The Chatter: Reliance, Infosys, VBL, Hind Zinc & More
Q4FY26 | Edition #57
Welcome to the 57th 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 12 companies across 8 industries.
Energy
Reliance Industries
FMCG
Varun Beverages Limited
Tourism & Hospitality
Mahindra Holidays & Resorts India Limited
Software Services
Infosys Limited
Healthcare
Sun Pharmaceutical Industries Ltd.
Financial Services
Piramal Finance Ltd
Bandhan Bank
Tata Capital
Bajaj Finance
Metals
Motherson Sumi Wiring India
Hind Zinc
Real Estate
Mindspace Business
Energy
Reliance Industries | Large Cap | Energy
Reliance Industries is India’s largest private sector company with diverse operations in hydrocarbons, refining, petrochemicals, renewables, retail, and digital services. It leads in managing a fully integrated Oil-to-Chemicals portfolio and emphasizes inclusive growth by partnering with various stakeholders.
[Concall]
Revenue per user is naturally rising by about 5% annually as customers upgrade to better data plans on their own. This organic growth provides a steady revenue lift even in periods where the company does not officially raise its phone plan prices.
“So, you should expect some increase in the ARPU even without any tariff increases and we spoke about this 4% to 5% kind of number that we have been observing over the last few quarters.”
— Anshuman Thakur, Head of Strategy, Reliance Jio Infocomm Limited
Retail profit margins have been slightly pressured because fast home delivery services cost more to operate than traditional in-store shopping. However, management believes this is necessary to capture a larger share of total consumer spending.
“Now, that is obviously reflected in the margins also. If you have looked at my margins, they have come down a bit because my hyper local deliveries are growing pretty rapidly. Internally, we look at the big box growth from the same box how much I am able to deliver.”
— Dinesh Taluja, CFO & Corporate Development, Reliance Retail
Reliance’s refineries are specifically designed to process heavy, complex crude oils that are often cheaper than standard light oils. The availability of heavy Venezuelan crude allows the company to lower its raw material costs and improve its refining spreads.
“So Venezuelan crude typically tends to be very heavy. It is a very heavy oil, and US of course is lighter crude. Canadian is heavy. That is actually a positive for us.”
— Srinivas Tuttagunta, COO – Refining & Marketing, Reliance Industries Limited
Reliance is aggressively expanding its battery manufacturing capacity to become a global leader outside of China. This large-scale investment positions the company to capture the growing demand for energy storage and electric vehicle batteries.
“On the battery as again, I had mentioned last time that we are now scaling the capacity to 100 gigawatt hours, where the equipment, the production line, equipment orders have already been placed. That effectively makes us one of the largest non-China LFP manufacturer globally.”
— Karan Suri, Senior Vice President - New Energy, Reliance Industries Limited
The signing of a massive green ammonia contract with a major global partner validates the commercial potential of Reliance’s new energy business. This move provides a clear path for future revenue as the company transitions toward sustainable fuels.
“We had a very significant event in the last quarter where we have signed probably one of the world’s largest green ammonia supply contract with Samsung C&T. This effectively demonstrates the confidence that the off-takers have in our integrated green energy and green chemicals ecosystem.”
— Karan Suri, Senior Vice President - New Energy, Reliance Industries Limited
While high naphtha prices are hurting many Asian chemical producers, Reliance is insulated because most of its raw materials come from other sources like ethane. This structural advantage allows the company to maintain profitability even when global oil prices are highly volatile.
“And of course as I have said earlier, also in these meetings, our feedstock is roughly about 75% of the line comes from non-naphtha sources. So, this situation was pretty good to be situation for us.”
— Amit Chaturvedi, President – Petrochemicals, Reliance Industries Limited
Reliance Retail has reached the 1,000 large-format store mark at a speed that surpasses any other retailer in global history. This rapid scaling demonstrates the company’s aggressive strategy to dominate India’s organized grocery and supermarket sector.
“In our understanding, this is the fastest ever roll out any retailer globally has reached to the milestone of 1000 big box stores. The growth is quite broad-based across categories.”
— Dinesh Taluja, CFO & Corporate Development, Reliance Retail
Individual data usage on the Jio network has reached exceptionally high levels and is projected to keep climbing as AI applications become more common. Higher data consumption typically supports long-term revenue growth and justifies the massive investments made in 5G infrastructure.
“Per capita data consumption increased to 42.3 GB per month, and this continues to see very healthy growth. And we are expecting this to keep growing like this with more use cases coming in now within AI-enabled use cases.”
— Anshuman Thakur, Head of Strategy, Reliance Jio Infocomm Limited
Management contrasted the strong macro setup through most of the year with the sudden disruption in March driven by energy markets. This sets the tone for how external shocks impacted performance.
“The first 11 months seemed fairly robust… domestic activity was fairly strong, consumption tailwinds were decent… energy prices were range bound. And then you go into March… almost doubling of prices… the concern for everybody is the supply shock and its impact on industry and consumer confidence… rupee depreciation is also an area of concern.
— V Srikanth, CFO
Despite a reported decline, management emphasized that the operating environment was extremely challenging and numbers understate the disruption.
“Oil-to-Chemicals down 4%… but that number does not capture how difficult the environment was… physical inability to get crude, logistics cost, insurance cost, volatility… and under recoveries on fuel retailing… I am very happy with the quality of performance.”
— V Srikanth, CFO
Rising data usage continues to be a structural tailwind for telecom monetization.
“Total data traffic increased to 241 exabytes for the year… around 66 exabytes for this quarter… that is 31% increase year-on-year… per capita data consumption continues to grow.”
