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In a bullish turn for India’s metal sector, Tata Steel and JSW Steel emerged as top gainers on the Nifty 50 index during Wednesday’s trading session, reflecting renewed investor confidence driven by strong quarterly earnings and improving profitability metrics.

Tata Steel: Profit Rebound Signals Recovery

Tata Steel’s stock rose 2.72% to ₹162.70, buoyed by a sharp turnaround in its financial performance. For the quarter ending June 2025, the company posted a consolidated net profit of ₹1,927.64 crore—more than double the ₹826.06 crore reported in the same period last year. This surge in profitability came despite a marginal dip in quarterly revenue to ₹53,178 crore from ₹54,771 crore.

On an annual basis, Tata Steel’s FY25 net profit stood at ₹2,982.97 crore, marking a dramatic recovery from the ₹4,851.63 crore loss in FY24. The company’s debt-to-equity ratio, now at 0.98, remains within a manageable range, suggesting prudent capital management amid volatile commodity cycles.

JSW Steel: Earnings Beat Despite Revenue Dip

JSW Steel followed closely, gaining 1.63% to ₹1,061.00. The company reported a quarterly net profit of ₹2,309 crore for June 2025, up from ₹879 crore in the previous year. EPS nearly tripled to ₹8.95, indicating improved operational efficiency and cost control.

While annual revenue declined to ₹168,824 crore from ₹175,006 crore, the company’s ability to sustain profitability—₹3,802 crore in FY25—despite macroeconomic headwinds, speaks to its resilience. However, its debt-to-equity ratio ticked up to 1.21, warranting close monitoring as the company continues to invest in capacity expansion.

Sector Sentiment: Cyclical Tailwinds and Global Demand

The rally in steel stocks aligns with broader optimism around infrastructure spending and global demand recovery. With China’s stimulus measures and India’s continued push for domestic manufacturing, steel producers are well-positioned to benefit from rising volumes and pricing power.

Moreover, the uptick in earnings signals that the worst of margin compression may be behind, especially as input costs stabilize and export opportunities expand.

Investor Takeaway: Tactical Opportunity or Long-Term Play?

For investors, the recent surge in Tata Steel and JSW Steel offers both tactical and strategic angles. Short-term traders may find momentum-driven gains attractive, while long-term investors could view the earnings recovery as a signal to revisit valuations.

However, caution is warranted. Steel remains a cyclical sector, sensitive to global trade dynamics, raw material prices, and policy shifts. Monitoring debt levels, capex plans, and geopolitical developments will be key to navigating future volatility.

As always, a diversified portfolio and a clear investment thesis remain essential when engaging with commodity-linked equities.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a financial advisor before making investment 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 & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

When it comes to selecting the right investment vehicle, many individuals find themselves comparing RD vs debt mutual funds. Both options cater to different investor needs—while recurring deposits are known for their safety and predictability, debt mutual funds offer relatively higher return potential with some associated risk.

So, is RD better than debt mutual funds? Let’s break it down, one step at a time so that you can make an informed decision based on your financial goals, risk appetite, and tax considerations.

What is a Recurring Deposit (RD)?

A Recurring Deposit (RD) is a time-bound savings instrument offered by banks and post offices in India. It allows you to invest a fixed amount every month for a pre-determined period, typically ranging from 6 months to 10 years. Upon maturity, the principal, along with the accrued interest, is returned to the investor.

RDs are particularly appealing for individuals who seek a secure and disciplined approach to saving, as they offer guaranteed returns and are backed by reputed financial institutions. Interest rates on RDs generally range between 6% to 7%, depending on the tenure and the institution.

For instance, if you invest ₹5,000 per month in an RD for 2 years at 6.5% interest, you will receive around ₹1,30,000 at maturity. The process is straightforward, predictable, and suitable for risk-averse investors.

What are Debt Mutual Funds?

Debt mutual funds are a type of mutual fund investment that primarily invest in fixed-income securities such as government bonds, corporate debentures, treasury bills, and other money market instruments. These funds aim to generate stable returns by earning interest on the instruments they hold.

If you have ever wondered what are debt funds, in simple terms, they are mutual funds that do not invest in stocks but in debt instruments, making them less volatile than equity funds. However, they are still subject to market risks, especially interest rate and credit risk, which can impact returns.

Debt mutual funds can offer returns in the range of 6% to 9%, depending on the type of fund, interest rate movements, and market conditions. They also provide flexibility in terms of investment amount and duration, with options like SIP (Systematic Investment Plan) or lump sum contributions.

Key Differences: RD vs Debt Mutual Funds

The table below provides a clear comparison between RD vs debt mutual funds across key parameters:

Feature	Recurring Deposit	Debt Mutual Funds
Risk	Very low	Moderate (market-linked)
Returns	Fixed (6–7%)	Variable (6–9%)
Liquidity	Limited (penalty on early withdrawal)	High (exit anytime, may have exit load)
Taxation	Interest taxed as per slab	Tax-efficient after 3 years (indexation)
Tenure	Fixed (6 months to 10 years)	Flexible
Flexibility	Fixed amount monthly	Flexible SIP/lump sum options

This comparison offers a clearer picture of the trade-offs between recurring deposit vs mutual fund investments.

RD vs Debt Mutual Funds: Which is Safer?

From a safety perspective, Recurring Deposits are generally considered safer. Since they are backed by banks and post offices, the capital is well protected and returns are assured.

In contrast, debt mutual funds, although relatively low-risk compared to equity mutual funds, carry certain market-related risks. The performance of these funds is influenced by interest rate movements and credit quality of the debt instruments in their portfolio.

Therefore, for investors prioritising capital protection, RDs are typically a more suitable choice in the rd vs debt mutual funds debate.

Taxation on RD vs Debt Mutual Funds

Tax treatment is a critical factor in evaluating RD vs debt mutual funds.

• Recurring Deposit: Interest earned is fully taxable as per your income tax slab. There is no special tax benefit, and higher-income earners may find the post-tax returns less attractive.
  
• Debt Mutual Funds: For investments held longer than three years, gains are classified as long-term capital gains (LTCG) and are eligible for indexation benefit. This can significantly reduce your tax on debt mutual funds, especially during high inflation periods. 

Thus, from a tax efficiency standpoint, debt mutual funds often outperform RDs when held for the long term.

