Motilal Oswal Financial Services

3QFY25 | India Inc on Call

Voices | 3QFY25

Voices

BSE Sensex: 75,311

S&P CNX: 22,796

Cautious commentary; India Inc. posts a third successive

quarter of single-digit growth

In this report, we present the key takeaways from our 3QFY25 conference calls with

various company management teams as we refine the essence of India Inc.’s ‘VOICES’.



BFSI drives with PSU Banks benefitting from lower credit costs:

The aggregate

earnings of the

MOFSL Universe companies

were in line with our estimates and

increased 6% YoY (vs. our est. of 7% YoY). Earnings for the Nifty-50 rose 5% YoY

(vs. our est. of +5%). The aggregate performance was marred by global

commodities (i.e., Metals and O&G). Excluding the same, the MOFSL Universe

and Nifty posted 10% and 7% earnings growth vs. our expectations of +11% and

+7%, respectively.

Management teams for most

Banks

remain cautious due to growth moderation

and contracting NIMs. A majority of the banks are closely monitoring asset

quality in unsecured segments, though there were some positive signs in

Dec’25, driven by improved collection efficiency. With repo rate cuts

announced, most banks indicate they are well-positioned to handle a potential

25bp cut; however, further reductions could pressure NIMs in FY26.

Within

NBFC/HFC,

various management teams highlighted the following: 1) the

demand outlook remained subdued in the CV segment due to weak government

spending and capex, while demand in PVs and tractors improved; 2) asset

quality deteriorated across most product segments barring power financiers and

select HFCs because of customer overleveraging, sluggishness in consumption,

and weak macroeconomic environment; 3) MFIs experienced early green shoots

with collection efficiency improving in Dec’24 and further in Jan’25; 4)

competitive intensity remained high in HFC/ AHFCs, which hurt disbursement

yields for the companies; and 5) gold loan demand remained strong due to rising

gold prices, high tonnage growth, and unavailability of unsecured loans.

Technology,

management teams of various IT companies remain cautiously

optimistic, as the demand from discretionary projects remains unchanged

compared to the previous quarter. However, they note a gradual recovery in

shorter-term engagements this quarter, with early signs of a revival in

discretionary spending. Cost optimization continues to be a key focus area for

clients, but the company is experiencing robust momentum in BFSI, with Hi-Tech

also exhibiting a positive outlook as semiconductor clients and hyperscalers plan

to raise spending.

Healthcare,

companies indicated sustained growth momentum in the chronic

category of therapies in the DF segment, offset by the adverse impact of the

weak season in acute therapies. Notably, the margins remained elevated due to

lower raw material prices as per management. For the US generics space,

management indicated that while price erosion is in mid-single to low-single

digits for the base portfolio, the growth prospects are promising given their

effort toward building a complex product pipeline.

Most of the management teams in the

Automobile

sector widely suggested a

slowing of domestic demand, while the outlook for exports remains uncertain.

Within the domestic market, tractor demand is predicted to be stable, while 2W,

PV, and CV growth is likely to be in the low-to-mid-single digits in the fourth

quarter.

February 2025

Voices | 3QFY25



Within

Consumer,

most companies witnessed limited volume growth, typically

in the low-to-mid-single digits. While urban demand remained subdued, rural

consumption exhibited indications of a revival. Management predicts a gradual

increase in demand, driven by reasons such as income tax breaks, interest rate

cuts, and a generally better macroeconomic climate.

Capital Goods,

management maintains a positive outlook across key sectors,

including power transmission & distribution, renewable energy, data centers,

railways, and defense. Public capital expenditure is anticipated to rebound in

the coming quarters, while private sector inquiries are expected to materialize

from 4QFY25 onwards.

Autos



In the 3QFY25 earnings calls, management widely suggested a moderation in

domestic demand, while the outlook for exports remains uncertain. Within the

domestic market, tractor demand is predicted to be stable, while 2W, PV, and CV

growth is likely to be in the low to mid-single digits in the fourth quarter. Most of

the companies expect input costs to remain steady from quarter to quarter, with

margin performance mostly determined by operating leverage advantages and

discounting trends in Q4. Ancillary players with worldwide exposure are projected

to experience ongoing problems due to demand uncertainties in certain export

markets.

Capital Goods



Management maintains a positive outlook across key sectors, including power

transmission & distribution, renewable energy, data centers, railways, and

defense. Public capital expenditure is anticipated to rebound in the coming

quarters, while private sector inquiries are expected to materialize from Q4FY25

onwards. In the defense sector, management remains highly optimistic,

forecasting a ramp-up in order inflows from 4QFY25, with a strategic focus on

improving the share of export orders in FY26. In the Powergen industry, genset

volumes are expected to improve sequentially but remain lower year-over-year.

Demand in the railway sector, though delayed, has impacted execution

timelines for players. With the election schedule now largely over across main

states, management expects the focus to shift towards capex in coming

quarters.

Cement



Cement demand is opening up as capex is gaining momentum from the end of

3QFY25. Rural demand should be positive with the good monsoon we have

witnessed. Industry volume growth is estimated to be ~6-7% YoY in FY26.

However, prices are anticipated to improve gradually with improvement in

demand. Industry players are targeting cost savings in the range of INR100-300/t

over the next two to three years. Further, they expect ~50mtpa capacity

addition in FY26 (almost ~8% growth). Consolidation is intensifying in the

industry with higher capacity addition by large players and aggressive M&A

activities. Expect sequential improvement in profitability in 4QFY25 led by

positive operating leverage, favorable fuel prices, and higher exit prices.

Chemicals



Management anticipates demand recovery, driven by international markets, and

local market normalization by 4QFY25. Key capacity expansions and greenfield

projects are on track, ensuring long-term growth across industries. Competitive

challenges, feedstock costs, and regulatory developments will have an impact

February 2025

Voices | 3QFY25

on margins and pricing. Capex remains a top priority, with investments in new

products, technology, and operational efficiency driving the companies' future

performance.

Consumer



Most of the companies witnessed limited volume growth, typically in the low to

mid-single digits. While urban demand remained subdued, rural consumption

displayed indications of a revival. Management predicts a gradual increase in

demand, driven by reasons such as income tax breaks, interest rate reductions,

and a generally better macroeconomic climate. However, rising commodity

costs, notably in the agricultural sector, combined with insufficient price hikes,

have strained gross margins in various sectors. To combat raw material inflation,

corporations are considering significant price increases in the fourth quarter.

The management teams are optimistic that price modifications, together with

an expected increase in volume, will drive revenue growth in the coming

quarters.

Consumer Durables



Management teams have indicated that demand in the C&W segment would

remain strong, led by infrastructure, industrial demand, and robust real estate

growth. Further, early summer trends and expected increases in consumer

spending will drive demand outlook for cooling products.

EMS



A majority of the management teams have either raised or maintained revenue

growth guidance, citing healthy demand across industries and a focus on

expansion, operating leverage, and margin improvement. Key investments in

electronics, railways, and backward integration, combined with worldwide

collaborations, are expected to boost long-term growth while retaining a

healthy order book.

Financials

Banks



Management teams for most banks remain cautious due to growth moderation

and contracting NIMs. A majority of the banks are closely monitoring asset

quality in unsecured segments, though there were some positive signs in

Dec’25, driven by improved collection efficiency. With repo rate cuts

announced, most banks indicate they are well-positioned to handle a potential

25bp cut; however, further reductions could pressure NIMs in FY26. The banks

have signaled a slowdown in unsecured segment growth, while other segments

remain resilient. PSBs continue to demonstrate stable asset quality, with no

signs of stress in either corporate or other retail segments, while credit cost

guidance continues to remain benign for most of the PSBs. Banks remain

cautious about deposit growth amid tight liquidity, although measures such as

RBI’s liquidity injection are expected to support a recovery in deposit growth.

NBFCs



Within

NBFC/HFC,

various management teams highlighted the following: 1) the

demand outlook remained subdued in the CV segment due to weak government

spending and capex, while demand in PVs and tractors improved; 2) asset

quality deteriorated across most product segments barring power financiers and

select HFCs because of customer overleveraging, sluggishness in consumption,

February 2025

Voices | 3QFY25

and weak macroeconomic environment; 3) MFIs experienced early green shoots

with collection efficiency improving in Dec’24 and further in Jan’25; 4)

competitive intensity remained high in HFC/ AHFCs, which hurt disbursement

yields for the companies; and 5) gold loan demand remained strong due to rising

gold prices, high tonnage growth, and unavailability of unsecured loans.

Capital Markets



Activity in the capital markets slowed down in 3QFY25, primarily due to F&O

regulations and weak market sentiments. The recent F&O regulations led to a

20% YoY/14% QoQ decline in ANGELONE’s order count, with management

guiding for an 18-20% income impact. True-to-label charges further weighed on

revenues. The medium-term growth drivers for BSE are improved premium

turnover quality, lower settlement fees, increased participation in long-term

contracts, and colocation rack implementation. All AMCs maintained their

positive outlook on SIPs despite weak market sentiments. The companies have

guided a reduced impact of telescopic TER structure on yields going forward, as

they have taken steps such as: 1) higher TER in a few debt schemes and 2) a

decline in AUM due to MTM, leading to an increase in TER. 360 ONE WAM

guides a 20-25% AUM growth aided by strong net flows. NUVAMA continues to

focus on annuity and ARR assets in the private business and MPIS in the wealth

business, resulting in robust flows.

Insurance



The general insurance players faced slow growth due to weak infrastructure

investments, slow credit growth, subdued motor sales, and accounting norm

changes during the quarter. STARHEAL repriced 65% of its retail health portfolio

to offset medical inflation and expects no impact from the 1/n regulation due to

its 1/365 URR method. ICICIGI’s retail health segment saw strong growth from

new product launches, while group health was weak due to lower credit growth

and rising competition. It will continue to evaluate price hikes in the health

segment due to medical inflation. Private life insurers saw steady premium

growth. With the implementation of revised commission structures and product

redesigning, all key players guided a minimal impact of surrender charges on

margins. Increased focus on the ULIPs led to VNB margin contraction, however,

management across key players guided to focus more on protection, annuity,

and non-par products to drive the margins growth.

Healthcare



In Healthcare, companies indicated sustained growth momentum in the chronic

category of therapies in the DF segment, offset by the adverse impact of the

weak season in acute therapies. Notably, the margins remained elevated due to

lower raw material prices as per management. For the US generics space,

management indicated that while price erosion is in mid-single to low-single

digits for the base portfolio, the growth prospects are promising given their

effort toward building a complex product pipeline. The overall filing pace has

reduced due to the inclination toward limited competition products.

Additionally, the companies indicated that they are building capabilities/

capacities towards GLP-1 products to position themselves for business

opportunities FY26 onwards in many emerging markets. Further, the

management teams indicated that the freight costs will moderate from their

elevated levels as the geopolitical issue in the Middle East is over. In the CDMO

space, the companies indicated that the increased inquiries due to the Bio-

secure Act are yet to convert into businesses. On the hospital front, companies

are implementing efforts towards adding beds and focusing on increasing the

February 2025

Voices | 3QFY25

volumes. Some companies indicated the international patient flow was

impacted due to political unrest in Bangladesh.

Overall, the pharma space continues to witness tailwinds led by niche pipelines

in the US and EU. Hospitals remain poised to benefit from the considerable

demand-supply gap by not only adding infrastructure but also nurturing the

doctor-nurse resources.



Logistics



In the logistics sector, demand remained subdued in 3QFY25, primarily due to a

slowdown in consumption, high inflation affecting MSME customers, and

weaker e-commerce volumes. E-commerce and express logistics companies

experienced sluggish growth during the quarter, driven by muted volumes and

intense competition. However, multi-modal logistics companies outperformed

pure-play freight operators and express logistics providers. Management

expects operational performance to improve in FY26, supported by lower fuel

costs and stable operating expenses. Over the long term, companies remain

optimistic about sector growth, fueled by e-way bills, GST implementation, the

expansion of Dedicated Freight Corridor (DFC) routes, and improved

connectivity to major ports, which are likely to drive a shift towards the

organized sector.

Metals



In the Ferrous Metals space, management teams across companies pointed to: 1)

a steady decline in coking coal costs; and 2) the development of captive raw

material mines. Though a better performance from Indian operations is backed by

better volumes in 3Q, weak NSR is keeping margins under pressure. Management

believes that global uncertainties might pose challenges to international steel,

base metal, and raw material prices in the short term. In the non-ferrous space,

management guided the CoP to increase, led by rising scrap prices and rising

domestic auction coal, which may be offset by favorable pricing conditions leading

to sustained margin in 4QFY25.

Oil & Gas



OMCs:

While various management teams expect marketing segment

performance to remain strong, weak refining performance might continue in the

short term amid subdued refining margins (mid-term GRM expected to be

~USD5-6/bbl). In 4QFY25, the management teams expect LPG under-recovery to

be in the similar range QoQ, and under-recoveries should start tapering off from

1QFY26 onwards.

CGDs

were hit by a sharp APM de-allocation in 3Q, and the

various management teams expect similar margins QoQ in 4Q, post APM re-

allocation, and New Well Gas allocation. However, CGDs’ management teams

remain optimistic about robust volume growth.

ONGC and OINL

also forecast

strong production growth due to KG-98 and NRL, respectively. Additionally, gas

utility entities are anticipating stable transmission volumes.

Real Estate



Management is confident of achieving a 20-30% YoY presales growth for FY25

even after the delays in approvals, fueled by strong demand. Moreover, real

estate companies indicate that demand will remain intact in the coming years.

Average growth in price realization will trend between 7% and 10% depending

on various geographies. Approval delays are easing out steadily, and projects

will be ready for launches consequently. Management is focusing on

replenishing the land to strengthen the project pipeline.

February 2025

Voices | 3QFY25

Retail



Retail:

Most retailers indicated that demand picked up during the festive season,

but the momentum could not be sustained after the festive period. Retailers such

as Metro Brands and Vedant Fashions highlighted that store additions would be

lower than their earlier guidance due to continued inflation in rentals. BIS

implementation continues to weigh on gross margins for footwear companies;

however, management teams expect the impact of non-BIS inventory liquidation

to be significantly lower going forward. Overall, despite continued weaker

demand trends, retailers remain optimistic about growth recovery aided by the

recent tax cuts announced in the Union Budget.



Jewelry:

The companies continued to post strong sales growth, fueled by festive

demand, wedding purchases,

and higher gold prices. Jan’25 saw healthy growth;

however, the sharp rise in gold prices led to some softness in the last 7-10 days.

Companies anticipate an increase in gold lease rates due to US tariff-related

changes, prompting banks to raise lease costs. Inventory losses related to

customs duty reduction were accounted for in 2Q and 3Q, and no further losses

are expected in the coming quarters.



QSR:

The companies witnessed a slight improvement in demand trends during

3Q, particularly toward the quarter’s

end. Same-store

sales growth (SSSG) saw

an uptick, supported by a favorable base. The revenue gap between dine-in and

delivery has narrowed, driven by increased dine-in footfall. However, subdued

underlying growth continued to weigh on operating margins, exerting pressure

on both restaurant and EBITDA margins for most brands. To drive recovery,

companies are focusing on innovation, customer engagement, and value-driven

offerings. Additionally, government measures aimed at the middle class in the

budget could aid demand revival. Despite the challenges, most companies have

maintained their store expansion guidance.

Technology



The management teams of IT companies remain cautiously optimistic, as the

demand from discretionary projects remains unchanged compared to the

previous quarter. However, they note a gradual recovery in shorter-term

engagements this quarter, with early signs of a revival in discretionary spending.

Cost optimization continues to be a key focus area for clients, but the company

is seeing robust momentum in BFSI, with Hi-Tech also showing a positive

outlook as semiconductor clients and hyperscalers plan to increase spending.

While manufacturing and life sciences face near-term challenges, management

expects an improvement as the demand environment stabilizes and policy

clarifications provide better visibility. Margins are expected to improve in FY26,

driven by operational efficiencies, including better pricing, automation, and an

optimized revenue mix. With deal ramp-ups, a gradual revival in discretionary

spending, and vendor consolidation efforts, management remains confident

about an improved growth trajectory in FY26.

February 2025

Voices | 3QFY25

Telecom



The benefits of tariff hikes are largely reflected in 3Q results for Bharti and Vi,

while RJio management indicates that tariff hike benefits are still to completely

flow through. The subscriber losses to BSNL, after the tariff hikes, are now

reversing for all three private telcos. Vi expects capex to increase further in 4Q

with ~INR100b guidance for FY25 (vs. INR53b in 9M), while Bharti expects capex

to trend downwards both in FY25 and FY26. Bharti and RJio have increased their

focus on accelerating the FWA rollout.

Utilities



The management teams noted a moderation in 3QFY25 power demand growth

to 2.7% due to

a high base effect from last year’s 9.9% growth. However,

they

highlighted that a surge in demand in the past month and an anticipated intense

summer could push peak demand to 265–270 GW, with current levels already

above 230 GW despite summer not having commenced. The ministry plans to

add 40–50 GW of renewable capacity annually until 2030, which is expected to

enhance sell-side liquidity on power exchanges in the coming years. To ensure

winter power availability, MoP extended the Section 11 directive until February

28, 2025. The Union Budget increased funding for the PM Surya Ghar scheme,

providing opportunities for rooftop solar expansion. Additionally, proposed

amendments to the Nuclear Power Act will enable private sector participation,

which the management is keen to explore as policy details unfold.

February 2025

AUTOMOBILE | Voices

Key takeaways from management commentary

AUTOMOBILES



In the 3QFY25 earnings calls, management widely suggested a moderation in domestic demand, while the

outlook for exports remains uncertain. Within the domestic market, tractor demand is predicted to be stable,

while 2W, PV, and CV growth is likely to be in the low to mid-single digits in the fourth quarter. Most of the

companies expect input costs to remain steady from quarter to quarter, with margin performance mostly

determined by operating leverage advantages and discounting trends in Q4. Ancillary players with worldwide

exposure are projected to experience ongoing problems due to demand uncertainties in certain export

markets.

KEY HIGHLIGHTS FROM CONFERENCE CALL

Demand outlook

Other key takeaways from the call



FY25 outlook:

AL is hopeful that the industry will



Defense:

Although the 3Q ramp-up in this segment

continue to grow in 4Q. Key demand indicators

was slower, management is confident of strong

for CVs are in place, including: 1) healthy fleet

growth in this business in the long run, driven by its

Ashok

operator economics, supported by improving

order backlog. It expects the Army will likely

Leyland

utilization levels and the ability to pass on freight

require 10-12k new trucks over the next 3-4 years.

rate increases, and 2) the beginning of the



Switch: It is hopeful that Switch India can be

interest rate cut cycle.

EBITDA positive by 2QFY26, though it will depend



While AL has good visibility for the next six

the company’s

ability to execute orders.

months, management is hopeful that all segments

within the CV industry will post growth in FY26.



Domestic 2Ws:

Management expects the



BJAUT expects the L5 segment to grow at 5-7%,

industry to post 6-8% growth in the near term.

driven by rising EV penetration, and BJAUT targets

Given its focus on 125cc+ segment, BJAUT targets

to outperform industry growth with new launches.

Bajaj Auto

to outperform industry growth.



Management has indicated that input cost is likely



Exports: BJAUT expects 20%+ growth in exports

to see headwinds in 4Q, which is likely to be

for the next couple of quarters. The fastest-

partially offset by favorable currency movement.

growing markets for BJAUT are Latin America

(+30% YoY) and ASEAN. Even Africa has

recovered, with Nigeria now clocking close to 30k

units per month.



Focusing on growth: Management has indicated



VECV: Management has indicated that discounts

that it will continue prioritizing growth and will

have been trending downward and are expected to

start shortlisting products that need marketing

continue as all OEMs recognize the importance of

Eicher

support to drive growth.

pricing discipline.

Motors



Exports: While sentiment in export markets



It is hopeful of a recovery in the upcoming quarters

remains weak, the company maintains a

as the government focuses on infrastructure

cautiously optimistic outlook for export growth in

spending.

FY26.



Outlook: After the festive season, 2W demand



As per management, increased disposable income

saw a temporary slowdown, but it is expected to

of INR40k-50k could support 2W EMI payments,

pick up with the upcoming wedding season and

boosting demand in the coming year.

Hero

March festivities. On the back of new launches,



EV business will remain a part of the standalone

MotoCorp

management expects HMCL to post double-digit

entity. Lower investments in the last 1-2 months

revenue growth in both FY25 and FY26.

were due to the transition from Vida V1 to V2.



HMI expects stability in export markets in coming



Management has indicated that, with the support

quarters. Growth drivers: 1) Hyundai India is an

of its parent, HMI would look at alternate

export hub for Latin America, the Middle East and

powertrains, including EVs, flex fuels, CNG and

Hyundai

Africa; 2) HMI intends to evaluate global export

hybrid for the Indian market to comply with

opportunities for Creta EV; and 3) Exter left-hand

emission laws.

drive should see huge opportunities in key



Its Pune plant is on track to commercialize

markets.

production by CY25 end, with initial capacity of



Management expects the domestic PV industry to

170k units p.a.

post low-single-digit growth in CY25 as well.

February 2025

AUTOMOBILE | Voices



M&M



Maruti



Tata Motors



TVS Motor

Co.



BIL



FES: Given strong rural sentiment, management

expects the tractor industry to grow by 15%+ in

4Q. This is likely to result in 10% growth of the

tractor industry for FY25.

While management has refrained from providing

guidance for FY26, it expects the industry to post

growth in FY26 as well.

Demand outlook: 3Q retails grew 8.3% YoY to

573k units, resulting in 3.5% retail growth for

MSIL over 9M. MSIL expects to deliver similar

retail growth in 4Q. Rural (+15%) is performing

better than urban (+2.5%) for MSIL.

Exports: MSIL continued to witness strong growth

in many export regions, including Africa, LatAm,

ME, and ASEAN.

India CV: Management believes there are positive

tailwinds for the sector, which include improving

fleet operator profitability led by improving

utilization levels and higher freight rates.

Indian PV: Management expects the PV industry

to post 2% YoY growth in FY25, in line with the

trend for 9M. Dealer inventory has now been

reduced to less than 25 days.

Domestic: Expects growth momentum to

continue in FY26. Healthy reservoir levels,

improved crop outlook, and higher infrastructure

investments should support demand going

forward.

International: In 3Q, Africa showed improvement,

with expectations for further growth in 4Q.

LATAM continued to perform well, with

consistent MoM growth.

Outlook: Management has maintained the

guidance of minor volume growth in FY25. The

market scenario remains challenging.

While volumes during the quarter grew despite

channel de-stocking, management clarified that

there were still no major market share gains.

CVs:

The Indian CV market is expected to post

slightly better growth QoQ in 4Q, while FY26 is

likely to be flat. US Class-8 CV demand is

projected to grow 10% in FY26, largely back-

ended. Uncertainty remains regarding potential

tariff changes.

Global demand:

Weak demand persists in the EU

and the US due to the industry transition to EVs

and economic uncertainty.



Automotive: Its market share in the below-3.5T

PikUp segment improved 230bp YoY to 51.9%.

Management is hopeful of a demand recovery in

the PikUp segment in the coming quarters, despite

the current slowdown.



In the hatchback segment, high-end cars are

outperforming low-end cars. Similarly, in rural areas,

consumer trends are increasingly aligning with urban

regions, with a noticeable shift to premiumization.

E-Vitara will be exported to over 100 countries. MSIL

is poised to become the No. 1 EV OEM by

production in India in its first year of launch.

JLR: Management has maintained its EBIT margin

guidance for FY25 at 8.5%.

Management may have, however, lowered its

revenue and RoCE guidance for FY25 due to the

ongoing slowdown in China. It intends to reaffirm its

FY26 guidance at the annual event after 4QFY25.



Capex: Guided for FY25 capex of ~INR13b and

investments of INR17b.

Investments are focused on product readiness, e-

bikes, new technology via TVS Singapore, and setting

up a new international hub in Dubai to tap

opportunities in Africa, the Middle East, and Europe.



RM costs: Costs increased 100bp in 3Q, but the

major impact is likely to be felt in 4QFY25 due to the

lag in shipping time. However, RM costs are likely to

remain stable in the coming quarters.

Capex: Management has guided for a capex of

INR11-12b for FY26.

JSA continued to see strong ramp-up and it expects

this business to hit an annualized run rate of INR10b

in the next 6-8 quarters.

Defense: The domestic ATAG order is likely to be

awarded in the next 3-4 months. However, serial

production will commence 15-18 months from now.



BHFC



February 2025

AUTOMOBILE | Voices

Amara Raja Energy

Current Price INR 971



Neutral

Click below for

Detailed Concall Transcript &

Results Update



Outlook:

LAB growth is expected to remain steady in the coming quarters.

Lithium packs and chargers are projected to grow at least 10% in FY25.

Discussions with multiple 2W and 3W OEMs for NMC cells are ongoing, though

no new major agreements have been disclosed beyond the previously

announced deal with Ather Energy. The company aims for a steady ramp-up in

its lithium cell business from CY27 onwards.

FY26:

4W segment is expected to grow 8-9%, while 2W demand could rise by

11-12%. The UPS segment is projected to grow 6-7%, and exports could see 13-

14% growth. Total LAB revenue is expected to grow 11-12% in FY26E.

Lithium ion Sector headwinds:

Challenges include oversupply, pricing pressure,

and RM volatility, particularly from China. Given the high capital intensity, the

company prefers a calibrated investment strategy, ensuring optimal utilization

of capital while adjusting timelines as required.

Revenue and growth:

LAB contributed 96% of revenue, while the remaining

came from the new energy business, including battery packs and chargers.

LAB Segmental Performance:

4W aftermarket volume growth stood at 11%,

while OEM demand remained muted. 4W exports grew 8-9%, with expectations

of a double-digit increase by year-end. 2W aftermarket and OEM volumes grew

16-17%, maintaining momentum. Tubular batteries and home UPS systems saw

15% volume growth. The lubes distribution business generated INR1b in

revenue this quarter. The industrial segment witnessed strong growth in UPS

and exports, though telecom battery demand declined due to the shift toward

lithium ion.

Segmental Market share in LAB:

The company holds a stable 33-34%

aftermarket share in 4W batteries and around 35-36% in 2W. Industrial battery

market share, combining lead and lithium, stands at 57-58% in telecom and 40-

43% in UPS. The OEM 2W segment has a 25% share, with inverter batteries at

10-11% due to limited manufacturing capacity.

Telecom Battery Segment:

It contributed 10-11% of total revenue, with LAB

accounting for 9%. Industry revenue growth remains muted due to limited new

tower expansion, with demand driven primarily by replacement. The segment

witnessed a 25% YoY decline due to the shift to lithium ion based batteries.

Despite the low capacity utilization of the plant, profitability impact is limited as

this is amongst the oldest plants of the company.

The company received insurance claims of INR2.75b in lieu of the accident at its

tubular battery plant. Given that this is in excess of its book value, company has

reported an exceptional gain of INR1.11b in Q3. The new plant is set to resume

operations in early FY26.

The first phase of the recycling plant (50k ton refining capacity) began

commercial operations this quarter, with smelting operations expected by

1QFY26.

Margin and cost pressures:

Operating margins were impacted by 100-120bp

due to higher alloy metal costs (tin and antimony) and a power cost adjustment

from the Andhra Pradesh government for FY24. Higher electricity costs are

expected to impact margins by 40-50bp in the next quarter as well. However,

February 2025

AUTOMOBILE | Voices

increased procurement from renewable sources is expected to reduce power

cost pressures from FY26.

Currency depreciation is another headwind, with INR nearing 87.5-88 per USD,

affecting imported lead prices. The company will explore mitigation measures to

manage the impact.

No immediate pricing changes have been made despite currency depreciation.

Lead price movement will be monitored, and pricing actions will be taken

accordingly.

New Energy Business:

Revenue declined 20% YoY due to changes in OEM

demand, but localization of chargers is expected to drive recovery through FY25.

The company started commercial deliveries of 2W battery packs and localized

portable chargers for 2W and 3W applications.

Lithium-Ion Plant:

The NMC cell plant is expected to commence operations by

end-CY26 or early CY27, initially targeting 1GWh capacity, with NMC cell prices

at USD70-75/kWh. The LFP plant will commence at least three to four quarters

after the NMC plant due to capital equipment gestation and software

development requirements. The company remains cautious with its investment

approach to avoid capital inefficiencies.

The NMC plant at 2GWh will not be EBITDA positive initially. The entire lithium

ion capacity utilization needs to reach at least 7-8GWh for low double-digit

EBITDA margins. Stabilization will take two to three years, with optimal margins

expected at ~85% utilization, subject to demand and plant ramp-up.

Capex Plans:

For FY25, total CapEx is expected to be around INR10b, with INR3-

4b allocated to lead-acid business and INR5-6b to the new energy business.

4W battery capacity utilization is at 85-90%, while 2W is close to 90%. Industrial

UPS batteries’ utilization is at 85%, whereas LVRLA is lower at 65-70%.

Efficiency

improvements have led to a 5-6% increase in output without significant capex.

The upcoming tubular facility with a capacity of 120-130k batteries will support

inverter battery demand.



Apollo Tyres

Current Price INR 413

Buy

Click below for

Results Update

Standalone update



Demand outlook:

Overall volume growth was marginal, with healthy

replacement demand being offset by OEM weakness. Replacement demand is

expected to remain positive in 4Q, with the potential for further growth beyond

current levels.



Volume Growth:

Replacement volumes grew 5% YoY, while OE volumes

declined 10% YoY. Exports remained flattish. In the replacement segment,

demand for TBR, PCR, and farm tires has picked up in Jan and is expected to be

better than Q3, in Q4.



OEM volumes remained weak, particularly in CVs, due to lower vehicle

production and an unfavorable mix (higher bus sales).



4Q Outlook:

The CV segment is expected to recover in 4Q, with improving

demand for TBR CV tires. Election-related volatility impacted demand this year,

but OEMs are seeing early signs of recovery, according to the management.

February 2025

AUTOMOBILE | Voices

Market share & product strategy:

APTY gained market share in the PCR and agri

replacement segments in India in Q3. The company is exiting the 12-13 inch tire

market with OEMs and continues to focus on the high-margin 16-inch+ segment.



Exports:

APTY sees the US as the next growth market, with a strong

performance in PCR (with the Vredestein brand) and initial traction in APTY TBR.

The Middle East, particularly Saudi Arabia, will be the next go-to region for

APTY.



Margins & cost structure:

EBITDA margin contracted YoY and QoQ due to sharp

raw material inflation (+15% YoY). RM costs included the impact of carrying

forward higher-cost inventory from the previous quarter. Given the input cost

inflation, the company reduced its other expenses during the quarter, which is

expected to return to normal levels in the coming quarters.



In 3Q, RM costs stood at INR175/kg (+15% YoY, +2% QoQ), with key inputs

priced at INR215/kg for NR, INR195/kg for SR, and INR125/kg for CB. RM costs

are expected to remain stable QoQ in 4Q, with no price increases planned so far

due to weak market conditions. Marginal cost benefits may be seen in 1QFY26.



Net debt to EBITDA for India stood at 1.4x as of Dec'24, compared to 1.1x QoQ.

Europe business update



Financials:

In 3Q, it reported revenue of EUR183m with an EBITDA of EUR32m,

achieving a 17.7% EBITDA margin. Reifen contributed EUR88m in revenue with

an EBITDA margin of over 7%.



Demand:

Demand recovery is expected to continue, with strong replacement

demand for both PCR and truck tires. There are no signs of demand tapering off,

and the UHP/UUHP segments are expected to grow faster.



Volume growth in the PCR segment lagged the industry; however, APTY

outperformed in profitable segments such as winter tires and UHP.



The UHP mix for APTY stood at 48% for the quarter, up from 43% YoY, reflecting

continued premiumization.



Despite raw material cost inflation (+4% YoY), the company reported an 18%

operating margin (+290bp QoQ, -260bp YoY).

Update on Capex and debt



Investments and debt:

India business capex stood at INR3.5b for 9M, with gross

debt at INR32b, while consolidated capex was INR5b with gross debt at INR35b.

FY25E capex is expected to moderate to ~INR7.5b. With the PCR segment in

both India and Europe reaching optimal utilization levels at 85%+ and 90%+,

respectively, management has planned growth capex for both regions in the

PCR segment. Assuming the same level of maintenance capex of INR7b and

another INR8b for growth, the estimated capex for FY26E is likely to increase to

INR15b. With this, the PCR capacity expansion in India would be 7-8%, while in

Europe, it will be slightly higher.



Financing:

In India, interest costs increased due to higher working capital

borrowings, driven by profitability challenges for dealers and a weaker market.

In Europe, interest costs declined, with working capital needs likely to reverse.

Additionally, the interest burden is expected to reduce in the coming quarters,

considering the reduction in debt.



February 2025

AUTOMOBILE | Voices

Ashok Leyland

Current Price INR 225

Buy

Click below for

Detailed Concall Transcript &

Results Update

Outlook



In January, the CV industry saw positive growth, and February is expected to

show similar growth. As a result, AL is hopeful that the industry will continue to

grow in Q4. Key demand indicators for CVs are in place, including: 1) healthy

fleet operator economics, given the improving utilization levels and the ability to

pass on freight rates, and 2) the beginning of the interest rate cut cycle.



While the company has good visibility for the next 6 months, management is

hopeful that all segments within the CV industry will post growth in FY26.



Management believes that the recent slowdown in bus demand is temporary. It

already has an order book from STUs of 4k buses to be executed over 6-8

months. Hence, management is confident that the strong growth momentum in

buses is likely to continue for at least two more years.



The regulation for mandatory AC cabins is likely to be implemented from Jun’25.

However, the cost impact for the same is likely to be much smaller. Hence,

management does not see any major impact of this regulation on the demand

for CVs.



Regarding the DFC, management expects only a gradual impact on CV demand

in the next few years.



Management has indicated that it continues to make good progress on its

medium-term targets, which include: 1) a 35% share in MHCV, 2) mid-teens

EBITDA margin, 3) strong growth in non-CV businesses, 4) leadership in

alternate fuels, 5) value unlocking in subsidiaries.

AL recovering in high-margin segments within MHCVs



Management indicated that over the last few quarters, it lost a significant share

in the tippers segment, which declined to about 23% from 29-30% due to a

product gap that was developed in the segment.



It has addressed this and is now seeing an improvement in market share for the

segment. Hence, it expects to experience disproportionate growth from this

segment over the coming quarters.



Overall, AL is experiencing a healthy market share recovery in both the MAVs

and tippers segments, which are better-margin products.



LCVs: In the 2-4T segment, the company now holds a market share of 18.5%. It

has also recently launched the new Saathi at the 2.2 T segment, marking its first

offering in the entry-level LCV segment. This is expected to help the company

improve its market share in the 2-4T segment to 20% in the short term and to

25% in the medium term.



AL’s products currently cover 48-49%

of the domestic LCV market. This is

expected to increase with the launch of Saathi. The company targets to increase

its addressable market reach to 80% on the back of new products over the next

3 to 4 years.



Exports: AL has seen a strong 19% YoY growth for 9M due to continued focus on

exports and a strong presence in regions like GCC, SAARC, and Africa. It

continues to experience a strong order book for Q4 as well.



The company hopes to reach close to 15k units of exports by FY25E (vs 11.5k in

FY24). Its medium-term (2-3 years) target is to reach 25k units of exports, while

its long-term target is to reach 50k units of exports.

February 2025

AUTOMOBILE | Voices

Defense business: Although the Q3 ramp-up was slower from this segment,

management is confident of strong growth from this business in the long run,

supported by its order backlog.



According to the management, the Indian Army has about 70k old trucks that

would need replacement soon. It expects the Army will likely require 10-12k

new trucks over the next 3-4 years. Management remains confident about the

long-term outlook of this business.



Switch: The India business continues to perform well and now has an order

backlog of 1800 buses, which includes 100 bus orders from Mauritius.

Management is hopeful that Switch India can be EBITDA positive by Q2FY26 at

the latest, though this will depend on its ability to execute the 1,800 bus order,

which has an execution timeline of 12-18 months. It expects to ramp up this

business well before considering the listing of this entity, which is likely to be at

least 2-3 years away.



The EV LCV sales run rate has now improved to 100 units per month.

What is ailing Switch UK?



The outlook for Switch UK remains uncertain, as the EV market for buses in the

UK is not picking up.



The UK market has seen a sudden surge in demand for diesel CVs and almost a

30% decline in the EV market.



EV volumes are currently below 1k units and hence, management indicated that

it does not make sense to maintain manufacturing operations for such low

volumes unless there is demand revival. Switch UK is currently operating at a

loss, and management has stated that it is currently evaluating options for

Switch UK.



Hinduja Leyland Finance: Management has indicated that the reverse merger of

HLFL in NXT Digital is on track and is likely to conclude by 1QFY26. AUM for HLFL

stands at INR444b and that for Hinduja Housing stands at INR134b, reflecting

growth of 26% and 43% YoY, respectively

Capex and balance sheet details



The company has moved to a strong position, becoming cash positive with

INR9.6b from a net debt of INR17.5b YoY. Capex for 3Q stands at INR1.8b and

the same for 9M was at INR4.9b.



The company has approved an investment of INR2b in HLFL and INR5b in Switch.

Of the INR5b in Switch, part of this will go to the Indian entity, while the balance

will go to Switch UK to help reduce debt.



Bajaj Auto

Current Price INR 8,482

Neutral

Domestic motorcycles

Click below for

Detailed Concall Transcript &

Results Update



Management expects the industry to post 6-8% growth in the near term. Given

its focus on 125cc+ segment, BJAUT targets to outperform industry growth.

It plans to launch nine new variants in the 125cc+ segment between Dec24 and

Marc’25, including the recently launched N125cc, upgrade for Pulsar 150cc to

160cc with improved features, etc.

While its retail market share in 125cc+ segment has remained stable for YTD, it

has lost share in 100cc segment due to aggressive discounts from competition.

February 2025

AUTOMOBILE | Voices

The 125cc+ segment continued to grow at 2x the pace of the 100cc segment in

3Q.



BJAUT has launched another variant under Triumph. It will focus on network

expansion and brand awareness of Triumph in tier 2/3 towns.



Cost increase due to OBD2 is likely to be 1% on its portfolio.

Exports



Management expects exports to grow 20%+ for the next couple of quarters.



The fastest-growing markets for BJAUT are Latin America (+30% YoY) and

ASEAN. Even Africa has recovered, with Nigeria now clocking close to 30k units

per month.



BJAUT enjoys healthy 55% market share in Nigeria. As per management, it has

significantly outpaced each of these key export markets on YTD basis.



Management has refrained from giving a long-term outlook for exports given

the current uncertainty in global markets.

Update on 3W EVs



BJAUT has sold 17k units of 3W EVs in 3Q. Its EV 3Ws have been well accepted

in the market.



It now enjoys a 37% market share in the passenger segment (up from 13% YoY)

and mid-20% share in the cargo segment.



The company has recently taken a price cut in 3W EV in select markets in line

with competition. It will launch one large 3W variant in 4Q.



It will also introduce an e-rik variant at 4Q end. The e-rik market is 45k per

month and BJAUT is now looking to gain some share in this unorganized market.



BJAUT expects the L5 segment to grow at 5-7%, driven by rising EV penetration,

and it targets to outperform industry growth on the back of its new launches.

Chetak



Chetak market share has improved to 22% in 3Q from 13% YoY.



It has recently launched a premium Chetak variant under the 35 series. It hopes

to gain to a stronger leadership position in EV scooter segment, especially in the

premium segment, where its share has been low.



This will also be a better margin product.



For its total EV portfolio, BJAUT posted EBIDTA in 3Q vs. just break-even in 2Q.