— Anshuman Thakur, Head of Strategy, Jio Platforms
Jio is embedding AI across its network stack, which could improve efficiency and customer experience.
“AI-first network… we have been implementing intelligence, AI automations, energy optimization… we should see good results coming out of these in the next few quarters.”
— Anshuman Thakur
Retail continues to scale strongly, though profitability is impacted by investments in quick commerce.
“We had the highest ever revenues of Rs.98,000 Crores… EBITDA at Rs.6,900 Crores… EBITDA margin at 7.9%… hyperlocal commerce continues to grow steadily.”
— Dinesh Taluja, CFO, Reliance Retail
Quick commerce is seeing exponential growth and driving transaction volumes.
“We had a 30% growth in average daily orders quarter-on-quarter and 300% growth year-on-year… transactions grew 39% for the full year.”
— Dinesh Taluja
Reliance is positioning its retail model differently from pure quick commerce players.
“We do not look at dark store or walk-in store… every store in my network can deliver… ultimately, I am looking at wallet share of the customer… dark stores only fill gaps.”
— Dinesh Taluja
Reliance Consumer Products is scaling rapidly across categories and geographies.
“We closed our revenue of Rs.22,000 Crores… Q4 revenue of Rs.7,350 Crores… both delivered two times growth over last year… categories growing across the board.”
— Ashutosh Goyal, CFO, Reliance Consumer Products
Campa has scaled rapidly to become a significant player in beverages.
“Campa delivered a revenue of Rs.4,700 Crores… making it the fourth largest carbonated soft drink brand in the country in a very short span of time.”
— Ashutosh Goyal
The Strait of Hormuz disruption created one of the biggest supply shocks in recent history.
“Dubai crude has surged to $168… never before kind of a price… totally unprecedented… we have never seen even during earlier crises this kind of shortage.”
— Srinivas Tuttagunta, COO – Refining & Marketing
RIL’s ability to process diverse crude types helped mitigate supply disruptions.
“We have processed more than 200 grades of crude oil… that flexibility stood in good stead… we could source crude from Venezuela, Russia, Brazil, Mexico and keep operations near capacity.”
— Srinivas Tuttagunta, COO – Refining & Marketing
Apart from crude price spikes and logistics disruptions, the downstream business also faced pricing constraints, which further impacted margins. This is important as it shows pressure was not just upstream-driven.
“We also had under-recoveries on fuel retailing because prices could not be fully passed on… so that also added to the pressure on the O2C business during the quarter.”
— V Srikanth, CFO
While revenues grew, ARPU expansion remained constrained due to pricing stability, indicating monetization still has headroom.
“ARPU growth has been moderate because we have not taken tariff increases… growth is largely volume and usage-led.”
— Anshuman Thakur, Head of Strategy, Jio Platforms
Beyond mobility, Jio is scaling home broadband aggressively, which could drive incremental ARPU and stickiness.
“Fixed broadband continues to scale well… and will be a key growth driver going forward.”
— Anshuman Thakur
Operational resilience ensured high utilization even during extreme supply-side disruptions.
“Despite all these disruptions, we were able to operate our refinery at near full capacity.”
— Srinivas Tuttagunta, COO – Refining & Marketing
FMCG
Varun Beverages Limited | Large Cap | Beverages
Varun Beverages is one of the largest franchisees of PepsiCo in the world outside the United States, producing and distributing a wide range of carbonated and non-carbonated drinks. The company operates an extensive manufacturing and distribution network across India and several international markets in Africa and South Asia.
[Concall]
VBL has completed its entry into the South African market by acquiring a major local producer. This expansion allows the company to apply its efficient business model to a new high-potential region for long-term growth.
“We consummated the acquisition of Tiza in South Africa through Bevco, strengthening our manufacturing footprint and route-to-market capabilities in Africa’s largest soft drink market. The acquisition is expected to generate meaningful operational and commercial synergies over time.”
— Ravi Jaipuria, Chairman
While global earnings per case rose, the company saw a small dip in India as they gave customers more product for the same price to attract new buyers. This strategy focuses on gaining a larger share of the market even if it slightly lowers the revenue per bottle in the short term.
“At the consolidated level, net realization per case improved by 1.6% year-over-year, supported by improved realizations in international territories primarily due to favorable currency movement. In India, realization per case declined by a marginal 1.5% primarily due to volume growth initiatives such as upsizing of packs and selected price point launches in target markets to onboard new consumers.”
— Raj Gandhi, President and Whole-Time Director
A significant portion of sales now comes from healthier drink options, aligning the company with modern consumer trends. Despite rising costs globally, the company improved its profit margins by buying raw materials early before prices went up.
“-In line with our focus on healthier offerings, the mix of low-sugar and no-sugar products increased to approximately 63% of consolidated sales volume during the quarter. Gross margins improved by 62 basis points to 55.2%, supported by early stocking of key raw materials despite an inflationary input environment.”
— Raj Gandhi, President and Whole-Time Director
Management is maintaining high inventory levels to protect their international operations from global supply chain risks. This massive stock provides a competitive advantage because they won’t be forced to raise prices as quickly as their rivals.
First of all, in our international markets, our effect on raw material will be practically zero or perhaps a couple of points, because we are well-stocked for this quarter and the next quarter as well. We normally carry six months of inventory internationally. So, our impact will be practically very low, which actually gives us an edge over our competition because I do not think competition carries anywhere close to six months of inventory.”
