The Chatter: ONGC, Divi's, LG, Pinelabs & More
Q4FY26 | Edition #61
Welcome to the 60th 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 13 companies across 9 industries.
Energy
Oil and Natural Gas Corporation Limited
Retail
Aditya Birla Fashion and Retail Limited
Redtape Limited
V2 Retail Limited
Auto
Amara Raja Energy & Mobility Ltd
Ashok Leyland
Consumer Durables
LG Electronics India
Healthcare
Divi’s Laboratories
Aarti Pharmalabs Limited
Aerospace & Defence
Aequs Limited
Financial Services
Pine Labs
Engineering & Capital Goods
Bajel Projects Limited
Real Estate
AGI Infra
Energy
Oil and Natural Gas Corporation Limited | Large Cap | Oil & Gas Exploration & Production
ONGC is India’s largest state-owned energy company, contributing significantly to the country’s domestic crude oil and natural gas production. The group operates across the entire energy value chain through major subsidiaries like HPCL, MRPL, and its international arm, ONGC Videsh.
[Concall]
The company is receiving premium pricing for natural gas produced from new wells, which is linked to 12% of international crude prices. This pricing policy incentivizes the company to invest more in exploration to replace older, lower-priced gas fields.
In fact, I do not think there is any local market in the world that pays more than 12% of the oil price. LNG is different because liquefaction costs are involved, but for new wells, India is likely the highest-paying market for onshore production. That also proves the government’s intention is to leave more money with E&P operators to fund further production and exploration.”
— Arun Kumar Singh, Chairman and CEO
Management expects nearly all of its gas production to eventually qualify for higher ‘new-well’ pricing as old reserves deplete. This shift toward high-margin gas will significantly improve the company’s long-term cash flow and profitability.
It is a matter of time—perhaps 4 to 6 years maximum—before almost 80-90% of ONGC gas becomes new-well gas under the current policy. You can factor that price into your calculations; at a crude price of 90 dollars, we get 10.8 dollars. We value gas more than oil in the local market for various reasons, primarily because managing gas is less cumbersome, which keeps more money in our pocket.”
— Arun Kumar Singh, Chairman and CEO
The petrochemical subsidiary, OPaL, is showing strong signs of financial recovery and is expected to grow its core earnings significantly this year. A successful turnaround here reduces the financial burden on the parent company and improves consolidated margins.
Regarding OPaL, we promised a turnaround and have almost achieved it. Our EBITDA reached 1,206 crores last year, although it was impacted in March when gas was diverted to LPG production. We expect this year’s EBITDA to reach 1,500-2,000 crores.”
— Arun Kumar Singh, Chairman and CEO
International production from the Sakhalin project has fully recovered to levels seen before geopolitical disruptions began. This stability in overseas assets is vital for the company’s diversified production goals.
Regarding OVL and our subsidiaries, we are back in Sakhalin and it is at full blast. Production is at pre-Ukraine levels. Sakhalin is our top asset within OVL.”
— Arun Kumar Singh, Chairman and CEO
The company is investing in a new port joint venture to lower its transportation costs and improve logistics for its petrochemical products. This strategic move strengthens the company’s infrastructure and market reach in northern India.
Finally, we approved a new joint venture with the Gujarat Maritime Board to create a port at Dahej. Dahej is the closest port to the densely populated northern parts of the country, making it the most cost-effective for transportation. It will also serve our interests for OPaL and LPG, particularly with the 8 million tonne Kandla-Gorakhpur pipeline.”
— Arun Kumar Singh, Chairman and CEO
The company is rebranding its identity to focus on gas, which now offers better profit margins than oil. Increasingly, new gas projects will benefit from free-market pricing rather than government-capped rates.
“--- Page 5 --- The macro picture is that gas is currently more lucrative for us. We should call ourselves a gas and oil company, rather than an oil and gas company. New gas, even from APM blocks like the DSF, is subject to free pricing and is not governed by the 12% slope.”
— Arun Kumar Singh, Chairman and CEO
The government has recently allowed the company to retain full market prices for oil without imposing windfall taxes or price discounts. This policy shift significantly increases the company’s earnings potential during periods of high global oil prices.
Despite the crisis and losses to OMCs, they didn’t apply SAED. Previously, we had to provide discounts up to 2 lakh crores. This time, we got flat Brent prices even at 140 dollars. As an ONGC investor, this is the best outcome.”
— Arun Kumar Singh, Chairman and CEO
A large one-time loss was recorded this quarter due to the mandatory return of an unproductive exploration block to the government. This is an accounting write-off and does not reflect a decline in the company’s ongoing operational health.
The Q4 abnormality was due to a block the government took away (DSF-4). We had drilled a well but didn’t develop it due to commerciality issues. Since the asset was lost, we had to write off about 1,800 crores. That was a one-off item, not the normal process.”
— Arun Kumar Singh, Chairman and CEO
The company has committed to a new major offshore development in Brazil, securing its production pipeline for the 2030s. This long-term project helps ensure the durability of the company’s international energy portfolio.
Regarding BM-C-34 in the Sergipe-Alagoas basin, the FID has been taken and the FPSO has been contracted. We are moving ahead with development. OVL’s net share of production should be 1.3 million tonnes per annum, starting in 2030 for oil and 2031 for gas.”
— Arun Kumar Singh, Chairman and CEO
Retail
Aditya Birla Fashion and Retail Limited | Mid Cap | Retail - Apparel
Aditya Birla Fashion and Retail Limited is a leading Indian fashion conglomerate with a vast brand portfolio including Louis Philippe, Van Heusen, and Allen Solly. The company operates over 1,200 stores and has significantly expanded into the ethnic wear and digital-first brand segments.
[Concall]
The integration of TCNS is showing progress with significant improvements in underlying sales growth and product relevance. Investors should watch for these gains to translate into sustained bottom-line profitability for the ethnic segment.