Which Offers Better Returns: RD Vs Debt Mutual Funds

To evaluate the potential return difference between RD vs debt mutual funds, let’s consider an example.

Assume you invest ₹10,000 per month for 3 years.

• In an RD at 6.5% interest, your maturity amount will be approximately ₹4,00,000.
  
• In a debt mutual fund averaging 8% annual returns, your corpus could grow to around ₹4.2–₹4.3 lakh.
  

While the difference may not seem large at first glance, post-tax returns from debt mutual funds—especially after three years—could be more favourable due to indexation benefits.

Factors to Consider Before Choosing Between RD and Debt Funds

Here are some essential factors to evaluate before deciding:

• Investment Horizon: RDs are suitable for short to medium-term goals. Debt funds are better suited for those with a horizon of 3 years or more.
  
• Risk Appetite: If your primary concern is capital safety, RDs are preferable. If you’re open to moderate risk for slightly higher returns, consider debt funds.
  
• Tax Preference: High-income earners may benefit more from the tax efficiency of debt mutual funds.
  
• Liquidity Needs: Debt mutual funds offer better liquidity compared to RDs, which may involve penalties on early withdrawal.
  

If you are unsure, consider consulting stock advisory services to receive personalised guidance.

Ideal Use Cases: Who Should Invest in What?

Let’s break down who may benefit most from each option:

• Recurring Deposit is ideal for:
  
  • Risk-averse investors
    
  • Senior citizens
    
  • Individuals seeking predictable savings
    
• Debt Mutual Funds are better suited for:
  
  • Investors with medium-term goals (3+ years)
    
  • Tax-sensitive individuals
    
  • Those comfortable with market-linked instruments

Thus, the right choice between rd vs debt mutual funds largely depends on your profile as an investor.

Conclusion

In conclusion, both Recurring Deposits and Debt Mutual Funds serve distinct purposes. While RDs offer stability and guaranteed returns, debt mutual funds provide better returns and tax efficiency over the long term. Ultimately, your decision should align with your financial goals, risk appetite, and tax planning strategy. When in doubt, don’t hesitate to explore stock advisory services for professional portfolio advice tailored to your 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 on RD vs Debt Mutual Funds

Is RD better than debt mutual funds?

It depends on your risk appetite, return expectation, and investment horizon. RDs offer safety, while debt funds offer potential for higher post-tax returns.

Are debt mutual funds safe like RDs?

No. Debt mutual funds involve interest rate and credit risk, unlike RDs which are backed by banks and offer capital protection.

Which is more tax-efficient: RD or debt mutual funds?

Debt mutual funds, especially if held for over 3 years, offer better tax benefits due to indexation.

Can I break my RD or exit a debt mutual fund early?

Yes, both are possible. Premature withdrawal from RDs attracts penalties. Debt mutual funds can be exited anytime, though exit loads may apply for short holding periods.

What is the average return from debt mutual funds vs RD?

RDs typically offer 6–7% fixed returns, while debt mutual funds can offer 6–9%, depending on market conditions and the type of fund.

In today’s fast-paced business world, making the right decisions often comes down to having the right data. And whether you’re starting your own venture, putting money into the stock market, or running an established company, knowing how financial models work can make a big difference. 

These models help you see the bigger picture, whether it’s forecasting revenue, assessing risk, or figuring out what your business is really worth. 

In this article, we will explain what is financial modeling, the types of financial models, how they are built, where they are used, and how you can begin learning this valuable skill, even as a beginner.

What is a Financial Model?

What is a financial model? Simply put, a financial model is a tool, usually built in Excel or similar spreadsheet software that represents the financial performance of a business or project. It includes calculations, assumptions, charts, and forecasts that help understand how a business might perform in the future based on current or expected conditions.

In simple terms, a financial model is a way to show a company’s financial situation using numbers and calculations. It helps you see how different decisions or changes like a drop in sales or rise in costs, might affect the business. So, if you’re wondering what is financial modeling, it’s the process of creating these models using company data, key financial ratios, and “what-if” scenarios to support important business decisions.

Why Are Financial Models Important?

Financial models are not just for large corporations. They are essential for:

• Startups planning fundraising and growth
  
• Investors analyzing business value
  
• Finance teams forecasting revenue and expenses
  
• Decision-makers evaluating risks and returns
  

Key benefits include:

Forecasting future performance: Predicts how much a business might earn or spend in the future, helping plan for profits and challenges ahead.

Capital planning:  Shows how much money a business needs, when it’s needed, and how it can be raised or managed efficiently.

Investment analysis:  Helps assess whether an investment opportunity is financially sound and likely to deliver returns based on future projections.

Risk management: Uses scenarios to test different outcomes, helping identify and prepare for financial risks or opportunities in advance.

Strategic planning: Supports big decisions like mergers or expansions by showing potential financial impacts and aligning them with long-term goals.

If you work in stock market advisory services or financial planning, financial models help you clearly see opportunities and handle risks.

Key Components of a Financial Model

A financial model isn’t just numbers on a spreadsheet. It has a clear structure and key components. These include:

1. Assumptions

The heart of every model lies in its assumptions. This includes projected growth rates, cost of goods sold (COGS), interest rates, tax rates, etc.

2. Revenue Projections

This estimates how much money a company expects to earn. It can be based on units sold, pricing models, or subscription rates.

3. Expense Forecasts

Covers both fixed and variable expenses, including salaries, rent, utilities, and marketing.

4. Income Statement

Also known as the Profit & Loss statement, it reflects profitability by calculating revenue minus expenses.

5. Balance Sheet

Shows the company’s assets, liabilities, and equity over time. It helps assess the business’s financial health.

6. Cash Flow Statement

Projects how cash moves in and out of the business. Vital for assessing liquidity and operational efficiency.

7. Financial Ratios

Financial Ratios are used for analysis and benchmarking, such as profit margins, debt-to-equity, return on equity (ROE), and current ratio.

Types of Financial Models

There are several types of financial models, each suited for different situations. Here’s a breakdown of the most common ones:

1. Three-Statement Model
This model connects the income statement, balance sheet, and cash flow statement to show a complete financial picture. It’s the base for more complex models and essential for decision-making.