Freedom CNG bike



This bike has been very well accepted in markets where CNG penetration is

good (viz. Delhi, Kerala). However, it is seeing low adoption in other markets.



BJAUT has launched one more variant of Freedom recently.



It targets to launch marketing campaigns to increase customer awareness about

the product from 4Q onward.

KTM



Pierer Mobility is in the midst of putting together a plan for the restructuring of

KTM by Feb’25. If all stakeholders approve, KTM may be revives from its current

woes.



From BJAUT’s standpoint, the revival of KTM is pertaining only to export

markets.



KTM bikes produced in BJAUT plant in India are clocking sales of about 6k units

per month.

Bajaj Auto Credit



The finance arm of BJAUT has completed its pan-India rollout ahead of schedule.



It enjoys almost 70%+ share in BJAUT stores.



February 2025

AUTOMOBILE | Voices

BACL now has AUM of INR70b. The credit arm posted minor PAT of INR520m for

the first time in 3Q.

Bajaj Auto Technology Ltd



The erstwhile Chetak Technology is now renamed as Bajaj Auto Technology Ltd



BJAUT intends to develop capabilities in the EV ecosystem toward electronics,

controls, hybrids, fuel cells, software, etc.



It has already employed 50 people.



Once it scales up, it would start supporting BJAUT and its partners.



Balkrishna Inds

Current Price INR 2,671



Neutral

Click below for

Detailed Concall Transcript &

Results Update

Outlook:

Management expects to maintain minor sales growth in FY25. The

market scenario continues to remain challenging. Though volumes during the

quarter grew despite channel de-stocking, management clarified that there are

still no major market share gains.



America:

The region posted growth driven by the company’s focus on products

and infrastructure. The demand is anticipated to stabilize and then grow in the

coming period.



India:

The company is seeing visible growth in the market, partly due to BIL’s

lower base. It holds a market share of 6-7% in India (similar to the global market

share), with ~10% market share in the Agri business.



Europe:

The demand scenario in this region remains weak.



RoW:

The company believes that growth is sustainable in other regions. RoW

includes regions such as Africa, the Middle East, Australia, and New Zealand.



Channel inventory currently stands at a normal level.



RM costs:

Costs increased 100bp in 3Q, but the major impact is likely to be felt

in 4QFY25 due to the lag in shipping time. However, RM is likely to remain stable

in the coming quarters. The company has not implemented any price hikes in 3Q

or Jan.



Carbon black project:

The advanced carbon black plant, with a capacity of

30,000 MTPA, was completed in September last year and is undergoing

customer testing for non-tire grade carbon black applications in plastics, ink, and

paint industries.



Revenue contribution from third-party carbon black sales stands at 9-10%.



Profitability for this segment is expected to align with or slightly exceed industry

standards, but is likely to be lower than the average company margins.

Capex: Management has guided for capex of INR11-12b for FY26.



The company incurred capex of INR9.68b in 9MFY25.



Capex for a 35,000 MTPA OTR tire range, announced in August last year, is

progressing as planned, with completion expected in H1FY26.

Others:



European deforestation regulations have been deferred to 1st Jan’26.



The company is not looking for any buyback at this stage.



EUR-INR rate: The EUR-INR rate was INR91 for Q3 and YTDFY25. For Q4, it is

expected to be INR92-93.

February 2025

AUTOMOBILE | Voices

Bharat Forge

Current Price INR 1,075

Neutral

Click below for

Results Update

India business trends and outlook



The Indian CV market is expected to post slightly better growth in 4Q QoQ while

FY26 is likely to be flat.



The US Class8 CV demand is projected to grow 10% in FY26, largely back-ended.

Uncertainty remains regarding potential tariff changes.



In domestic PVs, BHFC has seen strong growth in 3Q and the momentum is likely

to continue on the back of order wins from new customers. Increasing

localization is benefiting BHFC, with rising supplies of engine, transmission, and

chassis components.



Capex has slowed in infrastructure and industrial capital formation, particularly

in power plants and water projects. Large-scale projects from previous years

have been completed, while new mega projects are yet to commence. This is

likely to lead to a slowdown in the domestic non-auto segment in the near term.



Export industrial revenue grew ~7-8% YoY and was largely driven by strong

growth from oil & gas and aerospace segments.



Its aerospace segment continues to be a key growth driver with a quarterly

revenue run-rate of INR5-6b currently and is expected to surpass triple digits per

quarter in FY26. BHFC has approved new investments in landing gear machining

and high-precision ring mill forgings. This facility is likely to commence

production by FY27 end and the segmental revenues can potentially double

from there, post this.



Oil & gas revenue grew ~60-70% YoY in 3Q, over a low base of last year. This

sector can potentially see strong growth going forward which is contingent on

the development of pipeline infrastructure in the US.



The standalone business won orders worth about INR7.83b in this quarter



Standalone capex for FY26 is estimated at ~INR3b, with an additional INR2-2.5b

allocated for Indian subsidiaries. Investments will be concentrated on India's

business, including the new aerospace facility.

Update on Defense



Defense revenue was INR3.4b and the slower ramp-up was due to the lumpy

nature of the business. For 9M, defense revenue grew 49% YoY to INR14.9b.

This segment has seen order wins of INR1b in 3Q with outstanding orders of

INR57b.



The domestic ATAG order is likely to be awarded in the next 3-4 months.

However, serial production will commence 15-18 months from now.



A new MoU with L3 Harris opens opportunities in C4I (Command, Control,

Communications, Computers, and Intelligence) for defense electronics.

Update on Overseas subsidiaries



Weak demand in Europe and the US persists due to industry transition to EVs

and economic uncertainty. EU operations posted INR100m EBITDA, while the US

operations reduced losses to INR60m (with 60% utilization). Margin

improvement in the US has been driven by cost reductions and efficiency gains.



Demand softness in Europe and customer-specific challenges impacted

performance. While efforts are underway to reduce these losses, weak

performance is likely to be sustained in the coming quarters as well given weak

demand. The company is conducting a comprehensive review of its European

manufacturing footprint, with a clearer direction expected in six months.

February 2025

AUTOMOBILE | Voices

Update on JS AutoCast



JSA reported a 20% YoY revenue growth in 3Q, reaching INR1.66b.



On the back of strong new order wins, management is confident that this

business can ramp up to INR10b in revenues within the next 6-8 quarters. They

are also confident of improving margins in this business by 250-300bp from here

and would be driven by operating leverage, cost reduction, and an improved

product mix.

BOSCH

Current Price INR 27,272



Neutral

Click below for

Detailed Concall Transcript &

Results Update



The auto industry grew 3% YoY in Q3FY25 as OEMs adjusted production to

manage inventory levels post the festive season. PVs grew 4% YoY, led by

healthy growth in SUVs and aggressive festive promotion. As a result, inventory

was reduced to 55 days from 75 days earlier.

CV demand remained weak due to a slowdown in mining and construction

segments. However, buses and tipper segments are experiencing strong growth.

LCV growth remains muted due to a slowdown in economic activity in urban

regions.

Additionally, there is some shift visible from the SCV <2T segment towards 3Ws.

Tractors have posted healthy revival backed by favorable monsoon, improved

yield, and high MSPs. While 2W saw a festive surge in Oct, demand weakened in

Nov-Dec.

For BOS, its mobility segment grew 1.6% YoY, led by growth in the aftermarket

(8.8%) and 2W (+23.9%) segments. Aftermarket growth was led by high demand

for diesel systems, batteries, and lubricants. The 2W segment growth was led by

strong demand for exhaust gas sensors as well as a ramp-up of OBD2-based

models by some OEMs. The after sales division is likely to grow at 8-10% in the

long run.

The consumer goods segment has posted 8.8% YoY growth, led by strong

growth for grinders, drillers, cutters, spares, and accessories.

The energy and building technology division also posted 8% YoY growth, led by

higher orders for the installation of public address systems and video

surveillance systems.

The company has launched a VCU and accelerator pedal module in an EV model

introduced by

one of India’s largest UV OEMs.

Additionally, its EMS solution has been assembled for the first time in one of the

iconic 350 motorcycles in India.

Employee costs remained elevated as the company continued to invest in new

products. It expects employee costs to continue rising gradually for the same

reason.

The company is in the process of further restructuring its operations in order to

be competitive in the mobility business in India. For the same, an amount of

INR471m has been provided as an exceptional expense in Q3.

The company has entered into an agreement with Keenfinity India Private Ltd

(wholly-owned

subsidiary of its parent) to sell its Building Technology division’s

products, comprising video systems, access and intrusion systems, and

communication systems, for a cash consideration of around INR5.95b. This

segment generated revenue of INR4b and EBIT margin of about 6%. This sale is

February 2025

AUTOMOBILE | Voices

part of the parent company’s global strategy to exit this business at a global

level.

For certain products, the company is being screened for potential global

opportunities in products like electrification and hydrogen-based components.

In fact, for hydrogen-based components, it is closely working with the parent

company for potential global opportunities (local for global strategy).



CEAT

Current Price INR 2,706

Buy

Click below for

Detailed Concall Transcript &

Results Update

CEAT’s 3QFY25 performance:



The company reported volume growth of 7.9% YoY and revenue growth of

11.6% YoY. International and replacement segments have grown in double digits

in value terms, while OEM witnessed mid-single-digit growth.



OEM

–

MHCV continues to decline in the low single digits, 2W growth has

slowed but remains close to double digits, while passenger car growth has

slowed to low single digits.



Exports- Positive export growth, particularly from Europe, with TBR moving to

higher levels.



Replacement- Double-digit CV growth, driven by stronger radial demand; MHCV

grew mid-to-high single digits. Rural demand surged by 40-50% over urban,

boosting 2W and agri demand. Passenger car replacement demand is modest at

mid-single digits.



Demand outlook: For the coming quarters, in the replacement segment, CEAT

expects high single-digit growth in the truck bus segment, double-digit growth in

2W, and low single-digit growth in the farm and passenger segments. However,

in the OEM segment, 2W OEM is expected to grow in the high single digits, PV

low single digits, and CV OEMs are likely to remain weak in the near term.



Exports are likely to grow in double digits in 4Q as well.



Geopolitical issues and currency headwinds in Brazil persist, but GTM in the US

and Europe is improving, which drove strong quarterly performance in

passenger and TBR with a positive outlook ahead. Sri Lanka’s economic recovery

has helped revive that business, which has met CEAT’s targets for the fiscal.



Camso acquisition will help improve contribution from international business to

26% post-integration, which currently stands at 19%.



Non-Camso exports saw 46+ off-highway product launches in 3Q. Key OEM

approvals include ITL, Magna, JD Brazil, and Accomassi Ferguson. It has also

expanded OHT channels in the US and entered Vietnam and Peru.



The integration of CAMSO will generate synergies for OHT from 2HFY26. OHT's

share, currently at 15%, is expected to more than double with the acquisition.

The Camso acquisition will be funded through internal accruals as well as debt.



RM costs increased marginally by 1-1.2% QoQ in 3QFY25.



EBITDA margin contracted QoQ due to an increase in RM prices. CEAT has

received a 3-4% price hike in the indexed category of OEMs and a discussion-

based price hike in the commercial segment of OEMs.



In replacement, it has taken price increases in commercial and farm to the

extent of 1% to 1.5% in 3Q, about 4% in PCR replacement. However, it did not

take a price hike in the 2W segment barring a minor 1% hike at the end of 3Q.

They hope to take similar small price hikes in coming quarters in 2Ws.



EVs- It has about a 25% share of business in 2W and 4W EVs.

February 2025

AUTOMOBILE | Voices



Capex for 3Q stood at INR2.5b, and the same for YTDFY25 stood at INR7.13b,

with full-year guidance maintained at ~INR10.5b. The board approved a 2W

capacity expansion at Nagpur to 100k tyres per day.

In Chennai, PV capacity can be increased from the planned 20k to 35k-40k tyres

per day at peak brownfield capacity. TBR capacity can rise to 3k tyres per day,

with the current capacity at just 30%.

Debt reduced by INR0.50b to INR18.35b in 3QFY25. Working capital increased in

the previous quarter due to higher raw material inventory, particularly natural

rubber, driven by longer lead times. However, working capital reduced by

INR0.84b QoQ in 3Q, with further opportunities to normalize it in 4Q.

Craftsman Automation

Current Price INR 4,093



Neutral

Click below for

Detailed Concall Transcript &

Results Update



Guidance: For the first time, management has provided some indicative

guidance of what to expect in coming years, based on orders in hand and

integration of the new acquisitions

They expect to post revenue of around INR70b in FY26. Beyond the 3Q run rate,

the new Kothavadi plant is expected to contribute INR1-1.5b, while the new

Hosur plant is likely to contribute INR1.5bn of revenues in FY26.

They expect consolidated EBITDA to improve by 29% YoY to INR11b and deliver

40% growth in EBIT to INR7b.

Capex guidance for FY25 stands at INR8.5b (invested INR7b in 9M). Capex is

likely to reduce by 50% in FY26E.

Consolidated debt stands at INR18b, with D/E of 2.24x. They expect to sell the

Gurgaon land in 1QFY26 for around INR3b and use these proceeds to reduce

debt. Post this, D/E would come down to a comfortable level of 1.4x.

Sunbeam: Now a wholly owned subsidiary since Oct’24, posted a turnover of

INR2.84b with EBIT of INR100m.

The Gurgaon plant relocation has begun and is expected to be completed by

1QFY26, after which the land sale will be considered.

About 50% of employees opted for VRS and were relieved in Nov’24, with the

remaining to be settled by April-May. Post the relocation of Gurgaon plant and

the VRS, employee costs are expected to reduce by 30% with further reductions

expected going forward as they focus on automation.

The order book remains comfortable, and the company expects a reasonable

turnover and positive EBITDA in 4Q.

Sunbeam is expected to turn EBIT neutral by 2QFY26 and will be EBIT positive

for the full FY26.

Craftsman Germany reported consolidated revenue of INR560m with positive

EBITDA and expects to maintain this in 4Q. Its order book for CY25 is fully

booked.

Fronberg is expected to see modest growth of 5-10%, with strategic benefits

from cross-collaboration between Craftsman and Fronberg teams.

Bhiwadi: This plant has been operational in a record time of eight months. It is

operating at 20-25% utilization and expected to ramp up to full speed by July.

This plant posted EBIT loss of INR200m due to start-up costs. It is expected to

become EBIT neutral in 1QFY26, and by the end of FY26, it will be EBIT positive

with high single-digit margins.

February 2025

AUTOMOBILE | Voices



Hosur: The new greenfield alloy wheel plant at Hosur is planned to complement

the Bhiwadi plant, catering to customers in the South. Both Bhiwadi and Hosur

plants are fully booked with orders for CY25.

The Hosur plant will be operational by 2QFY26 and will reach full capacity by 4Q.

The revenue potential for the Hosur and Bhiwadi alloy wheel plants is expected

to be around INR4b each and the plants are likely to reach the peak by FY27.

Kothavadi- It is developing powertrain components for stationary engine

applications, a market that is seeing significant demand by AI-led data center

growth. It has secured engagements with five of the top 10 global players in the

segment, with trials underway at Unit 3.

Several samples have been supplied to customers, and production is expected

to begin in 4QFY25 upon approval.

Given the long gestation for these projects, the major ramp-up of this plant is

likely to be in FY27.

However, some engineering parts will be produced at the Kothavadi plant,

generating approximately INR1.50b in revenue for the next FY.

For the stationary engines and machining capacity (including the Arasur plant),

the expected revenue in FY28-29 is around INR8.5b.

Aluminium:



The aluminum business is set to reach INR40b in revenue next year, including

the alloy wheel capacity ramp-up.



They are now reaching a size where global players are showing interest to

consider them for global opportunities.

Industrials:



The order book for automated storage is full for the next year, positioning the

company to benefit from increased profitability in this area.



3Q automated storage revenue was INR1.42b, with a projected full-year

revenue of INR5b. Craftsman ranks among the top two Indian players in this

segment.



Exposure to ICE and evolution of product portfolio:



Around 90% of the powertrain products are related to ICE, with a small portion

being fuel-agnostic (e.g., transmission parts). The focus on powertrain remains

on commercial vehicles, construction equipment, and the farm segment, with a

growing emphasis on stationary engines. Further, with many MNCs setting up

large capacities for stationary engine applications in India, India is emerging as a

production hub for the same. Hence, management expects minimal EV risk in

the powertrain segment going forward.



In the aluminum business, the company has de-risked its portfolio by

diversifying into passenger vehicles and alloy wheels. The casting processes are

flexible and can cater to both ICE and EV applications. The aluminum content is

expected to increase in both ICE and EVs given OEM increasing their focus on

light-weighting.

February 2025

AUTOMOBILE | Voices

Eicher Motors

Current Price INR 4,807



Sell

Click below for

Detailed Concall Transcript &

Results Update

Leadership transition: Mr. Siddhartha Lal has now been appointed as the

Executive Chairman of Eicher Motors. Mr Vinod Aggarwal has been appointed as

the Vice Chairman (non-executive) of Eicher Motors. He will continue to be the

MD and CEO of VECV. Mr Govindrajan has been appointed as the MD of Eicher

Motors. He will continue to be the CEO at Royal Enfield.

Royal Enfield update



In 3Q, RE posted a strong 17% YoY growth in total volumes. While domestic

sales were up 13% YoY, exports grew 71% YoY over a low base. Even retail sales

for 3Q grew 19% YoY.



The QoQ margin contraction is attributed to the company’s focus on growth. It

launched models like Goan Classic, Batallion Bullet, and Scram 410 with

enhanced features but without any price increases, which impacted margins.

Additionally, after the launch of the Batallion Bullet model, the mix shifted in

favor of the Bullet segment in 3Q. Apart from this, it incurred expenses related

to the Motoverse and the global launch of its EV brand, Flying Flea. New launch

expenses stood at INR700m (of which the EV brand launch accounted for

INR200m). The company also spent on market activation activities in 3Q to

boost demand (impact 70bp).



Management has indicated that it will continue to focus on growth and start

shortlisting products that need marketing support to drive growth. It indicated

that it intends to push brand-building activities towards models like Hunter and

Guerilla over the coming quarters to drive demand. It will also look at investing

in improving the brand awareness of its recent launches.



Given its focus on growth, management has indicated that earnings growth

should be evaluated on an absolute basis rather than in terms of margin.



Inventory has now normalized to 2-3 weeks.



On a YTD basis, RE exports have seen 38.5% YoY growth and have been driven

by strong growth in the UK, Brazil, Italy, Europe, and the Americas. In fact,

retails in these markets have been 8-9% higher than wholesales, according to

the management. By 4Q, it will have launched all its models in all key markets.



The company has maintained its market share in the middle-weight motorcycle

segment in key regions globally: 1) No. 1 player in the UK; 2) amongst the top

three in Europe with 8.5% share; 3) 8% share in the Americas; and 4) 9% share in

APAC.



While sentiment in export markets remains weak, management maintains a

cautiously optimistic outlook for export growth in FY26E. It will invest in brand-

building activities in exports in FY26E.

VECV update



Management has indicated that discounts have been trending downwards and

are expected to continue, as all OEMs recognize the importance of pricing

discipline in the industry.



VECV launched its first SCV EV, Eicher Pro X, at the Bharat Mobility Show last

month.



Its spare part and servicing revenues grew 25.6% YoY to INR 7.1b.



Financials: Revenue grew 6% YoY to INR 58b. EBITDA margin expanded 80bp YoY

to 8.8%, aided by strong service revenues. PAT grew 44% YoY to INR3b.



While CV demand has remained weak for 9M, management is hopeful of a

recovery over the coming quarters as the government focuses on infrastructure

spending.

February 2025

AUTOMOBILE | Voices

Endurance Technologies

Current Price INR 1,878



Buy

Click below for

Detailed Concall Transcript &

Results Update

Stoferle acquisition in Germany

enhances its presence among German OEMs

and strengthens its vertical integration.



They signed SPA on 12th Dec’24 and they await EU antitrust approval. The

companies expect to close the transaction by FY25 end.



Stoferle has been a competitor of ENDU in transmission components. It has in-

house machine building capabilities and automation expertise.



For almost 60% of its products, Stoferle has been a sole supplier to OEMs. For

the balance 40%, ENDU was competing with Stoferle for business. After this

acquisition, ENDU will be the sole supplier for 80% of the products.



Thus, this acquisition will reinforce ENDU’s position in Germany.



Stoferle also has sound financials: EUR80m in revenue with 18-20% EBITDA

margin, and it is a net cash company.



Further, the SpA and Ingenia Automation acquisitions enhance ENDU’s in-house

machine-building, benefiting Indian operations. EU operations are managing

SpA internally for early payback.

Expansion Projects



The Auric Shendra

4W casting plant will be ready by Feb’25, with SOP planned

for Jun’25. This green facility, with zero waste to landfill, will house automated

die-casting machines and advanced finishing equipment. The plant has secured

a machine casting order from Valeo, with peak annual sales of INR730m, and an

INR1.5b export order from a premium global OEM.



The AURIC Bidkin 2W alloy wheel plant is on schedule and is expected to help

ENDU expand its OEM customer base.



ENDU is setting up a new G45 R&D facility for the suspension business, which is

set to open by Mar-Apr’25.

This facility will be four times larger than the existing

setup, strengthening OEM trust and enhancing its technological leadership in

suspension systems. The existing R&D setup will be used for the expansion of

suspension capacity.

Update on segmental new order wins



ENDU secured new orders worth INR7.8b, with 50% for EVs and 40% for 4Ws.

Key OEMs include HMCL, HMSI, Kawasaki, and TVS. It has won Al die castings

orders worth INR3.8b in FY25 from TTMT, Valeo, Ather, HMCL and Piaggio.

Brake orders stood at INR1.71b, transmission at INR524m, and drive shafts at

INR450m, mainly from Mahindra.



In the suspension segment, ENDU has secured INR1,430m in new orders in FY25,

including premium 2W models and e-scooters.



The braking segment has received INR1,710m in orders and now supplies brakes

to all major 2W OEMs in India. ABS production capacity stands at 650,000 units

annually. Beyond Bajaj and RE, the company is in advanced discussions with two

more OEMs for ABS opportunity. Its dual-channel ABS is planned for launch in

1QFY26.



In the transmission segment, clutch orders from HMCL and Royal Enfield will

boost sales by INR1,000m in FY26. It has also won drive shaft orders worth

INR450m. Management expects this business to touch the INR1,000m run rate

soon. It also expects to get orders for drive shafts from 4W OEMs in FY26.

February 2025

AUTOMOBILE | Voices



4W Suspension:

ENDU is entering the 4W suspension segment via a tech tie-up

with a leading Korean firm, initially as a second source but aiming for the

primary supplier status in new platforms. Strong OEM interest is driving ongoing

discussions, with a planned greenfield facility. Despite OEMs' preference for

home-country suppliers, ENDU is engaging with Japanese and other OEMs, by

leveraging its cost-competitive technology and performance.

4W braking business:

ENDU plans to enter the 4W braking segment, targeting

commercialization in 4QFY25. Development is underway with BWI, its existing

technology partner, for 2W braking systems.

New 4W EV orders:

ENDU has secured orders worth INR2.2b for its new AURIC

Shendra plant, including business from Valeo and a large unnamed customer

(INR1.5b). Discussions with additional customers are ongoing. This expansion

enhances ENDU’s casting business, targeting high-margin

exports and EV-related

applications. The company leverages its leadership in aluminum die-casting and

engineering capabilities to drive further growth.

Maxwell:

It is seeing strong growth and profitability, with a robust product

pipeline for 3Ws and 2Ws. While mass production is limited to one or two

customers, multiple discussions are underway. The company is also developing

allied products like motor control units and battery management systems.

Embedded electronics and EV readiness:

ENDU is advancing mid- and high-

voltage BMS via XP Safe and HP Safe for applications from 2Ws to grid storage,

ensuring cost-effective solutions through semiconductor partnerships. It is also

expanding into motor control and power electronics, enhancing OEM

opportunities. EV sales in 3QFY25 stood at INR722m (3.5% of total), with 96% of

its product range being EV-agnostic.

State incentives:

ENDU has submitted all necessary documents for state

incentives of INR80m for 2H. Booking in 4Q depends on the government issuing

the eligibility certificate, which is at an advanced stage.

Escorts Kubota

Current Price INR 3,020



Neutral

Click below for

Detailed Concall Transcript &

Results Update



Domestic Tractor:

Industry grew 13.5% YoY to 267k units, with North & Central

regions up 2.5% and the rest of India up 28.6%. EKL’s domestic volumes stood at

31,585 units (+6% YoY), with a market share of 11.8%. Industry growth for FY25

is expected at 6-7%.

Tractor Industry

is expected to grow by 14-15% in 4QFY25, with 1QFY26 also

expected to see healthy growth given positive rural sentiment. Outlook for FY26

depends on the monsoon, which remains a key demand driver.

EKL wholesale market share stood at 11.8%

for 3Q. Retail market share remains

higher than wholesale market share due to inventory rationalization, now at

four weeks (from six weeks earlier). EKL’s market share was impacted by higher

industry growth in non-core markets (South, West, Chhattisgarh, Odisha,

Jharkhand). Market share is expected to improve over the next 3-6 months,

supported by product interventions and channel expansion.

EKL launched the PROMAXX

series under the Farmtrac brand (30-50 HP) to

strengthen its presence in Gujarat, Maharashtra, Chhattisgarh, Odisha, and MP,

with more product launches lined up.

February 2025

AUTOMOBILE | Voices



Captive financing

has started selectively and will scale up in 2HFY26, aiding

market share growth.

Export volumes declined to 971 units (vs. 1,371 YoY), with ~27% of sales to the

Kubota Global Network. New specialized products for the European market

have entered production, with exports commencing from this quarter. Exports

are expected to grow 20-25% in FY26, aided by a low base and increased access

to Kubota’s European network (~5,000 units currently).

Export margins are in

line with domestic margins, though contribution per unit is slightly lower;

however, realization is better due to exchange rates.

Non-tractor revenue & machinery: Non-tractor revenue (agri machinery,

engines, services, and spares) formed 21% of agri machinery revenue, up from

19% YoY. The harvester segment grew over 30% YoY, but it is currently

imported, impacting margins. Margin improvement is expected once localization

begins. Kubota and Tractec hold over 30% share in the harvester segment.

Construction Equipment (CE): Industry volumes for cranes, backhoe loaders,

mini excavators, and compactors grew ~14% YoY, led by backhoe loaders

(+18%). EKL’s CE volume stood at 1,989 units (vs. 2,008 YoY), with revenue at

INR5.2bn (+4.1% YoY). EBIT margin improved to 11% (vs. 8.1% YoY), aided by

pricing actions and operating leverage. New emission norms from Jan’25 will

increase costs by 10%+ (BS3-to-BS5) and 5-6% (BS4-to-BS5). Given a weak

demand outlook, the cost pass-through may take time. This is likely to hurt

margins and profitability in FY26.

Railway Equipment Business (Discontinued Operations): Revenue declined 2.2%

YoY to INR2b. The order book stands at INR8.9b, excluding INR3.8b orders for

freight wagons, which are on hold. The railway division posted a PBIT of

INR440m, with a margin of 21.9% for the quarter.

Greenfield Plant: The company expressed interest in acquiring land in UP after

cancelling Rajasthan plant plans. Management is awaiting confirmation from the

Government on the same.

Happy Forgings

Current Price INR 900



Buy

Click below for

Detailed Concall Transcript &

Results Update



CVs:

The domestic

CV sector remained weak due to fund release delays and

slow financing, with M&HCV volumes down 7% YoY in 9MFY25. Recovery is

expected in 4Q, driven by infra push and export incentives.

EU and NA heavy-duty truck sales declined by 10-15% in CY24, with leading

OEMs reporting a 9% decline in deliveries for 9MCY24. Despite

this, HFL’s CV

sales saw only a marginal decline, outperforming broader market trends.

HFL launched new CV products on its 14k-ton press line, with revenues expected

from April onwards.

Farm equipment:

The domestic FE segment showed signs of recovery, with

HFL’s sales outperforming industry production growth in 9MFY25. However,

exports remained weak due to a significant decline in EU and North American

markets. Strong OEM relationships and recent client additions position HFL well

for a rebound when demand recovers.

Industrial segment:

Despite a global industrial slowdown, this segment is

expected to contribute 18-20% of total revenue over the next two years (from

February 2025

AUTOMOBILE | Voices

14% currently), with the potential to exceed 30% in 4-5 years if new capex

ramps up on expected lines.

Passenger vehicles:

It has secured an INR1.4b order from a leading Indian OEM,

with deliveries starting in FY26 and peak annual revenue expected at INR0.3-

0.5b. Deliveries of e-axle components for NA clients began in 3Q. On the back of

its new order wins, this segment is expected to contribute 8-10% (~4% now) of

revenue over the next few years.

Exports & Tariffs:

Exports contribute ~19% directly and ~9% indirectly to

revenue. While the EU and NA CV and FE sectors are experiencing a downturn,

HFL’s direct exposure to NA exposure remains low at ~4%. Testing for new PV

segment products is ongoing as planned, with no immediate tariff concerns.

However, the potential tariff impositions on Mexico, Brazil, and Canada remain

unclear for India, making it too early to assess any impact.

New product development:

HFL is developing small crankshafts for portable

gensets and the power sector, marking a new segment for the company. It is

expanding into heavy axle programs in Europe, targeting industrial, material

handling, mining, and excavator applications. Lightweighting initiatives are

underway in PVs, and pilot lots for front axle beams in CVs have been

completed. The company plans to set up a ring rolling line for the bearing

segment, though no business has been finalized yet.

RM:

Steel price decline impacted revenue by INR100m in 3Q and INR340m in

9M. The company also faced a scrap price hit of INR1.5-1.8b as this is not a pass-

through in OEM contracts. Inventory correction is largely completed, and steel

prices are unlikely to rise in the next 1-2 quarters unless demand from the

infrastructure sector strengthens.

Capex:

HFL announced an INR6.5b capex plan to establish advanced forging

capabilities for heavyweight components (>250kg), catering to power

generation, marine, mining, oil & gas, wind energy, and aerospace & defense.

The company is targeting 7-8% of the INR100b global market, currently

dominated by a European player with a 40% share.

Over 50% of this capex will likely be spent in FY26, with the remainder in FY27.

The facility, set to be operational by FY27, will be one of the largest in Asia.

It expects asset turns for the new heavy-duty forging business to reach 1.2-1.3x

at full scale. Even at 0.8x utilization, RoCE is projected to exceed 30%, with ASP

of over INR500/kg. Initial ramp-up to 0.5-0.6x utilization is expected in two

years, with 0.8x utilization achievable in three years. Large orders in discussion

could accelerate this timeline for which clarity is expected over the next 1-2

quarters.

Overall, for FY26, capex is expected to be INR4b, which includes investments in

heavy-duty forging lines and additions of the 10k-ton and 4k-ton press lines for

forgings and machining. Utilization on the 14k-ton press line stands at ~57-58%.

INR0.3-0.4b would be routine capex (included in total capex). The majority of

new capex is focused on export-oriented non-auto large components (250kg-

3T).

The Jammu facility is awaiting government approval, with proposals filed for

INR1.6b. The formation of a subsidiary has been completed but election delays

have impacted the execution.



February 2025

AUTOMOBILE | Voices

Hero MotoCorp

Current Price INR 3,880



Buy

Click below for

Detailed Concall Transcript &

Results Update



Strategy and leadership:

HMCL’s 2030 strategy focuses on four pillars: growing

the core, winning in premium, building EV leadership, and diversifying revenue.

Portfolio reshaping continues with four launches at Bharat Mobility (Xtreme

250R, Xpulse 210, Xoom 125, and Xoom 160).

Key Management Changes:

Mr. Niranjana Gupta (CEO) has decided to step

down from his post to pursue other opportunities. Mr. Vikram Kasbekar,

Executive Director (Operations) has been appointed as the Acting CEO w.e.f. 1st

May’25. Mr. Ranjivjit Singh has also

stepped down from his role as Chief

Business Officer. The current National Sales Head for India, Mr. Ashutosh

Verma, will become the new CBO for the India business unit from 1st May’25.

Further, Mr. Ram Kuppuswamy, currently the chief procurement officer, will

assume the additional role of Chief Operations Officer (Manufacturing) w.e.f 1st

Apr’25.

Outlook:

Post-festive, 2W demand saw a temporary slowdown, but is expected

to pick up with the upcoming wedding season and March festivities. On the back

of its new launches, management expects HMCL to post double-digit revenue

growth for both FY25 and FY26E. Rural contribution increased by 3% during the

festive period. The company expects this momentum to continue even in FY26,

given positive rural sentiments.

Impact of the Budget on 2W demand:

Income tax cuts benefit the INR0.6-1.2m

annual income segment, which is HMCL’s key customer base. As per

management, increased disposable income of INR40k-50k could support 2W

EMI payments, boosting demand in the coming year.

Exports have grown at 40% YoY during the quarter, double the industry rate.

Market Share & Sales:

HMCL’s domestic 2W retail market share rose 520 bps

QoQ to 32.8%, with HMCL posting the highest ever quarterly retail sales at over

2m units, growth of 11% YoY. This was in turn driven by highest ever festive

retails of 1.6mn units, growth of 13% YoY

EVs:

This business will remain a part of the standalone entity. Lower

investments in the last 1-2 months were due to the transition from Vida V1 to

V2. With V2 now fully stocked with most dealers, HMCL expects market share

recovery in 2W EVs in the coming months.

Its EV business is positioned on three pillars—accessible, affordable, and

aspirational. The recent launch of Vida V2 targets the sub-INR100k segment,

which makes up 60% of the EV market. Retail expansion and broader portfolio

coverage are expected to drive market share gains. HMCL is optimizing BOM

costs through localization and PLI benefits. While the focus is on scaling up its

presence in EVs, it intends to keep a close watch on profitability as well.

PLI Compliance for EVs:

HMCL's entire EV portfolio is expected to be PLI-

compliant in FY26.

Hero FinCorp:

Loan book grew 13% YoY to INR55.5b. Credit costs increased by

150bp to 6% due to lower collection efficiency, particularly in personal loans.

Efforts to improve collections are showing positive trends in Dec’24 and Jan’25.

Profitability, impacted in 3Q, is expected to recover with improving collection

efficiency.

February 2025

AUTOMOBILE | Voices



OBD phase 2 norms:

Management expects to transition all models to new

norms well within the timeline of 1st Apr’25. It expects to take a price hike of

about 1-2% for the same. Unlike in the previous transition, management has

clarified that they can produce existing models till Mar31st.

HMCL would launch a new platform in partnership with HD in FY26.

Hyundai Motor

Current Price INR 1,877



Buy

Click below for

Detailed Concall Transcript &

Results Update



Domestic SUVs account for 67.6% of volumes.

Rural sales contribution increased to 21.2% from 19.7% YoY. The contribution of

SUVs, even in rural regions, is stable at 68%.

CNG penetration increased to 15% from 12% YoY after the launch of dual-

cylinder variants.

In exports, demand in the Middle East (37% of exports) was down 10% YoY due

to the Red Sea crisis. Demand in Latin America was down due to adverse macro.

On the other hand, demand in Africa (28% of mix) was up 15% YoY as HMI

pushed sales in the region with the help of some pricing levers.

HMI expects stability in export markets in coming quarters. Growth drivers: 1)

Hyundai India is an export hub for Latin America, the Middle East and Africa

markets; 2) HMI intends to evaluate export opportunities for Creta EV globally;

and 3) Exter left-hand drive, likely to be ready in the next 12 months, is

expected to see huge opportunities in key markets.

Management expects the domestic PV industry to post low-single-digit growth

in CY25.

3Q margins impacted by: 1) export push in Africa with the help of pricing levers;

2) high discounts in the domestic market; 3) one-time compensation given to

employees after the IPO.

Discounts in 3Q stood at 2.6% of domestic ASP, up from 1.9% QoQ. Discounts

have declined QoQ in 4Q so far. Leading from the front, HMI increased prices in

Jan’25, followed by other OEMs.

Royalty has remained largely stable QoQ at 2.7% of revenue.

Fiscal incentive from Tamil Nadu govt stood at INR1b in 3Q.

Its Pune plant is on track to commercialize production by CY25 end, with initial

capacity of 170k units p.a. New launches are likely to coincide with this.

Management expects the new Creta EV to reach 10% penetration within Creta

portfolio.

HMI aims to localize the battery EV ecosystem, including cells, powertrain,

power electronics, etc.

Management has indicated that, with the support of its parent, HMI would look

at alternate powertrains, including EVs, flex fuels, CNG and hybrid for the Indian

market to comply with emission laws.

Management has indicated that HMI would announce a dividend policy by FY25

end.

February 2025

AUTOMOBILE | Voices

Mahindra & Mahindra

Current Price INR 2,757

Buy

Click below for

Detailed Concall Transcript &

Results Update

Auto update



Its market share in the <3.5T pick-up segment improved 230bp YoY to 51.9%.

Management is hopeful of demand recovery in the segment in the coming

quarters as the current slowdown remains puzzling.



Additionally, in the e-3W segment, it continues to maintain its market

leadership, with a 41.8% share in Q3. With the launch from large OEMs, the L5

EV penetration has now increased to 24.9%.



M&M has implemented a 0.7% price hike in YTDFY25 and another 0.8% hike in

Jan’25.



The auto segment margin expanded 120bp YoY to 9.7%.



The marketing spend for the new EV launches is allocated to MEAL and, hence,

is not part of the standalone auto division performance.



They are currently constrained by the gasoline powertrain capacity for XUV 3XO.

While they had planned for a 65% gasoline mix for the model, it is currently

trending much higher at 80%. It expects to raise XUV3XO’s capacity by 2k units

per month, bringing its capacity to 9k units per month.



The capacity for the Thar Roxx stands at 9k units per month and is fully fungible

now between the 3-door and 5-door variants. It plans to further increase the

capacity of this model by 2k units in a couple of months. Prior discounts on the

3-door Thar variant have now been withdrawn.



In exports, there is a strong demand for XUV3XO in South Africa. Currently, the

company is focused on leveraging existing models in existing markets (South

Africa, Chile, Australia, New Zealand, etc). Phase 2 will involve M&M launching a

lifestyle pick-up for global markets. At a later stage, the company plans to

explore exporting its EVs globally.

FES segment update



Tractor volumes in Q3 were up 20% YoY. M&M has gained 240bp market share

in Q3, reaching its highest-ever level at 44.2%. Even on a YTD basis, it has gained

170bp share, reaching 43.9%.



One of the reasons for M&M’s strong outperformance is the successful refresh

and transformation of Swaraj, which has been well-received by customers. It has

now entered the 20-30 HP segment with a good product and has gained market

share. Additionally, its strong markets of South and West are now seeing a

demand revival.



Most of the inventory correction required for M&M in tractors is now complete.



The farm machinery business has grown 12% YoY in Q3 and at 20% on a YTD

basis. Management believes there is still significant potential for further growth

in this segment.



Some of its international subsidiaries are seeing subdued performance, partly

due to hyperinflation in Turkey and weak demand in key regions. The company

is currently evaluating some of these subsidiaries, with the process expected to

be completed by Q4.



Standalone FES margins have expanded 260bp YoY to 18.1%. Excluding the

Powerol and Farm Machinery segments, core tractor margin expanded 190bp

YoY to 19.5%

February 2025

AUTOMOBILE | Voices

Given the strong rural sentiments driven by favorable indicators, management

expects the tractor industry to grow by 15%+ in Q4. This is likely to lead to a 10%

growth in the tractor industry for FY25E. While management has refrained from

providing guidance for FY26, it expects the industry to post growth in FY26E as

well.

