Business

India’s healthcare sector is abuzz with the news that Singapore’s GIC (Government Investment Corporation) is increasing its investment in Asia Healthcare Holdings (AHH), acquiring an additional 15% stake in the platform. Currently, the global private equity firm TPG has the majority stake in AHH through its equity investment arm, TPG Growth. 

However, with this stake, GIC will emerge as the largest shareholder. This strategic move comes ahead of AHH’s potential IPO in the next 1-2 years and will likely take its valuation to an estimated $800-900 million. Let’s explore why the move is significant for its various stakeholders and India’s healthcare sector. Source: Live Mint

Here’s a snapshot of the expansion’s key highlights:

Key Update	Details
GIC’s Stake Increase	Additional 15%
Valuation of AHH	$800-900 million
Key Acquisitions by AHH	₹600 crore for Nephrology stake

Objectives Behind the Transaction

Several factors drive this development:

1. Liquidity for TPG: TPG is divesting a portion of its stake to provide returns to its investors.
2. Preparation for IPO: AHH is gearing up for a public listing in the next 1-2 years. This transaction is expected to streamline its structure for the IPO.
3. Guaranteed Returns: The deal is likely to include provisions for guaranteed returns linked to the upcoming IPO, which will benefit both sides.

GIC’s Role in AHH’s Growth

GIC’s involvement with AHH is not new. In February 2022, GIC had invested $170 million (₹1,280 crore) in AHH, acquiring a minority stake of 40-45%. This initial investment positioned GIC as a significant stakeholder. With the upcoming transaction, GIC will assume a majority role, giving it greater control over AHH’s strategic direction.

This move is expected to strengthen AHH as it prepares for the public markets while expanding its footprint in India’s evolving healthcare landscape. Source: The Times of India

What Makes AHH Stand Out?

AHH is a single-specialty healthcare platform, focusing on specific care areas rather than a multi-specialty approach. Its portfolio includes:

• Motherhood Hospitals: Specializing in maternity care.
• Asian Institute of Nephrology and Urology: Focused on kidney care.
• Nova IVF: A leading provider of fertility treatments.

In recent years, AHH has made significant acquisitions to expand its capabilities. In September 2023, it acquired a majority stake in the Asian Institute of Nephrology and Urology for ₹600 crore.

This followed its earlier success in selling Cancer Treatment Services International in 2019 for $283 million. However, the deal is said to benefit not only AHH but also India’s growing healthcare sector. 

Why the Stake Increase Also Matters to India’s Healthcare Sector

India’s healthcare market, valued at US $110 billion in 2016, is projected to grow significantly, reaching $638 billion by 2025. An aging population and the increasing prevalence of non-communicable diseases drive this growth. Also, a larger population now has access to quality healthcare. 

Since the COVID-19 pandemic, the healthcare environment has improved and become favorable for public listings. Over 20 healthcare-related IPOs have raised ₹35,000 crore since April 2020, highlighting the sector’s strong growth potential.

From GIC’s stake increase, experts note that private equity investors are increasingly exiting through IPOs or strategic sales, capitalizing on the sector’s robust growth. Besides, AHH’s focus on single-specialty healthcare aligns with the industry’s shift toward holistic and integrated models. By focusing on areas like nephrology, maternity, and fertility, AHH is meeting the rising demand for specialized care.

The transition of GIC to a majority stakeholder positions AHH to leverage its expertise and financial backing, ensuring sustained growth and innovation in its offerings.

Conclusion

Singapore’s GIC’s 15% stake expansion in Asia Healthcare Holdings (AHH) signals confidence in India’s booming healthcare sector. AHH is set for significant growth, with a valuation of $800-900 million and a potential IPO in 1-2 years.

As India’s healthcare market, valued at USD 110 billion in 2016, is projected to grow significantly, reaching USD 638 billion by 2025, AHH’s focus on single-specialty care aligns with rising demand for specialized services, making this a critical milestone for both AHH and India’s healthcare evolution.

Related Posts

• 
  5 Multibagger Stocks in India 2024
• 
  Finance Sector Stocks List
• 
  Top Pharma Stocks of 2024 To Know
• 
  What is Samvat 2081 & why is it important to investors? 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

Reliance Power, a flagship company of the Anil Ambani-led Reliance Group, has recently been in the spotlight for all the right reasons. Its share price surged, hitting a 5% upper circuit in the stock market. This surge came after the Solar Energy Corporation of India (SECI) lifted its ban on the company from participating in renewable energy tenders. 

This development is attracting considerable attention from investors and analysts alike. But what’s driving this sudden momentum, and what does it mean for investors? Let’s break it down in simple terms. Source: Mint

Stock Performance on December 4

Reliance Power opened trading at its upper circuit limit of ₹41.07 on Wednesday, December 4, showcasing a strong bullish trend. This followed a modest 1.03% gain in the previous trading session on December 3, when the stock closed at ₹39.12 on BSE.

What is an Upper Circuit?

Before diving deeper, let’s quickly understand what a stock must hit the “upper circuit.” Stock exchanges set daily limits on how much a stock’s price can rise or fall, known as circuit limits. When a stock hits the upper limit, trading in that stock is temporarily halted because the price has risen as much as allowed for the day.

For Reliance Power, reaching the 5% upper circuit means strong buying demand, likely fueled by the positive news. 

Reliance Power Share Price Trend

Reliance Power has showcased strong growth, with its stock rising by 68% as of December 3. In contrast, the equity benchmark Sensex has posted a 12% increase during the same timeframe.

The stock hit its 52-week low of ₹19.37 on March 14 and reached a 52-week high of ₹54.25 on October 4. Despite this impressive yearly growth, monthly trends have been mixed. The stock surged 59% in September but saw declines of over 12% in October and 9% in November.

Why SECI Lifted the Ban

Last month, SECI barred Reliance Power from bidding on renewable energy projects, citing allegations of submitting fake documents in a tender for a 1,000 MW/2,000 MWh battery storage system. This led to the cancellation of the tender.

However, a week before SECI reversed its decision, the Delhi High Court stayed the ban, except for Reliance Power’s subsidiary, Reliance NU BESS. This court order played a major role in SECI lifting the ban, enabling Reliance Power to participate in future renewable energy tenders.

Background of the Tender Issue

The controversy originated from a SECI tender released in June for a large-scale BESS project. Reliance Power was accused of submitting falsified documents during the bidding process, leading to its disqualification and a temporary ban from future tenders. The ban initially raised concerns about the company’s credibility and ability to secure future contracts in renewable energy.

However, the Delhi High Court’s decision to stay the debarment and SECI’s subsequent withdrawal of the ban has helped restore some market confidence in Reliance Power.

A Brief Look at Reliance Power’s Journey

Reliance Power was once seen as a major player in India’s energy sector, with a diverse portfolio of power generation projects, including thermal, solar, and hydro. However, the company struggled with multiple issues over the years:

• High Debt Levels: Reliance Power borrowed heavily to finance its projects, leading to unsustainable debt.
• Project Delays: Delays in execution resulted in cost overruns and missed revenue opportunities.
• Regulatory Challenges: Navigating India’s complex energy regulations further impacted operations.

These challenges led to a drop in its share price, making investors cautious. However, the recent debt restructuring hints at a possible recovery, attracting renewed interest.

Impact on Market Sentiment

The removal of the ban is seen as a positive development for Reliance Power, especially as it paves the way for the company to participate in future renewable energy opportunities. Investors responded enthusiastically, as evidenced by the stock hitting its daily price limit.

This news boosts the company’s prospects in the renewable energy sector, an area with significant growth potential, given India’s focus on transitioning to clean energy sources.

What This Means for Investors

If you’re an investor or considering becoming one, here are a few things to keep in mind about Reliance Power:

1. Short-Term Opportunity: The recent rally could present opportunities for short-term gains, but be prepared for volatility. Stocks undergoing restructuring often experience sharp price swings.
2. Long-Term Potential: Those with a long-term outlook can consider this a positive sign. However, it is essential to monitor the company’s financial performance closely in the coming quarters.
3. Risks Remain: Despite the optimism, Reliance Power still has hurdles to overcome, including operational challenges and the need for consistent cash flow generation.
4. Diversification is Key: Don’t always put all your eggs in one basket. Balancing investments across different sectors and companies can help mitigate risks.

What’s Next for Reliance Power?

Lifting the ban is a crucial step for Reliance Power as it seeks to strengthen its position in India’s growing renewable energy sector. The company now has the opportunity to bid for key projects that could drive future growth and diversification.

While this development is a positive sign, Reliance Power must address operational challenges and reputational concerns stemming from the tender controversy. Ensuring transparency and compliance in future tenders will be essential to rebuilding trust and securing long-term investor confidence. 

Broader Implications for the Market

Reliance Power’s turnaround may affect the broader market, particularly for the Anil Ambani-led Reliance Group. If the company successfully stabilizes its finances, it might also restore investor confidence across other group companies.

India’s power sector is at a key turning point, with increasing energy demand and government support for renewable energy. A strengthened Reliance Power could majorly meet these needs and become an essential player in the sector.

Conclusion

The 5% upper circuit in Reliance Power’s share price is a positive development. While this is undoubtedly a positive step, the company’s long-term success will depend on its ability to execute projects efficiently, manage its finances wisely, and capitalize on opportunities in renewable energy.

For investors, the recent surge reminds them of the stock market’s dynamic nature. Whether looking for short-term gains or long-term growth, staying informed and weighing the risks is crucial. Reliance Power might still have a long way to go, but it seems to be moving in the right direction.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQs

For years, the question of who reigns supreme in India’s ride-hailing market had a simple answer: Ola and Uber. But has that started to change? With a growing foothold across cabs, auto-rickshaws, and bike taxis, Rapido has emerged as a serious contender. How did this once niche player in bike taxis manage to carve out a significant market share in a space dominated by giants? And more importantly, could Rapido truly disrupt the Ola-Uber duopoly and reshape the market?

Let’s break down the numbers, strategies, and shifts in user behavior to understand how this triangular battle is unfolding.

Market Share: A Shifting Landscape

Rapido’s entry into the ride-hailing market has transformed the competitive landscape. According to recent industry estimates:

• In the cab category, Uber leads with 50% market share, followed by Ola at 34%, and Rapido trailing with a 14% share.
• The auto-rickshaw segment paints a different picture, with Uber holding 40%, Ola at 26%, and Rapido emerging as the second-largest player with 31%.
• Rapido dominates the bike-taxi category with a commanding 56% market share, leaving Ola and Uber far behind.

Rapido’s co-founder and CEO, Aravind Sanka, disputes these figures, claiming a stronger foothold: 18% in cabs, 33% in auto-rickshaws, and 61% in bike taxis. While the exact numbers may vary, Rapido’s rapid rise across categories is undeniable.
Source: Economic Times

Rapido’s Strategic Growth

1. Humble Beginnings to Unicorn Status

Founded in 2015, Rapido entered a market already dominated by Ola and Uber, which boasted valuations of USD 5 billion and USD 60 billion, respectively. With just USD 2 million in initial funding, Rapido focused on perfecting its bike-taxi operations. In a market where many bike-taxi startups failed, Rapido navigated regulatory challenges and optimized its operations to become the largest player in this segment.

By mid-2022, Rapido had expanded its services to include auto-rickshaw bookings and last-mile delivery. A USD 200 million funding round in 2024 pushed Rapido’s valuation to USD 1.07 billion, marking its entry into the unicorn club. However, this was a “flat round,” reflecting cautious investor sentiment given Ola and Uber’s entrenched presence.

2. Financial Efficiency

Rapido has managed to grow while keeping costs in check. Despite expanding operations, its workforce has remained steady at 700 employees for the past two years. Revenue grew by 46% year-on-year to INR 648 crore in FY24, and losses were nearly halved to INR 370 crore. In FY25, the first-quarter loss stood at just INR 17 crore, a significant improvement.

App Activity: Gauging User Engagement

The app activity data highlights Rapido’s rise:

• Monthly Active Users (MAUs): Uber leads with 33.6 million, followed by Rapido at 31.8 million, and Ola at 28.6 million.
• New Downloads (2024): Rapido amassed over 33 million downloads, outpacing Uber (17.7 million) and Ola (17.3 million).
• Total App Installs: Ola leads with 206 million, followed by Uber (178 million) and Rapido (120 million).
• Monthly Downloads: Rapido dominates with 6.3 million, compared to Ola (5.3 million) and Uber (5.2 million).

These figures reflect Rapido’s ability to attract new users and maintain a competitive user base, challenging Ola and Uber on digital platforms.

The Subscription Model: A Game Changer

Rapido has capitalized on a shift in the revenue model within the ride-hailing industry. Traditionally, platforms charged a commission (up to 30%) on fares. Now, a subscription-based model allows drivers to pay a fixed fee, which is generally lower. This shift has benefited Rapido in three key ways:

1. Driver Attraction: Lower subscription fees encourage drivers to join, reducing their operational costs.
2. Cheaper Fares: With reduced overheads, Rapido offers fares that are 10%-15% cheaper, attracting cost-conscious riders.
3. Market Disruption: This model has disrupted the three-wheeler and bike-taxi categories and is gradually impacting the cab segment.

Challenges for Ola and Uber

Ola’s Decline

Ola, once a leader in India’s ride-hailing market, has been steadily losing its competitive edge. The shift is evident from app activity data provided by platforms like Sensor Tower and Similarweb, which show that Ola has now dropped to the third position in terms of monthly active users and new app downloads, trailing behind Uber and Rapido.

Key Indicators of Decline:

• Daily Trips: Ola’s daily trips have dropped to 460,000, significantly lower than Uber’s 840,000 and only slightly ahead of Rapido’s 320,000.
• Car Segment Share: Ola’s market share in the car-hailing segment has shrunk to 30% in terms of trip numbers.
• App Metrics: While Ola boasts an impressive 206 million total app installations, its inability to retain active users and attract new downloads has weakened its position.

Uber’s Resilience

Unlike Ola, Uber has demonstrated resilience and adaptability, maintaining its foothold in the market, especially in the premium cab segment. Data shows that Uber has not only closed the gap with Ola but also surpassed it in critical metrics like daily trips and active user base.

Uber’s Strategic Strengths:

• Core Mobility Focus: Uber has stayed committed to its core ride-hailing business, helping it navigate post-pandemic challenges.
• Expanded Offerings: The company has diversified its services, introducing quadricycles, bike taxis in select cities, courier services, and even bus shuttle operations, starting in Delhi with plans for further expansion.
• Partnerships: Uber’s exclusive tie-up with Everest Fleet ensures a steady supply of vehicles, a significant advantage in a market where driver retention is a challenge.