“Within premium ethnic wear brands, TCNS continued with its profitability improvement journey during the year. The business delivered 7% like-to-like growth in Q4 and 10% like-to-like growth in FY26, supported by a sharper product proposition, refreshed collections, and new launches that resonate well with consumers.”
— Jagdish Bajaj, CFO
The digital-first brand portfolio, TMRW, has secured substantial funding to fuel its growth without immediate further strain on the parent company. This funding cushion is vital as the company aims to reach segment-level profitability by FY29.
“As you are aware, with the equity issuance of Rs 440 crore during the year and more recent fund tie-up of Rs 500 crore through NCDs, TMRW is now adequately funded with Rs 800 crore cash to pursue its aggressive growth plans. This balanced approach should help drive long-term growth, improve operating leverage, strengthen the overall margin profile, and build a solid foundation for sustained profitability over time.”
— Jagdish Bajaj, CFO
Input costs are rising, and the company plans to pass these on to consumers through mid-to-high single-digit price hikes. Investors should monitor whether these price increases impact overall volume growth in the coming quarters.
“We are experiencing something like 3-4% inflationary pressure as far as raw materials are concerned. To fully counter it, we would take price increases between 5-8% depending on the category. We are still evaluating and we do not have a firm view on whether we will pass on all of it or some part of it.”
— Ashish Dixit, Managing Director
The digital brands under the TMRW umbrella are expected to hit profitability in three years, supported by their current cash reserves. Reaching a 1,500 crore run rate provides the necessary scale to begin improving the segment’s bottom line.
“Regarding profitability for TMRW, we had indicated FY29 as the year in which we expect the TMRW portfolio level—the sum of all brands—to become profitable. We feel 800 crores is a substantial amount of cash for a business which is already on a run rate of 1,500 crores. With scale, we will drive profitability.”
— Ashish Dixit, Managing Director
Redtape Limited | Mid Cap | Footwear
Redtape Limited is a leading Indian lifestyle brand specializing in footwear, apparel, and accessories with a significant retail presence across tier-2 and tier-3 cities. The company operates an omnichannel model through over 550 stores and dominant positioning on major e-commerce marketplaces like Flipkart and Myntra.
[Concall]
Management is seeing a permanent move by small-town consumers toward branded footwear. This trend, supported by tax benefits, provides a long-term volume growth runway for the company’s core product range.
“The Indian consumer, especially in tier-2 and tier-3 towns where the majority of our stores sit, is making a clear and steady shift towards organized branded products. The GST reduction on footwear below 2,500 was a meaningful volume catalyst for us, specifically because nearly all our products sit in that bracket. What I want to emphasize, though, is that the volumes we saw were not simply a one-time GST-led pull-forward.”
— Arvind Verma, Whole Time Director
The company is expanding beyond shoes into clothing and high-margin accessories to increase how much each customer spends. This diversification strategy helps attract a wider audience, including women, which could drive future revenue growth.
“Apparel is the category that widens our addressable market and lifts basket size. We are investing meaningfully behind women’s apparel as well and will push this further in FY27. Accessories gave us a revenue of 75 crores throughout the year, small in absolute terms today, but growing the fastest and carrying the highest margin profile.”
— Arvind Verma, Whole Time Director
The company’s long-term supply contracts protect it from sudden increases in raw material costs. This allows them to maintain stable prices and margins even when inflation affects the wider market.
“Although there is some pressure in the market, we work on a system where there is a 6-month design-to-production ratio. When the POs are released almost 6 months in advance, and once we have opened an LC, the vendor cannot come back and say there is a shift in the price range. That will not impact us much in the near future.”
— Arvind Verma, Whole Time Director
Redtape is using its strong cash generation to rapidly pay down debt and strengthen the balance sheet. This reduction in borrowing costs should lead to higher net profits for shareholders over time.
“If you look at our numbers, our debt outstanding has considerably gone down by 200 crores from September to March. Also, operating cash flow has increased; we currently have 175 crores in operating cash flow. As far as the inventory is concerned, we are planning to get it down to 150 days.”
— Vivek Agnihotri, Chief Financial Officer
The company has an ambitious plan to nearly double its store count while expanding into new geographic regions. This suggests a high level of confidence in the scalability of their brand across all of India.
“We are planning to add almost 200 to 250 stores. The size would be between 500 to 1,500 square feet. We will maintain the same ratio of 25% to 35% COCO stores, with the rest being FOFO. We are now moving into South and West India.”
— Arvind Verma, Whole Time Director
V2 Retail Limited | Small Cap | Retail
V2 Retail is a leading value fashion retailer in India primarily targeting Tier 2 and Tier 3 cities with affordable apparel. The company operates a network of over 325 stores and has demonstrated aggressive growth in the value fashion segment.
[Concall]
Management has temporarily increased inventory levels as a precautionary measure against global supply chain disruptions. Investors should expect working capital levels to normalize once geopolitical pressures ease and inventory returns to the 90-100 day target.
“Lastly, due to geopolitical tension, we have increased our safety stock in the month of March for seamless availability of stock, which has resulted in higher inventory levels in the month of March. Once the situation normalizes, we will reduce our safety stock. We are looking to maintain inventory at 90 to 100 days and creditors at 45 days.”
— Akash Agarwal, Director and CEO
The company is accelerating its physical expansion with plans to open up to 200 new stores in the upcoming year. Crucially, this growth is currently self-funded through internal cash flows, reducing the immediate need for equity dilution.
“For this year, the target would be anywhere between 170 to 200 stores, completely dependent on how we are performing and how the momentum continues. ... For at least this financial year, we are covered with internal accruals and the cash on the balance sheet.”
— Akash Agarwal, Director and CEO
Management intends to prioritize debt over equity for any future capital needs due to their strong balance sheet. This approach signals a commitment to avoiding further shareholder dilution while pursuing aggressive growth.