EV update



M&M will commence bookings of the BE 6E and XE 9E from 14th Feb onwards.

Given the encouraging initial response, management expects to sell 5k units per

month in the initial months of the launch.



With the new EVs, it is attracting a fairly new profile of customers, largely in the

INR25-30 lakh price range, many of whom would not have considered

purchasing an M&M vehicle earlier.



From Q4 onwards, the impact of the EV ramp-up will be visible on standalone

financials, as the standalone entity is engaged in contract manufacturing for

MEAL.



Maruti Suzuki

Current Price INR 12,679



Buy

Click below for

Detailed Concall Transcript &

Results Update



3Q retails grew 8.3% YoY to 573k units:

This marked the highest-ever

performance, driven by festive momentum and higher discounting. This resulted

in a 3.5% retail growth for MSIL over 9M. The company expects to deliver similar

retail growth in 4Q.

Rural (+15%) is performing better than urban (+2.5%) for MSIL.

In the hatchback segments, higher-end hatches are outperforming the lower-

end ones. Similarly, in rural areas, consumer trends are increasingly aligning

with urban regions, with a noticeable shift toward premiumization.

Inventory at the end of December stood at just nine days.

3Q margin contracted just 30bp

QoQ, which can be attributed to the following:

1) sales promotion up 20bp QoQ; 2) higher marketing spend due to the launch

costs of Dzire and e-Vitara

–

up 40bp QoQ; and 3) adverse forex of 30bp QoQ.

This was offset by lower input costs (30bp) and operating leverage benefit

(30bp).

Discount for Q3 stood at INR 30,990 per unit vs 29,300/unit in Q2.

MSIL continues to witness strong growth across many export regions, including

Africa, LatAm, ME, and ASEAN. Export revenues for 3Q stood at INR65b.

MSIL announced a price hike of 30bp on net sales in Jan’25.

e-Vitara will be exported to over 100 countries globally. MSIL is poised to

become the No. 1 EV OEM by production in India in its first year of launch.

With the launch of the e-Vitara, it plans to develop an EV ecosystem, including a

charging network, dealer capability, roadside assistance, etc.

The launch of the new Dzire has received a very positive response, selling more

than the previous variant, with about 20k pending bookings. The mix of the top

two variants has doubled to 37% from 19% for the old variant.

The CNG mix for MSIL stands at 30%+.

The company is currently evaluating the PLI compliance requirements for EVs.

Additionally, while the battery for e-Vitara will initially be imported, the

company plans to consider localizing production at a later stage.

The new Karkhoda plant will be operational from Q4FY25.

February 2025

AUTOMOBILE | Voices

Motherson Wiring

Current Price INR 50



Buy

Click below for

Results Update



MSUMI is in various stages of completion for the three new greenfield plants as

below: 1) Pune plant

–

SOP for EV + ICE plant has begun in 2Q, while the same

for EV only plant will begin in 4QFY25; 2) Navagam (Gujarat) plant

–

SOP for EV

only plant by 1QFY26 and the same for EV + ICE plant by 2QFY26; 3) SOP for

Karkhoda plant by 2QFY26.

These are sizeable plants with a peak combined revenue potential of INR21b,

i.e.,

~25% of MSUMI’s FY24 revenue. They have secured business

from large

Indian OEMs, including MSIL, MM and TTMT, for their upcoming new model

launches in coming years. Management has indicated that MSUMI remains the

preferred supplier for new-age vehicles by MSIL, MM and TTMT.

EV mix of total revenue stands at 3-4%.

Capex guidance for FY25 stands at INR2b. MSUMI has so far invested INR1.2b in

9MFY25. It has invested about INR400-600m in each plant, excluding the cost of

land and building, which MSUMI has taken on lease from SAMIL.

For high-voltage wiring harness, the company has localized the cables and few

connectors. However, based on OEM plans, the target would be to continue to

drive up the localization going forward.

SONA BLW Precision

Current Price INR 510

Neutral

Click below for

Detailed Concall Transcript &

Results Update

Business update



Weak demand in the EU, US off-highway market, and India's CV market

adversely affected the core differential gears and assembly businesses.



In North America, inventory build-up in 1H led to significant corrections in

recent months; management expects normalization of supply schedules by

Mar’25.



Supplies to a key customer will be impacted over the next two months due to

the transition to an upgraded model, with further disruption expected in

4QFY25.



EVs:

Revenue from BEV grew ~48% YoY to INR3.29b in 3QFY25, making up 39%

of total revenue.



Region-wise EV industry outlook:

China is likely to remain the fastest-growing

market in EV penetration globally. Management does not expect EVs in the US

to grow materially next year. While there is a slowdown in the industry, EV

penetration is likely to be on an uptrend in Europe. Further, India is likely to be

one of the fastest-growing EV markets globally given the strong line-up of new

models from many OEMs.



New orders:

The order book has increased to INR232b as of 3QFY25 from

INR231b.



The company has won a program for differential assembly for electric passenger

vehicles for the Indian market. This has added INR3b to the order book, for

which SOP is likely in 2QFY27.



EVs accounted for ~76% of the order book. In 3QFY25, it added one new EV

program, taking the total number of awarded programs to 57 across 32

customers.



Board of directors has approved an investment of USD4m in ClearMotion Inc., a

leading software-defined chassis company. It will own a 1.5% stake in the

company after the full conversion.

February 2025

AUTOMOBILE | Voices



Its proactive suspension and road sensing software provide a smooth riding

experience even on uneven road surfaces. The initial addressable size for the

product is USD4b, largely for premium cars. The company will progressively

move to a higher volume segment. ClearMotion has successfully commercialized

this technology, and it is already under production for Nio ET9.

Differentiated technology:

ClearMotion’s active suspension

technology

controlled by SONA’s BLDC motor-controller

based actuator has 5x lower

latency compared to the other existing alternatives available in the market.

In 3QFY25, it has commercialized one product, zone monitoring sensor, and

added two new future products- i) Robotics/EVTOL gearbox, and ii) Limited Shift

Differential (LSD) to its technology roadmap.

Increasing focus on China:

Asia (excl. India) currently contributes just 6% of

total revenue. Management has indicated that the company will increasingly

focus on having a presence in China, Japan and South Korean regions in a bid to

ramp up its global market share further.

Its global market share has improved in differential gears from 8.1% in CY23 to

8.8% in CY24 and in starter motor from 4.2% to 4.4%.

Tata Motors

Current Price INR 681

Click below for

Detailed Concall Transcript &

Results Update

Neutral

TTMT’s CV business



4Q CV volumes are expected to be flat YoY after a decline posted for 9MFY25.

This itself is expected to be a positive outcome and would set a good base for

growth for FY26. Management believes there are positive tailwinds for the

sector, which include improving fleet operator profitability led by improving

utilization levels and higher freight rates.



TTMT’s CV market share has declined 150bp to 37.7% for YTDFY25.



There are some signs of stress in financing in segments like SCVs, especially for

first-time buyers.



CV segment margins have improved 130bp YoY to 12.4%, 90bp of which was

driven by the accrual of PLI benefits for 9M.



RoCE for the CV business stands at 38.1%.

TTMT’s PV business:



Management expects the PV industry to post 2% YoY growth in FY25E, in line

with the trend for 9M.



TTMT PV business was able to improve market share by 70bp on a QoQ basis in

retail terms in 3Q.



Dealer inventory has now been reduced to less than 25 days.



Punch was the No 1 model in the industry in 2024 and continues to be the No 1

model in FY25YTD.



The supply-side

issues on the Tata Curvv have been addressed in Jan’25. Of the

automatic variants, one of them is likely to be available from 4Q itself, following

which one can expect the full benefit of this model. One other factor that is

impeding the ramp-up of this model is the new body style of the vehicle, which



customers are taking time to adapt. However, management is confident that

once its visibility on the road rises, its sales will pick up.



While the EV mix has reduced to 11% for YTD from 13% for FY24, the CNG mix

has improved to 24% from 16% in FY24.



They have managed to maintain a 53% market share in EVs despite a significant

increase in competition.



PV ICE segment margin is down 100bps YoY due to a decline in ASP.



PLI benefits accrued in the EV segment had a 150bp positive impact in 3Q.

Without this, the EV segment would have been EBITDA break even in 3Q.

February 2025

AUTOMOBILE | Voices

All of TTMT’s products are expected to qualify for PLI as they meet the 50%+

DVA criteria. Currently, TTMT has PLI certifications for Tiago and Tigor. The

company expects to receive the same for Punch in the coming quarters followed

by the Nexon. TTMT will receive 13% of revenue as a PLI incentive, net of vendor

claims. This can go up to 18% as the revenue keeps rising.

Consolidated:



At a consolidated level, net auto debt stands at INR 192b. TTMT India has a net

cash of INR700m. While JLR has a net debt of INR 123b, TML Holdings has a net

debt of INR75b



The demerger of PV and CV businesses is on track with the appointed date for

the same as

1st Jul’25, subject to all approvals.



The CV and PV businesses have delivered a strong FCF of INR25.2b in 3Q. The

company has invested about INR60b on a YTD basis and is on track to meet its

capex guidance of INR80b for FY25E.

JLR: Key takeaways from the management commentary



North America has seen 25% YoY growth on a YTD basis and 48% YoY growth in

3Q. The 3Q sales were boosted by timing issues on the homologation of certain

models on a QoQ basis.



However, China sales have been noticeably weak with contribution from the

region down to 9% of mix from 15% YoY.



In terms of models, RR, RRS, and Defender mix improved to 70% in 3Q from 62%

YoY. This has more than offset the impact of weak sales offtake in China.



JLR ASP declined to GBP72k per unit from GBP74k per unit QOQ as benefits from

a strong model mix were offset by a weak China mix, adverse forex impact, and

rise in VME.



EBIT margin for the quarter has improved to 9% (vs. 8.8% YoY) with the bulk of

the benefits being driven by a reduction in depreciation. Depreciation is likely to

remain stable at these levels for the next three quarters. It will again start rising

with the launch of the new EVs from 4QFY26 onwards.



VME has increased to 4.2% from 1.7% YoY. Management expects VME to

marginally rise in coming quarters due to weak demand macro.



Warranty provision has increased in 3Q due to a rise in costs. However,

management expects the same to have peaked in 3Q and expects the same to

start reducing in FY26.



Management has maintained its EBIT margin guidance for FY25 at 8.5%. This

translates into a 10.2% (vs. 9.2% YoY) EBIT margin for 4Q

–

which we think is a

tough ask, especially in the current adverse macro in its key markets.

Management may have, however, lowered its revenue and RoCE guidance for

FY25E due to the ongoing slowdown in China. It intends to reaffirm its FY26

guidance at the annual event post-4QFY25.



On a YTD basis, FCF stands lower at GBP 151mn due to increased capex (GBP

2.9bn) and increased working capital requirement.



If the US and UK regulators do not revisit the stated mandates for EV transition

in their regions, JLR’s cost for emission compliance is likely to rise in the future.



BEV launch pipeline:

RR EV is expected to commence deliveries from Q4CY25

followed by 1st BEV from EMA architecture in mid-2026. The Jag EV is expected

to be launched in late summer of 2026. In Jag EV, the company would not focus

on market share but have a strong presence in the premium end of the EV

segment.



February 2025

AUTOMOBILE | Voices

Tube Investments

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

Buy

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

Engineering:

The muted revenue growth in the engineering division was

primarily due to lower metal prices, though volumes grew 7-8% YoY. Exports

remained steady at 19-20% of revenue, but future demand remains uncertain

due to macroeconomic volatility.

Metal Formed:

Margins weakened due to lower pricing in the railway segment

and a temporary dip in PV-related demand, particularly in the door frame

business, due to model and year-end changes. The company expects margins to

normalize, targeting a sustainable PBT margin of 10-11%.

EV segment:

It remains committed to achieving USD1b in revenue from its EV

business by 2029. The company believes it is on track despite market evolution.

TIINDIA's 3W volumes underperformed the industry with a flat YoY growth at

1,837 units sold in 3Q, vs. the industry growth of 19% YoY. Management

reasoned that while 3Q industry growth was led largely by festive boost which is

prevalent in North and West India, TII has a stronger market presence in South

India and it has not lost share in this region. The EV penetration in the 3W

passenger L5 segment reached ~25% (Apr-Dec). The company has aggressive

plans for both passenger and cargo EVs, with scale-up plans from 1QFY26.

Profitability is a challenge industry-wide. The company would target to be

operational breakeven in FY26 aided by scale.

Truck deliveries fell from 42 in 2Q to 36 in 3Q, contributing to the revenue

decline from INR1.46b to INR1.27b. It sees an early-mover advantage in HCV

goods segments in EVs, where TII seems to be the only large-scale player for at

least another year, which will allow it to build a strong position in the segment.

They target to launch one new SCV and a new tractor EV in 4Q with a ramp-up

in FY26. TII aims to achieve operating breakeven for its two existing EV products

in the next FY, while the other two will still require investments.

Losses in 3Q increased due to a reduction in 3W PM-e-drive incentives (cut from

INR50k per vehicle to INR25k / unit), higher product development expenses,

costs related to the newly commissioned Tech Center, and increased fixed costs

for ramping up new products in tractor and SCV segments.

Capex for EVs:

It plans a capex of INR3b for its four EV business segments in

FY26E. The company is sufficiently funded for at least two more years in

TICMPL.

EV distribution:

The Company is exploring export opportunities for its EV

business and expects to consider it over a 2-3-year horizon. However, the

priority remains on establishing a strong domestic presence first.

Network:

3W Business

–

88 operational dealers, with plans to reach 100+ by the

end of FY25E. SCV: The company has given dealer LOIs in 15 cities, with dealers

expected to be operational by the end of the FY. Tractor: Targeting 10 dealers

by the end of the FY.

EV Chain Market:

While most EV scooters still do not use chain drives, one OEM

is in the early stages of developing a chain-based system as a replacement for

belts. The overall chain market remains strong due to sustained motorcycle

growth and a large aftermarket demand.

Medical devices:

It expects to complete its CE certification by 4QFY25, with

growth anticipated thereafter as customer relationships and distribution

channels continue to develop. The delay was due to the company’s name

change, which led to delays of a couple of quarters.

Depreciation:

Standalone capex stood at INR2.95b as of December, with higher

depreciation driven by these investments.

Optical Lens Business:

Progress has been slower than expected. Limited

customers are willing to source only lenses from India, and the company is

February 2025

AUTOMOBILE | Voices

cautious about investing in full camera module production due to pricing

challenges against Chinese competitors. It aims to achieve efficiency at the lens

level before considering forward integration into camera modules.

Moshine Business:

It has struggled to scale its investment due to supply chain

dominance by China in the electronics sector.

Export Opportunities: The company exports 35-40% of its exports to the US,

with half of it linked to long-term OEM relationships, making it relatively

insulated from immediate tariff changes. Beyond the engineering division,

export growth opportunities are being explored in bicycles, Metal-Formed

products, and industrial chains.

Acquisition Strategy:

The decision of the Murugappa Group to acquire

Hupergroup is based on the nature of the business. New platforms in entirely

different sectors, like inks and chemicals, are kept outside of TI. Management

has indicated that they would remain focused on existing TI2 and TI3 businesses

and target to ramp them up, before considering further inorganic growth

options. Management also indicated that valuations are currently not

supportive of considering inorganic growth.



TVS Motors

Current Price INR 2,383



Neutral

Click below for

Detailed Concall Transcript &

Results Update



Domestic:

Expect growth momentum to continue in FY26. The 2W retail market

grew ~9% YoY, with rural growth slightly higher at ~10%. Healthy reservoir

levels, improved crop outlook, and higher infrastructure investments are

expected to support demand going forward.

International:

During 3Q, Africa showed improvement, with expectations for

further growth in 4Q. Entry into Morocco is set to boost momentum in North

Africa, while the HLX 125 five Gear, launched last quarter in key African markets,

has received a very positive response.

LATAM continues to perform well, with consistent MoM growth. Sri Lanka’s

reopening is a positive development in the Asia market, where Nepal is

performing well. While Bangladesh faces challenges, a recovery is anticipated in

coming quarters. The Middle East also continues to perform well overall.

It has reported export revenue of INR20.18b during 3Q vs INR22.29b in 2Q.

EV- TVSL

reported EV revenue of INR8b in 3QFY25.

2Ws: EV industry volumes grew 36% YoY during 9M with penetration now at

5.8%, slightly better than the last year. The iQube is available at 900 dealerships,

with the potential to expand to 1,400 main dealerships schematically.

3W:

TVS recently launched King EV Max, offering a 179 km range, quick 2-hour

15-minute charging, and advanced features for better ROI and earning potential.

The 3W category is growing faster, with penetration at 21% YTD and 26% last

quarter, expected to rise further.

TVS Credit:

The company reported an AUM of INR271.9b (+7% YoY) with PAT

growth of 40% YoY at INR321cr. D/E improved to 2x from 5x, with a capital

adequacy ratio of 19.4%. GNPA stood at 3%. Collections were strong at INR70b

vs INR50b in 3QFY24; disbursements of INR74b vs INR69b in 3QFY24.

Capex:

Guided for capex for FY25 of ~INR13b and investments of INR17b.

Norton’s product development is on track, with launches expected by the end of

this year and early FY26. FY26 will be pivotal for Norton’s market entry.

Investments are focused on product readiness, E-Bikes, new technology via TVS

Singapore, and setting up a new international hub in Dubai to tap into

opportunities in Africa, the Middle East, and Europe.

February 2025

AUTOMOBILE | Voices

The merger of Sundaram Auto Components involves its plastic business, 100%

owned by TVS Motor. It plans to sell this business along with 24+ acres of land

near the factory. There will be no additional business or revenue transferred to

TVS Motor as part of this process.



PLI:

Will see the benefits of the full year to be accounted for in 4QFY25 and later

it will be accrued every quarter.

Others



OBD-II B norms:

TVSL preparing products for launch by April 1, 2025, with lower

price increases compared to the BS4-BS6 transition.



Spare parts revenue in 3QFY25 was INR9.5b vis-à-vis INR9.3b in 2QFY25.



Gross margins:

Steady over the quarters, with minimal material cost changes

and insignificant price increases in 3Q.



Technology:

Added 500 employees, with continued investment in capability

building and software for global market growth and new tech areas.



February 2025

CAPITAL GOODS | Voices

CAPITAL GOODS



| Voices

Management maintains a positive outlook across key sectors, including power transmission & distribution,

renewable energy, data centers, railways, and defense. Public capital expenditure is anticipated to rebound in

the coming quarters, while private sector inquiries are expected to materialize from Q4FY25 onwards. In the

defense sector, management remains highly optimistic, forecasting a ramp-up in order inflows from 4QFY25,

with a strategic focus on improving the share of export orders in FY26. In the Powergen industry, genset

volumes are expected to improve sequentially but remain lower year-over-year. Demand in the railway

sector, though delayed, has impacted execution timelines for players. With the election schedule now largely

over across main states, management expects the focus to shift towards capex in coming quarters.

KEY HIGHLIGHTS FROM CONFERENCE CALL

Outlook



Domestic Capex Cycle

Robust demand from data centers, manufacturing,

real estate, etc.

Industrial demand is robust, fueled by construction,

rail, mining, etc.

Strong demand from infra, construction, railways,

and defense, while Powergen demand will stabilize in

the next two quarters.

The outlook remains healthy with robust order

prospects in the near term. The government has

started to rebound, which will provide an impetus to

infrastructure.

The pipeline is the strongest in three years, primarily

in power, steel, cement, refining, and

petrochemicals. Certain large projects were delayed

due to design changes and shifts in timelines by

customers.

Cummins



Double-digit revenue growth guidance for FY25 and

FY26.



KOEL



Larsen and

Toubro

FY25 revenue guidance hiked to 15%. Order inflow

guidance of 15% will likely be exceeded. A margin

guidance of 8.25% was maintained.



Thermax



Bharat

Electronics



Guidance maintained for FY25: INR250b order inflow,

15% revenue growth, 42-44% gross margin, and 23-

25% EBITDA margin.

Robust prospects for exports and aftermarkets for

the near to medium term.

Domestic order inflows to improve on the back of

improving inquiries.



Triveni Turbine



Inquiries are up 75% from steel, cement, MSW,

chemicals, biomass, petrochemicals, etc.

Hitachi Energy



Robust traction in power T&D, HVDC, renewables,

data centers, etc.

Kalpataru

Projects



FY25 to see 12-13% revenue growth, PBT margin at

4.5-5%, NWC below 100 days, and order inflow

guidance of ~INR220-230b.



Strong domestic and international T&D pipeline,

driven by the shift towards renewable energy.

Healthy traction in real estate, data centers, etc.

KEC

International



FY25 order inflow guidance at ~INR250b will be

surpassed, while revenue growth will be slightly

lower at 12-14%, with margin guidance of 7.5%.



The tendering pipeline in both India and

internationally is very strong at ~INR1.5t.

Zen

Technologies



Guidance maintained for FY25 with revenue/EBITDA

margin/PAT margin at INR9b/35%/25%.



February 2025

CAPITAL GOODS | Voices

Bharat Electronics

Current Price INR 253

Buy

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Results Update

Major orders executed in the quarter



Management stated that the major orders that were executed in 3QFY25 were

for LRSAM, WLR (weapon locating radar), Shakti EW systems, ADCRS for

Akashteer systems, and the execution of a civilian project (CIVIC). As of this

date, out of the INR711b order book, around INR200b-250b worth of orders

consist of orders for LRSAM, electronic fuses, Himshakti, Arudhra radar, and

BMP-2 upgrade.

Order inflows to peak in 4Q



Order inflows for 9MFY25 were around INR110b and the management had

guided it to reach INR250b for FY25. The company continues to maintain that

guidance and is confident that the gap of INR140b will be filled in by the end of

4QFY25. Management stated that the large orders that they were expecting are

in the finalization stage and orders for the same should come in within 1-2

months. Major orders expected are Ashwini Radar, EW Suite for MI-17, Atulya,

and Himshakti, et al.

Status on prototype order for KAVACH



Management stated that for the orders on Kavach, they are in the process of

developing an indigenous product for the prototype order they received from

the railways. The same is expected to be completed by Jun-Jul’26.

After this

R&D stage, the same will be submitted to railways for further integration and

testing, which takes around 4-6 months. The company expects to get clearance

and certification on this by Dec’25-Jan’26 and will be ready for the next bid.

Share of non-defense to increase in the future



For the past few years and the first nine months of FY25, the share of non-

defense in revenue and order book has been between 7-9%.

The company’s

target is to initially increase that to 10-15% and later maintain it at 20-25% level.

To achieve that, management plans to enter different markets such as network

and cybersecurity-related business, and homeland security. Management also

stated that it wants to target data centers and border security for the same.

Company guidance



The company continues to maintain its FY25 guidance for revenue of +15% YoY,

Gross margins to be 42-44%, EBITDA margin to be in the range of 23-25%, and

order inflows to reach INR250b.

Cummins India

Current Price INR 2,693



Buy

Click below for

Detailed Concall Transcript &

Results Update



Domestic powergen:

Demand continues to be robust on the back of

infrastructure investments, data centers, real estate, manufacturing, hospitals,

and other mission-critical

applications. A large part of the company’s product

portfolio is localized, and the company is looking at further localization.

CPCB 4+ products:

Pricing will take 1-2 quarters to settle for industry

participants, while for KKC, it is largely stable, given that the company launched

its CPCB 4+ range in Jul’23. This launch also allowed KKC to bring down the

TCO

for its customers. Until the last quarter, CPCB 2 inventory was available in the

market, but it has been exhausted now. CPCB 4+ products accounted for ~40%

of 3QFY25 powergen revenue.

Industrial segment:

It reported 24% YoY growth on the back of robust backlog

execution in the construction and railways space. Railways is a tender-based

February 2025

CAPITAL GOODS | Voices

business and KKC continues to see base demand holding up. 9MFY25 revenue

breakup: Construction: INR4.5b, Rail: INR3.6b, Mining: INR1.7b, and Others

INR12.9b.

Exports:

Export trajectory is improving in the Middle East and LatAm, while

other geographies are a mixed bag. The company will observe the impact of US

tariffs on different regions very closely. Export revenue breakup

–

HHP: INR2b

(+47% YoY; +1% QoQ), LHP: INR2.2b (47% YoY; +9% QoQ).

3QFY25 revenue breakup:

Industrial

–

INR5.1b (+24% YoY), Powergen

–

INR12.7b (+18% YoY), Distribution

–

INR7.5b (+13% YoY), HHP exports

–

INR2b

(+47% YoY), and LHP exports

–

INR2.2b (+47% YoY).

Margin: 9MFY25 gross margin has probably reached peak levels, while future

margin performance will be determined by a combination of pricing, volumes,

product, and segment mix.



Hitachi Energy

Current Price INR 10,603



Sell

Click below for

Results Update



Order book execution

–

Revenue from the recently awarded HVDC projects for

FY26/27/28: The company secured an HVDC order to transmit renewable energy

from Khavda to Nagpur, covering 1,200 km and transferring 6000 MW of

renewable energy. The contract duration for execution is 48 months for bipole 1

and 54 months for bipole 2. Revenue recognition for the project will be low in

the first 12 months but will pick up significantly in the second and third years.

The company recorded its highest-ever order backlog of INR190b, ensuring

strong revenue visibility for upcoming quarters.

Status of Mumbai Adani HVDC project:

It uses VSC (Voltage Source Converter)

technology

–

a first-of-its-kind project in India. The execution is on track, with

the company leveraging its end-to-end capabilities in India.

Margin outlook

–

The company achieved a double-digit EBITDA margin of 10.3%

in 3QFY25 and maintains it further as revenue scales up. Forex gains and

operational efficiencies contributed to higher profitability.

Capex

–

The company plans to invest INR20b over the next 4-5 years to a)

expand the transformer factory and testing facilities, b) increase traction

transformer capacity, and c) strengthen network control and export capabilities.

The company is also planning to raise INR42b through QIP to fund capacity

expansion, M&A, and working capital requirements.

Exports

–

Export orders now contribute over 40% of total orders, excluding the

large HVDC project. The company is leveraging parent company expertise and

targeting strong growth in exports over the long term.

Extraordinary items

–

Exchange and commodity gains amounted to INR519m in

3QFY25. The company became debt-free as of 3QFY25, aided by advances from

HVDC projects and strong collections.

Services & Digital business expansion -

New service business unit launching

from FY26 to leverage ~INR820b worth of installed assets. ~10% of HVDC project

value will come from commissioning & services.

February 2025

CAPITAL GOODS | Voices

Kalpataru Projects

Current Price INR 941



Buy

Click below for

Detailed Concall Transcript &

Results Update



T&D segment

–

There is continued strong traction across both domestic and

international geographies given the global thrust on renewables, increasing

electrification, and grid expansion. In India, the pipeline looks very strong for the

coming 3-4 years, including HVDC projects. KPIL is confident of achieving 20-25%

revenue CAGR over the coming three years; however, the availability of labor

continues to be an issue.

Non-T&D

–

B&F, oil & gas, and urban infra segments continue to witness

healthy traction, while Railways would continue to be sluggish. In B&F, KPIL

doesn’t see any impact of weak private capex sentiments and is witnessing a lot

of traction in real estate, factories, PSU buildings, etc. In oil & gas, margins from

the Saudi Aramco order have not reached the recognition threshold, and FY26

will see ~40% execution and corresponding margin recognition in the high single

digit. Because of the political instability in Bangladesh, the execution of the

railway's order has been affected but is picking up now. KPIL intends to foray

into the African market for railway projects going forward.

Water

–

The collection trajectory continues to be slow, which has led to a

stretched WC cycle. Of the Water order book of ~INR100b, JJM projects account

for 75-80%. KPIL is confident of collecting receivables worth ~INR5-7b in the

next 2 quarters. While it remains cautious in the short term, the company is

optimistic about the long-term prospects on the back of budgetary allocations

for JJM projects. It has received payments from Odisha and MP, but UP is still

lagging, which forms a major portion of the Water segment’s order book.

Non-core assets

–

Sale of VEPL to be concluded in FY26, with an equity value of

~INR5b. Shubham is at a breakeven level. The company has invested ~INR690m

in road BOOT assets in 9MFY25 and expects to invest another INR290m in

4QFY25. In FY26, the investment would be below INR500m. The Indore real

estate inventory is expected to be cleared in a few weeks.

International subsidiaries

–

LMG is sitting on a record order book of INR31.4b,

while its revenue doubled YoY in 3QFY25. Fasttel was impacted by a sharp

weakening of the Brazilian Real and is expected to break even in FY26.

Guidance

–

Owing to the slowdown in Water projects, FY25 revenue growth

guidance has been trimmed to 12-13%. However, management maintained PBT

margin guidance at 4.5-5%, NWC below 100 days, and interest cost as a % of

sales below 2%. Except for Railways, all other segments will report double-digit

execution growth in FY26.

Kirloskar Oil

Current Price INR 608



Buy

Click below for

Detailed Concall Transcript &

Results Update



Powergen segment:

Demand has corrected owing to the CPCB 4+ transition and

pre-buying in previous quarters in LHP and MHP nodes where KOEL is dominant.

OptiPrime is seeing a healthy response, however, KOEL will need to ramp up its

marketing efforts as its presence in the HHP nodes is minimal. Industry volumes

are expected to recover to 36-38k units in 4QFY25 from ~32k units in 3QFY25.

Price discovery is still playing out with some nodes seeing a correction while

others have experienced an increase.

Industrial segment:

Demand continues to be strong from construction, defense,

railways, mining, and oil & gas sectors. Defense continues to be a key growth

area and the company doesn’t see any softening in demand. While the flat

budgetary allocation for railways is expected to have a bearing on power car

demand, KOEL believes it has other growth avenues. Notably, the CEV-V

February 2025

CAPITAL GOODS | Voices

emission norm change has helped the company gain market share with

construction OEMs.

Exports:

Exports declined 17% YoY, on a high base of 3QFY24 which saw the

delivery of a large one-time order (~INR400m). KOEL sees MENA and Americas

driving growth going ahead.

B2C:

The water management solutions segment (WMS) grew by 5% YoY while

the farm mechanization segment (FMS) revenues continued to decline (53%

YoY). Overall, B2C declined 3% YoY owing to the continued impact of the

consolidation of its manufacturing locations into a single unit in Sanand.

Accordingly, EBIT margin dipped to -9.3%, which is expected to normalize by

4QFY25. KOEL is evaluating its FMS business strategy closely, with adjustments

in product portfolio and business model.



KEC International

Current Price INR 744



Neutral

Click below for

Detailed Concall Transcript &

Results Update



Order inflows

–

KEC’s 3QFY25 order inflows saw a robust growth of 124% YoY at

INR86b, primarily driven by the T&D segment taking the order book to

INR374.4b (+24% YoY). Additionally, the company is L1 in orders worth INR40b

on the T&D side.

Total addressable market for domestic and international T&D Projects:

The

Indian government has announced an increase in renewable energy capacity

from 500 GW to 600 GW by 2032, which is expected to drive growth. Several

key orders have been secured, including a prestigious HVDC segment project for

PGCIL. The company's total order pipeline is INR1.5t, out of which around

INR500b is expected to be in the T&D segment. On international geographies,

the Middle East (Saudi Arabia, UAE, and Abu Dhabi) and the Americas are the

key growth drivers. Saudi Arabia has announced aggressive 2030 & 2040 T&D

expansion plans to support renewable energy and grid modernization. Abu

Dhabi’s power and renewables investment is increasing, providing new

opportunities.

Execution

–

Revenue grew 7% YoY to INR53.5b due to a conscious execution

slowdown in Water projects on account of delayed payments, labor shortage in

Civil and T&D projects, extended monsoon in South India, and Brazilian Real

depreciation, impacting SAE revenue in INR terms.

Civil segment

–

Bagged orders from residential and industrial real estate,

defense, and metals sectors. The company expects 15% growth in the civil

segment in FY26, driven by industrial (steel, metals, and mining) and commercial

segments. More focus is on selective order intake, ensuring better margins and

payment terms.

Railways segment

–

Legacy orders should see a physical completion in 1-2

quarters, while financial closure could take a year due to dispute arbitration.

Notably, newer orders have been booked at better margins, with average

execution below 12 months. Of the railways order inflow of ~INR20b, Kavach

orders account for ~INR7-8b. Of the overall railways capex outlay in the budget

of INR2.5t, KEC has a TAM of INR1.1t.

Cables business

–

Seeing steady growth, with orders from T&D, solar, railways,

and data centers. The company expects 11-12% revenue growth for FY26.

February 2025

CAPITAL GOODS | Voices

Customers are showing a preference for aluminum cables over copper due to

cost advantages, resulting in lower revenue growth as realizations are lower.

Capacity expansion

–

The upcoming aluminum conductor facility in Vadodara

will be commissioned by 4QFY25, while the elastomeric cables facility will come

online by 4QFY26. The company has successfully debottlenecked the Dubai and

Jaipur facilities for tower manufacturing, with the Jabalpur facility underway.

This will increase capacity from 422k MTPA to 468k MTPA of towers.

Others

–

With lower tendering in oil & gas, the company will focus on

international expansion and securing PQs. In case Mexico is imposed with tariffs,

KEC will ramp up supplies from India, which has a better margin profile. The

company is confident of achieving 110 days of NWC by 4QFY25, with a debt

reduction of INR5b and interest costs at 2.9% of 4QFY25 revenue.

Guidance

–

The company is on track to surpass its FY25 order inflow guidance of

~INR250b, with 9MFY25 OI of INR220.9b. Revenue growth guidance was toned

down to 12-14%, vs. 15% earlier. EBITDA margin at 7.5%, with 4QFY25 margin of

~9%, was unchanged.



Larsen & Toubro

Current Price INR 3,278



Buy

Click below for

Results Update



Core order book up 19% YoY

–

The order book at the end of 3QFY25 stood at

INR5.6t. Inflows during the quarter grew by 60% to INR963b. For the

Infrastructure segment, international geographies contributed to order inflow

growth (+33%), while domestic inflows declined 20% YoY. The domestic/

international mix stood at 58%/42%. The domestic order book comprises state

PSUs (39%) and states (26%), Center (15%), and private sector (20%). About 15%

of total order book is funded by multilateral agencies. 45% of the order book is

fixed price in nature.

Order prospects at INR5.51t

–

The prospect pipeline for 4QFY25 stood at

INR5.51t vs. INR6.27t for 4QFY24. This reduction was due to a fall in

hydrocarbon and carbon lite prospects. Infrastructure prospects stand at INR4t

spread across water (18%), power T&D (6%), renewable energy (3%),

transportation infrastructure (35%), buildings and factories (14%), heavy civil

(18%), and metallurgical and material handling (6%). Energy segment prospects

stand at INR1.44t, entirely from hydrocarbons, while Hi-tech manufacturing

prospects stand at INR65b.

Working capital at comfortable levels

–

The net working capital as a % of sales

at 12.7% saw a healthy improvement of ~390bp YoY. This was on the back of

gross working capital improvement and higher customer collections (INR591b

vs. INR494b).

Progress on new-age opportunities

–

LT received PLI incentives of INR3b for a

90,000 MTPA green hydrogen project at an incentive of INR11.11/kg of

hydrogen. The realization of the incentives depends on the timelines when the

project is set up and the output LT is able to generate. On the semiconductor

side, the company’s approach is to build up semiconductor designs, which will

be manufactured by other fabricators. It will explore in-house fab manufacturing

only in the longer term.

February 2025

CAPITAL GOODS | Voices



Signs of domestic capex bottoming out

–

Domestic ordering has slowed down

owing to the Center and state elections, coupled with selective private

investment. The company believes that economic activity has seemingly

bottomed out and there are initial signs of a rebound in government spending,

likely providing impetus to infrastructure spending in the near term.

GCC region looks promising

–

GCC region accounts for 84% of LT’s international

order book of INR2.37t. The region is strengthening its physical and digital

infrastructure while monetizing its oil & gas wealth. In addition to Saudi Arabia,

other countries too have embarked upon energy transition projects, which

provide robust visibility to the company. LT’s competencies such as oil & gas, gas

to power, and carbon capture are witnessing robust traction, with timely

payments. The company is able to compete well in GCC contracts and secure its

share of orders, as the addressable market has expanded. Labor availability is

not really a challenge, with the company having good relations with local

subcontractors.

Hyderabad metro performance

–

Average ridership saw a sequential decline to

445k pax/day vs. 468k pax/day in 2QFY25, owing to the festive holidays. PAT

loss came in at INR2.03b vs. INR2.54b YoY. The company expects further TOD

monetization to take place in 4QFY25 and aims to reduce debt from INR126b to

INR90b, which will help to bring down interest cost.

Thermax

Current Price INR 3,337



Sell

Click below for

Detailed Concall Transcript &

Results Update



Order pipeline

–

The strongest order pipeline in more than three years,

particularly in power, steel, cement, refining, and petrochemical industries.

Large projects had been forming but were delayed due to design changes and

shifting timelines by customers. Additionally, the company has been selectively

approaching larger government projects, owing to its past experience. January

saw a major INR2b order closure, with 4QFY25 expected to cross INR30b in new

orders and revenue. There is a need to secure consistent project inflows to

manage the base cost of INR1b.

Industrial Products

–

This segment has shown strong profitability and

consistency, with 40% growth in order inflow and ~30% growth in the order

book. The company has been focusing on expanding its heat pumps, gas

upgradation, and zero liquid discharge solutions. Services within industrial

products are highly profitable, with efforts to double service revenue.

International expansion in biomass and waste-to-energy segments is a key

growth driver. On the domestic side, a favorable policy environment for air

pollution, water and wastewater, ZLD, ethanol, semiconductors, biomass, WTE,

etc. will continue to bode well for the business going ahead.

Industrial Infra:

There is a conscious reduction in exposure to government

projects, while a selective approach will be adopted for future bids. A significant

improvement in orders is expected next year. Investment is increasing in

wastewater treatment, air pollution control, and desalinization plants. A push

toward cleaner energy and industrial sustainability is driving new business

opportunities.

Bio-CNG projects -

Bio-CNG has been a major area of investment, with over

INR1b already spent. The company is facing issues due to low conversion rates

February 2025

CAPITAL GOODS | Voices

from rice-based feedstock, volatility in moisture levels of feedstock, and

government-regulated pricing environment. There is lobbying for subsidies on

bio-CNG-derived fertilizers, which are a by-product of bio-CNG. The company

has multiple plants stabilizing operations and expects orders to resume in

2HFY26. Business grew from Nil to INR0.5b+ and TMX is targeting INR2-3b in

revenue in the next few years.

Green Solutions -

TOESL: Expects much higher ordering (INR0.5-1b) in 4Q, with a

pipeline of ~INR10b. Business is self-sustaining, with low funding requirement.

FEPL: Another disappointing quarter with heavy flooding in Chennai. FY26 losses

will narrow down from the FY25 levels. While the 1GW target remains intact,

the timeline will be a bit longer. Loan funding increased by ~INR3b.

Chemicals

–

Faced a temporary dip in profitability due to a mix impact, but it is

expected to recover in 4Q. TMX is investing in construction chemicals, flooring

solutions (Vebro partnership), and a new yet-to-be-announced product

segment. It acquired a new building for chemical expansion. TMX targets 16-

18% PBIT margins in 4Q and sustained growth next year.

Subsidiaries

–

TBWES: Doing extremely well with 8% margin and robust order

book. There was an ~INR150m hit owing to a government customer.