Pressures from New Models:

• The rise of subscription-based revenue models, like Rapido’s, has started to challenge Uber’s traditional commission-based system.
• Uber’s commission revenues attract higher taxes compared to subscription revenues, creating an uneven playing field. The issue is currently being debated by the Central Bureau of Indirect Taxes and Customs (CBIC) and the Karnataka High Court.

Source: Economic Times

The Road Ahead

The Indian ride-hailing market is no longer a straightforward duopoly. Rapido’s dominance in bike taxis, significant share in auto-rickshaws, and steady growth in the cab segment have reshaped the competitive dynamics. As of 2024, the market is a three-cornered contest, with Rapido demonstrating its ability to disrupt and innovate.

While Uber holds its ground and Ola faces challenges, Rapido’s trajectory suggests it is well-positioned to continue gaining traction. The ride-hailing sector’s evolution will depend on how these players adapt to new revenue models, user preferences, and market conditions.

By challenging the status quo and leveraging strategic advantages, Rapido has established itself as a formidable player in India’s ride-hailing economy. As the numbers suggest, the competition is far from over.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Honasa Consumer Ltd., the parent company of Mamaearth, a popular brand in the personal care segment, recently witnessed a dramatic 40% plunge in its stock value. This drop has raised concerns among investors and consumers alike for a brand known for its focus on sustainability and natural ingredients. Let’s explore what led to this fall and three strategies that could help Honasa Consumer regain investor confidence and revive its stock. Source: ET Prime

What Happened to Mamaearth’s Parent Company?

When Honasa Consumer, Mamaearth’s parent company, entered the stock market, it carried high hopes. As a leader in the D2C (Direct-to-Consumer) space, the company aimed to leverage its strong brand recognition and loyal customer base. Its IPO was expected to attract significant investor interest, positioning the brand for long-term growth.

Post-Listing Setback

Despite the initial buzz, Honasa Consumer’s stock faced substantial selling pressure after its listing, leading to a steep 40% drop in its valuation. Notably, the stock fell below its IPO price of ₹324 earlier this month and is currently trading at around ₹262. Source: ET Prime

Mounting Challenges Impacting Performance

The company’s recent performance has revealed several hurdles:

Revenue & Profit Decline: The latest quarter reported a revenue drop, raising concerns about the company’s growth trajectory.

Market Cap in crores (as of 03-12-24	CMP	PE Ratio	Debt to Equity	ROCE %
₹ 8,496	₹ 262	113	0.10	17.1

In the quarter ending September 2024, Honasa Consumer reported revenues of ₹462 crore, marking a decline compared to ₹496 crore in the same quarter of the previous year. Additionally, the company posted a loss of ₹19 crore for this quarter, a significant contrast to the ₹29 crore profit recorded during the corresponding period last year.

Key Reasons Behind Honasa Consumer’s Decline

• Legal Troubles: Ongoing legal issues have added to the company’s difficulties, creating uncertainty among investors. A court has ordered the attachment of Honasa’s assets in response to a ₹57 crore compensation claim filed by its former distributor, RSM General Trading. This legal dispute has damaged the company’s reputation and raised concerns about its governance.
• Intensifying Competition: The online personal care market is becoming increasingly crowded, with established giants like Hindustan Unilever and Procter & Gamble dominating the space. This makes it challenging for newer entrants like Honasa to maintain momentum.
• Investor Behavior: Foreign investors are offloading shares, while mutual funds are hesitant to buy, reflecting a lack of confidence in the stock’s recovery prospects. As of September 2024, mutual funds own a 3.8% stake in the company, while FPIs hold 19%. Retail investors have a smaller share of 2.4%. Foreign companies that previously held stakes in Honasa, including Peak XV Partners, Sequoia Capital Global, Sofina Ventures, and AIFs like Stellaris Ventures and Fireside Ventures, sold their shares on September 12.
•  Broader market conditions: With cautious investor sentiment and volatile markets, stocks like Honasa Consumer have faced additional selling pressure, further dragging down valuations.
• Operational Concerns and Inventory Dispute: The All India Consumer Products Distributors Federation (AICPDF) accused Honasa of holding unsold inventory valued at ₹300 crore, including near-expiry stock. However, the company denied this claim, stating that its actual inventory was ₹40.69 crore. Despite this, the issue has raised concerns about the company’s supply chain inefficiencies and its effects on distributors.

Source: ET Prime

Why Honasa Consumer’s Decline Matters

The drop in Honasa Consumer’s stock is a setback for the company and a signal to other D2C brands planning to go public. It raises important questions about how these companies should balance growth aspirations with profitability and market expectations.

3 Strategies to Revive Honasa Consumer’s Stock

While the stock’s decline is concerning, it is not insurmountable. Here are three strategies to help Honasa Consumer regain investor confidence and revive its stock value.

• Rethink its D2C strategy: Once a strength, the direct-to-consumer model is now facing challenges due to slowing demand and rising costs. Honasa must reevaluate this strategy and explore alternative distribution channels to improve profitability.
• Resolve legal disputes: The ongoing legal case in Dubai is damaging investor confidence. A quick resolution is crucial to restore trust and minimize potential financial losses.
• Improve inventory management: Honasa must implement effective inventory management practices to avoid excess stock and minimize losses. This will also help strengthen distributor relationships and ensure smooth supply chain operations.

The Road to Recovery

While the immediate future appears challenging, Honasa Consumer can still turn things around with decisive action. A successful execution of the recovery plan, coupled with a return to profitability, could help the company regain lost ground.

Technical indicators like the 20-day and 50-day EMAs can provide valuable insights into the stock’s potential trajectory. Crossing these key levels would signal early signs of a turnaround. However, if the stock continues to trade below these levels, it may struggle to recover.

Conclusion

The 40% plunge in Honasa Consumer’s stock is undoubtedly a wake-up call for the company. However, it’s not the end of the road. The company can turn things around by focusing on its core strengths, diversifying distribution channels, and enhancing financial transparency.

Honasa Consumer’s journey serves as a lesson for other D2C brands on the importance of managing valuations, market expectations, and operational excellence. 

Related Posts

• 
  Festive Push: Meesho Adds Mamaearth, Dabur, Titan to Lineup as Seller Base Jumps 42% YoY
• 
  The Rise of OFS: 3 Reasons Why Startups Opt for Investor Exits Over Growth Capital

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

The electric vehicle (EV) revolution is picking up speed, and Tesla is front and center in this exciting shift. But it’s not just about Tesla—the entire EV ecosystem plays a big role. From battery makers to software companies, the EV boom is opening up opportunities across many industries. But what about the lesser-known players—the stocks that aren’t obvious but stand to benefit from this transformation?

Tesla’s India Buzz and the Broader EV Transformation

In the coming months, discussions about Tesla entering India are likely to gain momentum. While geopolitical factors like import duty negotiations could add some drama, the focus remains on the transformative impact of the EV sector.

Whenever a sector undergoes a significant shift, certain companies naturally emerge as prominent players—like automakers and auto ancillary firms in the EV space. However, there are also companies that may not immediately seem connected to EVs but stand to benefit from the industry’s growth. These unexpected players, while not directly part of the EV sector, could play a pivotal role in shaping its ecosystem.

The NSE has created an index to track the EV ecosystem comprehensively. Within this index, several companies specialize in embedded software tailored for EVs. Additionally, some auto ancillary companies, well-prepared for this shift, have successfully transitioned to support the EV industry. Others have launched operations dedicated exclusively to the EV sector. Source: Economic Times

Look at all the companies in the new Nifty EV & New Age Auto Index.

Nifty EV & New Age Auto Index Stocks

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Tata Motors Ltd.	289068	785	8.63	20.1	19
Amara Raja Energy & Mobility Ltd.	23263	1271	24.0	18.7	28
Maruti Suzuki India Ltd.	344868	10969	24.6	21.8	16
KPIT Tecnologies Ltd.	38731	1413	53.3	38.4	47
Varroc Engineering Ltd.	7956	521	15.1	17.5	21
Reliance Industries Ltd.	1738910	1285	25.6	9.61	5
Bharat Forge Ltd.	62319	1338	62.8	12.9	24
Hero Motocorp Ltd.	96600	4830	23.4	29.1	25
TVS Motor Copmany Ltd.	115744	2436	61.4	14.7	53
Samvardhana Motherson International Ltd.	113777	162	30.0	13.7	12
Ashok Leyland Ltd.	69257	232	26.4	15.0	25
Motherson Sumi Wiring Ltd.	28445	64.3	43.1	48.0	–
Tata Elxsi Ltd.	42028	6748	51.4	42.7	6
CG Power & Industrial Solutions Ltd.	115519	756	129	46.6	73
Sona BLW Precision Forgings Ltd.	41406	666	72.1	24.0	-3
UNO Minda Ltd.	59561	1037	66	19.9	34
Mahindra & Mahindra Ltd.	363117	2920	30.5	13.6	52
Eicher Motors Ltd.	132177	4822	31.0	31.0	27
L & T Technology Services Ltd	55418	5236	44.1	33.4	1
Bosch Ltd.	102461	34,740	51.2	20.6	29
Olectra Greentech Ltd.	12973	1581	116	14.8	25.8
JBM Auto Ltd.	18312	1549	97.8	14.4	64
Rattanindia Enterprises Ltd.	9010	65.2	12.6	2.89	13

The EV revolution isn’t just about carmakers or batteries; it’s about a comprehensive ecosystem involving various industries. Beyond automakers, several companies are transforming themselves to cater to the growing EV demand. These include firms that supply specialty chemicals for battery production and others developing components essential to the EV ecosystem.

Here’s a list of 8 lesser-known stocks that may not immediately come to mind when one thinks of EVs.

Jupiter Wagons Ltd.

Jupiter Wagons Ltd. is a leading Indian manufacturer of railway freight wagons, passenger coaches, and wagon components.  Headquartered in Kolkata, the company caters to both Indian Railways and private sector clients. ^{Jupiter Wagons plays a crucial role in India’s railway infrastructure development with a focus on innovation and quality}.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Jupiter Wagons Ltd.	20856	491	57.0	31.7	144

Tata Technologies Ltd.

Tata Technologies is a global leader in product engineering and digital solutions. They serve major players in automotive, aerospace, and industrial machinery sectors. With a focus on innovation and digital transformation, they help clients design, engineer, and manufacture better products. Their expertise lies in areas like engineering services, product development, and digital manufacturing solutions.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Tata Technologies Ltd.	38143	940	59.0	28.3	–

Tube Investments of India Ltd.

Tube Investments of India Ltd. (TI) is a leading Indian engineering conglomerate. It specializes in manufacturing a wide range of products like bicycles, precision steel tubes, automotive components, and industrial chains. TI is known for its strong focus on quality, innovation, and customer satisfaction. It is a part of the prestigious Murugappa Group.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Tube Investments of India Ltd.	69882	3613	87.0	26.3	29

Schaeffler India Ltd.

Schaeffler India Ltd. is a leading manufacturer of high-precision bearings and automotive components. Part of the global Schaeffler Group, it supplies crucial components for engines, transmissions, and chassis systems. With a focus on innovation and sustainability, it caters to both the automotive and industrial sectors. Its products are designed to enhance efficiency and reduce emissions.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Schaeffler India Ltd.	55450	3548	58.4	26.7	32

Gujarat Fluorochemicals Ltd.

Gujarat Fluorochemicals Ltd. (GFL) is a leading Indian manufacturer of fluorochemicals and refrigerants. ^{It caters to various industries, such as automotive, electronics, healthcare, and construction. GFL is known for its innovative products and commitment to sustainability. It has a strong global presence and is} a major player in the fluorochemicals market.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Gujarat Fluorochemicals Ltd.	43164	3929	105	9.76	25

Exide Industries Ltd.

Exide Industries Ltd. is a leading Indian manufacturer of storage batteries. It caters to a wide range of applications, including the automotive, industrial, and telecom sectors. Exide is known for its high-quality products and strong distribution network. It is committed to providing reliable and efficient power solutions to its customers.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Exide Industries Ltd.	38,777	456	46.4	10.2	40

Tata Chemicals Ltd.

Tata Chemicals Ltd. is a leading global manufacturer of chemicals and fertilizers. It produces a wide range of products, including soda ash, inorganic chemicals, and specialty chemicals. Focusing on sustainability and innovation, it contributes to various industries like agriculture, consumer goods, and industrial manufacturing. Its products are used in everyday life, from food to pharmaceuticals.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Tata Chemicals Ltd.	28106	1103	45.8	7.81	8

Himadri Speciality Chemical Ltd.

Himadri Speciality Chemical Ltd. is a leading Indian manufacturer of specialty chemicals and carbon materials. It caters to diverse industries like steel, aluminum, plastics, automotive, and construction. With a focus on innovation and sustainability, it produces a wide range of products, including coal tar pitch, carbon black, naphthalene, and specialty oils. Himadri is committed to providing high-quality solutions to its customers.

Company	Market Cap in crore (as of 28-11-24)	CMP	PE Ratio	ROCE %	3 Yrs Return %
Himadri Speciality Chemical Ltd.	25884	524	53.8	18.8	128

Key Points on the EV Ecosystem and Emerging Opportunities

Batteries

The battery is the most critical component of an EV. Companies like Ola Electric are investing in advanced batteries, such as their Bharat 4680 battery, to power the future of EVs.

The focus goes deeper into the supply chain—companies are working on providing the essential materials required to manufacture EV batteries. This includes firms supplying specialty chemicals and other critical inputs that form the foundation of the battery ecosystem.

The EV Supply Chain

The EV supply chain spans from the most unexpected players (e.g., specialty chemical providers) to the more obvious ones like Ola Electric and automakers actively involved in EV production. This interconnected chain highlights opportunities across industries, not just within traditional auto or EV firms. Source: Economic Times

Why the EV Boom is Bigger Than Tesla

While Tesla has captured global attention, it’s important to note that the EV ecosystem extends far beyond one company. Governments are setting ambitious EV adoption targets, and traditional automakers are rapidly expanding their EV offerings. This surge creates opportunities in industries that may not immediately come to mind but are critical to EV adoption.

Is the Ecosystem Ready for Tesla?

Tesla’s vision has always been ambitious, from building cutting-edge EVs to scaling up its Gigafactories. But even Tesla can’t do it alone. Its success depends on a robust ecosystem of suppliers and partners.

The readiness of this ecosystem depends on several factors:

1. Infrastructure: Charging networks need to expand rapidly to match growing EV demand.
2. Supply Chain Resilience: From rare earth elements to semiconductors, supply chains must adapt to the increased demand for EV components.
3. Policy Support: Governments worldwide must invest in incentives, infrastructure, and research to support EV adoption.

