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Friendless EU Turns To India: Trade, Defense, And A New World Order 

Friendless EU Turns To India: Trade, Defense, And A New World Order 

The European Union (EU) has found itself navigating a complex and evolving global landscape in recent years. Facing challenges in its traditional alliances and seeking to diversify its partnerships, the EU has turned its attention to India, recognizing the nation’s burgeoning economic and defense capabilities. This pivot underscores the EU’s strategic intent to bolster ties with India, aiming to secure mutual benefits in trade, technology, and security domains.

Historical Context of EU-India Trade Relations

The EU and India have shared a dynamic trade relationship that has evolved over decades. The EU is India’s largest trading partner, accounting for €124 billion in goods trade in 2023, representing 12.2% of India’s total trade. This positions the EU ahead of the USA (10.8%) and China (10.5%) in trade with India. Conversely, India ranks as the EU’s 9th largest trading partner, contributing to 2.2% of the EU’s total goods trade in 2023. 

Over the last decade, trade in goods between the EU and India has surged by nearly 90%, reflecting a robust and growing economic partnership. In the services sector, bilateral trade reached €59.7 billion in 2023, a significant increase from €30.4 billion in 2020. The EU’s foreign investment stock in India also escalated to €108.3 billion in 2022, up from €82.3 billion in 2019, making it one of the largest investors in India. (Source: European Commission)

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Source: European Commission, Eurostat

Recent Developments and Strategic Shifts

In a significant move to strengthen bilateral ties, European Commission President Ursula von der Leyen, accompanied by a senior delegation, visited New Delhi in early 2025. This visit culminated in a mutual commitment to finalize a comprehensive Free Trade Agreement (FTA) by the end of the year. The envisioned FTA aims to enhance cooperation across various sectors, including trade, technology, connectivity, and defense. If finalized, it could become one of the largest agreements of its kind globally. (Source: Financial Times)

This strategic engagement is driven by the EU’s intent to diversify its economic partnerships amidst geopolitical tensions and tariff threats from the United States. By deepening ties with India, the EU seeks to reduce its reliance on traditional partners and mitigate risks associated with its strained relationships with China and the U.S. (Source: Reuters) 

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Economic Implications of the Proposed FTA

For the EU:

  • Market Expansion: Access to India’s rapidly growing economy is expected to become the world’s third-largest by 2030.
  • Reduced Trade Barriers: Lower tariffs on European exports, particularly in automobiles, alcoholic beverages, and luxury goods.
  • Stronger Supply Chains: India’s role as a manufacturing hub can help diversify supply chains away from China.
  • Tech & Innovation Collaborations: Increased engagement in AI, green energy, and digital transformation.
  • Investment Opportunities: Infrastructure, pharmaceuticals, and financial services open up for European firms.

For India:

  • Boost to Exports: Greater access to the €16 trillion EU market, increasing trade volumes.
  • FDI Inflows: Potential increase in investments in renewable energy, automotive, and digital sectors.
  • Job Creation: Enhanced trade and investment will stimulate employment across manufacturing, services, and IT industries.
  • Eased Compliance Standards: Greater alignment with EU trade regulations will facilitate smoother entry for Indian firms.
  • Technology Transfer: Collaboration with EU firms will accelerate India’s push toward high-tech and green industries. 

Defense and Security Collaboration

Beyond trade, the EU and India seek to fortify their defense and security partnership. In a landmark development, the EU is set to appoint a military adviser in India, marking a first in their bilateral relations. This move signifies the EU’s intent to enhance security cooperation with India, aligning with its broader Indo-Pacific strategy. (Source: Times of India)

Enhanced defense collaboration could encompass:

  • Joint military exercises and naval drills in the Indian Ocean.
  • Cybersecurity cooperation to counteract cyber threats.
  • Technology and intelligence sharing to address global security risks.
  • Strengthened counterterrorism efforts through multilateral frameworks.

Challenges and Considerations

While the prospects of deeper EU-India relations are promising, several challenges warrant consideration:

1. Trade Barriers & Tariffs

India’s relatively high tariffs on European goods, especially automobiles (100%) and alcoholic beverages (150%), remain a significant hurdle. The EU is pushing for tariff reductions to facilitate smoother market entry for European businesses. (Source: Reuters)

2. Regulatory Alignment

Divergent regulatory frameworks between the EU and India pose hurdles. The EU’s stringent environmental and data privacy laws (GDPR) could conflict with India’s business norms, requiring extensive negotiations for alignment.

3. Intellectual Property & Digital Trade

In past negotiations, India’s stance on data localization and intellectual property protections has been a sticking point. The EU seeks stricter IP rights and data-sharing norms, which may require India to alter its digital trade policies.

4. Geopolitical Pressures

Both India and the EU must navigate complex diplomatic landscapes:

  • EU’s strained ties with China necessitate a balancing act while increasing trade with India.
  • India’s independent foreign policy stance may not always align with EU security interests, particularly regarding Russia and regional conflicts.

5. Bureaucratic and Political Challenges

Due to bureaucratic hurdles, trade negotiations between the EU and India have stalled multiple times since 2007. It will be critical to ensure political willpower to finalize the FTA before 2025’s EU elections.

Conclusion

The EU’s strategic pivot toward India is a calculated move to diversify its partnerships in a rapidly shifting global order. The EU and India can gain economically, technologically, and strategically by pursuing a comprehensive FTA and strengthening defense collaboration. However, realizing the full potential of this partnership will require resolving trade barriers, regulatory differences, and geopolitical complexities through sustained engagement and diplomacy. 

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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.

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Lenskart: Turning Vision Into A ₹1,400 Cr Reality

Lenskart: Turning Vision Into A ₹1,400 Cr Reality

Hasn’t buying eyeglasses been such a hassle for the longest time? It was as if multiple store visits because of a limited collection, steep prices, and the constant struggle to find the right fit weren’t enough, and one had to deal with long waits to get the order. Not to mention choosing between style and affordability and compromising on one of the two!

But then came a vision that changed it all. More than just an eyewear brand, it reimagined how people choose, try, and buy glasses, making the experience a cakewalk, affordable, and available anytime, anywhere.

But this isn’t just a business story. It’s a story of revolution – of an engineer-turned-entrepreneur who dared to bring clarity to an age-old industry.

Curious to learn more? Read on

Story of Lenskart Storytelling 00 02

From Microsoft to Basement Hustles

You’ve made it if you land a job at Microsoft, especially in the US. At least, that’s what most people would think.

But for Peyush Bansal, the dream job felt more like a detour. “Microsoft was all about ushering in revolutions and consumer obsession,” he recalls.

He wanted to create something that genuinely changed lives. Kuch disruptive karna tha. So, in November 2007, he did the unthinkable: He quit his job, packed his bags, and flew back to India.

With ₹25 lakh in savings and an idea, he set up shop in the basement of his parent’s house in South Delhi. His first venture?

SearchMyCampus, an online classifieds platform for students looking for jobs and housing. It had a heart. It had a purpose. But it didn’t have profit.

One year in, he realized the hard truth: the numbers weren’t increasing. He needed a new plan.