— Ravi Jaipuria, Chairman
High-margin segments like dairy are growing rapidly and earning three times more per unit than standard soft drinks. This shift toward premium products helps maintain overall profits even when costs for other products rise.
Vivek, in fact, we have premiumized a lot of products. For instance, in our dairy business, which grew by 70%, the realization is 3 times higher than the normal portfolio. So, the focus is to compensate from within the system itself for the major part.”
— Raj Gandhi, President and Whole-Time Director
The company is improving its profitability by shifting production to larger, modern factories and closing older, expensive ones. These structural changes allow them to produce drinks at a much lower cost per bottle as sales volumes rise.
Utilization is definitely helping as volumes go up. We are using the bigger plants more and we have shut down a couple of small, old, high-cost plants. Overall efficiencies and cost-cutting are helping.”
— Ravi Jaipuria, Chairman
Tourism & Hospitality
Mahindra Holidays & Resorts India Limited | Mid Cap | Hotels & Resorts
Mahindra Holidays & Resorts India Limited is a leading player in the leisure hospitality sector, operating vacation ownership memberships under the flagship brand Club Mahindra. The company manages a diverse portfolio of resorts across India and international locations, focusing on family-oriented holiday experiences and domestic tourism.
[Concall]
The company added a record 900 rooms in FY26 and plans to accelerate this expansion by adding over 1,000 keys in the upcoming fiscal year. This aggressive capacity growth supports the management’s long-term vision of scaling the domestic hospitality business.
“If I look at the other measure of growth in the business, I think our network expansion continues at a good pace. We are expanding inventory while focusing on quality. During the year, we added about 900 keys. Our total inventory today is about 6,228 keys. As we go into FY27, we are looking to build on this and we expect more than 1,000 keys to be added in FY27.”
— Manoj Bhat, MD and CEO
The company has fully written down its equity investment in its European subsidiary following continued geopolitical and economic challenges in Finland. While this creates a one-time accounting loss, the company maintains a very strong cash balance to fund domestic operations.
“This quarter, as Manoj mentioned, we have taken an impairment charge of 234 crores towards equity investment in the entity driven by the HCR business outlook. Excluding this one-off charge, our PAT was 55.4 crores. Our total cash position continues to be healthy at about 1,446 crores as of March 31, 2026.”
— Bimal Agarwal, CFO
The launch of the Keystone product has successfully shifted the sales mix toward longer 10-year membership plans. This increase in tenure improves long-term revenue visibility and strengthens the company’s deferred revenue pipeline.
“New sales have jumped up roughly 20%, holding the number we mentioned in December. This is led by a few factors. One is that we are seeing more adoption of the 10-year product. Previously, our largest product was the 5-year plan; now it is the 10-year plan. It is trending in the right direction.”
— Manoj Bhat, MD and CEO
Management is initiating a strategic review of its European operations to explore partnerships or other long-term options. In the interim, they are focusing on fixing credit availability for customers in Finland to revive sales performance.
“Long-term, this is the year we will start looking at strategic options for the business. Any geopolitical improvement in the Ukraine situation would be positive for Finland, but we are not building that into our projections. For FY27, we are addressing the credit situation. We are onboarding new partners to help with sales conversions because many people are not getting loans to buy the product.”
— Manoj Bhat, MD and CEO
The company is deploying AI tools to track guest sentiment and personalize hospitality services in real-time. Improving the guest experience through technology is a key lever for driving higher on-site spending and member upgrades.
“For engagement, we launched an integrated AI sentiment meter in December. It tracks all interactions across channels, allowing our front office and sales staff to personalize offerings. This is helping us create more engaging and curated experiences for our guests.”
— Manoj Bhat, MD and CEO
The company is pursuing a capital-light expansion strategy, with most new room additions being leased rather than owned. This approach allows MHRIL to scale rapidly without heavy debt or depleting its cash reserves for land acquisition.
“No. Only about 25-30% of the room additions will be owned; the balance will come from capital-light models, such as leases. Even this year, we had a normalized cash flow from operations of 300 crores plus. Capital is not a constraint.”
— Manoj Bhat, MD and CEO
Software Services
Infosys Limited | Large Cap | IT Services
Infosys is a global leader in next-generation digital services and consulting, assisting clients in over 50 countries to navigate their digital transformation. The company leverages its AI-first core and cloud-enabling platforms, Topaz and Cobalt, to deliver high-scale business solutions and operational efficiency.
[Concall]
The company achieved significant growth in large deal signings, reaching nearly $15 billion for the full fiscal year. This robust order book suggests strong market demand and provides a high level of revenue visibility for future quarters.
“We had strong growth in financial services, the communications industry, manufacturing industry, and for the Europe geography for the full year. Large deals were strong for the full year; we had 14.9 billion dollars of large deals. This is a growth of 24% over the prior year. For Q4, we were at 3.2 billion dollars, a strong showing for the quarter.”
— Sunil Parekh, CEO
Only 50% of the newly won contracts have reached full execution, leaving significant revenue potential to be realized in the coming year. The company expects profit margins to improve as these deals scale and employee utilization rises toward more optimal levels.
“About half of it [net new deals] has already ramped up, and the other half will ramp through the year, so we will continue to get benefits from that in FY27 as well. Utilization levels today are not optimum; there is room to improve from where we are currently.”
— Management, Leadership Team
Infosys is commanding premium pricing for its specialized AI services, which helps offset the falling prices in standard IT maintenance. This shift toward high-value consulting is critical for the company to maintain its overall profit margins in a competitive market.