“No, our debt-to-equity ratio is very healthy, so we have the option of getting more debt on the books. I think that will be our first preference even if we need some cash for future expansion.”
— Akash Agarwal, Director and CEO
The company plans to pass through rising raw material costs to consumers rather than absorbing them in their margins. This pricing power is essential for maintaining gross margins in the 28% to 30% range amid inflationary pressures.
“Yes, we have seen some movement in yarn prices and that would have to be transferred to the customer. We will maintain our gross margins and prices might go up in the future by 3% to 4%.”
— Akash Agarwal, Director and CEO
Management has set a high bar by guiding for 50% revenue growth over the next two years. They are positioning the company to capture the structural shift from unorganized to organized retail in India’s growing economy.
“We are guiding for at least 50% revenue growth over the next 2 years. ... India is poised to grow at 5% to 6% GDP in the next 20 years and if you look at organized retail, it is poised to grow at 9% to 10%. We want to capture most of that market.”
— Akash Agarwal, Director and CEO
While aggressive expansion initially pulls down the average sales per square foot, new stores are starting at a healthy 70% of mature store levels. The company’s overall productivity is expected to rise as this massive wave of new stores reaches maturity over the next few years.
“We opened 130 new stores and the new stores start at about 70% of the sales per square foot of old stores. ... As they mature, you will see the growth in company PSF as well.”
— Akash Agarwal, Director and CEO
The company has shortened its lease lock-in periods to provide more flexibility in closing underperforming stores. This accounting and operational change reduces long-term liability risks while aligning more closely with industry standards.
“We changed the policy last quarter. We decided we would look at at least 2 to 3 years of performance for a new store before deciding whether to continue operating it. Our lock-ins and leases are about 1 year and the vendor lock-in is 11 years.”
— Akash Agarwal, Director and CEO
Auto
Amara Raja Energy & Mobility Ltd. | Large Cap | Auto Components & Equipments
Amara Raja is a leading Indian manufacturer of lead-acid batteries for automotive and industrial applications under the popular Amaron brand. The company is currently undergoing a strategic transformation to establish a significant presence in the lithium-ion cell and battery energy storage sectors.
[Concall]
The company continues to rely heavily on its traditional lead-acid business while the new energy segment is still in its early stages of revenue contribution. This high concentration highlights the continued importance of legacy battery demand to fund future technology shifts.
“During Q4 FY26, we achieved a consolidated revenue of approximately 3,530 crores. That is a growth close to 16% over the previous year. Of this revenue, about 92% came from our lead-acid battery business, and the rest is from the new energy business.”
— Y. Delli Babu, Chief Financial Officer
Management is maintaining stable double-digit margins in the core business despite rising input costs and a shift toward lower-margin original equipment manufacturer sales. This profitability is critical as these cash flows are needed to support the company’s massive transition to lithium-based technologies.
“At the lead-acid battery business level, we sustained operating margins of about 12% despite tremendous cost pressures at the raw material level and in operating costs. Raw material costs, particularly for alloys and sulfuric acid, increased substantially during the quarter due to ongoing geopolitical conflicts. Additionally, we saw a higher OEM mix during the current quarter, with growth upwards of 30% in both four-wheeler and two-wheeler OEMs, which impacts overall margins.”
— Y. Delli Babu, Chief Financial Officer
The company is aggressively shifting its capital allocation towards the new energy business, with nearly 75% of next year’s budget focused on lithium projects. This significant investment confirms the management’s commitment to transforming the company’s primary business model.
“In the coming year, we will spend between 1,500 and 1,700 crores in capex. Approximately 400 crores will go toward the lead-acid battery business, and the remaining 1,100 to 1,200 crores will be for the new energy business.”
— Y. Delli Babu, Chief Financial Officer
Management is pivoting their short-term new energy focus toward the stationary storage market, which is seeing more immediate domestic demand than electric vehicles. This adjustment ensures that their upcoming cell manufacturing capacity has a ready market as soon as production begins.
“A major strategic change is the increased focus on ESS. Earlier, we focused largely on EV, expecting it to drive short-term growth. While EV momentum remains steady and remains the largest long-term opportunity, the ESS market has accelerated due to the renewable energy drive in India.”
— Vikramaditya Gourineni, Executive Director - New Energy Business
The company has maintained its timeline for its first major lithium cell production line despite the complexity of the project. Using a pilot plant first is a deliberate strategy to minimize technical risks before scaling up to mass production.
“The first 2 gigawatt hour line, Giga-1, remains on target to start production in June 2027. We consciously chose to build R&D and pilot production first, and our experience with the customer qualification plant will help smooth the learning curve for Giga-1 and future mass manufacturing facilities.”
— Vikramaditya Gourineni, Executive Director - New Energy Business
Geopolitical tensions have forced the company to transition from licensed Chinese technology to internal research and development for their lithium cells. This shift increases the execution risk for their Gigafactory but ensures they maintain control over their intellectual property and supply chain.
“Since then, technology sharing and licensing from China have been disrupted by their government, affecting all technical tie-ups. We face challenges working directly on technology licensing with Chinese entities right now. As I mentioned, while we took what we could from earlier cooperation, our product development efforts for NMC, LFP, and future chemistries are now largely driven by our teams in India.”
— Vikramaditya Gourineni, Executive Director - New Energy Business
Inflation is hitting non-lead inputs like plastics and sulfur significantly, adding cost pressure beyond just metal prices. The company’s ability to pass these specific costs through to customers will be a key determinant of their margin performance in the coming year.
“Plastics account for almost 10% of our raw material cost, and we could see a 40% price increase if current momentum continues. Sulfur is driving up acid prices, and fuel costs are increasing inbound and outbound freight.”