2. Discounted Cash Flow (DCF) Model
It estimates a company’s value by predicting future cash earnings and adjusting them to today’s value. Often used by investors and analysts during valuation, especially for equity analysis and stock research.

3. Leveraged Buyout (LBO) Model
Used in private equity to check if buying a company using debt is profitable. It includes loan repayments, interest, and expected returns after selling the business later.

4. Merger & Acquisition (M&A) Model
Helps evaluate financial effects of merging with or acquiring another company. It considers cost savings, deal costs, and changes in earnings per share—important for strategic growth planning.

5. Budgeting Model
Used by companies to plan and manage finances. It sets targets for spending, tracks revenue, and compares real performance against the budget to ensure proper control and resource allocation.

6. Forecasting Model
Projects a company’s financial future, usually over several years. Unlike budgets, it’s more flexible and often includes best-case, worst-case, and realistic projections to guide long-term decisions.

7. Scenario and Sensitivity Models
Tests different financial outcomes by adjusting key inputs like sales or costs. Useful for seeing how changes in one factor can affect the overall business performance and risk exposure.

Common Use Cases of Financial Models

Financial models have widespread applications across industries and business functions. Here are some real-world uses:

1. Business Valuation
Investors and acquirers use financial models like DCF (Discounted Cash Flow)  to estimate a company’s value, helping them decide whether to buy, invest, or hold based on future earnings and expected returns.

2. Fundraising
Startups use financial models to show their revenue potential, costs, and growth projections. These models help convince venture capitalists or angel investors to fund their business ideas and expansion plans.

3. Budgeting and Forecasting
Finance teams use models to set financial goals, allocate resources, and predict future income and expenses. This helps businesses stay on track and make informed adjustments as needed.

4. Expansion Planning
When businesses consider growing through new locations, products, or markets, financial models help measure expected profits, costs, and risks, supporting better strategic decisions before committing funds.

5. Investor Presentations
Financial models are often part of pitch decks to show how money will be spent, how the business will grow, and what return investors can expect, building trust and credibility.

Financial Modeling in Excel: Basics to Know

Most models are built in Microsoft Excel, making it a critical tool for anyone learning what is financial modeling. Here’s what you need to know:

1. Key Formulas

• SUM, IF, VLOOKUP, INDEX/MATCH, NPV, IRR, PMT, XNPV, and XIRR are widely used.
  

2. Formatting Best Practices

• Use consistent formatting: color code inputs (blue), formulas (black), and links (green).
  
• Keep a clean, logical layout.
  

3. Error Checks

• Always include checks to verify your model’s accuracy—like balance sheet balancing (Assets = Liabilities + Equity).
  

4. Naming Conventions

• Use clear names for sheets, rows, and ranges to keep things organized.
  

5. Avoid Hardcoding

• Place all assumptions in a separate section and link them to your calculations.
  

Excel is also used to create dashboards for visual presentations. For advanced users, tools like Python or financial modeling software can add automation and complexity.

Examples of Financial Models Used in the Real World

Let’s look at some financial modeling examples used in real businesses.

1. Startup Financial Models

Startups often build a five-year financial projection model to raise funds from investors. This model includes assumptions about revenue growth, user acquisition, operating expenses (burn rate), and funding requirements.

Let’s understand this with an example:

Assumptions (Year 1)

• Users (starting): 10,000
  
• Monthly user growth rate: 10%
  
• Revenue per user per month: ₹100
  
• Monthly expenses (fixed): ₹5,00,000
  
• Monthly variable expenses (₹30/user)
  
• Planned fundraising milestone: After 12 months
  

Step-by-Step Calculation (Month 1 to Month 12)

Step 1: Calculate Users Each Month

Users grow by 10% monthly. So:

• Month 1: 10,000
  
• Month 2: 10,000 × 1.10 = 11,000
  
• Month 3: 11,000 × 1.10 = 12,100
  
• Month 12: Approx. 31,384 users
  

Total users in Year 1 (sum of all months) – 2,44,000

Step 2: Calculate Revenue

Revenue = Users × Revenue per User per Month

• Average monthly users ≈ 20,000
  
• Monthly Revenue = 20,000 × ₹100 = ₹20,00,000
  
• Yearly Revenue = ₹20,00,000 × 12 = ₹2.4 Crores
  

Step 3: Calculate Expenses

• Fixed Expenses = ₹5,00,000 × 12 = ₹60,00,000
  
• Variable Expenses = ₹30/user × 2,44,000 = ₹73,20,000
  
• Total Expenses = ₹60,00,000 + ₹73,20,000 = ₹1.33 Crores
  

Step 4: Calculate Burn Rate & Runway

Burn Rate = Expenses – Revenue (if negative cash flow)
In this case:

• Monthly Burn = ₹20,00,000 – ₹11,10,000 = ₹8,90,000 profit
  
• But in early months, revenue may not cover costs.
  

Assume first 6 months have a burn rate of ₹3,00,000/month

• Burn over 6 months = ₹18,00,000
  

Step 5: Fundraising Milestone

To raise funds, the startup includes projections like:

• User growth: From 10,000 to 31,000+ in one year
  
• Annual revenue target: ₹2.4 Cr
  
• Target funding: ₹1.5 Cr to support expansion and cover burn
  

Investors use this model to assess:

• Is the growth realistic?
  
• Are the expenses optimized?
  
• Will funding result in profitability or scale?
  

2. Project Finance Model

Used to evaluate large infrastructure or real estate projects. It includes debt service coverage ratios, construction costs, and timelines.

3. Franchise Expansion Model

Helps determine the financial impact of opening new franchise locations by analyzing capital costs, break-even points, and ROI.

4. Business Plan Model

Entrepreneurs use this to support loan applications or internal planning. It covers expected cash flows, costs, and sales projections.

Such financial modeling examples help you see the practical application of theory in industries ranging from tech and healthcare to real estate and retail.

Tips to Build a Robust Financial Model

Building a model isn’t just about crunching numbers. It’s about making sure it’s reliable, understandable, and decision-ready.

1. Start with Clear Assumptions

All calculations depend on assumptions—make them realistic and well-documented.

2. Ensure Consistency

Follow a consistent format across worksheets, formulas, and data entry.

3. Make it Flexible

Allow easy updates to variables like growth rates, cost inflation, or capital expenses.

4. Use Scenarios

Incorporate “best-case,” “worst-case,” and “most likely” scenarios to test robustness.