“The pricing dynamics are definitely better for some of the AI and transformation-led services. There is a consultative aspect and high expertise involved, so while pricing can be tight, it is certainly better than pure-play commoditized IT services. Where we see challenges is in legacy work or areas where AI-led productivity gains are already well understood by the client, which leads to downward pressure on pricing.”
— Management, Leadership Team
A specific manufacturing client in Europe will create a notable 1% drag on total company growth due to project cancellations and unfavorable deal terms. This specific headwind, combined with an aggressive shift to offshore delivery, is a key factor in the company’s modest growth outlook.
“To repeat what I said earlier, between a 70 basis point and 1% impact will come from the European client, which is a combination of a deal that did not meet our return expectations and ramp-downs due to the challenging macro environment in that sector. As for the reduction in onsite mix, we expect a 40-50 basis point impact based on the exit trajectory, and we believe there could be further improvement there.”
— Management, Leadership Team
Traditional project volumes are no longer the primary driver of growth, as AI automation allows the company to do more with less labor. This transition toward ‘flatter’ volumes suggests that future earnings growth will depend more on specialized pricing rather than simply hiring more people.
“We do see some deflation from existing services, and a large part of that is being offset by new AI-driven services. At this point, volumes for the last year have remained flattish. As we go forward, we continue to see volumes remain flatter or marginally positive, which is baked into our guidance.”
— Management, Leadership Team
Healthcare
Sun Pharmaceutical Industries Ltd. | Large Cap | Pharmaceuticals
Sun Pharmaceutical Industries is a leading Indian multinational pharmaceutical company that specializes in specialty and generic medicines. It maintains a strong global presence across over 100 countries, with a significant focus on therapeutic areas like dermatology and oncology.
[Concall]
Management contrasts the current cash-based Organon deal with the previous stock-funded Ranbaxy acquisition. This highlights a strategy to avoid shareholder dilution while leveraging a strong balance sheet for massive scale.
“At that point in time, we were of course a much smaller company, but at that time we were also buying another company which was almost 80% of our company in terms of size. We did not pay for that acquisition through cash, but we paid for that acquisition through a much more expensive currency; we paid through our stock. The dilution to Sun Pharma shareholders was close to 20%.”
— Dilip Shanghvi, Managing Director
Management acknowledges the significant debt required for the merger but emphasizes that the 2.3x EBITDA ratio remains manageable. Investors should see this as a temporary departure from their conservative fiscal history to fund transformative growth.
“This debt, even though large in terms of overall size, is still going to be 2.3x the combined company EBITDA. We have a focused effort toward finding a way to minimize the debt by finding a way to repay it as early as possible. All of you who have been tracking the company for a long time know that we have been either a low-debt or a significant cash-positive company for a long time.”
— Dilip Shanghvi, Managing Director
The merger grants Sun a strong foothold in China, the world’s second-largest pharma market, which currently generates nearly $1 billion for Organon. This geographical expansion diversifies Sun’s revenue streams away from US and Indian markets.
“Organon’s presence in China is substantial, with FY25 revenues of more than $800 million. They have eight large brands, including Propecia, Follistim, and Zetia. The business is growing despite many generics and being part of the Volume-Based Procurement (VBP) system.”
— Kirti Ganorkar, CEO, India Business
The company plans to proactively manage Organon’s existing high debt burden through strategic refinancing and negotiations with bondholders. Successful debt restructuring will be critical for maintaining the company’s credit rating and financial flexibility.
“Organon has a gross debt of about $8.5 billion and with cash of close to $900 million, the net debt is something we would be looking at refinancing. Our thought is to work with the existing bondholders to see if there is a possibility for a swap.”
— Jayashree Samar, Head of Finance
Financial Services
Piramal Finance Ltd | Mid Cap | NBFC
Piramal Finance is a diversified financial services firm focusing on retail lending, housing finance, and wholesale funding. It operates a wide-reaching network across India, utilizing a tech-enabled platform to serve customers in urban and rural markets.
[Concall]
The credit rating upgrade will significantly reduce interest expenses over the next three-year churn cycle. Lower funding costs should directly improve net interest margins and provide a competitive pricing edge.
“Domestic credit rating upgrades from AA to AA+ have the potential to lower our cost of borrowing by 50-80 basis points once we turn our current borrowings out and replace them with new borrowings. The AA+ rating also offers us access to certain parts of the lending market we could not access before, thus enhancing our ability to continue delivering industry-leading AUM growth.”
— Vikas Singla, CFO
Using AI to keep headcount flat while doubling the loan book demonstrates a highly scalable business model. Investors should view this as a structural improvement in long-term margin potential through technology.
“Our AUM has doubled in this period, whereas our operations staff and headcount has remained roughly flat. This compares well with the best of global elite enterprise-scale companies in terms of token usage for high-frequency agent AI and processing of massive amounts of document data.”
— Anand Piramal, Executive Chairman
The company has proactively tightened lending in sectors vulnerable to Middle Eastern geopolitical tensions. This defensive stance helps mitigate potential spikes in defaults if global supply chains remain disrupted.
“We have originally taken SMEs in the S&B sector as the epicenter of potential vulnerability and impact, but we have since expanded our watch list to include a broader set of sensitive sectors, including travel and logistics, textiles, gems and jewelry, food processing, etc. As of now, risk metrics here all appear contained. Bounce rates in these vulnerable sectors in April have come in at the same levels as March.”
— Jayaram Sridharan, MD and CEO
Massive early repayments in the wholesale book indicate that the underlying real estate projects are highly liquid and successful. This de-risks the balance sheet and provides surplus cash to redeploy into higher-yielding retail segments.
