The Chatter: TCS, Indian Bank, Amagi, CMR Green & More
Q4FY26 - Q1FY27 | Edition #67
Welcome to the 67th edition of The Chatter — a weekly newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.
We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.
In this edition, we have covered 9 companies across 8 industries and 1 podcasts.
Software Services
TCS
Financial Services
Indian Bank
Media & Entertainment
Amagi Media Labs
Services
CMR Green Technologies Limited
Chemicals
Premier Explosives
Engineering & Capital Goods
Rishabh Instruments
Kaynes Technology India Limited
Real Estate
NBCC (India)
Telecom
HFCL
Interviews/Podcasts
Tamal Bandyopadhyay
Software Services
TCS | Large Cap | Software Services
Tata Consultancy Services (TCS) is a global IT services company with deep industry expertise. They offer a wide range of services including application development, digital transformation, AI, data and cloud services, engineering, cybersecurity, and products. TCS has been a trusted partner for many global businesses in their transformation journeys.
[Concall]
Krithivasan said geopolitical tensions and macro headwinds persisted through the quarter, but TCS continues to deliver growth backed by strong execution.
“Q1 FY27 reflects continued growth momentum and the strength of our strategic positioning despite geopolitical and macroeconomic headwinds. Our revenue stood at ₹72,275 crore, growing 2.2% sequentially and 13.9% year-on-year. This is our fourth consecutive quarter of growth.”
— K. Krithivasan, CEO & MD
TCS highlighted that AI services have become a multi-billion-dollar business and continue to accelerate.
“Our AI services revenue continues to accelerate. At the end of Q1 FY27, it stands at an annualized revenue run-rate of US$2.6 billion, which is up 13.6%.”
— K. Krithivasan, CEO & MD
TCS emphasized that maintaining competitiveness is more important than short-term profitability.
“Our approach is not to optimize margins in isolation, but to invest in capabilities that strengthen our long-term competitiveness while continuing to deliver industry-leading profitability.”
— Samir Seksaria, CFO
Aarti Subramanian explained that AI demand is no longer limited to coding assistance.
“AI demand continues across IT operations, software engineering, modernization, business process transformation and enterprise platform implementation. The nature of engagements ranges from AI-led optimization to large-scale AI-native transformation programs.”
— Aarti Subramanian, COO
TCS sees enterprises rapidly moving toward agentic AI deployment.
“Agentic AI has rapidly dominated customer conversations this year and is increasingly shaping how we design and deliver solutions.”
— Aarti Subramanian, COO
Enterprises are now asking how AI should be managed rather than whether it should be adopted.
“With growing adoption, AI governance is becoming a top priority for enterprises. TCS is investing in enabling customers to deploy and manage AI securely through our agentic control plane.”
— Aarti Subramanian, COO
Management shared a real-world deployment.
“Continuous 24x7 monitoring has shifted from largely human monitoring to AI-led monitoring. The transformation has resulted in 30% faster remediation and 80% fewer incidents.”
— Aarti Subramanian, COO
AI is materially improving insurance operations
“TCS has deployed seven AI agents operating alongside human examiners. This human-plus-AI operating model has reduced claim settlement time by 40%, resulting in faster and more consistent claim operations.”
— Aarti Subramanian, COO
Hiring quality is shifting toward next-generation capabilities.
“Over 50% of our lateral hires already possess next-generation skills, and we expect this share to increase as we continue to build talent depth.”
— Sudeep Konummul, CHRO
Krithivasan explained what impacted demand.
“We saw geopolitical uncertainty continue through the quarter, and in many situations our clients wanted to defer projects.”
— K. Krithivasan, CEO & MD
Despite recent delays, management remains optimistic.
“We remain optimistic that demand will resume sometime in Q2 because our customers have a significant amount of pent-up technology backlog to be completed.”
— K. Krithivasan, CEO & MD
TCS quantified what it is currently delivering.
“In most places where productivity gains are passed on, they are in the 10–15% range.”
— K. Krithivasan, CEO & MD
Customers often expand work instead of simply cutting costs.
“Whenever we go to customers with productivity opportunities, customers often give us additional work so that the top line is not significantly impacted.”
— K. Krithivasan, CEO & MD
Management cautioned investors against expecting linear quarterly growth.
“AI revenue is not like traditional ADM revenue. Many of these projects tend to be one- or two-quarter engagements, so some quarters will naturally be lumpy.”
— K. Krithivasan, CEO & MD
Aarti explained TCS’ evolving AI delivery model.
“A Forward Deployed Engineer is a specialist who is multi-skilled but deeply proficient in one capability, working with a toolkit to solve customer problems. We target at least 1% of our employee base to work in this new operating model.”
— Aarti Subramanian, COO
Management differentiated sector outlooks.
“Banks are doing very well in the US. We remain quite optimistic about sustained growth in the BFSI segment.”
— K. Krithivasan, CEO & MD
Krithivasan pushed back against prevailing industry concerns.
“We do not believe there will be a drastic reduction in employment. People will be doing different things. We don’t agree with the view that AI will reduce overall white-collar jobs.”
— K. Krithivasan, CEO & MD
Aarti explained why the ₹800 million equivalent deal is strategically important.
“This is not just an S/4HANA upgrade. We are using AI to redesign business processes and execute the implementation with AI. It is a very nuanced AI implementation.”