5. Link Everything

Avoid hardcoded values. Instead, use references to ensure easy updates.

6. Keep it Simple

Don’t overcomplicate with too many variables unless necessary. Simple models are easier to interpret and audit.

By applying these practices, your models will become powerful tools aligned with your financial ikigai, that sweet spot where financial knowledge meets purpose.

Conclusion

Financial models are critical tools that help businesses, investors, and individuals make informed decisions. Learning how to build and read them is a valuable skill.

You don’t need to be a finance expert to get started. With practice, online courses, and a good understanding of Excel, anyone can begin their journey into what is financial modelling.

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 Financial Models

What is the purpose of a financial model?

A financial model helps predict future business outcomes. It supports decisions like investment evaluation, fundraising, budgeting, and risk analysis.

What are the most common types of financial models?

The most common include the 3-statement model, discounted cash flow (DCF), budgeting model, forecasting model, and scenario-based models.

Is financial modeling only for finance professionals?

No. While finance professionals use it regularly, entrepreneurs, business founders, product heads, and analysts also benefit greatly from learning what is financial modeling.

How accurate are financial models?

Financial models are only as accurate as the assumptions behind them. Including multiple scenarios improves reliability and helps manage risk.

What tools are used for financial modeling?

The most widely used tool is Microsoft Excel. Others include Google Sheets, Python (for automation or analytics), and specialized financial modeling software.

Can I learn financial modeling online?

Absolutely. Many free and paid courses teach financial modeling basics, with templates and real-world financial modeling examples. It’s a skill worth building for long-term professional growth.

Understanding a company’s financial health is essential before making any investment. Whether you are a beginner or rely on share market advisory services, reading financial reports helps you assess performance, risk, and growth potential. 

Two types of financial reports, standalone vs consolidated financial statements, often confuse investors. 

This guide will simplify the concepts and help you learn how to read balance sheets and decipher income statements with confidence.  

What Are Financial Statements?

Financial statements are formal records of a company’s financial activities and performance over a period. These include:

• Balance Sheet – shows assets, liabilities, and equity
  
• Income Statement (Profit and Loss) – reveals revenues and expenses.
  
• Cash Flow Statement – tracks inflow and outflow of cash.
  
• Statement of Changes in Equity – reflects changes in ownership value.
  

What Are Standalone Financial Statements?

Standalone financial statements represent the financial performance and position of a single entity, the parent company, without including the results of its subsidiaries or associated companies.

Key Features:

• Reflect only the operations of the parent company.
  
• Do not include the financials of subsidiaries, joint ventures, or associate companies.
  
• Help understand the core business strength of the parent entity.
  

For example, if Tata Motors reports standalone results, it shows how Tata Motors performed in isolation, without including companies like Jaguar Land Rover or Tata Technologies.

These statements are useful when an investor wants to evaluate how profitable or efficient the parent company is by itself.

What Are Consolidated Financial Statements?

Consolidated financial statements are financial reports that combine the financials of the parent company and all its subsidiaries, associate companies, and joint ventures.

Key Features:

• Present a comprehensive financial picture of the entire business group.
  
• Include revenues, expenses, assets, and liabilities of all entities under the group.
  
• Eliminate intra-group transactions to avoid double-counting.
  

For example, consolidated financial statements of Tata Motors will include figures from Jaguar Land Rover, Tata Technologies, and any other company it controls or significantly influences.

As per Indian Accounting Standards (Ind AS) and international accounting norms, publicly listed companies are required to publish consolidated statements for transparent reporting.

Standalone vs Consolidated Financial Statements: Key Differences

Understanding the contrast between standalone vs consolidated financial statements helps in interpreting financial data correctly. Here’s a side-by-side comparison:

Feature	Standalone Financial Statements	Consolidated Financial Statements
Scope	Only parent company	Parent + subsidiaries and associates
Purpose	Shows core entity’s performance	Shows group-wide financial performance
Complexity	Simpler to prepare and read	More detailed and complex
Investor Clarity	Good for evaluating individual company	Better for overall financial health
Internal Transactions	Not adjusted	Eliminated for accuracy
Usage	Legal compliance, segment evaluation	Transparency, group-level decision making
Regulation	Required by Companies Act	Mandated by SEBI and Ind AS for listed firms

By understanding both, investors can assess where a company is earning money and how much influence subsidiaries have on its profitability.

Why Are Both Financial Statements Important for Investors?

Both standalone financial statements and consolidated financial statements serve different purposes. Here’s why both matter to investors:

1. Clarity on Core Operations

Standalone financials help investors understand the profitability of the primary company without the noise of subsidiary data. For example, if a parent company is profitable while its subsidiaries are not, standalone data shows the true core strength.

2. Group-Level Performance

Consolidated statements show the overall performance of the business group. This is critical when evaluating diversified companies like Reliance Industries, which have businesses in oil, retail, telecom, etc.

3. Risk Analysis

An investor relying on only one set of financials may misjudge the risk. For instance, a profitable standalone result may mask losses in subsidiaries unless one looks at consolidated numbers.

4. Informed Decisions

Share market advisory services often recommend reviewing both statements to make better long-term investment decisions.

Examples: Reading Standalone and Consolidated Financials

Let’s look at an example to understand the difference better:

Example 1: Hypothetical Company – ABC Ltd.

ABC Ltd. owns 100% of a subsidiary XYZ Ltd.

Particulars	ABC Ltd. (Standalone)	ABC Ltd. + XYZ Ltd. (Consolidated)
Revenue	₹500 crore	₹750 crore
Net Profit	₹100 crore	₹80 crore
Debt	₹200 crore	₹400 crore

Here, the standalone statements show a net profit of ₹100 crore, but the consolidated version reveals a lower group-level profit of ₹80 crore. This indicates that the subsidiary XYZ Ltd. is making losses or has high costs.

Example 2: Real Example – Tata Steel (as per public filings)

Tata Steel’s standalone PAT (Profit After Tax) may be ₹2,000 crore, but its consolidated PAT (including operations from Europe and Southeast Asia) might show a different picture — often significantly lower or higher.

This is why understanding how to read balance sheets and deciphering income statements in both contexts is crucial.

Which Financial Statement Should You Rely On as an Investor?