Story of Lenskart Storytelling 00 03

The Birth of Lenskart

His next move? Flyrr, is an online eyewear platform catering to the U.S. market. This time, things clicked. By mid-2010, Flyrr was making $100,000 a month. The business was scaling, but something was off—he had no control over operations.

Suppliers weren’t listening to customer complaints. Orders were delayed. The cracks were growing. That’s when a thought hit him—what if he adapted this model to India?

The idea made sense. Millions of Indians needed prescription glasses, but buying them was a bad experience: overpriced, outdated, and inconvenient.

His team was all in. And just like that, in November 2010, Lenskart was born.

Story of Lenskart Storytelling 00 04

Seeing Through the Doubt:

The biggest hurdle? Convincing people to buy glasses online. Eyewear wasn’t like books or clothes—you couldn’t just click ‘Add to Cart’ without trying them on.

To erase that fear, Bansal pulled two bold moves – A 14-day ‘No Questions Asked’ return policy (which later became a year) and a dedicated call center to assist customers.

It worked. Sales started climbing. Then, in early 2011, IDG Ventures—the same investors who backed Myntra—came knocking.

Titan Eye Plus had already proven eyewear was a big business. But Lenskart’s online-first approach? That could be even bigger.

Bansal thought he needed ₹1-2 crore. The VCs had a different number in mind: $4 million (₹22 crore). The deal was done. 

Story of Lenskart Storytelling 00 05 1

The Multi-Store Experiment

There was one condition—the investors wanted Lenskart to expand beyond glasses.

Why stop at eyewear when you could also sell bags, watches, and jewelry? BagsKart, WatchKart, and JewelsKart were born within six months. And business boomed.

Revenue shot from ₹30 lakh to ₹10 crore by 2013. But while the new ventures were making money, they were also bleeding cash.

Lenskart was the only profitable part of the entire lot – ₹1 crore profit on ₹2 crore in sales. Bansal was at a crossroads. Did he follow the money or his mission?

Story of Lenskart Storytelling 00 06

The Ronnie Screwvala Moment

Enter Ronnie Screwvala, media mogul and serial entrepreneur. In January 2013, over a quiet breakfast meeting in Mumbai, he asked Bansal a simple question:

“What do you want to build?”
The answer came instantly—”I want to revolutionize eyewear.” “Then shut everything else down,” Screwvala said. Bansal hesitated. If he did that, investors might walk away.

“Don’t worry,” Screwvala assured him. “Shut them down, and I’ll invest more—at the same valuation.”
It was a moment of clarity.

Bansal took the leap. BagsKart, WatchKart, and JewelsKart were gone overnight. And Lenskart became the only focus.

Story of Lenskart Storytelling 00 07

From Clicks to Bricks

With all focus now on Lenskart, the next challenge was clear—cracking offline retail. People still believed, ‘try before you buy.’

So, Lenskart took a bold approach, blending online convenience with offline experience. 

Virtual try-ons and home eye tests made online shopping seamless, while physical stores helped bridge the trust gap.

AI-driven recommendations and precision-fit lenses ensured customers got the perfect pair every time. 
It wasn’t just about selling eyewear but changing how India shopped for it.

Story of Lenskart Storytelling 00 08

Blurred Losses to Crystal

The hybrid approach wasn’t just innovative—it was unstoppable.
By 2017, Lenskart had ₹179 crore in revenue—but losses of ₹262 crore.

But instead of slowing down, the company doubled down—cutting costs, improving operations, and refining its model.

One year later, the numbers flipped. Losses dropped to ₹118 crore, and revenue jumped to ₹292 crore. The breakthrough had arrived.

Story of Lenskart Storytelling 00 09

The Billion-Dollar Leap

December 2019 marked a milestone—Lenskart entered the unicorn club, raising $231 million from SoftBank.

And in 2020, for the first time—Lenskart turned a profit.
From a basement startup to a ₹1,400 crore business, the company had changed how India saw eyewear.

Reaching over 100,000 customers a month through www.lenskart.com and 1,400+ uniquely designed stores,

Lenskart is today a global powerhouse with a 69% gross margin—not by hiking prices but by relentlessly innovating.

Story of Lenskart Storytelling 00 10

Is 20/20: Lessons from the Journey

Success didn’t come without stumbles, and Bansal is the first to admit it. Early on, Lenskart’s high margins made cost-cutting an afterthought, leading to rising overheads and inefficiencies.

At the same time, while customers remained the priority, employees didn’t get the same focus.

External hires were favored over homegrown talent, and Lenskart started resembling big corporations rather than staying true to its roots. 

It took time to recognize these missteps and even longer to fix them, but Bansal knew that, like the perfect pair of glasses, a great company needs the right fit—inside and out.

Story of Lenskart Storytelling 00 11 1

Beyond Eyewear

Lenskart isn’t just about selling glasses—it’s about redefining vision.
From affordable pricing and free eye check-ups to cutting-edge tech and stylish designs, Lenskart ensures that clear sight is not a luxury but a right.

What started as a tiny basement hustle is now a billion-dollar brand. And if there’s one thing this journey proves, it’s that the right vision can change everything.

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From Street Snack to Industry Giant: The ₹30,000 Crore Momo Boom

From Street Snack to Industry Giant: The ₹30,000 Crore Momo Boom

In the bustling streets of India, a culinary revolution has been simmering, transforming a modest Himalayan dumpling into a colossal ₹30,000 crore industry. The momo, once a humble snack, has become a national obsession, captivating taste buds and carving a significant niche in the fast-food sector.

The Momo’s Journey: From Niche to Nationwide

In the late 1990s, momos were a rare delicacy found primarily in small eateries run by Tibetan refugees and Nepalese migrants. These establishments served traditional steamed dumplings filled with meat or vegetables and spicy chili sauce. Fast forward to today, and momos have become a ubiquitous street food, available in myriad variations across the country. Whether roadside stalls, high-end restaurants, or packaged frozen food aisles in supermarkets, momos are now integral to India’s food scene.

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The Rise of Organized Momo Chains

The momo industry in India remains unorganized mainly, with street vendors and small businesses dominating the landscape. However, Wow! Momo has emerged as a benchmark for gauging the industry’s growth, setting the standard for organized momo retail and expansion.

Leading the charge is Wow! Momo was founded in 2008 by Sagar Daryani and Binod Homagai with a modest investment of ₹30,000. From a single kiosk in Kolkata, Wow! Momo has expanded to over 680 outlets across 30 cities, offering innovative momo varieties that cater to diverse palates. The company’s success has attracted significant investments, including ₹130 crore from Tiger Global Management in 2019, valuing the chain at ₹860 crore. By 2024, Wow! Momo’s valuation soared to over ₹2,400 crore, following a ₹410 crore funding round led by Khazanah Nasional Berhad and OAKS Asset Management (Livemint).

The success of Wow! Momo has inspired many other food startups to follow a similar business model, creating more structured and scalable momo businesses. This has resulted in the emergence of brands such as Prasuma, which focuses on high-quality frozen momos, catering to the growing demand for ready-to-eat products.

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Source: Inc42

Expansion into the FMCG Sector

Recognizing the growing demand for ready-to-eat options, momo brands have ventured into the fast-moving consumer goods (FMCG) sector. Wow! Momo’s FMCG division, launched in 2023, achieved ₹60 crore in revenue within its second year, offering frozen momos and cup noodles through retail channels.