— Aarti Subramanian, COO
Krithivasan described how enterprise AI architectures are evolving.
“We believe most enterprises will have multiple LLMs—perhaps one LLM plus many SLMs, or multiple models within the same family. Model FinOps will become an important discipline.”
— K. Krithivasan, CEO & MD
TCS believes AI increases, rather than reduces, the role of large IT services firms.
“Making technology decisions across the infrastructure-to-intelligence stack is becoming more challenging because technology is changing so fast. Helping customers make those choices and integrate these technologies into complex enterprise landscapes is where we play a very big role. The need for this is bigger now than ever before.”
— Aarti Subramanian, COO
TCS launched Sovereign Secure Cloud for Europe to address regulated-sector demand.
“We launched TCS Sovereign Secure Cloud for Europe, directly addressing rising demand from governments and regulated enterprises for compliant sovereign and AI-ready cloud infrastructure.”
— K. Krithivasan, CEO & MD
Even though ERU declined in Q1, management was positive on future demand drivers.
“We are positive on the growth prospects of this segment on the back of AI infrastructure build-out, electrification, renewables, energy security, and mining critical materials.”
— K. Krithivasan, CEO & MD
Aarti explained that agentic AI deals are increasingly outcome-linked.
“In agentic GBS, we are seeing a lot more shift this quarter to more outcome-based commitments. Transaction and outcome-based commitments are increasing in autonomous GBS deals across F&A, HR, and customer experience.”
— Aarti Subramanian, COO
Krithivasan pushed back on concerns that AI productivity will sharply compress IT services spend.
“On a massive contraction or deflation, we don’t see that happening. In fact, our overall headcount actually increased this quarter. We are not seeing that kind of contraction in the work already with us.”
— K. Krithivasan, CEO & MD
Financial Services
Indian Bank | Large Cap | Banking
Indian Bank is one of India’s leading public sector banks, offering a comprehensive range of retail, corporate, MSME, and treasury banking services. In this interview, Binod Kumar, Managing Director & CEO, discusses the bank’s strong Q1 FY27 performance, loan and deposit growth outlook, margin trajectory, asset quality, ECL provisioning, treasury gains, capital adequacy, and the key drivers expected to support growth through the remainder of the financial year.
The bank is seeing broad-based growth across its key retail, MSME, and agriculture segments alongside strong traction in low-cost deposits. This diversified growth profile reduces concentration risk and supports a healthy cost of funds for the lender.
“When I gave the guidance at the end of the year, I was confident that I will do better than that. I have a very strong team and you must have noticed my CASA growth is 15.43%. All the sectors, RAM also has grown by 14.80%. MSME has grown by 17%, retail has grown by 18%.”
— Binod Kumar, Managing Director & CEO
Management is maintaining a conservative outlook for the full year despite a strong start to the first quarter. This cautious stance allows the bank to navigate macroeconomic uncertainties while ensuring they meet their stated performance targets.
“I am confident that we will consistently achieve whatever guidance we have given. Revision of the guidance I will see because so many things are still hanging around, so many uncertainties are there. After Q2 I will see if we can do better than that. For now, deposits 9 to 11%, advances 11 to 13%.”
— Binod Kumar, Managing Director & CEO
Indian Bank is deliberately exiting low-yield loans to prioritize net interest margins and overall profitability over market share growth. This strategy demonstrates management’s commitment to earnings quality and disciplined capital allocation.
“We have made some strategy. Even in this quarter we have settled around 6,000 crore of low-yielding advances. Wherever we get the opportunity, we are settling them. That’s why you might have seen my growth is a little less than the system, but I am mindful of the balance between growth and the bottom line. We remain very mindful while raising resources and while going for lending also.”
— Binod Kumar, Managing Director & CEO
Management has guided for exceptionally low credit costs and slippages for the remainder of the fiscal year. This high level of confidence in the loan book’s performance points toward sustained low provisions and higher net profits.
“Definitely credit cost will remain sub 1%. Presently it is 0.23 and slippage ratio will also remain sub 1 at 0.77. Sequentially I expect that it should go down only.”
— Binod Kumar, Managing Director & CEO
The bank is aggressively front-loading provisions to prepare for the upcoming Expected Credit Loss (ECL) regulatory transition. This proactive approach minimizes the risk of a sudden earnings shock when the new rules eventually take effect.
“I have estimated ECL impact of around 3,000 crore and I have given guidance that during the year I will be creating provision around 1,500 to 2,000 crore. Out of that, 1,000 crore I have already made provision for ECL. Going forward I don’t see much impact. It should be a smooth transition.”
— Binod Kumar, Managing Director & CEO
The bank’s current capital adequacy is strong enough to fund future growth and regulatory provisions without requiring immediate external equity. This self-sufficiency is positive for existing shareholders as it avoids potential earnings dilution from new share issuances.
“I don’t see any need for growth capital. We still have approval for raising around 5,000 crore through QIP or other sources, but I don’t see any need for capital. Earlier I was thinking I might need it for ECL, but since I have already made 1,000 crore of provision and will continue creating provisions as guided, I don’t think I will need to raise capital either for growth or for ECL.”
— Binod Kumar, Managing Director & CEO
A significant increase in branch-level productivity indicates a successful internal cultural shift and improved operational efficiency. Investors should note that a more engaged workforce across the branch network typically leads to more sustainable long-term growth.