Both statements have value, but which one to prioritize depends on your investment objective:

Choose Standalone When:

• You want to assess the core business performance of the parent.
  
• You are evaluating operational efficiency at the parent level.
  
• You want to understand segment-wise profit or loss.
  

Choose Consolidated When:

• You want a holistic view of the company’s total performance.
  
• You are investing in companies with multiple subsidiaries.
  
• You need to assess group-level risks and liabilities.
  

Large investors and share market advisory services usually prefer consolidated financial statements for long-term evaluation, while retail investors may refer to standalone statements for quarterly trends or specific segment performance.

How Are These Statements Regulated in India?

India has well-defined regulatory frameworks ensuring companies report both sets of financials accurately:

1. Companies Act, 2013

• Mandates the preparation of both standalone and consolidated financial statements for companies with subsidiaries.
  
• Ensures that shareholders get a complete financial overview.
  

2. SEBI (Listing Obligations and Disclosure Requirements)

• Requires listed companies to disclose both standalone and consolidated results quarterly and annually.
  
• Promotes transparency and comparability across companies.
  

3. Indian Accounting Standards (Ind AS)

• Align with International Financial Reporting Standards (IFRS).
  
• Provide specific guidelines on consolidation, elimination of intra-group transactions, treatment of joint ventures, etc.
  

By adhering to these regulations, Indian firms provide a reliable and consistent framework for investors to analyze financial performance.

Conclusion

Understanding the distinction between standalone vs consolidated financial statements is key to making smart investment choices. While standalone statements tell you how the parent company is performing, consolidated statements give a complete view of the entire business group.

Whether you are using share market advisory services or conducting your own research, it’s essential to compare both standalone and consolidated data. Start by understanding basic financial terms and learning how to read balance sheets. Don’t focus solely on profits, also, evaluate debts, expenses, and cash flows. Mastering these concepts and basic financial terms will empower you to assess companies more accurately and make informed investment 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 & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs 

What is the major difference between standalone and consolidated financial statements?

The main difference is scope. Standalone financial statements present the financials of the parent company alone, while consolidated financial statements include the combined financials of the parent and its subsidiaries.

Why do companies publish both standalone and consolidated results?

Companies publish both to offer transparency. Standalone reports help assess the main company’s health, while consolidated statements reveal how the entire group is performing — crucial for diversified companies.

Are consolidated financial statements more reliable?

Yes, for most investors. Consolidated financial statements provide a complete picture of a company’s operations and finances across its group. They are more useful for evaluating overall performance and risk exposure.

Do retail investors need to read both statements?

Yes. Retail investors benefit from comparing both to understand where profits or losses are coming from. Relying solely on one can give a distorted view of a company’s health, especially in large conglomerates.

Where can I find these financial statements?

Both standalone and consolidated financial statements are usually available through multiple sources such as company annual reports, stock exchange filings on platforms like NSE and BSE, the SEBI website, and the investor relations sections of company websites. These platforms provide access to reliable financial data, helping investors understand a company’s financial performance using accurate and updated information.

Samvardhana Motherson International Ltd. (SMIL), one of the world’s largest automotive component manufacturers, has announced a major acquisition that further cements its global presence. The company will acquire 81% stake in Japan’s Yutaka Giken Co., Ltd. (YGCL), a long-term supplier to Honda Motor Company, along with 100% stake in Yutaka Autoparts India. This acquisition is a strategic leap for SMIL, strengthening its product portfolio, global reach, and partnership with Honda, one of the world’s most respected automotive brands.

Why This Deal Matters

Yutaka Giken is a trusted supplier of crucial metal components and assemblies for Honda, including rotors, stator assemblies, drive systems, and brake systems. With 13 manufacturing plants and 1 R&D center across 9 countries (Japan, China, USA, Thailand, Brazil, India, Indonesia, Mexico, and the Philippines), YGCL brings both scale and technical expertise. Importantly, the company is debt-free, making it a clean and financially sound acquisition target.

For SMIL, this acquisition enhances its ability to serve Honda more effectively while opening the door to cross-selling opportunities with other global automakers, especially in emerging markets where demand for high-quality components is rising rapidly.

Market Reaction and Strategic Importance

The announcement was welcomed by investors, with SMIL’s stock moving higher on the news. The market clearly views this acquisition as a strong strategic fit, reinforcing SMIL’s position in the automotive value chain. By integrating Yutaka Giken’s capabilities, SMIL is not only expanding its metal component portfolio but also strengthening its long-term “content per car” strategy—the idea of increasing the value of Motherson’s components in every vehicle manufactured worldwide.

A Diversified Global Giant

SMIL is not new to transformative acquisitions. As a diversified global manufacturing specialist, the company operates across 44 countries with more than 400 facilities on five continents. It serves nearly every major automotive OEM while also supplying to industries such as aerospace, logistics, health & medical, and IT.

Its operations are structured across five core business segments:

1. Wiring Harness – End-to-end design, development, and manufacturing of complete wiring systems.
   
2. Vision Systems – Supply of interior and exterior mirrors, along with advanced camera-based detection systems.
   
3. Modules & Polymer Products – The largest revenue contributor, supplying everything from plastic components to fully integrated modules.
   
4. Integrated Assemblies – Premium module assembly and delivery solutions for automakers.
   
5. Emerging Businesses – Expanding into non-automotive areas like aerospace and healthcare.
   

Among these, the Modules & Polymer Products division contributes the biggest share of SMIL’s revenues, making the Yutaka Giken acquisition particularly significant as it diversifies and strengthens the metal components vertical.

Aligning with Industry Shifts

The automotive industry is undergoing rapid transformation, with the rise of electric vehicles (EVs), hybrid technologies, and advanced mobility solutions. Acquiring a metal components specialist like YGCL helps SMIL position itself strongly in these future-ready areas. Components such as stators and drive systems are essential not only for internal combustion engines but also for the evolving EV and hybrid architectures.

This acquisition therefore allows SMIL to fortify its core business while securing a foothold in next-generation vehicle technologies.

Financial Strength and Execution Capability

Despite facing some profitability pressures due to industry-wide headwinds, SMIL continues to show resilience. Revenue has grown steadily, largely driven by acquisitions and solid performance across businesses. Importantly, the company maintains a comfortable leverage ratio of 1.1x, giving it the flexibility to fund acquisitions and expansion without straining its balance sheet.

