and we are seeing Q2 as a quarter of acceptance. Typically, the market works toward a correction where inventory levels go down and every player ends up with similar prices for their inventory.”
— Management
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Quotes in this newsletter were curated by Shahid, Meher, & Srusti.
Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes so there maybe some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human and mistakes are AI.