Welcome to the 95th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.
We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.
In this edition, we have covered 5 companies across 3 industries.
Financial Services
Punjab National Bank
Central Bank of India
Manipal Payment And Identity Solutions Limited
FMCG
Dodla Dairy Limited
Retail
Rentomojo Limited
Financial Services
Punjab National Bank | Large Cap | Financial Services
Punjab National Bank is one of India’s largest public sector banks, providing a comprehensive suite of banking and financial services to retail, corporate, and agricultural customers. It operates an extensive network of branches across India and maintains a growing presence in international financial centres.
Management reports that the bank has achieved a steady upward trend in all major operational metrics over the last eighteen months. This indicates that the bank’s core business model is currently generating consistent and sustainable performance improvements.
“This momentum reflects consistent execution over the past six quarters. If you look at our quarter-on-quarter performance across key metrics—deposit growth, advances, asset quality, and profitability—we have shown steady improvement year-on-year and quarter-on-quarter. We have built a resilient, sustainable balance sheet from a growth, asset quality, and earnings perspective. While detailed financial ratios will be shared alongside our formal quarterly earnings announcement, PNB sits in a very strong operational position.”
— Ashok Chandra, Managing Director & Chief Executive Officer
The bank exceeded its initial target for foreign currency deposits by securing $2.7 billion in long-term funding. For investors, this suggests a more stable funding base and a lower cost of capital, which should protect profit margins in the near term.
“Early on, we guided that PNB would mobilize around $2.5 billion USD through the scheme. We ultimately reached $2.7 billion USD. This successfully secured long-term, stable foreign currency deposits, lowered our overall cost of deposits, and provided positive NIM support across current and upcoming quarters.”
— Ashok Chandra, Managing Director & Chief Executive Officer
Management believes the domestic economy’s strong 7% growth rate is providing a significant tailwind for the entire banking sector. This favourable macro environment supports high loan demand and helps keep the overall quality of bank assets healthy.
“More broadly, India’s macro economy remains highly resilient despite global geopolitical headwinds. While average global GDP growth hovers around 3.0% to 3.3%, India continues to expand rapidly at over 7.0%. Organizations like the World Bank have revised India’s growth forecast upward to 7.1%. As a primary credit driver for the real economy, the banking sector across both public and private banks is benefiting directly. Across credit growth, asset quality, and earnings profitability, bank balance sheets are healthier today than they have been in years.”
— Ashok Chandra, Managing Director & Chief Executive Officer
Management utilised new foreign deposits to pay off more expensive short-term debt and certificates of deposit. This strategic replacement of high-cost debt directly improves the bank’s earnings quality by lowering interest expenses.
“Approximately 67% of that mobilization was leveraged, with the remainder representing core FCNRB deposit flows. We are completely comfortable with that ratio. In terms of deployment, we have fully utilized those funds to replace high-cost bulk deposits and CDs during the quarter. This deployment executed exactly on plan.”
— Ashok Chandra, Managing Director & Chief Executive Officer
The bank has clarified the new digital payment fee structure, which primarily targets large commercial transactions while keeping small ones free. This regulatory clarity allows the bank to better forecast its future fee income from digital services.
“1. Peer-to-Peer (P2P): Remains 100% free of charge for consumers. 2. Small P2M Transactions: Peer-to-merchant transactions under ₹2,000 remain completely exempt. 3. Small Merchants: Merchants with a monthly turnover below ₹1 lakh are fully exempt. 4. Utilities & Essential Services: Payments for railways, telecom, insurance, standing instructions, and fuel carry a flat cap of ₹5 per transaction, regardless of payment size. 5. Large Commercial Transactions: P2M transactions exceeding ₹2,000 attract a 0.4% fee, subject to a maximum absolute cap of ₹300 per transaction. Retail consumers pay nothing.”
— Ashok Chandra, Managing Director & Chief Executive Officer
The vast majority of the bank’s digital transactions remain free, meaning that the immediate revenue impact from new merchant fees will be small. The decision to reinvest these fees into technology and security suggests management is prioritising system safety over short-term profits.
“For PNB specifically, approximately 96% of our UPI transaction volume falls under ₹2,000 and is completely exempt. Only ~4% of transactions will generate an MDR yield, making the direct revenue impact modest. We will reinvest these incremental collections directly into strengthening system resilience, upgrading cyber-security infrastructure, and scaling new UPI features—such as credit lines on UPI and cross-border remittance integrations across our 11 partner countries.”
— Ashok Chandra, Managing Director & Chief Executive Officer
More than half of the bank’s loans are set up to adjust automatically whenever the central bank changes interest rates. This allows the bank to quickly pass on higher costs to borrowers, protecting its earnings during periods of rising interest rates.
“Approximately 56% of our total advance portfolio is directly benchmarked to the Repo Rate (EBLR). Under bank policy, any monetary policy rate change is passed through to EBLR-linked borrowers on the very next working day. If a rate adjustment occurs, it will reflect in our asset yields immediately.”
— Ashok Chandra, Managing Director & Chief Executive Officer
The bank currently has a very healthy balance between its loans and deposits, leaving room for significant loan growth. This means the bank does not need to offer higher, more expensive interest rates to attract new deposits to fund its expansion.