Management has emphasized that the challenges in Europe are being addressed and cost optimization measures are underway. With its track record of successfully integrating global businesses, SMIL is well-positioned to extract long-term value from the Yutaka Giken acquisition.

Looking Ahead

The acquisition is expected to be completed by Q1 FY27, and once finalized, it will give SMIL a stronger relationship with Honda while expanding its customer base and product offerings. By combining its global footprint with Yutaka Giken’s specialized expertise, SMIL is set to become an even more strategic partner for global automakers.

The deal reflects SMIL’s broader vision of evolving from just a component supplier to a value-adding partner in the global automotive ecosystem. It also highlights the company’s ability to align with industry megatrends like electrification, safety, and smart mobility.

Conclusion

The Yutaka Giken acquisition is more than just another addition to SMIL’s portfolio—it is a strategic move that enhances its capabilities, strengthens relationships with global OEMs, and prepares it for the future of mobility. With its scale, execution strength, and diversified presence, SMIL continues to demonstrate why it remains one of the most trusted names in the automotive supply chain.

For investors and industry watchers alike, this acquisition is a clear sign that Samvardhana Motherson is not just keeping pace with global industry shifts—it’s driving them.

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.

Waaree Energies, one of India’s leading renewable energy companies, has made headlines after its US subsidiary secured a 452 MW solar module supply order for large-scale projects in America. This milestone order reflects Waaree’s growing global presence and gave investors reason to cheer, sending the company’s stock to an eight-month high.

The achievement underlines Waaree’s strong execution capabilities, international ambitions, and its alignment with the accelerating global transition to clean energy.

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Waaree Energies: A Leading Name in Renewable Energy

Waaree Energies has established itself as a major force in the renewable energy space, with a strong focus on solar photovoltaic (PV) modules and cells manufacturing.

• Module capacity: ~15 GW
  
• Cell capacity: ~5.4 GW
  

This significant manufacturing base gives Waaree a competitive edge both in India and globally. Beyond the domestic market, Waaree has expanded its footprint to 25+ countries, consistently winning international orders.

The company is working toward becoming an end-to-end green energy solutions provider, supporting the entire solar value chain and catering to the rising demand for clean energy worldwide.

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The 452 MW US Order: A Strategic Breakthrough

The latest order involves supplying 452 MW of solar modules to a major utility-scale solar project developer in the United States. This contract is part of Waaree’s FY26–27 supply schedule and underscores the company’s increasing relevance in the American renewable energy market.

Notably, this deal follows other significant wins:

• 540 MW order in June 2025
  
• 586 MW and 599 MW orders earlier this year
  

Together, these international orders demonstrate Waaree’s ability to consistently attract large contracts from overseas developers.

The US has emerged as a key growth market for Waaree, aided by its 1.6 GW module manufacturing facility in Texas, which positions the company strategically to meet local demand while complying with domestic sourcing preferences and clean energy policies.

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Robust Order Book and Project Pipeline

Waaree’s strong execution and global expansion are reflected in its impressive order book and pipeline:

• Order book: ~₹49,000 crore (equivalent to ~25 GW of projects)
  
• Project pipeline: Over 100 GW
  

This healthy backlog gives Waaree significant revenue visibility and a clear path for sustained growth in the coming years.

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Strong Financial Performance Backing Expansion

In addition to its operational milestones, Waaree Energies has delivered solid financial results.

For Q1 FY26, the company reported:

• Healthy revenue growth supported by domestic and international orders.
  
• Significant jump in profitability, showcasing improved margins and efficient operations.
  

Looking ahead, Waaree has set an ambitious guidance for FY26, targeting an EBITDA of ₹5,500–6,000 crore. Such confident projections highlight the company’s optimism and ability to translate its strong pipeline into tangible financial performance.

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Strategic Importance of the US Market

The United States is currently one of the largest and fastest-growing solar markets globally. With supportive government policies, such as clean energy tax credits under the Inflation Reduction Act (IRA), demand for renewable energy infrastructure is expected to surge in the coming decade.

Waaree’s growing foothold in the US, marked by this 452 MW order and its Texas facility, perfectly aligns with these tailwinds. By establishing a credible presence in North America, Waaree is positioning itself as a long-term strategic supplier in one of the world’s most lucrative renewable markets.

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Why This Matters for Investors

For investors, the recent developments around Waaree Energies carry several important takeaways:

1. Global Expansion in Motion – With multiple wins across international markets, Waaree is successfully executing its overseas growth strategy.
   
2. Robust Order Book – A ₹49,000 crore backlog provides strong revenue visibility, reducing earnings volatility.
   
3. Financial Strength – The Q1 FY26 performance and strong guidance point to sustained profitability.
   
4. Sector Tailwinds – Supportive policies in both India and the US, along with global decarbonisation efforts, create a favourable long-term environment.
   
5. Stock Market Confidence – The latest contract win lifted Waaree’s stock to an eight-month high, signalling investor optimism.
   

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The Road Ahead

Waaree Energies’ expansion strategy blends scale, execution, and market diversification. Key priorities moving forward include:

• Scaling global operations with a sharper focus on the US and Europe.
  
• Expanding domestic capacity to cater to India’s growing renewable demand.
  
• Investing in technology and R&D to enhance efficiency and competitiveness.
  
• Capturing value across the clean energy chain, from module manufacturing to end-to-end green energy solutions.
  

As renewable energy transitions from being a niche sector to a mainstream global priority, Waaree is well-positioned to ride this structural growth wave.

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Conclusion

The 452 MW solar module order in the US marks another major milestone in Waaree Energies’ global journey. Backed by a strong order book, expanding international presence, and consistent financial performance, the company is carving out a leadership position in the renewable energy space.

While short-term market movements may come and go, Waaree’s strategic expansion, operational excellence, and alignment with global clean energy trends suggest that its long-term growth story remains firmly intact.

For investors and industry watchers alike, Waaree Energies is emerging as a key player not just in India, but in the global renewable energy 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.

Shares of InterGlobe Aviation, the parent company of India’s largest airline IndiGo, witnessed pressure in intraday trade after news surfaced that the Gangwal family had offloaded a part of their stake. The family of co-founder Rakesh Gangwal sold 2.2% equity through a block deal, amounting to approximately ₹5,136 crore, as part of their ongoing phased exit strategy.

