Business

Hindustan Unilever Limited (HUL), one of India’s leading FMCG giants, has made headlines with two significant developments. The company acquired a majority stake in Minimalist, a fast-growing skincare brand, for Rs 2,955 crore, and its impressive Q3 performance saw a 19% year-on-year (YoY) jump in profit after tax (PAT).  Source: Economic Times/Moneycontrol

Despite reporting strong quarterly earnings, Hindustan Unilever’s share price dropped by 3.7% on January 23, 2025, due to a weaker-than-expected Q3 performance. 

HUL’s Q3 Results

HUL reported impressive financial results for the third quarter of FY25 but could not meet market expectations. The company’s PAT jumped 19% year over year to Rs 3,001 crore, primarily due to a one-time gain of Rs 509 crore from the divestment of the Pureit business. Strong consumer demand across categories drove HUL’s revenue from operations to rise by 2%, reaching ₹15,195 crore.

Key Financial Highlights

Operational Efficiency:

• Operating profit for Q3 rose by 1% YoY to ₹3,570 crore, while margins dipped by 20 basis points (bps) to 23.5%.

Beauty and Wellbeing Business:

•  The segment grew by 1%, but volumes declined in the low single digits. Hair care achieved mid-single-digit competitive volume growth, led by strong Dove, Tresemme, and Clinic Plus performances.

Home Care Business:

• Sales in the home care segment increased by 6%, driven by high-single-digit volume growth in fabric wash and household care.

Personal Care Business:

• The personal care segment recorded a 4% decline in sales with mid-single-digit volume drops. Strategic actions in skin cleansing resulted in market share gains during the quarter.

Packaged Foods Business:

• Packaged foods saw mid-single-digit growth, led by robust performance in future core and market-maker segments. Ice cream revenue remained flat year over year. Source: Economic Times

HUL Acquires 90% Stake in Minimalist

Hindustan Unilever’s acquisition of a 90% stake in Minimalist signals a calculated move to strengthen its presence in the high-growth skincare segment. Minimalist, known for its science-driven and ingredient-focused skincare products, has carved a niche in the market with its transparent and affordable offerings.

The deal, among the largest in the direct-to-consumer (D2C) segment, is set to be finalized by the end of the June 2025 quarter.

According to Tracxn, a private markets data provider, founders Rahul Yadav and Mohit Yadav hold a majority stake of 61%. Peak XV Partners follows with 27.4% ownership, while Twenty Nine Capital holds 5.6%. The remaining stake is attributed to ESOPs. Source: Moneycontrol

Reinforcing Leadership in FMCG

By expanding into the high-potential skincare market, HUL diversifies its portfolio and future-proofs its business against evolving consumer trends. The Minimalist acquisition offers HUL an opportunity to integrate the brand’s innovative approach with its extensive reach and expertise. 

What Lies Ahead?

Integration of Minimalist:

A smooth integration of Minimalist into HUL’s operations will be crucial for realizing the full potential of the acquisition.

Innovation-Driven Growth:

HUL’s focus on innovation, backed by its R&D capabilities, will be pivotal in driving long-term growth.

Sustainability Goals

Aligning with global sustainability trends, HUL’s expansion into transparent and ethical skincare through Minimalist resonates with its commitment to responsible business practices.

Conclusion

By tapping into the booming skincare market and maintaining strong financial performance, HUL continues to set benchmarks in the FMCG industry. HUL is strengthening its leadership by setting industry standards and adapting to challenges and opportunities with a focus on changing consumer needs.

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

Major players have long dominated India’s fast-moving consumer goods (FMCG) sector with a widespread national and international presence. However, regional brands have carved out a significant market share by leveraging competitive pricing, localized operations, and deep-rooted connections with regional consumer bases. During the pandemic, their agility allowed them to capture notable market share from larger corporations.