Similarly, Prasuma, a Gurugram-based brand known for its frozen momos, has gained popularity for providing convenient, high-quality products. In February 2025, ITC Ltd. announced plans to acquire Prasuma, aiming to strengthen its presence in the frozen foods market, which boasts an annual size of over ₹10,000 crore (Livemint).

This shift toward the FMCG sector signifies the momo industry’s transformation beyond street food. The ability to reach supermarket shelves has allowed momo brands to tap into India’s evolving consumer habits, where convenience and quality play a crucial role. It also signals potential global expansion, as Indian brands may begin exporting frozen momos to international markets.

Cultural Integration and Regional Adaptations

The momo’s widespread appeal can be attributed to its adaptability. Vendors and restaurants have introduced variations tailored to regional tastes, incorporating local spices and ingredients. From tandoori momos in North India to chocolate-filled momos for dessert enthusiasts, the versatility of this dish has endeared it to a broad audience. Momos have become an integral part of the street food culture in cities like Kolkata, with establishments like Blue Poppy Thakali serving hundreds of plates daily (Livemint).

The Road Ahead

As the momo industry continues to flourish, companies are exploring new avenues for growth. Wow! Momo, for instance, plans to go public within the next two years, aiming to replicate the success of global fast-food giants. The brand also seeks to expand its store count to 1,000 and double its revenue to ₹1,000-1,200 crore by 2027. With the increasing popularity of frozen and ready-to-eat momos, the industry’s trajectory points toward sustained expansion, driven by innovation and an ever-growing consumer base (Livemint).

In essence, the momo’s evolution from a regional delicacy to a national sensation exemplifies the dynamic nature of India’s culinary landscape. Its journey reflects changing consumer preferences and the potential for traditional foods to achieve commercial success on a grand scale.

Related Posts

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

  1. Why have momos become so popular in India?

    Momos have gained popularity due to their affordability, versatility, and ability to cater to a variety of tastes with different fillings and cooking styles.

  2. Which are the leading momo brands in India?

    Some of the leading momo brands in India include Wow! Momo, Prasuma, and several street food vendors who have built strong local reputations.

  3. How big is the Indian momo industry?

    The Indian momo industry is valued at approximately ₹30,000 crore and continues growing rapidly with increasing demand for street food and frozen momos.

  4. What are the different types of momos available?

    Momos come in various forms, including steamed, fried, tandoori, and pan-fried. They can be filled with vegetables, paneer, chicken, pork, or sweet fillings like chocolate.

  5. Are frozen momos as good as freshly made ones?

    Frozen momos have improved significantly in quality and taste, making them a convenient alternative. Brands like Prasuma and Wow! Momo offers high-quality frozen options that closely resemble freshly made momos.

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UltraTech's Wire Venture Sends Polycab, KEI, Havells Crashing Upto 20%

UltraTech’s Wire Venture Sends Polycab, KEI, Havells Crashing Upto 20%

A major development has rattled the Indian wires and cables industry. On February 25, 2025, UltraTech Cement, a key player in the Aditya Birla Group, announced its entry into the sector with a substantial ₹1,800 crore investment. This move aligns with the company’s vision to expand as a full-scale building solutions provider. However, the news has triggered a sharp market reaction, causing notable stock volatility among established industry players.

Market Reactions: A Closer Look

The immediate aftermath of UltraTech’s announcement was a sharp decline in the share prices of established wires and cable manufacturers. Here’s a snapshot of the market movements:

  • Polycab India: Experienced a steep drop of 18.5%, with shares plummeting to ₹4,679.55.
  • KEI Industries: Faced a significant downturn of 20.5%.
  • RR Kabel: Shares fell by 19%.
  • Havells India: Witnessed a decline of 9%.
  • Finolex Cables: Saw a reduction of over 6%.

These figures underscore the market’s apprehension regarding intensified competition and potential pricing pressures stemming from UltraTech’s entry.

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Source: NSE

UltraTech’s Strategic Expansion

UltraTech Cement, a leader in the cement industry, is making a major move into the wires and cables sector—a surprising shift that caught many in the market off guard. The decision is part of the company’s broader strategy to transform into a holistic building solutions provider rather than just a cement manufacturer.

Key Aspects of the Expansion Plan

  1. Investment Size and Funding
    • UltraTech has committed ₹1,800 crore (₹18 billion) in capital expenditure (capex) for this new business segment.
    • This is a significant investment, highlighting the company’s long-term commitment to the sector.
  2. Manufacturing Facility in Bharuch, Gujarat
    • The first manufacturing plant will be located in Bharuch, Gujarat, a strategic choice given its industrial infrastructure and connectivity.
    • Gujarat is home to several manufacturing clusters, allowing easy access to raw materials and transportation networks.
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Source: NSE

  1. Projected Timeline
    • The plant is expected to be operational by December 2026.
    • This timeline gives UltraTech nearly two years to set up production, build supply chains, and establish distribution channels.
  2. Target Market & Growth Potential
    • The company aims to tap into the growing demand for wires and cables across various sectors, including:
      • Residential construction (housing projects)
      • Commercial real estate (office spaces, malls, hotels)
      • Infrastructure projects (airports, metro rail, roads)
      • Industrial applications (factories, data centers, renewable energy)
    • The wires and cables industry has been growing at a CAGR of 13% between FY19 and FY24, making it an attractive market for expansion.
  3. Potential Challenges
    • No immediate synergy with the cement business: Unlike cement, which is a bulk commodity, wires, and cables require specialized production, branding, and retail networks.
    • Establishing brand credibility: Existing players like Polycab, KEI, and Havells have spent years building brand recognition and customer trust.
    • Need for regulatory approvals: The wires and cables business involves stringent safety standards, requiring certifications before products can enter the market.

Source: Outlook Business

Implications for Existing Players

The announcement of UltraTech’s entry triggered an immediate market response, with stocks of existing leaders like Polycab, KEI, Havells, and RR Kabel plunging up to 20% in a single day. This reaction reflects investor concerns about intensified competition, potential price wars, and margin pressures.

Increased Competitive Pressure

  • Polycab and KEI Industries have long dominated the wires and cables market, benefiting from steady growth in India’s real estate and infrastructure sectors.
  • UltraTech’s entry introduces a powerful new player with deep financial backing, forcing existing companies to rethink their pricing, marketing, and distribution strategies.
  • The market might see discounting strategies or aggressive pricing models, leading to a short-term impact on profit margins.

De-Rating of Valuation Multiples

  • Analysts believe that while earnings estimates for existing companies may not change immediately, their valuation multiples could take a hit.
  • Polycab’s stock, for example, is already down 36% from its 52-week high, suggesting investor caution about future profitability.
  • This is because UltraTech, backed by the Aditya Birla Group’s financial muscle, could invest heavily in expansion without worrying about short-term profitability, forcing competitors to adapt.
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Source: NSE

UltraTech’s Potential Advantages

  • Leverage with Real Estate Developers:
    • As a cement giant, UltraTech works closely with builders and infrastructure developers, giving it a natural entry point into the wires and cables business.
  • Extensive Retail Network:
    • With 4,400 UltraTech Building Solutions (UBS) stores across India, the company already has a strong distribution channel, reducing the need for heavy investments in supply chain development.
  • Raw Material Access via Hindalco:
    • Copper and aluminum are major inputs in wires and cables. UltraTech can access copper supplies through Hindalco (another Aditya Birla Group company), potentially reducing raw material costs.