“Regarding cost of funds: PNB maintains a comfortable liquidity buffer and a healthy Credit-to-Deposit (CD) ratio around 75%. This CD ratio provides ample runway to fund credit expansion by 3 to 4 percentage points without aggressively hiking deposit interest rates. Our ALCO committee will evaluate broader market liquidity before deciding on any deposit rate revisions.”
— Ashok Chandra, Managing Director & Chief Executive Officer
Management is maintaining its forecast for 7% to 10% growth in interest income, driven by internal efficiencies rather than external rate hikes. Following a strong first quarter, investors can expect continued growth in profit margins for the rest of the year.
“At the start of the financial year, we guided for 7% to 10% annual NII growth, alongside steady NIM expansion. That baseline guidance did not rely on policy rate increases; it was driven by organic balance sheet rebalancing. Our Q1 results demonstrated that trajectory, expanding NIMs by 4 basis points while improving absolute NII. We expect this positive NII and NIM expansion trend to continue through the remainder of the fiscal year.”
— Ashok Chandra, Managing Director & Chief Executive Officer
Central Bank of India | Small Cap | Financial Services
Central Bank of India is a legacy public sector bank with a massive pan-India branch network, particularly strong in rural and semi-urban regions. The bank focuses on a RAM-heavy lending strategy while maintaining one of the highest CASA ratios in the industry to keep funding costs low.
[Concall]
The bank reported strong double-digit growth across its lending and deposit segments while improving its return on assets. Investors can see that the focus on Retail, Agriculture, and MSME (RAM) loans is driving both growth and profitability.
“Just before I hand over to our CFO, I would like to share the key highlights of our June performance. As far as global business is concerned, in June we grew by 18.29%; total deposits grew by 11.68%; and CASA, when the entire world was struggling with CASA, grew by 11.16%. Total advances grew by 28.58%. In RAM, which is our primary strength, we grew by 21.38%, and net profit grew by 13.26%. Gross NPA declined to 2.6%, and net NPA was 0.49%. ROE was 14.92%, and ROA was just above 1%.”
— M.V. Murali Krishna, Executive Director
Since exiting the Prompt Corrective Action (PCA) framework in 2021, the bank has significantly bolstered its capital buffers and reduced bad loans. This structural improvement indicates a healthier balance sheet that can now support more aggressive credit growth.
“Now, this is where you will see the bank’s transformation journey. I have taken it from the post-AQR period, right from the date we started the bank’s growth journey. PCA ended in April 2021. From a net profit of 206, we started in Q4 FY21, and we are now at 1,324 crores in Q1 FY27. CRAR, which started at 13.1%, is now 18.28%, a very healthy and well-buffered CRAR. On CET1, we were at 11.06% in April 2021, and this is now 16.54%. We began the journey after PCA with an NNPA of 5.09%, and it is now 0.49%; the curve continues to go down.”
— Vivek Kumar, CFO
Management is migrating its retail and MSME loan processing to a new digital platform to lower costs and speed up approvals. This tech-driven approach aims to maintain the bank’s competitive 46% CASA ratio through better customer acquisition.
“We have built a host of journeys on the digital lending platform, which not only gives us a downside on cost but also an upside in terms of credit underwriting principles and turnaround time. The retail journeys are in place, and we are gradually shifting the entire retail acquisition process to the DLP platform. We have MSME journeys, and almost all government-sponsored schemes are entirely covered on the DLP platform. On the liability side, we have initiated a host of digital on-lending initiatives, which have created a benchmark, with CASA consistently above 46%.”
— Vivek Kumar, CFO
The bank is focusing on lowering its operating costs and increasing income from fees to improve efficiency ratios. Success here would lead to higher net margins as the bank extracts more revenue from its existing customer base.
“We have taken efforts to improve the cost-to-income ratio. It is currently slightly higher at 55.4%, but over the years, the curve has been on the downside. The cost-to-income ratio is declining, and income is increasing. The initiatives we have taken to optimise costs will definitely provide a further boost through rationalisation of the cost-to-income ratio. As I said initially, an increase in fee-based income will give a fillip to the bank’s overall income. Cross-sell and up-sell opportunities will increase the customer’s digital wallet and wallet share.”
— Vivek Kumar, CFO
With a Credit-Deposit ratio of 74%, the bank has significant room to increase lending without needing to aggressively raise expensive deposits. This liquidity buffer allows it to target high-yield MSME clusters to boost interest margins.
“We are at 74%, which gives us headroom for growth in the CD ratio. This gives us sufficient strength to pursue more qualitative business and ultimately increase the NIM numbers. On the MSME front, various clusters have been identified and cluster-based products have been developed with a focused strategy. I would state clearly that every quarter and every year, the bank runs specific, focused outreach camps for its customers, not only for MSME but for the entire RAM segment, targeting MSME customers in these clusters.”
— Vivek Kumar, CFO
Despite localised pressure in the agriculture segment, the bank has drastically lowered its slippage ratio to 0.40%. This gives management confidence in maintaining its asset quality guidance of keeping bad loan additions below 1% for the year.