What Should Investors Watch For?

For those looking to capitalize on the EV boom, here are some key trends to monitor:

• Battery Innovations: Breakthroughs in battery technology could shift market dynamics, benefiting companies that adapt quickly.
• Global Expansion: Companies with international operations are better positioned to benefit from the worldwide EV push.
• Regulatory Changes: Policies promoting EV adoption will directly impact companies across the ecosystem.

The Road Ahead

The EV revolution is reshaping industries far beyond the automotive sector. While Tesla remains a driving force, the ecosystem supporting EVs is just as critical—and often overlooked.

The EV ecosystem is evolving to support this shift as the world moves toward electrification. Whether or not it’s entirely ready for Tesla, one thing is clear: the opportunities in this space are immense, and the players who adapt quickly will drive the future.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

Hindustan Unilever Limited (HUL), a household name in India’s FMCG sector, has separated its ice cream business. This strategic decision is turning heads, sparking interest from both the financial markets of Dalal Street and everyday consumers on Main Street. It reflects the rising importance of the ice cream category and highlights HUL’s commitment to maximizing shareholder value.

Analysts believe the demerger presents an exciting opportunity for existing investors to gain a stake in a dedicated ice cream entity. This segment, characterized as a high-growth business, has the potential for a 15-20% compound annual growth rate (CAGR) and profit margins between 5% and 9%. Source: Mint

HUL’s Financial Performance

HUL reported a revenue of ₹59,144 crore from operations in FY23, which grew by 2% to ₹60,469 crore in FY24. Meanwhile, the company’s net profit increased by 1.5%, rising from ₹9,962 crore in FY23 to ₹10,114 crore in FY24.

Let’s explore why this decision could be a game-changer.

A Scoop of Business Potential

HUL’s ice cream segment, home to popular brands like Kwality Wall’s, Cornetto, and Magnum, may account for only 3% of the company’s total revenue, roughly ₹1,800 crore in FY24. While this might seem modest, the category has been identified as a high-growth area. However, significant investment is required to unlock its full potential. 

This separation is expected to give the ice cream business the flexibility and focus needed to thrive independently. According to the company, this move will allow the new entity to have a dedicated management team and greater flexibility to adopt strategies tailored to its unique business model. Source: Economic Times

A Rare Move in the Ice Cream Industry

Globally, pure-play publicly-listed ice cream companies are a rarity. Most ice cream operations are integrated into broader FMCG businesses. Apart from Vadilal Industries, the most prominent players in India’s ice cream market, such as Amul, Arun, Havmor, Naturals, and Baskin Robbins, remain privately owned.

HUL’s decision stands out, reflecting its confidence in the segment’s growth prospects and its ability to create significant shareholder value through this focused strategy.

Comparison Between Vadilal’s and HUL’s Ice Cream Business

Vadilal’s Ice Cream Business		HUL’s Ice Cream Business
Revenue	Operating Profit Margin	Revenue	Revenue Share
Rs.1,125 Crores	20%	Rs.1,800 Crores	3%

What it Means for the Shareholders

For HUL shareholders, creating an independent listed entity for the ice cream business is a noteworthy value addition. It allows them to remain part of the business’s growth journey while enjoying greater transparency and a sharper operational focus.

The spin-off aims to maximize shareholder value by potentially unlocking new investment opportunities in the fast-growing ice cream market. This sector thrives thanks to rising consumer demand for indulgent and premium products.

The Growing Ice Cream Market in India

India’s ice cream industry is enjoying a rapid growth trajectory! In 2023, the market reached a noteworthy ₹228.6 billion. However, the real excitement lies in its future. Projections by IMARC Group indicate the market is set to soar to a staggering ₹956 billion by 2032, fueled by a strong compound annual growth rate (CAGR) of 17.4% from 2024 to 2032.

Who’s Leading the Pack?

The competitive landscape is buzzing with big players like GCMMF (Amul), Kwality Wall’s, Vadilal, Mother Dairy, Hatsun, and Cream Bell. Each brand is carving out its niche through premium offerings, affordability, or regional dominance.

What’s Driving This Growth?

Several factors fuel the rising popularity of ice cream in India:

• Rising Disposable Incomes: People are more willing to indulge in premium and experimental flavors as incomes grow.
• Consumer Cravings for Indulgence: Ice cream is not just a treat but an experience. Consumers are actively seeking rich, indulgent options.
• Innovative Offerings: Leading brands are captivating the market with exciting new flavors, healthier options, and creative packaging. Brands are stepping up with exciting innovations. Creambell’s Fun Spin Range and international-inspired flavors like Green Apple and Chocky Swirl bars highlight the market’s move toward diversification and novelty. These creative offerings cater to a younger, experimental audience looking for unique and fun experiences.
• Expanding Distribution Networks: Whether in bustling cities or remote villages, better distribution channels are making ice cream accessible to all.

Challenges of the Demerger

While the spin-off strategy can be a good decision, there are hurdles to overcome. Developing local capabilities and managing the transition without disrupting operations will be critical. Additionally, competition in the ice cream sector is fierce, with domestic and international players vying for market share. Ensuring robust growth while maintaining profitability will require strategic planning​

Main Street’s Sweet Spot

Beyond the financial markets, this move could resonate with consumers. As the ice cream business gains independence, it might expand its product range and distribution network. This would likely lead to more innovative offerings tailored to diverse consumer needs. With brands like Kwality Wall’s already enjoying a strong presence, the spin-off could further enhance customer experiences.​

What Lies Ahead?

The board has yet to finalize the separation mode, with options like demerging and listing the business or outright sale being considered. The decision is expected by year-end and will set the stage for the ice cream business’s future trajectory. This is an opportunity for HUL to streamline its focus and enhance its presence in trending demand spaces such as health and beauty.​

A Win-Win Strategy?

HUL’s ice cream spin-off exemplifies strategic foresight. While Dalal Street anticipates the financial benefits of this move, Main Street can look forward to a more dynamic and consumer-centric ice cream brand. If executed well, this separation could become the sundae of choice for investors and consumers alike.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

Have you been keeping an eye on the telecom sector lately? If so, you might have noticed some exciting developments. On Tuesday, November 26, Vodafone Idea Ltd (VIL) showcased one such instance as its share price soared by 18.79% to reach an intraday high of ₹8.28, eventually closing 7.88% higher at ₹7.53.

This rally followed reports that the Union Cabinet approved a significant bank guarantee waiver for telecom operators. Let’s explain what happened, why it matters, and how it impacts Vodafone Idea and the broader telecom sector.

The Bank Guarantee Waiver

The Union Cabinet’s decision to waive bank guarantees (BGs) for telecom operators has been viewed as a critical move to ease the sector’s financial burden. Historically, Indian telecom companies have been required to provide BGs for deferred payments on spectrum purchased in auctions.

Although the 2021 telecom reforms eliminated the BG requirement for spectrum acquired from 2022 onwards, obligations for earlier auctions remained. Reports indicate that telecom operators, including Vodafone Idea and Airtel, collectively owe the government over ₹30,000 crore in BGs.

The Cellular Operators Association of India (COAI) had advocated for this change, citing the need to improve cash flow and allow greater investment in network infrastructure. Vodafone Idea, the most financially strained operator, gains the most from this decision.
Source: Livemint

How It Impacts Vodafone Idea Share Price

Vodafone Idea’s financial troubles have been well-documented. The company owes over ₹24,700 crore in BGs and has struggled to meet its obligations in recent months.

1. Missed Payments:
   • On November 1, Vodafone Idea defaulted on a BG payment of approximately ₹350 crore related to spectrum acquired in the 2012 auction.
   • In September, it missed a BG payment exceeding ₹4,600 crore for the spectrum bought in the 2016 auction.
2. Relief from Waiver:
   By waiving BG requirements for pre-2022 spectrum payments, the government is offering Vodafone Idea immediate financial relief. The waiver reduces the company’s liability, giving it more flexibility to seek additional credit from banks.
3. Funding Requirements:
   To sustain its operations and compete with rivals like Bharti Airtel and Reliance Jio, Vodafone Idea is seeking ₹25,000 crore in loans and ₹10,000 crore in BGs or letters of credit. The BG waiver strengthens its case for securing these funds.
4. Performance Metrics:
   Despite its challenges, Vodafone Idea showed signs of recovery in the second fiscal quarter ending September 30:
   • Consolidated loss narrowed to ₹7,176 crore, compared to ₹8,737 crore in the same period last year.
   • Revenue from operations increased to ₹10,932 crore, up from ₹10,716 crore.
   • Average Revenue Per User (ARPU) rose to ₹166, marking a 7.8% sequential increase.

Source: Livemint

Market Reaction and Trading Activity

The news of the BG waiver sparked a significant rally in Vodafone Idea’s share price. The share price rose by 18.79%, reaching an intraday high of ₹8.28 before settling at ₹7.53, a 7.88% gain.

• Volume Spike:
  Trading volume surged, with 18.72 crore shares exchanging hands on the BSE. This figure was substantially higher than the two-week average volume of 4.97 crore shares.
  
• Turnover and Market Cap:
  The day’s turnover on the counter stood at ₹147.92 crore, with Vodafone Idea commanding a market capitalization of ₹52,483.96 crore.

Comparative Outlook with Rivals

While the bank guarantee waiver benefits all telecom operators, Vodafone Idea gains the most due to its higher BG obligations. For comparison:

• Airtel:
  Airtel’s BG payment of ₹2,200 crore for the 2016 auction is due in September 2024.
  
• Reliance Jio:
  Jio’s BG of ₹4,400 crore for the same auction is due after Airtel’s payment.

Airtel and Jio have healthier financial positions and lower outstanding BG obligations than Vodafone Idea.
Source: The Economic Times

A Step Toward Recovery

The telecom sector has been grappling with heavy debts and intense competition, especially after the introduction of Reliance Jio in 2016. Vodafone Idea, the most debt-laden player, has faced significant hurdles in maintaining operations and retaining market share.

• Subscriber Base:
  Vodafone Idea’s total subscriber base stands at 205 million, with 125.9 million 4G subscribers, slightly down from 126.7 million in the previous quarter.
  
• Fundraising Efforts:
  The company recently raised ₹24,000 crore through equity and actively seeks additional funds to support its operational needs and network expansion.

The Broader Implications

The bank guarantee waiver is not just a win for Vodafone Idea but a potential game-changer for the entire telecom industry. By improving cash flow and reducing financial strain, the move encourages greater investment in infrastructure, which is critical for the rollout of advanced technologies like 5G.

For investors, the rally in Vodafone Idea’s stock reflects renewed optimism about its ability to navigate its financial challenges. However, the path to recovery remains complex, requiring sustained efforts to improve operational efficiency and secure funding.

Conclusion

The Union Cabinet’s decision to waive bank guarantees for telecom operators marks a significant shift in policy, offering much-needed relief to the struggling sector. For Vodafone Idea, the move represents a lifeline as it works to stabilize its finances and remain competitive in a challenging market.

As the dust settles, all eyes will be on how the company leverages this relief to strengthen its position and drive long-term growth. The journey ahead is undoubtedly challenging, but the waiver provides a critical foundation for rebuilding.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

The Adani Group, an Indian conglomerate, has recently faced another significant blow. On Thursday, November 21st, shares of all Adani Group companies took a substantial hit, plummeting between 10% and 20% at the market open. This sharp decline was triggered by severe allegations against Gautam Adani and other key executives by the US District Court and the Securities & Exchange Commission (SEC).

What Led to the Adani Stock Crash?

On November 21, U.S. authorities, including the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), unsealed charges against Gautam Adani and other senior executives from the Adani Group. The charges revolve around allegations of bribing Indian government officials between 2020 and 2024 to secure lucrative contracts for solar energy projects. These contracts, valued at over $2 billion in post-tax profits over two decades, were allegedly obtained through unethical practices.

The Allegations Explained

The U.S. indictment accuses Gautam Adani, Sagar Adani, Vneet Jaain, and others of conspiracy to defraud U.S. investors by concealing bribes and misrepresenting their financial dealings. Key allegations include:

• Bribery Amount: The group is accused of paying $250 million to Indian officials.
• Deceptive Practices: The executives reportedly raised over $3 billion in loans and bonds based on falsified information.
• Code Names and Concealment: Investigators revealed that internal communications referred to Adani using code names like “Numero Uno” while others worked to obstruct inquiries into the matter​. Source: BusinessToday

Immediate Market Reactions

The allegations have sent shockwaves through the market, leading to a significant sell-off of Adani Group stocks. Two of the group’s flagship companies, Adani Ports and Adani Enterprises, both listed on the Nifty 50 index, plunged by 10% each. Other group companies, including Adani Green Energy, Adani Energy Solutions, Adani Total Gas, and Adani Power, experienced 15% to 20% decline.

Even companies indirectly linked to the group, such as ACC and Ambuja Cements, saw declines​. The broader market reacted cautiously, with the BSE Sensex dropping by 0.57% to 77,134 points.

Impact Beyond Stock Prices

The $250 million bribery allegations have created ripple effects beyond Adani Group’s share prices. The immediate fallout saw the cancellation of a $600 million dollar bond offering, which the group had planned to raise capital for its renewable energy projects. This decision reflects a cautious approach amid heightened scrutiny from global investors and regulators. 

The bond market, often a gauge of investor sentiment, responded negatively as Adani’s existing U.S. dollar bonds fell sharply during Asian trading hours, indicating reduced confidence in the conglomerate’s financial standing.​

Institutional investors, who were previously optimistic about Adani’s resilience post-Hindenburg allegations, are now re-evaluating their positions. Notably, GQG Partners, one of Adani’s significant backers, released a statement to the Australian Exchange expressing concerns and intent to reassess their portfolios in light of the bribery charges. Such developments could dampen the group’s ability to attract international investments, a vital component of its ambitious expansion plans​. Source: CNBC

A History of Scrutiny

This scandal adds to a growing list of controversies surrounding the Adani Group. In 2023, Hindenburg Research accused the group of stock manipulation, accounting fraud, and improper use of tax havens, calling it “the largest con in corporate history.” While Adani denied the allegations, the fallout wiped out over $111 billion in market capitalization, exposing vulnerabilities in the conglomerate’s corporate governance. 

Despite recovering from that crisis through strategic investments from institutions like GQG Partners, these new allegations reinforce concerns about governance and ethical practices within the organization.​

Regulatory scrutiny of the Adani Group has been consistent, both domestically and internationally. In India, the Securities and Exchange Board of India (SEBI) has investigated allegations of money laundering and financial irregularities, although it has faced criticism for delays in taking decisive action. Internationally, this latest bribery case further underscores challenges for companies operating in emerging markets, where regulatory oversight and transparency often face systemic constraints. Source: India Business News​

What’s Next?