The FMCG market’s total revenue is expected to grow at an impressive CAGR of 27.9% from 2021 to 2027, reaching nearly US$ 615.87 billion. In 2022, the urban segment contributed 65% to the overall annual FMCG sales, while rural India accounted for more than 35%, showcasing the sector’s diverse consumer base (ibef.org). Yet, the fiscal year 2023-24 has revealed vulnerabilities in the growth trajectory of regional players, with many experiencing a deceleration in sales growth. Source: ibef.org

The Ascendancy of Regional Brands

During the COVID-19 pandemic, supply chain disruptions severely impacted larger FMCG companies, allowing regional brands to enter the market. Their localized manufacturing and distribution networks enabled them to meet consumer demands efficiently.

Market Share and Growth:

• Regional FMCG brands controlled over 40% of the market in categories like snacking and spices (Economic Times). Examples include Balaji Wafers in the snacks segment and MTR in the spices category.

Pandemic Advantage:

• Proximity to local markets and reduced dependence on global supply chains provided a strategic edge, enabling faster replenishment and reduced costs.

Consumer Trust:

• Many consumers favored regional brands for their perception of authenticity and alignment with local tastes.

Key Challenges Leading to Growth Deceleration

Despite their pandemic-era success, regional FMCG brands have encountered significant hurdles in sustaining rapid growth in the post-pandemic economic environment. Key challenges include:

Economic Slowdown

The broader economic slowdown in India has affected discretionary spending, impacting regional and national FMCG players. Lower rural incomes and higher inflation have reduced the purchasing power of a significant consumer base.

Declining Consumer Sentiment:

• Economic data from FY 2023-24 indicates a contraction in FMCG sales volume growth of 6.4% during Q4 2024, reflecting a shift toward value-for-money products (NielsenIQ).

Operational Scalability

For many regional brands, the rapid revenue growth experienced during the pandemic posed challenges in scaling operations.

• Supply Chain Limitations: Chandu Virani, founder of Balaji Wafers, highlighted operational inefficiencies and difficulties in sourcing raw materials as key constraints (Economic Times).
• Production Challenges: Expanding manufacturing capabilities to meet heightened demand proved challenging, sometimes leading to supply shortages.

Commodity Price Volatility:

Fluctuations in the prices of key commodities, such as edible oils and grains, have disrupted cost structures.

Impact on Margins:

• Although commodity prices declined in 2023, the benefits were insufficient to offset earlier inflationary pressures, squeezing profit margins.

Rising Competition from National Players

Large FMCG companies have begun to recover from pandemic disruptions, reclaiming market share by deploying aggressive marketing strategies and leveraging economies of scale.

Implications for the FMCG Sector

Shifting Market Dynamics

As regional brands grapple with operational and economic challenges, national FMCG players are positioned to regain some of their lost market share. This shift may lead to intensified competition across product categories.

Consumer Impact

Changes in market dynamics will likely affect product availability and pricing. Consumers may experience a shift toward either premium offerings from larger companies or more value-driven products from regional players.

Strategic Adjustments

Both regional and national brands must reassess their strategies to remain competitive. Areas of focus include:

• Supply Chain Resilience: Investing in technology and infrastructure to streamline operations.
• Sustainable Pricing Models: Balancing competitive pricing with profitability.
• Localized Product Development: Tailoring products to meet evolving consumer preferences.

Conclusion

Regional FMCG brands in India have demonstrated remarkable resilience and adaptability, particularly during the pandemic, by capturing significant market share through localized operations and competitive pricing. However, the economic challenges of 2023-24 have highlighted the need for these brands to evolve. Addressing operational inefficiencies, enhancing supply chain capabilities, and navigating commodity price volatility will be critical to sustaining growth in a highly competitive market.

As the FMCG sector continues to evolve, the interplay between regional and national players will shape consumer experiences and industry dynamics in the years to come. For stakeholders across the industry, the current period represents both a challenge and an opportunity to innovate and adapt to a rapidly changing landscape.