Market Growth vs. Supply Surge

  • The wires and cables industry is already seeing around ₹100 billion in capex over the next 2-4 years from existing players. UltraTech’s entry adds to the supply pressure, meaning the market must grow at a minimum of 11%-13% CAGR to absorb the additional production without leading to oversupply and margin compression.
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Short-Term Impact vs. Long-Term Outlook

Short-Term (Next 1-2 Years)

Immediate concerns about UltraTech disrupting the market are causing share price drops. However, the actual earnings of existing companies remain unaffected in the near term, as UltraTech won’t start production until 2026.

Medium-to-Long Term (Post-2026)

If UltraTech scales up successfully, established players may face permanent pricing pressures and lower market dominance. Companies with strong branding, superior product quality, and robust distribution (like Polycab and Havells) may still retain leadership positions. Source: Economic Times

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Source: NSE

UltraTech’s Position and Potential Synergies

Despite being a new entrant, UltraTech may leverage certain advantages:

  • Established Relationships: The company’s existing connections with real estate developers could facilitate market penetration.
  • Distribution Network: UltraTech’s extensive network of 4,400 UltraTech Building Solutions (UBS) stores may serve as a robust distribution channel for its new product line.
  • Raw Material Access: Affiliations with group companies like Hindalco could ensure a steady supply of essential raw materials such as copper and aluminum.

These factors might provide UltraTech with a competitive edge, enabling it to navigate the challenges of entering a well-established market.

Investor Sentiment and Future Outlook

The market’s reaction has been twofold. While shares of existing players experienced a downturn, UltraTech’s own shares also slipped by 4.99% to ₹10,420.65 on the BSE. This decline reflects investor concerns about UltraTech’s diversification beyond its core cement business.

Analysts advise a cautious approach. The actual impact of UltraTech’s entry will unfold over time, contingent upon its execution strategy and market reception. Existing players may need to reassess their competitive strategies to maintain their market positions.

Conclusion

UltraTech Cement’s ambitious venture into the wires and cables industry marks a significant shift in the sector’s dynamics. While the move aims to capitalize on the industry’s growth potential, it introduces a new layer of competition for established players. As the situation evolves, stakeholders will keenly observe how UltraTech’s entry reshapes the market landscape and influences investment trajectories.

Related Posts

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.

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From Slowdown to Surge: Analyzing India's GDP Growth in Late 2024

From Slowdown to Surge: Analyzing India’s GDP Growth in Late 2024

India’s economic landscape in the October-December quarter of fiscal year 2024-25 exhibited a notable resurgence, primarily driven by enhanced rural demand and escalated government expenditure. This period marked a recovery from the preceding quarter’s deceleration, underscoring the dynamic interplay of policy measures and sectoral performances in shaping the nation’s Gross Domestic Product (GDP).

Historical GDP & Recent Trends

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Source: Data Commons

In the July-September quarter of 2024, India’s GDP growth experienced a significant slowdown, registering at 5.4%, the most sluggish pace observed in seven quarters. 

This downturn was largely attributed to subdued urban demand and a postponement in government spending, which were consequences of the national elections during that period. The electoral process often leads to fiscal conservatism, as incumbent governments tend to restrain expenditure amidst political transitions.

However, the subsequent October-December quarter witnessed a revitalization of economic activity. Projections indicated a GDP growth of approximately 6.3% year-on-year, a discernible improvement from the prior quarter’s performance. This resurgence, while promising, remained slightly below the central bank’s anticipated growth rate of 6.8% for the same timeframe. reuters.com

Catalysts of Growth

  1. Rural Demand Amplification: The rural economy emerged as a pivotal contributor to this growth phase. Favorable monsoon seasons bolstered agricultural output, enhancing rural communities’ purchasing power and consumption patterns. This uptick in rural demand stimulated the agricultural sector and positively affected ancillary industries, including consumer goods and services tailored to rural markets.
    reuters.com
  2. Government Expenditure Escalation: Post-election, there was a marked acceleration in government spending, particularly capital outlays. Data from the Bank of Baroda indicated that the government’s capital expenditure surged to 47.7% in Q3 FY25, a substantial rise from 24.4% in the same quarter of the previous fiscal year. This infusion of public funds into infrastructure projects such as highways, ports, and railways invigorated the construction sector and generated employment opportunities, thereby fostering economic vitality.

Sectoral Performance Analysis

  • Agriculture: The sector experienced accelerated growth, with projections estimating a 4.5% increase in Q3 FY25, a significant leap from the 0.4% growth in the corresponding quarter of the previous year. This surge was propelled by improved food grain production and robust rabi crop sowing, reflecting the sector’s resilience and critical role in the broader economic framework.
  • Services: Maintaining momentum, the services sector was projected to grow by 6.9% in the October-December quarter. Sub-sectors such as trade and hospitality benefited from the ‘experience economy,’ while the financial sector demonstrated stability with a growth rate of 6.5%. This consistent performance underscores the sector’s adaptability and its contribution to economic diversification. 
  • Manufacturing and Industry: Despite the overall positive trajectory, the industrial sector exhibited signs of moderation. Manufacturing growth was expected to decelerate to 6% in Q3 FY25, down from 11.5% in the same period the previous year. Factors contributing to this slowdown included a high base effect and diminished corporate earnings in key industries such as crude oil, steel, and automotive sectors. cfo.economictimes.indiatimes.com

Economic Implications and Future Outlook

The observed growth during the October-December quarter underscores the efficacy of targeted fiscal policies and the intrinsic strength of India’s rural economy. However, sustaining this momentum necessitates a balanced approach that addresses existing challenges:

  • Urban Demand Revival: While rural demand has shown resilience, urban consumption remains tepid. Factors such as stagnant wages and inflationary pressures have constrained urban spending. Policy interventions to enhance urban disposable incomes and consumer confidence are imperative to rejuvenate this segment.
  • Inflation Management: Inflation risks purchasing power and overall economic stability, particularly in food prices. The Reserve Bank of India (RBI) anticipates that headline inflation will converge to 4% in the upcoming fiscal year. Achieving this target will require vigilant monetary policies and supply chain enhancements to mitigate price volatility.
  • Global Economic Dynamics: India’s economy is not insulated from global uncertainties, including geopolitical tensions and trade policy shifts. Such external factors can influence export demand and capital flows, necessitating adaptive strategies to safeguard economic interests.
    reuters.com

Conclusion

The October-December quarter of FY 2024-25 highlights India’s capacity for economic recovery, driven by strategic government interventions and a robust rural sector. A multifaceted approach addressing urban demand, inflation control, and global economic integration is essential to maintain and enhance this growth trajectory. Such a comprehensive strategy will fortify India’s economic foundation, ensuring sustained progress in the face of evolving challenges. 

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.