The road ahead for Adani Group is fraught with uncertainties. The U.S. legal system’s involvement, including civil and criminal charges, could lead to prolonged litigation. The allegations of fraud and corruption may compel existing investors to reassess their exposure, potentially leading to further sell-offs or funding challenges. If proven, these charges could result in hefty fines or restrictions, impacting the group’s ability to raise capital in global markets.​

Domestically, the allegations may spur stricter regulatory scrutiny from Indian authorities, which could impose additional compliance requirements on Adani Group’s projects and financing strategies. This would likely increase operational costs and slow its ongoing renewable energy and infrastructure projects, such as its ambitious solar energy ventures​.

In Conclusion,

The group’s next steps will likely involve aggressive legal defenses and public relations campaigns to rebuild investor confidence. However, the dual challenge of legal battles in the U.S. and scrutiny at home will test the group’s resilience and ability to navigate this crisis while maintaining its growth trajectory. For stakeholders, this situation highlights the intricate interplay between global compliance standards and business practices in emerging markets.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Have you been tracking city gas distribution (CGD) stocks? If so, you might have noticed something alarming on November 18, 2024. Shares of key players like Indraprastha Gas Limited (IGL) and Mahanagar Gas Limited (MGL) plummeted by up to 20%, marking one of their sharpest declines in recent times.

This sharp drop follows the Indian government’s decision to cut the allocation of Administered Price Mechanism (APM) gas to CGDs for the second consecutive month.  

Let’s break down what happened, how it impacts the sector, and what this could mean for the companies involved.  

What is APM Gas Allocation, and Why is It Important?

APM natural gas is sourced from old domestic fields and priced significantly lower than gas from new fields or imported liquefied natural gas (LNG). For CGDs, this low-cost gas is critical because it helps them supply compressed natural gas (CNG) and piped natural gas (PNG) at competitive prices to consumers.  

When the government reduces APM gas allocation, these companies must look for costlier alternatives like New Well Gas, High-Pressure, High-Temperature (HPHT) gas, or spot LNG. This inevitably increases input costs, compressing profit margins and putting pressure on gas prices for end consumers.  

The Recent Cuts and Their Magnitude  

In October 2024, the government initially reduced APM gas allocations to CGDs by 20%. This was already a significant blow to their profitability. On November 16, 2024, a second round of cuts was announced:  

– IGL reported an additional 20% cut, bringing the total reduction to 40% in two months.  

– MGL faced an 18% additional reduction, piling on top of the earlier cut.  

– Adani Total Gas also indicated a 13% further reduction.  

The revised allocation levels mean companies need to rely more heavily on higher-priced gas, pushing their costs further. Source: MoneyControl 

Market Reaction  

The government’s decision to cut APM gas allocation sent shockwaves through the market, triggering a sharp sell-off in CGD stocks. IGL’s stock price plunged 20% to ₹325.05, marking a new 52-week low, with average trading volumes surging over tenfold. This decline pushed the stock below its previous low of ₹385.20, recorded on November 20, 2023. 

Similarly, MGL’s stock dropped 18% in intra-day trading to ₹1,075 on the NSE, edging closer to its 52-week low of ₹1,018, last seen on November 23, 2023. Both stocks have corrected significantly from their respective 52-week highs, with IGL down 43% and MGL down 46%. 

Meanwhile, Gujarat Gas shares saw a 9% decline, settling at ₹442.80 in intra-day trading. The widespread sell-off reflects investor concerns over CGD companies’ profitability challenges in light of these allocation cuts.

The Financial Impact on MGL & IGL

Both IGL and MGL have acknowledged the adverse impact on their profitability:  

• IGL’s statement highlighted that it receives a domestic gas allocation for CNG volumes at a government-fixed price of $6.5/MMBtu. With the revised allocation, the company foresees a sharp reduction in margins. IGL is now exploring alternatives to maintain supply stability, including long-term gas contracts and HPHT gas.  

• MGL noted a similar impact, emphasizing that it must bridge the shortfall using higher-priced alternatives. According to the company, the additional costs will necessitate significant price adjustments for CNG and PNG to offset lost margins.  

Brokerages have calculated the potential financial hit for CGD companies. Replacement gas, priced at around $13-14/mmbtu, could lower EBITDA per standard cubic meter (EBITDA/scm) by approximately ₹2.7-3. To recover this, CGD players must increase CNG prices by at least ₹4.5-4.8/kg. 

Source: MoneyControl

Broader Implications for CGDs  

This is not the first time CGDs have faced allocation cuts. The October 2024 reduction triggered heavy selling of CGD stocks, with analysts anticipating further challenges for the sector.  

The sharp pace of recent cuts and a lack of clear communication from policymakers have amplified market pessimism. According to Motilal Oswal Financial Services (MOFSL), CGD companies may need to hike CNG prices by ₹5-6/kg to maintain profitability. However, no action has been taken on price revisions so far, adding to the uncertainty.  

How will it Impact the Investors?  

The current situation has raised critical concerns among investors:  

1. Profitability Outlook: With escalating input costs, CGD margins are under pressure, and there’s no clarity on how or when companies will adjust prices to offset these impacts.  

2. Policy Ambiguity: The government’s lack of communication regarding the rationale for the cuts or any plans for stabilization has unnerved investors.  

3. Valuation Risks: Ongoing challenges could lead to further brokerage downgrades, which would weigh heavily on CGD stock valuations.  

The Road Ahead  

The CGD sector is at a crossroads. Companies struggle to adapt to the revised allocation framework by exploring costlier alternatives and potentially adjusting consumer prices. However, the absence of clear government policies and the sharp pace of cuts have left market participants wary of short-term recovery prospects.  

For now, CGD stocks are likely to remain under pressure, and investors will closely monitor any updates from companies and policymakers on how they plan to address these challenges.  

Conclusion:

Understanding the dynamics of the APM gas allocation cuts reveals that this is a critical moment for the CGD sector. While the immediate impact has been severe, the long-term implications depend on how quickly the companies can adapt and whether the government clarifies its policy direction.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

NIFTY50 and the SENSEX have been plummeting for over a week. The domestic stock market is struggling to stay rooted amidst the selling pressure. Consequently, the indices have slipped into one of the steepest correction phases in the past four years, which led to a fall of around 10%. 

Despite the weak global cues and the declining broader markets, one NSE SME stock grew its share price. Aditya Ultra Steel Limited, a stock listed on NSE SME, rose 8% and marked a rising trend. Read further to know the reasons behind the stock’s resilient positive returns. 

Overview of Aditya Ultra Steel Limited:

Aditya Ultra Steel Pvt. Ltd., part of the Aditya Group of Companies, specializes in manufacturing TMT bars for the construction and infrastructure industries. Incorporated in July 2011 as a Private Limited Company, it is registered in Gujarat at Dadra and Nagar Haveli. The company produces rolled steel products, primarily TMT bars, under the trusted Kamdhenu brand. These bars are designed for construction and infrastructure development projects, ensuring quality and durability.  

Their manufacturing plant is located in Wankaner, Gujarat. It features modern facilities, including advanced testing laboratories, and benefits from excellent transport connectivity to streamline operations. Aditya Ultra Steel focuses on the B2B market, delivering TMT bars tailored to the needs of various construction and infrastructure ventures.

The company manufactures TMT bars under a retail license agreement with the Kamdhenu brand, serving Gujarat’s Kutch and Saurashtra regions. It sells these bars through a distribution network of 73 dealers. To streamline deliveries, the company owns a fleet of 23 vehicles. A significant portion of its revenue, 57%, comes from its top customer, while 98.5% of its total income is generated from Gujarat.

Revenue and Profit Trends of Aditya Ultra Steel Limited:

Due to the expansion of the construction industry, the demand for TMT bars and the need for steel in different infra projects has increased gradually. The TMT bar market is set to see steady growth. Between 2022 and 2027, it is expected to expand at a CAGR of 4.34%. Looking ahead to 2033, the market revenue is predicted to grow faster, with a CAGR of 9.6%. 

The growth prospects and positioning of Aditya Ultra Steel Limited led to the company’s consistent rise in revenue and profits. In 2023-24, the company’s total income rose by 10.73% to Rs.588.59 crore from FY2023’s income of Rs.531.57 crore. 

Aditya Ultra Steel also clocked a profit of Rs.7.68 crore, almost double the net profit (after tax) of FY2023, Rs.3.7 crore. Over the past five years, the company’s profit trend has been as shown-

Apart from its steady finances, the company also came into the limelight due to its recently launched IPO on 16th September 2024 as a part of its expansion plans. Aditya Ultra Steel launched its SME IPO in September 2024 to raise Rs.45.88 crore for expansion, working capital, and corporate needs. The company was listed on the NSE SME on 16th September, with shares priced between Rs.59 and Rs.62. It made a strong debut, listing at Rs.69.60, about 13% higher than its issue price.  

On the same day, the stock touched a peak of Rs.72. However, by November 13, it hit an all-time low of Rs.50. Shortly after, the stock showed some recovery, gaining 8% on November 18, 2024.

Factors Contributing To The Share Price Growth:

1. Aditya Ultra Steel Limited posted good financials for the half-year ending September 2024. The company maintained strong growth during the first half of the financial year 2024-25 (H1FY25). In a press release on November 16, the company reported revenue of Rs.312.39 crore H1FY25. EBITDA stood at Rs.10.50 crore, while net profit reached Rs.5.20 crore.  
2. The company announced in its press release that it is focusing on expansion. This initiative focuses on increasing production capacity, improving operational efficiency, and adopting sustainable practices. The company’s September IPO was a part of this vision.
3. The company is setting up a 5 MW solar power plant in Jasdan, Rajkot, Gujarat. This project, worth Rs.15.35 crore, will have a capacity of 5,000 KWP. It aims to meet the company’s energy needs while promoting sustainability.
4. The company partnered with Maheshwar Ispat Private Limited to manufacture TMT bars from June 2023. In FY24, Maheshwar Ispat produced 10,866 MT of TMT bars, which made up 11.28% of the company’s total production.

Bottomline:

India’s steel and TMT market is growing, driven by rising demand for steel, the advantages of TMT bars, and the expanding global industry. Aditya Ultra Steel Limited is in a strong position to benefit from this growth and plans to expand in the coming years. However, as with any listed company, investing in it comes with risks, especially since it is a small-cap company. 

So, if you’re considering investing in Aditya Ultra Steel Limited, make sure to do thorough research on both the industry and the company’s fundamentals before making any decisions.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Toyota Kirloskar Motor, Toyota’s Indian subsidiary, had a remarkable year, with profits reaching levels typically achieved over a decade. Sales rose by 66% year-on-year, and operating profit surged to nearly Rs. 6,000 crore—a 2.5-fold increase. 

This impressive growth highlights Toyota’s ability to align with market demand and optimize its operations, making FY24 a major milestone in the company’s journey in India. Here’s a look at the main factors driving this impressive financial achievement.

*All figures are in crores.

Rising Demand for SUVs and Premium Vehicles

In recent years, Indian consumer preferences have shifted significantly toward SUVs and premium vehicles, categories where Toyota has a strong presence. Models like the Toyota Fortuner, Innova Crysta, and new entrants in the hybrid segment have resonated well with Indian buyers seeking high-performance vehicles.

Key Points:

• Toyota’s SUV models are popular for their durability and performance, aligning with consumer preferences.
• Premium vehicles offer higher margins, contributing to a substantial increase in profits.
• Introducing hybrid models has positioned Toyota as an innovative and environmentally conscious brand.

4 Key Factors Behind Toyota’s India Business Success

Established Models Drive Revenue

Toyota’s classics, like the Innova and Fortuner, continue to drive substantial revenue, and regular price hikes push their ex-showroom prices higher. 

Key points:

• Increased Prices: Toyota’s popular models, the Innova and Fortuner, have seen substantial price increases since 2018, pushing their price ranges higher and boosting revenue.
• Sales Growth: Domestic sales of the Innova and Fortuner grew by 32% and 56%, respectively, from FY18 to FY24, reflecting sustained demand.
• Revenue Share: These two models make up around two-thirds of Toyota’s revenue in India, with the rest coming from rebadged Suzuki models.
• Cost Efficiency: With costs rising slower than revenue, Toyota’s revenue from these models has fueled the company’s impressive profit growth.

Source: ET Prime

Expanding with Suzuki Partnerships

Toyota’s collaboration with Suzuki has brought rebadged Suzuki models, including the Toyota Glanza, to the Indian market. These models have gained popularity and even outsold Toyota’s traditional models in recent months, enabling Toyota to reach a broader audience.

Key points:

• Strategic Partnership with Suzuki: Toyota’s collaboration with Suzuki aligns with its “Make in India” goals, particularly in the high-volume and electrification segments. Together, they hold a 55% market share in India.
• Expanded Product Line: Since rebadging the Maruti Suzuki Baleno as the Toyota Glanza in 2019, Toyota has introduced four rebadged models. These vehicles now outsell Toyota’s original models, making the brand more accessible and affordable.
• Price Positioning and Profitability: Rebadged Suzuki models, priced between Rs.7 lakh and Rs.20 lakh, complement Toyota’s higher-end models. Toyota’s premium image lets it charge a slight premium on these models, enhancing profits for both brands.
• Enhanced Dealer Offerings: The alliance broadened dealer offerings, allowing them to cater to a wider customer base, from compact cars to luxury models, helping retain lifelong customers within the Toyota lineup.
• Attracting New Customer Demographics: The rebadged models appeal to younger buyers seeking affordable, sporty options with Toyota’s brand reputation. This has added new segments to Toyota’s customer base.
• Rapid Product Expansion: Toyota quickly expanded its lineup without high R&D costs, capturing more market share and boosting sales momentum in India.

Success with Hybrid Technology

Hybrid technology is also a major factor in Toyota’s success. Models like the Urban Cruiser Hyryder, which feature hybrid solid options, cater to India’s growing interest in eco-friendly and fuel-efficient vehicles. 

Key Points:

• Shift in Consumer Perception: Toyota has successfully changed how Indian customers view hybrid vehicles, starting with the Innova petrol hybrid introduced in December 2022.
• Strategic Product Transition: Toyota paused sales of the diesel Innova Crysta for three months, encouraging customers to consider the new hybrid Innova. As a result, hybrids, such as the Urban Cruiser Hyryder, gained substantial traction, making up 23% of Toyota’s FY25 sales.
• Meeting Emission Goals and Customer Demand: Hybrids align with Toyota’s future emission strategy and prove that Indian customers are willing to pay for advanced technology. A hybrid Fortuner is also planned.
• New Market Positioning: The Innova Hycross has shifted its perception from a fleet to a premium personal vehicle, allowing Toyota to capture new customers. This repositioning also increases profitability, as the top hybrid model commands a higher price than the diesel variant.