“I will give you the figures for the previous year. As of March {? 36 ?}, our slippage ratio was 1.16%. In March 2025, it was 1.47%. As of today, it is 0.40%. We had given the market guidance that our asset quality would remain below 1%. Despite some hits from agriculture in states such as Maharashtra and Uttar Pradesh, we have achieved this. More than 300 crores slipped in the agriculture sector, or 400 crores if Uttar Pradesh is also included. Thus, out of the total slippages, 400 crores came from the agriculture sector. Despite that, due to all these initiatives, we have been able to contain slippages and maintain asset quality below 1%. It is 0.40%; even if we annualise it, it is 0.80%. Looking at any potential surprises or other factors, there is sufficient cushion. We will remain below 1%.”
— Kalyan Kumar, MD & CEO
The bank is launching a dedicated wealth management division by early 2027 to diversify its revenue streams. This move into specialised financial services could improve fee-based income and deepen relationships with high-net-worth clients.
“Regarding your first question on wealth management, we have already started. We hired 300 marketing officers, and among those 300 officers, we selected more than 40 for the wealth management vertical. Very shortly, we are also going to approach the market to hire a senior team because this business requires specialised skill sets. Therefore, we will soon hire a team to run this vertical. I can tell you that by December or January, we are going to start the wealth management vertical on a full-fledged basis. The groundwork has already started. We have selected more than 40 people for this segment. They were already trained at their earlier organisations and have worked in this segment. We already have the required skill sets.”
— Kalyan Kumar, MD & CEO
Management believes the market is undervaluing the bank, as it trades significantly below its book value despite strong performance metrics. They are emphasising that the current low valuation does not reflect the bank’s improved asset quality and high growth rates.
“That is why I do not feel that this apprehension is justified. You are right, and I am also trying to find the reason why you are not finding this stock sufficiently attractive. There are very few public-sector bank stocks trading at less than 1 times price-to-book. Our book value is 41, and our stock is trading between 30 and 31. It is at a rock-bottom level. I can assure you and all the people listening to me that, given the initiatives we have taken, our asset quality is under control. Despite growth of 20-22%, we are containing slippages, and the NPA ratio and credit cost are also favourable.”
— Kalyan Kumar, MD & CEO
Management is confident in keeping net interest margins above 3%, supported by a loan book where 61% of loans are linked to external benchmarks. This structure allows the bank to benefit quickly from any interest rate hikes, protecting its profitability.
“Pranay, NIM as of June was 3.06%. In March also, it was above 3%. What I mean to say is that I have given guidance for this year that it will remain above 3%. If you look at growth, yield on advances, and cost of deposits, they are all very comfortable and give us confidence. Another factor is that the contribution of the RAM sector is 68%. I have given guidance of 65:35, with a plus or minus 5% range. It is currently 68%. More than 60% of our advances are linked to external benchmark-linked rates. Approximately 61% of advances are linked to external benchmark-linked rates. Looking at newspaper reports and expectations, there are chances of a hike in the repo rate or benchmark rate, and that would support us by improving the yield on advances.”
— Kalyan Kumar, MD & CEO
The bank is professionalising its deposit mobilisation by creating dedicated customer acquisition centres and training officers to target specific high-value segments. This systematic approach aims to keep its low-cost CASA ratio robust against competition.
“If I talk about current accounts and savings accounts, we have opened customer acquisition centres at more than 50 locations through our marketing setup. This facility was not previously available at the Central Bank. We have engaged the services of 53 LDMs, who are very good at maintaining relationships with government agencies and others. We have provided them with special training and given them iPads containing details of customised products. All marketing officers have been properly trained. Segment-based tasks covering trusts, associations, societies, and clubs are being carried out in an integrated manner through a technology platform. Our marketing officers are visiting religious places, doctors, hotels, hospitals, and other such segments.”
— Kalyan Kumar, MD & CEO
The bank successfully raised nearly $1 billion in foreign currency deposits, providing a significant boost to its liquidity. The diversified nature of these deposits reduces the risk of sudden withdrawals by a few large entities.
“Through our network, we were able to mobilise 925 million dollars in FCNR(B) deposits. That comes to approximately 8,000 crores, or 8,800 crores. It was a good number, meaning it was widely diversified. It was not concentrated among a few customers across the country.”
— Management, Executive Team
Manipal Payment And Identity Solutions Ltd. | Small Cap | Financial Services
Manipal Payment & Identity Solutions is a specialised manufacturer and technology provider of secure payment cards, national IDs, and automated banking kiosks. The company commands a significant domestic market share in payment cards and is aggressively expanding its high-margin metal card and international export businesses.
[Concall]
The management team provided background on the Manipal Group’s deep roots in the Indian banking sector and its current structure as a diversified conglomerate. This history of financial sector involvement suggests a strong foundation for the company’s focus on secure payment technologies.
“Just to give you a quick overview of the history of the group, Gautham’s grandfather was instrumental in setting up Syndicate Bank before independence. As you know, coastal Karnataka has been a citadel of banking. A lot of banks originated from that geography. The Pais originally wanted to formalise banking, and once banking was formalised, the group ventured into other businesses, such as education, healthcare, media, print, and so on. Fast-forward to today, the group has around 14+ businesses divided into three major platforms: the legacy BFSI platform, where Manipal Payments is our flagship arm; the consumer platform; and what we call ancillary platforms, where we house businesses like CPC, print, advertising, and so on. In that sense, we operate more like an evergreen fund. Manipal Payments is the first of many companies that has now been listed, and we believe that the group has the potential for a few more companies to access the capital markets in the near future.”