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SpiceJet Shares Drop 6% Despite ₹26 Crore Q3FY25 Profit – 4 Reasons Why

SpiceJet Shares Drop 6% Despite ₹26 Crore Q3FY25 Profit – 4 Reasons Why

SpiceJet, one of India’s prominent budget airlines, recently announced a return to profitability in the third quarter of the financial year 2024-2025, reporting a net profit of ₹26 crore. This marks a significant turnaround from the ₹300 crore loss recorded during the same period the previous year. 

Despite this positive development, the airline’s shares experienced a 6% decline on 27th February 2025, leaving investors puzzled. Let’s delve into the factors contributing to this unexpected market reaction.

image 20
Source: BSE

Financial Turnaround Amidst Challenges

The December 2024 quarter showcased SpiceJet’s resilience, with total revenue surging by 35% to ₹1,651 crore. This growth was primarily driven by robust passenger demand and enhanced operational efficiency. Notably, for the first time in a decade, the company’s net worth turned positive, underscoring the success of its turnaround strategy. Economic Times

SpiceJet’s Financial Highlights

Quarterly ComparisonIn the previous quarter ending September 2024, SpiceJet had reported a loss of ₹441.7 crore.
Revenue DeclineRevenue from operations fell 35% YoY to ₹1,140.7 crore from ₹1,756.6 crore last year.
Quarterly Revenue PerformanceFor Q3FY25, operational revenue stood at ₹817.1 crore.
EBITDA GrowthEBITDA surged to ₹210 crore from ₹3 crore; excluding forex impact, it rose to ₹316 crore from ₹30 crore.
Net Worth ImprovementThe company achieved a net worth of ₹70 crore, turning positive for the first time in a decade.
Source: LiveMint

Market Reaction: A 6% Share Decline

Despite the encouraging financial results, SpiceJet’s shares fell by 6% following the announcement. Several factors may have contributed to this decline:

  1. Profit Margins and Sustainability Concerns: While a ₹26 crore profit is a positive sign, it remains modest relative to the airline’s revenue base. Investors might be cautious, questioning whether this profitability is sustainable in the long term, especially given the competitive nature of the aviation industry.
  2. Historical Financial Instability: SpiceJet has faced financial turbulence, including delayed earnings announcements and significant losses. This history may lead investors to adopt a “wait and see” approach, affecting immediate market confidence. LiveMint
  3. Operational and Legal Hurdles: The airline has been entangled in various operational challenges and legal disputes. For instance, two former pilots recently approached the National Company Law Tribunal (NCLT), seeking insolvency proceedings against SpiceJet over unpaid dues. Such legal issues can raise concerns about the company’s financial health and management practices.
  4. Broader Market Sentiments: The overall stock market environment is crucial in individual stock performances. If the broader market is experiencing volatility or bearish trends, even companies reporting positive results might see their share prices decline as part of a wider market movement.

Operational Highlights 

In January 2025, SpiceJet reintroduced its first grounded Boeing 737 MAX aircraft into service to enhance operational capacity and cater to high-demand routes such as Jeddah and Riyadh. This move was anticipated to boost revenue and improve market share. LiveMint

However, the airline continues to grapple with challenges, including resolving disputes with lessors and vendors. The airline mentioned that approximately 70% of claims with lessors and vendors have been settled, indicating progress and highlighting ongoing financial obligations. Moneycontrol

Know More:  SEBI Registered investment advisory |  Stock investment advisory

Investor Considerations

For current and potential investors, it’s essential to weigh both the positive strides and the existing challenges:

  • Return to Profitability: The shift from a substantial loss to a profit within a year showcases effective management strategies and operational improvements.
  • Positive Net Worth: Achieving a positive net worth after a decade signifies a strengthened financial position.
  • Areas of Caution:
    • Modest Profit Levels: The relatively small profit margin may raise questions about long-term profitability and growth prospects.
    • Ongoing Legal and Financial Issues: Pending disputes and financial obligations could impact future earnings and operational stability.

Conclusion

SpiceJet’s return to profitability in Q3 FY25 is a significant achievement, reflecting the company’s resilience and strategic efforts amidst a challenging environment. However, the subsequent 6% decline in share price underscores the complexities of investor sentiment, influenced by factors such as profit sustainability, historical financial instability, ongoing legal challenges, and broader market conditions. 

As the airline navigates these challenges, stakeholders will keenly observe its strategies to maintain and enhance profitability, resolve outstanding disputes, and strengthen its market position in the competitive aviation sector.

Related Posts

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

  1. Why did SpiceJet’s shares drop despite a profit?

    Despite a ₹26 crore Q3FY25 profit, shares fell due to concerns about the profit’s sustainability, ongoing financial restructuring, heavy debt load, and operational challenges like fleet availability and competitive pressures. Investors are wary of long-term stability amidst these factors.

  2. What are the key reasons for the market’s adverse reaction?

    The market reacted adversely due to high debt, uncertain profits, reliance on one-time gains, and operational challenges. Investors worry about SpiceJet’s long-term stability and competitiveness despite its quarterly profit.

  3. Is the profit indicative of a turnaround for SpiceJet?

    While the profit is a positive sign, it doesn’t guarantee a full turnaround. Significant debt and operational hurdles remain. Future profitability hinges on successful restructuring, consistent operational efficiency, and addressing financial liabilities, making long-term stability uncertain.

  4. What operational challenges does SpiceJet face?

    SpiceJet faces challenges like fleet availability due to maintenance and financial constraints, intense competition impacting yields, and fluctuating fuel prices. These operational hurdles affect profitability and investor confidence. Consistent operational efficiency and cost management are crucial for sustained financial health.

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₹50.11 Cr Balaji Phosphates IPO Opens Feb 28. Issue Details and SWOT Analysis

₹50.11 Cr Balaji Phosphates IPO Opens Feb 28. Issue Details and SWOT Analysis

Balaji Phosphates Limited is set to launch its IPO, attracting attention from investors looking to tap into the growing fertilizer industry. The company, known for its phosphate-based fertilizers and soil enhancement products, has established a strong presence in multiple states. Here’s a complete breakdown of the IPO details, allocation structure, company financials, and SWOT analysis to help you make an informed decision.

IPO Details

Balaji Phosphates IPO is a book-built issue worth ₹50.11 crores. The IPO comprises a fresh issue of 59.40 lakh shares aggregating ₹41.58 crores and an offer for sale (OFS) of 12.18 lakh shares amounting to ₹8.53 crores. The IPO opens for subscription on February 28, 2025, and closes on March 4, 2025. The allotment is expected to be finalized on March 5, 2025, with the company listing on NSE SME on March 7, 2025.

Offer Price₹66 to ₹70 per share
Face Value₹10 per share
Opening Date28 February 2025
Closing Date4 March 2025
Total Issue Size (in Shares)71,58,000 
Total Issue Size (in ₹)₹50.11  Cr
Issue Type Book Built Issue IPO
Lot Size2000 Shares
Listing atNSE, SME
Source: Balaji Phosphates DRHP 

The IPO price band is set at ₹66 to ₹70 per share. Investors must bid for a minimum of 2000 shares, requiring a minimum investment of ₹1,32,000. Given the potential for oversubscription, bidding at the cutoff price is recommended, amounting to approximately ₹1,40,000. High Net-worth Individuals (HNIs) must invest in at least 2 lots (4,000 shares), requiring an investment of ₹2,80,000.