Expanding Market Presence

Toyota has increased its distribution network, especially in tier-III and tier-IV towns, as well as rural areas. This expanded footprint has boosted Toyota’s visibility and consumer trust. 

Key Points:

• Increased Distribution Network: Toyota has significantly expanded its showroom and service center presence in tier-III and tier-IV towns and rural areas, boosting consumer confidence in the brand.
• Rural Market Strategy: While Toyota has targeted rural markets for some time, this focus has grown stronger in the last 2-3 years, supported by dealer feedback.
• Promotional Discounts: During the festive season, the company offered discounts on its vehicles, including Rs.30,000 off on the Fortuner and Rs.100,000 off on certain Innova Crysta variants, marking a shift from its premium brand positioning.
• Alliance Synergies Driving Growth: The Toyota-Suzuki partnership contributed to a 37% growth in Toyota’s dealership network from FY20 to FY24, with increased competition in the utility vehicle market helping both brands thrive. Source: ET Prime

Several other factors contributed to Toyota’s business success. Let’s examine these factors more closely.

Benefiting from Government Policies and Incentives

India has introduced various incentives to foster the adoption of cleaner and more sustainable vehicles. Toyota has adeptly positioned itself to benefit from these government initiatives, making it a preferred choice among environmentally conscious consumers.

Key Points:

• Government subsidies on hybrid vehicles reduce costs for consumers, driving sales.
• Policies promoting cleaner technology favor Toyota’s hybrid models.
• Regulatory support enhances Toyota’s profitability by reducing production and tax burdens.

Lean and Cost-Effective Operations

It well-known lean manufacturing system, the Toyota Production System (TPS), is vital in keeping operational costs low and efficiency high. By continuously refining its processes, Toyota maintains high-quality standards while controlling expenses, directly impacting profitability.

Key Points:

• TPS minimizes waste, optimizes inventory, and improves efficiency.
• Cost-effective operations increase Toyota’s profit margins without compromising quality.
• Streamlined production processes help Toyota meet rising demand quickly and efficiently.

Strong Brand Equity and Customer Loyalty

The company’s longstanding reputation for reliability and quality has built a loyal customer base in India. This brand equity ensures repeat customers and contributes to higher resale values for Toyota vehicles, reinforcing the brand’s desirability and driving more sales.

Key Points:

• Strong brand loyalty results in repeat purchases and customer referrals.
• The reputation for durability enhances the long-term value of its vehicles.
• High resale values and quality assurance attract new and loyal customers.

Impact of Global Supply Chain Constraints on Competitors

The company’s robust supply chain management has allowed it to mitigate challenges that affected other automakers. By maintaining close ties with suppliers and adhering to just-in-time (JIT) production, Toyota could deliver vehicles without major delays, capturing market share lost by competitors facing supply issues.

Key Points:

• Efficient supply chain management helped Toyota avoid production delays.
• JIT production minimizes inventory costs and keeps operations agile.
• Toyota capitalized on supply disruptions among competitors to capture additional market share.

What Lies Ahead

Toyota’s recent success demonstrates its adaptability and understanding of the Indian market. Looking forward, Toyota plans to continue investing in hybrid technology, expand its local manufacturing capacity, and introduce more models that cater to evolving Indian consumer preferences.

Toyota’s Upcoming Product Launches in India

• Fortuner’s Strong-Hybrid Powertrain (2025)—The Fortuner with a strong-hybrid powertrain is scheduled to be launched in early 2025.
• 2026 Milestones for Toyota – The e-Vitara, a rebadged Suzuki product, is expected to arrive in India by early CY2026.
• Other Expected Launches (2025-2026) include the Corolla Cross SUV, a smaller Fortuner hybrid, and the Landcruiser Prado. Source: ET Prime

Toyota’s Research and Market Strategy

• Extensive Pre-launch Research – Toyota conducts in-depth research to ensure new products are produced in manageable volumes and meet customer demands.
• Challenges with Previous Launches – Despite this approach, past models like the Etios (2010) and Yaris (2018) struggled in the Indian market.
• Reliance on Established Models—Toyota has relied on successful, older models like the Innova (2005) and Fortuner (2008).

Conclusion

Toyota’s ability to earn ten years’ worth of profits in just one year shows its smart strategy, flexibility with market trends, and focus on efficiency. By meeting India’s rising demand for SUVs and hybrids, improving local production, and building strong brand loyalty, Toyota has set a high standard for profitability in the Indian auto market. 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

Imagine being one of the 500 employees whose lives are about to change forever as Swiggy, India’s leading food delivery giant, launches its initial public offering (IPO). With a public listing set to unlock ₹9,000 crore worth of employee stock option plans (ESOPs), Swiggy is poised to propel these employees into the ‘crorepati’ club, creating one of the largest wealth generation events in India’s startup ecosystem.

With a large ESOP pool, Swiggy’s IPO has attracted significant attention. The Bengaluru-based company has made a name for itself in the food delivery industry and now stands as a testament to the financial opportunities for employees in high-growth tech companies. 

What are ESOPs

ESOPs, or Employee Stock Option Plans, are powerful tools for companies to compensate employees by offering them a stake in the company. Instead of or in addition to a traditional salary, employees are granted options to buy shares in the company at a set price, often below the market value. 

These options can later be exercised, allowing employees to convert them into shares. Employees then can either hold onto these shares, hoping for a further increase in value, or sell them, realizing their gains.

ESOPs at Swiggy

Swiggy has rolled out three major ESOP plans, initiated in 2015, 2021, and 2024, totaling nearly 230 million shares. Of these, around 9 million options have already been exercised, leaving a substantial portion still available for employees to convert into shares. 

The most recent ESOP grants included significant allocations to Swiggy’s leadership team, with close to ₹2,600 crore going to top executives like CEO Sriharsha Majety, CTO Madhusudhan Rao, and other senior company figures.

Name	Designation	ESOP Liquidity  (in Cr.)
Sriharsha Majety	Cofounder & Group CEO	1894.11
Amitesh Jha	CEO Instamart	126.41
Rohit Kapoor	CEO Food Marketplace	92.63
Rahul Bothra	Chief Financial Officer	81.73
Madhusudan Rao	Chief Technology Officer	81.73
Girish Menon	Chief Human Resources Officer	81.73
Phani Kishan	Cofounder and Chief Growth Officer	81.73
Nandan Reddy	Cofounder and Head of Innovation	81.73
Ashwath Swaminathan	Ex-chief Growth and Marketing Officer	54.48

In addition to this year’s IPO, Swiggy has previously facilitated liquidity for employees by allowing them to cash out some of their ESOPs. For instance, a buyback of ESOPs in July 2023 generated over ₹500 crore in liquidity for employees.

Swiggy’s IPO and the Market Impact

Swiggy’s IPO, valued at around ₹11,300 crore, is the biggest public offering by an Indian tech company since Paytm’s IPO in 2021. Institutional investors have shown a robust interest, with the IPO subscribed 3.59 times. Swiggy’s strong market performance has added to the enthusiasm, making it one of the most awaited listings of the year.

This enthusiasm isn’t surprising. Swiggy’s major rival, Zomato, made waves in the industry when it went public in July 2021, creating 18 dollar millionaires and minting wealth for numerous employees. Similarly, Paytm’s 2021 IPO led to financial gains for around 350 employees, many of whom became crorepatis overnight. Swiggy continues this trend in the consumer internet sector, solidifying its role as a key player in India’s tech ecosystem. Source: Economic Times

The Financial Mechanics

Employees converting their ESOPs to shares are liable to pay tax on the difference between Swiggy’s current share price and the price at which their options were granted. Swiggy has partnered with several financial platforms to ease this conversion process and support employees with the necessary financing.

Lock-in Exemptions

One unique advantage Swiggy employees have is an exemption from the mandatory one-year lock-in period. In July 2023, the Securities and Exchange Board of India (SEBI) granted Swiggy employees the ability to sell shares just a month after the IPO. This early liquidity option significantly boosts employees’ financial flexibility, allowing them to capitalize on their newly acquired wealth sooner than expected.

Swiggy’s Wealth Creation and the Startup Ecosystem

The economic impact of Swiggy’s ESOP liquidity event is expected to extend beyond individual wealth creation. Employees who gain substantial wealth through ESOPs often explore new ventures, invest in property, or build assets, potentially stimulating local economies. The wealth generated from Swiggy’s IPO could ripple out, with some employees even choosing to establish their startups, further enriching India’s entrepreneurial ecosystem.

Other consumer internet companies have also conducted significant ESOP buybacks and IPO events in recent years. Flipkart, a leader in India’s e-commerce sector, has conducted multiple ESOP buybacks, amounting to a total payout of $1.5 billion over several years. In 2023 alone, Flipkart paid out $700 million to its employees following its separation from PhonePe. Razorpay, another prominent Indian startup, conducted four ESOP buybacks between 2018 and 2022, generating over $90 million for 1,900 employees.

Companies such as Meesho, Urban Company, and Purplle have joined this trend by facilitating ESOP buybacks for their employees, enhancing wealth creation opportunities across the startup sector. The increase in ESOP-based wealth generation marks a pivotal shift in the Indian job market, where employees are not just earning salaries but are building substantial financial assets.

A Transformative Moment for Swiggy and Its Employees

As Swiggy goes public, nearly 5,000 current and former employees stand to benefit from its ₹9,000 crore ESOP pool, marking one of the largest wealth creation events in India’s startup history. The IPO provides a financial breakthrough for around 500 employees, who will join the ranks of the country’s ‘crorepatis.’ 

The journey of Swiggy’s employees highlights the transformative power of ESOPs as startups and established companies continue to leverage stock options to attract, retain, and reward talent.

Conclusion

Swiggy’s IPO is a significant step for the company and a momentous event for its employees, who have been instrumental in driving its success. As these employees stand on the brink of newfound financial freedom, Swiggy’s IPO is a powerful reminder of the opportunities in India’s vibrant and fast-evolving startup ecosystem.

Related Posts

• 
  3 IPOs Aim for ₹1,160 Cr and 4 Including Swiggy Up for Listing This Week
• 
  ₹11,300 cr Swiggy IPO Launches Tomorrow! Key Details, GMP Insights & SWOT Analysis

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The equity markets have seen a significant shift recently, with small-cap and mid-cap stocks drawing substantial investor interest. As valuations in these sectors surge, many investors reconsider blue-chip or large-cap stocks, often viewed as more stable and resilient. This article explores why bluechip stocks may be set for a resurgence and how current market conditions could favor these well-established companies.

So far in 2024, the Nifty 50 represents large-cap companies and has provided investors with around 12% returns. In comparison, the Nifty Midcap 100 and Nifty Smallcap 250 have delivered 22% and 25% returns, respectively, based on market data.

The Nifty Midcap 100’s current price-to-earnings (PE) ratio is 44.19, above its five-year average of 37.36, while the Nifty Smallcap 250 stands at 33.89, higher than its average of 29.05. In contrast, the Nifty 50’s PE ratio 23.32 sits just below its five-year average of 24.68.

It is important to note that many mid-cap and small-cap stocks now hold high valuations, which could limit their future return potential, according to industry experts. Over half of mid-cap index stocks trade with a price-to-earnings (PE) ratio above 40, suggesting potential overvaluation. 

Market experts increasingly point to bluechip stocks as valuations in small- and mid-cap sectors reach elevated levels. In the face of economic uncertainty, large-cap stocks present a more secure choice for cautious investors. However, this shift does not mean small- and mid-caps are losing their appeal entirely.

Source: Mint

3 Reasons Smallcap and Midcap Markets are Overheating

Record High Valuations:

Small-cap and mid-cap stocks have seen a significant run-up in prices. With high valuations, these stocks may now be trading above their fundamental value, raising concerns about a potential market correction.

Increased Retail Investor Interest:

Retail investors have flocked to smaller stocks for quick gains, increasing prices even further. While this trend is beneficial in the short term, it has created an imbalance in valuations, with some stocks priced much higher than their actual worth.

Vulnerability to Economic Shifts:

Small and mid-cap companies are generally more sensitive to economic shifts, making them riskier in the face of economic slowdowns or inflationary pressures. In contrast, large-cap companies often have diverse revenue streams and global reach, enabling them to withstand economic turbulence better.

The Appeal of Bluechip Stocks in an Overheated Market

Stability and Reliability:

Blue-chip stocks represent large, established companies with proven track records. They tend to be less volatile than small-cap and mid-cap stocks, making them appealing during market uncertainties.

Strong Fundamentals and Valuations:

Unlike their smaller counterparts, many blue-chip stocks are trading at more reasonable valuations. With consistent earnings, robust business models, and often dividend payouts, these stocks offer a safer bet for long-term investors looking for sustained growth.

Defensive Characteristics:

Blue-chip stocks typically can perform well even during economic downturns. Companies in sectors like consumer goods, healthcare, and utilities often remain resilient as they provide essential services that consumers continue to need, regardless of economic conditions.

3 Key Factors Contributing to the Bluechip Comeback

1. Shift in Investor Sentiment:

As the small-cap and mid-cap markets reach high valuations, some investors shift their focus to blue-chip stocks for better value and reduced risk. This shift in sentiment could drive more capital into large-cap stocks.

2. Institutional Investor Interest:

Large institutional investors, such as mutual funds and pension funds, prefer blue-chip stocks for their stability. The increased demand for blue-chip stocks could boost their prices as these investors rebalance their portfolios.

3. Potential Regulatory Concerns:

With high retail involvement and increased volatility in smaller stocks, regulatory measures to stabilize the market could be considered. Such measures could direct investor attention back to the blue-chip sector, less prone to speculative risks.

Key Sectors in the Bluechip Category Poised for Growth

1. Technology and Communication:

With continued demand for digital services, large-cap tech firms remain promising for long-term growth. These companies have significant resources to innovate and adapt to changing market needs.

2. Financial Services:

Banks and financial institutions, which form a substantial part of the blue-chip segment, are seeing renewed interest due to their resilience. As economic activity picks up, these companies are likely to benefit from higher loan demand and fee income.

3. Consumer Goods:

Firms that produce essential consumer goods, often considered defensive stocks, have shown steady performance. The demand for these products remains consistent, regardless of economic fluctuations, making them popular among risk-averse investors.