— Mayank Botika, Head Strategy, Finance & Treasury
Management highlighted their significant presence in the Indian card market and their top-ten global ranking among major payment networks. Investors should note that the high concentration of the top four players in India creates a significant competitive barrier to entry.
“We are a leading player in the domestic payment card market, with a market share of more than 21%. Among public sector banks, we have a higher market share of 27.4%. We have more than a billion National ID tags in 12+ languages. As part of our driving license contract, we have offered multiple services at more than 80 locations across multiple states in the country. We are now present in 15+ countries with four subsidiaries. Globally, we are ranked 10th in terms of shipments of Visa and Mastercard cards, excluding China. If you look at the global market, close to 20 billion cards are in circulation and the market is growing at a CAGR of around 2-2.5%. The top 10 players hold around 71% market share, which is highly gated by certifications and presence in multiple markets. In India, close to 377 million cards were shipped last year, and the market is growing at a steady CAGR of 13.1%. The top four players hold a share of close to 90%, and MPI holds a share of close to 21.7%.”
— K. Girish Kini, CEO & Executive Director
The company is utilising a hub-and-spoke manufacturing model to address international markets while complying with data security laws. This strategy allows them to leverage lower Indian manufacturing costs for the bulk of the product while handling sensitive data locally in foreign markets.
“Our entire model is to manufacture in India for the world. If you look at a card, 90% of the card’s revenue comes from the base card, which carries the bank branding and the theme branding. This portion of the card is produced in India. The remaining 10%, which is personalisation basically, the name, number, and secure information that goes inside the chip—is manufactured in the local market because of data localisation laws. This portion of the activity has to be carried out in the local market. Our Nigeria bureau is fully operational, and we have supplied base cards and personalised cards to multiple banks in this market. Our revenue has been growing at a CAGR of 116%. In FY23, close to 7% of our revenue was from exports. In Q1, we are at around 15% of our overall revenue, and we delivered revenue worth 64 crores in Q1.”
— K. Girish Kini, CEO & Executive Director
Management is focusing on metal cards because they offer significantly higher revenue per unit than standard plastic cards. The presence of international patents provides the company with a protected competitive advantage in this rapidly growing premium segment.
“Metal cards are a very niche and premium segment. We are seeing a significant amount of movement in the HNI space in payment cards, and the realisation per card is almost 20 to 25 times that of a traditional card. During the last year, close to 64 million metal cards were issued globally, growing at a CAGR of around 15%. The US is the largest market. In India, the CAGR is around 47%, and close to 2 to 2.2 million cards were issued in metal. Within this space, there are very few players globally manufacturing metal cards. This falls into the branded category, like pharmaceuticals, where manufacturers have patents granted in multiple markets. Today, we are one of them, and we have patents granted in India and multiple other markets.”
— K. Girish Kini, CEO & Executive Director
Profitability has improved due to a shift toward higher-value products and greater control over the manufacturing process. By producing its own chips and software, the company has reduced its reliance on external suppliers and improved its margins.
“EBITDA has expanded significantly over the last 3 years. It has increased from more than 19% to more than 33%. The major contributors to this expansion in the EBITDA margin are the favourable product mix. The share of our revenue from digital automation, metal cards, and tax stamps has increased substantially. Economies of scale and operating leverage, which we are getting because of the increased revenue, are favouring the overall margin expansion. Backward integration has also contributed. Today, we have our own RuPay chip applet. We manufacture the inlay that goes into the cards in-house, and the technology platform required to run the entire operation has been built by our own IT team.”
— Ramnath, Chief Financial Officer
Despite the popularity of UPI for transactions, management expects steady growth in physical card issuance due to new government transit and welfare programs. This suggests that the core business remains resilient and supported by structural shifts in urban infrastructure.
“Recently, the largest PSU rolled out an RFP, and its overall issuance for the next 3 years is almost double. What we clearly see is that multiple use cases are emerging in the debit card space, especially in transit. All the metros are on a closed-loop network, which is completely being migrated to an open loop. There are re-cardings to be done across all metros, as well as fresh issuance across the metros. In addition, public transport facilities and public bus transport are gaining significant traction. For senior citizens, concessions and student passes are all moving onto cards. The government is encouraging the complete migration of these services to the card platform. Coming to UPI, UPI is primarily about the number of transactions. What we issue in terms of the number of cards and the number of transactions are two different subjects. Therefore, we believe debit cards will continue to grow at around 13% overall in terms of industry growth.”
— Management, Executive Team
Management has set a target for international sales to reach up to a quarter of total revenue. Reaching this goal would diversify the company’s income streams and reduce its dependency on the Indian banking sector.
“As we have indicated, we are focusing on the international business, which currently accounts for 15% of revenue, and this will start as the revenue profile— The international business should also grow at a faster pace. We believe that it should account for around 20 to 25% of our total revenue profile going forward in the near future.”
— Management, Executive Team
The company aims to maintain a 30% EBITDA margin even as it faces global supply chain and geopolitical challenges. Investors should watch if the shift to premium products like metal cards can successfully offset these external cost pressures.