“In fact, due to these significant repayments, almost 50% of the contractual repayments due to us in FY27 have already been paid by our borrowers to us today. While strong rates of repayments continue to be a major growth segment for us, it also highlights that the portfolio is doing very well and is performing well ahead of our underwriting.”
— S. Natkarni, CEO, Wholesale Lending
Increasing the proportion of unsecured loans is a deliberate strategy to hike the overall portfolio yields. If credit costs remain controlled, this shift will be the primary driver of consolidated margin expansion in FY27.
“Regarding the levers on the growth book NIM itself, there are two main factors. One is exactly what you said, which is the product mix on the asset side, specifically an increase in unsecured lending. We have previously guided that we would like unsecured to be about 400-500 basis points larger in our mix compared to where it is right now.”
— Jayaram Sridharan, MD and CEO
The company is moving into higher-quality borrower segments that were previously inaccessible due to higher funding costs. This diversification reduces the overall risk profile of the mortgage book while leveraging the new, lower cost of funds.
“We have already seen signs of this in our high-ticket LAP and mass affluent housing disbursements. Those are more AA+ like businesses, and we have been building that muscle in anticipation. We were purely a mid-prime player in the past; now you will see a bit more of a prime-like portfolio.”
— Jayaram Sridharan, MD and CEO
Management remains open to acquisitions but maintains a disciplined, value-oriented approach to capital allocation. This strategy protects shareholders from the risks of overpaying for growth through expensive, transformational deals.
“We remain quite interested in M&A. Piramal has a DNA of doing mergers and acquisitions. However, we are value-based acquirers. We have limited interest in buying perfect assets at fully priced-in values. We would rather find something that might be a little imperfect but is priced at a value.”
— Jayaram Sridharan, MD and CEO
Management expects the impact of geopolitical disruptions to have a lagging effect on credit quality, potentially appearing in the second quarter. Providing this timeline allows investors to track specific leading indicators like bounce rates for early signs of stress.
“I do not think there was any chance of seeing it in Q4, and I do not expect it in Q1 either. But in Q2, we should watch. July or August is when you might see that outcome. That is why bounce rates are important to watch.”
— Jayaram Sridharan, MD and CEO
The new focus on rural and gold lending branches is highly capital efficient compared to urban expansion. This allows the company to rapidly grow its physical footprint without negatively impacting the overall expense-to-assets ratio.
“A gold branch takes about one-third of the operating expense of a regular urban branch on an annual basis. A rural branch takes about one-tenth of the investment of an urban branch. These categories are much cheaper than our full-service branches.”
— Jayaram Sridharan, MD and CEO
Using one-time gains to aggressively write down assets helps create a cleaner and more conservative balance sheet for the future. This reduces the risk of unexpected negative surprises from the legacy portfolio in subsequent quarters.
“The markdowns we took this quarter were to make good use of the one-time gains we had. We had 1,500 crores in bounty and we wanted to strengthen the balance sheet rather than taking it all through the P&L. Suffice it to say, this helped us clean up the legacy book nicely and created pockets of conservatism.”
— Jayaram Sridharan, MD and CEO
Bandhan Bank | Mid Cap | Private Bank | Asset Quality Recovery & Margin Stability
Bandhan Bank’s latest quarter hints at a stronger comeback than the market expected. With margins improving, key stress areas showing signs of easing, and management sounding confident about the road ahead, the bigger question now is whether this is just a good quarter, or the beginning of a much larger turnaround.
The bank reports a stabilising credit environment, with expectations for loan provision costs to drop significantly in the future. Lowering credit costs is essential for the bank to improve its net earnings and return on equity metrics.
“Credit cost exited Q4 at 2 percent with guidance to improve toward 1.6 to 1.7 percent.”
— Partha Pratim Sengupta, MD & CEO.
The bank has set a clear medium-term profitability target for its return on assets, signalling confidence in its operational efficiency. This outlook provides investors with a concrete benchmark for the bank’s earnings recovery over the next few years.
“ROA guidance remains 1.5 to 1.6 percent exit by FY27.”
— Partha Pratim Sengupta, MD & CEO.
Management is seeing interest margins improve as the bank lowers its cost of borrowing while maintaining better asset quality. This supports stronger core profitability.
“NIM improvement driven by lower cost of funds and better asset quality.”
— Partha Pratim Sengupta, MD & CEO.
Tata Capital | Large Cap | Financial Services
Tata Capital Ltd, the flagship financial arm of the Tata Group, is a leading diversified NBFC. Its core business includes retail, SME, and corporate lending, along with wealth management, insurance distribution, and private equity services.
[Concall]
Management is using artificial intelligence to drastically speed up the loan approval process for small businesses. This automation helps the company handle more business efficiently and should lower operating costs over time.
“Our underwriting assist platform, amongst the first in the industry, has reduced credit memo preparation time from 2 days to 20 minutes in our SME business, thereby improving productivity of the underwriting team by 30%. The adoption rate of underwriting assist platform today stands at 85%.”
— Rajiv Sabharwal, Managing Director and Chief Executive Officer
The motor finance business intentionally shrank its total loan book to focus on profitability and quality over size. Management expects this division to start growing again soon now that the internal cleanup is finishing.
“The AUM stood at INR25,390 crores, a sequential decline of 4% reflecting our fitness-first approach. Even though positive growth in AUM is lagging by about a quarter, underlying momentum is improving. Disbursements grew 32% sequentially in quarter 4 and we expect this to build as business stabilizes.”