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

Reliance Industries Limited (RIL), a titan in India’s corporate landscape, has reported an 11.7% year-on-year increase in net profit for Q3 FY25, taking it to ₹17,394 crore. On the same day, its stock saw an intraday gain of 4.7%, reflecting robust investor sentiment. What’s driving these stellar numbers, and what does this mean for stakeholders?

Let’s look into the sectoral performance and underlying factors fueling this growth, breaking it down step-by-step to clarify this financial update.

The Numbers Speak: A Snapshot of RIL’s Performance

RIL’s consolidated revenue for Q3 stood at ₹2,67,186 crore, registering a year-on-year growth of 7.7%. This was complemented by an all-time high EBITDA of ₹48,003 crore, a 7.8% increase from the corresponding quarter of the previous year. Additionally:

• Net Profit: ₹21,930 crore, up 11.7% YoY.
• Reliance Retail Revenue: ₹90,333 crore, an 8.8% YoY increase.
• Jio Platforms Revenue: ₹38,750 crore, up 19.2% YoY.
• Oil-to-Chemicals (O2C) Revenue: ₹149,595 crore, a rise of 6% YoY.

While the O2C segment faced headwinds, RIL’s retail and digital services businesses showed robust growth, contributing significantly to the overall performance.

Breaking Down the Key Growth Drivers

1. Reliance Retail: Dominance in the Consumer Space

Reliance Retail, RIL’s consumer-facing business, achieved an 8.8% Y-o-Y revenue growth to ₹90,333 crore in Q3 FY25. Sequentially, revenue grew by 18%, driven by productivity improvement initiatives and increased customer engagement during the festive season through new product launches and promotions. Key highlights include:

• EBITDA Growth: EBITDA rose by 10% YoY to ₹6,632 crore, with margins improving by 20 basis points to 8.3%.
• Store Network Expansion: By the end of the quarter, Reliance Retail’s store count had reached over 19,102, reflecting continued expansion.

• B2C Grocery Push: The business saw significant traction in its B2C grocery segment, driven by strong demand and enhanced distribution capabilities.
• E-Commerce and Promotions: Platforms like JioMart benefited from higher customer engagement, boosting online sales alongside in-store performance, particularly during the festive period. Source: Economic Tmes

2. Jio Platforms: Leading India’s Digital Revolution

Jio Platforms reported a 19.2% YoY increase in revenue to ₹38,750 crore, with EBITDA growing by 18.8% to ₹16,585 crore. The wireless subscriber base expanded to 482 million, supported by a tariff hike and increasing penetration of high-speed internet services. Key takeaways include:

• ARPU (Average Revenue Per User): Improved to ₹181.70 from ₹181.7 in the previous quarter.
• 5G Rollout: Jio continued to rapidly deploy 5G services, further solidifying its leadership position in the telecom sector.
• Digital Content Consumption: Increased data usage per customer boosted revenue.

3. Oil-to-Chemicals (O2C): Navigating Challenges

Segment Revenue for 3Q FY25 increased by 6.0% Y-o-Y to ₹ 149,595 crore ($ 17.5 billion) primarily on account of higher production meant for sale as compared to 3Q FY24 which had planned maintenance and inspection shutdown of major units. EBITDA for 3Q FY25 increased by 2.4% Y-o-Y to ₹ 14,402 crore ($ 1.7 billion) following a strong volume-led growth and higher polymer deltas.:

• Operational Efficiencies: Revenue growth was supported by robust domestic demand and product placement.
• Diversification: Reliance’s move to explore alternative energy sources, including hydrogen, is expected to provide long-term stability to this segment.

Why Did RIL’s Stock Surge by 4.7% Intraday?

The market’s positive reaction can be attributed to several factors:

1. Strong Overall Performance: The net profit and EBITDA exceeded analysts’ expectations, reinforcing investor confidence.
2. Retail and Digital Services Growth: Robust performance in these segments offset weaknesses in the O2C business, signaling diversified revenue streams.
3. Stock Resilience: RIL shares had been trading around ₹1,200 over the past few months despite a bonus issue in October. On Thursday, before the earnings announcement, the stock closed 1.31% higher at ₹1,268.70 on the BSE. This steady performance, coupled with the earnings beat, likely fueled the intraday surge.
4. Optimism Around Future Prospects: With ongoing investments in green energy, retail, and digital services, RIL continues to strengthen its position as a multifaceted conglomerate.