This development has naturally sparked investor curiosity, given IndiGo’s dominance in the Indian aviation sector. However, while the stock faced short-term pressure, the company’s long-term fundamentals and growth trajectory remain robust.

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Background: The Gangwal Family’s Stake Sale

The Gangwal family’s exit strategy has been underway for more than three years. In February 2022, Rakesh Gangwal resigned from IndiGo’s board following differences with co-founder Rahul Bhatia. Since then, the family has been gradually reducing its shareholding through block deals.

• In 2023 and 2024, the family trimmed its holdings.
  
• In May 2025, they sold 3.4% stake.
  
• The latest move involved selling 2.2% stake, bringing down their total holding to ~5%.
  

Interestingly, earlier reports suggested a possible 3.1% sale, but the family ultimately opted for a smaller tranche this time. As of June 2025, the promoter group’s collective stake stood at around 44%, with Rakesh Gangwal personally holding 4.73% and the Chinkerpoo Family Trust owning 3.08%.

With the recent sale, the Gangwal family’s role as significant shareholders has further diminished, reaffirming their intent to eventually exit completely from the company.

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IndiGo’s Business Model and Market Leadership

Despite stake sale headlines, IndiGo continues to shine operationally. Known for its low-cost carrier (LCC) model, the airline has built its reputation on:

• Affordable fares
  
• On-time performance
  
• Hassle-free travel experience
  

This clear and consistent strategy has enabled IndiGo to cement a dominant leadership position in India’s aviation market.

As of Q1 FY26, the airline operates a fleet of 400+ aircraft, covering 91 domestic and 41 international destinations. This makes IndiGo not only India’s largest passenger airline but also one of the most strategically positioned carriers to benefit from rising travel demand in the long run.

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Q1 FY26 Performance: Strong Growth Despite Cost Pressures

IndiGo’s Q1 FY26 earnings highlight the company’s ability to deliver growth even in a challenging environment.

• Revenue Growth: Healthy year-on-year growth, supported by higher passenger traffic.
  
• Profitability: Margins were under some pressure due to elevated fuel costs—a common challenge across the aviation sector.
  
• Operational Strength: Passenger metrics remained strong, underscoring IndiGo’s brand loyalty.
  

What stands out is IndiGo’s ability to gain market share even when the overall industry faced a slowdown.

In July 2025, India’s domestic air traffic declined by 2.9%, but IndiGo’s market share rose to an impressive 65.2%. This reflects the airline’s operational resilience and competitive edge.

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Why Investors Should View the Stake Sale in Context

While the Gangwal family’s stake reduction has created short-term volatility in IndiGo’s stock, it is important to understand the broader context:

1. Planned Exit Strategy – This is not a sudden or unexpected move. It is part of a multi-year phased exit that began in 2022.
   
2. No Impact on Operations – IndiGo’s management and day-to-day operations remain unaffected. The airline continues to execute its growth strategy.
   
3. Sectoral Tailwinds – India’s aviation market remains structurally attractive, with long-term demand expected to grow due to rising disposable incomes, increasing urbanisation, and improving airport infrastructure.
   
4. Market Leadership – IndiGo’s ability to capture market share in a shrinking industry environment reinforces its dominance.
   

In essence, the stake sale reflects a personal financial decision by the Gangwal family rather than a reflection of IndiGo’s business fundamentals.

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The Road Ahead

Looking ahead, IndiGo is well-positioned to capitalise on the next phase of India’s aviation growth story. Key growth drivers include:

• Fleet Expansion: Continuous additions to its aircraft fleet.
  
• International Growth: Expanding network in high-demand overseas routes.
  
• Cost Discipline: Leveraging its low-cost model to withstand industry headwinds.
  
• Brand Loyalty: Strong customer trust that allows it to outperform peers consistently.
  

As the aviation sector navigates cyclical challenges like fuel price volatility and seasonal demand swings, IndiGo’s scale, efficiency, and execution give it a distinct advantage.

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Conclusion

The Gangwal family’s latest stake sale might have triggered short-term stock pressure for IndiGo, but it is simply another step in their multi-year exit plan. Importantly, it does not alter IndiGo’s long-term growth story.

With its dominant 65.2% market share, extensive route network, and a business model tailored to cost efficiency and customer convenience, IndiGo remains a standout performer in India’s aviation sector.

For investors, the message is clear: while ownership patterns may shift, IndiGo’s operational strength, market leadership, and growth prospects remain firmly intact.

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.

When you’re trying to grow your money or plan for your retirement, how you manage the investments is just as important as where you invest. That’s where Portfolio Management Services (PMS) come in. They help create personalized strategies based on your goals and the level of risk you are comfortable taking. 

But not all Portfolio management types are the same. It’s important to know the difference between Discretionary, Non-Discretionary, and Advisory PMS, as each gives you a different level of control and involvement.

From complete delegation to personalized guidance, each type of PMS investment offers you a different level of decision-making freedom and customization.

As part of this beginner’s guide to PMS, let’s explore the different types of portfolio management services to help you choose the right one for your investment journey.

What Are Portfolio Management Services?

In simple terms, Portfolio Management Services (PMS) are professional investment services offered by qualified portfolio managers who build and manage a customized portfolio on behalf of clients.

Classification of Portfolio Management Services in India

In India, portfolio management services are typically classified into three broad categories, based on how investment decisions are taken and who controls the final execution.

Here’s a quick look:

Portfolio Management Type	Decision Control	Execution	Investor Involvement
Discretionary PMS	Fund Manager	By Fund Manager	Minimal
Non-Discretionary PMS	Investor	By Investor	Moderate
Advisory PMS	Investor	By Investor	High

These classifications help investors select services based on their comfort with risk, investment knowledge, and time availability.

Discretionary Portfolio Management Services

Under Discretionary PMS, the portfolio manager takes complete control of all investment decisions. From choosing the right stocks to deciding when to buy or sell, everything is handled professionally without the investor’s involvement.

Key Features

1. The manager has full discretion over the investment strategy:
The portfolio manager independently selects assets, allocates funds, and manages investments without needing approval from the investor for each move.

2. Ideal for investors who prefer a hands-off approach:
Perfect for those who want professional management without being involved in daily decisions or constantly monitoring the market themselves.

