Ask Profit | Yen Carry Trade In focus | NDTV Profit - video Dailymotion

NDTV Profit

Wondering about equity strategy post global sell-off?   Get all your queries regarding this answered by our technical and fundamental guests with Alex Mathew on Ask Profit. #ndtvprofitlive

Transcript

00:00:00a global sell-off in risk assets.

00:00:02And we're at very close to the low point of the day

00:00:05for the benchmark Nifty 50.

00:00:06In fact, it is still trading at below 24,000.

00:00:12We've recovered some bit of ground,

00:00:14but it's still sharp gashes across the board.

00:00:17You have the mid-cap index that's trading

00:00:18with cuts of very close to 4%.

00:00:20You have the small-cap index

00:00:22that's trading with cuts of over 4%.

00:00:25And in fact, the market breadth will tell you

00:00:27what a stark picture it is.

00:00:30It is, in fact, just a handful, 200 or so,

00:00:34in fact, only 80 or so gainers at this juncture,

00:00:38and you have over 2,000 declines right now.

00:00:41In fact, a worse picture than it was

00:00:43even about half an hour, 45 minutes back.

00:00:46And the sectoral picture is even more difficult

00:00:49to look at at this juncture.

00:00:51The biggest losers are the metal pack,

00:00:53which is down over 5%.

00:00:55You have the PSU Banking Index,

00:00:57which is down about 4.8%.

00:01:00Realty is down close to 5%.

00:01:02IT is down four and a half percent.

00:01:04The PSC Index as a whole is also down over 4%.

00:01:08In fact, you name it, the consumer goods

00:01:11are down about 3% or thereabouts,

00:01:14and if anything, they're performing better

00:01:17than some of the other pockets of the market.

00:01:19Let's bring our experts on board.

00:01:21We've got Sameer Dalal of Natwar Dalal & Sons,

00:01:24we've got Rajesh Palviya, who's the Senior Vice President

00:01:26Technical and Derivatives Research at Axis Securities.

00:01:30Gentlemen, it's a tough day to be commenting

00:01:32on the markets right now, but I think the question

00:01:35that a lot of my viewers will have

00:01:37is where do you duck for cover at this juncture?

00:01:41Rajesh, if you have open positions,

00:01:43what do you suggest to do?

00:01:48Yeah, good afternoon.

00:01:49So looking at the sell-off in today's session,

00:01:52we are now almost trading near to 50-day moving average.

00:01:55So I think 23,800 is now the immediate level

00:02:00where the 50-day moving average we have for the Nifty.

00:02:05So if it breaks below 23,800,

00:02:07I think one should close some of the long position

00:02:11because below 23,800, there is a possibility

00:02:14that Nifty may continue.

00:02:17Furthermore, sell-off towards 23,250,

00:02:21that's the 100-day moving average for the Nifty.

00:02:24Bank Nifty has already slipped below

00:02:26to 50-day moving average,

00:02:27and the way Bank Nifty is witnessing the supply pressure,

00:02:30we believe that in India weeks,

00:02:33that's the fear index has already moved up.

00:02:37So these all parameters are indicating

00:02:40that possibly Nifty may attempt to break down

00:02:43below 23,800.

00:02:45So I think those who are already sitting in profit

00:02:48in their positions,

00:02:51I think they may trim down some position

00:02:54if you have those position

00:02:56for short-term trading perspective.

00:02:59But for long-term investor,

00:03:00I think, again, this fall of market

00:03:03is again giving the opportunity.

00:03:04But I think one should wait for this fall

00:03:08to settle down at certain level,

00:03:09then only to deploy a long trade.

00:03:12I don't think today is the day

00:03:14where one should jump and deploy

00:03:17to buy these dips,

00:03:19because it's still a global sell-off is there.

00:03:22There is no reversal at all in any of the indices

00:03:26at the global market as well as in our market.

00:03:28So I think one should wait for Nifty

00:03:30to settle down at certain level,

00:03:32then, yes, again, this falling market

00:03:35is giving you the opportunity to deploy

00:03:37some of your capital or investment in quality stocks.

00:03:41Right, Rajesh.

00:03:42Sameer, just a quick view on what you would say

00:03:45about the longer-term investments,

00:03:48because I have a confession to make.

00:03:49My SIP is due today,

00:03:51and I haven't put that on pause.