Risks and Considerations in Reinvesting in Bluechips

Slower Growth Potential:

Blue-chip stocks generally offer slower growth than small-cap and mid-cap stocks, which may not appeal to aggressive investors looking for high returns in a short period.

Sector-Specific Risks:

While blue-chip companies are more stable overall, fluctuating commodity prices and regulatory changes may affect certain sectors, such as energy. Investors should consider sectoral factors before investing.

Interest Rate Sensitivity:

As interest rates rise, some blue-chip companies, especially those with significant debt, may experience increased costs. Rising rates can also affect the discount rate for future cash flows, impacting valuations.

Tips for Investing in Bluechip Stocks

1. Prioritize Diversification:

A diversified portfolio of blue-chip stocks across different sectors can provide stability and growth, minimizing sector-specific risks.

2. Focus on Dividend-Paying Stocks:

Many blue-chip stocks offer dividends, providing an additional income stream. Dividend-paying stocks are often more stable and appeal to investors seeking regular returns.

3. Evaluate Long-Term Fundamentals:

Blue-chip stocks are generally more suitable for long-term investments. Focus on companies with strong fundamentals, steady earnings growth, and sound management practices.

Conclusion 

Overheating small-cap and mid-cap markets have raised concerns about a potential correction, prompting investors to consider blue-chip stocks a safer alternative. With solid fundamentals, defensive qualities, and resilience against economic downturns, blue-chip stocks offer stability and growth potential in a turbulent market. 

As investors reevaluate their portfolios, bluechips appear poised for a comeback. They provide a more balanced approach to long-term wealth creation.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQ

Hindalco, a leading player in the metals sector, recently saw its shares drop by 6% after its U.S.-based subsidiary Novelis reported an 18%  decline in second-quarter profits. This downturn reflects Novelis’s various operational challenges, significantly impacting Hindalco’s overall valuation due to its reliance on the subsidiary for international operations.

Overview of Hindalco’s Business Structure

Hindalco Industries Limited is part of the Aditya Birla Group, a prominent aluminum and copper manufacturing company. It operates domestically and internationally, with Novelis being one of its major assets in the global market. Novelis specializes in rolled aluminum products and has a strong foothold in North America, making it a key contributor to Hindalco’s revenue and profit structure. 

Investors closely monitor Novelis’s performance, which significantly influences Hindalco’s consolidated financial outcomes.

Q2 Performance Highlights for Novelis

Novelis reported an 18% decline in profit for Q2, highlighting challenges in its operational environment. Here are some key aspects of Novelis’ recent performance:

• The company faced a demand reduction, leading to lower revenue. It reported an 18% decline in net income, totaling $128 million for the September quarter of 2024-25.
• The income decline is attributed to a $61 million charge due to production interruptions at the Sierre plant, higher restructuring and impairment expenses, and Weaker operating performance.
• Net sales for Q2 increased by 4.5%, reaching $4,295 million, compared to $4,107 million in the same quarter last year.
• EBITDA per tonne stood at $489/t, with adjusted EBITDA at $462 million for the quarter.
• The decrease in EBITDA was largely due to higher aluminum scrap prices, an unfavorable product mix, and flood-related disruptions at the Sierre plant.

Additional factors contributed to a substantial dip in Novelis’ profitability, triggering concern among Hindalco’s investors.

Stock Performance Over the Past Year

Hindalco shares have gained approximately 37% over the last 12 months, outperforming the Nifty 50 index, which rose by 26% over the same period.

Market Reaction to Hindalco’s Stock

Following Novelis’ Q2 results, Hindalco’s shares fell by 6%, reflecting investor apprehension over the company’s profitability and growth trajectory. This reaction is rooted in Hindalco’s dependence on Novelis as a revenue stream, and the profit contraction in the subsidiary could have a prolonged impact on Hindalco’s financial stability.

The market response can be attributed to several underlying concerns:

1. Reliance on Novelis for Revenue: Investors recognize that Hindalco’s performance is highly correlated with Novelis. Any adverse performance in Novelis quickly translates into diminished earnings for Hindalco.
2. Impact on Earnings per Share (EPS): Lower profits from Novelis are expected to affect Hindalco’s EPS in upcoming quarters, making it less attractive to investors focused on growth and dividend income.
3. Future Growth Concerns: Given Novelis’ challenges, the market is wary of Hindalco’s short-term growth prospects, which could impact its valuation.

Potential Impact on Hindalco’s Financial Health

Novelis’ performance dip presents several implications for Hindalco’s financial health and strategic direction. Some of the potential effects include:

• Short-Term Earnings Volatility: Hindalco might experience volatility in its earnings, especially if Novelis continues to face operational and market challenges. The profit margins could remain pressured, influencing Hindalco’s overall profitability.
• Need for Diversification: The dependence on Novelis may prompt Hindalco to explore additional growth opportunities in other regions or sectors to minimize the impact of Novelis’ performance on its consolidated results.
• Investor Sentiment and Stock Valuation: Continued weakness in Novelis’ results might lead to a conservative outlook from analysts, affecting Hindalco’s stock rating and valuation multiples in the near term.

Strategic Response from Hindalco and Novelis

To counteract Novelis’s challenges, Hindalco may implement several strategies to restore investor confidence and improve profitability. Here are potential steps that Hindalco and Novelis could consider:

1. Operational Efficiency Initiatives: Both companies may optimize operational efficiency to reduce costs. This could involve streamlining supply chain processes and adopting energy-efficient technologies to lower production expenses.
2. Hedging Against Input Costs: Hindalco might use hedging strategies to manage raw material and energy cost fluctuations, which would provide some protection against price volatility.
3. Product Portfolio Diversification: By expanding into other product lines or enhancing existing ones, Novelis could mitigate its reliance on any one sector, like automotive, which has shown instability.
4. Expansion into Emerging Markets: Hindalco and Novelis might look toward emerging markets, where demand for aluminum is expected to grow due to infrastructure projects and industrialization. These markets could offer new revenue streams and counterbalance challenges in North America.

Outlook for Hindalco Industries

Despite the current setback, the company has a track record of adapting to market fluctuations. In the long term, Hindalco could recover if it manages to leverage growth opportunities, particularly as the demand for sustainable and lightweight materials grows across industries. Here’s a look at the factors that could support Hindalco’s future growth:

• Sustainability Initiatives: Both companies invest heavily in sustainable manufacturing practices, including recycling initiatives. This focus aligns well with the global shift toward sustainability, potentially attracting new clients in the eco-conscious markets.
• Focus on Premium Products: Novelis can emphasize premium offerings like high-strength aluminum alloys, which are in demand in aerospace and electric vehicle (EV) manufacturing. These premium products command higher margins and are less susceptible to price wars.
• Growth in Electric Vehicles (EVs): The ongoing shift to electric vehicles presents a substantial opportunity for aluminum manufacturers. Lightweight materials are essential for enhancing EV efficiency, and Novelis could capture this growing demand by strengthening its EV sector partnerships.

Conclusion

The recent 6% drop in Hindalco’s share price underscores Novelis’ financial performance’s impact on the parent company. While challenges persist, Hindalco’s proactive strategies and strong industry position could help it navigate this period of volatility. By focusing on operational efficiencies, diversifying its product offerings, and expanding into emerging markets, Hindalco could strengthen its foundation for future growth.

Investors may need to monitor the company’s forthcoming quarters to see if these strategies positively impact its financial health. As the global economic landscape evolves, Hindalco’s ability to adapt and leverage new opportunities will determine its long-term stability and attractiveness as an investment option.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

The pharmaceutical industry is no stranger to long-term investments in research and development (R&D). One of India’s prominent pharmaceutical companies, Wockhardt, witnessed an unprecedented stock surge, climbing fivefold due to the success of a unique molecule developed over 25 years. 

In July, Wockhardt’s new drug Zaynich, an antibiotic targeting highly resistant infections, helped treat a challenging infection in a young cancer patient in California. News of Zaynich’s successful trials is already boosting Wockhardt’s stock price, with some investors making long-term bets on the company.

Wockhardt’s shares have struggled, underperforming the Nifty 50 by over 150% over the past decade, impacting its reputation as an investment. However, its recent breakthrough antibiotic drug has sparked interest from mutual funds and prominent investors. 

Mutual funds and high-net-worth investors like Rekha Jhunjhunwala were among the first to spot the opportunity. The stock has surged 5x in a year to over INR 1,100 per share, yet the company’s financial struggles persist. It has reported losses for 11 straight quarters, its return ratios have declined for over a decade, and its sales growth remains highly inconsistent.

For Wockhardt chairman Habil Khorakiwala, it was a wait spanning over two decades. His first antibiotic, WCK771, began its journey in 2000, with Zaynich standing out as a promising lead that his scientists were hopeful about.

What is Zaynich

It is an antibiotic designed to combat bacterial infections that have developed significant resistance to other treatments. Known as WCK5222 or Zaynich, this unassuming drug has captured the attention of investors. Wockhardt now has an opportunity to reclaim its former glory.

WCK 5222: Zaynich

Indication Potential -Complicated Urinary Tract Infections -Complicated Intra-abdominal InfectionsBlood Stream Infections	WCK 5222 -Patents: Compound & Composition patent, granted in key markets. -Qualified Infectious Disease Product status granted by USFDA -Key opinion leaders from US, EU & China.
Treatment Regimen -Hospital Injectible -TID for 7-14 Days	WCK 5222 -Patents: Compound & Composition patent, granted in key markets. -Qualified Infectious Disease Product status granted by USFDA -Key opinion leaders from the US, EU & China.

The Financial Impact: Why Wockhardt’s Stock Surged

• Stock Market Reaction: Wockhardt’s stock performance reflected strong investor sentiment, rallying five times its previous value as news of the molecule’s success spread. This reaction highlights the market’s confidence in the drug’s revenue potential.
• Attraction for Institutional Investors: A breakthrough drug with regulatory approval attracts institutional investors. This spike indicates heightened interest, setting Wockhardt apart from its competitors in the pharmaceutical sector.
• Regulatory Milestones: According to reports, Wockhardt plans to secure Indian regulatory approval for Zaynich by March next year. Phase three clinical trials are expected to conclude by early 2026, and a global launch could follow by mid-2026.
• Breakthrough in Antibiotic Innovation: Zaynich combines Wockhardt’s drug, zidebactam, with cefepime, a Bristol-Myers Squibb antibiotic, and is one of the rare treatments effective against various difficult-to-treat pathogens discovered in the last five decades.
• A Timely Solution to Antibiotic Resistance: In a world where antibiotic misuse is rampant, fatal infections from resistant pathogens are becoming a leading cause of death. Zaynich provides critical hope, especially for patients facing severe infections after complex surgeries.
• Expansive Market Opportunity: According to Khorakiwala, this drug could benefit approximately 700,000 patients in the US alone, and it has an even larger market in India, impacting over 1.1 million. Source: Economic Times

Challenges and Future Prospects

Wockhardt is conducting a global phase three clinical study for Zaynich, indicating advanced human testing across multiple countries. Successful completion of this study could lead to registrations and marketing authorizations within the next two years.

Pricing Strategy

• When Zaynich becomes available in India, Wockhardt plans to price it at a 75%—80% discount compared to US rates, which range from USD 8,000 to USD 10,000 per treatment course.

Impact of Antimicrobial Resistance (AMR)

• In the US, there are over 2.8 million AMR cases annually, resulting in approximately 48,000 deaths.
• Wockhardt projects that by 2050, AMRs could cause over 8 million deaths worldwide and impact the global economy by USD 100 trillion.

Market Potential

• Zaynich represents a significant advancement in managing bacterial infections, particularly against carbapenem-resistant strains.
• Competitors include Pfizer’s Avycaz, Zavicefta, and Shionogi’s Fetroja.
• The global market for these drugs is expected to reach USD 1 billion, with potential sales for Zaynich projected at around USD 500 million in a few years.

Cautions and Considerations

• Zaynich will not be a first-line treatment due to the need for careful assessment to avoid misuse and resistance.
• Challenges may arise in achieving rapid adoption among doctors. Experts emphasize the importance of effective marketing and distribution for Wockhardt to capitalize on its research investments.
• Alliances with global players are recommended for better licensing and negotiation outcomes.

Competition Landscape

Orchid Pharma achieved a breakthrough with enmetazobactam (Exblifep) earlier this year, receiving FDA approval for complicated urinary tract infections. Companies are focusing on promising molecules to inhibit beta-lactamases, reducing the frequency of AMR development.

Bugworks is another player with promising antibiotic research, particularly with drug BWC0977, which is effective against various life-threatening infections. Other companies like Rempex Pharmaceuticals and Merck are also pursuing new treatment options.

Wockhardt’s Opportunity

Wockhardt faces significant opportunities in the market, but these come with considerable risks. The company’s track record in risk management has been inconsistent.

Historical Challenges

• In the early 2000s, Wockhardt accumulated debt by spending USD 453 million on three international acquisitions.
• The company suffered losses of INR 555 crore from foreign exchange and derivatives during the global financial crisis of 2008, which severely impacted its economic health.
• By 2012, Wockhardt resolved its debt issues through loan restructuring and the sale of hospital assets. It experienced a brief period of recovery, with sales exceeding INR 5,500 crore in FY13.

Recent Struggles

• Following this peak, Wockhardt entered a downward trend, with all seven manufacturing plants facing scrutiny from US regulatory authorities between 2014 and 2019.
• Additional debt restructuring and partial monetization of non-core businesses have kept the company afloat during these challenging years.
• In 2020, Wockhardt sold part of its domestic branded business, including a manufacturing plant in Baddi, Himachal Pradesh, to Dr. Reddy’s for INR 1,850 crore.

Current Risk-Reward Assessment

• With Wockhardt’s stock price already reflecting expectations of potential sales from Zaynich, the current risk-reward ratio appears unfavorable, indicating limited upside potential.
• The company must improve profitability before Zaynich’s launch to justify the current market valuation.

Source: Economic Times

Conclusion

The 25-year journey to develop this molecule speaks volumes about the dedication, innovation, and resilience required to thrive in the pharmaceutical industry. Wockhardt’s success could catalyze more investment in patient-centered R&D, reshaping market dynamics and inspiring confidence in long-term scientific pursuits.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

Have you been tracking the movement of Reliance Industries Ltd (RIL) shares? Monday marked a significant moment as RIL shares turned ex-bonus for its sixth and largest bonus issue in Indian history—a 1:1 issue that has doubled shareholders’ stakes. What does this mean for investors, and how has the share price shifted following this major development?