3. The portfolio is personalized based on the investor’s risk profile, but the manager drives daily decisions:
While tailored to your goals and risk level, the manager takes complete charge of buying, selling, and strategy implementation.

4. Generally suited for High Net-Worth Individuals (HNIs):
Best for busy or less-experienced investors who trust professionals to manage large investments efficiently and strategically.

Discretionary PMS is among the most popular portfolio management types in India, especially for those looking for long-term wealth creation without daily market monitoring.

Non-Discretionary Portfolio Management Services

In Non-Discretionary PMS, the portfolio manager only provides recommendations. The final decision to buy or sell securities lies with the investor. Execution also happens only after the investor’s approval.

Key Features

1. Investor retains control over final transactions:
In Non-Discretionary PMS, the investor makes the final call, giving full control over buying and selling decisions.

2. Portfolio managers give advice, but no action is taken without approval:
Managers suggest investment moves, but nothing happens unless the investor agrees, ensuring complete involvement in every portfolio decision.

3. Suitable for investors who are knowledgeable and want better transparency and control:
Best for experienced investors who prefer to stay involved and value having a clear view of all portfolio actions.

4. Helps build confidence and allows for real-time involvement in the investment process:
Since investors stay actively engaged, it boosts their confidence and understanding, making the investment journey more hands-on and transparent.

If you are someone who enjoys reviewing suggestions and wants custom advice with control, this type of PMS investment may be for you.

Advisory Portfolio Management Services

The Advisory PMS model is the most flexible and cost-efficient among all portfolio management types. Here, the manager provides advice, but the investor takes full responsibility for executing trades and managing funds.

Key Features

1. No direct execution by the portfolio manager:
In this model, the advisor only gives recommendations—all buy/sell decisions and trade execution are done by the investor.

2. Offers suggestions for portfolio allocation, diversification, and asset strategy:
The manager provides expert advice on where to invest, how to spread risk, and align strategy with financial goals.

3. Great for investors who prefer DIY investing with expert guidance:
Ideal for investors who like managing their own money but still want support from professionals for smarter decision-making.

4. Often comes at a lower fee structure, making it an attractive option for cost-conscious investors:
Since the advisor doesn’t handle transactions, fees are usually lower, making it a more affordable choice for budget-aware investors.

Advisory PMS works best for financially savvy individuals who want expert inputs while maintaining full autonomy.

Which Type of PMS is Best for You?

Selecting the right types of portfolio management services depends on your investment goals, time availability, market knowledge, and risk appetite.

Here’s a simple comparison to help you decide:

Factor	Discretionary PMS	Non-Discretionary PMS	Advisory PMS
Control	Low	Moderate	High
Cost	Higher	Moderate	Lower
Flexibility	Medium	High	Very High
Ideal For	Busy Professionals	Informed Investors	DIY Investors

SEBI Guidelines for Different PMS Types

The Securities and Exchange Board of India (SEBI) regulates all types of portfolio management services to ensure transparency, fairness, and investor protection.

Key Guidelines Include:

• Minimum Investment: SEBI mandates a minimum investment of ₹50 lakhs for PMS accounts.
  
• Registration: All PMS providers must be registered with the SEBI.
  
• Disclosure Norms: Clear performance reporting, risk metrics, and fee structures must be disclosed.
  
• Audit & Compliance: Regular audits and compliance checks ensure the safety of investor funds.
  

These regulations build trust and promote compliance in the financial ecosystem. Whether it’s discretionary or advisory, every portfolio management type is subject to strict governance.

How Do Portfolio Managers Customize These Services?

Each type of PMS investment allows for customization based on client profiles, investment goals, and market outlook.

Common Customization Strategies:

• Large-cap focused portfolios: Stable returns with lower risk.
  
• Mid & small-cap portfolios: High-growth potential with higher volatility.
  
• Thematic investing: Based on emerging trends like ESG, digital India, or green energy.
  
• Sectoral Strategies: Focused exposure to sectors like banking, IT, pharma, etc.
  

Whether you choose discretionary or non-discretionary PMS, your portfolio can be customized with different strategies to match your goals, highlighting key PMS benefits like flexibility and personalisation.

Common Myths About PMS Types

Many investors hesitate to use PMS due to confusion or myths around various portfolio management types. Let’s bust a few of them:

Myth 1: Non-discretionary PMS means no advice

Fact: Non-discretionary PMS provides regular expert recommendations, but the investor takes final action.

Myth 2: Advisory PMS is the same as mutual funds

Fact: Mutual funds pool money from multiple investors, while advisory PMS offers personalized recommendations based on your profile.

Myth 3: Discretionary PMS locks you out of your portfolio

Fact: While the manager takes decisions, you can monitor performance and receive detailed reports regularly.

Myth 4: All PMS types are risky

Fact: Risk varies by strategy, not by portfolio management type. A conservative discretionary PMS can be less risky than an aggressive advisory plan.

Understanding the types of portfolio management services and debunking these myths can help you make smarter financial decisions.

Conclusion

Choosing the right type of portfolio management is like picking the perfect travel guide – you need someone who understands your journey and moves at your pace. Whether you are a busy professional seeking a fully managed solution or a hands-on investor who enjoys being involved, there’s a PMS model that fits. 

With guidance from a trusted share market advisor, you can assess your risk appetite, time commitment, and financial goals to choose between discretionary, non-discretionary, or advisory PMS services.

FAQs 

What is the difference between discretionary and non-discretionary PMS?

In discretionary PMS, the portfolio manager makes all buy/sell decisions independently. In non-discretionary PMS, the manager gives advice, but the investor must approve and execute each trade.

Which PMS type offers more control?

Advisory PMS offers the highest level of control, followed by non-discretionary PMS. In discretionary PMS, the control lies mostly with the fund manager.

Is advisory PMS suitable for HNIs?

Yes, especially for HNIs who are financially savvy and prefer to take decisions themselves but still value expert guidance. It also offers cost benefits.

Can I switch between PMS types later?

Switching is possible, but it depends on the terms of your agreement and the PMS provider’s offerings. Always consult your portfolio manager for a smooth transition.

Are all PMS types SEBI registered?

Yes. All providers offering any type of portfolio management service must be registered with SEBI and adhere to its regulations.

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.