00:03:53I would think that for the long-term investor,

00:03:56it's not, of course, it's not something to scoff at.

00:03:59It's not a small cut, it's a large cut.

00:04:01But what would you say to the long-term investor?

00:04:05So honestly, if you ask me,

00:04:06we've been saying this to long-term investors

00:04:08also for a while that,

00:04:08look, this is not the right time to get into the market

00:04:11for the simple reason that what are the returns

00:04:13you're gonna walk away with

00:04:14at the end of two-year period, right?

00:04:16Because valuations are strength.

00:04:18So if even earnings catch up with valuations,

00:04:20we've always been saying,

00:04:21we've always been of the opinion

00:04:22that your returns are gonna be very low teens,

00:04:26or even a high single-digit kind of returns

00:04:29over a two-year period,

00:04:30give your returns a bit of luck,

00:04:31which is not something exceptional.

00:04:33Now, what you rightfully said,

00:04:35you have an SIP like you.

00:04:37There are tons of people in India

00:04:39who have these SIPs ongoing,

00:04:41who are not going to cut them

00:04:42for a one-day fall in the market,

00:04:44which is of this proportion.

00:04:46And because of which the valuations of the market,

00:04:49which are elevated,

00:04:50will continue to remain at elevated levels

00:04:52because at some fall,

00:04:54let's assume the market falls another 2%, right, from here,

00:04:57these mutual funds,

00:04:58which are sitting on almost a lakh

00:05:00and 40,000 crores of cash,

00:05:01will come in to buy into the stocks

00:05:04that they like and where they feel

00:05:06the relative correction has been good.

00:05:08So they will kind of continue to support the market

00:05:11at these higher levels.

00:05:12However, having said that,

00:05:14this correction was long overdue.

00:05:16We've been saying for a while

00:05:17that the markets are due for a correction.

00:05:19It's been defying all logic,

00:05:21defying all bad news that has come into the system.

00:05:25Now, finally, some amount of rationalization,

00:05:28but how short-lived this is going to be?

00:05:31I think it will be short-lived.

00:05:32I think you will see maybe another 2%, 3%,

00:05:33and then you will see the markets bouncing back

00:05:35given the kind of money flow that is there in India.

00:05:37Yeah, absolutely.

00:05:38Fair point.

00:05:39And the point that you were making

00:05:40of over a lakh crores sitting on the sidelines,

00:05:43just with the mutual funds, in fact,

00:05:44and that will be deployed as and when it's required.

00:05:48Let's kickstart the query segment.

00:05:50And quite a few of you have written in.

00:05:51By the way, that number that you see on your screen,

00:05:53if you're tuning in for the first time,

00:05:55that's where you send your questions.

00:05:56And if you've got specific questions

00:05:58about why this event is taking place

00:06:01or why the selling is taking place,

00:06:03don't hesitate to ask.

00:06:05The first question we're taking is from Vinod.

00:06:06He's writing in from Chennai,

00:06:07and he's asking about five stocks.

00:06:10I will list those stocks.

00:06:11And Vinod, I'm sure you have a lot of questions for Sameer.

00:06:13Anything that catches your ear.

00:06:15Perhaps you can talk about Morpen Laboratories,

00:06:17Jamuna Auto, Balmer Lorry, ONGC, and Hoodco.

00:06:23Which of these stand out today,

00:06:25and which of these would you buy based on the fundamentals?

00:06:28So if you ask me which I would buy today,

00:06:30I would probably consider ONGC.

00:06:32I'll tell you why I'm looking at ONGC.

00:06:34There is a lot of talk about Iran attacking Israel,

00:06:38and this is probably going to happen soon.

00:06:40It could happen as soon as one day.

00:06:42Now, if something like that happens,

00:06:44what you're going to see is oil prices spiking up,

00:06:47and that is a beneficial for ONGC.

00:06:48Of course, the government will take it away

00:06:50in some sort of way by increasing their,

00:06:54what is that little tax?

00:06:55I forget the name of the tax they call it,

00:06:56but they'll increase the tax on crude prices,

00:06:59so ONGC won't get the benefit.

00:07:01But at least some amount of the benefit

00:07:03of increased crude prices could come to ONGC.

00:07:05We believe the Middle East crisis is not totally over.

00:07:08It can escalate, so that would be one of the reasons

00:07:11I look at ONGC.

00:07:13Strong business model, strong cash flows

00:07:14at the end of the day.