Allocation of Shares

Investors can bid for a minimum of 2000 shares and in multiples thereof. The table below summarizes the minimum and maximum investment requirements:

Investor CategoryLotsSharesInvestment Amount
Retail (Min)12,000₹1,40,000
Retail (Max)12,000₹1,40,000
HNI (Min)24,000₹2,80,000
Source: Balaji Phosphates DRHP 

Grey Market Premium (GMP)

As of February 27, 2025, the Balaji Phosphates SME IPO showed no Grey Market Premium (GMP), suggesting a projected listing price of ₹70, matching the issue price and no anticipated gain or loss.

Objectives of the IPO

The net proceeds from the IPO will be utilized for the following purposes:

  • Meeting capital expenditure requirements.
  • Funding the company’s working capital requirements.
  • General corporate purposes.

Company Overview

Incorporated in 1996, Balaji Phosphates Limited manufactures and supplies phosphate-based fertilizers such as Single Super Phosphate (SSP), NPK Granulated and Mixed Fertilizers, and Zinc Sulphate. These fertilizers comply with India’s Fertilizer Control Order (FCO) standards and are sold to wholesalers, retailers, cooperatives, and farmers under the brands ‘RATNAM’ and ‘BPPL’.

The company’s manufacturing facility is located in Dewas, Madhya Pradesh. As of March 31, 2024, the unit had a manufacturing capacity of 120,000 MT per year for SSP, 3,300 MT for Zinc Sulphate, and 49,500 MT for NPK Granulated & Mix. The company primarily operates in Madhya Pradesh, Chhattisgarh, Maharashtra, Andhra Pradesh, and Telangana.

Know More:  SEBI Registered investment advisory |  Stock investment advisory

Financial Strength

Balaji Phosphates Limited has maintained stable financial growth over recent years. As of August 31, 2024, the company had total assets worth ₹95.28 crore, compared to ₹88.48 crore in March 2024 and ₹96.83 crore in March 2023.

Source: Balaji Phosphates DRHP 

The company recorded revenue of ₹54.85 crore for the five months ending August 2024, while revenue for March 2024 stood at ₹151.68 crore. Revenue in March 2023 was ₹144.64 crore, and in March 2022, it was ₹124.12 crore. The profit after tax (PAT) for August 2024 stood at ₹4.15 crore, compared to ₹6.04 crore in March 2024, ₹6.09 crore in March 2023, and ₹3.19 crore in March 2022.

The company’s net worth has grown, increasing to ₹39.15 crore as of August 2024 from ₹35 crore in March 2024 and ₹28.97 crore in March 2023. Reserves and surplus have grown to ₹21.31 crore in August 2024 from ₹17.17 crore in March 2024. Total borrowings have increased to ₹35.58 crore in August 2024 from ₹33.22 crore in March 2024, reflecting ongoing financial leverage for business expansion.

Source: Balaji Phosphates DRHP 

SWOT Analysis

STRENGTHSWEAKNESSES
Established presence in the phosphate fertilizer industry since 1996.

Strong brand reputation with widely recognized ‘RATNAM’ and ‘BPPL’ products.

Diversified product portfolio catering to different agricultural needs.

Strategic manufacturing location in Madhya Pradesh, serving multiple states.

Consistent financial performance with stable revenue growth.		Dependency on the agriculture sector, which is affected by weather conditions and government policies.

Fluctuations in raw material prices could impact profit margins.

Moderate reliance on borrowings for business operations.
OPPORTUNITIESTHREATS
Rising demand for fertilizers due to increased focus on agricultural productivity.

Potential expansion into new regional markets and exports.

Government initiatives supporting the agricultural sector could boost demand.

Introduction of new fertilizer products to enhance the company’s market reach.		Competition from larger fertilizer manufacturers and new market entrants.

Regulatory and compliance risks in the fertilizer industry.

Market volatility affecting investor confidence post-listing.

Conclusion

Balaji Phosphates Limited has built a strong foothold in the agricultural sector with phosphate-based fertilizers and soil enhancement products. The company’s stable revenue growth, expanding market presence, and established brand reputation make it a noteworthy SME IPO. However, before deciding, potential investors should consider industry challenges, raw material dependencies, and market competition. With the IPO listing scheduled for March 7, 2025, on NSE SME, investors will closely watch the stock’s debut performance. Whether you are a retail investor or an HNI, understanding the company’s fundamentals and the IPO structure is crucial before subscribing.

OTHER IPO RESOURCES: IPO | Current IPO | Upcoming IPO | Listed IPO

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.

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Unlocking Value: The Economic Impact of Vedanta’s Five-Entity Split

Vedanta Limited, a prominent Indian multinational conglomerate, has become a significant force in the global natural resources sector. With diversified operations spanning metals, mining, oil and gas, and power generation, Vedanta has consistently played a pivotal role in India’s industrial landscape. Its aluminium division is the country’s largest producer, contributing approximately 61% to its total revenue. reuters.com

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Source: Annual Report

The Demerger Plan: A Breakdown

As of February 27, 2025, Vedanta Limited has made significant strides in its strategic demerger plan. The plan will restructure its diverse business portfolio into five independent, sector-focused entities. This move is designed to streamline operations, enhance transparency, and unlock shareholder value.

The approved demerger will result in the formation of five distinct entities, each concentrating on a specific sector:

  1. Vedanta Aluminium Metal Ltd.: As one of the world’s largest aluminum producers, this entity will focus on producing and supplying aluminum, leveraging its extensive resources and market position.
  2. Vedanta Oil & Gas Ltd. will oversee the oil and gas operations, maintaining its status as India’s largest private-sector crude oil producer.
  3. Vedanta Power Ltd.: This entity is dedicated to power generation and aims to contribute significantly to India’s energy sector.
  4. Vedanta Iron and Steel Ltd.: Focusing on the ferrous products industry, this company will manage the iron and steel operations, catering to both domestic and international markets.
  5. Vedanta Ltd.: The parent entity will continue to house the base metals business, including operations in zinc and copper, and will act as an incubator for emerging ventures, such as technology initiatives.

Share Allocation

According to the demerger scheme, upon completion, each Vedanta shareholder will receive one additional share in each of the four newly formed entities for every share held in Vedanta Limited.

The Need For Vedanta Demerger

The decision to demerge into five distinct entities is a strategic maneuver aimed at enhancing operational efficiency and unlocking shareholder value. Several key considerations drive this restructuring:

  1. Focused Management and Operational Agility: By segregating into specialized units—Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Iron and Steel, and the parent Vedanta Limited—the company aims to foster dedicated management teams for each sector. This specialization is expected to streamline decision-making processes, tailor strategies to specific market dynamics, and enhance responsiveness to industry-specific challenges.
  2. Attraction of Sector-Specific Investments: Independent entities can appeal to investors with targeted interests, facilitating strategic partnerships and investments aligned with each sector’s unique growth prospects. This approach allows for more precise capital allocation and the potential to tap into diverse funding sources.
  3. Enhanced Transparency and Valuation: The demerger will provide clearer financial disclosures for each business unit, enabling more accurate performance and value assessments. This transparency can lead to a re-rating of the individual entities, potentially resulting in a cumulative market capitalization that surpasses the pre-demerger valuation.
  4. Unlock Hidden Value: Separate listings allow each entity to be valued based on its specific industry metrics, potentially leading to a higher cumulative market capitalization.