— Y. Delli Babu, Chief Financial Officer
Domestic cell manufacturing currently faces a significant cost disadvantage compared to Chinese imports due to the absence of a local raw material ecosystem. The business case for the Gigafactory relies heavily on potential government mandates for local sourcing to create a protected market.
“We estimate a ‘China plus $15 to $20’ gap because we lack a local material supply chain and scale. However, we anticipate that the government will mandate localization in sectors like energy storage where they are the primary buyer, similar to solar equipment.”
— Vikramaditya Gourineni, Executive Director - New Energy Business
Management believes that raw material constraints will make hybrid vehicles a more practical medium-term solution for India than pure electric vehicles. This perspective justifies their continued investment in traditional lead-acid technology as part of a multi-chemistry strategy.
“India cannot leapfrog directly into EVs because we cannot replace oil imports with a total dependency on imported raw materials for batteries. This means hybrids will likely accelerate, and we have solutions for all levels of hybridization.”
— Harsha Vardhana Gourineni, Executive Director - Automotive and Industrial
While the largest automotive manufacturers are building their own internal battery supply chains, a significant middle-tier market remains open for third-party cell suppliers. This competitive landscape defines the target customer base for Amara Raja’s future Gigafactory production.
“Regarding customers doing their own cells, large OEMs like Tata or Ola are doing so, but most OEMs we are in touch with do not have plans to localize cells and are looking to players like us. While some OEMs are moving pack assembly in-house, there are still many opportunities where they require both cell and pack from us.”
— Vikramaditya Gourineni, Executive Director - New Energy Business
Ashok Leyland | Mid Cap | Auto Ancillary
Ashok Leyland specializes in manufacturing commercial vehicles, components, and diesel engines for industrial, genset, and marine applications. Its foundry division produces automotive parts like cylinder blocks, heads, and tractor housings, serving the automotive industry.
[Concall]
The company achieved its highest-ever annual LCV volume in FY26, outperforming the industry with significant market share gains in Q4.
“Ashok Leyland’s domestic LCV volume for Q4 was at 21,801 units, higher by 23% year-over-year, with growth better than that of the industry. LCV Vahan market share for Q4 was 12.8% with a gain of 90 basis points on a year-over-year basis. For the full year, LCV volume was 74,322 units, higher by 12% year-over-year, and full-year LCV Vahan market share stood at 12.7%, higher by 80 basis points year-over-year. This is the highest ever annual volume recorded in LCV.”
— Shenu Agarwal, Managing Director and CEO
The company expects the tipper, multi-axle, and tip-trailer segments, driven by mining, infrastructure, and construction projects, to be the fastest-growing CV categories this year.
“This year, we think the tipper segment and the multi-axle segment would be the fastest-growing segments, followed by the tip-trailer segment. Anything connected with mines, infrastructure projects, or construction projects should show tremendous promise this year.”
— Shenu Agarwal, Managing Director and CEO
The industry is expected to maintain pricing discipline and implement multiple price hikes throughout the year to manage commodity cost challenges without significantly impacting demand.
“I think the current situation should add to that discipline. There would be a challenge on the commodity cost side. The industry, to the extent possible, should use their judgment to see how much can be passed on to the market without affecting demand. Generally speaking, we are hoping the industry looks at taking multiple price hikes during the year.”
— Shenu Agarwal, Managing Director and CEO
The defense business has its strongest ever order pipeline exceeding 1,500 crores, ensuring very strong growth for at least the next two to three years.
“But our order pipeline in defense is the strongest ever. It is above 1,500 crores for the orders in hand due for execution and supply. We also hope to receive many more orders during the year. For defense, we are very sure that for at least the next two to three years, we will show very strong growth.”
— Shenu Agarwal, Managing Director and CEO
The CEO believes any temporary dip in CV demand due to macroeconomic factors will likely transform into pent-up demand later, given strong industry fundamentals.
“My feeling is that even if there is a setback, this demand is not going to go away permanently. It is going to convert into pent-up demand. The reason I say that is because fundamentally the situation is very strong on the ground. The sentiment is strong. People have huge expansion plans. The aging of the fleet is at its highest. The rate cut has really improved the economics and the TCO of the fleet. When fundamentals are strong, even if there is a temporary dip because of a macroeconomic factor, that will end up becoming pent-up demand for the industry.”
— Shenu Agarwal, Managing Director and CEO
The company is adopting a phased approach to EV battery manufacturing, starting with packs for captive use, expanding to external automotive demand, and eventually considering cell manufacturing.
“No, we are starting with the pack first. It is a phased approach that we are adopting. So we are starting with the pack for captive consumption and also for energy storage systems. In the second phase, we will expand the pack capacity to get into non-captive demand on the automotive side. And then in the third phase, we will look at cell manufacturing.”
— Shenu Agarwal, Managing Director and CEO
Export volumes are anticipated to decline in Q1 due to ongoing international logistics issues, although conditions are improving.
“Now, of course, export volumes may still be affected because of the international logistics situation... So exports might drop, I would say, in Q1, although things are now coming back to normalcy as we speak.”
— Shenu Agarwal, Managing Director and CEO
Despite market sentiment around rising diesel prices impacting some logistics, the underlying demand for MHCV and LCV remains strong, supported by GST rationalization and fleet replacement needs.
“In May, we are not seeing any significant slowdown on either the MHCV or LCV side. However, there is a kind of sentiment attached to the diesel oil prices that is there in the market, which is affecting current logistics operations in many routes and areas. However, I think the resilience of demand based on GST and on the replacement factor is acting very, very strongly.”
— Shenu Agarwal, Managing Director and CEO
Ashok Leyland approaches the new fiscal year with cautious optimism, acknowledging positive CV demand drivers but also potential macroeconomic headwinds like commodity and diesel price volatility.