“I think we are on the right track. One thing I would like to highlight is that participation of the branches has increased. Earlier, in Q1, normally 25 to 30% of the branches used to achieve their target. This quarter, 51% of the branches achieved the target. Buy-in from the staff has increased, which has supported us in the performance. Hopefully, this type of performance we will be able to sustain.”
— Binod Kumar, Managing Director & CEO
The bank clarifies that recent stress in the MSME portfolio is limited to a few specific accounts rather than representing a systemic issue. Improving leading indicators like SMA numbers suggest that the bank’s overall asset quality remains on a positive trajectory.
“MSME is because of one or two accounts. Otherwise there is no concern. So far we have not seen any impact from the West Asia crisis. Even if you see my SMA numbers, they have sequentially come down from 4.73 to 4.69. So we don’t see any concern on the asset quality side so far.”
— Binod Kumar, Managing Director & CEO
Media & Entertainment
Amagi Media Labs | Mid Cap | Media & Entertainment
Amagi Media Labs is a global leader in cloud-based SaaS technology for broadcast and connected TV. The company provides end-to-end solutions for content creation, distribution, and monetization across traditional and streaming platforms.
[Concall]
Media companies currently spend up to four times more on manual labor than on the actual technology used to manage their content. Automating these manual tasks with AI agents could significantly improve profit margins for broadcasters and streaming platforms.
“When we talk to customers, we learn that for every $1 they spend on technology, there is $2 to $4 of human toil. This is a big limiting factor for video businesses because everyone needs ‘eyes and ears’ to control and manage the system. This is where agents come to the rescue. The chore of content preparation and globalization will start to become agentic.”
— Bhaskar, Management Representative
AI agents can now automate complex television scheduling by analyzing viewership data and social trends in real-time. This reduces the time required for a day’s worth of programming from eight hours to just ten minutes, allowing companies to scale their channel offerings globally.
“In an agentic world, between 2:00 AM and 5:00 AM while you are sleeping, the system is building schedules automatically. It understands your taste, the genre of the content, business needs, and yesterday’s viewership analytics. It might even look at social signals—like noting it was a certain actor’s birthday—and schedule accordingly.”
— Bhaskar, Management Representative
Next-generation ‘World Models’ will allow fans to experience sports from the perspective of the players through physics-based video synthesis. This technological leap could revolutionize fan engagement and create highly valuable, immersive advertising opportunities.
“In sports, the system can understand the physics of the ground and air drag to predict a ball’s trajectory. This will lead to truly immersive video. You could watch a game from the shoes of a player or the gloves of a goalkeeper. Immersive video is dependent on how world models evolve, and this will dramatically change the experience for audiences.”
— Bhaskar, Management Representative
By replacing expensive manual labor in subtitling and dubbing, AI is opening up a larger market for content localization. Investors should note that this lowers the cost for media companies to enter new international markets, driving overall industry growth.
“The fundamental idea is that the human element of tasks—like speech-to-text for subtitling, dubbing, or artwork and promo creation—is changing. This is an incremental TAM (Total Addressable Market) because it addresses human costs that previously limited expansion. We see this as enabling newer business possibilities.”
— Bhaskar, Management Representative
Despite lower costs per task due to AI, management expects the total volume of media production to increase as companies find more ways to use the technology. This paradox suggests that the overall media technology market will grow even as individual services become cheaper.
“I see the Jevons paradox playing out. If you have more automation and capability, civilization tends to do more things rather than fewer. Customers are asking how they can use this to expand their revenue opportunities and capabilities. While the cost per individual job might deflate, the multiplier effect of the volume of jobs people want to do looks expansionary for the industry.”
— Bhaskar, Management Representative
Services
CMR Green Technologies Limited | Mid Cap | Aluminum
CMR Green Technologies is India’s largest aluminum recycler, controlling nearly 45% of the domestic automotive recycled aluminum market. The company operates 13 manufacturing plants across India, specializing in liquid aluminum alloys and non-ferrous metal recycling for major OEMs.
[Concall]
The company holds a dominant 45% market share in the Indian automotive recycled aluminum sector, supplying almost half of all domestic vehicles. This massive scale creates a significant competitive moat and establishes the company as a critical partner for major automakers.
“According to ICRA report on the industry recently, we are rated number 12 in the world, including China. In the automotive recycled aluminum space, what we produce is alloy ingots, liquid alloy in aluminum. In the auto sector, we have nearly a 45% market share, which means that more or less every second vehicle that you see on the road, be it a two-wheeler or a four-wheeler, it’s made from aluminum supplied from CMR.”
— Mohan Agarwal, Chairman and Managing Director
Management is diversifying revenue streams by moving into beverage can recycling through a strategic partnership with Hindalco. This expansion reduces the company’s total reliance on the automotive cycle and taps into high-volume FMCG packaging markets.
“Recently, we have from the auto sector, we have diversified into two new sectors. One, we have built a beverage can recycling plant, put up in Odisha near to Hindalco Industries, where we supply liquid recycled liquid metal to Hindalco. This is a very strategic initiative because this is supplying new metal to a primary producer.”
— Mohan Agarwal, Chairman and Managing Director
CMR is now producing recycled aluminum billets and sheet ingots, products that were traditionally only manufactured by primary miners. This move allows the company to compete directly for business in the solar and construction sectors where demand for sustainable materials is rising.