— Rajiv Sabharwal, Managing Director and Chief Executive Officer
Current global conflicts in West Asia have not yet caused major supply chain disruptions for the company’s business clients. Most borrowers are currently able to pass higher costs to their customers, which protects their ability to repay loans.
“When we talk to clients who are there in the SME or the large corporate side, they have stocks of raw materials and which is helping them tide over this situation. Similarly, they are saying that raw material is available and they are able to produce. There’s been some impact on their cost structures, but as most of them are saying that they are able to pass this on.”
— Rajiv Sabharwal, Managing Director and Chief Executive Officer
Improving loan performance has given management the confidence to start lending more in high-yield unsecured categories like personal and business loans. This strategic shift is expected to boost the company’s overall interest earnings next year.
“So we’ve seen significant drop which has been happening and that’s the reason we’ve started looking at increasing our disbursements in each of these businesses. We started activating the same post quarter 1 and if you look at those numbers, our disbursements in each of the unsecured businesses, whether it’s personal loans, business loans, or microfinance business, is increasing and that’s an increasing trend in every quarter.”
— Rajiv Sabharwal, Managing Director and Chief Executive Officer
The company is being extra careful when lending to small and medium businesses that might be affected by global economic shifts. This proactive monitoring helps the company avoid future losses in its SME portfolio.
“In terms of our assessment, we feel that we should be more careful in certain parts of the MSME business and this is where our messaging to our credit team is that you should look at some segments within the MSME and try to understand more, more from the working capital cycle at this point of time and availability of raw material. So our caution as far as impact of the war is there, it’s more on the MSME segment.”
— Rajiv Sabharwal, Managing Director and Chief Executive Officer
The vehicle financing unit is successfully diversifying by funding more brands outside of Tata Motors. By focusing more on used and smaller commercial vehicles, they are reducing their reliance on the volatile heavy truck market.
“In the Motor Finance business, our non-Tata OEM share in new commercial vehicle disbursements for quarter 4 has reached 26%, reflecting early success in our multi-OEM strategy. We are increasing exposure to used commercial vehicles and small and mid-commercial vehicles while reducing our heavy commercial vehicle concentration.”
— Rajiv Sabharwal, Managing Director and Chief Executive Officer
Bajaj Finance | Large Cap | Financial Services
Bajaj Finance is a financial services company specializing in lending, partnerships, payments, and deposits. With a diverse portfolio catering to retail, SMEs, and commercial clients in urban and rural India, the company also offers various financial products.
[Concall]
After a period of rapid post-COVID expansion and subsequent adjustment, management views the current state as a sustainable ‘cruise’ phase. Investors can expect a more predictable, high-ROE growth profile moving forward as the business matures.
“Over the last 18 months, we have calibrated those responses. From here, you should see us in a cruise mode. At 5,10,000 crores, we are a significant player with a fiduciary responsibility to remain resilient. We intend to deliver a 20-22% ROE and a 22-24% balance sheet growth.”
— Management, Executive Leadership
The gold loan segment is being aggressively scaled and is expected to triple its contribution to the overall loan book within the next year. This diversification into secured, high-margin lending provides a buffer against volatility in unsecured retail segments.
“The gold loan portfolio continued to witness strong momentum, growing by 115%. That business now contributes 3.5% of overall AUM. We foresee the gold loan portfolio probably crossing 10% of total AUM by FY27.”
— Rajeev Jain, Vice Chairman and Managing Director
Management intentionally slowed MSME lending over the past year to manage risk and clean up the portfolio. The projected return to double-digit growth by mid-FY27 suggests that management now views the segment’s credit environment as stabilizing.
“MSME continued to see muted growth, growing by only 6% on account of a set of proactive risk actions we have been taking since Q2 FY26. We expect it should return to double-digit growth or the company growth momentum between Q2 and Q3 of FY27.”
— Rajeev Jain, Vice Chairman and Managing Director
A small, legacy vehicle financing portfolio has been disproportionately hurting the company’s asset quality metrics. The planned run-down of this book by late 2026 should provide an automatic tailwind for improved credit performance and lower overall provisioning.
“The captive two-wheeler and three-wheeler business now contributes less than 1% of AUM, but in Q4 it accounted for 13% of GNPA and 5% of overall credit cost. This book will wind down to less than 1,500 crores by September 2026, which will lead to further improvement in GNPA and lower credit costs for FY27.”
— Rajeev Jain, Vice Chairman and Managing Director
The company is transitioning nearly all customer interactions to automated AI interfaces to drive operational leverage. This shift is designed to dramatically lower the cost of servicing millions of customers while maintaining high engagement levels.
“On customer engagement, 27 AI voice and text bots are now live, and all customer engagement will move into a bot interface by June 2026. Any communication across any channel, whether for sales, service, or debt management, will have a text bot embedded in it.”
— Rajeev Jain, Vice Chairman and Managing Director
Management is seeing immediate cost benefits from AI deployment, specifically in call center operations where bots are significantly cheaper than human agents. These efficiency gains directly support the goal of reducing the opex-to-NTI ratio over time.
“Consumers and employees will start to experience the benefits this year. An AI call center agent is one-third of the cost. We had 5,000 outbound voice agents, and we have optimized that; 30% are now AI voice agents.”
— Management, Executive Leadership
A large portion of new loan volume is coming from the existing customer base, which lowers the cost of acquisition and provides more reliable risk profiles. This internal ecosystem is a key competitive moat that drives superior economics compared to pure-play lenders.