Source: NSE

Key Strategic Initiatives and Investments

1. Green Energy Expansion

Reliance’s focus on clean energy is a long-term growth driver. The company’s investments in hydrogen, solar, and other renewable sources align with global trends and regulatory support for sustainable practices.

2. Retail Business Transformation

Reliance Retail’s continued expansion into Tier 2 and Tier 3 cities, coupled with the integration of offline and online channels, positions it as a dominant player in India’s retail landscape.

3. Jio’s 5G Ambitions

As Jio aggressively rolls out 5G services, it is poised to capture a larger share of India’s burgeoning digital ecosystem, which includes smart devices, IoT, and digital entertainment.

Balance Sheet Insights

RIL’s outstanding debt stood at ₹3.5 lakh crore as of Q3 FY25, reflecting an increase of ₹14,116 crore over the September quarter. Meanwhile, cash and cash equivalents rose by ₹15,089 crore to ₹2.35 lakh crore during the same period. This resulted in a net debt of ₹1.15 lakh crore, marking a decline of ₹973 crore compared to the previous quarter. The company’s net debt-to-EBITDA ratio improved to 0.6 in the December 2024 quarter from 0.66 in the September 2024 quarter.
Source: Money Control 

Capital Expenditure (Capex)

Capital expenditure (excluding amounts incurred towards spectrum) for the quarter ended December 2024 was ₹32,259 crore. This was slightly higher than the ₹30,102 crore reported in the year-ago period but lower than the ₹34,022 crore spent in the September quarter. The investments reflect RIL’s continued focus on expanding its capabilities across various business segments.

Challenges to Watch

Despite the strong quarterly results, certain risks persist:

• Global Economic Uncertainty: Macroeconomic challenges and geopolitical tensions could impact demand and margins.
• O2C Segment Volatility: Continued pressure on refining and petrochemical margins may weigh on future performance.
• Competition: Rising competition in the telecom and retail sectors could affect growth trajectories.

Conclusion

RIL’s Q3 results underscore the strength of its diversified business model. Retail and digital services drive growth, while the O2C segment faces challenges. The stock’s 4.7% intraday gain reflects strong investor confidence in the company’s strategic direction and future potential.

As RIL continues to evolve, its ability to adapt to changing market dynamics and leverage opportunities in new-age businesses will be crucial.

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.

2024 was a challenging year, especially for the retail sector. While most struggled, one brand withstood it all and emerged as a clear winner. We are talking about Trent, a Tata Group company. With an extraordinary 133% return in 2024, Trent has outperformed expectations and industry benchmarks. The key driver of this success? Zudio, its value-fashion brand, has taken the Indian market by storm.

Let’s look closely at how Zudio’s strategy, execution, and unique approach have transformed Trent’s fortunes.

Zudio: Driving Trent’s Growth

While Westside was Trent’s flagship brand, the turnaround in Trent’s fortunes has largely been powered by Zudio. Operating in the competitive fast-fashion segment previously dominated by global giants like H&M, Zudio has carved a unique position by targeting India’s burgeoning middle-class consumer. Its strategy focuses on offering trendy, affordable fashion that aligns with local sensibilities—a formula that has resonated strongly in urban and semi-urban markets.

Zudio’s rapid expansion into tier-2 and tier-3 cities has been a significant growth lever. These underserved regions offer immense potential, and Zudio’s understanding of local fashion preferences has allowed it to deliver designs that appeal to a wide audience. By maintaining affordability without compromising style, Zudio has built a loyal customer base and filled a gap in the value-fashion segment.