00:07:16So the others, I mean, I don't cover that much.

00:07:18I mean, those many of them, so I don't have a big one.

00:07:20Yeah, that's a fair point.

00:07:21All right, let's run through quite a few

00:07:23of the questions coming through right now.

00:07:24So let's take as many of them as possible.

00:07:27The next one's on Rajesh Expos,

00:07:29and this one's for you, Rajesh.

00:07:30We've got Gilson, who's bought at level of 306,

00:07:33and he's looking for an outlook over the next 18 months.

00:07:36He's bought at an average price of 1,306,

00:07:39or, I don't know, okay.

00:07:41I'm not sure about the price.

00:07:43In fact, I should pull up the chart

00:07:44and see where it's currently trading.

00:07:46It's 306, not 1,306.

00:07:48There was a mistake in that plate.

00:07:49He's bought at 306, and he's wondering what to do.

00:07:52Rajesh, what's your view?

00:07:55So the stock is now, you know,

00:07:57shown breakdown below 20-day moving average,

00:08:00and now the stock is trading at 50-day moving average,

00:08:03which is placed at around 294.

00:08:04If any breakdowns happen below 294,

00:08:07then there could be furthermore supply pressure

00:08:09we can see towards 285.

00:08:11Anyhow, the stock is in downtrend.

00:08:14Stock is moving in falling channel on a daily

00:08:17as well as on the monthly chart.

00:08:20So we believe that, you know,

00:08:20any pullback should be used as an exit opportunity

00:08:23in the stock.

00:08:24The major supply zone for the stock on the higher side

00:08:26is placed at around 330 level.

00:08:28So I think if you get any opportunity in, you know,

00:08:31some pullback towards your cost,

00:08:34so you should try to exit in the stock

00:08:36as overall structure for Rajesh Export

00:08:38is on the bearish side.

00:08:41It's not too far away from the buy price,

00:08:43so perhaps now is a good opportunity.

00:08:44Rajesh Maheshwari is writing in from Indore.

00:08:46He's asking about Global Spirit,

00:08:48and he's got 200 shares,

00:08:49which he's bought at an average price of 1,242.

00:08:52What's a short to medium-term outlook on this stock?

00:08:55Is it advisable to remain invested, or should you sell?

00:08:59I will come to you on this one, Sameer,

00:09:01because generally you say that a spirit company

00:09:03is not something that will be affected by global factors.

00:09:07At least I would think not, right?

00:09:08At least the fundamentals should not be.

00:09:10If anything, it might actually see higher sales

00:09:15based on people, you know,

00:09:17trying to drink their sorrows away.

00:09:19What would you say about that?

00:09:20And would you say that you should hold on?

00:09:22Absolutely, there is some amount of resilience

00:09:24when it comes to companies like this.

00:09:27Global Spirit, unfortunately, is not in my coverage,

00:09:29but we are saying that the business that they are into

00:09:34is quite positive.

00:09:34UPL and United Spirits are two companies that we do cover,

00:09:38where we find valuations a bit extended.

00:09:41So even though we like the long-term prospects

00:09:43of the business,

00:09:44we are saying that this is not the time to get in.

00:09:46And we've actually, I mean, if you're holding,

00:09:48you can continue to hold,

00:09:50but it's difficult to say that valuation periodings

00:09:52are possible and growth is going to ensure

00:09:55that these stocks continue to move up.

00:09:58Global Spirits, no actual coverage,

00:10:00so I can't really comment.

00:10:01Fair point, all right.

00:10:02Bhrigu's got this next question.

00:10:03He's holding ITC at levels of 500.

00:10:06Let's pull up the chart

00:10:07and see where it's currently trading.

00:10:09It is at 487 despite, okay, it's actually holding on

00:10:12with cuts that are far lower

00:10:14than what you're seeing across the board.

00:10:16And he's got a two to three week view.

00:10:20He's got a leveraged position.

00:10:21He's asking whether he should book a loss

00:10:24or should he hold out for a few weeks.

00:10:26Rajesh, dangerous to have leveraged positions

00:10:28in this market.

00:10:29What would you say?

00:10:30What advice would you give?

00:10:33Yeah, in this kind of market, yes,

00:10:35it's very difficult to hold the leveraged position

00:10:37because the way market is falling,

00:10:39I think ITC is also under pressure

00:10:42because of market volatility,

00:10:43but still the stock is holding about 20 to moving average.