“For the open architecture two-wheeler business, 50% of customers are existing customers. For new car financing, about 43% to 45% of volume comes from existing customers. Given our 120 million customer franchise, focusing on the existing base provides better risk management and operating leverage.”
— Management, Executive Leadership
AI is already delivering tangible operational leverage, especially in loan processing capacity.
“During the peak of Diwali, we processed 600,000 loans in a single day… without AI our capacity was 100,000… next Diwali we might process close to a million loans in a day.”
— Management
Metals
Motherson Sumi Wiring India | Mid Cap | Mixed Q4, Copper-Led Margin Pressure
Motherson Sumi Wiring India is a leading manufacturer of automotive wiring harnesses and electrical distribution systems, supplying major OEMs across ICE, EV, hybrid, and CNG platforms. The company delivered healthy revenue growth in Q4, but margins remained under pressure due to elevated copper prices and forex impact. Management believes this pressure is temporary, but the key question is whether margin recovery will meaningfully improve if commodity costs stay elevated.
Short-term costs like copper price spikes and currency fluctuations reduced the company’s profit margins this quarter. These pressures are expected to be temporary as the company will recover these costs from customers over the coming months.
“Margins were impacted mainly by temporary copper price increases and forex mix. Copper cost impact is expected to be offset over the next 3 to 6 months through customer pass-through arrangements.”
— Anurag Gahlot, COO, Motherson Sumi Wiring
The company has contractual agreements to pass on raw material price increases to clients with a slight time lag. This structure protects the long-term earnings potential of the core business despite short-term volatility in metal prices.
“Copper cost impact is expected to be offset over the next 3 to 6 months through customer pass-through arrangements. Management remains confident that the underlying profitability of the core business remains stable.”
— Anurag Gahlot, COO, Motherson Sumi Wiring
New manufacturing facilities are currently increasing production levels to meet market demand. As these plants reach higher capacity utilization, the resulting efficiency gains will likely support overall margin improvement.
“Greenfield plants are ramping up and management expects margin improvement as volumes increase. Management remains confident that the underlying profitability of the core business remains stable.”
— Anurag Gahlot, COO, Motherson Sumi Wiring
Electric vehicles and hybrid models now make up nearly nine percent of the company’s sales. Since these vehicles require more complex and valuable wiring systems, this shift improves revenue potential per vehicle sold.
“EV contribution stands near 8.5 percent of Q4 revenue with management highlighting EV and hybrid platforms as content accretive. This contribution is expected to grow as more platforms launch.”
— Anurag Gahlot, COO, Motherson Sumi Wiring
Leadership believes the fundamental drivers of the business and profit margins remain intact. This suggests recent financial headwinds are temporary rather than structural.
“Management remains confident that the underlying profitability of the core business remains stable. The company continues to see strong demand across various automotive segments.”
— Anurag Gahlot, COO, Motherson Sumi Wiring
Hind Zinc | Large Cap | Metals
Hindustan Zinc, a Vedanta Group company, is the world’s largest integrated zinc producer and a top global silver producer. It excels in mining critical minerals and metals with a diversified portfolio, known for operational excellence, innovation, and sustainability. The company integrates mining to marketing, ensuring efficiency and high-quality zinc, lead, silver, and value-added products.
[Concall]
Management is actively diversifying the business by entering the critical minerals segment with specific projects for potash and rare earths. This expansion reduces the company’s dependence on zinc and lead while tapping into high-growth sectors like energy transition.
“On our journey to becoming a multi-metal enterprise, we have secured three critical mineral blocks: potash, tungsten, and rare earths. We have established clear timelines with work now underway.”
— Arun Misra, Chief Executive Officer
Hindustan Zinc achieved its lowest quarterly production cost in years due to internal efficiency and better pricing for by-products. Maintaining a low-cost structure ensures that the company remains highly profitable even if global metal prices face future volatility.
“On the cost front, despite a volatile geopolitical environment, we achieved the lowest quarterly zinc cost of production excluding royalty since underground transition at $903 per ton, reflecting a decline of 9.0% year-on-year and 4.0% quarter-on-quarter. The reduction was driven by a combination of factors: lower power cost, improved by-product realization, and operating leverage benefits from increased volume.”
— Arun Misra, Chief Executive Officer
Management has locked in specific prices for a portion of their 2027 production to protect against market price drops. This hedging strategy provides a level of earnings certainty for investors regardless of short-term price swings in the global market.
“For the Q1, for the zinc, it is a hedge at 20 KT spread between the April to June at a average price of $3,100, and silver is hedged 25 tons at a average price of $57. For the full year FY27, 71 KT is hedged at an average price of $3,225 per ton and silver is hedged at 59 tons at a average price of $60 per troy ounce.”
— Sandeep Modi, Chief Financial Officer
Management is using a flexible production strategy that allows them to prioritize the most profitable metal based on current market prices. This ability to shift focus between zinc, lead, and silver helps protect margins when individual commodity prices are volatile.
“And if the lead metal prices fall while zinc prices are up, which happened last year, then we’ll tilt our production towards more of zinc, less of lead. And we will sell the lead MIC which is made surplus this way. And then produce silver whatever is possible through the zinc maximization route at the same time recover silver through the lead MIC sale.”
— Arun Misra, Chief Executive Officer
The shift toward renewable energy is not just for sustainability but is a core part of the company’s cost-reduction strategy. Moving to 70% renewable power could permanently lower production costs by $25 per ton, making the company even more competitive.