“Looking forward, we are entering the new fiscal year with cautious optimism. Demand drivers for commercial vehicles remain positive overall. However, we are mindful of macroeconomic headwinds such as global economic uncertainty, commodity price volatility, and diesel price increases.”
— Shenu Agarwal, Managing Director and CEO
Consumer Durables
LG Electronics India | Mid Cap | Consumer Durables
LG Electronics India Ltd, a leading home appliances & consumer electronics manufacturer since 1997, serves B2C & B2B markets in India and abroad. It offers diverse products, installation, and repair services, with strong distribution, manufacturing units, and extensive service centres.
[Concall]
LG India’s FY27 growth strategy, EXCEL, focuses on export expansion, new factory capability, market leadership, and localization.
“Looking ahead to FY27, we have established a clear roadmap for our future growth strategy. We call this strategy EXCEL. This stands for EX: Export expansion, C: Capability of new factory production, E: Expansion of market leadership, brand and new business, and L: Localization.”
— Soonjoo Seo, Investor Relations Officer
LG India’s localization rate reached 55.2% in FY26, with a target to increase by 1-2% annually to improve cost competitiveness and manage forex volatility.
“This year, our localization rate reached 55.2%, an improvement of about 1.4% points year-on-year. We are targeting an annual increase of more than 1% to 2% points going forward. We expect this to contribute to stronger cost competitiveness and more stable management of foreign exchange volatility.”
— Soonjoo Seo, Investor Relations Officer
Dishwashers became a significant growth driver in Q4 FY26 due to increasing urban consumer adoption.
“Our dishwashers business also emerged as an important growth driver this quarter, gaining meaningful traction as urban consumers increasingly embrace the convenience it offers.”
— Aditya Bhasin, Head, Investor Relations
LG maintained its absolute leadership in the premium television segment with a 60% OLED market share as of March 2026.
“In the premium television segment, LG maintained absolute leadership with an OLED market share of 60.0% as of YTD March 2026.”
— Aditya Bhasin, Head, Investor Relations
Q4 FY26 margin decline was primarily due to 5.6% Rupee depreciation and significant temporary strategic channel promotion investments (1.1% impact).
“However, the rupee depreciated almost by 5.6% year-on-year in this quarter, creating a meaningful headwind on our import cost. The single largest contributor was our channel promotion investments, which impacted margins by approximately 1.1%. These were temporary strategic investments made to separate our channel partners, drive sell-out, and strengthen our market position during this quarter, and build confidence among our channel partners.”
— Atul Khanna, Chief Accounting Officer
LG India expects margin recovery and early double-digit EBITDA margins in FY27 due to implemented price hikes, rationalized promotions, and strong summer demand.
“Looking ahead, with the price hikes now in place across categories, promotional intensity rationalizing, hot summer going on, we are confident of recovering our margins for financial year ‘27 and to deliver our early double digit EBITDA margins for ‘27 full year.”
— Atul Khanna, Chief Accounting Officer
AC demand is strong, refrigerators are trending towards larger and more energy-efficient models, and French door refrigerator market share rapidly grew from 5% to 14% by March 2026.
“ACs are very well supported by the summer demand, and we will surely deliver good growth over last year . Refrigerator demand is also steady and moving as per expectations . Customers are choosing larger and more energy - efficient models, which is a very positive signal for us . Our French door refrigerators are also doing extremely well. We launched these products in the month of November, and our market share jumped from 5% to 14% by March 2026 and we will become number one player for French door refrigerator very soon .”
— Sanjay Chitkara, Co-Chief Sales & Marketing Officer
LG India is entering the new INR 3000 crore chest freezer market with five competitively priced models, aiming to generate new revenue streams.
“On chest freezer, this is entirely a new category for LG India. And we are launching a strong range for five models in the upcoming quarter at very competitive prices. Currently the chest freezer market sizes is roughly around INR 3000 crores. And it will create new business revenue for us in the near term.”
— Sanjay Chitkara, Co-Chief Sales & Marketing Officer
Healthcare
Divi’s Laboratories | Large Cap | Healthcare
Divi’s Laboratories is a pharmaceutical company specializing in the manufacture of Active Pharmaceutical Ingredients (APIs), Intermediates, and Nutraceutical ingredients, with a strong focus on exports. The company offers custom synthesis services to support innovator pharma companies in developing their patented products, from clinical trials to late life cycle management.
[Concall]
Management acknowledged a challenging operating environment due to geopolitical tensions, logistics bottlenecks, and raw material inflation. Despite these uncertainties, the company remains confident about growth prospects and reiterated its long-standing growth aspiration.
“As historically that we always look for a double-digit growth in our revenues, and that’s what we would also say today.”
“With the change in scenarios, I would say it’s difficult to project, but we would say it would remain stable.”
— Nilima Prasad Divi, Whole-Time Director (Commercial)
The company provided one of its strongest comments on the impact of the Middle East conflict. Several suppliers have declared force majeure, and availability of solvents and intermediates has tightened significantly. However, Divi’s says operations remain uninterrupted.
“Yes, we are having difficulty in sourcing material, but we are not having any production stoppages at our end.”
“The impact is there on multiple products, not just on solvents. We are reviewing this on a quarter-on-quarter basis, and we are trying to secure every month for the next 3 months, how -- to make sure that our production is continuously running for the next 3 months.”
— Nilima Prasad Divi, Whole-Time Director (Commercial)
Management highlighted that geopolitical disruptions have materially impacted global logistics. Freight costs, shipping timelines, and availability of containers remain under pressure.
“During this period, a number of suppliers invoked force majeure clauses, while freight rates across both ocean and air transportation started increasing considerably.”
“Freight-related cost pressures are expected to continue in the near term, and we have incorporated these factors into our planning for the coming quarters.”
— Nilima Prasad Divi, Whole-Time Director (Commercial)
Divi’s indicated that demand remains healthy across its core generic portfolio. The challenge continues to be pricing rather than volumes.