“On the EBITDA margin specifically between products, we do not compute it, mainly because there is a lot of common infrastructure, common costs, and common raw materials that we use across the products. Therefore, it is not possible for us to properly compute the EBITDA margins for each product. Having said that, as we move ahead and the mix changes, as I have already indicated, metal cards and {? Tassterm ?} are directionally margin-accretive businesses for us. As revenue increases, operating leverage is also working in our favour. However, global geopolitical issues could continue. Considering all these factors, we have guided to a clear 30%. I will leave it to the market to evaluate the overall numbers.”
— Ramnath, Chief Financial Officer
The company is aggressively investing its IPO funds into expanding its metal card production and establishing local bureaus in developed countries. This large capital expenditure is intended to support the management’s ambitious international growth targets.
“Overall, 238 crores from the IPO proceeds has been earmarked for capacity expansion. Of that amount, roughly 100 to 120 crores is allocated for the current financial year. We are increasing the overall capacity required for our international operations in India for base-card manufacturing. We are also significantly increasing our capacity for metal cards. In developed markets, we will have personalisation bureaus. Each personalisation bureau will cost roughly 30 crores to establish and start operations. This year, we may add one more international bureau in a developed market.”
— Ramnath, Chief Financial Officer
The history of the company shows that each technological upgrade in card security has led to higher pricing and better profit margins. The transition to even more advanced card types could provide a similar boost to earnings in the coming years.
“Historically, the product has evolved continuously. When we started the business, it was only a magstripe card, which was sold at a single-digit realisation. Then we moved to EMV-based contact cards, where the realisation increased by 4 times. Then, around 2023-2024, we moved to dual-interface cards, where both contact and contactless features are enabled. Again, the realisation doubled from the EMV card. Therefore, continuous technological enhancement has taken place in the card, and at the same time, our volumes have grown significantly. From FY21 to FY24, our overall production doubled. That operating leverage, coupled with the technological enhancements, has led to the overall increase in margins. The backward integration we have carried out across the business has also contributed.”
— Ramnath, Chief Financial Officer
Management expects high double-digit growth for the current fiscal year and steady growth over the next three years. While the timing of large contracts might cause some quarter-to-quarter fluctuation, the overall outlook for expansion remains robust.
“Coming back to your question about FY27 growth, this year we believe that the top line will increase by around 30% to 35% compared with FY26. In terms of an average growth rate for the next 2 to 3 years, because of the lumpy nature of the business there could be timing differences. Broadly, however, we are looking at potential CAGR growth of around 20% to 25% over a 3-year horizon going forward.”
— Ramnath, Chief Financial Officer
Environmental regulations are pushing Indian state governments to move from plastic to paper-based security stamps for liquor and tobacco. The company is positioning itself as a leader in this transition, which could secure more long-term government contracts.
“In the domestic market, there are two types of products. One product has holographic features with paper-based features, while the other tax stamp is polyester-based. Around 15 to 16 states use polyester-based tax stamps, and the remaining states use paper-based tax stamps. Due to the plastic ban, where products below 50 microns are being banned because they are not collectible, state governments have started banning these products. There is a good opportunity for significant transition from polyester to paper. Today, we are at the forefront of offering paper-based tax stamps along with high-security features to the market. Globally, we see significant opportunities in the African continent, especially in the Middle East and these markets, in the tax stamp space.”
— Management, Executive Team
Management expects the impact of currency fluctuations and geopolitical issues on their costs to remain steady in the near term. This suggests that while costs are higher than in previous years, the company has stabilised its spending relative to its income.
“Overall, forex is in a similar range. If you look at the overall geopolitical tensions, they have not yet settled properly. Therefore, Q2 should be in a similar range, but as we move ahead, we will have to see how it develops. To clarify, by similar range, you mean as a percentage of revenue? Correct.”
— Management, Executive Team
Because the company imports raw materials for its chips, it is vulnerable to a weaker rupee. To manage this risk, they use a formal hedging program to balance its import costs against its export earnings.
“The company also has a Board-approved forex policy, which insulates us against any significant adverse effect from rupee depreciation, particularly because we are a net importer. We have a separate forex hedging policy. For a particular period, we hedge the net exposure. Imports are predominantly raw materials for chips, while exports represent revenue generated through global subsidiaries. We hedge the net exposure through the Board-approved forex policy.”
— Management, Executive Team
The company is prioritising growth investments and working capital but aims to eventually share profits with investors through dividends. They are also keeping the door open for buying other companies to expand their technology or market reach.
“Good question, Mohit. To explain our thought process regarding capitalisation, the first priority would be to deploy capital for growth capex, as we have announced from the IPO proceeds and going forward. Since the revenue base is increasing, this will entail higher working capital, and we would want to utilise capital for that as well. We also want to be a dividend-paying company. The Board is currently deliberating on the dividend policy, but we definitely want to be a dividend-paying company in the future. Once all these capital requirements have been addressed, if there is a possibility, the company is open to inorganic growth. If there are worthwhile acquisitions within our segment, the company would be open to them.”
— Management, Executive Team
FMGC
Dodla Dairy Limited | Small Cap | FMCG
Dodla Dairy is an integrated dairy company primarily operating in South India with a presence in Africa and recently expanded into Bihar and Jharkhand. It specialises in the procurement and processing of milk and value-added products like curd, paneer, and ghee under the Dodla and Osum brands.