Operational Excellence

Trent has leveraged its experience with Westside and its partnership with Zara to optimize Zudio’s operations. Key factors include:

• Efficient Supply Chain: Zudio’s ability to refresh inventory every 15 days is a game-changer. This is much faster than the industry norm of 45-60 days, enabling Zudio to stay ahead of fashion trends and respond swiftly to consumer demand.
• Cost Management: By focusing on private-label sales and bulk manufacturing, Zudio has limited the cost of goods sold (COGS) to 60-65%. This strategy ensures competitive pricing without sacrificing margins.
• Store Productivity: Zudio’s smaller store size, averaging 9,500 square feet compared to Westside’s 21,000 square feet, enhances operational efficiency. With revenue per square foot at ₹16,300, Zudio generates double the industry average, making each store highly productive. Source: Mint

A Smart Expansion Model

Zudio’s aggressive store expansion strategy has been central to its success. Its outlets have grown more than sixfold, from under 90 in FY21 to nearly 600 by FY25. Its Franchise-Owned, Company-Operated (FOCO) model has facilitated this explosive growth. This approach minimizes capital costs, accelerates store openings, and ensures quicker breakeven points for new locations.

Moreover, Zudio’s focus on influencer-driven marketing over traditional advertising has helped control expenses while maintaining a strong connection with its target audience. This cost-efficient marketing approach has amplified its brand presence without the need for extravagant campaigns.

Financial Contributions and Revenue Growth

Zudio’s impact on Trent’s financial performance is undeniable. In FY24, Zudio surpassed Westside to contribute around 50% of Trent’s revenues. While Westside’s relatively premium offerings deliver higher gross margins, Zudio’s profitability is supported by its faster inventory turnover and operational efficiencies.

In Q2 FY24, Trent reported a 39% year-over-year increase in consolidated revenue, reaching ₹4,157 crore. Net profit rose by 46.9% to ₹335.06 crore. This impressive growth in a sluggish economic environment highlights Zudio’s crucial role in driving Trent’s success.

Challenges and Risks Ahead

Despite its stellar performance, Zudio faces significant challenges that could impact its future growth.

• Expansion Risks: Zudio’s international debut with its first store in Dubai marks a bold move. While its Indian designs may appeal to Dubai’s Indian diaspora, the value-fashion proposition might not resonate as strongly in a market accustomed to premium offerings.
• Similarly, Zudio’s foray into the competitive beauty segment with Zudio Beauty involves substantial investment risks with the potential for limited returns. If these ventures divert resources or underperform, they could slow down the expansion of Zudio apparel stores, leading to slower revenue growth and increased vulnerability to competition.

• Rising Competition: The fast-fashion industry in India is witnessing growing interest from new players. Competitors like Reliance Retail’s Yousta, Aditya Birla Fashion and Retail’s Style-Up, and Shoppers Stop’s InTune are vying for a share of the value-fashion market. This intensifying competition could pressure Zudio’s revenue growth and margins, especially if input costs rise.

• Market Valuation Risks: After a steep stock-price rally in 2024, Trent’s valuation has moderated to a P/E of 120.96 from a high of 139.77, which remains below the 5-year median of 150.56. These factors, coupled with global market uncertainties and a potential risk-off sentiment, could weigh on Trent’s stock performance in the medium term.

Source: Mint

Zudio’s Competitive Edge

Zudio has successfully positioned itself as a leader in the value-fashion segment by:

• Understanding Local Sensibilities: Zudio’s designs cater to the preferences of Indian consumers, offering trendy apparel that aligns with their tastes.
• Timely and Affordable Offerings: By delivering in-vogue designs quickly and at competitive prices, Zudio has addressed the needs of budget-conscious shoppers.
• Leveraging Consumer Trends: Zudio’s focus on the bottom of the pyramid has paid off, especially as many industries have shifted toward premiumization.