February 2025

CEMENT | Voices

CEMENT



Cement demand is opening up as capex is gaining momentum from the end of 3QFY25. Rural demand should

be positive with the good monsoon we have witnessed. Industry volume growth is estimated to be ~6-7% YoY

in FY26. However, prices are anticipated to improve gradually with improvement in demand. Industry players

are targeting cost savings in the range of INR100-300/t over the next two to three years. Further, they expect

~50mtpa capacity addition in FY26 (almost ~8% growth). Consolidation is intensifying in the industry with

higher capacity addition by large players and aggressive M&A activities. Expect sequential improvement in

profitability in 4QFY25 led by positive operating leverage, favorable fuel prices, and higher exit prices.

Capex plans



KEY HIGHLIGHTS FROM CONFERENCE CALL

Insights and future outlook FY25



UltraTech

Cement



Ambuja

Cements



Volume started to recover from Dec’24 and there

has been a demand recovery across all sectors,

including infrastructure, IHB, rural, and urban

demand. Urban demand, though, is maturing slightly

but continues to see growth.

The company aims for double-digit growth driven by

expanded capacities and targets a capacity utilization

of 80-85%. Industry demand growth is expected to

be at 6-7% YoY in 4QFY25 and FY26. Despite the

increased competitive intensity in the South region,

prices are likely to improve with a pickup in demand.

Cement demand is projected to grow 4-5% in FY25,

implying a better demand scenario compared to

1HFY25, driven by improved consumption, greater

demand in the housing and infrastructure segments,

and increased government spending.

Price hikes were implemented in mid-Dec’24

and are

expected to positively impact 4QFY25. However,

cement prices in the South remain more depressed.

The company’s exposure in the South region has

increased with the acquisition of a GU each in Tamil

Nadu and Penna Cement.

Avg. fuel cost declined to INR1.55/Kcal vs.

INR1.71/kcal in 2QFY25. The fuel consumption cost is

currently at the same level. The share of green

power in the total electricity consumption stood at

55.1% vs. 54.8% in 2QFY25. Further, improved cost

control was driven by a reduction in other expenses

The company has started operations of its state-of-

the-art, end-to-end solid waste feeding system for

municipal solid waste consumption at one of its

locations, and this system is being replicated at other

plants too. This initiative will help increase the share

of alternative fuel and improve the TSR level.

Y25 started slow due to the general elections in

1Q, followed by heavy monsoons in 2Q, with the

macro slowdown further impacting overall growth.

However, the company remains optimistic,

supported by healthy GDP growth and increased

government spending.

The company expects consolidation to continue in

the industry, with a large part of capacity addition

driven by the top four players. Currently, players are

aggressive in gaining volume/market share.

Competitive intensity is expected to be high in

South India, as small players acquired by larger



Capex in FY25 will be ~INR93b. In FY26, capex is expected

to be at INR80-90b for UTCEM and INR4-5b for Kesoram.

Capex in FY27 is expected to be at INR60-70b.

ICEM’s

capex will be at INR5b+. UTCEM will add an organic

capacity of 15mtpa in FY26. Including other big players’

capacity addition, overall supply in the industry is

estimated at ~50mtpa in FY26

The company has added 6.75mtpa clinker in 9MFY25 and

another 3.35mtpa will be added in 4QFY25. It will also

commission a clinker capacity of 10mtpa in FY26.

The company plans to expand its cement capacity to

140mtpa by FY28 and is progressing well to achieve the

stated target. With the acquisition of Orient Cement, the

company’s operating cement capacity will rise to 97mtpa

(post completion of the acquisition) from 89mtpa

currently. The company has identified 13 additional

grinding units, for which land acquisitions and statutory

approvals are currently in process. These units will help

the company achieve a capacity of 140mtpa by FY28.

Capex for FY25 is estimated at INR80b; 9MFY25 capex

stood at INR60b. The remaining balance will be utilized in

4QFY25 for ongoing expansions.

Capex is pegged at INR38-40b for FY25; it stood at INR32b

in 9MFY25. The full-year FY25 depreciation is estimated at

INR28b.



Shree Cement



Dalmia

Bharat



Capacity expansion of 2.4mt in the Northeast and 0.5mt in

Bihar is at the advanced stage. The company expects the

clinker capacity in the Northeast to be commissioned in

2QFY26. Capex stood at INR20.4b in 9MFY25 and INR6.6b

in 3QFY25. It is pegged at INR30b in FY25 and INR25b-

INR30b in FY26 (including land acquisition).

The company is likely to provide details of the next phase of

its expansion in the next six months, aiming to reach a

grinding capacity of 75mtpa vs. 49.9mtpa by FY26-end.

February 2025

CEMENT | Voices

companies seek to optimize these assets by ramping

up capacity utilization.



J K Cement



Volume growth for the company should be at 7-8%

YoY in 4QFY25 and ~10% in FY26. Most of the

company’s volume growth is coming from the

Central markets because of capacity additions in the

region. In the Central region, the company is

growing ahead of the markets

There has been some improvement in cement

prices in both the North and Central markets

recently. However, volume push at the year-end

needs to be seen. In FY25, the company will realize

cost savings of INR40-50/t and the rest of INR75/t

will be realized over the next few quarters. It is

trying to increase its share of green power and AFR

and also working towards logistics cost

improvement



Birla Corp



JK Lakshmi

Cement



BCORP remains cautiously optimistic about demand

recovery, projecting full momentum restoration in

4QFY25. Post the muted demand scenario earlier in

FY25, the Northern and Eastern regions witnessed

demand recovery and favorable price movements

toward the end of 3QFY25. The Kumbh Mela had no

material impact. However, the pent-up demand is

expected to be realized in the coming period..

The company’s core market in Central India has

been facing challenges due to overcapacity and

weaker demand in the trade segment, leading to

pricing pressures.

Demand showed recovery with better traction in its

operating markets. JKLC expects strong demand in

FY26, supported by pent-up demand related to

delayed capex.

It anticipates ~8% volume growth in 4QFY25,

aligning with industry growth expectations of ~6-8%

in 4QFY25.

Prices are also improving, backed by improvement

in cement demand. Cement price is currently up by

around INR75-100/t compared to the 3QFY25

average.



JKCE spent ~INR14b in 9MFY25 and capex in FY25/26 will

be at INR19b/INR17b. The capex of FY26 will largely be

towards Panna expansion (~INR14b) and maintenance

capex will be INR3b. JKCE is also trying to get approvals for

the Jaisalmer plant and will have better clarity by 2QFY26.

A clinker plant of 3.3mtpa at Panna and grinding units of

1mtpa each at Panna, Hamirpur, Prayagraj are expected to

be completed by Dec’25. Bihar GU should get

commissioned in 11-12 months.

Some modifications are being done at the Toshali plant

which is about to be completed now. The cumulative loss

from this plant in 9MFY25 was INR90m. This plant should

become EBITDA positive in FY26.

The company is getting limestone for existing capacities

under long-term agreements. However, limestone is not

available for future expansion. The state government is

considering JKCE’s proposal for the allotment of mining

reserves. This plant is expected to get normalized in

4QFY25 and JKCE will also launch its brand in the markets.

So far, the company has not provided any guidance on its

future expansion plan, beyond the ongoing capacity

expansion at Kundanganj (Line III) GU in eastern UP with a

planned capacity of 1.4mtpa.

Capex for 9MFY25 was around INR3b, and the total capex

for FY25 is INR5b, reduced from the earlier projection of

INR7b.



Surat GU Phase-I of 0.75mtpa is likely to be commissioned

in Feb-Mar’25

and Phase II of 0.6mtpa by Jun’25. Its

brownfield clinker/cement capacity expansion of

2.3mtpa/1.2mtpa at Durg, Chhattisgarh, and greenfield GU

at Prayagraj are expected to be commissioned in 1HFY27.

The Phase II expansion of 2.2mtpa grinding unit in Bihar

and Odisha should be commissioned in FY28. Also, the

greenfield capacity expansion of 1.5mtpa in the Northeast

is expected in FY28.

Surat GU Phase-I of 0.75mtpa is likely to be commissioned

in Feb-Mar’25

and Phase II of 0.6mtpa by Jun’25. Its

brownfield clinker/cement capacity expansion of

2.3mtpa/1.2mtpa at Durg, Chhattisgarh, and greenfield GU

at Prayagraj are expected to be commissioned in 1HFY27.

The Phase II expansion of 2.2mtpa grinding unit in Bihar

and Odisha should be commissioned in FY28. Also, the

greenfield capacity expansion of 1.5mtpa in the Northeast

is expected in FY28.

February 2025

CEMENT | Voices

Ambuja Cements

Current Price INR 480

Click below for

Detailed Concall Transcript &

Results Update

Buy

Demand and pricing



Cement demand is projected to grow 4-5% in FY25, implying a better demand

scenario compared to 1HFY25, driven by improved consumption, greater demand

in the housing and infrastructure segments, and increased government spending.



Price hikes were implemented in mid-Dec’24

and are expected to positively

impact 4QFY25. However, cement prices in the South remain more depressed.

The company’s exposure in the South region has increased with the acquisition of

a GU each in Tamil Nadu and Penna Cement.

Operational highlights



The blended cement mix in total sales volumes is at ~82%. Premium products as %

of trade volume increased 400bp to ~26% (flat QoQ). Kiln fuel costs stood at

INR1.66/Kcal vs. INR1.84/INR1.59 YoY/QoQ. The share of AFR in the fuel mix was

at ~8% vs. 9.5% in 2QFY25. The share of green power in the power mix increased

to 21.5% vs. 15.8%/18.2% YoY/QoQ. Additionally, the company has increased its

WHRS capacity from 40MW (at the time of acquisition from Holcim Group) to

197MW

and aims to expand it further to 218MW by Mar’25.



Freight costs declined due to footprint optimization, as overall lead distance

declined by 4km to 285km. Direct dispatches increased 7pp YoY to ~57%. Road

PTPK costs decreased by 2% to INR4.12 PTPK. The company has ordered 11

GPWIS rakes, all of which have been delivered and are running in the approved

circuit. These rakes will enable cost-efficient clinker movement from other plants

to the clinker grinding units. In addition, the company has ordered 26 BCFC rakes

for safe and cost-efficient transportation of Fly Ash from thermal power plants to

its facilities. Of these, five rakes have been delivered and another four are likely to

be delivered before Mar’25.



The company commissioned a 200MW solar power in Gujarat, Khavda, during the

quarter. It also secured 631mt of new limestone reserves (one in MP and one in

Karnataka) in 3QFY25.



The company now includes the volumes of Penna and Sanghi in its overall consol.

volumes (1.4 mt) during the quarter. The cost structures of both the companies

are currently in a transition phase, with various initiatives in place to reduce costs.

The capacity utilization for both entities is still sub-40%. The company estimates

INR100-150/t of impact on profitability due to the transition of these newly

acquired assets, which are still in the ramp-up and transition phase. It expects the

performance of both assets to improve going forward and reach 70%+ capacity

utilization in FY26. Additionally, both Sanghi and Penna brands (B and C

categories) have been transitioned into ACEM and ACC (A category).



The Sanghi plant has two kilns. Cost optimization and shutdown work have been

completed for the first kiln, while the second kiln remains shut down for full repair

and maintenance.



The company is set to receive a large bucket of incentives of around INR45b (over

the next seven to nine years).

February 2025

CEMENT | Voices

Capacity expansion and capex plan



The company plans to expand its cement capacity to 140mtpa by FY28 and is

progressing well to achieve the stated target. With the acquisition of Orient

Cement, the company’s operating cement capacity will rise to 97mtpa (post-

completion of the acquisition) from 89mtpa currently.



The 4mtpa clinker unit in Bhatapara (Chhattisgarh), along with associated grinding

units in Sankrail and Farakka (West Bengal) and Sindri (Jharkhand), is expected to

be commissioned by end-4QFY25. The GU in Salai Banwa, Uttar Pradesh, is set to

be commissioned in 1QFY26. The brownfield expansions at the Bathinda GU in

Punjab and the Marwar GU in Rajasthan are expected to be commissioned in

2QFY26. Additionally, the Kalamboli blending unit in Maharashtra, the Dahej GU

expansion in Gujarat, the Jodhpur (Penna) GU, and the Krishnapatnam GU are

expected to be commissioned in 3QFY26. The Maratha clinker unit of 4mtpa in

Maharashtra and the Warishaliganj grinding unit in Bihar are expected to be

commissioned by end-FY26, with the potential to reach 118mtpa by FY26-end.



The company has identified 13 additional grinding units, for which land

acquisitions and statutory approvals are currently in process. These units will help

the company achieve a capacity of 140mtpa by FY28.



Additionally, the Maratha clinker unit (4mtpa) in Maharashtra and the

Warisaliganj grinding unit in Bihar are set to be completed by FY26 end, bringing

the total capacity to 118mtpa. With 13 more grinding units planned, the capacity

is expected to reach 140mtpa by FY28.



Capex for FY25 is estimated at INR80b; 9MFY25 capex stood at INR60b. The

remaining balance will be utilized in 4QFY25 for ongoing expansions. The

company’s consolidated cash balance stood at INR87.6b as of Dec’24. Cash

outflow for the Orient Cement acquisition is expected to be INR40b (excluding the

cash required for an open offer, expected in FY26) in 4QFY25. With this, the

company expects a closing cash balance of around INR37.0b as of Mar’25.

Birla Corp

Current Price INR 974

Buy

Click below for

Detailed Concall Transcript &

Results Update

Demand and pricing



BCORP remains cautiously optimistic about demand recovery, projecting full

momentum restoration in 4QFY25. Post the muted demand scenario earlier in

FY25, the Northern and Eastern regions witnessed demand recovery and

favorable price movements toward the end of 3QFY25. The Kumbh Mela had no

material impact. However, the pent-up demand is expected to be realized in the

coming period.



The company’s core market in Central India has been facing challenges due to

overcapacity and weaker demand in the trade segment, leading to pricing

pressures.



The North region witnessed a strong uptick in demand as well as pricing, mainly in

the non-trade segment, where prices were significantly lower. The company also

benefited from its single-location plant at Chanderia Rajasthan.



The company deliberately limited exposure to non-trade sales to maintain

profitability and brand strength in the premium trade segment.

February 2025

CEMENT | Voices

The Mukutban plant emerged as a growth engine despite pricing pressures in

Maharashtra. The plant maintained ~40% premium product sales and

predominantly sold blended cement, despite being in an OPC-dominated region.

Operational performance



The company’s

capacity utilization stood at ~92% in 3QFY25 vs. ~85%/78% in

3QFY24/2QFY25. Blended cement sales stood at 79% in 3QFY25 vs. ~83%/83% of

total volumes in 3QFY24/2QFY25. Trade share stood at ~68% of total volumes in

3QFY24 vs. ~69%/71% each in 3QFY24/2QFY25. Premium products contributed

~59% of trade volumes in 3QFY25 vs. ~52%/62% in 3QFY24/2QFY25.



The share of renewable power stood at ~26% in 3QFY25 vs. ~23%/25% in

3QFY24/2QFY25. The company aims to achieve 35% green energy usage over the

next 1-1.5 years through hybrid solar initiatives. The lead distance was ~360km,

while for the Mukutban plant, it was ~425km.



Fuel consumption costs stood at INR1.50/Kcal vs. INR1.47/Kcal in 2QFY25.

Reduced reliance on petcoke and a shift toward indigenous coal helped contain

costs for the company. The Bikram coal mines are expected to reach optimum

utilization levels by FY27, which is expected to increase indigenous coal supply by

~30% and raise the overall mix of indigenous coal to ~55-60%.



Accrued incentives stood at INR600m in 9MFY25, with a projection of INR1.0b for

FY25.

Capacity expansion and net debt



So far, the company has not provided any guidance on its future expansion plan,

beyond the ongoing capacity expansion at Kundanganj (Line III) GU in eastern UP

with a planned capacity of 1.4mtpa.



Capex for 9MFY25 was around INR3b, and the total capex for FY25 is INR5b,

reduced from the earlier projection of INR7b.



Net debt stood at INR30.0b as of Dec’24.



Dalmia Bharat

Current Price INR 1,771

Buy

Click below for

Detailed Concall Transcript &

Results Update

Demand and pricing outlook



FY25 started slow due to the general elections in 1Q, followed by heavy monsoons

in 2Q, with the macro slowdown further impacting overall growth. However, the

company remains optimistic, supported by healthy GDP growth and increased

government spending.



Demand growth in 3Q was slower than estimated, registering low single-digit

growth due to lower government spending, unseasonal rains, and state elections.

Within regions, the east market saw better growth than the south. Sales volume

from Dalmia’s plants

grew ~4% YoY (as last year, it had 0.37mt volumes through

tolling arrangements with JP Group plants). Government spending may increase

20% YoY over Dec’24-Mar’25. The company expects ~6-7%

growth in 4Q, led by a

pickup in government spending and a seasonally strong quarter for construction

activities. Further, it expects industry growth to stand at ~6-8% YoY in FY26,

subject to a pickup in GDP growth.



The company continues to invest in brand building, expanding retail channels,

premiumizing its product mix, and maintaining its position as a low-cost producer.

Additionally, it is building practices/culture for long-term engagement, with a

strong focus on people, process, and culture.

February 2025

CEMENT | Voices

The company expects consolidation to continue in the industry, with a large part

of capacity addition driven by the top four players. Currently, players are

aggressive in gaining volume/market share. Competitive intensity is expected to

be high in South India, as small players acquired by larger companies seek to

optimize these assets by ramping up capacity utilization.

Operational highlights and cost insights



RM costs marginally declined due to a reduction in fly ash and limestone costs.

Fuel consumption cost stood at INR1.31/Kcal vs. INR1.36/Kcal in 2QFY25. The

benefit of lower fuel prices was offset by a reduction in the RE share (due to the

shutdown of WHRS). The share of RE stood at ~33% vs. ~39% in 2QFY25. RE

capacity is currently at 252MW, with an additional 21MW signed in 3Q (total at

297MW under the group captive arrangement).

The company expects RE’s share

in the total power mix to reach 42-45% by FY25-end and anticipates power costs

to decline in 4Q as the RE share increases.



Fright costs were higher, partly due to selling in Central India markets from its

eastern plants and higher clinker transfer costs resulting from plant shutdowns for

debottlenecking. Lead distance was at 269km vs. 287km/280km YoY/QoQ. While

DALBHARA is not serving all Central India markets from its own plants, earlier

tolling arrangements with JP have helped it serve both the UP and MP markets.



Blended cement sales stood at 85% vs ~83% QoQ. The C:C ratio stood at 1.7 vs.

1.64x in 2QFY25. The trade share stood at ~66% vs. 63% YoY. The premium

cement sales share stood at ~24% vs. 21% in 3QFY24.



Depreciation increased sequentially due to accelerated depreciation on certain

equipment that was replaced during the debottlenecking process.



Incentives accrued stood at INR1.0b in 3QFY25 (including an additional incentive

of INR140m related to 1HFY25) and incentives received stood at INR1.2b.



Incentives receivable stood at INR7.6b as of Dec’24. The company expects total

incentive accruals and collections to be around INR3.3b in FY25. It expects a

normalized incentive of INR90-100/t in FY26.



The company has reiterated its target of cost savings of INR150-200/t by FY27E

through internal cost-saving initiatives.



In the Northeast, the company is a strong player with higher capacity, a robust

dealer network, an established brand, and a low-cost structure. With numerous

announcements regarding hydropower projects, infrastructure, and border safety,

along with improved connectivity between the Northeast and the rest of India,

the company expects demand to rise in this region. The company is not involved

in coal mining in the Northeast. It currently has stock coal/fuel for 4-5 months and

believes there will be no impact on its operations.



The Odisha captive power plant is shut due to an accident. While this will not

impact production, power costs may increase as a result.

Expansion plans and capex



Capacity expansion of 2.4mt in the Northeast and 0.5mt in Bihar is at the

advanced stage. The company expects the clinker capacity in the Northeast to be

commissioned in 2QFY26. Capex stood at INR20.4b in 9MFY25 and INR6.6b in

3QFY25. It is pegged at INR30b in FY25 and INR25b-INR30b in FY26 (including land

acquisition).



February 2025

CEMENT | Voices

The company is likely to provide details of the next phase of its expansion in the

next six months, aiming to reach a grinding capacity of 75mtpa vs. 49.9mtpa by

FY26-end.

Debt position and other key highlights



Gross debt stood at INR54.6b as of Dec’24 vs. INR47.8b as of Sep’24. Net debt

(considering the IEX investment part of cash and cash equivalents) stood at

INR12.4b vs. INR6.4b as of

Sep’24. The increase in net debt by INR3.0b was due to

a lower value of IEX investments (MTM value stood at INR24.2b vs. INR27.2b as of

Sep’24), and the balance INR3.0b was related to capex and other costs that were

not fully covered by internal cash accruals. The company does not expect a

material increase in net debt by FY25-end/FY26.



Its net debt to EBITDA stood at 0.55x vs. 0.25x as of Sep’24. The company

considers the net debt to EBITDA ratio to be at comfortable levels to initiate the

next phase of expansion. It has reiterated its target to maintain the net debt to

EBITDA ratio below 2.0x until there is a large inorganic/strategic opportunity.



Grasim Industries

Current Price INR 2,461

Buy

Click below for

Detailed Concall Transcript &

Results Update

Paints Segment



Birla Opus continues to gain market share in the Indian decorative paints market,

backed by the rapid expansion of its distribution network, increasing brand

visibility, and superior product quality.



Industry demand growth for Paints is lower than earlier anticipated. In 3Q,

industry growth was flat to marginally negative. However, the decorative paints

market is estimated to grow in double digits over the next decade.



Birla Opus will be the second-largest player in terms of installed capacities

(1,332mlpa) after all its plants get commissioned. Commercial production at the

Chamarajanagar plant started in Nov’24, while the Mahad (capacity of 230mlpa)

and Kharagpur (capacity of 236mlpa) plants are expected to be commissioned by

4QFY25 and 1QFY26, respectively.



The advertisement campaigns ‘Duniya Ko Rang Do’ and ‘Naye Zamane Ka Naya

Paint’ have been successful, reaching over 700m Indians. The addition of the

dealer network remains on track, and Birla Opus is now the second most visible

paint brand in India.



Operating losses in the segment were in line with estimates. The company is on

track to exit FY25 with a high single-digit market share. It will continue investing in

brand building, as well as expanding its distribution and dealer network.



The company saw a strong offtake in the mid and upper-mid-tier towns in the first

few months. However, in the last quarter, it saw excellent traction in metros. The

product is already available in over 5,500 towns.



It has a presence in all product categories and across various points in the Paints

segment. Better quality of products has helped the company gain acceptance. Its

luxury products too are receiving good repeat orders. It is still developing the

distribution of its entire product range, as some of the SKUs have only recently hit

the market.



170+ products with over 1,000+ SKUs are placed in the distribution channel, and

131 depots are operational across India. The company is confident of having

February 2025

CEMENT | Voices

50,000 dealers on board by the end of FY25. The total capex in the Paints business

stood at INR90.2b as of Dec’24, ~90% of the total project cost.

VSF Segment



The VSF segment’s margin was impacted by a 10% increase in RM prices, including

pulp, caustic soda, and Sulphur.



VSF volume remained flat YoY at 205KT due to production disruption at the Excel

Plant, Kharach, and seasonally weak demand during the quarter-end. While VFY

volume grew 10% YoY on a lower base; realization remained under pressure due

to a surge in cheaper imports from China.



The Board has approved setting up a 110K TPA capacity (increased capacity at

153K TPA) of Lyocell (specialty Fibre) at Harihar, Karnataka. The first phase of 55K

TPA will be executed by mid-FY27 at an investment of INR13.5b.



China’s operating rates improved to 89% in Q3FY25 vs. ~86% in Q2. Additionally,

the average inventory holding was at the lowest level of eight days compared to

an average of 13 days for FY24. A stable demand scenario in China has led to

steady CSF prices of USD1.65/kg in Q3FY24.

Chemical Business



Caustic soda’s international average spot prices (CFR-SEA)

for Q3FY25 were higher

by 16% YoY at USD516/ton, the highest since 1QFY24. Realization in domestic

markets also improved QoQ, in line with global prices. However, continued

negative Chlorine realizations due to oversupply resulted in a slower growth in

ECU realization, increasing by only ~8% YoY to INR34,041/ton.



Caustic soda sales volume growth at 1% YoY was muted due to lower production

at the Vilayat plant, restricted by lower power availability.

B2B E-commerce



The B2B building material market size is huge (+INR1t), and Grasim remains

committed to building a comprehensive and end-to-end B2B commerce platform

for all user categories. Digital adoption has still been fairly low.

JK Cement

Current Price INR 4,619

Click below for

Detailed Concall Transcript &

Results Update

Buy

Demand, pricing, and operational highlights



Volume growth for the company should be at 7-8% YoY in 4QFY25 and ~10% in

FY26. Most of the company’s volume growth is coming from the Central markets

because of capacity additions in the region. In the Central region, the company is

growing ahead of the markets.



There has been some improvement in cement prices in both the North and

Central markets recently. However, volume push at the year-end needs to be

seen. In FY25, the company will realize cost savings of INR40-50/t and the rest of

INR75/t will be realized over the next few quarters. It is trying to increase its share

of green power and AFR and also working towards logistics cost improvement.



The company had placed orders for pet coke between USD95 and USD105/t in

3QFY25, but there has been some increase in fuel costs recently. Fuel

consumption cost/kcal was INR1.5 vs. INR1.82/INR1.65 in 3QFY24/2QFY25. Pet

coke consumption stood at ~75% in the quarter.



Green energy contributed 50% of energy requirements in 9MFY25 vs. 51% in

FY24; it targets the contribution to increase to 75% by FY30. The thermal

February 2025

CEMENT | Voices

substitution rate was at 11% in 9MFY25 vs. 16.3% in FY24 and the target is to

increase it to 35% by FY30.



Cement/clinker capacity utilization was at 73%/85%. Blended cement sales were

at 67% vs. 70% in 2QFY25. Trade sales were at 66% vs. 65% in 2QFY25. Premium

product sales were at 16% (highest ever) vs. 14% in 2QFY25. The target is to

increase premium products’ share to 20%+ in the next two years. The maximum

sales of premium cement are happening in the South region as of now.



Road mix was at 91% while 9% of volumes were transported through railways.

The lead distance was at 422km vs. 427km/419km in 3QFY24/2QFY25.



Incentives run-rate should be at INR250m/month. There was an additional

incentive of INR100-150m in 3Q on account of Panna and Ujjain units.

Acquisition of Saifco Cement



JKCE announced the acquisition of Saifco Cements Private Limited (Saifco) which

has a clinker/cement capacity of 0.26/0.42mtpa in Srinagar. This company had a

turnover of INR863m in FY24 and JKCE will acquire a 60% stake at an INR1.74b

(EV/t of ~US$80). This acquisition should be completed in 6-9 months subject to

the completion of due diligence and fulfilment of certain conditions.



Saifco has a presence in the Srinagar markets and is operating at a low capacity

utilization of 40% as the plant gets operated for nine months only due to weather

conditions and EBITDA/t is INR1,500. JKCE plans to invest INR600m through the

accruals of Saifco and believes that it will lead to improvement in operational

efficiency and can help to improve EBITDA/t by INR400/t.



Saifco has SGST benefits available till 2031 (100% exemption amounting to

INR800-900/t). The clinker capacity of this plant can be expanded to 1,000

tons/day. Mining reserves of this plant are spread across 144 hectares and the

plant has a limestone reserve of 123mt. Earlier, mining leases in the region were

allotted to individuals only and not to the companies. These individuals used to

lease the mines to companies, but there has been a relaxation in this norm now.

The mines will be transferred in the name of JKCE and renewable of the mining

lease has been granted till 2046.

Capacity expansion and capex update



JKCE spent ~INR14b in 9MFY25 and capex in FY25/26 will be at INR19b/INR17b.

The capex of FY26 will largely be towards Panna expansion (~INR14b) and

maintenance capex will be INR3b. JKCE is also trying to get approvals for the

Jaisalmer plant and will have better clarity by 2QFY26.



A clinker plant of 3.3mtpa at Panna and grinding units of 1mtpa each at Panna,

Hamirpur, Prayagraj are expected to be completed by Dec’25. Bihar GU should get

commissioned in 11-12 months.



Some modifications are being done at the Toshali plant which is about to be

completed now. The cumulative loss from this plant in 9MFY25 was INR90m. This

plant should become EBITDA positive in FY26.



The company is getting limestone for existing capacities under long-term

agreements. However, limestone is not available for future expansion. The state

government is

considering JKCE’s proposal for the allotment of mining reserves.

This plant is expected to get normalized in 4QFY25 and JKCE will also launch its

brand in the markets.

February 2025

CEMENT | Voices

Fujairah unit and white cement business



Result of Fujairah, UAE plant has improved as the UAE economy has started

improving. The EBITDA of this plant was at INR240m in 3QFY25; similar at 2QFY25.

EBITDA in 9MFY25 was INR680m vs. INR550m in 9MFY24.



Putty markets continue to remain competitive, as Asian Paints and UltraTech are

very aggressive. This has put pressure on prices. Asian Paints has become the

largest seller of Putty, but they do not have any manufacturing capacity. Putty

demand is growing at 8-9% YoY. Putty volume of Asian Paints should have grown

in double-digits;

whereas; JKCE’s volumes have grown at 4% YoY. OPM of this

segment is around 15-20%.



Asian Paints is planning to set up a white cement plant in the UAE that will be

commissioned in mid-FY26. It will export clinker into India and will be used for

putty production here. JKCE is a major supplier of white cement to Asian Paints

(~0.1mt) and hence, volume could be impacted. However, it is diversifying its

market presence for white cement. The capacity utilization of the Fujairah plant is

~85% and it should continue to operate over 75%.

Other Highlights



Revenue of the Paints segment was INR830m vs. INR530m in 2QFY25 and

INR470m in 3QFY24. In 9MFY25, revenue was at INR2b vs. INR1.1b in 9MFY24.

Revenue should be at INR2.75b in FY25, INR4.0-4.5b in FY26, and INR6b in FY27.



This segment incurred a loss of INR170m vs. INR70m in 2QFY25. During 9MFY25,

the total loss was INR380m and loss in FY25 is estimated to be INR500m+. This

business should achieve EBITDA break-even by FY27.



Standalone

gross debt was at INR48.63b vs. INR45.93b in Mar’24. Cash and Cash

Equivalents were INR17.55 vs. INR20.11b in Mar’24. Net debt was at INR31.08b

vs. INR25.82b in Mar’24.

JK Lakshmi Cement

Current Price INR 710

Click below for

Detailed Concall Transcript &

Results Update

Buy

Demand and pricing



Demand showed recovery with better traction in its operating markets. JKLC

expects strong demand in FY26, supported by pent-up demand related to delayed

capex.



It anticipates ~8% volume growth in 4QFY25, aligning with industry growth

expectations of ~6-8% in 4QFY25.



Prices are also improving, backed by improvement in cement demand. Cement

price is currently up by around INR75-100/t compared to the 3QFY25 average.

Operational efficiency



JKLC standalone cement capacity utilization was 78%, UCWL utilization was ~57%,

and overall company capacity utilization was 68% during the quarter.



TSR stood at ~11% vs. 13% in 2QFY25. Further, lead distance was 381km vs.

387km in 2QFY25. Blended cement share was ~65% and its C:C ratio stood at

1.45x.



Premium product share was at ~19% of trade volume vs. 25% to 30% in 2QFY25.

In east regions, the company’s

premium product share is not good. JKLC is

streamlining its brand and changing price positioning, which also hurt premium

February 2025

CEMENT | Voices

product share during this quarter. But it expects the share to increase back to

previous levels, given the brand restructuring (including in east markets).



Non-cement revenue stood at INR1.35b, including RMC revenue of INR640m.

Margin remained subdued at ~1%.



Average fuel cost stood at INR1.57/kcal vs. INR1.62/Kcal in 2QFY25.



The company has been undertaking various cost efficiency initiatives, which

include the increase in utilization of railway siding and wagon loading at Durg and

Udaipur units. The company is also planning to ramp up TSR at Udaipur and Sirohi.



The company is focusing on adopting clean energy to reduce its carbon footprint

and energy expenses. This includes boosting investments in solar and wind power

while optimizing energy usage at major plants. Currently renewable energy

accounts for 48% of the company's total energy needs, with plans to further

increase it going forward.

Capacity expansion and capex



Surat GU Phase-I of 0.75mtpa is likely to be commissioned in Feb-Mar’25

and

Phase II of 0.6mtpa by Jun’25. Its brownfield clinker/cement capacity expansion of

2.3mtpa/1.2mtpa at Durg, Chhattisgarh, and greenfield GU at Prayagraj are

expected to be commissioned in 1HFY27. The Phase II expansion of 2.2mtpa

grinding unit in Bihar and Odisha should be commissioned in FY28. Also, the

greenfield capacity expansion of 1.5mtpa in the Northeast is expected in FY28.



Consolidated capex, which was earlier pegged at INR9.0b in FY25, has been

lowered to INR8.0b (INR5.0b for JKLC standalone and INR3.0b for UCWL). It

guided for capex of INR10.0b/INR15.0b for FY26/FY27 for capacity expansion and

efficacy improvement plans as announced by it.



Consolidated gross debt stood at INR21.5b and net debt stood at INR17.5b as of

Dec’24.

The Ramco Cement

Current Price INR 862

Neutral

Click below for

Results Update

Capex and project update



The company is set to reach a cement production capacity of 30mtpa by Mar’26

through the commissioning of line II at Kolimigundla. This target will be further

supported by de-bottlenecking and expanding grinding capacities at existing

facilities with minimal capital investment.



The company has monetized INR4.4b out of its targeted INR10b from non-core

assets and remains on track to achieve the stated goal. Additionally, it has

received advances totaling INR100m for assets that are currently in the advanced

stages of the sale process.



The WHRS plant of 2MW at Alathiyur was commissioned in 3QFY25. An additional

10MW WHRS at R Nagar is planned for commissioning by 1QFY26. Railway siding

in Kolimigundla, AP, will be commissioned in 4QFY25.



The construction chemicals capacity expansion in Odisha is expected to be

commissioned by 4QFY25.



The company has acquired ~52% of the mining land and ~13% of factory land for a

Greenfield project in Karnataka.



The total capex incurred was INR2.56b in 3QFY25 and INR8.0b in 9MFY25.

February 2025

CEMENT | Voices

Capacity utilization and volume



Cement capacity utilization stood at ~75% vs. ~74%/~75% in 3QFY24/2QFY25.

Cement volume declined ~3% YoY to 4.3mt, whereas building products volume

was flat YoY to 0.09mt.



Volume share from South/East was ~79%/~21% in 3QFY25 vs. ~76%/~24% in

3QFY24.

Operational highlights



The share of premium products was ~26% in 3QFY25 vs. ~31% in 3QFY24 in the

South region. In the East region, the share of premium products was ~23% in

3QFY25 vs. ~20% in 3QFY24. The OPC share was ~30% of total volumes in 3QFY25

vs. 33%/30% in 3QFY24/2QFY25.



Blended coal consumption cost was USD122/t (INR1.45/kcal) vs. USD138/ USD130

(INR1.64/INR1.60 per kcal) in 3QFY24/2QFY25.



TRCL used 69% petcoke vs. 51%/58% in 3QFY24/2QFY25. It used ~62% petcoke in

9MFY25 vs ~52% in 9MFY24.



Green energy contributed 39% of power requirements vs. ~36%/39% in

3QFY24/2QFY25. Green energy contributed ~37% in 9MFY25 vs ~34% in 9MFY24.

Green power share is expected to reach ~40% in FY25.



Avg. lead distance was 259kms in 3QFY25 vs 282kms in 3QFY24 and 244kms in

2QFY25.

Debt and other highlights



Net debt (including working capital borrowings) stood at INR46.2b vs. INR51b/

INR49.6b as of Dec’23/Sept’24.



The cost of debt for 3QFY25 is 7.89% as against 7.85% in 3QFY24.

Ultratech Cement

Current Price INR 11,289

Buy

Click below for

Detailed Concall Transcript &

Results Update

Demand and pricing



Volume started to recover from Dec’24 and there has been a demand recovery

across all sectors, including infrastructure, IHB, rural, and urban demand. Urban

demand, though, is maturing slightly but continues to see growth.



The volume of ICEM was not included in 3Q volumes. The North and West regions

continued to perform well, while the East region saw the lowest growth

compared to other regions. Industry volume growth is expected to be at ~5% YoY

in 3QFY25.



Capacity utilization in the East region was below 70%, while it was at ~75% in

other regions. The North region saw the best profitability, followed by the West

region.



The company aims for double-digit growth driven by expanded capacities and

targets a capacity utilization of 80-85%. Industry demand growth is expected to be

at 6-7% YoY in 4QFY25 and FY26.



The exit-Dec price was marginally up (~1%) vs the 3QFY25 average. Cement

demand started to improve from Dec’24, thus boosting cement prices. The North

and West regions saw the best improvement in prices, with a growth of 3%+. In

Jan’25, prices improved in the Central and West regions (~1.5%).



Despite the increased competitive intensity in the South region, prices are likely to

improve with a pickup in demand.

February 2025

CEMENT | Voices

Guidance on new acquisitions and strategic investment



Integration of ICEM and Kesoram cement businesses:

Capacity utilization of ICEM

was 57% in 3Q, and there is an opportunity to increase the utilization rate.

Kesoram is operating at ~70% capacity utilization, with the potential to improve

its utilization by 4-5pp. There is no rush to change the brands of the acquired

entities; however, the transition will happen in due course. The company will

provide better clarity on the brand transition in the next quarter. It will take 12

months to improve the profitability of ICEM and bring it to a reasonable level.

WHRS at ICEM plants will be commissioned by 3QFY27. There is also scope to

improve realizations and reduce operating costs at Kesoram’s plants. Increasing

the density of plants in the South region will help reduce logistics costs.



The open offer for ICEM was

subscribed at 110% and concluded on 21st Jan’25.

Post the open offer, UTCEM’s stake increased to 84.19%, which will be brought

down to 75% in line with regulatory requirements. The average cost of acquisition

was INR359/share.



Debt of ICEM stood at INR8.77b

in Dec’24 and the EV for this acquisition is

INR120.8b for 14.45mtpa capacity. Cash generation from non-core assets will help

further reduce debt. Capex will be required for WHRS, RE, and plant upgrades.

The company has started reducing operating costs from the first month itself.

There are debottlenecking and brownfield opportunities at a few of the plants,

which will help increase capacities. WHRS will be commissioned by 3QFY26, and

after that, the company’s opex should be in line with UTCEM. There is

a difference

of INR25-30/bag in the selling price of UTCEM and ICEM brands. Rebranding of

the ICEM brand will take place over time. ICEM’s profitability turnaround is

expected in 12 months, and at that time, it will



generate INR200-300/t lower profitability compared to UTCEM. The company will

look forward to monetizing land that is not suitable for cement plants. ICEM’s

Tamil Nadu plants have limestone reserves with visibility of over 25 years.



The company is awaiting the last leg of approvals for the mine transfers in

Telangana and Andhra Pradesh. This acquisition is expected to be completed by

Mar’25. UTCEM’s capacity will reach 185mtpa by FY26-end,

including the

capacities of Kesoram and ICEM.



The company is evaluating the North East markets and its investment in Star

Cement is purely financial investment. It has acquired an 8.42% stake at a

consideration of INR7.76b.

Operational highlights



The company will have to use a mix of coal and petcoke and given its size, it will

face higher consumption costs. Blended imported fuel consumption (CV: 7500)

cost was at USD125/t; 6% lower QoQ and 17% lower YoY. Petcoke consumption

was at 58% in 3Q and fuel consumption cost was INR1.76/kcal vs INR1.84/kcal in

2QFY25. At current spot prices, coal costs should come down to INR1.7/kcal.