“Second initiative, which is also a first in the country, is we have put up a large facility for producing recycled green billets and sheet ingots. Up to now, this was primarily being serviced by the primary producers. With technology and our experience, we have been able to produce very good quality of that product, which has got large acceptance amongst our customers.”
— Mohan Agarwal, Chairman and Managing Director
Electric vehicles require significantly more aluminum than traditional cars to offset battery weight and improve range. This structural shift in automotive design provides a massive long-term demand catalyst for the company’s recycled products.
“EV because of its very large weight of the batteries and very low center of gravity. The aluminum usage actually in EVs is expected to be 3x more than that in the conventional vehicles. So, in the conventional vehicles, aluminum is mostly used in engine and transmission, in suspension, in steering, these kinds of the things which are there.”
— Mohan Agarwal, Chairman and Managing Director
Management is tracking upcoming European restrictions on scrap exports which could tighten global raw material supply. They believe the costs will be absorbed by suppliers or passed to buyers, maintaining the company’s processing spreads.
“EU is threatening regulations in which they want to ban the export of scrap to non-OECD countries from about May of 2027. They’re also threatening imposition of 15% export duty on aluminum scrap from September 2026. I think if we look at the September ‘26 export duty scrap, then what two things what would happen that part of that export duty the suppliers there will have to bear.”
— Mohan Agarwal, Chairman and Managing Director
Delivering molten metal directly to client production lines creates an extremely sticky customer relationship. This logistical integration makes it difficult for competitors to displace CMR and ensures steady, predictable volume.
“Molten metal kind of locks in our customer very, very strongly with us. We deliver them 24 hours a day directly online. So, a liquid metal customer is tied with us at the hip. So, they don’t move to anybody else, we don’t move to anybody else.”
— Mohan Agarwal, Chairman and Managing Director
The company has historically expanded its market share even when the broader automotive industry was in a downturn. Diversification into non-auto sectors will further stabilize growth and protect the company from specific sector weaknesses.
“The industry had degrown during that period. We still grew. In ’23, ‘24, I suppose, or ’22, ‘23, there was degrowth in the auto industry, but we have had positive growth even in those years. So, subsequently now we have also diversified into non-auto. So, which will ensure that we will be able to better manage any such situation which may again arise in future.”
— Mohan Agarwal, Chairman and Managing Director
Chemicals
Premier Explosives | Small Cap | Chemicals
Premier Explosives Limited is engaged in manufacture of high energy materials like bulk explosives, packaged explosives, detonators, detonating fuse, solid propellants, pyrogen igniters, pyro devices, etc., having applications in mining, infrastructure, defence, space, homeland security and such other areas. The company also operates and maintains solid propellant plants of defence and space establishments.
Opening the discussion, Chowdary explained how the combination of Apollo Micro Systems and Premier Explosives strengthens the group’s overall defence offering.
“We are expecting a strong consolidation of the strengths of both Premier Explosives and Apollo Micro Systems. They are strong in defence electronics and aerospace electronics, while we are strong in high-energy materials for defence and aerospace. Together, we expect to create a much stronger platform for future growth.”
— T. V. Chowdary, Managing Director
Responding to why the promoters chose to sell a 41% stake instead of remaining independent, management said the decision was driven by long-term continuity.
“One of the key reasons was succession planning. We wanted to ensure that the company continues well beyond the 45 years we have already built. Strategically, we also felt that instead of remaining focused only on energetic materials, we should evolve into a company that combines electronics with explosives because the future lies in integrated defence technologies rather than a single product line.”
— T. V. Chowdary, Managing Director
Management elaborated on the succession philosophy behind the deal.
“The founder, Dr. Gupta, is now over 80 years old. He groomed me to take over the leadership, and I am also not getting any younger. The idea was to ensure that the next generation—whether from Dr. Gupta’s family or Apollo’s promoters—takes the company forward and fully realizes the business potential through this partnership.”
— T. V. Chowdary, Managing Director
Asked about execution risks following the acquisition, Chowdary said both businesses are complementary.
“I don’t see any integration hurdles because the facilities are separate and the expertise is complementary. Apollo has expertise in electronics, while we have expertise in high-energy materials. Today we manufacture the energetic components of defence systems and depend on external agencies for electronics and communication systems. Bringing both strengths together should significantly enhance our capabilities.”
— T. V. Chowdary, Managing Director
Management believes cultural alignment is another reason the combination should succeed.
“Both promoter groups are first-generation entrepreneurs and technocrats who remain very grounded. Their primary objective is the growth of the company, and that common mindset gives us confidence that the combined business can grow much faster.”
— T. V. Chowdary, Managing Director
Investors asked whether the ownership change could affect government contracts or defence approvals.
“Both companies are already operating in the defence sector. The licensing procedures, regulatory framework and approvals applicable to both companies are the same. Apollo Micro Systems is an established defence company with all the required licences and permissions, and Premier Explosives also operates under the same framework. We therefore do not expect any disruption. This is not a new entrant into the defence ecosystem but the combination of two well-established defence companies.”
— T. V. Chowdary, Managing Director
Management explained how the partnership could improve Premier’s growth trajectory.
“We certainly expect faster growth because we are already expanding our business and adding more verticals. Apollo Micro Systems brings financial strength, fund-raising capability and complementary products where electronics and explosives come together, such as intelligent munitions and UAV systems. These are areas where both companies can complement each other very effectively.”
— T. V. Chowdary, Managing Director
Management emphasized that execution remains the near-term focus.