Future Potential

Analysts project a robust compound annual growth rate (CAGR) of 41% for Zudio’s revenues between FY24 and FY26. By 2026, Zudio may account for approximately 66% of Trent’s total revenue. With continued expansion and innovative strategies, Zudio is poised to remain a key growth engine for Trent.
Source: Mint

Zudio’s success story exemplifies the power of understanding and serving the needs of a diverse customer base. Its strategic focus on value fashion, efficient operations, and rapid expansion have transformed it into a significant contributor to Trent’s extraordinary performance. However, the brand must navigate challenges like expansion risks, rising competition, and market valuation pressures to sustain its growth. As Zudio continues to scale new heights, it solidifies its position as a leader in the fast-fashion space and a critical pillar of Trent’s growth story.

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.

India’s financial landscape reached new heights in 2024, with a significant surge in mergers and acquisitions (M&A) activity and unprecedented fundraising in the equity capital markets. As global and domestic investors sought opportunities in one of the world’s fastest-growing economies, the year saw a remarkable 38% jump in M&A transactions, alongside record-breaking IPO activity that underlined India’s position as a major player in the global financial ecosystem.

Key Highlights of 2024

M&A Activity Overview

• Total Value: M&A deals surged to $109 billion in 2024, compared to $79 billion in 2023, driven by robust corporate strategies and investor confidence
• Domestic Contributions: Indian corporates accounted for $48 billion of this activity, nearly doubling their participation from $26 billion the previous year (Economic Times).
• High-Profile Deals:
  • Viacom and Disney Merger: This reshaped the entertainment sector.
  • Aster DM’s Acquisition of Quality Care: Strengthened its foothold in healthcare.
  • Bharti Group’s Stake in BT Group: Expanded its global telecommunications footprint.
• Sectoral Focus: Key industries with heightened M&A activity included technology, industrials, infrastructure, and retail, reflecting evolving market dynamics and diversification strategies.

Driving Factors

1. Economic Growth: India’s strong GDP performance and increasing global recognition as an investment hub attracted domestic and international investors.
2. Private Equity (PE) Involvement: PE firms played a pivotal role in funding high-growth startups and acquiring stakes in established companies.
3. Conglomerate Ambitions: Companies like the Adani Group, Reliance Industries, and Birla Group actively pursued acquisitions to bolster their portfolios and expand into new markets.

Record-Breaking IPO Activity

India’s equity capital market experienced unparalleled growth in 2024, with total fundraising reaching $74 billion across initial public offerings (IPOs), follow-on public offers (FPOs), and qualified institutional placements (QIPs) (Economic Times).

• Milestone IPOs:
  • Hyundai Motor India IPO: Raised $3.3 billion (₹27,870 crore), making it the largest IPO in India’s history, surpassing LIC’s 2022 record.
  • Vodafone Idea FPO: At $2.2 billion (₹18,000 crore), it became India’s largest FPO, eclipsing records by Yes Bank and ONGC.
• Diverse Sectors: Fundraising spanned industries like automobiles, telecom, retail, capital goods, and e-commerce, accounting for 59% of the total issue size.
• Market Dynamics: Over 300 IPOs were launched, reflecting retail and institutional investors’ strong appetite for equities.

Key Drivers of Equity Fundraising

1. Investor Sentiment: Confidence in India’s economic trajectory encouraged robust participation from domestic and foreign investors.
2. Sectoral Growth: Rising consumer demand, digital transformation, and infrastructure investments created lucrative opportunities.
3. Regulatory Support: Government reforms and policy initiatives made it easier for companies to access capital markets.

Looking Ahead: 2025 and Beyond

The momentum built in 2024 is set to continue, with an active IPO pipeline estimated at $35 billion. Major companies expected to go public in 2025 include:

• HDB Financial Services: A leading non-banking financial company (NBFC).
• LG Electronics India: A prominent player in consumer electronics.

Emerging Trends

1. Green and Sustainable Investments: Increasing focus on ESG (Environmental, Social, and Governance) factors will drive investments in renewable energy and sustainable technologies.
2. Tech-Driven Growth: Startups and tech companies will continue to attract significant funding, particularly in fintech, e-commerce, and AI.
3. Global Integration: Indian firms will likely pursue more cross-border deals, enhancing global competitiveness.