Power cost was slightly higher due to an additional one-time charge of INR480m

levied by the Andhra Pradesh government during the quarter.



Lead distance was 377km vs 397km in 2QFY24, with potential for further

reduction of 5-6%. Coastal transport will not go beyond 5% (3% as of now).

February 2025

CEMENT | Voices

Capex and net debt



Capex in FY25 will be ~INR93b. In FY26, capex is expected to be at INR80-90b for

UTCEM and INR4-5b for Kesoram. Capex in FY27 is expected to be at INR60-70b.

ICEM’s capex will be at

INR5b+. UTCEM will add an organic capacity of 15mtpa in

FY26. Including other big players’ capacity addition, overall supply in the industry

is estimated at ~50mtpa in FY26.



The company has added 6.75mtpa clinker in 9MFY25 and another 3.35mtpa will

be added in 4QFY25. It will also commission a clinker capacity of 10mtpa in FY26.



Consolidated net debt stands at INR161.60b after taking into consideration the

cost of the open offer (INR31.42b to be paid on the 4th/5th of Feb’25) and ICEM’s

net debt (INR8.77b). The company expects net debt to peak in FY26 and start

reducing thereafter.

February 2025

CHEMICALS | Voices

CHEMICALS



Management anticipates demand recovery, driven by international markets, and local market normalization

by 4QFY25. Key capacity expansions and greenfield projects are on track, ensuring long-term growth across

industries. Competitive challenges, feedstock costs, and regulatory developments will have an impact on

margins and pricing. Capex remains a top priority, with investments in new products, technology, and

operational efficiency driving the companies' future performance.

KEY HIGHLIGHTS FROM CONFERENCE CALL



Alkyl

Amines



Clean

Science &

Technology

Outlook

The Ethylamines plant contributed to the volumes in

3Q, without which it would have been constrained on

that front. Although utilization is at 60-65%, the

company expects this to pick up going forward. In the

future, there could be debottlenecking that could

happen from 100tpd to 120tpd in the plant. DMAHCL

is running at 80-85% utilization and the company is

planning to announce a Greenfield project in Dahej

for the same in FY26.

CLEAN is actively pursuing R&D activities and has

entered the HALS series, which has an estimated

global market size of USD1b. While the commercial

production from CFCL has commenced, management

expects HALS to ramp up in the next three years.



Quarterly snapshot

AACL’s 3QFY25 revenue increased 15% YoY

to INR3.7b. The

growth was mainly volume-driven, while the company still

experiences pricing pressure from Chinese players. Gross

margin expanded 80bp YoY to 48.4%, while EBITDAM stood at

19.2%. RM prices declined more than the FG prices. PAT came

in at INR438m vs. our estimate of INR298m



CLEAN’s reported

EBITDA in 3QFY25 was above our estimate at

INR985m (+14% YoY), with a gross margin of 63.5% (vs. 66.8%

in 3QFY24). The EBITDAM contracted to 40.9% from 44.5% in

3QFY24. The revenue contribution of Performance Chemicals

increased 2% YoY in 3QFY25, while that of Pharma & Agro

Intermediates declined 1% and 2% YoY, respectively. PAT

increased 5% YoY to INR656m.

Revenue was at INR19b (our est. INR18.6b, down 5% YoY).

EBITDA was at INR1.7b (our est. of INR2.4b, down 45% YoY).

Gross margin was at 26.8% (down 490bp YoY) while EBITDAM

stood at 8.9% (vs. 15.2% in 3QFY24)

Reported PAT stood at INR981m (our est. of INR1.5b, down

51% YoY). In 9MFY25, Revenue was at INR61b (+10% YoY),

EBITDA at INR7.8b (-5% YoY), and PAT at INR4.9b (-11% YoY).

EBITDAM was at 12.7% (-200bp YoY).



Deepak

Nitrite



Fine Organic

Industries



Galaxy

Surfactants

Industry demand is improving, with international

recovery leading and domestic demand expected to

normalize by 4QFY25. Agrochemical de-stocking is

easing, polymer demand is strengthening with new

projects, and margin expansion is likely as feedstock

costs decline.

Agrochemical volumes are rising internationally, with

domestic demand expected to follow by quarter-

end. Key projects, including Acetophenone and nitric

acid, will be commissioned in 1HFY26, while

increased domestic Phenol supply may reduce

imports.

FINEORG has already applied for Environment

Clearance (EC) which is currently in progress. That

said, it would take 18-24 months to set up new

capacities. Although the Greenfield capacity is

expected to take care of growth for the next 10 years,

FINEORG does not expect growth to commence until

the beginning of FY28. Exports account for more than

50% of the total revenue for FINEORG.

Volume growth of 6-8% for the next 2-3 years is intact

as of now, including EBITDA/kg guidance. Capex

would be more in terms of equipping the company for

the future.



Navin Fluorine

International

The additional R32 capacity, with a capex of INR840m,

is progressing on schedule for commissioning by

Feb’25, with an asset turnover of 2-2.5x.

The AHF

capex of INR4.5b remains on track for early FY26

commissioning, with captive consumption expected

at 25-27ktpa and external sales at 6-7ktpa.

Management anticipates exiting FY25 with an

EBITDAM at ~25%, with no guidance on future margin

trajectory.



FINEORG reported revenue of INR5.2b, 19% below our

estimate, while EBITDA was INR1b (34% below; up 13% YoY) in

3QFY25. The EBITDAM contracted 170bp YoY to 20%, while the

gross margin contracted 360bp YoY to 38.2%. PAT increased

28% YoY to INR890m (our est. INR1.2b). There was a slight dip

in demand from export markets QoQ, as exports contributed

56% of the revenue, while domestic sales accounted for 44% of

total revenue.

GALSURF reported an EBITDA/kg of INR16.9, down 5% YoY (our

estimate of INR18). The company achieved a total volume

decline of ~1% YoY to 62.6tmt (our est. of 68.8tmt) with strong

YoY performance in the RoW region. Subsequently, EBITDA

stood at INR1.1b (down 6% YoY), while PAT came in at

INR646m (down 9% YoY, our estimate of INR798m).

NFIL’s EBITDA/PAT

in 3QFY25 came in at 6%/12% higher than

our estimates due to the strong YoY performance in the HPP

and Specialty Chemicals segments. Gross margin stood at

56.6%, while EBITDA margin expanded 920bp YoY to 24.3%.

Earnings expanded 131% YoY to INR836m in 3QFY25.

Management continues to drive operational efficiency in the

company while indicating that it could exit FY25 with an

EBITDAM at ~25%.

February 2025

CHEMICALS | Voices



NOCIL



Industries

Demand is expected to improve next month, but



pressure will persist due to competition from China,

Korea, and the EU, impacting prices and volumes.

While tyre demand remains strong in the domestic

replacement market and exports, OEM demand is

weak. Volumes are set to recover next quarter,

driving operating leverage higher.

Volume growth of 8-10% is expected for FY25, with a

similar trend for FY26. An anti-dumping investigation

on a couple of products should conclude within the

next 9-12 months. The company is exploring inorganic

growth and new product development; it has

~INR5.5b in cash and investments. Inquiries from the

US are also rising following new tariffs on China.

The company maintains its growth guidance of single- .

digit revenue growth for FY25 and is cautiously



progressing toward achieving it. The pharma revenue

guidance for FY25 remains unchanged from the

previous quarter, projected at ~INR2.5-INR2.75b.

Management anticipates revenue growth to

accelerate further in 4QFY25, driven by the current

order visibility.

Management anticipates robust demand from agro in

4QFY25 with a significant performance improvement

over 3QFY25. Going forward, SRF anticipates clocking

a revenue growth of ~20% in FY26. The company

expects positive traction from FY26 onwards in PTFE.

For FY25, SRF has plans to incur a capex of ~INR15b,

and going forward the company’s capex will be in the

range of ~INR15b-20b for future projects.

India, Asia, and the US are expected to continue their

growth momentum, with the western parts of Europe

likely to be flat or experience a slight decline. Pricing

in the domestic market has remained steady in India,

and the management expects the same in 4QFY25.

Management expects volumes in 4QFY25 to be much

better compared to 3QFY25.



NOCIL's EBITDA/kg stood at INR18.5 in 3QFY25, down 52% YoY,

missing our estimate. Sales volumes increased 3% YoY to

12.9tmt. Realization was down at INR247.4/kg (down 10% YoY)

due to reduced selling prices in line with the fall in RM prices.

Hence, EBITDA was at INR238m (down 50% YoY) while PAT was

at INR185m (down 38% YoY). Volumes, too, declined on a

sequential basis.

PI reported flat revenue YoY in 3QFY25, as muted growth in

CSM (up 4% YoY; 82% mix) and domestic (up 5% YoY; 15%

mix) businesses was fully offset by a 50% YoY fall in the

pharma business (up 55% QoQ; 3% mix). EBITDA declined

14% YoY on account of a change in the product mix and

adverse operating leverage.

SRF posted a decent overall performance in 3QFY25.

However, the Chemicals business and the Packaging Films

business displayed material improvement during the

quarter. Margins for the Chemicals business improved

120bp/ 620bp YoY/QoQ, while the same for the Packaging

Films business improved 240bp/70bp YoY/QoQ.



SRF



Tata

Chemicals

TTCH’s 3QFY25 consolidated EBITDA declined

20%/30%

YoY/QoQ due to lower realizations YoY (while sequentially,

realizations have marginally inched up), higher fuel & freight

costs, a plant production outage in the US, and unfavorable

operating leverage across geographies.

Clean Science & Technology

Current Price INR 1,325



Neutral

Click below for

Detailed Concall Transcript &

Results Update



Despite difficult time for the chemical sector, the company has posted robust

growth on a YoY basis

Volumes have increased, decline in RM price and weakening of USD which has

given the company an edge in 3QFY25

Coal prices also came off a bit in 3Q and the plant was shut down for five days

because of Diwali so consumption was on the lower side therefore decline in

Opex

Utilization levels of Performance 65-70%, Pharma 65%, FMCG 80% in 3QFY25

Increased growth in revenues with new products in the HALS series and pharma

intermediate product

HALS volumes in 3QFY25 was 190tpm while Dec’24 exit rate was 200tpm

Realization of USD4.5/kg in 3QFY25

1QFY25 sales was 125tpm, 2Q was 135tpm, 3Q total volumes was 570t and 4Q

total volumes expected ~600-650t

Sales contributed by HALS 701, 770, 622 and the newly launched HALS 944, 119,

783

HALS 770 was produced in the parent company where a majority of it was

produced in 3QFY25

Expect 3-4ktpa of sales volumes in HALS in FY26, with USD5.5-6/kg selling price

expected

February 2025

CHEMICALS | Voices



HALS119- used in agricultural films with customers in Turkey, Europe, and North

& South America- price of ~USD8-9/kg

HALS944- used in polyolefin films with customers in similar countries and India

as well- price of ~USD7-8/kg

25% GM on HALS for CLEAN

China's market share in HALS is 30%

Commercialized DHDT is a pharma intermediate that is used to manufacture

Lamivudine and provides import substitution play for the company.

Also provides cross-selling opportunities to its DCC customers

Samples have been sent to customers in 3QFY25 and no contribution in the

quarter

Further, commercialized BHT strengthens the antioxidant portfolio of CLEAN

and is sold along with BHA, TBHQ, and AP

Want to produce 2-3ktpa on an annual basis with pricing around USD3/kg

Revenue at peak to be at INR600-800m

All approvals in the next 6 months with further 1.5years to be taken to ramp up

to 70-80% utilization

CLEAN has dropped P-BQ product and instead with the same facility/ equipment

is undertaking the below product with minimal capex

The company is undertaking the production of Barbituric Acid- an intermediate

used to produce pigment yellow.

Imported from China, not produced in India currently

The pilot plant has been approved by Sudarshan Chemicals

Expected commercialization in the next 3 months

GM is decent to the tune of 50%

Acetone prices have come off which should aid in margin expansion from

4QFY25.

Galaxy Surfactants

Current Price INR 2,289



Buy

Click below for

Detailed Concall Transcript &

Results Update

Several one-off items impacted the 3Q performance, including a weaker-than-

expected festive season, excess channel inventory, lower-than-projected govt

spending, and weak rural and urban spending.



Softness is likely to continue in 4Q as well.



Lower funding for various D2C brands.



Rural and urban spending to pick up from 1QFY26.



Lower operating leverage in the India business (40% of the total business).



Lower-than-expected conversion in the specialty segment.



Structural story remains intact as per the management.



Galseer Derma Green product



Green oil soluble cleanser (for the skin)



High-margin product for use in the US and Europe.



Customers are sampling it, including consumer sampling.



Volumes were down 7% in India and 1.5% in AMET but up 9.5% in RoW.



Specialty volumes declined 5% YoY, while performance segment volume grew

0.5%.



Capex would be aimed more at equipping the company for the future.

Standalone business



Some specialty ingredients did not perform as expected.



Fatty alcohol prices to be stable in 4Q but may reach ~USD1500/mt next year.



Palm oil and palm kernel oil prices have gone up, which affected fatty alcohol

prices.



Supply chain issues have eased compared to 1HFY25 and may ease further going

forward.

February 2025

CHEMICALS | Voices



Retains volume growth guidance of 6-8% for the next 2-3 years, along with

EBITDA/kg guidance.

Navin Fluorine Intl

Current Price INR 4,045



Neutral

Click below for

Detailed Concall Transcript &

Results Update

Business environment continues to be uncertain due to geopolitics and macro.



Despite this, the company delivered sustainable performance.

HPP



Better realization by optimizing product mix in the quarter



Volume growth in inorganic salts, R32, R22, and HFO



Additional R32 capacity at a capex of INR840m progressing on schedule, to

commission by Feb’25

Asset turnover to be 2-2.5x



AHF capex for INR4.5b on schedule to be commissioned by early FY26



Captive consumption to be ~25-27ktpa and external sales to be ~6-7ktpa

Spec Chem



Ongoing ramp-up at Dahej and Surat to contribute higher in coming quarters



Dahej capacity utilization of 80-85% in 3QFY25 compared to 40-45% last quarter



Surat asset turn to be 1.2x, with capex of INR300m; supply has already started



Dahej Fluorospecialty product (Project Nektar) capex of INR5.4b



Revenue of ~INR5.2b spread across 2 years (by FY27 get closer to this peak)



40-50% of the revenue should come in FY26

CDMO



Fermion contract to contribute ~30% of the USD100m target in the business



Registration process is in a very advanced stage



The customer is confident of getting favorable registration in Apr-May’25



Direct dispatches already started



Order book for CY25 already secured in the business



Supply of a new molecule expected in CY25 as well



cGMP-4 asset turnover to be 2x



cGMP-1/2/3 total revenue could be USD50-60m



Management continues to drive operational efficiency in the company.



The company is striving to achieve the following targets to create long-term

value for all stakeholders:



Manufacturing excellence



Deepening the relationship with existing customers while pursuing new ones



Disciplined project execution



Pursuing growth opportunities within a tight financial framework



Management expects to exit FY25 with an EBITDAM at ~25%; no guidance on

future margin trajectory.

P I Industries

Current Price INR 3,203

Buy

Click below for

Detailed Concall Transcript &

Results Update

Operating performance



PI delivered stable performance amid challenging times. Despite a high base,

exports grew ~9% in 9MFY25 thanks to healthy volume growth, which was

primarily driven by growth in new products (up ~35% YoY in 9MFY25).



The company is witnessing a healthy volume offtake in the domestic business

(~8% volume growth in 9MFY25). However, total revenue remained subdued

due to reduced supply to institutional customers.



The company maintained its focus on new product launches, successfully

commercializing six products in the export segment and six in domestic agri

brands during 9MFY25.

February 2025

CHEMICALS | Voices

Margins continue to be influenced by changes in the product mix.



As of Dec'24, the company's order book stood at USD1.4b.

Outlook and guidance



Looking ahead to the next season, market sentiment will be shaped by

investment trends in the sector and the overall health of the rural economy.



Being a pure agrochemical and CSM business with an opportunity size of INR20b

to INR50b in innovative products, the company is targeting a 10x bigger market

opportunity over the next two decades.



The company maintains its growth guidance of single-digit revenue growth for

FY25 and is cautiously progressing toward achieving it.



The pharma revenue guidance for FY25 remains unchanged from the previous

quarter, projected at ~INR2.5-INR2.75b.



A strong pipeline of over 20 products is advancing through various stages of

development and registration.



The company has identified three new projects for potential near- to long-term

revenue generation.



Management anticipates revenue growth to accelerate further in 4QFY25,

driven by the current order visibility.



The company is making steady progress in its mid- to long-term growth

trajectory in the pharma segment.



Stable commodity prices and higher reservoir levels should drive growth for the

agri segment for PI, as it focuses on new launches and biologicals. However, the

overall pricing pressure is expected to continue in the generic space.



The effective tax rate (ETR) for FY25 is expected to be around 22-23%.

Pharma business



Before acquisition, the company developed and supplied specific intermediates

and products tailored to the Covid period. Additionally, some development

projects initiated during that period have now been integrated into the

company's overall pharmaceutical development pipeline.



Gross margins have been maintained, and as the company transitions toward

the CRDMO business, margins are expected to improve further.



Revenue should accelerate further in 4QFY25, driven by strong order visibility.



The new CDMO project is a lifeline application and a commercial product.

Currently undergoing testing, it holds strong long-term potential.

Biological Business



The company plans to introduce new products in India while expanding these

products in its existing markets.



PI is among the top three players in the Indian market.



The company anticipates a growth of more than 25-30% next year, with further

acceleration in the following years.

Agrochem Business



The industry currently presents a mixed scenario, with performance varying by

product, and it is showing improvements in certain markets. Meanwhile, the

global crop protection industry continues to demonstrate a strong growth

trajectory in the medium-to-long term.



The domestic agrochemical segment is facing pricing pressure.



In certain geographies, inventory levels have stabilized, accompanied by a

recovery in demand.



Certain generic products continue to face inventory destocking; however, the

overall industry is expected to improve over the next two quarters, positioning

itself better than last year.

CSM



The business faces near-term macro headwinds, including tariff wars,

geopolitical uncertainties, and pricing pressures.



February 2025

CHEMICALS | Voices

The company aims to sustain its current volume levels, with demand expected

to improve in the second half of CY25.

Capex



The company plans to undertake capex by constructing two new multi-product

plants (MPP). The total capex for this initiative is estimated to be INR80-100b.

Others



PI became the first Indian company to receive approval from International

Organization for Standardization (ISO) for a ground-breaking insecticide named

"PIOXANILIPROLE”.



Currently there are 60+ projects at different development stages.



PI secured a key CDMO order for a new program.



The company is actively advancing technological development to establish new

frontiers for growth, with the progress on R&D leading to potential

commercialization.



Incoming inquiries indicate a shift, with over 50% directed toward non-

agrochemical products, particularly electronic chemicals.



Plant healthcare is currently a small business, serving primarily as a

development platform for the company.



The increase in depreciation was due to the amortization of intangibles added in

this quarter as part of PHC’s integration, and this run rate is expected to

continue going forward.



The company continues to gain traction in new customer acquisitions, adding 5-

10 new customers in 3QFY25.



PI has successfully commercialized 3 to 4 electronic chemical projects over the

past two years, which are currently in the scale-up stage. It is collaborating with

global players from Japan and the EU. This year, two molecules have been

commercialized, and a strong development pipeline is in place, with plans to

commercialize two more molecules next year.



The company has identified Pharma and Biologicals as key growth engines for

the next two decades. With relatively smaller initial investments, both segments

are currently operating at a smaller scale. However, given the significant growth

opportunities, the company aims to target an addressable market of USD100b in

Pharma and over USD25b in Biologicals.



SRF

Current Price INR 2,727

Buy

Click below for

Detailed Concall Transcript &

Results Update

Chemicals business: Specialty chemical



The Specialty chemical business reported strong revenue and margin growth

driven by the notable traction gained by the newly launched products while

achieving the highest-ever quarterly sales for some products.



The success of commercialization and ramp-up of the new products will remain

a key driver of growth going forward.



Despite some intermediates continuing to face competition from China, the

overall agro segment has started to show signs of recovery with the demand

deferment for certain key agro intermediates now witnessing a gradual pickup.



The management anticipates robust demand from agro in 4QFY25 with a

significant performance improvement over 3QFY25



Most of the new registered products are patented.



Specialty chemicals witnessed netter margins in 3QFY25 led by a better pricing

environment, operating leverage, new products, and increases in overall

volumes.

February 2025

CHEMICALS | Voices

Going forward, SRF anticipates to clock a revenue growth of ~20% in FY26.



The company has capitalized ~INR20b over the last two years.

Chemicals: Fluorochemicals



The Fluorochemical business was largely driven by strong growth in volumes of

ref gases in the domestic market led by Strong support for refrigerants from

OEMs



Demand for Dymel®/ Pharma propellant remained strong



Refrigerant gas demand and pricing are expected to remain strong globally, with

the US markets witnessing a decline in HFC consumption due to regulatory

changes and a shift to alternatives



while markets like India and the Middle East are experiencing higher growth

rates



Going forward china's consumption growth will remain a key driver of the

growth of refrigerant gas



The company expects positive traction from FY26 onwards in PTFE



The current capacity of R32 is 25-28KMT and the company no plans to further

expand this



R32 capacity utilization for 9MFY25 stands at ~65-70%

Packaging film business



The Packaging Films Business maintained a steady performance and recorded a

modest improvement in margins compared to the second quarter.



SRF remains India's largest exporter of BOPET films, with strong growth in high-

impact VAP sales across BOPP and BOPET, supporting performance in

challenging market conditions



South Africa maintained its domestic market leadership with stable results;

Hungary saw increased sales to Mainland Europe, while Thailand faced intense

competition from Chinese players.



The demand-supply mismatch in BOPET continued in the short to medium term,

while the BOPET demand and prices remained stable in India.



Freight rates from India & Thailand to the US have started to show early signs of

softening.

Technical textiles business:



The Technical Textiles business performed well owing to the higher sales volume



Lower demand and pressure on margins in the Belting fabrics segment led to

the technical textiles segment remaining muted on a sequential basis.



Polyester Industrial Yarn achieved the highest-ever capacity utilization while

better traction on Polyester Tyre Cord Fabric was witnessed.



The demand outlook for NTCF and PIY is expected to remain stable, while BF

demand is expected to experience moderate growth.



The aggressive import prices for BF from China continue to hurt margins,

creating a persistent challenge for market competitiveness.

Others



For FY25 the company has plans to incur a capex of ~INR15b and going ahead on

future projects the company the capex will be in the range of ~INR15b-20b



The company witnessed an overall reduction in interest rate in the last 6-8

months and management expects this to flow through in FY26



Going ahead the management remains confident of finishing the year on a

reasonably strong footing.



February 2025

CHEMICALS | Voices

Tata Chemicals

Current Price INR 854

Neutral

Click below for

Detailed Concall Transcript &

Results Update

Demand-supply scenario



Asian markets have shown growth, particularly in China, reporting robust

volume growth on a YoY basis



The US and Western EU have started showing a slight decline in volumes,

primarily led by reduced demand for flat and container glasses.



The current demand scenario is likely to persist in the short term, with the

industry expected to stabilize over the long term, led by growth sectors such as

solar glass and lithium batteries.



Globally, supply increased this quarter from major exporting countries such as

China, US, and Turkey. However, Chinese exports have been muted and

moderated based on internal demand, while the US and Turkey have seen a

robust increase, with some of their exports directed to China.



Prices in China witnessed a sharp decline in the range of ~25-30%, while prices

in domestic markets declined 15% YoY due to lower import prices. Prices in the

Western EU and the US remained stable due to annual contracts.



Volumes in India and US have been strong and are expected to remain stable in

the next quarter as well.



The market has remained range-bound with pricing stabilizing at lower levels,

largely due to the supply-demand imbalance. These levels are likely to continue

for the next 3-6 months.



India, Asia, and the US are expected to continue their growth momentum, with

the western parts of Europe likely to be flat or experience a slight decline.

India



Revenue growth was largely due to high volumes, which was partially offset by

lower pricing.



The imposition of MIC is expected to be sentimentally positive as it will

safeguard domestic price volatility.



Pricing in the domestic market has remained steady in India, and the

management expects the same in 4QFY25.



The company reported sequential EBITDA growth in its India business, which is

also growing at a decent pace on a YoY basis.



The debt from Singapore has been moved to India.



The company has plans to calibrate the high inventory it holds in India.



Management expects volumes in 4QFY25 to be much better compared to

3QFY25.



The company expanded its capacity utilization in India.



The current capacity is ~250KMT/quarter (gross production, which includes both

soda ash and bicarb). Going forward, the company targets to operate at ~230-

235KMT/quarter.



The plants operated at full load capacity in 3QFY25, i.e 251KMT per quarter,

leading to higher inventory levels.

North America



US exports to Southeast Asian countries, especially Indonesia, Malaysia, and

Thailand, have increased significantly.



The US contract with ASP remains unchanged. However, pricing in the US has

dropped by USD50/MT.

February 2025

CHEMICALS | Voices

High inventory levels are due to upcoming deliveries, but this is expected to

normalize going forward as it is a timing issue.



The company took two large shutdowns this year, which were originally

scheduled for 2Q but were instead implemented in 3Q.



Domestic sales of container glass in the US were very low, as the market favors

chemical glass and flat glass.

Europe



The UK market witnessed lower volumes, but pricing remained steady.



The company decommissioned its soda ash plant in the UK, but some units will

still operate to produce chemicals such as bicarb and salts. The company does

not anticipate any major expenses related to this.



The UK will manage its own debt with two units still in operation.



Due to the Emission Trading Scheme and its impact, Turkey’s natural market for

natural soda ash will continue to be EU, as it has lower carbon emissions. After

serving the EU, the company will ship it to the southern American and Indian

markets.

Capex and capacity expansion



Management is in the initial stages of calibrating capex to reduce stress on cash

flow.



With a 400KMT expansion in the US, the company is exploring the possibility of

a two-step expansion approach.



A 300KMT capacity expansion is planned in Kenya, which will be done in phases,

with the first 50KMT set to open in the initial phase and the remaining in the

latter phases (3-4 phases).



The company also has plans for a 300KMT capacity expansion in India, which will

be completed all at once, as there is no opportunity for phased expansion.



Most of these capex projects are brownfield expansions, initially planned over 3

years, but now recalibrated to span up to 4 years.

Others



China remained a net exporter in 3QFY25, with most of these exports directed

to Southeast Asian countries.



Inner Mongolia’s capacity has come online.



China is now selling soda ash from both processes below their cost, driving

down prices; however, these prices are not sustainable for them in the long

term.



Long-term debt remains intact, although there has been an increase due to a

rise in working capital.



February 2025

CONSUMER | Voices

CONSUMER



Most of the companies witnessed limited volume growth, typically in the low to mid-single digits. While urban

demand remained subdued, rural consumption displayed indications of a revival. Management predicts a

gradual increase in demand, driven by reasons such as income tax breaks, interest rate reductions, and a

generally better macroeconomic climate. However, rising commodity costs, notably in the agricultural sector,

combined with insufficient price hikes, have strained gross margins in various sectors. To combat raw material

inflation, corporations are considering significant price increases in the fourth quarter. The management

teams are optimistic that price modifications, together with an expected increase in volume, will drive

revenue growth in the coming quarters.

KEY HIGHLIGHTS FROM CONFERENCE CALL

Takeaways from 3QFY25 performance

Outlook for FY25



Domestic volume grew modestly by 1.6% YoY. The



Management expects revenue weakness to persist

impact of last year’s price cuts (3%) continued to

hurt for at least two more quarters.

value growth despite a 1% price hike in 2QFY25. The



The company is targeting to achieve single-digit

Asian Paints

decorative paint industry saw a 4-5% decline in 3Q.

volume growth in the near term, with 18-20%



There was a weak demand period with overall muted

EBITDA margin guidance for the medium term.

sentiment, which impacted the paint industry.



APNT is more worried about industry challenges

Downtrading impacted value performance. Demand

than competition.

was also impacted by a shorter festive season and



urban slowdown.



BRIT posted operating revenue growth of 6% YoY in



The company is implementing strategic price hikes

3QFY25, with volume growth of 6%.

(2% in 3Q, further 2.5% in 4Q and 1.5% in 1QFY26)

Britannia



Economic slowdown and high food inflation led to and cost efficiency (~2.5% in FY26) to offset cost

subdued consumer demand. CPI rose to 5.2% in 3Q, inflation.

with food inflation at 8.4%.



It has guided that EBITDA margin will be in the range



Britannia's commodity inflation stood at ~11%, of 17-18%.

primarily driven by rising cocoa and palm oil prices.



No major capital expenditure is planned, with only



GM contracted 510bp YoY to 38.7%, due to rising

INR1.5-2b allocated for FY26.

commodity prices, mainly palm oil (+43% YoY) and



Cocoa (+103% YoY).



Direct reach has expanded to 2.88 million outlets,

with rural distribution now covering 31,000

distributors.



Dabur’s consolidated sales grew by 3% YoY. India



The company anticipates sequential improvement in

revenue rose 2%, with volume growth of 1.2%.

demand and mid-single digit value growth in



Urban demand moderated during the quarter,

4QFY25, driven by both pricing and volume growth.

Dabur

affected by persistent food inflation. The rural



For FY26, the company aims to maintain margins,

market exhibited strong performance.

with a potential for marginal improvement through



Delayed and contracted winter conditions were

cost initiatives and pricing actions.

observed, with October and November being the

warmest in India in recent years, impacting seasonal

product demand.



Dabur had taken 3% price hike to offset inflation,

but it was neutralized by trade schemes and

promotions.



India revenue grew 3% YoY, with flat volume



The company has taken mid-single-digit price hikes

growth.

in 3Q, with further increases expected in 4QFY25 to



There is a slowdown in urban consumption,

offset palm oil inflation. They expect positive

particularly in modern trade and premium product

organic revenue growth in 4QFY25.

Godrej Cons.

segments. Rural demand has outpaced urban



EBITDA margins in Raymond business sustained at

demand, driven by the success of GCPL's Van

mid-teens and will expand further going forward.

Program, which enhanced rural penetration and



Margins are expected to improve sequentially, with

growth.

normalization expected in 1HFY26.



GCPL is working to reduce inventory levels in urban



general trade, especially in metro areas, aiming to

improve the return on investment for GT

distributors to 20-30%.

February 2025

CONSUMER | Voices



Hindustan

Unilever



Marico



PIDI



UNSP



Demand recovery was delayed as urban



HUVR has implemented price hikes to mitigate the

consumption was under pressure. The higher share impact of raw material price inflation. It will

of LUPs has further impacted the mix for underlying continue to raise prices by low-single digits if

volume growth (UVG). Near-term growth pressure is commodity prices remain at the current level.

expected to sustain despite healthy rural demand.



EBITDA to be maintained at the lower end of 23-

UVG was flat YoY in 3Q.

24%.

Home Care maintained high-single-digit volume



growth and clocked 5% revenue growth. Fabric

Wash and Household Care sustained strong growth.

Beauty & Wellbeing segment posted a low-single-

digit volume decline, with revenue growth of 3%

(standalone 1%), impacted by the delayed winter

and mass skin portfolio. Personal Care posted a mid-

single-digit volume decline and 3% revenue decline,

impacted by skin cleansing. Oral Care grew in mid-

single digits, led by pricing.

Domestic revenue growth was 17% YoY with 6%



The company expects double-digit revenue

volume growth. International growth was 10% YoY

growth (unlike other FMCG peers) in the medium

(16% cc growth).

term, and has maintained its operating margin

FMCG sector retained a steady demand momentum

guidance at ~20% for FY25.

in 3Q, with stable urban sentiment and relatively

stronger rural demand growth.

Price increases were implemented across core

portfolios in response to the sharp escalation in

input costs.

Modern trade and e-commerce, including quick

commerce, led growth with high double-digit

volume increases, while general trade was flat.

Project SETU now covers 11 states.

UVG was 10% in 3QFY25. Consumer business



Management has maintained its guidance of

witnessed value and volume growth of 5% and 7%

double-digit UVG for FY25.

YoY, similar trend in 9MFY25. B2B business reported



PIDI aims to achieve growth of 1-2x of GDP in its

19% and 22% value and volume growth.

core category and 2-4x in its growth category.

Price cut impact lowering down, value and volume gap



Management maintains EBITDA margin guidance in

has narrowed down to 200bp vs. >400bp in 1HFY25.

the range of 20-24% for FY25.

Demand has seen some softness, particularly in urban



market. Rural growth continues to outperform the

urban.

VAM dipped to ~USD884/t in 3QFY25 from USD902/t

in 3QFY24 and is anticipated to remain stable in the

near term.

The price mix stood at 4.6% (5.2% excluding Andhra



The company remains committed to achieving

Pradesh).

double-digit P&A growth in FY25.

Total volume grew 10%. Prestige & Above (P&A)



The company expects FY25 margin expansion to be

clocked volume/value growth of 11%/16%. Popular

in the range of 70-100bp.

segment posted 6%/10% YoY volume/value growth.

Andhra Pradesh saw quick ramp-up after policy

change and contributed 6% to total revenue in 3Q

ENA price continues to face inflationary pressures, and

this trend is expected to persist for the next couple of

quarters. However, glass cost has stabilized.

February 2025

CONSUMER | Voices

Asian Paints

Current Price INR 2,237

Click below for

Detailed Concall Transcript &

Results Update

Neutral

India Business



Demand was weak with overall sentiments being muted. This adversely

impacted the paint industry, and downtrading hit value performance. The

demand during 3QFY25 was also hurt by the shorter festive season along with

the urban slowdown.



The decorative segment’s

volume rose 2% (+12% five-year

CAGR) while value

declined 8% YoY (+10% five-year CAGR). During 9MFY25, volume was up 3% YoY

(+13% five-year CAGR) while value declined by 6% YoY (+11% five-year CAGR)



Decorative and Industrial segment performance was slightly better with 1.7%

volume growth while value declined 6.6%. During 9MFY25, volume rose 3%

while value declined 5% YoY.



Distribution expansion continued with 1.69lac touch points.



Painting service has seen sustained acceptance; the biggest in the world.



B-B has done quite well than 2Q; govt spending was better. Overall B-B is

showing good signs.



New Launches:

Several premium products were launched. Apex Ultima Air-o-

Clean was launched in the exterior category, which uses advanced technology

that neutralizes known pollutants. It is available in 200+ shades. There is also a

range of regional packs (Maharashtra, Gujarat, and Kerala) under Royale GLITZ.

There has also been a packaging change, with premium looks across luxury,

premium, and economy ranges. The contribution from the new products was

12% of revenue.



Future of waterproofing with 25 years of waterproofing warranty for terraces.



Launched a new campaign for Ultima Protek, an ultra-durable exterior paint

with 12 years of warranty. The new campaign is also for the exterior textures.



The VAM project in Dahej and the white cement project in Dubai are on time.



Beautiful Homes Signature Store launched in Mumbai, spread across 14k sqft.

Similarly, it was launched in Surat spread across 13k sqft.



The company launched Nilaya WALL WRAP Zero PVC, Zero Plastic, Zero VOC,

and made from naturally occurring minerals.



The demand in November and December was better than October.



The decorative industry saw a decline of 4-5%, while industrial performance was

slightly better.



The company has not seen such kind of demand issue in the last two to three

decades (probably seen in the early ‘90s).



NEO latex paint was to add a new customer base; the target customers are not

part of the organized paint so this launch expands the category size.



The company is looking to reduce the hassle for the customers in the paint

category.



Near-term Outlook:

The demand condition was challenging in 3Q with stress

seen in urban continues. The company is optimistic about rural demand. Paint is

a category where consumers can postpone demand, which is impacting the

current overall slowdown. Govt spending should be strong going ahead.

Industrial business should be strong. The revenue growth weakness will be

sustained for at least two more quarters. The company is looking to first achieve

single-digit volume growth in the near term.

February 2025

CONSUMER | Voices

Competition:

The company has not seen much competition impact in 1HFY25;

instead, it was the industry weakness that hit most players. It is too early to

comment on the new competition impact as the category size at INR800b is

huge. Competition has now rolled out products across price points; it will be

important to see real value propositions to customers as there is no uniqueness

in the product.

Operating Margin



GM improved sequentially but it was down YoY.



Last year’s price cut impact was in 3QFY25 despite a 1.2% price hike in 2QFY25.



Employee cost inflation was negligible as the company looked for higher

employee productivity.



Sales and distribution expenses have gone up to counter competition.



Negative oplev impacted the operating margin.



The company maintains 18-20% EBITDA margin guidance for the medium term.

International Business



3Q growth in INR terms at 5%; strong 17.1% growth in constant currency terms



Africa: Impacted by currency devaluation in Egypt & Ethiopia



Middle East: Strong double-digit growth; especially in UAE

–

a key growth

market.



Focus on prelux and waterproofing categories supporting growth.



Increase in overall profitability driven by the recovery in key Asian geographies.



Britannia Inds

Current Price INR 4,837

Neutral

Click below for

Detailed Concall Transcript

& Results Update

Business environment and performance



Economic slowdown and high food inflation have led to subdued consumer

demand.



The Consumer Price Index (CPI) rose to 5.2% in 3Q, with food inflation at 8.4%.



Private final consumption expenditure (PFCE) is projected to grow by 7.8% in

real terms and 13.7% in nominal terms in 2H.



Key household essentials experienced significant inflation in Dec’24, with cereals

at 6.5%, oils & fats at 14.6%, vegetables at 26.6%, and fruits at 8.5%.



BRIT's commodity inflation stood at ~11%, primarily driven by rising cocoa and

palm oil prices.



The company is implementing strategic price hikes and cost-cutting measures to

mitigate the impact of inflation.



A 2% price increase was implemented in 3Q, with an additional ~2.5% planned

for 4Q (overall price hike expected to be 4.5% for FY25). A further 1.5% increase

is planned for 1QFY26.



The company continues to focus on cost efficiency measures, targeting savings

of ~2.5% of sales in FY26.



Direct reach has expanded to 2.88 million outlets, with strengthened rural

distribution now covering 31,000 distributors.



Focus states, including Madhya Pradesh, Rajasthan, Uttar Pradesh, and Gujarat,

grew 2.6x faster than the rest of India in 3Q, contributing 15% of total revenue,

with rural markets showing stronger growth.



The company remains committed to innovation, catering to regional

preferences and driving premiumization.

February 2025

CONSUMER | Voices

The RTM 2.0 strategy aims to expand distribution, enhance sales capabilities,

upgrade technology, and improve street-level engagement.



Urban retail channels are 1.3 times more profitable than the company's overall

business.



International business continues to perform well, particularly in the non-Middle

East markets, maintaining healthy margins.



No major capital expenditure is planned, with only INR1.5-2b allocated for FY26.



The e-commerce

mix for BRIT’s product categories stands at ~ 4% for biscuits,

17% for croissants, 9% for cakes, and 11% for dairy, showing a higher share for

adjacent businesses.

Adjacent categories



The company plans to relaunch its entire cake and cheese portfolio with

enhanced graphics to strengthen its competitive position.



Croissant is on a strong double-digit growth trajectory.



Rusk continues to see healthy volume and value growth.



Wafers are driven by innovation and distribution expansion.



Cheese category is leveraging in-house capabilities for competitiveness and

growth.



Drink segment maintains strong double-digit growth.



Croissant revenue projected to reach INR2b next year. Milk business has already

crossed INR2b in revenue.



Strengthened adjacent categories with new launches like Dual Flavored Layer

Cake and INR5 Rusk Pack.