The Bonus Issue and Its Impact on Shareholders

Reliance Industries recently declared a 1:1 bonus issue ahead of its Annual General Meeting (AGM), granting shareholders one bonus share for each share held. This latest bonus issue, the sixth in RIL’s history, is a milestone for the company and its investors. With each bonus issue, shareholders effectively double their holdings without making additional investments. Such an issue, especially on this scale, can profoundly affect stock liquidity, investor sentiment, and long-term market performance.

When RIL shares opened on Monday morning, they were adjusted for the bonus issue, reflecting a starting price of Rs 1,338—a 49.61% drop from Friday’s close of Rs 2,655.45. However, this apparent drop was only an adjustment, with the share price showing a modest gain of 0.77% on an adjusted basis.

How a Bonus Issue Affects Share Price and Shareholding

In financial terms, a bonus issue increases the number of outstanding shares in the market. As a result, the stock price adjusts downward in proportion to the bonus share ratio to keep the company’s overall valuation the same. This adjustment can make shares appear cheaper, often enhancing liquidity and opening doors for more investors. However, it also impacts the company’s free reserves and surplus, as they are adjusted to account for the additional shares.

This bonus issue was RIL’s first since 2017 when the stock was priced at Rs 725.65. Since then, RIL’s stock has surged by nearly 270%, delivering robust returns for its investors. This remarkable growth has led the stock to its latest adjusted value of Rs 2,655.45 just before Monday’s ex-bonus trading session.

Key Historical Context: RIL’s Bonus Issuance Track Record

Reliance Industries has a history of issuing bonuses at strategic points. The company’s previous bonus issuance was in 2009, when shares were issued in the same 1:1 ratio, and the stock turned ex-date on November 26 of that year. Notably, the 1997 issuance was also a 1:1 issue. Before this, RIL offered bonuses in the 6:10 ratio in 1983 and the 3:5 ratio in 1980. Each issuance has played a role in elevating the stock’s liquidity and rewarding shareholders, helping Reliance grow into one of India’s most valuable companies.

Bonus History of Reliance Industries Ltd.
Announcement Date	Bonus Ratio	Record Date	Ex-Bonus Date
05-09-2024	1:1	28-10-2024	28-10-2024
21-07-2017	1:1	09-09-2017	07-09-2017
07-10-2009	1:1	27-11-2009	26-11-2009
13-09-1997	1:1	29-11-1997	27-10-1997
28-10-1983	3:5	30-11–0001

Moreover, RIL has proactively offered rights issues, with five offerings, the latest one issued in May 2020. In a strategic move in July 2023, RIL completed the demerger of Jio Financial Services Ltd, creating additional value streams within its expanding corporate structure.

RIL’s Market Influence Following the Ex-Bonus Adjustment

RIL’s influence on the broader Nifty 50 index cannot be overstated. As shares adjusted for the 1:1 bonus on Monday, Reliance’s stock was a key contributor to the index’s gains, which rebounded after five consecutive days of losses. Monday’s session saw RIL add approximately 20 points to the Nifty, indicating its significant weight on the index and broader market sentiment.

Despite recent market headwinds, RIL’s stock rebounded from oversold levels on Friday. The Relative Strength Index (RSI) dipped to 29.5, indicating that the stock was near an oversold threshold (an RSI below 30 generally suggests this status). By Monday, the stock had rallied, trading at Rs 1,349—up by 1.7% from its adjusted opening price, showing resilience and renewed investor confidence.

Broader Market Trends and RIL Share’s Position

The past month has been challenging for the Indian stock market, with BSE-listed companies losing market capitalization worth ₹41 lakh crore since September 27, when the Nifty reached a record high of 26,277. Amid this market turbulence, Reliance shares declined by 13%, resulting in a loss of Rs. 2.77 lakh crore in market capitalization. However, RIL’s shares have shown stability year-to-date, up by 2.53%, in contrast to the BSE Sensex’s rise of 9.87% over the same period.

Analyst Sentiment: A Mixed Yet Optimistic Outlook for RIL

Market analysts have mixed but generally positive expectations for RIL’s future performance. According to PL Capital Institutional Equities, RIL’s core refining and petrochemical businesses may face challenges soon due to a muted refining outlook. Still, gas production is expected to hold steady at 28-30 mmscmd with realizations of around $10/MMBtu. Furthermore, Jio’s Average Revenue Per User (ARPU) saw a 7% quarter-on-quarter increase, and projections suggest continued growth bolstered by recent tariff adjustments.

RIL’s retail business is expected to maintain steady performance. JM Financial notes that RIL’s strategic focus on renewable energy and the green sector will likely strengthen its position over the coming years. They also highlight the potential for revenue growth in Jio and retail operations within the next 3-4 years.

What Lies Ahead for Reliance Industries

Reliance Industries continues to adapt and expand, both domestically and internationally. The company’s ventures into retail, telecommunications, and green energy signal a forward-looking strategy that positions it for long-term growth. RIL has committed an impressive Rs 75,000 crore to its renewable energy initiatives, which could transform India’s clean energy landscape.

Additionally, analysts believe that the potential demerger of RIL’s retail and Jio Platforms, combined with the expansion of green energy initiatives, could strengthen the company’s value and increase shareholder wealth. 

Conclusion

Reliance’s recent 1:1 bonus issue marks an important chapter in its history, reaffirming its role as a cornerstone of the Indian stock market. For current shareholders, the 1:1 bonus reflects RIL’s strategy to reward its investors while maintaining market liquidity. As RIL diversifies and adapts to market demands, its role within the Nifty 50 remains pivotal. Whether RIL can sustain the momentum of its impressive returns in the future is yet to be seen.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Are you planning to buy a new car this festive season? If so, you might be surprised to learn that car dealerships across India are grappling with an unprecedented inventory pile-up. 

The Federation of Automobile Dealers Associations (FADA) recently reported that retail car sales in India plummeted by 18.81% in September, creating significant financial pressure on dealerships.

The overall inventory has reached an all-time high, with over 790,000 unsold vehicles worth approximately INR 79,000 crore, representing a supply lasting 80 to 85 days. This situation poses serious challenges to the automotive retail sector, raising concerns about its resilience amid persistent economic pressures and fluctuating demand.

Why the Retail Cars Overstock?

The Indian automotive market, once a beacon of growth, is now facing a period of uncertainty. Several factors have contributed to the current situation:

• Aggressive Dispatches: Automakers, eager to meet production targets, have been aggressively dispatching vehicles to dealerships, even in the face of slowing demand.
• Weak Consumer Sentiment: Rising interest rates, inflation, and geopolitical tensions have dampened consumer sentiment, reducing demand for new cars.
• Shifting Market Dynamics: The market is witnessing a shift towards premium and SUV segments, while demand for entry-level and mid-segment cars has softened.
• Production Challenges: Supply chain disruptions and component shortages have impacted production schedules, leading to an inventory build-up.

The market is also experiencing the impact of frequent new model launches, especially in the compact SUV category, which has led to competition among models and further inventory accumulation. As a result, older models are now piling up in dealerships, unable to keep pace with consumer preferences for the latest offerings. Source: Economic Times

Which Car Brands Are Most Affected?

While the entire industry grapples with inventory issues, some brands are more affected than others. Maruti Suzuki, India’s largest carmaker, is facing a significant inventory buildup, especially for models like the Baleno and Grand Vitara. Hyundai and Mahindra also deal with higher-than-normal inventory levels, particularly for specific models.

1 Mahindra & Mahindra

Mahindra dealers currently hold an average of 50 days’ worth of inventory, with popular models like the Bolero, Scorpio-N, and XUV700 experiencing varying demand across different regions. For example, urban dealerships have seen higher stocks of rural-favorite Bolero models, while tier-II and tier-III cities are witnessing higher supplies of Scorpio-N and XUV700 due to their popularity in metro regions.

2. Kia India

Kia dealers have managed to avoid high discount pressures, holding an average inventory of around 1.5 months. Models like the Seltos continue to perform well, while the recently launched Carnival MPV has drawn attention with a six-month waiting period. The South Korean brand appears less impacted by inventory challenges than other major automakers.

3. Maruti Suzuki India

Maruti Suzuki, India’s largest carmaker, deals with average dealership inventories of 60 days. However, some models like the Baleno and the Grand Vitara carry higher stock levels of up to 90 days. The premium Nexa outlets, which usually offer higher dealer margins, are experiencing flat growth due to high inventory levels.

Conversely, Arena outlets selling high-demand models like the Swift and Brezza have seen better performance, with Brezza carrying a waiting period of 15 days. However, internal competition has also impacted Maruti’s sales; the Swift has cannibalized 20% of Baleno’s sales, while Brezza has similarly affected Grand Vitara sales.

4. Tata Motors

Tata Motors is currently offering substantial discounts on several models, with the Tata Safari carrying a cash discount of INR 25,000 and a price drop of INR 1.8 lakh. The Harrier offers a similar cash discount and a price reduction of INR 1.6 lakh. The Nexon iCNG and electric models have drawn strong demand for Tata dealerships. In October, Tata adjusted its targets to reduce inventory; the company reduced its wholesale targets while raising retail goals to help dealers clear stock from an initial 90-day inventory level at the start of the month to 45 days by month-end.

5. Hyundai Motor India

Hyundai dealerships operate with inventories of 45 to 60 days, though the flagship Creta SUV is an exception, remaining a fast-mover without any discounts or significant stock buildup. The newly launched Alcazar has shown promise in the market, but models like the Exter are seeing slower demand, with inventory levels around two months. According to Samir Choudhry of Trident Automobiles in Bengaluru, a dealer’s business judgment often influences inventory decisions, but rapid stock build-up can lead to financial stress. Source: Economic Times

The Impact on Dealers

This oversupply of vehicles has put significant financial pressure on car dealerships. With unsold inventory piling up, dealers face challenges in managing cash flow and meeting their financial obligations. They are resorting to heavy discounts and promotional offers to clear the stock, which can erode profit margins. Many automakers, like Tata Motors, have restructured targets to adjust the stock burden on dealerships, while others are focusing on clearing older models through increased promotions.

New model launches and special editions are also being leveraged to drive showroom traffic, offering potential buyers an incentive to consider other available models alongside these fresh releases. Vehicles like the 2024 Maruti Suzuki Swift, Hyundai Alcazar, and Mahindra 3XO, as well as special editions from multiple automakers, are generating significant interest. However, most new models are in high demand and do not suffer from inventory overhang.

Outlook for Indian Car Dealerships

Dealerships hope the Diwali season will clear most of the current stock, and FADA is optimistic about improved sales continuing into November. However, the overall sentiment remains cautious, as several external factors have impacted auto sales over recent months, including a prolonged election season, extreme weather, and regional floods.

The Road Ahead

To address the overstocking issue, automakers and dealers may need to adopt a more cautious approach to production and inventory management. This could involve adjusting production schedules, offering more attractive financing options, and implementing innovative marketing strategies to stimulate demand.

As consumers, this presents an opportunity to negotiate better deals and secure significant discounts on new cars. However, it’s essential to carefully consider your needs and budget before making a purchase. The Indian auto industry is undoubtedly going through a challenging phase. However, it can emerge stronger and more resilient with the right strategies and adjustments.

*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

How does a ₹8,100 crore deal impact the Indian cement industry? How does it position Ambuja Cements, an Adani Group company, in its race to reach 100 million tonnes per annum (MTPA) cement capacity by 2025? These are the key questions that the latest acquisition by Ambuja Cements raises as the company continues its aggressive expansion strategy under the leadership of Adani Group.

On Tuesday, Ambuja Cements announced it will acquire a 46.8% stake in Orient Cement Ltd (OCL) for an equity value of ₹8,100 crore. This deal aims to bring Ambuja Cements closer to its target of achieving 100 MTPA capacity by the 2025 financial year and increasing its market share across India by approximately 2%. 

Key Details of the Acquisition

The acquisition will take place in two stages. First, Ambuja Cements will acquire 37.9% of Orient Cement’s shares from the company’s promoters and 8.9% from select public shareholders. Following this, Ambuja plans to launch an open offer to acquire an additional 26% stake in OCL’s expanded share capital.

The open offer will be priced at ₹395.40 per share, in line with the Substantial Acquisition of Shares and Takeovers (SAST) regulations. This open offer is expected to be completed within 3-4 months. Source: MoneyControl

This is Ambuja Cements’ fifth major acquisition since Adani Group took control of the company in September 2022. Prior to this, Ambuja made headlines with its June acquisition of Hyderabad-based Penna Cement, signaling its intention to consolidate its presence in South India. This latest move adds to Ambuja’s production capacity, boosting it by 8.5 million tonnes and bringing its total cement capacity to 97 MTPA. The company has set an ambitious goal of reaching 140 MTPA by 2028.

Strategic Significance of the Deal

Orient Cement’s plants in Telangana, Karnataka, and Maharashtra are crucial to Ambuja’s strategy to expand its footprint in South India.

The South Indian market is seen as a hotspot for infrastructure-driven demand, with major projects like the development of Andhra Pradesh’s new capital, Amravati, set to drive cement consumption. The Union Budget 2024 allocated ₹15,000 crore for Amravati’s development, which is expected further to spur demand for construction materials, including cement.

The acquisition also provides Ambuja access to Orient’s high-quality limestone reserves, an essential raw material in cement production. With existing statutory approvals in place, there is potential to increase Orient’s cement capacity from its current 8.5 MTPA to 16.6 MTPA in the near future. Source: Livemint

Competitive Landscape: Ambuja vs. UltraTech

Ambuja’s aggressive expansion in South India puts it head-to-head with UltraTech Cement, India’s largest cement producer, currently holding over 180 MTPA capacity. UltraTech, a key competitor, aims to reach 200 MTPA by 2027 and has also been expanding its presence in the South with its acquisition of Penna Cement. 

The southern region is becoming a key battleground for cement companies due to the expected rise in infrastructure demand. Cement firms are scrambling to secure production capacity to meet the upcoming demand boom, and Ambuja’s acquisition of Orient Cement is a significant step in this direction.

Stock Market Reaction

The news of the acquisition immediately impacted the stock prices of both Ambuja Cements and Orient Cement. Ambuja’s shares rose modestly, trading up 1.49% at ₹580 on the announcement day, while Orient Cement’s shares increased by 1.65%, trading at ₹358.25. However, despite this initial positivity, both companies’ stocks experienced a decline amid broader market corrections. Ambuja’s stock closed 2.4% lower at ₹558, while Orient Cement fell 2.5% to ₹343.4. 

Despite this short-term dip, Ambuja’s stock performance over the past year has been strong. Its share price has risen by 35%, significantly outpacing the 24% gain in the benchmark Sensex.