“Generics has slight pricing pressure, but our customers also understand what’s happening in the market and they have been very understanding and we have been in constant discussion in how to manage the pricing at both end.”
“We have not lost any volumes or any supply or have any supply issues with any of our customers.”
— Dr. Kiran S. Divi, CEO
Divi’s clarified that recent growth has come from existing products and not from upcoming patent-expiry opportunities.
“The volume has been picked up. We had steady growth in volume, and our customer base has been quite steady in the generic business.”
“This is from our existing portfolio itself. While we are still waiting for our customers to launch our new portfolio, what we have told you in 2026-’27, as the products come off patent.”
— Dr. Kiran S. Divi, CEO
The company emphasized that most major generic APIs are covered by contracts containing raw material pass-through mechanisms.
“Most of our APIs on the generic segment are backed by long-term contracts, which have variability clauses, which protects us from such situations.”
“These are reviewed -- based on the contracts, some of them would be reviewed every 3 months. There is a clause where it directly impacts on the raw material plus.”
— Dr. Kiran S. Divi, CEO
This is perhaps the strongest strategic statement on the peptide opportunity made by management during the call.
“We have several 3,000-liter SPPS, which by far in India nobody has.”
“We are quite strong and committed towards this segment, and we are targeting to be one of the largest global players in the world.”
— Dr. Kiran S. Divi, CEO
Divi’s highlighted meaningful commercial traction in iodine-based contrast media with global innovators.
“We are working with most of the top players in the market at this point who are innovators.”
“In the Iodine base, we are already in commercial sales.”
— Dr. Kiran S. Divi, CEO
Divi’s continues transferring pre-chemistry and backward integration activities into Unit 3 to free up GMP capacity at existing facilities.
“Operations at Unit 3 have been steadily progressing, and the facility is now playing an increasingly important role in our overall operations by supporting our backward integration capacity.”
“Through the year, we have gradually transferred select activities from Unit 1 and Unit 2, freeing up GMP space.”
— Dr. Kiran S. Divi, CEO
Management cautioned investors against expecting immediate monetization from recently completed projects.
“The cycle is typically when we do an innovative product, we completely depend on the customer’s timeline.”
“We have seen time cycles all the way from 6 months... or we have seen as long as 3 years.”
“To be optimistic, we believe we would like to be in the 2-year range.”
— Dr. Kiran S. Divi, CEO
Despite port congestion, freight bottlenecks, and supply-chain challenges, management stated that customer deliveries remained unaffected during the quarter.
“No, we haven’t had any loss of revenue because of the logistics issues in the last quarter.”
— Nilima Prasad Divi, Whole-Time Director (Commercial)
Unlike previous supply-chain disruptions, Divi’s is not seeing meaningful stockpiling behavior from customers. Management attributes this to its reputation for reliable delivery.
“Our supply chain model is pretty stable. We proactively make sure that the material reaches our customer in time, and that’s what Divi’s has been known for and that we deliver on time to the customers.”
“I don’t think they are stocking up any material that they are foreseeing the shortage.”
— Nilima Prasad Divi, Whole-Time Director (Commercial)
Management acknowledged that margins remain below historical peak levels because of pricing pressure and higher input costs.
“The two key things that we see, the margins going more than 32% historic figure. One is the generic pricing pressure for sure.”
“The second one is mainly the cost of materials that has increased.”
“That’s something we dearly wish for that we also go back to 38%, which also depends on the market conditions.”
— Nilima Prasad Divi, Whole-Time Director (Commercial)
To mitigate supply disruptions and ensure uninterrupted production, Divi’s is proactively building inventory.
“Most of the increase in inventory, I would say you might be seeing from the Q1 of next year.”
“We are securing material and we are storing material to make sure that we are efficiently manufacturing and supplying our customers.”
— Nilima Prasad Divi, Whole-Time Director (Commercial)
Aarti Pharmalabs Limited | Small Cap | Pharmaceuticals
Aarti Pharmalabs manufactures active pharmaceutical ingredients, intermediates, and xanthine derivatives for global regulated and non-regulated markets. The company also provides contract development and manufacturing organization (CDMO) services with specialized focus on late-phase and commercial molecules.
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Aarti is diversifying its research capabilities into complex molecules like peptides to future-proof its CDMO pipeline. While these investments won’t boost immediate earnings, they expand the addressable market for high-value contracts.
“We have decided to invest in the R&D of peptides and oligonucleotides. This investment in new R&D technologies will not yield immediate results but has good potential in the future, and we would like to explore these newer technologies.”
— Rashesh Gogri, Chairman
The company is executing a 50% capacity expansion in its xanthine division to meet growing demand. Investors should watch for the volume ramp-up over the next year to validate the capital expenditure investment.
“The xanthine derivatives expansion is progressing as planned with current capacity being 6,000 metric tons per annum, and the incremental capacity will be available for production at the end of the current quarter. The ramp-up to 9,000 metric tons per annum will happen gradually over the next few quarters.”
— Rashesh Gogri, Chairman
Management believes their ability to offer a China-independent, backward-integrated supply chain is a key competitive advantage for global innovators. This strategic positioning is critical for winning market share in the evolving ‘China Plus One’ global sourcing landscape.
“Why we get shortlisted is due to our manufacturing capabilities, our unique ability to scale up production from kilo labs and put up assets, and our unique ability to do a backward integrated play where China dependence is reduced. Apart from the balance sheet, these are the factors that play a part.”
— Rashesh Gogri, Chairman
Aerospace & Defence
Aequs Limited | Small Cap | Aerospace & Defence
Aequs Limited is a precision manufacturing specialist operating in the aerospace and consumer sectors with large-scale production clusters in India, the US, and France. The company focuses on vertically integrated manufacturing for global OEMs, producing complex aerostructures, engine components, and consumer electronics.