The year 2024 marked a turning point for India’s financial markets. The surge in M&A activity and equity fundraising underscores the country’s growing economic clout and its appeal to global investors. With robust market fundamentals, strategic corporate initiatives, and an ambitious IPO pipeline, India is poised to sustain this growth trajectory in 2025 and beyond, reinforcing its position as a leading global investment destination.

Know more about:
IPOs | Current IPOs | Upcoming IPOs | Listed IPOs | Closed IPOs | IPO Performers

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

Coffee cafes have long been the go-to place for a quick caffeine fix or a cozy spot to work, socialize, or unwind. However, the coffee market has recently faced significant challenges, pushing even the most iconic brands and local favorites to rethink their strategies. 

Well-established Café chains like Starbucks, Barista, Chaayos, and Third Wave Coffee are struggling due to reduced consumer spending, evolving consumer preferences, and fierce competition. The impact is harsher on the retailers because they opened hundreds of new stores last year despite increasing losses. In some cases, this resulted in the same retailer opening multiple stores in the exact location, which slowed their growth rather than expanding the market.

However, smaller brands like Tim Hortons and Blue Tokai have surprisingly avoided these challenges. Let’s examine what’s happening in the world of coffee businesses.

Sales Growth Trends of Different Coffee Brands

Growth has slowed across several major coffee brands. Barista and Chaayos saw their growth rate fall from nearly 70% to just 5% in FY24. Starbucks’ sales growth declined to 12% in FY24 from 70% in FY23. Third Wave’s sales growth dropped to 67% in FY24, down from 355% the previous year. Cafe Coffee Day posted a 9% growth in FY24, a sharp drop from 59% the year before. 

Brands Defying the Trend

Tim Hortons more than doubled its sales in its first full year of operations. Blue Tokai bucked the slowdown with a 70% growth in FY24, slightly down from 73% in FY23. Tim Hortons, the Canadian coffee chain that opened its first outlet in India in 2022, aims to have over 100 stores in the next three years. Similarly, British coffee and sandwich chain Pret A Manger, which launched its first store in Mumbai through a franchise agreement with Reliance Brands, plans to open up to 100 stores in the next five years. 

Target Market and Pricing

Most coffee chains price their cups between Rs 250 and Rs 350, aiming at wealthy coffee lovers who appreciate special brewing methods and unique experiences. This narrows their customer base. Since 2022, the number of coffee outlets has increased, with new and established brands expanding. As a result, the number of cafés in larger cities has risen significantly in recent years.

Coffee Market in India 

The Indian Coffee Market was valued at USD 478 million in 2022 and is projected to grow to USD 1,227.47 million by 2032, with a CAGR of 9.87% from 2024 to 2033. India’s domestic coffee consumption has risen significantly over the past five years, driven by the expanding middle class and growing awareness of coffee culture.

Furthermore, roasted coffee and instant coffee were the most popular segments consumed by Indians.

Key players operating in India’s coffee market 

Araku	Blue Tokai	Bloom Coffee Roasters
Bru	Café Coffe Day	Continental AG
Country Bean Coffee	DAVIDOFF	KC Roasters
Narasu’s	Nescafe	Sleepy Owl Coffee

India’s Coffee Market Segmentation:

By Product Type	Whole Bean, Ground Coffee, Roasted CoffeeInstant Coffee
By Form	Coffee Pods, Coffee Capsules, Coffee Powder
By Generation	Gen Alpha, Gen Z, Millennial, Gen X
By Distribution Channel	Hotel/Restaurants, Coffee Shops, Supermarkets/Hypermarkets, Specialty Stores, Convenience Stores, Online

Changing Market Dynamics and the Impact on the Industry

The overall slowdown in the coffee market, combined with the growth of smaller chains, indicates broader changes in India’s café culture. Several factors are contributing to these changes, including the economic slowdown, rising inflation, and shifts in consumer spending habits. 