Adani’s Cement Strategy

Adani Group entered the cement sector by acquiring Ambuja Cements and ACC Limited in September 2022 for $10.5 billion, a strategic move to fill a key gap in its infrastructure portfolio. With its substantial interests in coal, power, logistics, and real estate, Adani saw significant synergies in integrating cement production into its ecosystem. 

These synergies offer Ambuja the potential for cost reductions in cement production, as Adani’s coal and power businesses provide essential inputs for the energy-intensive cement manufacturing process. This vertical integration is expected to give Ambuja a competitive edge in cost and efficiency.

In addition to the Orient Cement acquisition, Ambuja also acquired Sanghi Industries in Gujarat in August for an enterprise value of ₹5,000 crore. Sanghi Industries’ 6.1 MTPA production capacity further strengthens Ambuja’s market position, particularly in Western India.
Source: Economic Times

Conclusion

With the acquisition of Orient Cement, Ambuja Cements is solidifying its position as one of the dominant players in the Indian cement industry. The deal brings the company closer to its 100 MTPA capacity goal and enhances its presence in the crucial South Indian market. While Ambuja still faces stiff competition from industry leader UltraTech, its strategic acquisitions and synergies within the Adani Group position it well for the future.

*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The Kamath brothers, founders of Zerodha, are known not just for running one of India’s top brokerage platforms but also for their varied investment choices. Their latest big move? They’ve invested Rs. 100 crores in Nazara Technologies, a gaming company set to ride the wave of India’s booming gaming scene. With 450 million gamers and a rapidly expanding market, Kamath is betting on the future of gaming.

Through his investment firm, Kamath Associates & NK Squared, he purchased ₹100 crore worth of shares in Nazara Tech at ₹714 per share. In this article, we’ll explore why Kamath chose Nazara and the growth of the gaming industry in India.

Per PWC’s Global Entertainment and Media Outlook, the Indian online gaming market is projected to grow at a compound annual growth rate (CAGR) of 14.5%, doubling from ₹33,000 crore in 2023 to ₹66,000 crore by 2028. Source: Mint

Nikhil Kamath’s Vision for the Gaming Sector

Before we discuss the growth of the gaming industry, let’s examine some interesting facts about Nikhil Kamath. His story is truly inspiring. Starting with just ₹ $8,000 at a call center, he built a fortune of $3.07 billion. As the co-founder of Zerodha, Kamath changed the brokerage industry with a zero-brokerage model, similar to how Jio transformed the telecom industry.

His belief in India’s rising consumption power has fueled his investments in companies that cater to growing Indian consumer demands. One of the most prominent examples is Kamath’s backing of Nazara Technologies, a leading name in Indian esports and gaming. He views Nazara Technologies as a key player in the gaming industry, which holds a unique position as one of India’s few listed gaming entities.

Why Did Kamath Place Big Bets on Nazara?

• Established Gaming Leader: Founded in 1999, Nazara has grown into India’s leading gaming and sports media company, driven by its mergers and acquisitions strategy.
• Diversified Revenue Streams: Nazara’s portfolio is well-diversified, including popular brands like Kiddopia, Sportskeeda, and Nodwin. In FY24, gaming accounted for 36% of its revenue, with 55% coming from esports and 9% from ad tech.

• Impact of GST Changes: Nazara’s shares dropped but quickly recovered, as the Real Money Gaming (RMG) segment minimally contributed to the company’s overall revenue after the announcement of GST changes.
• Cautious Expansion Approach: Due to ongoing regulatory uncertainties, the company took a cautious approach to expanding in the RMG segment.

Why the Gaming Industry?

India’s gaming industry has witnessed an exponential rise in recent years, with mobile gaming and esports leading the way. According to Kamath, the country’s increasing digital penetration and improved internet infrastructure have created a favorable environment for gaming companies to flourish. Moreover, with the younger population embracing esports and mobile games, the sector is expected to grow even further.

Enormous Potential in Gaming

• Kamath’s View on Gaming: Nikhil Kamath believes the gaming industry, particularly esports, has huge potential and could become the next big thing in India.
• Global Market Insights: On X (formerly Twitter), Kamath highlighted that the worldwide gaming market was worth $159.3 billion in 2020, nearly triple the $60.8 billion market of the film and music industries combined.
• India’s Gaming Landscape: With 45 crore gamers, including 18 lakh esports enthusiasts, India has become a major player in the gaming world. The online gaming community is growing at an impressive 10% CAGR annually. Projections indicate that by 2028, India will surpass China with 720 million gamers.
• Growth Potential: EY’s New Frontiers report indicates India’s gaming penetration is at 30%, which lags behind other countries like the USA (56%), China (53%), and Japan (83%), revealing immense room for expansion.

Young and Tech-Savvy Population

• Demographic Advantage: According to the India Brand Equity Foundation (IBEF), India is the youngest country in the world, with 45% of its population—over 60 crore people—under the age of 35. This youthful and tech-savvy demographic is a significant growth driver for the gaming industry.
• Internet Usage Trends: Gaming made up 53% of internet usage in 2023, following OTT platforms, communication, and social media. The rising smartphone users, expected to exceed 1 billion by 2025, will further boost gaming growth.

Source: Mint

Economic Growth and Revenue Opportunities

• Rising Income Levels: As India transitions from a low-income to a middle-income nation, its per capita income is projected to exceed $26,000 by 2047, a dramatic rise from the current $2,484.
• Revenue from In-App Purchases: Economic growth will likely lead to increased spending on in-app purchases, which currently account for 70% of mobile gaming revenue. This growth will drive revenue from free-to-play games through ads, subscriptions, and sponsorships.

Source: Mint

Financial Analysis of Nazara Technologies

Nazara Technologies has positioned itself as a leader in the space by building a diverse portfolio across gaming, esports, and edutainment. The company’s growth trajectory and strong foothold in emerging markets made it a perfect fit for Kamath’s investment philosophy, which seeks to tap into industries with high potential for consumer spending.

Market Cap as of 22.10.24 (In Cr)	Revenue		Net Profit		Stock Price CAGR (1Yr)	PE Ratio
	March 2024	March 2023	March 2024	March 2023
Rs. 6647	1138	1091	75	61	15%	79.6

Nazara has experienced slow growth over the past year, with revenue rising slightly from ₹1,091 crore in FY23 to ₹1,138 crore in FY24. Although revenue remained flat due to cost control measures, the company increased its net profit from ₹61 crore to ₹75 crore, registering a 20% growth. 

Merger & Acquisitions

• Nazara has actively pursued mergers and acquisitions, spending over ₹1,800 crore in the last six months, which could potentially double its revenue within two years.
• Recent acquisitions include Comic Con India, which hosts events related to popular culture, such as comics, cosplay, movies, merchandise, and gaming. The company has also acquired Publish. Me, Fusebox, Ninja, Freaks4U (investment), and Branded.
• In addition, Nazara launched its publishing division, “Nazara Publishing,” which promotes games developed by Indian creators. The company plans to release up to 20 games across mobile, web3, virtual reality (VR), and personal computers (PC) by mid-2025.

Source: Mint

Strategic Alignment: Zerodha and Gaming

While Zerodha is primarily known as a brokerage platform, the Kamaths’ investment in gaming reflects their broader interest in the Indian consumption story. 

Their exposure to sectors like gaming is rooted in the notion of identifying industries with untapped potential. His private investment vehicles, Kamath Associates and NK Squared, have a track record of backing consumer-focused startups like Licious (a meat delivery platform) and Third Wave Coffee. This demonstrates the Kamath brothers’ preference for companies that cater to everyday Indian consumers.

Business Model of Gaming Companies

The gaming industry faces significant hurdles due to regulatory uncertainties, which could impact its growth trajectory.

• Diverse Business Models:
  • Free Games: Include freemium, shareware, and ad-funded models.
  • Paid Games: Operate on upfront payments, subscriptions, and Real Money Gaming (RMG). In RMG, players pay an entry fee contributing to both platform revenue and prize pools for winners.

Regulatory Setback

• Complex Regulatory Landscape: The online gaming landscape in India has become increasingly complicated, especially for RMG, which is taxed at 28%.
• Tax Implications:
  • Games outside the RMG category face an 18% tax on platform fees.
  • The recent tax hike has caused turmoil in the industry, leading states like Tamil Nadu to ban RMG games despite the Supreme Court classifying them as skill-based.
• GST Changes:
  • Until mid-2023, GST was applied at 18% on gross gaming revenue.
  • The government’s decision to impose a higher GST rate of 28% on the entire contest entry amount (CEA) has significantly affected the ecosystem, dramatically increasing companies’ tax liabilities.
  • For example, a platform that previously paid ₹1.8 in GST on a ₹100 entry fee now faces a tax of ₹28.
• Financial Consequences:
  • The GST authorities have raised a demand exceeding ₹1.12 trillion due to this tax revision, which is currently under judicial review.

India’s Gaming Sector: A Growth Story

Despite all the regulatory hurdles and challenges, India’s gaming market is experiencing a phenomenal rise. The RMG market (Real Money Gaming) continues to be the largest segment in India’s gaming industry, generating ₹16,500 crore in revenue in 2023 and representing 83-84% of the overall gaming market.  The esports segment, in particular, has surged thanks to the rise of professional gaming leagues and competitions.

Nazara Technologies has played a pivotal role in shaping the Indian gaming landscape. As one of the few publicly listed gaming companies in the country, it has diversified its offerings across esports, interactive gaming, and learning apps for children, positioning itself as a multifaceted player.

The Future of Gaming Stocks in India

With the gaming industry’s rapid growth, more Indian companies will likely go public in the coming years. Nazara Technologies is a rare publicly listed gaming stock, but as investor interest grows, it could pave the way for other gaming firms to follow suit.

Conclusion

As India’s gaming market expands, the Kamaths’ early investment in this space could unlock new opportunities. Their diversified investment approach, which includes exposure to the gaming industry, highlights their foresight in identifying sectors that will drive India’s consumption story forward.

Their involvement in the gaming industry through Nazara Technologies is another example of their forward-thinking investment philosophy.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

Bajaj Auto, the renowned Indian two-wheeler manufacturer, experienced a significant 9.5% drop in its stock price on Thursday, October 17th, 2024. This decline followed the release of disappointing second-quarter (Q2) FY25 financial results and a downward adjustment to the company’s full-year sales forecast.

Bajaj Auto Share Price Tumbles 9.5%

Bajaj Auto Q2 Performance Misses Expectations

While Bajaj Auto reported a 9.2% year-on-year increase in net profit for Q2, this figure fell short of analyst expectations. Investors were likely anticipating a stronger showing, particularly given the company’s previous track record.

Moreover, revenue surpassed the ₹13,000 crore milestone for the first time, reaching ₹13,247 crore for the quarter ending September 2024 – an increase of 20% compared to ₹10,838 crore in the same quarter last year. However, some analysts might have anticipated a more substantial growth. The profit for the quarter stood at ₹1,385 crore, reflecting a 37% decline from the ₹2,020 crore reported in the corresponding period of the previous year. Source: Moneycontrol

Financial Metrics:

Market Cap in Crores (as of 17.10.24)	CMP	PE Ratio	Revenue in Crores(Q2FY25)	Net Profit in crores(Q2Fy25)	Stock Price CAGR (5 Yrs)
₹2,89, 219	₹10,357	39.2	₹!3,247	₹1,385	30%

However, the bigger concern for investors was the company’s downward revision of its sales guidance for FY25. This suggests that Bajaj Auto is anticipating slower growth in the coming quarters than its initial projections.

Brokerages Turn Cautious

The weak Q2 performance and revised guidance have prompted several brokerages to adopt a more cautious stance on Bajaj Auto’s stock. While some analysts remain bullish on the company’s long-term prospects, they acknowledge the near-term challenges.

Brokerage Views:

• Macquarie: Maintains a “neutral” rating, citing disappointing gross margins.  
• Jefferies: Expresses optimism on the auto sector overall but remains cautious about Bajaj Auto.
• Citi issued a ‘sell’ recommendation for Bajaj Auto with a target price of ₹7,800 per share, indicating a potential downside of 33% from the last closing price ₹11,616. 
• Citi was surprised by the cautious outlook on festive demand despite Vahan data showing a 12% year-on-year increase in registrations.
• HSBC sets a target price of ₹14,000 per share for Bajaj Auto, highlighting its 30% growing market share. 

These mixed brokerage signals have contributed to the uncertainty surrounding Bajaj Auto’s near-term prospects. Investors are likely waiting for further clarity before making any significant investment decisions.

Source: Moneycontrol

Potential Reasons for Lower-Than-Expected Performance

Multiple factors may have affected Bajaj Auto’s lackluster Q2 performance and lowered guidance. Some potential reasons include:

• The company’s Q2 performance fell slightly below expectations, primarily due to a marginal miss in average selling prices (ASPs) and gross margins.
• Slowdown in Domestic Demand: The Indian two-wheeler market may be experiencing a slowdown, which could impact Bajaj Auto’s sales volumes.
• Rising Input Costs: Inflationary pressures and an increase in the cost of raw materials could be squeezing profit margins.
• Supply Chain Disruptions: Ongoing global supply chain disruptions might hinder the company’s ability to meet production targets.

Can Bajaj Auto Recover?

Despite the recent setbacks, Bajaj Auto remains a leading player in the Indian two-wheeler market. HSBC expects the next major disruption to come from the formalization of the e-rickshaw market, with Bajaj Auto’s potential entry playing a key role in this development.

The company enjoys a strong brand reputation, a robust distribution network, and a commitment to innovation. Here are some key factors that could influence the company’s future performance:

• Demand Recovery: A potential rebound in domestic two-wheeler demand could significantly improve Bajaj Auto’s sales figures.
• Cost Management: Effective cost management strategies could help mitigate the impact of rising input costs and improve profitability.
• Focus on Exports: A continued focus on exports could provide a vital source of growth for Bajaj Auto.
• Product Launches: Introducing new and innovative products could help Bajaj Auto maintain its competitive edge in the market.

The coming quarters will be crucial for Bajaj Auto. The company’s ability to navigate the current challenges and capitalize on growth opportunities will determine its future trajectory.

Investor Takeaway

The recent sell-off in Bajaj Auto’s stock presents an opportunity for investors to take a calculated approach. The near-term outlook appears cautious, and investors should consider their risk tolerance and investment horizon before making any decisions.

Further Considerations:

• Monitor future company announcements and analyst reports for updates on Bajaj Auto’s performance.
• Analyze the overall health of the Indian two-wheeler market and the broader economic landscape.
• Compare Bajaj Auto’s performance with those of its competitors.

*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.