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The company is committing to a massive ten-year investment to create a dedicated hub for engine and landing gear components in Tamil Nadu. This move aims to establish a unique domestic supply chain that can handle complex aerospace parts from start to finish.
“In February 2026, we signed an MOU with the government of Tamil Nadu to invest 1,900 crores over 10 years for new vertically integrated aerospace manufacturing ecosystem within a new aerospace and defense park at Hosur across 250 acres in the SIPCOT Shoolagiri Industrial Park. This will be India’s first fully vertically integrated aero-engine and landing gear components manufacturing ecosystem.”
— Arvind Melligeri, Executive Chairman and CEO
Aequs is shifting its product mix toward more sophisticated aviation components that require specialized technical skills. These complex parts are harder for competitors to replicate and usually result in higher profits and longer contracts.
“We are also actively moving up the value chain into landing gear and engine components, where our integrated forging, machining and surface treatment capabilities deliver significant competitive advantage. These are higher complexity, higher value parts that command better margins and deeper customer relationships.”
— Rajiv Kaul, Co-founder and Managing Director
To counter the loss of Hasbro, the company has secured a long-term deal with Mattel to fill its production capacity. Management believes this transition will prevent any major negative impact on their consumer division’s growth.
“Yes, we have signed a long-term agreement with Mattel and both sides are fully beneficial to scaling volumes. We also expect Mattel volumes to absorb the capacity impact from Hasbro. More broadly, we continue to engage with large strategic customers across the consumer segment and remain confident that overall growth for the business will not be materially impacted.”
— Rajiv Kaul, Co-founder and Managing Director
Management is aggressively spending on new equipment because global clients require their suppliers to have large-scale production capacity. Failing to expand could result in losing major contracts to international competitors who can handle higher volumes.
“Customers want us to have a meaningful share of their requirements, and collectively we are committed to scaling operations and absorbing more work in India. If we do not scale, the customers will look for alternates. There is a timeline we must follow, and we are committed to seeing utilization increase, which is why we guided for EBITDA break-even in Q4.”
— Arvind Melligeri, Executive Chairman and CEO
Procuring specialized metals for aerospace is becoming increasingly difficult, with some materials taking over a year to arrive. This extreme lead time forces the company to plan its inventory and cash flow much further in advance than usual.
“Titanium, superalloys, and some steels currently have some of the longest lead times in the industry. Certain tough steels have lead times as high as 65 to 75 weeks. Titanium is typically a 52-week lead time.”
— Arvind Melligeri, Executive Chairman and CEO
Financial Services
Pine Labs | Mid Cap | Financial Services
Pine Labs is a leading merchant commerce platform that provides offline and online payment solutions along with risk management and consumer credit products. The company serves over 2 million merchant touchpoints across India, Southeast Asia, and the Middle East.
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The company has issued strong revenue guidance for the next fiscal year and expects profit margins to expand. Investors should note the management’s confidence in translating higher sales directly into better bottom-line earnings.
“We think we will be able to grow at about 21% to 23.5% on a year-on-year basis as far as revenue is concerned. We have already shown how we see the flow-through between revenue, contribution margin, and adjusted EBITDA in our business, so we definitely feel confident that we will be able to significantly improve our adjusted EBITDA going into FY27.”
— Amreesh Rau, Chief Executive Officer
The online payment gateway business is growing much faster than the core offline segment and has captured major market share. Securing the largest e-commerce and quick-commerce players provides a stable and high-volume foundation for digital growth.
“In the online space, we are making very good progress; we have grown that business almost by 60% on a year-on-year basis. All three quick-commerce companies and all three e-commerce companies are today using Pine Labs as a platform.”
— Amreesh Rau, Chief Executive Officer
Pine Labs is successfully exporting its Indian technology stack to emerging markets across Asia and the Middle East. This international expansion is diversifying the company’s income and providing valuable foreign currency revenue.
“What we have delivered here in India and the tech stack we have created for the Indian market is extremely relevant in markets like the Philippines, Vietnam, or the UAE. You are seeing very strong progress and we are getting dollar-based revenues from our international business.”
— Amreesh Rau, Chief Executive Officer
The company has aggressively adopted artificial intelligence to automate almost all of its software development work. This significant operational change is expected to lower long-term costs and accelerate the delivery of new features.
“89% of all new code written within Pine Labs over the last two quarters has been completely AI-generated. It does two things for us: one, it provides tremendous efficiency as we build new products, and two, our legacy platforms are being updated and improved as we speak.”
— Amreesh Rau, Chief Executive Officer
Competitive pressure is easing as some rivals find the hardware-heavy payments business unprofitable or shift focus toward lending. This consolidation allows Pine Labs to win large corporate contracts that require specialized technology rather than credit products.
“We are seeing newcomers pull out because it is not economically viable for them. Second, some competitors’ large revenue models are built around financial services and lending rather than payment-based revenues. An OMC does not need a loan today, so that is not a segment they want to address.”
— Amreesh Rau, Chief Executive Officer
A significant portion of the company’s growth is driven by increasing the number of active terminals rather than just deploying hardware. Higher activation rates indicate better utilization of the existing network and improved returns on investment.
“About 25-30% of growth comes from activating merchants and stores. In our deck, we show the ratio of POS machines activated for flow and transactions improved from 21% a year ago to 30%. This will continue to add to our growth.”
— Amreesh Rau, Chief Executive Officer
Pine Labs is launching blockchain-based settlement tools to speed up international money transfers. This new product line targets global pain points in cross-border payments and represents a major push into future-ready financial infrastructure.
“We are seeing stablecoins used for faster movement in person-to-person, person-to-merchant, and bulk remittances. Second is programmable money, where money can be used only for a specific service. We will start sales activities for this in the next month. This is entirely for global markets and nothing to do with India.”