The quick-service restaurant (QSR) sector, which includes coffee chains, has also felt the effects of this slowdown. Experts argue this is a broader issue related to consumer spending than just the coffee market. With fewer people willing to spend on premium coffee experiences, brands adjust their pricing and offerings to appeal to a larger audience.

For instance, Tata Starbucks, the joint venture between Tata Consumer Products and Starbucks Corp, has been adjusting its portfolio and pricing strategies to counteract declining footfalls. Last year, the chain introduced classic hot and iced coffee at Rs 150 for a small cup, which is about 20-30% cheaper than regular coffee offered at Starbucks and other café chains. This shift in pricing strategy reflects the changing consumer preferences and the need to cater to a broader, more price-sensitive audience.

The Indian coffee market is experiencing significant change. While large chains like Starbucks and Barista are struggling with slowing growth, smaller brands like Blue Tokai and Tim Hortons are thriving. This shift in the market reflects changing consumer preferences, with a growing demand for affordable, high-quality coffee.

As the industry adapts to these changes, innovation, affordability, and an emphasis on sustainability will clearly shape the future of India’s coffee market. The café culture in India is evolving, and only the brands that can keep up with these changes will succeed in the long run.

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

On January 8, 2025, Jindal Worldwide’s shares surged by 5.7%, reaching an all-time high of ₹471.20. This boost followed the company’s announcement of a bonus issue, which has excited investors and market watchers alike. Source: LiveMint

What Led to the Surge?

Jindal Worldwide’s share price surge can be directly linked to a 4:1 bonus issue announcement. Investors will receive four additional shares for every share they hold at no extra cost. This effectively increases the number of shares investors own, enhancing liquidity and marketability.

The board of directors approved this proposal on January 7, 2025. The bonus shares are expected to be credited by March 6, 2025, aligning with regulatory timelines. This decision will also adjust the company’s capital structure, reflecting the increased number of shares in circulation. Source: LiveMint

Understanding Bonus Issues and Their Impact

A bonus issue is a way for companies to reward their shareholders without distributing cash. Instead of dividends, existing shareholders receive additional shares proportional to their current holdings. This approach enhances investor confidence and signals the company’s strong financial health.

In this instance, Jindal Worldwide’s board approved the 4:1 bonus issue on January 7, 2025. As of March 31, 2024, the bonus shares will be allocated from the company’s free reserves and securities premium account. Shareholders can expect these bonus shares to be credited or dispatched by March 6, 2025, adhering to the two-month timeline from the board’s approval. Source: Business Standard

Implications for Shareholders

For shareholders, this bonus issue translates to an increase in the number of shares they hold, though it doesn’t directly enhance the overall value of their investment. The market typically adjusts the share price to reflect the increased number of shares in circulation. In Jindal Worldwide’s case, the paid-up share capital will rise from ₹20.05 crore, comprising 20,05,20,400 fully paid-up equity shares, to ₹100.26 crore, consisting of 100,26,02,000 shares.

Market Reaction and Stock Performance

The announcement had an immediate positive impact on the company’s stock price, propelling it to a 52-week high of ₹471.20.  The smallcap stock has surged 75% from its 52-week low of ₹267.75, recorded in January 2024.

Over the past year, Jindal Worldwide’s stock has appreciated by approximately 44%. Notably, in January 2025 alone, the stock has gained over 15%, building on a 25% rise in December and a 3% increase in November.

Source: LiveMint

About Jindal Worldwide

Established in 1952, Jindal Worldwide is a prominent player in the textiles sector. The company primarily manufactures denim fabric, premium shirtings, yarn dyeing, bottom weights, and home textiles through its various internal divisions. The company has demonstrated consistent performance and strategic initiatives, including the latest bonus issue.

Jindal Worldwide’s decision to issue bonus shares has been met with enthusiasm in the market, as evidenced by the surge in its stock price. While the bonus issue increases the number of shares held by investors, it’s essential to understand that the overall value of their investment remains unchanged immediately following the issuance. Investors should continue to monitor the company’s performance and market conditions to make informed decisions about their holdings.

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