“As of today, we are focused on executing the business we already have. We have an order book of around ₹1,500 crore, and our priority this year is to execute as much of that as possible before entering the next financial year.”
— T. V. Chowdary, Managing Director
Explaining why product expansion takes time in the defence sector.
“Defence products cannot be introduced easily. Any new products that we develop jointly will have to undergo the required qualification and approval processes before they can be commercialized.”
— T. V. Chowdary, Managing Director
Management outlined the strategic rationale behind the acquisition.
“The future is going to be electronics combined with explosives rather than standalone products. That strategic direction is one of the key reasons behind bringing these two companies together.”
— T. V. Chowdary, Managing Director
Management identified the product categories that could benefit most from the partnership.
“Products where electronics and explosives come together—such as intelligent munitions and UAV systems—are the areas where we believe the combined strengths of both companies can create significant opportunities.”
— T. V. Chowdary, Managing Director
While optimistic about the merger, management declined to provide financial projections until integration progresses.
“We certainly expect stronger growth, but it is too early to comment on how much that growth will be. The impact will become clearer from the next financial year.”
— T. V. Chowdary, Managing Director
Engineering & Capital Goods
Rishabh Instruments | Small Cap | Engineering & Capital Goods
Rishabh Instruments Limited is a vertically integrated player offering electrical automation devices, metering, control and protection devices, portable test and measuring instruments, and solar string inverters. Through its Subsidiary, Lumel Alucast, it also manufactures and supplies aluminium high pressure die casting. The company additionally provides manufacturing services like mould design, EMI/EMC testing, Electronic Manufacturing Services, and software solutions.
Opening the discussion, Dinesh Musalekar said the company has consistently delivered on its commitments despite a challenging global environment, supported by robust demand across geographies.
“We are happy with what is happening in the stock market, but more importantly, the fundamentals of the business have remained exactly the same as we have been communicating. Despite the global situation over the last few quarters, we have delivered what we committed. Our Electrical & Electronics Instrumentation business has been performing extremely well across all our key geographies—India, the US, Europe and the UK. This growth is being driven by increasing focus on energy optimisation and the transition towards unconventional energy sources.”
— Dinesh Kumar Musalekar, Managing Director
Explaining the key growth drivers, management highlighted the increasing demand arising from AI-led infrastructure investments globally.
“We are seeing a big surge in demand for low-voltage and medium-voltage products because of the AI data centres coming up across the US, India, Ireland and parts of the Middle East. Along with that, rising energy costs are forcing customers to optimise energy usage, which is leading to additional capital expenditure. Even though several countries have increased defence spending, investment in the energy sector continues to grow because of upgrades to power distribution networks.”
— Dinesh Kumar Musalekar, Managing Director
Management explained that the company’s growth is supported by both new infrastructure spending and upgrades to existing energy systems.
“Our business is driven by two major factors. One is new project spending in developing countries, while the second is the continuous upgradation of electrical infrastructure and energy optimisation initiatives in developed economies. Across Europe, India, Latin America and Africa, there is significant project spending taking place to modernise energy infrastructure.”
— Dinesh Kumar Musalekar, Managing Director
On innovation, management outlined its long-term R&D strategy and global collaboration model.
“We finalised a five-year product development roadmap last year. The plan spans products across low-voltage and medium-voltage categories, and we continue to introduce about 12 new products every year through our seven R&D centres spread across different continents. These are collaborative global development programmes, where different teams contribute hardware, software and product engineering across multiple locations.”
— Dinesh Kumar Musalekar, Managing Director
Management highlighted the resilience of the business model through diversification.
“We have around 145 product groups spread across multiple industries and geographies. Because energy is consumed in almost every industry, we are not dependent on any one sector. That diversification makes us relatively immune to weakness in any specific industry.”
— Dinesh Kumar Musalekar, Managing Director
Explaining the scale of investment in transformers, management quantified the capacity expansion underway.
“As an example, today we manufacture around 6,000 low-voltage transformers per day, and we are enhancing that capacity to around 10,000 units per day. We already have a strong demand pipeline to support that growth, particularly from the US, Europe and India.”
— Dinesh Kumar Musalekar, Managing Director
Responding to a question on the transformer opportunity, management explained why demand is expected to remain elevated.
“There is clearly a shortage of transformers globally because of the massive increase in energy demand created by AI data centres. Energy forms the base of the entire AI ecosystem—first comes energy, then computing power, and then the applications built on top of it. We are positioned right at that foundation by providing products that improve the availability, quality and efficiency of power.”
— Dinesh Kumar Musalekar, Managing Director
Management explained the changing business mix over the last few years.
“Our business earlier consisted of around 40% aluminium high-pressure die casting, which went through a difficult phase in Europe, while Electrical & Electronics Instrumentation accounted for about 60%. Today, Electronics & Instrumentation contributes roughly 75% of the business, while aluminium die casting has come down to around 25%. This Electrical & Electronics Instrumentation business continues to grow at around 20% year-on-year.”
— Dinesh Kumar Musalekar, Managing Director
Management explained why the company does not report a large order book despite strong demand.
“In the Electrical & Electronics business, we don’t operate with a very large order book. Typically, our visibility is only about one to two months because orders keep coming continuously. It is a business with a relatively short booking-to-billing cycle.”