Implications for Shareholders

The demerger significantly shifts existing shareholders’ investment portfolios. Upon completion, shareholders will receive proportional shares in each newly formed entity corresponding to their existing holdings in Vedanta Ltd. This allocation allows investors to tailor their exposure based on individual sector performance and risk appetites.

Financial analysts project that this restructuring could lead to a re-rating of Vedanta’s businesses. Vedanta trades at an enterprise value to EBITDA multiple of under 5x. Post-demerger, the individual companies could command higher valuations, ranging from 6x to 7x, depending on industry dynamics. 

This potential uplift suggests an optimistic outlook for shareholders, with the sum-of-the-parts valuation possibly exceeding the current enterprise value. livemint.com

Financial Performance Overview

Leading up to the demerger, Vedanta Ltd. reported robust financial metrics:

  • Q3 FY2024 Revenue: ₹385.3 billion, a 10% increase year-on-year.
  • Net Profit: ₹35.5 billion, marking a 76% surge from the previous year.
  • EBITDA: ₹112.8 billion, with margins improving to 34%.

Market and Economic Implications

The demerger is poised to have several significant impacts on the market and broader economy:

  • Stock Market Performance: Following the announcement and subsequent approval of the demerger, Vedanta’s share price experienced an upward trajectory. On February 21, 2025, the stock rose by 1.99%, reaching an intraday high of ₹442.2 on the BSE. This marked the fifth consecutive session of gains, with the stock appreciating over 7% year-to-date. zeebiz.com 

Vedanta Share Price Performance (Pre & Post Demerger Approval) 

DateShare Price (₹)% Change (Intraday)
Feb 16, 2025430.20.009
Feb 17, 2025432.50.005
Feb 18, 2025436.10.008
Feb 19, 2025438.30.006
Feb 20, 2025442.20.0199

Source: Investing.com and EquityPandit

Since the demerger approval, Vedanta’s stock has gained 7% YTD and experienced a 1.99% jump on Feb 21, 2025.

  • Debt Management and Financial Health: As of September 2024, Vedanta’s parent company, Vedanta Resources, reported a debt of $11.36 billion. The demerger is expected to facilitate more effective debt management by allocating liabilities appropriately among the new entities, thereby improving financial stability and credit profiles. reuters.com
  • Sectoral Growth and Economic Contribution: Each independent entity is positioned to pursue growth strategies tailored to its specific industry. For instance, Vedanta Aluminium, India’s largest aluminium producer, can focus on expanding its market share and innovating within the aluminium sector. Such targeted growth may enhance the company’s contribution to India’s GDP, stimulate job creation, and bolster the country’s position in the global market. 

Next Steps

The demerger process is anticipated to conclude within 12 to 15 months, subject to statutory and regulatory approvals, including clearance from the National Company Law Tribunal (NCLT). timesnowhindi.com

This strategic restructuring positions each entity to pursue focused growth trajectories, attract sector-specific investments, and enhance shareholder value. 

Conclusion

Vedanta Limited’s strategic demerger into five specialized entities represents a calculated effort to enhance operational efficiency, attract targeted investments, and unlock shareholder value. Vedanta is poised to create a more agile and transparent corporate structure by aligning each business unit with its core competencies and market dynamics. This move positions the individual entities for focused growth and contributes positively to the broader economic landscape.

Know More:  SEBI Registered investment advisory |  Stock investment advisory

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.

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Tata Capital Board Approves ₹15,000 Cr Plus  Mega IPO; Tata Investment Shares Soar 8%

Tata Capital Board Approves ₹15,000 Cr Plus  Mega IPO; Tata Investment Shares Soar 8%

On February 25, 2025, Tata Investment Corporation’s shares surged over 8% after Tata Capital’s board approved plans for an initial public offering (IPO). The board also greenlit a ₹1,504 crore rights issue, with the record date set for the same day. 

Work has already begun on Tata Capital’s proposed IPO to meet the Reserve Bank of India’s requirement for “upper layer” NBFCs to go public by September 2025. While the final size of the offering is yet to be determined, sources indicate it is likely to exceed ₹15,000 crore, making it a high-impact deal.  Moneycontrol

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Source: NSE

This IPO will mark the Tata Group’s first since Tata Technologies’ blockbuster listing in November 2023 and will include a fresh issue of 23 crore equity shares and an offer for sale by existing shareholders. Tata Sons, which holds nearly 93% of Tata Capital, will continue as the controlling shareholder of the Tata Group’s non-banking financial company (NBFC).

In conjunction with the IPO approval, Tata Capital’s board has also sanctioned a rights issue amounting to ₹₹1,504 crore. A rights issue allows existing shareholders to purchase additional shares at a predetermined price, typically at a discount, in proportion to their current holdings. Reuters/Moneycontrol

Impact on Tata Investment Corporation

Tata Investment Corporation, an investment company within the Tata Group, holds a stake in Tata Capital. The announcement of the IPO has positively influenced investor sentiment, leading to the observed 8% increase in Tata Investment’s share price. This surge reflects market optimism about the potential value unlocking from Tata Capital’s public listing.

Understanding the Relationship Between Tata Investment Corporation and Tata Capital

Tata Investment Corporation is a non-banking financial company (NBFC) that primarily focuses on long-term investments in equity shares and other securities of companies across various industries. As part of the Tata Group, it holds stakes in several Tata and non-Tata companies, including Tata Capital.

Tata Capital, established in 2007, serves as the financial services arm of the Tata Group. It offers various financial products and services, from housing to personal loans. Tata Sons, the principal holding company of the Tata Group, holds a significant 92.8% stake in Tata Capital as of March 2024. Reuters

Know More:  SEBI Registered investment advisory |  Stock investment advisory

Market Reactions and Future Prospects

The market’s response to the IPO approval has mainly been positive, as evidenced by the uptick in Tata Investment’s share price. Investors are optimistic that the public listing of Tata Capital will lead to greater transparency, improved corporate governance, and enhanced value creation for stakeholders.

As Tata Capital moves forward with its IPO plans, it will be essential for potential investors to closely monitor its financial performance, market position, and growth prospects. The successful listing of Tata Capital could set a precedent for other NBFCs in India, especially those required to comply with regulatory mandates for public listing.

Conclusion

The approval of Tata Capital’s IPO signifies a strategic milestone for the Tata Group’s financial services arm. The positive market reaction, particularly the surge in Tata Investment Corporation’s shares, underscores investor confidence in the potential benefits of this public offering. 

As the IPO process unfolds, stakeholders will be keenly observing the developments and assessing the long-term implications for both Tata Capital and its associated entities.

Related Posts

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

  1. Why is Tata Capital launching an IPO?

    Tata Capital’s IPO is largely driven by the Reserve Bank of India’s (RBI) regulations. The RBI mandates that “upper layer” Non-Banking Financial Companies (NBFCs) must list publicly. Tata Capital falls under this category, necessitating its IPO to comply with these regulations, ensuring greater transparency and governance.