“So we earlier said that every 2% renewable energy increase will have a $1 cost reduction. We still stand by it given the long-term coal prices. So if we move from 20% to 70%, we can see the further potential of $25 per ton cost reduction.”
— Sandeep Modi, Chief Financial Officer
The company is choosing to keep most of its silver production unhedged to benefit from potential price increases. This strategy reflects management’s belief in strong silver demand and their comfort with existing high profit margins.
“Given that 58%, 59% kind of EBITDA margin of the company, we believe that and silver being a by-product, we believe that it’s not worthwhile to experiment and do the hedging beyond 10%. And every company has a philosophy. Either you have the Indian counterparts in the other metal business who has the 40% to 60% hedge for the many of the quarters.”
— Sandeep Modi, Chief Financial Officer
Real Estate
Mindspace Business | Micro Cap | REIT
Mindspace Business Parks REIT (MINDSPACE) is a leading Indian commercial real estate investment trust with a portfolio of over million sq. ft. of office space, reporting a strong 95.7% committed occupancy as of March 2026. It focuses on Grade-A business parks in key markets like Mumbai, Pune, Hyderabad, and Chennai.
[Concall]
Management pushed back against the “AI reduces office demand” narrative, highlighting empirical evidence of growth.
“The AI narrative has been running for the last 3 years… office demand has grown 18%, 16%, 15% year-on-year… There is no evidence of mass vacancy increases… AI increases productivity… productivity drives growth… and talent needs space.”
— Ramesh Nair, CEO & Managing Director
AI-driven work is increasing demand for premium office spaces, aligning with Mindspace’s portfolio positioning.
“AI will accelerate the flight to quality… companies will seek upgraded spaces, stronger amenities, and better sustainability credentials… for a portfolio like ours… this shift works firmly in our favor.”
— Ramesh Nair, CEO & Managing Director
India remains a key destination for global companies, supporting long-term office demand.
“Rupee depreciation has made India more attractive to GCCs… in dollar terms, Indian office rents have effectively held flat while infrastructure and talent have strengthened.”
— Management
Macroeconomic pressures are increasing the cost of construction materials across the board. While the company is well-positioned, these rising costs and geopolitical tensions have led to slightly slower lease closures in the short term.
“Oil-driven inflation and rising input costs are real. Steel is up 2%, RMC and cement is up 8%, paints are up 15%, tiles are up 10%, and PVC pipes are up 16%. We observed some slowdown in decision-making on a few deals.”
— Ramesh Nair, CEO and MD
The REIT is expanding into data centers, which could become a meaningful revenue driver.
“We are the only REIT with data centers in our portfolio… once complete, our data center portfolio will span approximately 1.7 million square feet.”
— Management
Significant pre-leasing ensures future occupancy and rental growth.
“We have pre-leased 2 million square feet… including 0.8 million to a healthcare GCC at ₹110 and 0.7 million at ₹121 per square foot.”
— Management
Occupancy has reached historic highs, indicating tight supply-demand dynamics.
“Committed occupancy reached 95.7%, the highest we have ever reported since listing… up from 93% in FY25.”
— Management
While macro risks are causing delays in leasing decisions, underlying demand remains intact.
“We observed some slowdown in decision-making on a few deals… Global headwinds and travel disruptions may delay some transactions in the near term… When the pent-up demand releases, we are positioned to capture it.”
— Management
Industry data points to strong structural demand for office spaces, especially from GCCs and global firms.
“India’s office market posted a quarterly record 21.5 million square feet of gross leasing… GCCs expanded their footprint by 43% year-on-year… Pan-India vacancy dropped to a 5-year low of 14.7%.”
— Management
By reinvesting in property upgrades, the REIT ensures that tenants are less likely to move and more willing to pay higher rents upon renewal. This cycle of building and upgrading is central to their strategy for long-term compounding of returns.
“Modernized assets drive stickiness, stickiness drives renewals, and renewals drive rental growth. We are not just building parks, we are building ecosystems where businesses grow and people belong.”
— Ramesh Nair, CEO and MD
Because market rents have risen so quickly, lease expiries are currently viewed as a positive development that allows for significant price hikes. This situation has enabled the company to achieve very high rental spreads during the recent quarter.
“Right now, given where the market is today, we are not complaining about tenants exiting because it is giving us a massive upside; otherwise, we would not be achieving the 40% mark-to-market that we did this quarter.”
— Ramesh Nair, CEO and MD
While the extreme rental growth of the past year may moderate due to corporate budget limits, the lack of available space in Hyderabad continues to support high prices. This supply crunch ensures that the company’s existing assets in the city remain highly valuable.
“We definitely see rentals going up in the next year, though not by the 25% we saw last year because companies will have their budget restrictions. But regarding the Hyderabad market—I wish we had more space to give. Everything is gone.”
— Ramesh Nair, CEO and MD
That’s it for now! Your feedback will really help shape how The Chatter evolves. Drop it down in the comments below!
Quotes in this newsletter were curated by 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.
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India is trying to do something very difficult:
Stay globally integrated while being resilient to global fragmentation
It’s balancing between:
Western economies
emerging markets
energy suppliers
Bigger pattern (your macro theme)
This fits perfectly into your broader analysis:
Global system → fragmenting
India → positioning as a bridge economy
Not fully aligned with any single bloc Benefiting from shifts (e.g. supply chain relocation)
While geo-economic fragmentation is increasing global instability, India’s domestic strength and strategic positioning are allowing it to remain relatively resilient though not insulated.
India isn’t escaping the global storm
but right now, it’s one of the few major economies still managing to grow inside it.