— Dinesh Kumar Musalekar, Managing Director
Kaynes Technology India Limited | Small Cap | Electronic Manufacturing Services (EMS)
Kaynes Technology is an Indian electronics manufacturing services (EMS) company providing design-led manufacturing solutions across automotive, industrial, aerospace, defence, medical, railway, and semiconductor sectors. In this interview, Ramesh Kunhikannan, Executive Vice Chairman, discusses the impact of recent customs duty changes, the government’s Make in India push, opportunities in semiconductor and display manufacturing, the company’s expanding order book, working capital outlook, and how India’s electronics manufacturing ecosystem is evolving over the next few years.
The Indian government has reduced import duties on components used for electronic displays and camera modules. This policy change directly reduces input costs for Kaynes’ high-growth automotive and industrial segments.
“First of all, let me thank the Ministry of Finance for giving this concession on the basic customs duty. This will be really helpful because most companies have started the assembly of displays, and these consumables are mainly used in displays, cameras, and camera modules. Most automobiles now have displays and camera modules, so this is a really helpful move.”
— Ramesh Kunhikannan, Executive Vice Chairman
Management expects the recent tax exemptions to boost both overall profitability and liquidity. Investors should note the expected improvement in cash flow as less capital remains locked in tax-heavy inventory.
“Yes, both benefits will be there. Costs will come down, company profits will improve, customers will also benefit, and cash flow will improve because cash otherwise gets tied up in these components. The future is bright for all of us.”
— Ramesh Kunhikannan, Executive Vice Chairman
Global automotive giants are actively pressuring their supply chains to localize manufacturing within the Indian ecosystem. This structural shift suggests a long-term demand tailwind for domestic electronics manufacturers like Kaynes.
“Customers are already looking at India and there is a big push from automobile giants to Tier 1 and Tier 2 suppliers to manufacture in India. Over the next three to five years, India’s manufacturing capability, component availability and technical knowledge will improve significantly.”
— Ramesh Kunhikannan, Executive Vice Chairman
The company is diversifying its business by entering the advanced semiconductor and display manufacturing markets. Strong interest from potential clients in these new categories is already driving growth in the company’s order book.
“Kaynes has announced that we are getting into the semiconductor business as well as the display business. We have received a lot of RFQs. Our order book is increasing and we have developed many products for the future.”
— Ramesh Kunhikannan, Executive Vice Chairman
Rising prices for memory and other raw materials are being driven by global political instability. Management’s ability to pass these costs directly to customers helps protect the company’s underlying profit margins.
“Costs have gone up drastically. In our business these costs are passed through to customers. The entire cost structure is increasing because of the geopolitical situation.”
— Ramesh Kunhikannan, Executive Vice Chairman
Despite high volatility in memory chip pricing, they only represent a tiny portion of the total product cost for Kaynes. Management believes global supply chain disruptions are helping India gain share as a preferred manufacturing hub.
“Memory accounts for only about 2–3% of the bill of materials. The semiconductor industry may see disruption, but disruption also brings opportunity. India should use this opportunity as a manufacturing base.”
— Ramesh Kunhikannan, Executive Vice Chairman
The company is efficiently converting its existing order backlog into revenue while winning new projects. This indicates a healthy balance between execution of past orders and future business development.
“Our backlogs are getting cleared, new pipelines are coming in and we are steadily growing. On all other fronts, we are growing steadily as usual.”
— Ramesh Kunhikannan, Executive Vice Chairman
Management is projecting a significant improvement in the company’s financial efficiency and working capital cycles in the near term. Investors should look for improved earnings quality and stronger balance sheet metrics starting from the third quarter.
“By the end of next quarter, our working capital situation will improve, and we expect to show good results from Q3 onwards. On all other fronts, we are growing steadily as usual.”
— Ramesh Kunhikannan, Executive Vice Chairman
Real Estate
NBCC (India) | Small Cap | Real Estate
NBCC is a government-owned company specializing in project management consultancy, engineering procurement & construction, and real estate development. It focuses on institutional, housing, industrial sectors, redevelopment of government colonies, roads, hospitals, airports, and overseas projects. The company also undertakes civil & structural works for the power sector, including chimneys & cooling towers, and develops commercial, corporate, and residential properties.
Opening the discussion, Mahadevaswamy highlighted the company’s current order book, execution pipeline and FY27 revenue guidance.
“We have a very strong order book of around ₹1.2 lakh crore. Currently, projects worth about ₹38,000 crore are under execution. During this year, we plan to award another ₹20,000 crore of projects, which will increase our running projects substantially. For FY27, we are targeting a turnover of around ₹16,000–17,000 crore.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Management explained why redevelopment projects take longer than conventional PMC assignments.
“Redevelopment projects generally take four to five years because they are self-sustainable projects. Existing structures have to be demolished, multiple statutory approvals have to be obtained and, importantly, inventory has to be monetized. Generating funds through inventory sales itself typically takes about one to one-and-a-half years, which is why these projects naturally have a longer execution cycle.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Elaborating on the order pipeline, management shared the expected timing of the large awards.
“We are hopeful of receiving these large orders during the third or fourth quarter of the current financial year. Both are expected to come from the central government and will be in the PMC segment.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Management explained the composition of NBCC’s current order book.
“Around 96–97% of our projects are in the PMC segment. Within PMC, around 50–60% consists of redevelopment projects, while the balance comprises conventional PMC assignments.”