[Concall]
Management is aggressively expanding paneer capacity through both organic operations and recent acquisitions in Jharkhand. This move signals a strategic shift toward high-margin value-added products to offset volatility in the liquid milk segment.
“We have approximately 12 tons of paneer capacity. We already have paneer capacity. We are currently producing around 4.5-5 tons here. Separately, at HR Foods, we are producing close to 2 tons of paneer. Recently, at HR Foods, we also enhanced the paneer capacity to 7-8 tons. Therefore, together, HR Foods and Dodla have approximately 17-18 tons of paneer capacity. We are currently selling close to 6.5 tons, or 6-7 tons, of paneer.”
— Murali Mohan Raju, CFO
The upcoming Maharashtra facility is scheduled to begin liquid milk operations in March, followed by full-scale powder production by mid-year. Investors should watch for a significant revenue contribution from this region starting in the first half of the next fiscal year.
“The Maharashtra plant is on track. We will start the liquid milk plant in February or March, specifically in March. Normally, milk availability increases only in May and June. Therefore, in May and June, we will also operate our powder plant at full capacity.”
— Management, Executive Team
The company currently faces a gap between its present gross margins and the levels required to hit its 9% EBITDA target. Management anticipates that recent price corrections will drive a 3-4% margin expansion in the second half of the year.
“Our current gross margin is approximately 22-23.5%. To achieve 9% margins, we require a gross margin of 26-27%. We expect our gross margin to reach approximately 26-27% in the coming quarters.”
— Management, Executive Team
Management is maintaining an optimistic 18-20% revenue growth target despite a slightly slower start in the first half of the year. The focus remains on top-line durability while banking on Q3 and Q4 for profit margin recovery.
“Revenue guidance will be around 18-20%. We cannot comment on the bottom line because we still have another 6 months to consider. However, our top-line revenue growth is currently 15-16%. We are on the same track. As I said, EBITDA was slightly lower in the first and second quarters, and we expect it to be corrected in the coming quarters.”
— Management, Executive Team
The company is transitioning its Maharashtra procurement to local processing while building new supply lines for its existing Hyderabad markets. This decoupling of procurement and sales networks is intended to reduce logistical costs and drive incremental revenue growth.
“The 3 lakh litres we are currently procuring from Maharashtra will be converted from April next year onward and processed at the Maharashtra plant itself. For the procurement we are currently bringing from Maharashtra to Hyderabad and the surrounding areas, we are creating an adequate procurement network here. Therefore, our dependence on Maharashtra will not continue in the coming years.”
— Management, Executive Team
Despite weather-related supply disruptions in mid-Q2, the African operations showed a sharp recovery in volume and profitability by September. Management expects the international segment to meet or exceed its 10-12% margin targets.
“Africa is doing very well. We performed very well in the first quarter. In the second quarter, during July and August, there was a significant milk shortage because of El Niño. In September, the business picked up very well, beyond our expectations, both in terms of revenue growth and profitability. We are fully confident that Africa will perform in line with, or better than, our projections.”
— Management, Executive Team
Procurement challenges at government cooperatives are creating a supply vacuum that Dodla is successfully filling despite higher pricing. This dynamic demonstrates Dodla’s strong procurement network and its ability to gain market share even during inflationary periods.
“In Tamil Nadu, the cooperative dairy is unable to supply milk to consumers. Therefore, although we have increased the selling price, our sales have not declined because the cooperative has pressure on the procurement side and does not have enough procurement in Tamil Nadu. In Karnataka, over the last 2-3 days, they have already provided information that they will increase the sales price by approximately 4-5 rupees tonight or tomorrow.”
— Management, Executive Team
The integration of Osum Dairy involved deep operational overhauls, including SAP implementation and procurement stabilisation. These corrections are now nearing completion, setting the stage for Osum to contribute positively to group margins in the coming fiscal year.
“We have made many backend corrections at Osum, particularly in quality, processes, supply, and the brand. We have corrected everything. It is now gradually moving into a positive position, which is a good sign. We have made many backend corrections. We implemented SAP, made several corrections on the procurement side, and corrected the plant. We have brought the SOPs and everything else on par with Dodla.”
— Management, Executive Team
The company has outlined a significant capital expenditure plan focused on Maharashtra, Uganda, and regional backend infrastructure. This aggressive reinvestment of cash flow signals management’s commitment to large-scale capacity expansion over the next 24 months.
“The majority of the money will go toward the capex we have planned, either for Maharashtra or Uganda. Approximately 200 crores will be required here after the net loan drawdown, another 100 crores in Uganda, and another 10-20 crores for expansion at Osum Dairy. In addition, we need another 50-60 crores for backend infrastructure, apart from our regular 60 crores.”
— Murali Mohan Raju, CFO
Management believes that procurement price inflation has peaked, bringing much-needed stability to raw material costs. This suggests that the worst of the margin compression from input costs is likely behind the company.
“Considering the corrections we have already made in procurement, I do not think prices will go beyond this level. Everyone now has sufficient milk, and there is no shortage.”
— Management, Executive Team
Dodla aims to gradually increase the share of value-added products in its portfolio by roughly 1% annually. While liquid milk remains the primary revenue driver, this steady mix shift is intended to provide a long-term buffer for overall margins.