Cost and margins



Palm oil prices surged 36% QoQ and 43% YoY in 3QFY25. Cocoa prices increased

19% QoQ and 103% YoY in 3QFY25.



Employee costs impacted by stock price appreciation provisions. Stock price in

2Q was ~INR6,300, which dropped to ~INR4,600 in 3Q, causing an impact of

INR750m on employee costs. Employee costs fluctuate quarterly in line with

stock price volatility.



The company highlighted that employee costs will rise at a rate of 0.75x of

revenue growth.



Management highlighted that EBITDA margin will be maintained at 17-18%.



Dabur

Current Price INR 505

Buy

Click below for

Detailed Concall Transcript

& Results Update

Operating Business and Environment



Urban demand moderated during the quarter, affected by persistent food

inflation, while the rural market exhibited strong performance.



Delayed and contracted winter conditions were observed, with October and

November being the warmest in India in recent years, impacting seasonal

product demand.



The company anticipates sequential improvement in demand and mid-single-

digit value growth in 4QFY25, driven by both pricing and volume growth.



The company's rural distribution network expanded by 15,000 villages this fiscal,

now covering over 131,000 villages.

February 2025

CONSUMER | Voices

According to Nielsen data, rural growth outpaced urban growth by 490 basis

points during the quarter. Overall, the FMCG sector grew by 7%, with urban

areas growing by 5% and rural areas growing by 10%.



In Dabur's domestic business, value growth stood at 1.7%, with urban areas

growing by 0.6% and rural areas growing by 2%. Rural demand outpaced urban

by 140bp.



The strategic vision cycle has been revised from four years to three years,

considering the volatile geopolitical landscape.



The company implemented a 3% price increase YTD to offset the 3% inflation;

however, the pricing impact was neutralized by trade schemes and consumer

promotions.



In the home care segment, the company achieved 15-16% volume growth and

5% value growth, with 10% of the value growth offset by the trade schemes.

Similarly, in the hair oil segment, volume growth stood at 6%, while value

growth was 3% during the quarter.



The company expects 8% inflation going forward and plans to implement

calibrated price hikes to sustain profitability.



During the quarter, the inventory days at the distributor level are at ~21 days.



Quick commerce maintained strong growth momentum, driven by speed,

convenience, and 24/7 availability, reinforcing its role as a key distribution

channel.

Cost and Margins



The company remains focused on premiumization and product mix optimization

to drive margin expansion.



In 4QFY25, the company expects mid-single-digit operating profit growth and

maintain margins at the current level.



For FY26, the company aims to maintain margins, with a potential for marginal

improvement through cost initiatives and pricing actions.

Segmental performance

HPC



The HPC segment recorded a 6% YoY sales growth during the quarter.



Oral Care grew by 9% YoY, driven by strong demand for Dabur Red toothpaste

and the premium brand Meswak.



Meswak posted 16% growth, driven by strong premium positioning, while

Babool declined during the quarter.



The herbal care category market share has increased from 30% to 32%.



The Gels portfolio in the 'freshness' segment achieved double-digit growth.



The company received recognition from the Indian Dental Association (IDA) for

Dabur Red Toothpaste as a non-fluoride product.



To modernize its oral care portfolio, the company will

revamp Dabur Red’s

packaging to enhance appeal in the organized trade channels.



As part of a marketing initiative during Mahakumbh, the company set up 10-15

stalls showcasing its toothpaste and toothbrush range, while also organizing the

Dant Snan campaign before pilgrims take bathing at Kumbh Mela.



Revenue growth in oral care was driven by both volume growth and price hikes.

The company expects oral care to be its fastest-growing segment in FY26.



Rural markets contribute 45-50% of oral care revenue, aligning with the

company's overall rural business contribution.



February 2025

CONSUMER | Voices

The hair oils segment grew 3% YoY and gained 150bp market share. The

Shampoo category outperformed the broader market, gaining ~20 bps in market

share.



Home Care registered 5% YoY growth, with Odonil delivering double-digit

volume growth, supported by strong performance in the Aerosol and Gel

segments, resulting in a 101bps market share gain in air fresheners.



Odomos reported a muted performance due to a category-wide slowdown, but

still outperformed the segment, gaining 574bps market share in the MRC

(Mosquito repellent cream) segment.



Sanifresh recorded double-digit growth during the quarter.



Skin Care grew by 6% YoY, led by strong performance in the Gulabari franchise,

which posted high single-digit growth.

Healthcare



The Healthcare portfolio declined by 1% YoY during the quarter.



Health Supplements saw a 3% YoY decline, impacted by unfavorable weather

conditions, affecting seasonal product demand.



Chyawanprash continued to strengthen its market leadership, gaining 139 bps in

market share. The category declined by 6% YoY while the Dabur Chyawanprash

sales dipped 3% YoY helping to gain market share. The company is actively

working to revive growth in this portfolio.



The Chyawanprash portfolio’s

annual revenue rate is ~INR5,000m and is seeing

good traction in its new formats, including tablets, liquids, and powders.



Chyawanprash’s new variant flavors now contribute 20% of the overall portfolio

and are offering higher margins.



The Digestives category grew by 4% YoY, with Hajmola recording mid-single-

digit growth in both candy and tablet formats. Extensions and variants of

Hajmola now contribute more than 15% to the overall Hajmola franchise.



The OTC & Ethicals segment remained flat YoY while key brands like Honitus,

Shilajit, Health Juices, and Women’s Health tonics performed well. The annual

revenue rate for OTC is ~INR8000-9000m and for Ethicals is ~INR5000m.

Food & beverages



The Foods segment maintained its strong growth momentum, reporting ~30%

YoY growth driven by Hommade paste, coconut milk, oil & ghee, tomato puree,

and Lemoneez.



Badshah continued its strong growth trajectory, delivering 16% value growth

with double-digit volume growth, and is gaining market share.



The Beverages segment declined by 10% YoY, with the Juices & Nectars (J&N)

category impacted by muted festive season demand and price-driven

competitive pressures. Despite the decline, Real gained ~318 bps market share

during the quarter.



The Active Juices portfolio grew by 10% YoY, contributing 10% of the beverages

portfolio, while the coconut portfolio and food drinks also posted double-digit

growth during the quarter. The Nectars business faced pricing pressures,

prompting the company to reduce prices from INR 130 to INR 100 for 1L pack

and introduce lower-priced packs to remain competitive.



Adverse weather conditions such as unseasonal rains, weak summer season,

and lackluster festive demand affected the beverage segment. The nectar

portfolio, being predominantly urban-centric, was further affected by the



February 2025

CONSUMER | Voices

slowdown in urban consumption. 40% of the beverages portfolio comprises

200ml tetra packs, which were the most impacted during the quarter.

The company is revamping its communication strategy, positioning cola as

sugar-flavored water, while Dabur products use only natural sugar, and

introducing new competitively priced offerings with an emphasis on value for

money and also improving the distribution margin.



Emami

Current Price INR 549

Buy

Click below for

Detailed Concall Transcript

& Results Update

Performance and outlook



Urban demand is facing headwinds, primarily due to rising food inflation and

liquidity constraints in retail and wholesale trade channels.



Rural demand exhibited resilience, driven by favorable monsoon conditions and

a strong harvest.



Seasonal categories were impacted by the delayed onset of winter, adding

further complexity to market dynamics.



Organized channels like Modern Trade, e-Commerce, and Institutional sales now

contribute 28.6% of domestic business and grew by 13% in 3Q.



There is a slowdown in general trade; however, there are no inventory issues.



Emami focuses on small packs catering to middle-income consumers (~20%

revenue contribution).



Rural salience in the domestic business stands at 53-54%, with organized

channels contributing 28-29% and urban GT contributing 16-18%.



CSD (canteen store department) is included in institutional sales, contributing

~4% of total revenue.



Operating cash flow (CFO) is expected to be in the range of INR5,000-5,500m in

9MFY25.



Goodwill amortization is expected to be INR900m for FY26.



The company remains committed to achieving high-single-digit revenue growth

and double-digit EBITDA growth in FY25.



The effective tax rate stands at 8-9% in FY25 due to MAT credit, with the

company anticipating a rate of 10% in FY26.

Cost and margins



Gross margin expansion is driven by a combination of price hikes, input cost

deflation, and the company’s cost-reduction

initiatives. This improvement is

expected to be sustained in the near term.



Deflation has been observed in packaging material costs, and the company has

implemented a 1.5-2.5% price increase across categories, including both LUPs

(low-unit packs) and larger packs.



The impact of the 1.5-2.5% price increase is expected to reflect in 4Q,

contributing positively to margins.

New product launches



The company rebranded its flagship product Fair and Handsome to Smart and

Handsome in Jan’25, reflecting a strategic shift toward a more inclusive and

contemporary positioning in the male grooming category.



Under the Smart and Handsome brand, the company aims to reposition itself as

a comprehensive solution provider for male grooming needs, moving beyond

fairness-focused products.

February 2025

CONSUMER | Voices

The strategy includes an enhanced focus on face wash offerings and a robust

pipeline of NPD across the male grooming segment over the next three years.



In Dec’24, the company introduced Mentho Plus Balm TOTAL in the southern

region, marketed as an aromatic balm designed to address various types of body

pain, including cold and headache, thereby expanding its presence in the

therapeutic and wellness segment.



During 3QFY25, the company launched a new television commercial for

BoroPlus antiseptic cream in the Bengal region, reinforcing its market

positioning and engaging with its core consumer base in a key geography.

Segmental information



The healthcare portfolio delivered double-digit growth, driven by strong

performance across Zanducare, Zandu Ayurvedic Cough Syrup, Zandu Health

Juices, and the Immunity range, reflecting sustained consumer demand in the

wellness segment.



In the BoroPlus range, growth was led by the core BoroPlus Antiseptic Cream

and lotions, benefiting from continued brand strength and category expansion.



Boroplus has shown growth on a lower base, driven primarily by the core cream

segment. This momentum is expected to continue in 4Q as the brand continues

to perform well.



Boroplus, a mass-market brand, is driven by strong rural demand and enhanced

trade schemes.



The company has increased its focus on the Kesh King Shampoo Sachet,

enhancing in-market visibility through prominent display units and strategic

placements to capture incremental demand in value-conscious segments.



Kesh King faces challenges due to category issues in the hair oil segment. The

company has engaged BCG to develop strategic plans for Kesh King, with the

strategy expected to be delivered in the next 1-2 quarters.



In The Man Company portfolio, Emami is strategically calibrating discounts to

ensure sustainable long-term growth, despite a temporary impact on revenue. It

also plans to invest judiciously in branding initiatives to achieve sustainable and

profitable growth over the next two quarters.



The Brillare portfolio witnessed robust growth, with hair care products like Hair

Oils and Professional Shampoos leading the momentum, followed by body care

products. Offline expansion efforts have also gained traction, with coverage

extending to over 3,000 salons and retail stores, driving higher visibility and

consumer engagement.



The decline in The Man Company is attributed to a shortened festive period this

year (one month YoY compared to two months last year) and delays in

transitioning to quick commerce platforms.



The company has maintained its pricing strategy for new launches under the

Smart and Handsome brand.



Smart and Handsome is seeing a revival in 4Q, supported by new product

launches.



The international business witnessed a decline, primarily due to lower growth in

Russia and Ukraine. However, performance was stable in Bangladesh and other

markets.



Panchasrishta growth in healthcare faces challenges due to a declining category

after Covid. The company is undertaking initiatives like improved packaging and



February 2025

CONSUMER | Voices

advertising campaigns to revive the category. Category saw strong growth

during Covid, but major players now face pressure or decline.

The company has not seen any significant impact from Dabur’s SESA acquisition

in hair oil and does not anticipate much competitive threat from it.

There are gradual benefits in the Ethicals portfolio from insurance policies

extended to the Ayurvedic portfolio. The company is taking steps to engage with

Ayurvedic hospitals; however, improvements in both the ethical and generic

portfolios are expected to be gradual.



Godrej Consumer

Current Price INR 1,024

Click below for

Detailed Concall Transcript

& Results Update

Buy

Performance and outlook



There is a slowdown in urban consumption, particularly in the modern trade and

premium product segments.



Rural demand has outpaced urban demand, driven by the success of GCPL's Van

Program, which significantly enhanced rural penetration and growth.



The company is working to reduce inventory levels in urban general trade,

especially in metro areas, aiming to improve the return on investment for GT

distributors to 20-30%.



The company expects positive organic revenue growth in 4QFY25.



It has implemented multiple price hikes across categories, especially in soaps, to

counter the impact of elevated palm oil derivative costs.



It implemented a mid-single-digit price hike in 3Q, with further price increases

expected in 4QFY25.



These price hikes, combined with damage cuts and trade scheme reductions, led

to trade destocking, impacting short-term volume growth.

Cost and margins



Palm oil prices have corrected ~20% from their peak, but PFAD (a key derivative)

has only declined 7-8%, delaying the expected input cost relief.



Normalization in PFAD prices is expected, depending on global supply-demand

dynamics.



The company

is implementing price hikes to restore India’s margins at 24-26%.



Margins are expected to improve sequentially, with normalization expected in

1HFY26.



EBITDA margins in the Raymond business improved to mid-teens and will

expand further going forward.

Segmental performance

Home Care



Home Care revenue grew modestly by 4% YoY.



The Household Insecticides (HI) category faced challenges due to an unfavorable

season and a slowdown in urban consumption.



Good Knight Agarbatti continues to deliver exceptional growth, gaining

significant market share in the incense sticks segment.



GCPL gained a significant market share in liquid vaporizers, particularly in

machines, during November and December.



Premium formats in the HI category were impacted by the slowdown in urban

consumption; however, market share gains in these formats indicate strong

consumer acceptance of the RNF molecule.



The Air Fresheners segment delivered double-digit volume growth.

February 2025

CONSUMER | Voices

Fabric Care reported robust double-digit volume growth, driven by successful

category expansion.



Godrej Fab has been rolled out nationally and continues to strengthen its

market position with sustained share gains.

Personal Care



Personal Care revenue grew by a subdued 2% YoY.



Personal Wash volumes declined in the mid-to-high single digits, offset by price

increases implemented across the portfolio.



Persistent cost pressures from inflation in palm derivatives continue to weigh on

margins, with the pressure expected to persist in the near term.



Magic Handwash sustained its strong performance, delivering robust double-

digit volume growth.



Hair Colors posted mid-single-digit volume growth, supported by steady

category performance.



The Godrej Expert Rich Crème access packs maintained double-digit growth

momentum.



Shampoo hair color volumes continued their strong growth trajectory,

expanding in double digits.



The Sexual Wellness segment delivered double-digit value growth and further

strengthened its market share.



GTM integration for deodorants across cosmetic outlets is nearing completion,

with performance stabilizing in this segment.

International market updates



Indonesia showed steady performance with a 6% volume growth, 9% revenue

growth, and 12% EBITDA growth.



Indonesia Hair Colors recorded strong double-digit volume growth, driven by

Shampoo Hair Color.



Indonesia Stella Pocket continues to perform strongly, with volumes doubling

YoY.



In Africa and Latin America, the focus remains on balancing pricing with volume

growth to drive revenue recovery.

New launches



The company has launched Mini Aer Pocket in certain states of South India at

INR30.

The company re-launched Aer Spray at INR99 across India.

Hindustan Unilever

Current Price INR 2,250

Buy

Click below for

Detailed Concall Transcript &

Results Update

Operational environment



FMCG demand trends remained subdued during the quarter with continued

moderation in urban growth, while rural sustained its gradual recovery.



Rural demand was driven by the consumption of LUPs, while urban markets

faced demand compression, with consumers trading down from larger to

smaller packs, particularly in the Home Care segment.



The moderation in consumption trends will continue in the near term.



HUVR has implemented price hikes to mitigate the impact of raw material price

inflation. HUVR will continue to raise prices by low-single digits if commodity

prices remain at the current level.



HUVR focuses on volume-led growth to drive competition.

February 2025

CONSUMER | Voices

The company has sustained positive absolute volume (tonnage) growth.

Underlying volume growth was flat in 3QFY25, impacted by higher growth in

Home Care with lower per-ton realizations and faster growth of lower-priced

packs (LUPs), such as sachets, compared to larger packs. However, this was

partially offset by ongoing premiumization efforts.



Home Care remains a resilient category given its essential nature, performing

well despite macroeconomic challenges. HUVR’s strong portfolio, with product

availability across price points, is ensuring continued growth.



The new Stratos formulations for Lifebuoy and Lux have been expanded to a

large part of the country and have received positive consumer feedback.



Organized trade continues to outpace growth compared to other channels and

has grown by double digits during the quarter.

Costs and margins



Gross margin was primarily impacted by RM prices, with volatility in commodity

prices. Crude oil and soda ash prices declined 11% and 3%, while palm oil and

tea prices increased 40% and 24% YoY.



EBITDA is expected to be maintained at the lower end of 23-24%, led by the

product mix and operating leverage.



Management guided that EBITDA margins for the Food business will be

maintained at 19-20% and for Personal Care at 17-18%.

Segmental highlights

Home Care



Home Care grew 6%, with a high-single-digit UVG, both in Fabric Wash and

Household Care.



The Fabric Wash segment delivered broad-based growth across all formats, with

the liquids portfolio sustaining its double-digit growth momentum.



Rin bar was re-launched with advanced product enhancements for superior

performance. Comfort underwent a comprehensive re-launch to further

strengthen its brand positioning and superiority.



Household Care growth is driven by strong performance in the Dishwash

category. The launch of Sun, a new liquid dishwash brand, reflects the

company’s strategic focus on expanding liquid products within the mass

segment.

Beauty & Wellbeing



Beauty & Wellbeing’s standalone revenue grew 3% (1% standalone revenue),

with a low-single-digit underlying volume decline. Excluding the winter portfolio,

the segment grew in mid-single-digit.



Hair Care recorded mid-single-digit competitive volume growth, driven by

strong performances from Dove, Tresemme, and Clinic Plus. Growth was broad-

based across sachets and emerging formats. New launches, including Dove’s

Hair and Scalp Therapy and Tresemme’s Silk Press range, bolstered the

company’s future core and market-maker

portfolio.



Skin Care faced challenges due to a delayed winter, while Color Cosmetics had a

muted quarter. However, sequential improvement in the mass skin segment

was supported by portfolio expansion. The non-winter skincare portfolio

achieved mid-single-digit growth.



Six strategic focus areas and emerging channels continued to deliver double-

digit growth.



February 2025

CONSUMER | Voices

Personal Care



Personal Care saw a 3% decline and a mid-single-digit volume decline.



Strategic initiatives in Skin Cleansing drove market share gains during the

quarter, with positive momentum observed in the non-hygiene segment.



Lifebuoy was re-launched to address challenges in the declining hygiene

category.



Body Wash maintained its strong double-digit growth, further solidifying its

market leadership. As part of the premiumization strategy, Dove introduced its

Serum Shower collection of soaps and body wash.



Oral Care achieved mid-single-digit growth, led by pricing and the performance

of Closeup.

Food & Refreshment (F&R)



F&R’s revenue was flat, with a mid-single-digit

volume decline.



Tea recorded low-single-digit growth, driven by premium brands such as 3 Roses

and Taj Mahal, while retaining its value and volume leadership in the category.



Coffee achieved double-digit growth, supported by robust performance in

organized trade channels.



HUVR's Nutrition Drinks strengthened its value and volume market leadership

despite a category decline due to subdued consumption. Pricing adjustments for

consumption packs were implemented during the quarter to drive demand.



Packaged Foods posted mid-single-digit growth, led by strong contributions

from future core and market-maker segments.



Key categories such as ketchup, mayonnaise, food solutions, international

sauces, and cuisines continued to deliver strong volume growth.



New launches during the quarter included Knorr's Korean Noodles flavor and

the pan-India expansion of Horlicks Strength Plus.



Ice cream revenue remained flat year-on-year.

Minimalist acquisition



HUVR has acquired a 90.5% stake in Minimalist at an EV of INR29.55b, paying

INR26.70b. The remaining 9.5% will be acquired from the founders within two

years. The deal is expected to close in 1QFY26.



The founders, Mohit and Rahul Yadav, will continue to lead the business for two

years post the acquisition.



Minimalist has an annual revenue run rate of +INR5b and the business has been

profitable since inception. Revenue in FY22/FY23/FY24 was at INR1.03b/

INR1.84b, and INR3.47b.



HUVR is under-indexed in the premium beauty and wellbeing category and has

targeted to shift the portfolio towards premiumization by 900bp.



The acquisition of Minimalist supports this transformation by expanding HUVR’s

beauty portfolio. Minimalist operates in the masstige segment with strong e-

commerce capabilities. Half of the overall beauty market comprises the

masstige segment, which sees robust demand from affluent customers.



The derma activist category, where Minimalist operates, comprises 2/3 masstige

products. This segment is growing at twice the rate of the overall beauty

market.



Minimalist also excels in innovation, with several successful launches in the

previous quarters driving growth across categories.

Synergy opportunities:



Expansion of Minimalist’s product portfolio using HUVR’s R&D capabilities

February 2025

CONSUMER | Voices

Leverage HUVR’s distribution network to build Minimalist’s offline presence as

Minimalist already has an online presence



Utilize Unilever’s global reach to expand Minimalist internationally



Benefit from HUVR’s supply chain to achieve cost and capacity efficiencies,

creating margin synergy

Ice-cream business



The ice cream business will be operated under the Kwality Wall’s (India) Limited

brand, incorporated in Jan’25.



The demerger offers shareholders an equitable opportunity to participate in the

future value creation of the standalone ice cream business, with a 1:1 share

entitlement ratio.

Acquisition of the palm undertaking



HUVR has approved the acquisition of the palm business from Vishwatej Oil

Industries in Telangana.



This move supports HUVR's palm localization strategy to reduce dependence on

imports from Indonesia and Malaysia and strengthen its supply chain. The

acquisition aligns with India's National Mission on Edible Oils.



Indigo Paints

Current Price INR 1,064

Buy

Click below for

Detailed Concall Transcript &

Results Update

Performance and outlook



The demand slowdown has persisted over the past year, with festive demand

falling below expectations.



No significant difference has been observed between urban and rural demand

growth.



The company has seen some

signs of improvement in Jan’25 and expects

demand to recover, driven by favorable crop conditions, a reduction in interest

rates, and potential tax relief in the Union Budget.



Emulsion value growth stood at 3%, while volume growth was 2%, indicating an

improved product mix and increasing premiumization.



Premium emulsion at the retail level is the fastest-growing segment, with a

strong focus on engaging painting contractors across metro cities and Tier-1,

Tier-2, and Tier-3 markets.



Waterproofing and construction chemicals (WPCC) products for the retail

channel were launched and marketed under the INDIGOPN brand (Protect Plus

Series), while Apple Chemie continues to target the B2B and fast-growing

infrastructure segment.



The company is strategically focusing on selling Apple Chemie in regions where

the product mix is more favorable.



The company does not see significant demand for latex paint and has no plans

to enter this segment.



INDIGOPN has been minimally impacted by Birla Opus, primarily due to its

differentiated product offerings and strong distribution network. The effect on

Indigo Paints’ sales is estimated to be ~1%.



The entry of new players has had a limited impact on existing industry

participants. However, as the overall market is experiencing a slowdown, these

effects have become more noticeable.



Pricing in the paint industry is primarily dictated by the market leader.

February 2025

CONSUMER | Voices

Paint consumption is largely driven by repainting, which accounts for 85% of

total demand, while new construction contributes ~15%.

Costs and margins



Gross margin was affected by a change in product mix and price cuts

implemented last year.



During 2QFY24 and 3QFY24, the company hired additional employees as part of

its expansion efforts, leading to an increase in employee costs.



The additional depreciation from the new plant in Tamil Nadu (commissioned in

Sep’23) impact on PAT is already factored into the base.



Advertising and promotion (A&P) expenses as a % of revenue declined to 8.2%

in 3QFY25 from 9.5% in 3QFY24.



Apple Chemie's margins were significantly impacted due to an unfavorable

product mix but are expected to improve with a better product mix and a focus

on select states.

Distribution network



INDIGOPN added 217 tinting machines in 3QFY25, bringing the total count to

10,772.



As of Dec’24, the number of active dealers stood at 18,578, reflecting a QoQ

decline of 120. During periods of weak market conditions, active buyers tend to

reduce their purchases, leading to a drop in dealer count. However, as demand

recovers, the number of active dealers is increasing again.



The company has a network of 750–1,000 dealers that exclusively sell

INDIGOPN’s products.

Others



In Jodhpur, erection work is progressing at full pace for the water-based plant

with a capacity of 90,000 KLPA, with commissioning expected by 3QFY26.



Erection and installation work is also progressing for the solvent-based plant,

with a capacity of 12,000 KLPA, and commissioning is expected by 1QFY26.



The brownfield expansion of putty production is expected to be commissioned

by 1QFY26.



Jyothy Labs

Current Price INR 355

Neutral

Click below for

Detailed Concall Transcript &

Results Update

Performance and outlook



The quarter saw food inflation, moderation in urban consumption, and a gradual

recovery in rural demand.



Rural demand is improving, supported by a good monsoon and rising wages,

while urban demand is under pressure.



The company is seeing no major improvement in demand in the near term.



The revenue mix between urban and rural is 60:40.



JYL is implementing selective price hikes to mitigate inflationary pressures.



It took a low-single-digit

price hike in Dec’24, with

an additional increase

planned in 4Q for the soap portfolio.



The company reported 4% value growth and 8% volume growth for the quarter.



Excluding the HI (Household Insecticide) segment, value growth stood at 6%,

while volume growth was 10% during the quarter.



Overall volume growth was driven by the dishwash category.



The difference in value and volume growth is attributed to higher grammage

and trade promotions offered by the company on select SKUs.

February 2025

CONSUMER | Voices

Higher grammage is being offered in dishwash and liquid detergents.



The gap between volume and value growth is expected to remain in the 2-3%

range in FY26.



Quick commerce is rapidly gaining traction in metro areas, reshaping channel

dynamics.



The company is focusing on rural distribution, product innovation, and SKU

expansion to cater to specific consumer segments.

Costs and margins



Rising raw material prices may exert pressure on margins.



A&P spending is expected to remain in the 8-9% range.



JYL maintains EBITDA margin guidance of 16-17% for FY25.

Segmental details

Fabric care



Fabric care net revenue rose 9% YoY, led by liquid detergents.



Ujala Detergent Powder held a 24.5% market share in Kerala in 3QFY25.



The company enhanced consumer engagement through targeted programs,

promotions, and channel-specific SKUs.



It expanded its liquid detergent portfolio with Mr. White and Morelight,

strengthening innovation and catering to diverse price segments

Dish wash



It delivered 4% sales growth in 3QFY25.



Competitive intensity remains high in small pack grammage. Pril maintains its

leadership in Modern Retail and E-commerce, driven by larger SKUs.



Exo has 14.1% market share in dish wash bar and Pril has 13.5% market share in

dish wash liquids in 3Q.

Household Insecticides



Sales declined 25% YoY in 3QFY25 due to unfavorable weather conditions.



Maxo LV recorded strong double-digit growth YTD, though 3Q saw a decline.

Coil sales remained impacted by consumers shifting toward incense sticks.



Jyothy launched Maxo Anti-Mosquito Racquet featuring long battery life to

further expand its HI portfolio.



Maxo Coil and liquid vaporizer market share stood at 23.8% and 7.2%,

respectively, in CY24.

Personal Care



Sales declined 4% YoY in 3QFY25 due to a slowdown in consumption.



To capitalize on growth opportunities in the mass toilet soap category, JYL

introduced JOVIA beauty soap in two variants

–

"Lemon & Aloe Vera" and

"Sandal & Turmeric"

–

strengthening its personal care portfolio.



JOVIA was launched in the mass segment at a highly competitive price point of

INR25-26, targeting downtrading consumers. The product is expected to be

margin-dilutive in the initial years.



The company focuses on increasing the visibility and appeal of Margo Neem

Naturals, with dedicated campaigns aimed at boosting brand visibility and

consumer engagement.



February 2025

CONSUMER | Voices

LT Foods

Current Price INR 386

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Detailed Concall Transcript &

Results Update

Outlook and guidance



The company aims for revenue from the Organic Food and Ready to Heat

(RTH)/Ready to Cook (RTC) segments to each account for ~10% of its total

consolidated revenue by FY29.



The company remains focused on maintaining a diversified portfolio across

categories and geographies, with expansion plans driven by shifting consumer

trends.



Going forward, the company expects margins to expand from 2QFY26, led by

the positive impact of lower raw material prices and reduced freight costs.

Freight costs



Logistics costs as a percentage of revenue increased 2.3%/0.5% YoY/QoQ and

stood at ~7.2% of the revenue in 3QFY25.



The company is in talks with freight companies, and the management expects

freight costs to come down from FY26 onwards.



Freight costs are expected to remain elevated in 4QFY25 and 1HFY26, as the

current inventory already includes the freight cost component.



Europe and US were the regions most impacted by the Red Sea crisis. However,

European freight costs have started to decline, while US costs still remain

elevated.

International market



In North America, the company’s flagship brand Royal continues to maintain its

market leadership with ~55% market share, while Golden Star remains the

number 1 jasmine rice brand.



The company has maintained its market share of ~20% in the northern parts of

Europe.



It has further expanded its global presence by extending its footprint in the

Middle East.

Basmati and other specialty rice



The Basmati and other specialty rice segment has witnessed strong traction in

the international market, led by strong demand in the US, Europe, and the

Middle East.



Paddy prices have decreased compared to last year (in the range of 10-15%),

with the company now evaluating its pricing strategy in response to the

increased competitive environment. The average paddy procurement rate for

this year declined ~10-15% YoY and stood at INR32/kg.



Revenue from India grew 14% QoQ in 3QFY25. However, the company is seeing

soft demand in the Indian market. Revenue from international markets

increased 11% QoQ, with the Middle East being the fastest-growing territory

(~37% YoY in 9MFY25).



Basmati rice volume stood at 185KMT/525KMT, with an average realization of

INR105/kg / INR103/kg in 3QFY25/9MFY25.



The company currently holds ~28% of the market share in India, compared to

30% last year. This was a strategic decision as the company exited some

segments due to lower profitability. However, the company has increased its

market share in the premium segment.



Golden Star continues to be a major contributor to the profits from associates,

with the business growing at the rate of 20%. However, profitability is impacted

by inflated freight costs, as raw materials are sourced from Thailand. Going

forward, the company expects freight costs to improve.

February 2025

CONSUMER | Voices

Organic food and ingredients



Growth in the organic foods segment was driven by the expansion of

distribution in Europe and the US, along with increased sales across product

segments, such as rice, grains, and soya.



LTFOODS completed the acquisition of the remaining stake in NBFL (17.5%) on

31st Dec’24. NBFL is now a 100% wholly-owned

subsidiary of LTFOODS.



With the rise in global demand for health-conscious products, the company

targets a revenue of INR10b+, with an expected CAGR of ~10-12% and EBITDA

margins of ~14% by FY26.

RTH and RTC



RTH/RTC reported a revenue decline of ~16% YoY, primarily due to the

discontinuance of ‘Daawat Sehat’.



The company witnessed a robust growth of ~148% in Biryani Kits, 26% growth in

RTH, and ~60% growth in Kari Kari in 9MFY25.



The company targets a revenue CAGR of ~33-35% over the next five years in the

RTH and RTC segments.



The US is growing at a much higher rate compared to the Indian market,

contributing ~INR1b in revenue while maintaining an EBITDA margin of 7%.



India currently is not profitable; however, the company remains optimistic

about the future of RTH and RTC in India and aims to break even by FY27.

Other



Higher inventory days in 9MFY25 were due to strategic paddy procurement, as

greater demand is anticipated in key markets like the US and India.



Other income was lower in 3QFY25 due to the reclassification of exchange into

operating revenue.



India/US/UK and Europe/Rest of the World contribute 30%/40%/18%/12% to

the total income.



The company expects to receive its insurance claim by 10th Mar’25.

Marico

Current Price INR 634

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Detailed Concall Transcript &

Results Update

Business environment and outlook



The FMCG sector maintained steady demand momentum during the quarter,

with urban sentiment remaining stable and rural demand sustaining its

relatively stronger growth.



Retail inflation eased in December due to moderating food prices but remained

at relatively high levels.



A favorable crop season and supportive government initiatives are expected to

aid consumption in the coming quarters, with further stimulus measures

anticipated in the upcoming Union Budget.



The India business recorded a sequential improvement in underlying volume

growth, supported by resilient performance across core portfolios and the

expansion of new businesses.



Offtake growth remained robust, with over 90% of the business either gaining or

maintaining market share and ~80% of the portfolio sustaining or improving

penetration on a MAT basis.



Price increases were implemented across core portfolios in response to the

sharp escalation in input costs.



Modern Trade (MT) and E-commerce, including Quick Commerce, led growth

with high double-digit volume increases, while General Trade (GT) was flattish.



Quick commerce has emerged as a major growth driver in the organized

channel, with growth exceeding 50%.

February 2025

CONSUMER | Voices

In the domestic revenue mix, organized channels contribute ~30%, CSD accounts

for 6-7%, and General Trade (GT) makes up 63-64%. Profitability is higher in

General Trade than in organized channels.



Project SETU was extended to one more state during the quarter, bringing the

total coverage to 11 states.

Material costs, margins, and guidance



Gross margin contracted ~180 bp YoY, mainly due to the sharp increase in copra

and vegetable oil prices, partially offset by price hikes.



Copra prices surged 38% YoY and rice bran oil prices were up 19% YoY in

9MFY25. Crude oil derivatives remained range-bound.



Commodity prices are expected to remain elevated in the near term.



Consolidated A&P expenses increased 19% YoY in 3Q, reflecting continued

investments in strengthening brand franchises and driving portfolio

diversification.



The company has maintained operating margin guidance at ~20% for FY25.

Segmental performance

Parachute coconut oil



Parachute Rigids recorded 3% volume growth despite a 1% grammage reduction

in the key price-point pack, offsetting the need for a price hike.



Volume offtakes grew in high single digits, resulting in a ~140 bp market share

gain on a MAT basis.



Revenue growth for the brand reached 15%, aided by the price hike taken by

the company during the year.



An additional price hike of ~5% at the brand level was taken towards the end of

the quarter, as copra prices are likely to remain firm in the near term.



Parachute oil’s rural contribution exceeds that of urban sales. With the

anniversaries of price hikes in 2QFY26 and 3QFY26, the volume-value gap is

expected to narrow.

Saffola oil



Saffola oil delivered low-single-digit volume growth despite a sharp increase in

vegetable oil prices.



Revenue growth stood at 24%, driven by price increases taken over the past few

months.

VAHO



VAHO declined 2% in value terms; however, it is showing signs of recovery.



The mid and premium segments performed relatively better, contributing to a

~70 bp gain in value market share on a MAT basis.



Gradual improvement is expected in VAHO trends, supported by increased ATL

investments, brand activations, and strengthening rural consumption sentiment.

Foods and Premium Personal Care



The Foods segment recorded strong 31% YoY value growth in 3Q, nearing an

annual revenue run rate (ARR) of INR10b.



Saffola Oats delivered double-digit growth, while newer franchises continued to

perform well.



In the Foods business, Saffola Oats is the key driver, with its EBITDA margin

aligning with the company’s overall margin. Both oats and masala oats have

delivered double-digit growth.



Other categories like honey and soya are in the early stages and are expected to

become margin-positive once their annual revenue reaches INR1-1.5b.



True Elements and Plix’s plant-based

nutrition portfolio sustained their strong

growth momentum. The cash burn in the business has been reduced.



Premium Personal Care maintained its strong trajectory, driven by the digital-

first portfolio.



Beardo is on track to achieve a double-digit EBITDA margin this year.



February 2025

CONSUMER | Voices

The company aims to achieve a positive EBITDA margin for its overall digital

portfolio in FY26, with a goal of double-digit margins by FY27.



The combined revenue contribution of Foods and Premium Personal Care

(including Digital-first brands) to the domestic business stood at ~21% in

9MFY25, reinforcing the ongoing portfolio diversification strategy.



The digital-first portfolio is expected to reach an ARR of ~INR6b by FY25 end,

with ambitions to double this by FY27, resulting in these segments contributing

~25% of domestic revenue by FY27.

International business



International business delivered 16% growth in CC terms.



Bangladesh reported 20% Constant Currency Growth (CCG) on a subdued base,

reflecting the resilience of the business model despite macroeconomic

challenges.



MENA recorded 35% CCG, driven by broad-based growth across the Gulf region

and Egypt.



South Africa posted 17% CCG, with both the Hair Care and Health Care segments

performing well.



South East Asia experienced a soft quarter due to sluggish consumption trends

and geopolitical uncertainties in Myanmar.



NCD and Exports grew 15% during the quarter.



EBITDA margin for the International business stood at 27.1%, expanding ~100 bp

YoY.



Double-digit constant currency growth momentum is expected to be sustained

over the medium term.



Page Inds

Current Price INR 41,560

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Click below for

Results Update

Performance and outlook



The operating environment in 3Q remained challenging due to subdued demand

conditions.



The festive demand provided an initial uplift but lacked sustained momentum

throughout the quarter.



Retail and consumer demand were muted, with a slight pickup in October, but

November and December remained subdued.



The premium innerwear category saw strong consumer acceptance, driven by

enhanced quality and product innovation.



Secondary sales showed a slight improvement over primary sales during the

quarter.



The company did not take any price hikes in 3Q, and none are expected in 4Q.



Growth was broad-based across all categories, with no significant pressure in

any segment.



Revival in consumer demand, improved inventory levels, and digitalization

initiatives are expected to drive medium-term growth.



Growth is accelerating as the company expands further into the country, with

Tier-3 and Tier-4 cities leading, followed by Tier-1, Tier-2, and metros. This

includes both organic and inorganic growth.



The Odisha plant is set to be operational by March, with an additional sewing

facility in KR Pete, Karnataka. Together, both the plants will house 2,000 sewing

machines, with Odisha capable of running two shifts to meet future demand.



The company will benefit from Odisha state subsidies, including wage subsidies

for 5-6 years, along with incentives on power, water usage, and additional capex

subsidies.

February 2025

CONSUMER | Voices

Inventory days



Inventory at the distributor level has been reduced by five days, with ~17.7-18m

pieces of inventory in the system.



Innerwear inventory is at an optimal level, while athleisure and junior categories

have some scope for further inventory reduction.



Working capital days improved to 65 days from 75 at the end of FY24.



Inventory days reduced to 59 from 93 days at the end of FY24 due to channel

stocking adjustments.



93% of the overall business operates under ARS, with 84% of distributors

contributing to this model, ensuring optimal inventory levels.

Costs and margins



Gross margin expanded YoY, driven by lower raw material costs and improved

productivity.



EBITDA margin expansion was supported by stable input costs and enhanced

operational efficiencies.



The FY25 EBITDA margin guidance remains at 19-21%, despite achieving 21.6%

in 9MFY25, as management anticipates higher IT costs for digitalization and

increased marketing expenses in the coming quarters.



The FY26 EBITDA margin guidance remains broadly unchanged at 19-21%.

Market penetration and growth potential



Women's market penetration stands at 6-8%, with a 6% share in bras and 8% in

panties.



Men's innerwear has 18-20% market penetration and athleisure has 6% market

penetration.



EBITDA margins remain consistent across all categories, ensuring profitability as

the business scales.



Performance across categories was strong, with better growth seen in the

athleisure and women's segments.

Distribution channels



PAGE has a distribution network that comprises 110,176 MBOs, 1,436 Exclusive

Brand Outlets (EBOs), and 1,212 LFS as of Dec’24.



The expansion plan for EBOs and retail outlets remains aggressive compared to

the previous years.