— K. P. Mahadevaswamy, Chairman & Managing Director
On real estate monetization, management highlighted the progress achieved so far.
“We have already monetized around 2.34 lakh square feet through Bharat Business Park. Across two auctions, we have sold inventory worth nearly ₹8,900 crore. Only one tower remains, which should fetch another ₹1,000 crore. Overall, we are in a very strong sales position.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Management explained why NBCC’s redevelopment model offers better value than the traditional PPP structure.
“After successfully completing redevelopment projects like Moti Bagh and Kidwai Nagar, we are now executing seven GPRA redevelopment projects. This is a very successful model because the Government of India does not invest any money. If the government has ‘X’ number of units today, we provide almost double the number of units and nearly four times the built-up area without burdening the government financially. We are now expanding this model to state governments because they have large land parcels in prime locations. In my view, this model is better than the PPP model.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Explaining the economics of redevelopment projects, management contrasted NBCC’s fee model with private developers.
“In a PPP model, developers generally expect margins of 40–50% in real estate. In our redevelopment model, we charge only 8–10% as PMC fees, while the remaining value accrues to the Government of India or the respective state government. That is why governments are increasingly awarding these projects to us.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Management quantified the profitability of redevelopment projects.
“In redevelopment projects, we earn margins of around 8–10%, including marketing. These margins are better than what we earn in pure PMC projects.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Management provided earnings guidance while outlining the long-term profit trajectory.
“For the current year, we are expecting a profit after tax of around ₹1,100–1,200 crore. Over the next two to three years, we expect this to increase to around ₹2,000–2,500 crore.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Explaining the expected improvement in profitability, management highlighted the contribution from real estate.
“In our real estate business, we earn margins of more than 30%. That is one of the key reasons why we believe our bottom line can reach around ₹2,500 crore over the next three years.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Responding to a question on execution bottlenecks, management pointed to labour availability rather than contractors.
“There is really no shortage of good contractors. The challenge is the shortage of skilled labour. One of the reasons is that various state governments are providing welfare schemes, making it difficult to attract skilled workers. It is unfortunate because, despite India having the world’s largest population, skilled labour continues to be one of our biggest concerns.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Management explained the financial structure of redevelopment projects.
“Redevelopment projects are self-sustainable. The inventory that is created is monetized, and those proceeds fund the development itself. That is why these projects do not require direct government investment.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Management sees significant opportunities beyond central government projects.
“We are expanding this redevelopment model across various state governments because they possess large land parcels in prime locations that can be better monetized through redevelopment.”
— K. P. Mahadevaswamy, Chairman & Managing Director
While discussing long-term targets, management suggested earnings could continue to grow beyond FY29.
“By FY29, we expect profit to be around ₹2,000–2,500 crore. By FY30, it should improve further.”
— K. P. Mahadevaswamy, Chairman & Managing Director
Telecom
HFCL | Small Cap | Telecom Equipment & Optical Fibre
HFCL is an Indian technology company specialising in telecom infrastructure, optical fibre cables, and connectivity solutions. In this interview, Mahendra Nahata, Chairman & Managing Director, discusses the global AI infrastructure opportunity, India’s data centre build-out, HFCL’s positioning as a connectivity solutions provider, export outlook, order pipeline from hyperscalers, and the company’s ₹950 crore capacity expansion plans to support future growth.
The rapid growth of AI is causing a massive surge in data traffic that requires high-capacity fibre optic networks. This trend secures a long-term demand cycle for the company’s core fibre products as global data volumes continue to scale.
“Look, AI is growing worldwide, and because of the growth of AI, data flow is increasing immensely. This has led to the increased use of fibre optic cable because you require a medium for the flow of data. The kind of mammoth amount of data that is flowing leaves no other option than using fibre optic cable.”
— Mahendra Nahata, Chairman & Managing Director
The company is evolving from a cable manufacturer into a comprehensive provider of internal data centre connectivity hardware. This shift into passive equipment and specialised cables allows them to capture a larger share of the capital spending by tech giants.
“What we are trying to become is a one-stop shop for providing connectivity solutions for data centres, which includes fibre optic cable, different kinds of smaller connectivity cables required inside data centres, and various other passive equipment. Our effort is to become a one-stop shop for data centre connectivity solutions.”
— Mahendra Nahata, Chairman & Managing Director
While India currently lags behind the US in AI adoption, management believes local government support for hardware and software will accelerate growth. This implies that while international markets are the current priority, India represents a significant future growth runway.
“I believe that, given India’s software talent and the semiconductor push by the Government of India, the country will develop AI much faster than people expect. However, reaching the level of the United States will still take some time because AI-driven data flow is much higher in those countries.”
— Mahendra Nahata, Chairman & Managing Director
Management expects international markets to drive 70% of revenue for the next two years until domestic Indian data centres are ready for hardware installation. This provides investors with a clear timeline for when the next phase of domestic growth will likely begin.
“I believe that for the next two years, exports will continue to account for around 70% of our business. After that, as the data centres currently being built in India reach a stage where they require connectivity solutions such as fibre optic cables and indoor connectivity products, domestic demand will pick up.”
— Mahendra Nahata, Chairman & Managing Director
With a massive 15,000 crore order book, the company has high revenue visibility and expects further deals from major US technology firms. This strong backlog validates the company’s competitive position in the global high-speed connectivity market.