“We are already at 30-32%. Every year, it may increase by 1-1.5%, or at least 1-1.5%. That is our focus because the liquid business will also continue to grow. We want to maintain the proportion and increase it by at least 1% over the existing 32% VAP.”
— Management, Executive Team
Changing milk cycles have eliminated the massive seasonal surpluses that previously allowed the company to profit from inventory price fluctuations. Investors should expect more stable, operationally-driven earnings rather than gains from inventory speculation going forward.
“Earlier, once in 3 years or once in 4 years, we used to get a significant flush. During that flush, we converted milk into powder. At that time, butter and SMP prices were very low. We used to keep the products as inventory and wait until prices improved, after which we would sell them. However, over the last 1.5-2 years, there has not been much surplus. Our input and output are mostly matching, so there is not much inventory.”
— B. V. K. Reddy, CEO
Management characterises the current fiscal year as an outlier due to simultaneous hits from geopolitical tensions and climate disruptions. The primary implication for investors is that cost pressures are broad-based, affecting everything from energy and logistics to packaging.
“This is a peculiar year. We faced two problems. One was the West Asia war, and the other was El Niño. Earlier, we faced only one problem related to weather patterns. For example, lower production could lead to higher procurement prices. This year, because of the West Asia war, packaging material costs and transportation costs have also increased. All these factors have added to the pressure.”
— Management, Executive Team
The company has successfully passed through more than double the cost of procurement increases to its end consumers in the Karnataka market. This demonstrates significant pricing power and should lead to expanded per-litre margins in that region starting Q3.
“In total, in Karnataka, we have taken approximately 4 rupees of price increases on the sales side, while the procurement price has been increased by 2 rupees.”
— Murali Mohan Raju, CFO
Retail
Rentomojo Ltd. | Small Cap | Retail
Rentomojo Ltd. is a leading Indian digital platform providing furniture, appliances, and electronics on a monthly subscription basis. The company utilises proprietary demand-prediction algorithms and a growing network of offline experience centres to manage a large asset-heavy rental inventory.
[Concall]
Management explains that high job mobility and the rise of nuclear families are creating a structural shift toward rental consumption. This suggests the company’s business model is aligned with long-term demographic trends rather than a temporary fad.
“As I also became part of the organisation, with increased urbanisation coupled with increased mobility in the workforce, and with attrition touching close to 20% across organisations, you name it, and you can look at an average LinkedIn profile these days—most people are changing jobs every 2 years or so. We saw society moving from a joint-family setup to more nuclear and solo setups, with people potentially changing houses every 2 years. In fact, according to a report by Redseer, the average tenancy in India is close to 19 months. That is the kind of society we adopted between 1990 and 2015. With every move, every time somebody moved away from the household, and of course with a job change, there were associated household changes. With every move came the compounding issues of relocation costs, breakages, repairs, disposal headaches, and the risk of obsolescence altogether.”
— Geetansh Bamania, Chairperson, MD & CEO
The company uses ‘purchase displacement’ to measure its market reach by calculating the retail value of goods users chose to rent instead of buy. This high figure indicates a massive addressable market that is actively choosing subscriptions over traditional ownership.
“In FY26 alone, we received approximately close to 1 million items ordered on the platform. That is equivalent to close to 1,100 crores of purchase volume being displaced from the market. If you take just the number of items and multiply it by the average retail prices, that would be close to 1,150 crores worth of purchases. That means that if we were in the selling business, that would be the kind of demand we would be seeing. In Q1 FY27 alone, we received close to 3.3 lakh items on the platform, which is again equivalent to close to 400 crores of displacement in terms of purchases. We believe that the number of items ordered is the single most important metric for understanding the company’s growth and future prospects, as the rest of the aspects flow through the P&L from that one variable.”
— Geetansh Bamania, Chairperson, MD & CEO
The management highlights that their EBITDA efficiently converts into cash, allowing them to fund growth through internal accruals. For investors, this demonstrates high earnings quality and a reduced reliance on dilutive equity or expensive debt.
“Our cash flow from operations grew by almost 50%, with 49.6% year-on-year growth and roughly a 37% CAGR over the last few years. We have consistently maintained more than 100% EBITDA-to-cash-flow-from-operations translation for the last 3 years. This possibly reflects the quality of our earnings. What we show in EBITDA actually translates into operating cash flow. That has been our fundamental principle when we approach the P&L. In FY26, we generated close to 173 crores of operating cash flow, broadly covering our 87.5 crores of growth CAPEX. This self-funded growth has helped us consistently maintain a normalised return on capital of more than 26%, including in Q1 FY27.”
— Geetansh Bamania, Chairperson, MD & CEO
Profitability improved this quarter primarily due to significantly lower interest costs as the company optimised its debt structure. This shows that the company is gaining financial leverage as it scales, allowing more revenue to flow directly to the bottom line.
“Our normalised PAT margin also increased from 15% to 17%, an increase of approximately 230 basis points. This was driven by finance-cost efficiencies, as we optimised our borrowing cost. Finance cost increased 10% year-on-year while revenue grew approximately 51%, taking finance cost from 7.59% of revenue to 5.8%.”
— Hakeem Ujjainwala, Chief Financial Officer
Management is expanding beyond Tier-1 cities because they are seeing rapid, unexpected demand in smaller markets like Indore and Lucknow. This geographic expansion increases the company’s total addressable market and strengthens its national brand presence.