The company is now focusing on its distribution network, with an emphasis on

metros and tier 2 and 3 cities.



Modern retail, including exclusive brand stores and e-commerce, continued to

exhibit strong growth.



The company has not lost any shelf share in the GT market, indicating no major

competitive pressure from industry peers.

Pidilite Industries

Current Price INR 2,769

Click below for

Detailed Concall Transcript &

Results Update

Neutral

Demand environment and outlook



The company is witnessing some softness in both urban and rural markets at the

macro level; however, rural growth continues to outperform urban growth.



The Pidilite core category is under strain due to the subdued demand

environment. Management remains cautious about demand recovery in the

near term as there is no significant increase in consumer disposable income.



The company remains optimistic about medium-term recovery, supported by

increased government spending.



During the quarter, the gap between volume and value growth narrowed.

February 2025

CONSUMER | Voices



PIDI targets growth of 1-2x GDP in its core categories and 2-4x GDP in high-

growth categories. In the current demand scenario, growth will be on the lower

side.

Around 70% of revenue is derived from the repair and renovation segment,

while the remaining 30% comes from new construction. Both new and regular

construction activities are witnessing a slowdown across geographies.

The expected demand recovery from the festive season has not materialized,

with no significant revival observed in the real estate sector.

The B2B business continues to deliver strong double-digit growth, driven by

strategic execution. The B2B growth is mainly led by: 1) the projects division,

where the growth momentum observed over the past 6-8 quarters is expected

to sustain, 2) the packaging business, benefiting from increased consumer

demand through e-commerce and quick-commerce channels, and 3) the

pigments business, which has shown healthy growth, though competitive

pressures may lead to some moderation in the coming quarters.

Subsidiary companies, such as ICA Pidilite, which has a predominantly urban

focus, are facing some pressure. Moreover, there are some internal challenges

in the Pidilite MEA subsidiary that have impacted growth. However,

management expects recovery once these issues are resolved.

The company is focusing on driving revenue growth through volume growth

rather than price hikes.

It will continue to invest in brand building, upgrading and expanding

manufacturing facilities, and strengthening the distribution network.

Cost and margin



The consumption cost of VAM stood at USD 884/ton in 3QFY25 vs USD 902/ton

in 3QFY24. The company anticipates VAM costs to remain stable in 4QFY25.



Management has guided for ad spends to remain at 3-5% of sales over the next

three years, reflecting a consistent focus on brand investments.



Input costs are expected to remain stable over the next two months. However,

given the uncertain geopolitical conditions, fluctuations are anticipated in the

medium team.



Management has projected EBITDA margins to be in the range of 20-24% for

FY25. For 9MFY25, EBITDA margins stood at ~23.8%; however, negative

operating leverage is expected in 4QFY25 due to the typically smaller quarter.

Inorganic opportunities



The company is generating healthy cash flows and will consider inorganic

growth opportunities when strategically viable.



Management is looking to explore opportunities in the EV and semiconductor

sectors, given their high growth potential.



Its technology partnership with Jowat for PU hot melt adhesives is strategically

significant, catering to advanced packaging. The company has also partnered

with electronic adhesive manufacturers to enhance its capabilities in emerging

technologies.

February 2025

CONSUMER | Voices

Tata Consumer Products

Current Price INR 1,025

Click below for

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Results Update

Buy

India packaged beverages business



The India packaged beverages business witnessed a revenue growth of 10% YoY,

led by a 7% growth in volumes and growth across segments, fueled by

competitive prices rather than heavy discounting.



The company calibrated price hikes and implemented them across the tea

portfolio.



Tea volumes grew 7% YoY, led by the company’s focus on long-term

competitiveness while calibrating price increases across the portfolio, which

partially offset the significant increase in tea costs.



The company has implemented decent hikes in tea and expects margin pressure

to ease going forward. The price hike has compensated for 40% of the cost

increase, with the remaining 60% still to be addressed.



The company expects to see the full benefit of the price increase in teas by the

end of 1QFY26 or early 2QFY26.



Going forward, the company will continue to focus on gaining market share

through volume growth.



Coffee continued its strong performance, growing 28% in 3QFY25.

India foods business



The business registered 31% YoY revenue growth in 3QFY25, with LFL revenue

(excluding Capital Foods) growing 11% YoY. The segment recorded volume

growth (excluding Capital Foods) of 1% YoY during the quarter.



Salt revenue grew 7% YoY, driven by pricing and modest volume growth during

3QFY25. Value-added salts maintained their strong momentum (up 31% YoY).



Tata Salt relaunched Sendha + (rock salt), offering consumers a superior and

trusted product in the mass premium segment and registered record volumes.



The dry fruits portfolio has achieved an Annualized Run Rate (ARR) of over

INR1b, while Tata Simply Better’s cold press oils achieved an ARR of ~INR500m.



Tata Sampann’s portfolio witnessed another strong quarter, posting 23% YoY

growth, with the urban growth rate in low single digits and the rural growth in

double digits.



Going forward, management anticipates gross margins to expand to ~12-15%.

Ready-to-drink (RTD)



Revenue for the RTD segment declined 2% owing to the recalibration of trade

pricing.



During the quarter, the RTD business recorded a volume growth of 14%, with a

notable growth of 39% in Dec’24.



The premium business grew 12% in 3QFY25 and contributed to ~15% of the

total RTD business.



Tata Copper+ recorded 21% revenue growth, significantly up from the previous

quarter.

Capital Foods and Organic India



Capital Foods/Organic India revenue stood at ~INR2.1b/INR930m in 3QFY25.



The run rate of Capital Foods continues to improve with expansion into white

spaces and the buildup of the food services channel.



Organic India is now listed in all major trade banners and pharmacy chains.

February 2025

CONSUMER | Voices

Tata Starbucks



Revenue grew 8%/10% YoY/QoQ, led by improving demand trends.



The company added 16 new stores (net) in 3QFY25, bringing the total store

count to 473 as of Dec’24.



Expansion in East India was dialed up with store launches in Patna, Ranchi,

Jamshedpur, Bilaspur, and Gangtok, bringing the total number of cities to 74.

Non-branded business



Non-branded business revenue in constant currency (including Vietnam) grew

8% YoY in 3QFY25, led by exceptionally strong coffee realizations in the

plantation business, which grew 36% YoY.



The soluble business witnessed ~2% YoY revenue growth in 3QFY25, as the

multi-decadal high coffee prices impacted demand.



EBIT margin for non-branded business expanded 880bp YoY.

International operations



US business: The US coffee continued to witness accelerated growth, up 5%. The

Tea business witnessed 4% YoY growth (constant currency).



UK business: Revenue for 3QFY25 remained flat while operating margins

remained robust. The company strengthened its number 2 position in the UK,

with Good Earth now being listed on Tesco.



Canada business: It witnessed revenue growth of 5% YoY (constant currency),

with ~21% growth in specialty tea, as supply normalized following Tetley's

transition to new and improved sustainable packaging.



A substantial portion of margin expansion comes from the UK and Canada,

where the company has implemented structural changes.



The US has also witnessed improvement. However, the company plans to

reinvest this margin expansion into brand building in Canada, while the

International business will continue experiencing margin expansion.

Distribution channels



The sales and distribution infrastructure was further strengthened with the

scale-up of

split routes for the company’s sales force, resulting in significant

improvements in product range selling.



Channels of the future continued to drive growth and innovation. Ecommerce

channel grew 59% and Modern Trade recorded 14% growth during the quarter

(excluding Capital Foods and Organic India). Ecommerce now accounts for ~15%

of the revenue, which is slightly higher than Modern Trade.



The rollout of new channels in Food Services and Pharmacies, aimed at fueling

growth, is progressing as planned.

Other highlights



Coffee prices have reached a 50-year high. As prices move up, margins in this

segment are expected to improve, but such high prices may lead to a tapering of

demand.



The beverage industry has become significantly more competitive after taking

price hikes.



Tata Gluco+ has taken a price cut to compete with other players, which has

impacted margins to an extent.



The management laid a long-term guidance of mid-single-digit growth for

beverages.

February 2025

CONSUMER | Voices



Despite a 7% price hike in talk, there was no margin expansion, while Sampann

witnessed slight margin dilution.

Capital Foods’ margins are ~50% higher than TCPL’s, making it one of the key

reasons for its acquisition.

United Breweries

Current Price INR 2,029

Neutral

Click below for

Detailed Concall Transcript &

Results Update

Environment and outlook



Total volume growth stood at 8.4% in 3Q (vs. category growth of 7%), driven by

broad-based growth across our footprint and positively impacted by recent

policy changes in AP.



Premium volume grew 33% in the quarter, bringing the YTD growth rate to 35%.

The growth in the premium portfolio was led by Kingfisher Ultra, Kingfisher Ultra

Max, and Heineken Silver.



UBBL indicated that it has lost market share in West Bengal, as beer has become

expensive (from INR135 to INR160) after the recent duty increase. It has also

lost market share in Rajasthan and Tamil Nadu.



The 15% price increase in Telangana is not enough to cover the entire costs, as

per UBBL. The company is pushing for tax restructuring, as currently the entire

price increase is passed on to consumers. Furthermore, UBBL expects its

outstanding receivables to be paid by the government soon.



In Karnataka, beer is becoming less affordable for consumers, as per UBBL. In

the economy segment, UBBL has a low volume share and has passed on price

increases to customers in this segment. In its Ultra portfolio, UBBL is absorbing

the price hikes. As per management, this is done to protect category growth.



With the revised UP excise policy, effective Apr’25, liquor stores can sell both

beer and IMFL, thus UBBL can now reach 17,000 stores vs. 6,000 earlier.



The company anticipates that growth in its premium segment will continue to

outpace the overall portfolio growth in the coming quarters.

Costs and margins



UBBL expects gross margin recovery to be gradual.



The company is prioritizing the development of local capabilities in its breweries

to bring premium production closer to the market and consumers, aiming to

drive long-term margin growth.



UBBL saw 5% improvement YoY in the bottle recovery rate. Given volume

growth, new bottles are also being introduced in the network. The company

aims to achieve a 70% bottle recovery rate.



The company will introduce a productivity program in 2HFY26 to optimize its

efficiency and profitability.

Product development



UBBL introduced Kingfisher Flavours with two new variants, Lemon Masala and

Mango Berry Twist, to target young customers. Currently, they are launched

only in Goa and Daman and will be gradually scaled up. Management stated that

the initial traction has been encouraging.

Capex



UBBL is investing INR7,500m in a greenfield brewery in UP (after 12 years),

which will produce both mainstream and premium brands, including Heineken,

in cans and bottles. The facility will add 1.0-2.0 MHL capacity, which is expected

February 2025

CONSUMER | Voices

to be ready by 4QFY27. Currently, the company caters to this market through

contract manufacturing.

UBBL has been investing in warehouses and maintenance capex to optimize its

production capacities ahead of the peak season.

UBBL added 10,000 coolers in 3QFY25.



United Spirits

Current Price INR 1,328

Neutral

Click below for

Detailed Concall Transcript &

Results Update

Operational environment and outlook



The demand environment for the company remains moderate but shows

sequential improvement.



Management anticipates a stable demand situation over the next two to three

quarters.



While inflationary pressures persist, the company has effectively mitigated the

impact by leveraging its pocket pack strategy, catering to price-sensitive

customers.



Revenue growth during the quarter was led by greater consumer participation in

social occasions and festive celebrations during October-December.



The structural premiumization trend continues to support growth, with no

significant signs of down-trading within the portfolio.



The price mix for the quarter stood at 4.6%, and 5.2% excluding AP.



The company remains committed to delivering double-digit growth in the P&A

segment, including AP, for FY25 and is on track to meet this target.



Inventory levels are at ~60 days, with retailers holding 30-35 days of inventory

and corporation deposits holding 20-25 days of inventory.



Other income increased due to dividends from a wholly-owned subsidiary, Royal

Challengers Bangalore.

Andhra Pradesh policy change



Andhra Pradesh contributed 6.1% of the overall revenue growth in 3QFY25 and

2.4% on a YTD basis.



This quarter marked the transition of Andhra Pradesh's alcobev retail operations

from government control to private retailers, leading to a retail pipeline filling

and a significant scale-up.



Price levels in Andhra Pradesh are similar to those in Telangana, but a superior

cost footprint in Andhra Pradesh contributes to a slightly better profitability.



Local production was ramped up to meet demand, and the state now has a

stable operational setup.



While the retail pipeline filling has boosted 3Q revenues, quarterly run rates will

stabilize over the next two to three quarters.

Costs and margins



Neutral alcohol (ENA) costs remain inflated, with a further increase anticipated

due to adjustments in ethanol pricing.



Glass costs have been declining for three quarters but are expected to stabilize,

reducing incremental benefits.



Marketing reinvestment during the quarter was 11% of net sales, aligning with

efforts to sustain brand equity during the festive season.



Employee costs increased due to the setup of new teams in Andhra Pradesh and

investments in innovation and commercialization teams.

February 2025

CONSUMER | Voices

Brands/new launches/re-launches



The company expanded its portfolio with X Series, a new non-whiskey offering

under McDowell's brand, now launched in five key markets: Maharashtra, Goa,

Uttar Pradesh, Rajasthan, and Madhya Pradesh.



A 180ml pocket pack for Royal Challenge was introduced in Assam, Rajasthan,

and Maharashtra. This ‘triple benefit intervention’ is designed to enhance

consumer penetration, improve carbon footprint efficiency, and boost value

chain productivity.



The company launched Godawan in the UK in December, receiving widespread

acclaim for its purpose-driven branding and exceptional quality.



A duty-free version of Godawan was introduced at Dubai Duty Free, with further

rollouts planned for Indian duty-free markets.



Exclusive limited editions of Godawan were created for premium hotel chains

such as Taj, further elevating the brand's luxury positioning.

Varun Beverages

Current Price INR 476

Buy

Click below for

Detailed Concall Transcript &

Results Update

India



The soft drink industry in India is growing at a faster rate than any other FMGC

industry.



Management targets a double-digit volume growth in the domestic business.



VBL is not competing with the lower-priced products in the domestic markets.

Management focuses on growing its outlet reach.



VBL currently operates in 4 million outlets across India, out of a total of 12

million outlets. The company aims to expand its presence by 10% annually.



The company continues to experience strong growth in India, with no signs of

decline. Instead, it is witnessing accelerated expansion, with no disruptions to its

growth trajectory.



India business is expected to maintain margins at ~21% over the long term.



There is ample room for competition in India, and the increased competition will

further strengthen and expand this market segment in India.

South Africa



Modern trade accounts for 40-45% of the South African market, leading to

lower margins. To drive margin expansion, VBL is increasingly focusing on the

general trade market, which makes up ~60% of the market in South Africa,

coupled with the implementation of backward integration, which is starting next

year.



Margins are improving, and the South African market is expected to evolve

similarly to the Australian market.



VBL anticipates strong growth of 30% in this market.

Ghana and Tanzania



PepsiCo already holds the leading position in the Tanzanian market. VBL aims to

further strengthen its market presence by enhancing its go-to-market strategy

and expanding production capacity.



In Ghana, PepsiCo has a minimal presence, making it a largely untapped market

for expansion, and the company has plans to redevelop the entire market.



Management expects African markets to achieve strong double-digit growth.

February 2025

CONSUMER | Voices

Capacity and capex



Management expects to incur a capex of INR31b for CY25. As of 31st Dec’24,

about INR16.5b has already been incurred through capital work in progress

(CWIP) and capital advances.



Out of the expected capex, VBL will spend INR20b to establish greenfield

facilities in India (in Prayagraj, Damtal, Buxar, and Meghalaya).



In CY25, capacity is set to increase by 25% compared to CY24, with new plants

becoming operational by Mar’25, ahead of the peak season.



VBL does not anticipate any capacity shortages this year, supported by strong

growth.



From the CY22 level, India annual production capacity increased by ~45% in

CY24 and ~25% in CY23.

Sting



Sting contributes ~15% of total volume, while the energy drink segment in India

remains underpenetrated, accounting for only 5-6% of total beverage volume.

VBL plans to expand its presence by continuously adding new products.



The company is set to launch a new energy drink variant, Sting Gold, soon.

Unlike Sting Blue, which was introduced as a limited edition for the World Cup,

Sting Gold is planned as a long-term product.



New products will provide customers with a wider variety of tastes and options,

expanding choices in the energy drink market.

Others



The no-sugar and low-sugar product mix is improving, with 7Up and Mirinda

expanding into low and no-sugar variants, along with Sting offering low-sugar

alternatives.



Morocco is expected to generate ~USD25m-USD30m or more in revenue, with

production starting in Jun’25.



Zimbabwe and Zambia operations began in Feb’25, while the plant is set to

commence production in 3QCY25.



The Indorama JV capacity expansion is on track, with production set to begin in

early 3QCY25. Once operational, VBL will have ample recycled products to meet

its requirements.



Currency devaluation in Africa is currently lower than in India. In cases of

significant devaluation, costs are passed on to customers, while minor

fluctuations have a minimal impact. Pricing adjustments and cost fluctuations

are easily absorbed in the African markets.



The company now has three backward-integrated facilities.

February 2025

CONSUMER DURABLES | Voices

CONSUMER DURABLES



Management teams have indicated that demand in the C&W segment would remain strong, led by

infrastructure, industrial demand, and robust real estate growth. Further, early summer trends and expected

increases in consumer spending will drive demand outlook for cooling products.

KEY HIGHLIGHTS FROM CONFERENCE CALL

Insights and future outlook FY25



Capex plans



Havells



Polycab



KEI Inds



RR Kabel

The consumer sentiment is a bit weak but has started

improving by 3Q-end. The company has gained market

share in all consumer-facing categories. Residential

demand is anticipated to improve as real estate has

been doing better for the last few years

No major pricing action across categories, however,

given the fluctuation in copper prices, C&W prices may

see changes. The company remained focused on

channel and product expansions. Management targets

an EBIT margin (ex-Lloyd) of 12-13% in FY26. In the

Lighting segment, volume growth was 13-14% YoY, but

price erosion adversely impacted growth. Currently,

price erosion is bottoming out, and growth should

start improving.

The Indian economy has experienced a slowdown

over the last few months; however, key metrics such

as visual payments, power demand, services PMI, air

passenger traffic, and pool collection indicate a

sustained recovery. The current slowdown appears to

be temporary, and a pick-up is anticipated over the

next few quarters.

The company is confident that demand in the current

quarter remains strong and, so far, has not seen an

impact from the slowdown in public capex during

1HFY25. However, if public capex does not pick up

materially going forward, it could lead to some impact

on the C&W industry in 1HFY26.

The demand outlook remains strong, and it remains

optimistic on domestic as well as export growth

opportunities. It is getting good traction from

customers in the international markets. It intends to

achieve a revenue growth of 19-20% and an EBITDA

margin of 11% in FY26. In the export market, revenue

should grow from the US and Australia in FY26. Export

revenue should grow 30% YoY in FY25 and 30-35%

YoY in FY26. The contribution of exports should be at

15-17% of revenues in the next 2-3 years.

The target is to achieve a turnover of INR250b by

FY30, and it will clock a CAGR of 20% from FY26

onwards. EBITDA margin should be at 12.5% by FY28.

RoCE should improve to 28% in 3-4 years vs. 24% as of

now. It targets raising its US exports to INR5b in FY26

vs. INR2b in FY25. Freight cost for USA export is

between 8-10%.

Demand for cable & wire remains resilient despite a

slowdown in general economic activity, and the

company has taken several initiatives like capacity

expansion, the introduction of high-margin products,

new launches, and expansion of the distribution

network to capitalize on the growth opportunities.

Infrastructure spending by the government and an

increase in housing construction activities are

expected to drive growth going ahead.



The additional investments in other segments are in the

emerging channels for sustainable growth in the business.

Incremental investments will continue, but there should

not be any additional cash burn.

Investments in other categories of Lloyd are being made.



The company targets capex of INR60b-INR80b over the

next five years, with the majority allocated to the C&W

business, which is expected to generate an asset turnover

of 4x-5x.

For EHV cable expansion, capex is estimated at INR6.0-

7.0b. This will be commissioned by FY26-end and is

estimated to start contributing to revenue from 1QFY27

onwards. The EHV cable asset turnover is close to 4x;

however, the ramp-up is expected to be gradual.



During 9MFY25, capex incurred was INR4.26b including

INR2.52b for the Sanand project, INR570m for the

Chinchpada project, INR270m for the Bhiwadi project,

and INR490m for the Pathredi plant. Capex in 4Q will be

INR4b and FY26 capex will be around INR6-7b.

Brownfield expansions at the Chinchpada and Pathredi

plants are completed, and capacity utilization in 9MFY25

stood at 85% for cable, 69.7% for housing wire, and 91%

for stainless steel wire. Volume growth should be at 16-

17% in FY25. The Sanand project’s first phase of

expansion is expected to be commissioned by 1QFY26

and the second phase will be completed by FY26-end. The

commissioning of the Sanand plant will help it achieve a

volume CAGR of 19-20% over the next few years vs. a 14-

15% CAGR over the last 15 years.



Ongoing capex (INR5b in FY24/25) had a revenue potential

of INR25b and will help to grow in FY26/27. It will incur a

further capex of INR12b spread across FY26-28. This capex

will be for brownfield expansion at the Waghodia plant,

and most of the capex (~80%) will be towards cables.

Revenue potential from this capex will be INR40-45b.

Capex in the FEMG segment will be at INR200-250m every

year only as 67% of sourcing happens through trading.

February 2025

CONSUMER DURABLES| Voices



Voltas



The pressure on UCP margins is due to the company's

focus on gaining market share, which involves

significant spending on advertising, promotions, and

in-store demonstrations. It aims to deliver a high

single-digit margin in 4QFY25.

Voltbek aims to fully localize refrigerator

manufacturing in India, reinforcing its Made-in-India

brand identity. Premiumization across product

categories and an extensive washing machine lineup

will drive market share growth.



It has earmarked capex of INR4.0-4.5b for compressor

manufacturing and ramping up production from 1m to 2m

units over the next 12 to 18 months. While investments in

other machinery, such as injection molding, sheet metal

work, copper tubes, and heat exchangers, will be

completed in the next 10 to 12 months, commercial

finalization (capex of INR2.5b) has not happened as the

company is looking for some technological collaboration.

Havells India

Current Price INR 1,517



Neutral

Click below for

Detailed Concall Transcript &

Results Update



The consumer sentiment is a bit weak but has started improving by 3Q-end. The

company has gained market share in all consumer-facing categories. Residential

demand is anticipated to improve as real estate has been doing better for the

last few years.

No major pricing action across categories, however, given the fluctuation in

copper prices, C&W prices may see changes. The company remained focused on

channel and product expansions. Management targets an EBIT margin (ex-Lloyd)

of 12-13% in FY26.

The additional investments in other segments are in the emerging channels for

sustainable growth in the business. Incremental investments will continue, but

there should not be any additional cash burn.

Lighting segment:

In the lighting segment, volume growth was at 13-14% YoY,

but price erosion impacted overall growth. Pricing trend pressure is seen across

categories, including, CoB LEDs. Price erosion is bottoming out, and growth

should start improving. The Lighting segment’s contribution margin should be in

the range of 30-32%. The company is focusing more on premium and emerging

technologies.

ECD segment and small appliances:

Demand for water heaters was very strong

after remaining flat in the last few years. The contribution margin in water

heaters and small appliances is lower than in Fans and hence, the margin was

low. However, the ECD segment should start improving going forward. The focus

in the ECD segment is to gain market share in small appliances and other

categories where investments are being made. Initially, investments are higher

in branding and channel expansion, but the margin should come back to ~24-

25% in the medium to long term. Growth for small appliances was higher than

for Fans and water heaters; though all these categories grew in double digits.

C&W

–

Overall, volume growth in cables was 11-12%; though it was negative for

wires. Overall, it was flat for the segment. The RM cost increase impact was 8-

9% YoY. Wires segment is seeing restocking, and 4Q is seasonally a strong

quarter for the cables segment due to higher demand for underground cables.

Wires continue to have healthy growth potential, while the company is catching

up in cables. C&W mix is 60% wires and 40% cable and is not seeing a significant

shift. The expansion was on both cables and wires, but cables require a

significant capex. There will be equal focus on both the cables & wires

segments, and it will continue to remain a focused player in wires.

Switches & Switchgear segment

–

Change in product mix, channel mix, and

plant relocation overhead led to lower margins in the segment during 3QFY25.

February 2025

CONSUMER DURABLES| Voices

Project business comes with lower margins, while there was no pressure on

margin in the trade channels. The contribution margin of the segment will be in

the range of 38-40%, and the margin should improve in the coming quarters.

The need for relocation was strategic, as a small plant in Faridabad (Haryana)

was relocated to Sahibabad (Uttar Pradesh), where the company has a switch &

switchgear facility. EBIT margin in the switchgear segment should normalize at

~24-25%. The mix of Switches, Switchgear, and Industrial segments is 40:40:20.

Lloyd:

For Lloyd, other categories have grown faster than RAC during the

quarter. Management is looking at expanding its contribution margin; in the

RAC business, the margin is improving and premiumization is working.

Investments in other categories of Lloyd are being made. The company’s right-

to-win in other categories (ex-RAC) is also improving and consumers have

started recognizing the brand. The company’s

journey into the RAC segment is

giving confidence, and it remains a long-term journey. There is positivity in the

channel after a strong summer season last year, and stocking starts happening

from Jan/Feb for the next season. Last time, the channel was not positive.



KEI Industries

Current Price INR 3,566

Buy

Click below for

Detailed Concall Transcript &

Results Update

Demand outlook and guidance



Demand outlook remains strong and it remains optimistic on domestic as well as

export growth opportunities. It is getting good traction from customers in the

international markets.



It intends to achieve a revenue growth of 19-20% and an EBITDA margin of 11%

in FY26. In the export market; revenue should grow from USA and Australia in

FY26. Export revenue should grow 30% YoY in FY25 and 30-35% YoY in FY26.

Contribution of export should be at 15-17% of revenues in the next 2-3 years.



The target is to achieve a turnover of INR250b by FY30 and it will clock a CAGR

of 20% from FY26 onwards. EBITDA margin should be at 12.5% by FY28. RoCE

should improve to 28% in 3-4 years v/s 24% as of now.



It targets to increase its US exports to INR5b in FY26 v/s INR2b in FY25. Freight

cost for USA export is between 8-10%.

KEII

–

3QFY25 performance



Volume growth for cables & wires was 16-17% in 3Q. Domestic institutional

sales of cables & wires was INR8.1b; up 45% YoY. Domestic institutional EHV

sales were at INR410m; down 78% due to non-receipt of ROW permissions and

clearances for undertaking the works.



The company had export revenue of INR690m towards the Gambia project last

year which declined to INR130m in 3QFY25. This led to lower export revenue for

cable & wires.



EHV capacity was used for the production of HT cables which recorded a growth

of 45% YoY. The company generated ~INR2b additional revenues for HT cables.

The EBITDA margin for EHV cables is 4-5pp higher. Even in 4QFY25; the company

will utilize EHV capacity towards HT cables (INR500-600m).



EPC revenue other than cable was INR600m vs. INR1,460m in 3QFY24. The

company is focused on gradually reducing its EPC business and would maintain

annual revenues of INR4-5b in this segment.



B2C sales contributed 51% of revenues v/s 46% in 3QFY24.

February 2025

100

CONSUMER DURABLES| Voices

Order book and revenue growth



Pending order book stands at INR38.7b vs. INR38.3b in 3QFY24 and INR38.5b in

2QFY25. The order book for EPC was down 41% YoY; while the order book for

Export and Cable segments grew 20%/18% YoY. EHV’s

order book was INR6b; up

1% YoY. EHV segment’s revenue should get normalized and reach at INR5.5-6b

in the next year as the order book remains strong.



The export order book will be executed in the next 3-4 months. The EHV order

book will be executed in six months; while the EPC order book will be executed

in two years.

Capex plan



During 9MFY25, capex incurred was INR4.26b that included INR2.52b for the

Sanand project; INR570m for the Chinchpada project; INR270m for the Bhiwadi

project, and INR490m for the Pathredi plant. Capex in 4Q will be INR4b and FY26

capex will be around INR6-7b.



Brownfield expansions at the Chinchpada and Pathredi plants are completed

and capacity utilization in 9MFY25 stood at 85% for cable, 69.7% for housing

wire, and 91% for stainless steel wire. Volume growth should be at 16-17% in

FY25.



The Sanand project’s

first phase of expansion is expected to be commissioned

by 1QFY26 and the second phase will be completed by FY26-end.

Commissioning of the Sanand plant will help it to achieve a volume CAGR of 19-

20% over the next few years v/s 14-15% CAGR over the last 15 years.

Other highlights



The margin in the export and cable business was ~11%. In the institutional

business of LT and HT cables, the margin was 10.5%. In EHV, the margin stood at

14-15%; whereas, in the EPC business, the margin was ~12-14%.



The company is focused on increasing its retail sales and the same has been

growing at 20-25% YoY over the last few years. This has been achieved by

expanding the geographical reach and increasing the sales team and influencer

activities.



The company has reduced RM purchases through LCs due to surplus funds,

which will help to save interest expenses.



Working capital: Improved management saw inventory days reduce to 2.25

months, while receivables remained stable at 2.1 months.



Gross debt was INR2.7b vs. INR1.3b

as of Mar’24. The cash balance was INR16b.

Acceptance credit was INR1.13b vs. INR5.1b as of Mar’24. Overall, the net cash

balance stood at INR17.1b vs. the net cash balance of INR566m as of Mar’24.

Polycab India

Current Price INR 5,598

Buy

Click below for

Detailed Concall Transcript &

Results Update

Key highlights of Project Spring



The company has launched Project Spring, which will focus on six strategic

pillars: a) solidifying market leadership in B2B; b) expanding in B2C; c) ramping

up the international business; d) driving innovation- and automation- led holistic

development; e) nurturing talent and capabilities; and f) increasing ESG

integration.



The domestic C&W industry is expected to grow at 1.5x to 2.0x the real GDP

growth. The global C&W market is also witnessing strong growth, fueled by

February 2025

101

CONSUMER DURABLES| Voices

several transformative trends, such as investment in renewable energy projects,

adoption of EVs, expanding digitization, and the need to invest in data centers.

Additionally, urbanization trends and the rise of smart city projects are creating

significant traction worldwide. These factors are expected to drive the growth of

the global C&W industry, which is expected to post 7.5% CAGR and reach

USD410b by FY30.



Overall demand for C&W is expected to remain robust in the near- to mid-term,

both domestically and globally. Within Project Spring, the company targets to

grow the C&W business at 1.5x the market growth, with sustainable EBITDA

margins of 11%-13%. Moreover, it targets to increase its international business

share to 10%+ of the overall company's revenue. The company targets capex of

INR60b-INR80b over the next five years, with the majority allocated to the C&W

business, which is expected to generate an asset turnover of 4x-5x.



In FMEG, the company expects the sector to register 8-10% growth in the near

to mid-term, driven by factors such as favorable demographics, urbanization,

increasing per capita income, increasing brand consciousness, and the

continuing upcycle of real estate. It aims to grow 1.5x to 2.0x the market

growth, increasing its market share in line with its goal of becoming top-three

player across product categories within the FMEG business. Further, it targets to

achieve EBITDA margin of 8-10% by FY30 within this segment.



The company will continue with its existing product categories within the FMEG

business and does not plan to add any new categories in the near future. A small

part of the capex will be allocated to expanding capacities, as needed.

Demand trends in the C&W segment



The Indian economy has experienced a slowdown over the last few months;

however; key metrics such as visual payments, power demand, services PMI, air

passenger traffic, and pool collection indicate a sustained recovery. The current

slowdown appears to be temporary and a pick-up is anticipated over the next

few quarters.



Government capex is expected to improve, supporting infrastructure growth

and industrial demand. Meanwhile, the real estate sector continues to drive

sustained demand momentum.



The company is confident that demand in the current quarter remains strong

and, so far, has not seen an impact from the slowdown in public capex during

1HFY25. However, if public capex does not pick up materially going forward, it

could lead to some impact on the C&W industry in 1HFY26.

POLYCAB

–

3QFY25 performance and other highlights



Margin recovery in the C&W segment was led by: a) normalization of margins in

the wire business, and b) higher export revenues - 62% YoY and 29% QoQ. The

contribution from the international business to consolidated revenue stood at

8.3% for the quarter and 6.6% for 9MFY25.



Capacity utilization is at ~75-80% in cables, while slightly lower in wires. In the

mix of C&W, the share of cables has increased to over 75%. Volume growth for

cables was in double digits in 9MFY25, while for wires, it was in single digit.

Overall C&W volume growth was in double digits in 9MFY25.



The growth of the FMEG business was led by factors such as channel expansion

and the implementation of the influencer management program. The Fan

segment continued to experience growth. The Lights and Luminaires segment

February 2025

102

CONSUMER DURABLES| Voices

registered strong volume and value growth on the back of festive demand and

successful execution of various strategic initiatives. Additionally, switchgears,

conduit pipes, and fittings and switches delivered healthy growth, driven by

sustained demand from real estate. The growth was also supported by the

introduction of 130 plus new SKUs, geographical expansion to over 500 towns,

the addition of 150 distributors in new geographies, and 7,000 retailers during

the year. Losses in the FMEG business were reduced, led by improving

contribution margin and higher economies of scale.

The domestic cable business continued to deliver healthy growth. However, the

growth of the wire business was impacted by the high channel inventory at the

beginning of 3Q and the declining trend of copper prices. Wire demand is

expected to improve in 4Q, led by normalized channel inventory and the

inflationary trend in copper prices.

The quarterly run-rate for the EPC business is expected to remain at similar

levels, with a high single-digit margin in the medium-to-long term.

The company is expanding capacity across product categories in C&W. The

capacities are largely fungible, allowing flexibility to produce any type of cable

based on which one is driving higher demand at a given point in time.

For EHV cable expansion, capex is estimated at INR6.0-7.0b. This will be

commissioned by FY26-end and is estimated to start contributing to revenue

from 1QFY27 onwards. EHV cable asset turnover is close to 4x; however, the

ramp-up is expected to be gradual.

The company’s EPC order book stood at INR48b as of Dec’24, to be executed

over the next two to three years.

Further, the working capital was at 51 days, within a comfortable range of 50-60

days.



RR Kabel

Current Price INR 1,134

Buy

Click below for

Detailed Concall Transcript &

Results Update

View on domestic and export demand



Demand for cable & wire remains resilient despite a slowdown in general

economic activity and the company has taken several initiatives like capacity

expansion, introduction of high-margin products, new launches, and expansion

of distribution network to capitalize on the growth opportunities. Infrastructure

spending by the government and an increase in housing construction activities

are expected to drive growth going ahead.



On the export front, weak economic conditions, shipment delays, and

geopolitical issues continued to impact demand, however; the company posted

11% YoY growth in export revenue in 3Q. It is working on securing new

certifications to strengthen its presence in global markets.



About 10% of the company’s export revenue came from the US. Europe's

contribution to export revenue was 50%+. Export was hurt in the European

markets in Oct and Nov’24, but improvement was witnessed from Dec’24. The

company has a strong order book for exports and it is also in the process of

acquiring new certifications for the European and US markets. This will help

higher growth in the future.



In the European markets, the company competes with Turkish players, while in

the US, China remains

the largest exporter. India’s contribution to global exports

103

February 2025

CONSUMER DURABLES| Voices

remains low and there is scope to improve its export markets both in the US and

Europe.



In domestic markets, wire is considered as a B2C product and there is a liking for

branded products. The organized sector is getting market share in wires.



The capex cycle to increase capacities in cable & wires is ~24-30 months. Given

the government’s plan for infrastructure spending, focus on wind and solar

energy, and export opportunities; there should not be a scenario of oversupply

in domestic markets.

Guidance for 4QFY25



1HFY25 saw high volatility in RM prices; however; prices have stabilized now.

Volume growth of cable & wire is expected to be at 15% in 4QFY25 and 10-12%

in FY25. EBIT margin of this segment should be at 8% in 4QFY25.

Cable & Wire segment



The revenue mix of cable & wire is at 30:70 in both domestic and export

markets. Cables’ contribution should increase to 35% with the commissioning of

additional capacities.



Volume growth in 9MFY25 was ~6% YoY (wire volume declined ~3% YoY). Export

volume of wire declined ~6% YoY in 9MFY25; while; domestic volume was flat.

Volume growth of cable was ~21% YoY in 9MFY25 led by ~18% growth in

domestic markets and ~19% growth in export markets. Demand for wire has

started improving from end-3QFY25. Earlier, due to RM cost volatility, the

channel was holding low inventory. Now, with stabilization in inventory levels;

demand is expected to improve.



Capacity utilization for wire is 65-67%; while it is 90-95% for cables. The

company is facing capacity constraints for HT cables as it has limited capacity.

The situation should improve in 4Q or after that. The target is to improve the



margin of the C&W segment by 100-120bp every year led by a change in

product mix, higher scale of operations, and more value-added products (e.g.,

solar and specialized cables). The target is to reach to double-digit margin in the

cable & wire segment in FY28.

FMEG segment



In the FEMG segment, growth was driven by higher volumes of fans, followed by

growth in appliances. Cost savings, volume growth, and product-mix

optimization helped to curtail losses in this segment. This segment should

achieve EBITDA break-even in FY26 led by new product launches,

premiumization, and expansion of geographical reach.



Fans’ contribution to the segment’s revenue has increased to 45% now vs. 40%

earlier. ~32% of segmental revenue comes from Lighting; while ~23% is from

appliances and switches. Premium fan’s

contribution is at 23-25%

of fan’s

revenues.

Capex and working capital



Ongoing capex (INR5b in FY24/25) had a revenue potential of INR25b and will

help to grow in FY26/27. It will incur further incur a capex of INR12b spread

across FY26-28. This capex will be for brownfield expansion at the Waghodia

plant and most of the capex (~80%) will be towards cables. Revenue potential

from this capex will be INR40-45b. Capex in the FEMG segment will be at

INR200-250m every year only as 67% of sourcing happens through trading.



Net

working capital was at 65 days vs. 64 days in Mar’24 and 63 days in Sep’24.

February 2025

104

CONSUMER DURABLES| Voices

Voltas

Current Price INR 1,284

Buy

Click below for

Detailed Concall Transcript &

Results Update

Macro trends



The global economy experienced stable but subdued growth, with a projected

annual growth rate of 3.1%. The US saw upgrades in its economic forecasts,

while other advanced economies, particularly in Europe, faced downgrades due

to geopolitical tensions and financial market volatility.



In India, the economy continued to grow, driven by strong performance in the

services and agricultural sectors. However, inflationary pressures, particularly in

food prices, posed challenges, leading to a cautious monetary policy stance by

the RBI. Despite global uncertainties, India's economic fundamentals remain

strong, positioning it as a key player in the global economic landscape.

Unitary Cooling Products



The third quarter is traditionally a lean period for cooling products. Demand

during this period is primarily driven by the festive season or a second summer

in the country. An anticipated strong summer demand and support from In-shop

demonstrators helped it to achieve better performance for all products with the

RAC category experiencing good demand. Both window and split ACs

experienced healthy growth and VOLT’s market share in the RAC segment stood

at 20.5% exit-Dec’24.



The revenue mix in the UCP segment was 61% from RAC followed by 19% from

commercial airconditioning, 15% from commercial refrigerator, and the

remaining 5% from air cooler & water heater. The pressure on UCP margins is

due to the company's focus on gaining market share, which involves significant

spending on advertising, promotions, and in-store demonstrations. It aims to

deliver a high single-digit margin in 4QFY25.