“Our order book for fibre optic cables and related products is roughly ₹15,000 crore. I expect a significant amount of additional order inflow from hyperscalers, particularly in the United States, in the near future. Demand is strong.”
— Mahendra Nahata, Chairman & Managing Director
The main bottleneck for the company is its own production capacity rather than a lack of customer interest or market demand. Investors should track how quickly new facilities come online to turn this excess demand into actual sales.
“The only challenge currently is supply and capacity constraints, which we are working to address. Going forward, export revenue will continue to be a significant growth driver for us.”
— Mahendra Nahata, Chairman & Managing Director
The company is moving toward backward integration by setting up its own facility to manufacture preforms, which are essential raw materials for fibre. Producing these in-house should help protect profit margins and reduce the risk of global supply chain disruptions.
“In addition, we will build a new facility for manufacturing preforms, the key raw material required for manufacturing optical fibre. Tomorrow we will be signing an agreement with a supplier for the machinery required for preform manufacturing.”
— Mahendra Nahata, Chairman & Managing Director
A capital investment of 950 crore is being deployed to expand both raw material and finished goods production capacity. This significant spending signals management’s confidence in the long-term sustainability of the current AI and telecom infrastructure boom.
“Taken together, our planned investment is around ₹950 crore, with a major portion allocated towards the preform facility as well as the expansion of our optical fibre and optical fibre cable manufacturing capacities.”
— Mahendra Nahata, Chairman & Managing Director
Interviews/Podcasts
Tamal Bandyopadhyay | Microfinance industry cycle | Subtext By Zerodha
What caused the latest cycle, how is this time different, and what can we do to avoid it?
Microfinance in India blows up with unusual regularity — roughly every four to five years, and almost always across the entire industry rather than at a single bad actor. To understand why this keeps happening, we spoke to Tamal Bandyopadhyay, one of India’s most closely followed banking journalists and a senior advisor at Jana Small Finance Bank, to trace the anatomy of the latest cycle — and what it would take to break the pattern.
The RBI’s quiet move to raise the secured loan limit for MFIs — from 15% to 25% to now 40% — is less a policy reform and more a candid admission of how often the sector has fallen into trouble.
“This is to save the microfinance entity. Look, you guys got into trouble. Now I am allowing you to have more and more secured loan to balance it out.”
— Tamal Bandyopadhyay, Senior Advisor, Jana Small Finance Bank
The borrower base is structurally exposed to shocks that secured lenders never face — natural calamities, political interference, and loan waiver promises that break credit culture even among those who can afford to repay.
“Even if I’m able to pay, I’ll say I’ll not pay because the state government is there to help me out.”
“One person defaulting because they can’t is a credit event. A whole village refusing to pay because they think they won’t have to is a broken culture.”
— Tamal Bandyopadhyay, Senior Advisor, Jana Small Finance Bank
Investors have simply priced the boom-bust rhythm in from the start — which means the cyclicality is not a bug the market is trying to fix, but a feature it has learned to underwrite.
“Every four or five years, I’ll not get any money for two years or three years. So when I’m getting money, they will not compromise on their return.”
— Tamal Bandyopadhyay, Senior Advisor, Jana Small Finance Bank
The latest crisis was different from every previous one — not triggered by politics, natural calamity, or a single rogue lender, but engineered by the industry itself after the RBI freed interest rates in 2022.
“I did say it was a red letter day for the industry because Reserve Bank of India gave them freedom which they are asking for. I’m sure industry would hate me for this. It’s been misused.”
“This is actually made by probably the entire industry, barring exceptions.”
— Tamal Bandyopadhyay, Senior Advisor, Jana Small Finance Bank
The scale of the boom and the reckoning that followed were both extreme — a fourfold expansion in the loan book between FY17 and FY24, followed by a violent contraction in which active borrower accounts fell 31% and the number of borrowers dropped from 87 million to 69 million.
“You give the borrowers more money, push down their throat, which they are not able to pay back. It was a completely supply-side problem. You can’t blame the borrowers.”
“It was sort of harakiri — because they thought that good times will last.”
— Tamal Bandyopadhyay, Senior Advisor, Jana Small Finance Bank
For investors trying to read the cycle, the only signal that actually matters is underwriting quality — visible long before it ever shows up in the NPA line, and best understood through an analogy from the Raghuram Rajan era.
“Bankers were doing belly dancing. And Raghuram Rajan forced them to do striptease. So essentially, they were stark naked.”
“Two banks turned out to be carrying 30%-plus bad loans. Today the system’s net NPA sits below 1%. They changed their underwriting.”
— Tamal Bandyopadhyay, Senior Advisor, Jana Small Finance Bank
The worst of this cycle is behind the industry, but the path forward is unsentimental — many mid-sized MFIs are quietly becoming business correspondents, the smallest are shutting down, and even the largest need to fundamentally rethink what they are.
“Many of the smaller, medium-sized MFIs are turning into BCs, business correspondents. It’s high time they need to reinvent themselves. It can’t go on.”
— Tamal Bandyopadhyay, Senior Advisor, Jana Small Finance Bank
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Quotes in this newsletter were curated by Shahid, Meher, & Srusti.
Disclaimer: We’ve used AI tools in filtering and cleaning up these quotes so there maybe some mistakes. Now, if you are thinking why we are using AI, please remember that we are just a small team of 5 people running everything you see on Zerodha Markets 😬 So, all the good stuff is human and mistakes are AI.