— Amreesh Rau, Chief Executive Officer
The company has deepened its relationship with large oil marketing companies by providing automation and loyalty programs beyond simple payments. These long-term, multi-layered contracts provide high revenue visibility and make the service harder for competitors to replace.
“The petroleum segment is one of our oldest. We do fuel pump automation, forecourt controllers, and integration. Second is payment infrastructure deployment. Third is transaction or flow-based revenues. Fourth is loyalty services; for Indian Oil, we are managing the entire Extra Power loyalty card program for the next five years.”
— Amreesh Rau, Chief Executive Officer
Engineering & Capital Goods
Bajel Projects Limited | Small Cap | Power Transmission & Distribution
Bajel Projects is a specialized engineering, procurement, and construction company that focuses on building power transmission infrastructure like substations and high-voltage lines. Originally a part of Bajaj Electricals, the firm now operates as an independent entity executing domestic and international projects alongside its own tower manufacturing facilities.
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India’s massive push for renewable energy is creating a huge demand for new power transmission lines to connect green energy sources to the grid. This multi-year roadmap suggests a steady pipeline of work for specialized infrastructure companies for the rest of the decade.
“India’s power sector continues to be one of the most attractive markets globally. The country is targeting roughly 900 gigawatts of non-fossil fuel-based installed capacity by 2030, which represents a significant increase from current levels. To enable this transition, the Central Electricity Authority (CEA) has outlined a transmission roadmap requiring approximately 114,687 circuit kilometers of transmission lines and 1,274,185 MVA of transformation capacity.”
— Rajesh Ganesh, Managing Director and CEO
Geopolitical tensions and rising oil prices have recently slowed down the company’s expansion plans in the Middle East. Additionally, the business remains vulnerable to price spikes in essential raw materials like steel and aluminum which can impact project costs.
“Towards the end of the year, the US-Iran conflict further stretched global supplies with crude oil reaching over $100 a barrel, giving rise to overall inflation. This conflict also resulted in a slowdown of our plans in the Middle East and North Africa region. As an EPC company, Bajel remains exposed to the vagaries of market fluctuations in aluminum, zinc, and steel prices.”
— Rajesh Ganesh, Managing Director and CEO
The company has gained significant momentum recently by winning its first major international order and bidding on a massive pool of new projects. This strong pipeline of pending and potential contracts provides high visibility for future revenue growth.
“Post March 2026, we have secured orders exceeding 1,000 crores, including our first order from the Middle East and North Africa region valued at approximately 400 crores for the construction of a 500 kV overhead transmission line. We are currently L1 or in advanced stages of negotiation with customers on orders worth over 2,000 crores. We are also actively pursuing opportunities worth 22,000 crores.”
— Rajesh Ganesh, Managing Director and CEO
Bajel is significantly increasing its internal manufacturing capacity for power towers to better control its supply chain and meet growing demand. While they are investing for growth, management is becoming more cautious about the global economic environment heading into the next year.
“Our manufacturing facility at Ranjangaon near Pune is being expanded to 110,000 to 120,000 metric tons per annum. Once operational, the expanded facility will significantly enhance our captive capability and ability to serve both domestic and international demand. The macroeconomic optimism that characterized FY26 has been considerably tempered as the world enters FY27.”
— Rajesh Ganesh, Managing Director and CEO
A large temporary spike in unpaid bills at the end of the year was caused by a single major customer delaying payment, which has since been resolved. This suggests the recent increase in debt was a timing issue rather than a permanent problem with getting paid.
“Also, one marquee customer held back payments in the last fortnight of March of around 225 crores. We have collected most of both of these since then. The other increase is part of the EPC cycle where final retention amounts increase as you do projects.”
— Nitesh Bhandari, CFO
Real Estate
AGI Infra | Small Cap | Realty | Premium Housing Shift Fuels Growth Ambitions
AGI Infra is a Punjab-based real estate developer focused on residential communities and commercial projects. As buyers increasingly gravitate toward premium housing and community living, the company is expanding into larger markets while targeting faster profit growth than revenue growth over the next five years.
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AGI is moving into Tier-1 locations in Punjab where property prices and demand are significantly higher. This geographic expansion is the primary driver for the company’s rising profit margins and better brand positioning.
“The company expanded from Jalandhar into Ludhiana over the last few years and is now moving toward Chandigarh and New Chandigarh, where management expects further margin improvement. Management attributed recent margin expansion partly to moving from smaller towns into larger cities, where realizations and profitability are higher.”
— Sukhdev Singh Khinda, Managing Director
Punjab’s real estate market is maturing as buyers move up the value chain toward luxury amenities and gated communities. This premiumization allows the company to command higher prices and better unit economics.
“According to management, the concept of community living is gaining rapid acceptance across Punjab, particularly in Jalandhar and Ludhiana. The company is observing a clear consumer shift from affordable housing toward premium and luxury housing segments as purchasing power improves.”
— Sukhdev Singh Khinda, Managing Director
Owning land outright reduces the project costs and eliminates the need to share profits with third-party landowners. The current land bank provides a decade-long development pipeline, ensuring long-term revenue predictability.
“AGI Infra follows a self-owned land model and primarily develops projects on land owned by the company rather than relying heavily on joint development agreements. Management highlighted that the company owns approximately 164 acres of land reserves, providing visibility for development over the next 8–10 years.”
— Sukhdev Singh Khinda, Managing Director
Management is forecasting healthy top-line growth but expects profitability to grow even faster due to operating leverage and higher-margin projects. This mismatch between revenue and profit growth targets suggests a focus on increasing capital efficiency.
“Looking ahead, management expects revenue growth to compound at approximately 18–20% annually over the next five years. Profit growth is expected to outpace revenue growth, with management targeting a profit CAGR of around 25–27% over the same period.”
— Sukhdev Singh Khinda, Managing Director
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Quotes in this newsletter were curated by Meher, Shahid & 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.