The company did not implement any price hikes in 3Q, as it is a lean period for

ACs, and the focus remains on increasing sales volume. If commodity prices and

forex pressures persist, the company may explore value engineering to offset

costs, while considering the need for potential price adjustments.



The commercial refrigeration (CR) segment faced challenges. While all the CR

product categories reported moderate growth, sales push to liquidate inventory

and reduced capex by customers led to a dip in margins. Growth was driven by

higher sales in Visi coolers, Combo, and glass top freezers. Cold Room portfolio

is gaining traction with a strong order pipeline. However, low production ramp-

up in the new factory added costs. With fresh orders expected, the outlook for

CR products remains positive in the coming months.



The air cooler segment saw strong growth despite the off-season.

VOLT’s

market share in air coolers reached 11.1% in exit-Sep’24, making it the No. 2

brand. Quantity tie-ups with distributor and sub-dealer schemes for the season

contributed to strong performance in the both Air cooler and Water heaters

segment.



The commercial airconditioning segment continued steady performance, driven

by strong sales of VRF and ducted ACs. Margin-accretive products, value

engineering, and AMC jobs boosted profitability. A strong order pipeline for

retrofit jobs and a positive conversion of product sales to AMC jobs are

expected to sustain consistent growth in this business.

February 2025

105

CONSUMER DURABLES| Voices

Rising commodity prices and USD-INR depreciation affected profitability, but

cost control measures helped maintain stable margins. Investments in BTL

advertising yielded positive results, while consumer financing schemes drove

strong sales growth. Value engineering initiatives further supported profitability.



The newly established AC facility in Chennai continues to ramp up as planned

and is gearing up for the season. It anticipates operational efficiency to boost

business in the coming months.

Electro-Mechanical Projects and Services



The project execution remained strong across verticals and geographies. Focus

on completion certification and various project management initiatives boosting

profitability. The total order book for the segment reached INR68.2b, ensuring a

strong pipeline for future execution.



Domestic projects expanded their order book, maintaining a positive outlook.

New orders worth INR14.4b were secured in 9MFY25, bringing the total order

book to INR48.6b.



In the international projects sector, operations in the UAE and Saudi Arabia

continued to perform well. It remains focused on collections. The international

order book stood at INR19.6b, mainly from the UAE and Saudi Arabia. In 3Q, no

new international orders were taken. There have been no cancellations of

orders. The focus in international business is on consolidation, ensuring good

KYC practices, and only executing profitable projects. This strategy continues to

mitigate any potential risks from past issues.



The company has adopted a two-fold strategy for its international business 1)

focusing on collecting outstanding payments from previous customers, as some

exposures were higher than expected; 2) the company is concentrating on

expanding its business in key geographies, specifically the UAE and Saudi Arabia,

where it is executing a mix of large and small projects (10-12 in total). It plans to

selectively pursue more projects in these regions, provided they are funded by

reliable clients.



February 2025

106

EMS | Voices

EMS



A majority of the management teams have either raised or maintained revenue growth guidance, citing

healthy demand across industries and a focus on expansion, operating leverage, and margin improvement.

Key investments in electronics, railways, and backward integration, combined with worldwide

collaborations, are expected to boost long-term growth while retaining a healthy order book.

Other Key highlights



KEY HIGHLIGHTS FROM CONFERENCE CALL

Insights and future outlook



Avalon Tech



Cyient DLM



Data Pattern



Avalon has raised its FY25 revenue growth guidance

to 22-24% (up from 16-20%), reflecting strong

expansion and demand trends. Growth will be broad-

based, with each vertical contributing 25-30% to

revenue, driven by a significant upside in the

communication sector.

Gross profit margins for FY25 are expected at 34-36%,

with a medium-term target of 33-35%. EBITDA

margins are projected to be more than or equal to

12%, driven by operating leverage.

Cyient DLM reiterates a 30% revenue CAGR guidance

over the next three years, though yearly growth rates

may vary, and expects the overall margins to be soft

till 1HFY26 and expand from there on, driven by the

change in revenue mix.

The order backlog stands at INR21.4b, including

INR2.9m from Altek. While order consumption by

major clients is outpacing order book growth, the

company is seeing strong traction in North America

and is actively engaging with three large global firms.

DATAPATT maintains its revenue guidance of ~20-25%

growth over the next 2-3 years while maintaining

EBITDA margin at ~35-40% for the full year.

Data Patterns anticipates a major ramp-up in 4QFY25

and remains optimistic about delivering strong

growth. It is firmly on track to achieve its full-year

growth guidance.



The US market is gaining strong traction with increasing

deal wins; while AVALON’s solar business remains small,

minimizing any impact from Trump’s policies.

Avalon Tech has secured key deals in the industrial and

communication sectors and is moving from prototype to

volume production for an automotive customer, with

strong traction expected next year.



The focus on local manufacturing in the US, driven by

favorable regulations by the new government, will provide

significant growth opportunities for Altek and strengthen

its manufacturing capacities in the US markets.

The integration process of Altek is going at a good pace,

and as per the plan, with synergy benefits being mapped

and expected to start in the upcoming quarters. The ROE

is expected to be along the same lines as Cyient DLM.



Kaynes Tech



Amber

Enterprises



Dixon

Technologies



Management reduced its revenue guidance to INR28-

29b from the earlier guidance of over INR30b for

FY25.

While its EBITDA margin guidance remains intact at

~15%. For FY26, management expects INR45b of

revenue (ex-inorganic revenue) with further

improvement in margins led by better gross margin

and operating leverage.

New products in the railway segment will have a

margin profile of 15-18%. Revised EMS division

growth guidance for FY25 to be +55% YoY (vs. +45%

earlier).

Its capex plan includes INR2.5b for consumer

durables, INR6.5b for the electronics division (with

INR4.0–4.5b in FY26), and INR3.5b for the railways

division (INR1.5b expected in FY26).

Dixon is in discussions with a global technology

partner to set up a world-class display fab, a critical

component in Mobile, IT Hardware, and Consumer

Electronics.

It has finalized the location for manufacturing of

displays in partnership with HKC, with production set

for 1HFY26. It is also exploring entry into precision

components, mechanical parts, camera modules, and

battery packs.



As of

Dec’24,

the international order book stands at

INR1b, with 3QFY25 production orders including INR800m

for EW, INR530m for Radar, and INR530m for Avionics

exports.

Inventory days increased due to two large radar orders,

which tied up ~60-65% of the company's inventory. The

company is expected to deliver one project by Mar’25-

end and the other by 1HFY26, leading to a significant

decline in inventory.

The company highlighted its plans to raise funds through

QIP to support its future growth drivers, such as

geographical expansion (in North America), scaling up the

ODM business, and deepening its technological footprint

in certain niche areas of semiconductors.

The ramp-up of the smart meter is progressing well, and

the current order book makes it mandatory for the

company to further increase its capacity soon.

Its subsidiary has formed a JV with Korea Circuit to

manufacture HDI, Flex, and semiconductor substrate

PCBs, with the facility to be ready by 1QFY26 and trials

starting in 2Q/3QFY26.

It expects the Resojet JV to break even in FY26 with losses

declining from 2QFY26, and a full turnaround for all JVs

beyond FY26.

The company expects total mobile phone volumes to

ramp up and reach around 30m units in FY25, with

exports of 0.5-0.6m units of mobile phones expected in

February and March of this fiscal year.

It is expanding capacity in the telecom segment due to

increased volumes and expects to double

the segment’s

revenues in FY26. It is exploring additional categories like

robotic vacuum cleaners, water purifiers, chimneys, and

other large kitchen appliances.



February 2025

107

EMS | Voices

Amber Enterprises

Current Price INR 5,516

Buy

Click below for

Detailed Concall Transcript &

Results Update

Segment-wise



Consumer Durables:

Growth in RAC sub-segment was driven by the conversion

of new customers from gas charging to ODM and deepening of customer

relationships. One new customer in the quarter in its commercial AC division

strengthens its order book position. Management stated

that Amber’s JV with

Resojet is progressing well, with trials under process and mass production is

expected to begin from 1HFY26 onward.



Electronics:

The company revised its EMS division growth guidance for FY25 to

+55% YoY (vs. +45% earlier), led by both PCBA and bare board verticals. The

company’s continued expansion of its customer base in its PCBA vertical with

the addition of renewable energy customers is expected to support its revised

guidance. Further, the management sees increased wallet share for existing

customers and order book visibility of INR20b+ for its JV with Koran Circuit.



Railway:

The segment was largely impacted by delays and product expansion

expenses. Management states that the delay in offtake is only for a few quarters

and that there have been no cancellations for these orders. The company has

further strengthened its order book for the segment by adding air conditioning

orders for a Metro project. Over the next 2-3 quarters, management expects the

order book for defense to start ramping up too. Management expects these

factors to revive the segment, bringing the margins back to the 18-22% range by

2HFY26. Management also expects new products in the railway segment to have

a margin profile of 15-18%.

Other highlights



PLI Incentives:

Management confirmed INR4b PLI approval from the GoI and is

skipping the third round of PLI for home appliances to focus on leveraging

existing incentives.



JV and associates:

The company’s subsidiary formed a JV with Korea Circuit for

the manufacturing of HDI, Flex and semiconductor substrates PCBs. The facility

is expected to be ready by 1QFY26, with trials to begin from 2Q/3QFY26.



Capex:

Management spoke about capex for the consumer durables division to

be around INR2.5b as the company is bringing up new model line-ups and

ramping up the component segment. Further, for the electronic division, the

company had already announced capex investment of INR6.5b in regards to its

Hosur PCB manufacturing facility. Out of this, a major portion of INR4-4.5b is

expected to come in next year. For the railways division, out of the already

announced INR3.5b capex for its new facility in Faridabad, the company has

already spent INR1b in the current fiscal, and another INR1.5b is expected to be

incurred in FY26.



Minority interest:

Revenue from Ascent Circuit for 3QFY25 was around

INR820m, which is expected to grow by 20-25% in the coming quarters.

Management expects revenues from Ascent Circuit to double in 2-3 years. Even

though revenue is starting to ramp up for Ascent Circuits, the same is not being

reflected in profits, and hence, it is in minority interest, mainly because of the

scale of operations and Amber’s ownership in the said company being at ~60%.



Losses in JV:

Management expects its JV with Resojet to break-even in FY26 and

the losses to start coming down from 2QFY26. After a loss in FY26 from other

JVs, management expects a complete turnaround beyond FY26.

February 2025

108

EMS | Voices

Avalon Technologies

Current Price INR 660

Buy

Click below for

Detailed Concall Transcript &

Results Update

Business and growth outlook



AVALON is experiencing strong growth, fueled by the US market recovery and its

expansion in India. The company is capitalizing on these opportunities to

strengthen its position.



With sustained momentum, AVALON has raised its FY25 revenue growth

guidance to 22-24%, up from the previous 16-20%, reflecting confidence in its

expansion and demand trends.



Gross profit margins for FY25 are expected at 34-36%, with a medium-term

target of 33-35%. EBITDA margins are projected to be more than or equal to

12%, driven by operating leverage



Growth will be broad-based, with each vertical contributing 25-30% to revenue.

While the communication sector is set for a significant upside, medical remains

a lower-focus area.

Operating performance



Operating leverage benefits are starting to show, leading to improved

profitability as the company scales. Efficiency gains are driving better cost

absorption, supporting margin expansion.



Trade receivables increased from 80 days in Sep’24 to 94 in Dec’24, temporarily

pushing up net working capital days. However, management expects a 10–15-

day improvement by FY25-end, easing the pressure.



The company’s financial position remains stable, with gross debt at INR1.56b

and cash & investments at INR1.29b. Despite a negative cash outflow of

INR106m from operations in 9MFY25, liquidity remains manageable.



Capex stood at INR113m in 3QFY25 and INR727m in 9MFY25. The company

continues investing in new manufacturing facilities, reinforcing its commitment

to long-term growth.



The order book mix is well-aligned with the revenue mix, with India contributing

45% and the US 55%.



Higher other income was recorded due to investment returns and forex gains,

supporting overall profitability.

Manufacturing & Market Performance



The US operations reported a net loss of INR340m, a sharp improvement from

the INR140m loss in 1QFY25. However, profitability remains uncertain due to

political and macroeconomic factors.



Customers are increasingly shifting business from the US and Mexico to India.

Meanwhile, production for Lunar has begun, with a ramp-up likely in 1QFY26.



India operations remained strong, with EBITDA margin at 15% and PAT margin

at 10.8%, reflecting healthy profitability.



The Chennai export plant (Phase 1) is fully operational and generating business,

while the company has sufficient capacity to double growth in three years, with

a 6-9 month lead time for new infrastructure.

Geographical trends and segment focus



The US market is gaining strong traction with increasing deal wins; while

AVALON’s solar business remains small, minimizing any impact from Trump’s

policies.



In the US energy storage is growing at 50-70% YoY, and the clean energy

segment continues to perform well, supporting long-term growth.



Customer inquiries are shifting from Mexico to AVALON’s India operations,

reflecting India’s growing importance

in the supply chain.

February 2025

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EMS | Voices

In India, the company has secured key deals in the industrial and

communication sectors and is moving from prototype to volume production for

an automotive customer, with strong performance expected next year.



The company is focused on volume-led automotive products, considering EV as

a global opportunity rather than an India-centric market.



In the railways segment, new products have been added, with Kavach-related

products currently under testing.



Chip design services are offered through US subsidiaries, though IP ownership

remains with clients. Around 150-200 designers are engaged in this segment,

enhancing the company’s capabilities.

Others



AVALON is actively working on anti-collision systems for railways, with

significant business potential expected in the future.



The company is seeing increasing traction in clean energy storage solutions,

which are less impacted by policy changes compared to solar.



Phase 2 of the Chennai expansion is expected to begin in the 4QFY25, further

supporting future growth.



AVALON is strategically using its US presence as a "beachhead" to onboard

customers, before transitioning production to India for cost efficiency.



Cyient DLM

Current Price INR 413

Buy

Click below for

Detailed Concall Transcript &

Results Update

Operating performance



The revenue mix is slowly changing, which will have some effect on operations

in the medium term.



Large contracts signed last year are starting to see some traction.



The defense segment reported ~31% YoY growth, while the aerospace segment

reported ~14% YoY growth.



The business share of the Rest of the World (ROW) market continues to be

higher, driven by increased demand in aerospace & defense customers outside

of India.



The Indian business mix stood at ~39%, with a major contribution from the

defense segment, and going forward, management expects this trend to

continue.



One-time M&A integration related expenses of INR80m were included as other

expenses in 3QFY25 and are not expected to be repeated going forward.



Despite foreign exchange gains, other income remained low, and going forward

the company does not expect other income to increase as the company

continues to consume the surplus cash from the IPO, leading to a decrease in

interest yields.

Order book



Order backlog stands at INR21.4b, which includes INR2.9m worth of order

backlog from Altek.



Growth in order consumption by big clients is faster than growth in the order

book.



The company is in active conversation with three large global companies, with

the company seeing strong traction in the North American markets.



Standalone order book execution is usually around 18-24 months.

Altek acquisition



Altek is based in Connecticut, providing high-value electronic manufacturing

service in the medical and industrial segments.



The integration process is going at a good pace as per the plan, with synergy

benefits being mapped and expected to start from the upcoming quarters.

110

February 2025

EMS | Voices

Going forward the focus will be on market dealers. It is working with top clients

of both companies.



The focus of local manufacturing in the US, driven by favorable regulations by

the new government, will provide significant growth opportunities for Altek and

strengthen its manufacturing capacities in the US markets.



Altek has been providing services in the EMS industry for about 50 years, with a

focus

on the industrial, defense and medical segments. Altek’s business

complements Cyient DLM’s business in many ways.



Many clients of the company are based in the US and this acquisition will open

more avenues for the company.



Altek EBITDA margins were similar to Cyient DLM in 3QFY25, significantly below

the historical margins of ~10%. However, 3Q was a one-off quarter and the

company has a plan for margin expansion.



RoE for both businesses will be in similar lines.

Guidance and Outlook



Management reiterates a 30% revenue CAGR guidance over the next three

years, though yearly growth rates may vary.



Overall margins are expected to be flat in FY25 on a YoY basis.



EBITDA margins are expected to be soft in 1HFY26 and may expand in FY26,

driven by the change in the revenue mix.

Others



The industry and medical segments are showing signs of a recovery in India.



Cyient DLM has added a leading global technology company, which specializes in

energy services and solutions.



Currently, the company has sufficient capacity; hence, there are no major capex

plans other than small incremental capex.



The pipeline as of 3QFY25 stands at USD1b (total contract value), with three

large deals at advanced stages.



The revenue mix has changed significantly from the previous quarters and it

looks more balanced with the acquisition of Altek, which resulted in 47%/156%

YoY growth in the industrial/MedTech.



Standalone EBITDA margins were impacted by the rise in other expenses due to

the increase in bad debt provisions.



Every year USD1m will be coming under amortization and the balance will be

goodwill.



Data Patterns

Current Price INR 1,546

Neutral

Click below for

Detailed Concall Transcript &

Results Update

Industry scenario



The Indian government allocated INR6.8t for the defense budget in FY25-FY26,

reflecting a 9.5% increase from the previous year.



A significant INR1.8t has been designated to enhance military capabilities, with

70% of the modernization budget dedicated to domestically produced weapons

and equipment.

Operating performance



While the company faced certain delivery deferments from customers, the

overall execution momentum remains strong.



In 3QFY25. a substantial portion of the revenue and order book was driven by

the export market.



The company achieved an improvement in gross margin to 80% in Q3, up by

1260 bp, driven by a favorable product mix.

February 2025

111

EMS | Voices

The company took on two large contracts for radars with very low margins to

build capability and demonstrate product capabilities.



The total impact of the deferment of contacts was ~INR700m.

Guidance



The company maintains its revenue guidance of ~20-25% growth over the next

two to three years while maintaining EBITDA margins at around 35-40% for the

full year.



The company anticipates a major ramp-up in 4QFY25 and remains optimistic

about delivering strong growth. It is firmly on track to achieve its full-year

growth guidance.



The company reports higher margins when producing systems domestically in

India, compared to exporting complete systems.



The management is strategically deploying funds to accelerate product

development with a substantial portion allocated to expanding its R&D

capabilities.



Moving forward, the company will focus on growing the addressable market,

with an emphasis on manufacturing complete systems.

Order book



The international order book stands at INR1b as of 31 Dec’24.



In 3QFY25, the company secured production orders for EW worth INR800m,

Radar worth INR530m, and Avionics export worth INR530.



The market order book does not follow an annual cycle; it typically takes several

years to develop.



However, the conversion rate to contracts could accelerate in the near future,

with growth driven by repeat contracts and new orders.

Others



Inventory days were elevated as the company proceeded with two larger orders

for radar, with ~60-65% of its inventory tied up in these orders. Once these

orders are completed, inventory is expected to decrease substantially.



The company generally avoids inventory-based contracts due to their

complexity but took on two larger orders to develop expertise and proficiency in

designing and constructing complete systems.



The company has experienced a shift in order intake, with some product-related

decision-making taking longer than expected. However, none of those contracts

have been lost.



The company is working internally to develop products that meet export

standards before reintroducing them to the international market. This strategy

follows a medium- to long-term approach.



Indian businesses generate higher EBITDA margins compared to exports

business.



There have been delays in executing orders due to financial constraints within

the government and delays in government clearances. However, as these issues

are resolved, the company expects to be involved in many more programs.



Additionally, DRDO has received approval for several new programs, with the

necessary funding already sanctioned.



February 2025

112

EMS | Voices

Dixon Technologies

Current Price INR 14,087

Buy

Click below for

Detailed Concall Transcript &

Results Update

Backward integration and entry into the components ecosystem to boost future

growth



Backward integration:

Dixon has finalized the location for the manufacturing of

displays in partnership with HKC, with plans to start production in 1HFY26. The

company is also expanding into precision components, mechanical parts,

camera modules, and battery packs. The company is awaiting component PLI

from GoI under ISM 2.0 and will then decide on the further expansion of its

components product portfolio.



Display Fab:

Electronics manufacturing has reached a level of maturity, and

now, a component ecosystem is required on the non-semiconductor side, i.e.

displays, mechanicals, etc. Management mentioned that Dixon is in active

discussions with an existing global technology partner for setting up a world-

class display fab, which is a critical component in Mobile, IT Hardware, and

Consumer Electronics. The company is awaiting government guidelines on

ISM2.0 for this fab. It expects a 50% capital subsidy from the central

government

and 20% from the state government for this fab. Hence, Dixon’s

share of capex will be much lower. This is a margin-accretive project with a fast

payback period, and a large part will add value through captive consumption in

mobile, notebook, etc. The expected capex is around USD3b

–

TV displays are

60%, mobile 12-15%, and notebook 12-15%.

Segment-wise



Consumer Electronics:

Consolidated revenue/EBITDA were weak for the

quarter, decreasing 32%/31% YoY, reaching INR6.3b/0.22b. The contribution of

refrigerators to the segment totaled INR1.7b. Within the first year of operations,

Dixon was able to capture 8% of the market share in India in refrigerator

manufacturing. The company also started exporting refrigerators to Nepal and is

actively exploring the Sri Lanka and UAE markets. The LED TV market has faced

poor growth due to subdued consumer demand. Management stated that the

company is working closely with Amazon Fire TV and LG for webOS, where it

already has some export queries and expects growth starting from 1QFY26. The

company has also started manufacturing 65-100

inch digital signage’s, for which

it has a decent order book.



Mobile Phones:

Consolidated Revenue/EBITDA from the mobile phones & EMS

segment for the quarter increased 190%/210% YoY, reaching INR93b/3.2b. To

strengthen its position as a trusted mobile manufacturing partner, the company

has expanded its capabilities by adding a new facility in Noida, bringing the total

to seven state-of-the-art manufacturing units with a combined capacity of over

60m smartphones annually. Dixon’s subsidiary Ismartu has invested INR1.3b in

acquiring land, plant, and machinery to scale up production for brands like

Nothing, Techno, and Itel, including fulfilling 3m export volumes to Africa. The

company expects to export 0.5m-0.6m units in February and March of this fiscal

year. Management stated that orders remain strong for Motorola, Xiaomi's

volumes are growing steadily, and OPPO's order book has been robust. The

company successfully dispatched its first production for Compal in

December’24. Further, Dixon has entered into a JV with Vivo, with Dixon holding

51%, where Vivo will transfer its production to this JV.



Lighting Products:

Management claimed that a further increase in the backward

integration of lighting products is expected to materialize in 4QFY25, which will

lead to a positive change and margin expansion.



Home Appliances:

Consolidated revenue stood at INR3.15b in 3QFY25, up 9%

YoY. The segment’s EBITDA stood at INR320m, increasing 7% YoY, while EBITDA

February 2025

113

EMS | Voices

margins contracted 20bp from 10.4% to 10.2%. In terms of volume sales, the

company grew 100% YoY, reaching monthly sales of 25 thousand units.

Management stated that it is exploring additional categories like robotic vacuum

cleaners, water purifiers, chimneys, and other large kitchen appliances in this

particular business.

Kaynes Technology

Current Price INR 4,214

Click below for

Detailed Concall Transcript &

Results Update

Buy

Outlook and guidance



FY25 revenue guidance targets INR28-29b, representing 55% YoY growth, with

implied 4QFY25 growth of 60-67% to achieve guidance; margins expected to be

over 15%. At the current gross block, the company can grow revenue by 40-50%

from current levels (TTM).



FY25 EBITDA margin is expected to be more than 15%, with further

improvement supported by high-margin segments like industrials, aerospace,

and IT; gross margin is projected to sustain above 30% in the long term.



KAYNES’ FY26E revenue is projected to be ~INR45b, driven by growth in EMS,

Semiconductor, and OSAT & PCB businesses, barring acquisition-based revenue.



The long-term outlook anticipates significant margin improvement by FY27-

FY28, driven by high-margin OSAT business contributions.

Orders and execution



Order book growth is driven by industrials, EVs, aerospace, and automotive

sectors, with orders expected to materialize from 4QFY26.



Aerospace and defense-secured orders are anticipated to contribute

significantly to revenue from FY26 onwards.



Smart Meters’ integration of Iskraemeco is progressing

well, with capacity

expansion at the new Hyderabad plant addressing current orders; shipment

delays are due to ramp-up, while additional orders include AMISP and three

state projects.



Railways revenue has been impacted by order delays related to elections, with

recovery expected post-budget; order inflows have increased, and production

for "Kavach" will begin after POC completion in FY26.

Capex and projects



OSAT business groundbreaking at Sanand, Gujarat is underway, with revenue

expected from 4QFY26; HDIPCB factory approved in Tamil Nadu, with total

semiconductor project capex at INR23b, supported by 50% Central and ~20-25%

state subsidies, which comes to 6-9

following the Central’s subsidy.



QIP funds will be utilized for expansion into new geographies like North

America, scaling the ODM business, and potential acquisitions of companies

with USD35-50m ticket sizes having strong profitability and cultural alignment.

Business updates and strategic initiative



For growth, the company wants to strengthen its presence in North America,

Europe, and South Asia and focus on ODM and high-margin businesses as part of

its margin strategy. Additionally, an infrastructure push is expected to drive

demand in the railways, power, and telecom sectors through government

projects.



The automotive business focuses on EV chargers, components, and expansion

into 2W and 3W segments.



The IoT and IT segments are progressing as anticipated, with the largest

government customers onboarded, and further expansion is expected in the

coming year, backed by growing opportunities; these segments are among the

higher-yielding

areas in the company’s order book, which also includes

industrial, aerospace, and railways.

114

February 2025

EMS | Voices

The company has secured a large European-based medical client, which has

expanded its presence in the US through acquisitions, providing substantial

RFQs and significant order visibility, thereby addressing a prior gap in large.



clientele and positioning the company for steady growth in the medical

segment.



By FY26-27, three-fourths of the revenue is expected to come from the existing

EMS business, while one-fourth will be driven by newer businesses. This will

require additional working capital; hence, the increase in debt levels for FY26 is

anticipated to be less than proportionate.



The company has acquired a majority stake (54%) in Sensonic GmbH, a railway

network safety company.

Other



Exports to contribute 20-25% of revenue by FY26, driven by silicon and PCB

assembly.



Working capital days improved to 107 days in Dec '24 from 117 days in Mar '24,

while inventory days remain elevated due to advance purchases for upcoming

quarters. Positive operating cash flow (OCF) is expected to begin from 4QFY25

onwards.



Syrma SGS Technology

Current Price INR 441

Buy

Click below for

Detailed Concall Transcript &

Results Update

Operating performance



Margin expansion was largely driven by a favorable change in the product mix,

along with initiatives implemented by management, which have started to yield

results.



As of Dec’24, net working capital stood at 64 days, slightly higher than the last

quarter due to additional inventory for new customers. However, the guidance

for the full year remains unchanged at 60 days.



Gross debt as of Dec’24 stood at ~INR6.8b

Outlook and guidance



Going forward, the company expects ~39-40% of revenue to come from the

consumer business, with an implied mix in 4QFY25 to be in similar lines as

3QFY25. The long-term target is to reduce this mix to below 35%.



The company expects EBITDA margins of approximately 7% in 4QFY25, in line

with its long-term guidance, and is targeting an EBITDA of around INR3b for

FY25.



Management expects the company to grow at the rate of ~30-35%, with a

continued focus on margin expansions.



The export business typically has higher margins than the domestic business,

and the company targets to bring the export mix to ~25%-30% of total revenue

going forward.



The tax rate for FY25 and FY26 is expected to be ~23%-24%.



The current weighted average asset turnover is ~5.6x and is expected to

improve to ~6.5-7x, driven by the order book and new business opportunities.

With EBITDA margins of 8-8.5%, the overall ROCE is expected to be within the

target zone.



With the current gross block (minor additions), the company can achieve

revenue of INR65b.



The company expects ~INR700m revenue from railways in FY25 and anticipates

this segment to contribute ~INR1b to overall revenue going forward.

February 2025

115

EMS | Voices

Order book



As of Dec’24, the order book stood at INR52b, which is expected

to be executed

over 9-12 months.



The auto/consumer/industrial mix of the order book stands at 30%+/30-40+/20-

22%.



The company has witnessed strong traction from smart metering, adding a new

client in this segment alongside existing orders from Honeywell.

Capex



The company incurred a capex of ~INR1.80b in 9MFY25. For FY25, it plans to

incur a capex of ~INR2b-2.25b, with spending primarily focused on building a

large R&D center in Pune and a facility in Germany.



For FY26, the company targets a capex of ~INR1b-1.5b.

Others



The company has started renegotiating contracts in the consumer segment to

explore potential opportunities for margin expansion, with plans to structure

the business in a way that allows it to benefit from PLI and improve margins.



The joint venture for laptops started last month, and the company expects it to

mature into backward integration for board manufacturing in the coming years.



The company had previously acquired land in North Haryana but has since sold

it, as all expansion activities are now focused in Pune.



The company has received INR140m in 9MFY25 and expects ~INR170m for FY25,

compared to INR165m in FY24.



Overall capacity utilization at the Pune plant is slightly below 70%. The company

recently added two lines in Pune and has the ability to add more, with additional

lines expected to be ready by FY26-27.



The company has received approvals for a QIP, and the funds raised will be used

to fuel inorganic growth opportunities.



The company is evaluating its plant for potential entry into the OSAT business.



The Auto and Consumer segments remained flat QoQ in 3QFY25, as inventory

typically builds up in 2Q to cater to the festive season in 3Q.

February 2025

116

FINANCIALS/BANKS| Voices

FINANCIALS/BANKS



Management teams for most banks remain cautious due to growth moderation and contracting NIMs. A

majority of the banks are closely monitoring asset quality in unsecured segments, though there were some

positive signs in Dec’25, driven by improved collection efficiency. With repo rate cuts announced, most banks

indicate they are well-positioned to handle a potential 25bp cut; however, further reductions could pressure

NIMs in FY26. The banks have signaled a slowdown in unsecured segment growth, while other segments

remain resilient. PSBs continue to demonstrate stable asset quality, with no signs of stress in either

corporate or other retail segments, while credit cost guidance continues to remain benign for most of the

PSBs. Banks remain cautious about deposit growth amid tight liquidity, although measures such as RBI’s

liquidity injection are expected to support a recovery in deposit growth.

Outlook for FY25

Asset quality and collection efficiency



The macroeconomic environment is showing signs of



Fresh slippages increased to INR54.3b (from

moderation, and it remains volatile. Liquidity constraints

INR44.4b in 2QFY25). While the GNPA/NNPA ratio

could continue to impact loan & deposit growth in FY26.

inched up mildly by 2bp/1bp QoQ to 1.46%/0.35%.



Deposit growth has been lower compared to other

PCR stood at 76.2%.

private banks, but the bank remains focused on



Credit costs stood at 1.28% vs. 0.90% in 2QFY25.

improving the quality and granularity of deposits.

Restructured loans edged lower to 0.12%.



The bank provides 100% provisioning on retail unsecured

exposures at 90 DPDs, demonstrating a more prudent

approach compared to peer banks.



The bank has ample liquidity, is growing deposits faster



GNPA/NNPA ratio increased by 6bp/5bp QoQ to

than the industry, and is well-positioned to capture

1.42% / 0.46%. PCR decreased 207bp QoQ to 67.8%.

market share when the macroeconomic environment



HDFCB holds total provisions (contingent + floating)

improves.

of INR259b. CAR improved to 20%, with Tier 1 at



The C/I ratio remains stable, with cost growth maintained

18% (CET1 at 17.5%).

at 7%.



Regarding the excess liquidity on the balance sheet, the

investment net of cash was INR500b sequentially. This

was invested in the treasury and the earnings stood at

6.5-7.0%.



The bank continues to add branches but has been



Fresh slippages stood at INR60.85b (ex-agri at

streamlining its internal process by continuously

INR53.7b). The GNPA ratio declined 1bp QoQ to

leveraging the cost base, which has led to lower opex

1.96% while the NNPA ratio was stable at 0.42%.

consistently.

PCR moderated 29bp QoQ to 78.7%.



Credit costs stood at 37bp in 3QFY25 and the bank



The contingency buffer stood unchanged at INR131b

expects to sustain its target of ~50bp going forward.

(1.0% of loans).



There remains considerable scope for the bank to

enhance its fee income, particularly in transaction

banking and asset-related services.



The bank is reducing the share of its MFI business and



Fresh slippages were elevated, up 22% QoQ to

wants to bring this down to 8-10%. About 13% of the MFI

INR22b, primarily due to a rise in slippages in the

business pertains to Karnataka, and the bank has reduced

consumer finance book to INR19.2b.

this book by 4% QoQ.



GNPA/NNPA ratios increased 14bp/4bp QoQ to



Early indicators suggest that CE will be down by 1%.

2.25%/0.68%. The bank has utilized INR2b of the

contingent buffer of which INR1.6b was towards MFI

and INR0.4b for the corporate portfolio.

Restructured book declined 11bp QoQ to 0.18%.



NIMs have stabilized, supported by favorable yields and



Fresh slippages declined 11.6% QoQ to INR16.6b,

cost of funds. As the share of unsecured loans increases,

with MFI contributing the highest. GNPA ratio was

yields are expected to improve. On the cost side, CA

flat at 1.5%, while NNPA declined 2bp QoQ to 0.41%.

deposits will help manage and contain expenses.

PCR increased 1.75% QoQ to 73.2%.



The bank aims to achieve a RoA of over 2%, which will



SMA-2 advances stood at INR2.1b (5bp of loans).

depend on when the embargo is lifted.

CAR stood at 22.8%, while CET-1 stood at 21.7%.



Credit growth guidance remains at 14-16%, with broad-



Fresh slippages declined to INR38.23b vs INR48.71b

based growth across all segments.

in 2QFY25.



The bank continues to expect FY25 credit costs at 0.5%.



The GNPA ratio improved 6bp QoQ to 2.07%, while



It targets a sustainable RoE of over 15%, outperforming

the NNPA ratio was flat at 0.53%. PCR ratio declined

credit growth.

marginally to 74.7%. Restructured book declined to



Deposit growth is targeted at 10% YoY, with a possibility

INR137b (0.34% of advances).

of meeting this goal in 4QFY25.

KEY HIGHLIGHTS FROM CONFERENCE CALL

Axis Bank

HDFC

Bank

ICICI

Bank

IndusInd

Bank

Kotak

Mahindra

SBI

February 2025

117

FINANCIALS/BANKS | Voices

AU Small Finance Bank

Current Price INR 525

Buy

Click below for

Detailed Concall Transcript &

Results Update

Opening Remarks



The Indian economy saw an uptick at the end of 2Q before slowing down in 3Q.

However, the rural economy and government spending have increased.



Deposits are analyzed based on growth, CASA ratio, LCR, CD ratio and COF, and

the bank aims to maintain these ratios at an optimal level. This year the bank

has grown 16% YoY on deposits side. Bank grew 2.3% QoQ on deposits on

account of withdrawal of some government accounts.



CASA ratio stands at 31% and LCR is at 115%, up 3% QoQ. About 80% of deposits

are stable.



The bank focuses on the right mix of deposits with optimal pricing. Incremental

CoF improved to 7.4%, though the current market environment is challenging.



The bank increased its rate by 10bp in peak TDs. Despite this, the CoF guidance

is maintained at 7.10-7.15%.



Branch banking is in focus in the top 20 cities, of which Delhi, Jaipur and

Bangalore are performing well. The bank plans to open 70-80 new branches in

these cities.



The bank has made a lot of efforts to improve branch profitability.



Its loan portfolio has grown 13% YTD, faster than the system and that of other

peers.



Retail business book forms 67% of the total business portfolio and is a flagship

franchise, which has been built over the years. This segment is performing well

with 14% growth YTD and will benefit from an increase in the number of

touchpoints.



December is strong in terms of asset quality.



Wheels book makes up 32% of the GLP and is expected to grow 25% YoY. Yields

have improved by 25bp YoY and asset quality is broadly well. It will be present in

530 touchpoints by FY26 end and will be expanded to bigger geographies.



Mortgage book forms 33% of the GLP and has ATS of INR1.2-1.3m; there are no

close peers operating in a similar yield. MBL is expected to grow in low teens.

Credit cost is 0.6% YTD. It is present in 900 touchpoints in this segment.



Gold forms 2% of the portfolio and expertise comes from Fincare. Gold grew

29% YTD with yields of 16%. The latest guidelines of the RBI provide the level

playing field for the bank.



Commercial banking is 21% of the portfolio. Competition is mainly with other

private sector banks. Growth and asset quality remain largely on track.

Commercial banking generated INR110b of deposits for the bank.



AD1 business is gaining traction and is important for current account.



An inclusive finance bank is key to fulfilling financial inclusive charter. The total

book is INR78b and the MFI is the biggest in this portfolio with a strong MFI

franchise. It has the lowest exposure in the industry and the book is well

diversified.



MFI industry is under stress due to high customer indebtedness; however, the

long-term prospects remain strong. The bank has tightened its MFI norms and

has improved collection efforts.

February 2025

118

FINANCIALS/BANKS | Voices

MFI GLP declined 6% QoQ and credit cost was 9.4% annualized. SMA pool was

4.4%. Collection efficiency has bottomed out. December was better in terms of

collections in the MFI. The bank is keeping a close watch on the MFI segment.



PPoP increased 6%, driven by strong control in opex. PAT was down 7% QoQ

due to higher credit cost in MFI.



Achieved 1.5% of RoA in 3Q.



NIM decline by 23bp due to a higher proportion of investment book (~10bp),

adverse loan mix and higher CoF (~9bp), and NII reversal on NPAs (~4bp).



Insurance fee was impacted by the changes in regulatory norms of IRDA.



C/I is expected to be at 57-58% in FY25.



Although the credit cost will be high, RoA will be maintained at 1.6%. GLP

growth is expected at 20% and secured portfolio will grow faster at 23-24%.



The bank has applied for the universal banking license and is in touch with the

RBI.

Laibilities



Fincare has 1,200 touchpoints to operate in MFI, with 70% of them being quasi-

headquarters. About 80-90 branches will be added in this experiment this year.



23-25%

deposit growth is expected in Mar’25.

Advances



AUBANK wants to build MFI with the help of other secured businesses. The bank

had expected RoA of 4% in MFI, but it has given only 1% this year.



MFI exposure is expected to be capped at 10% and the bank will be looking at

this book differently.



The bank has reduced the guidance as it does not want to face a hiccup in the

future.



The bank has SMF lending. It does not expect the SMF deficit despite a slowing

MFI book. The bank is working on the digital lever and should be lesser in C/I in

next few years.



MFI book

–

CE inched up to 98.7% and is a stable outcome.



Gold loan circular

–

The BC model has to be revamped (business has to be done

from the branches). Renewal has been stopped in the industry. LTV of gold loans

has been standardized and cannot give above 75% throughout the tenure.



The guidelines have been stringent and the bank only lacks in the delivery time

of the loan. There is a level playing field for all. Many banks might be doing this

and Fincare is already practicing this. It has been working on this and a lot of

work has to be done to come out in the final print.

Yields, cost and margins



The bank targets 2% RoA, which will be aided by a rate cut will be helpful as the

bank will be utilizing the funds in a better way.



CoF was 7.05% in 2QFY25.

Asset quality and provisions



On MFI

–

the bank is 4.4% of SMA and 17% of borrowers have more than three

lenders. But lot of it has been arrested in the past few quarters. The bank will

take one more quarter to have more color on it. The overall credit cost will be

1.5-1.6% for the entire bank in FY26. There as green shoots available, such as

the upcoming MFIN guidelines.



MFI credit cost will be 6-7% in FY26 and it will remain high in 4Q. Other secured

assets will continue to improve in 4Q.



February 2025

119