  2. How does Tata Investment Corporation’s share price relate to Tata Capital’s IPO?

    Tata Investment Corporation is a significant shareholder of Tata Sons, the parent company of Tata Capital. Thus, news of Tata Capital’s IPO generates increased investor interest in Tata Investment Corporation, leading to a rise in its share price due to anticipated gains from Tata Capital’s public listing.

  3. What is the estimated size of the Tata Capital IPO?

    The Tata Capital IPO is projected to be a mega IPO, with an estimated size exceeding ₹15,000 crore. This substantial figure indicates the scale of Tata Capital’s operations and its significance within the Indian financial market.

  4. What factors are influencing the strong investor interest in this IPO?

    Tata Capital benefits from the strong reputation and trust associated with the Tata Group. Additionally, its position as a leading NBFC and the growth potential of India’s financial services sector contribute to the high investor interest. The scale of the IPO also adds to the excitement.

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Sensex Tanks 800 Points, Nifty Nears 22,500! 5 Reasons Behind the Crash

Sensex Tanks 800 Points, Nifty Nears 22,500! 5 Reasons Behind the Crash

On February 24, 2025, the Indian stock market experienced a significant downturn, with the Sensex plummeting 857 points (1.14%) to close at 74,454.41 and the Nifty 50 dropping 243 points (1.06%) to settle at 22,553.35. This fall marked the fifth consecutive session of losses, erasing approximately ₹4 lakh crore from investors’ wealth in a single day.

Several prominent stocks, including NTPC Green Energy, Tata Motors, and Adani Green Energy, reached their 52-week lows during the session. The broader market also faced pressure, with the BSE Midcap index falling by 0.78% and the BSE Smallcap index declining by 1.31%.

Market Performance Overview

The Sensex opened at 74,893.45, a dip from its previous close of 75,311.06. During the session, it tumbled 924 points to touch 74,387.44. By the end of the day, it settled at 74,454.41, marking a decline of 857 points or 1.14%. Similarly, the Nifty 50 began at 22,609.35, down from its prior close of 22,795.90, and dropped 1.2% to hit 22,518.80 during intraday trading. It eventually closed at 22,553.35, down 243 points or 1.06%.

AD 4nXdjHZTEqge7FvPsgfsW1P7bdVSrj3blH4CNv20FudaYuWQurn4wacQH GHktpuyXjIIkDSztVywdXpuEkEoJNlFK0QZl62KmCHyT3pcoA4J0aOcK6ArUzHMWBLTokykOWDaLZljbQ?key=c0yiQwz0LdchwDImowWKqtXo
Source: BSE

This downturn wasn’t limited to the major indices. The BSE Midcap index fell by 0.78%, and the BSE Smallcap index decreased by 1.31%. The collective market capitalization of BSE-listed companies shrank by approximately ₹4 lakh crore in a single session, dropping from about ₹402 lakh crore to nearly ₹398 lakh crore.

Sectoral Indices Performance

Most sectoral indices faced significant losses:

  • Nifty IT: Decreased by 2.71%
  • Nifty Metal: Fell by 2.17%
  • Nifty Oil & Gas: Declined by 1.10%
  • Nifty Bank: Dropped by 0.67%

However, not all sectors were in the red.

  • Nifty FMCG: Increased by 0.36%
  • Nifty Auto: Rose by 0.22%
  • Nifty Pharma: Inched up by 0.02%

AD 4nXccTYZwxiGZ4MNpJg1ox4DUuJYONK5z4xfFESmM0ZJXgj9EBc3SgmiNwgt O5Wz6pf4LdIta6hVJdPoywzzQ4rqc8nWxREnT5Av TRTJcPKjBrlkVgOhKM
Source: NSE

Key Factors Behind the Market Decline

Several elements have contributed to this market slump:

Global Trade Tensions

The ongoing trade disputes, particularly involving the U.S., have created an atmosphere of uncertainty. Policies introduced by President Donald Trump have raised concerns about potential trade wars, which could hamper global economic growth. This apprehension has led investors to be cautious, impacting markets worldwide.

    Foreign Portfolio Investors (FPI) Outflows

    Foreign investors have been pulling out funds from the Indian equity market. In February alone, FPIs sold Indian equities worth nearly ₹37,000 crore up to the 21st. Since October 2024, the total outflow has surpassed ₹3 lakh crore. Factors such as high market valuations, rising U.S. bond yields, and signs of an economic slowdown have prompted this exodus.

    Attractive Chinese Market

    The Chinese stock market has been on an upward trajectory recently. Attractive valuations in China and relatively high valuations in India have led investors to reallocate funds. This “sell India, buy China” trend is expected to persist in the near term as Chinese stocks continue to appeal to global investors. 

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    Domestic Economic Concerns

    Indicators suggest a deceleration in India’s economic growth. Moody’s Analytics projects that India’s GDP growth rate will slow to 6.4% in 2025, down from 6.6% in 2024. Factors such as new U.S. tariffs and weakening global demand are anticipated to affect the country’s export performance, adding to investor concerns.

    Inflation and Interest Rate Uncertainty

    In the U.S., persistent inflation coupled with moderated economic growth has created a challenging scenario. The S&P Global’s flash U.S. Composite PMI Output Index fell to 50.4 in February, the lowest since September 2023. Simultaneously, the U.S. Consumer Price Index rose by 0.5% in January, reaching 3% year-over-year. These dynamics have led to uncertainty regarding future interest rate adjustments by the Federal Reserve, influencing global investor sentiment. Source: Livemint

    Stocks Hitting 52-Week Low

    The market downturn has also led to several stocks reaching their 52-week lows:

    • Adani Green Energy: Dropped to ₹819.1, a decline of 3.6% on Monday. The stock has decreased by almost 18% in the past month and 58% over the last year.
    • Tata Motors: Fell to ₹666, a 1% drop on Monday. The stock is down 8.5% in the past month and over 28% in the last year.
    • NTPC Green Energy: Plunged to ₹96.2, a 9% decrease on Monday, coinciding with the end of a three-month lock-in period for shareholders.
    • Sun TV Network: Declined to ₹567.05, a 1.5% drop on Monday. The stock is down 9.5% in the past month and 8.5% compared to a year ago.

    Source: Livemint

    What should investors do?

    While the recent downturn has raised concerns, investors should focus on staying informed and making well-researched decisions. Tracking market trends, understanding global economic shifts, and diversifying portfolios can help mitigate risks. Short-term volatility is a part of market cycles, and rather than reacting impulsively, investors should assess their long-term financial goals and risk appetite before making any changes to their investments. Monitoring fundamental indicators and sectoral movements will also provide insights into potential recovery trends.

    Conclusion

    The recent decline in the Indian stock market is a result of global and domestic factors. Trade tensions, foreign investor outflows, attractive alternative markets, domestic economic slowdown, and inflation concerns have collectively contributed to the current market scenario. Investors are advised to stay informed and exercise caution in their investment decisions as the situation evolves.

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    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.

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    An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

    An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.

    An investment advisory firm is a company that helps investors make decisions about buying and selling securities (like stocks) in exchange for a fee. They can advise clients directly or provide advisory reports and other publications about specific securities, such as high growth stock recommendations. Some firms use both methods, like Research & Ranking, India’s leading stock advisory company, specializing in smart investments and long-term stocks since 2015.