“We definitely do not see this as only an urban phenomenon. If India has to become a 7-8 trillion dollar economy, most other geographies will also have to play a significant role. Of course, Indore and Lucknow will not be as large as Bangalore, but at the same time, as we have disclosed in the RHP and DRHP, Lucknow and Indore are growing at very strong exponential rates. We realised this during the COVID period, when many people were moving back to their hometowns. They were not availing of relocation as a free service, and that is when they told us, “Why are you not present in Indore and Lucknow?” That is how we gradually started understanding that expanding the network base also helps create the network effect that we want.”
— Geetansh Bamania, Chairperson, MD & CEO
The CEO notes that most customer acquisition is organic because search volume for rentals is still maturing. This gives the market leader a major advantage, as growth is driven by brand recognition rather than just high marketing spend.
“In 2015, the paid funnel was almost non-existent. Even today, only a small portion of the keyword funnel is available. Because of this organic behaviour, it is not possible to simply purchase a large number of consumers with capital, as the paid funnel is small. Therefore, if somebody is the largest player in the ecosystem, that player would have the biggest network effect to leverage and potentially have the capacity to grow. A certain degree of the future can also be assessed from the way keyword volumes have historically grown.”
— Geetansh Bamania, Chairperson, MD & CEO
Historical data shows that a single batch of rental assets can generate five times its cost in revenue over its lifecycle. This wide gap between the initial cost and the total rental income earned per item is the core driver of the company’s high return on capital.
“We mentioned in the RHP that the 2017 cohort generated approximately 5 times revenue, indexed to 100 dollars. The 2017 cohort was worth a couple of million dollars, but if you index that to 100 dollars, it generated 5 times the revenue multiple. Approximately 56% of the products in that cohort were still generating revenue. That gives us an indication of the useful life available in the business. The payback period is shorter than the useful life. We have not disclosed the payback period as such, but there is a considerable difference between the payback period and the useful life.”
— Geetansh Bamania, Chairperson, MD & CEO
The company is partnering with major manufacturers like Dixon to source appliances directly, which likely reduces acquisition costs. Developing these direct manufacturing ties is a key step in improving margins and securing a stable supply of assets.
“With Dixon, we are predominantly sourcing refrigerators and washing machines at present. It has been an important relationship for us. We are also building similar relationships with some other contract-manufacturing companies. At present, the products are predominantly refrigerators and washing machines.”
— Geetansh Bamania, Chairperson, MD & CEO
The management emphasises that their internal software is critical for balancing demand, item returns, and the complex logistics of refurbishment. This sophisticated backend operation acts as a barrier to entry for smaller competitors who lack similar historical data and predictive tools.
“As I mentioned, supply addition is based on a complex inventory-prediction algorithm that we have perfected over many years. In a typical selling business, all you need to determine is the traffic coming in, such as add-to-carts, and then look at the funnel and estimate demand based on the impressions you are seeing on the paid side and the organic side. Here, the complexity is not only predicting demand but also predicting churn. Several predictions are taking place. We have to predict demand, predict churn, predict how many items we will be able to repair on a daily basis, and account for the countless consumables required at the backend. We have more than 200-300 SKUs and more than 1,000 consumables at the backend. We need to determine the right time to conduct inventory prediction for them and maintain the appropriate inventory days. If consumables are involved, we also need to predict technician and carpenter attrition. We somehow have to predict how many units of a particular refrigerator, for example, can be moved from a refurbishment bin to a deployable bin.”
— Geetansh Bamania, Chairperson, MD & CEO
Management targets an optimal occupancy rate of 83-84% to ensure they have enough stock to meet demand without over-investing in idle inventory. This balance is vital for maintaining high asset utilisation while avoiding missed revenue opportunities due to stockouts.
“We do not consider 90% occupancy to be good, and we do not consider 65-70% occupancy to be good. We have identified a suitable range of approximately 83-84%. This range is not too aggressive in terms of the stock we hold, allowing for some warehouse capacity to remain unutilized, while also not being so conservative that we consistently go out of stock. We have maintained 83-84% occupancy, which is a direct outcome of our inventory-prediction model.”
— Geetansh Bamania, Chairperson, MD & CEO
Management explains that their subscription model is naturally more resilient to inflation than one-time sales models. Since price hikes are spread over many months for the consumer, the company can pass on higher costs without drastically reducing demand.
“Our rental prices are always a function of the procurements we undertake. That is a lever that is always available to us. We can decide whether to pass the increase on or absorb some of it. However, what I want to say is that a 10-15% increase staggered over an 18-20-month period does not create as much sensitivity in the conversion funnel or margins as one might assume. The sensitivity of the conversion funnel and margins is lower because the increase is staggered over an 18-20-month period.”
— Geetansh Bamania, Chairperson, MD & CEO
The company has a large backlog of nearly 408 crores in unrecognised contracted revenue, which provides significant visibility for future earnings. This predictable revenue stream is a key advantage of the subscription-based model over traditional retail.
“The total contracted revenue contracted during this quarter was approximately 5,544 million, and the unrecognised amount was approximately 4,079 million.”
— Hakeem Ujjainwala, Chief Financial Officer
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