00:10:46So I would suggest here to keep a strict stop loss

00:10:49of 480, 478.

00:10:52This is the two level where one,

00:10:53he should keep as a stop loss

00:10:56because if it breaks below 478,

00:10:58then furthermore, sell off would be there,

00:11:00then 460 would be the next level for the ITC.

00:11:03But at this juncture, I think still the stock

00:11:06is trying to hold out about 20 to moving average.

00:11:11So I think he may hold the position with stop loss of 470.

00:11:16Coming back to you on IREDA,

00:11:17and this is a question coming from Sandeep Khattare.

00:11:21He's wondering whether this is the right time to buy

00:11:23with 5% down.

00:11:25Maybe we can pull up the slightly longer term charts

00:11:28over the last month or so.

00:11:29This is, of course, a stock that has run up quite a bit.

00:11:32The 12 months, it's still up quite considerably.

00:11:35The last month, it is still gained about 5%

00:11:38despite the fall today.

00:11:40Would you suggest a fresh entry

00:11:41for the next six months, Rajesh?

00:11:46So I think the way stock has corrected

00:11:52from its recent swing high,

00:11:54I think IREDA, again, if it comes near to 220,

00:12:00then I think he needs to average out certain more position

00:12:05because it's a very important and major support area

00:12:08for this decline.

00:12:09So IREDA-

00:12:10Clarify that, Rajesh, let me clarify that.

00:12:12What he's saying is that he hasn't yet bought.

00:12:15If he hasn't bought, would you suggest a fresh entry?

00:12:18So I think wait for 225 to 220 zone,

00:12:21where, again, the stock is having good support area.

00:12:23He can add positions around those level,

00:12:26which is important.

00:12:27And risk to reward would be in favor

00:12:29for IREDA around 225 level.

00:12:32At that time, he can keep his stop loss of 215.

00:12:34On the higher side, 250 is the resistance zone.

00:12:38If it's crosses those level,

00:12:39then yes, there could be a possibility

00:12:41of really towards 270, 275 also.

00:12:43And I think everybody tuning in

00:12:44will have seen Sameer shaking his head quite noticeably

00:12:48when I asked whether it can be bought at the current juncture

00:12:50and that kind of answers the question

00:12:52on the fundamental side as well.

00:12:54Tata Steel is the next question.

00:12:55Sameer, unfortunately,

00:12:56we're getting a lot of short-term questions.

00:12:58I will come to you on a fundamental one soon.

00:12:59But Tata Steel for the short-term,

00:13:01bought at levels of, or rather,

00:13:03actually, we don't have a buy price.

00:13:04Sarveshwaran is asking whether or not

00:13:06it is the right time to buy at this juncture

00:13:10for the short-term, at least for this week.

00:13:12What would you say, Rajesh?

00:13:13Very short-term view.

00:13:16So Tata Steel, most of the metal stocks

00:13:19are hammered in today's sell-off.

00:13:22I think Tata Steel is also now on a verge

00:13:25of giving breakdown to its previous swing low

00:13:27of June 24.

00:13:29So I think if it slips below to 148,

00:13:31there could be a possibility of furthermore

00:13:34go downside towards 139 or 138 level.

00:13:38So that would be the next level

00:13:39for Tata Steel on the downside.

00:13:41But still on the higher side,

00:13:43160 is the supply zone as of now.

00:13:46So until the stock not crosses 160,

00:13:48it may remain under pressure.

00:13:50And possible downside we can see

00:13:52towards 138 for Tata Steel.

00:13:54Okay.

00:13:55Porsche Limited is the next counter.

00:13:56And Sameer, I'm hopeful that you have a view on this one

00:13:59because we've got Vinay from,

00:14:03well, I don't know where,

00:14:03but Vinay is asking about this.

00:14:05He's bought at 6,000 levels.

00:14:07It's currently at 5725.

00:14:10Should he hold on?

00:14:11Sorry, these are companies we don't cover.

00:14:13Okay, that's a fair point.

00:14:15It is not a very large company.

00:14:17It's got a market share of just about 1,750 crore rupees.

00:14:21Rajesh, any view on the charts?

00:14:25I'm sorry.

00:14:26Not enough data.

00:14:27Okay, fair point.

00:14:28All right.

00:14:30That's all right.

00:14:31We have to try and get views on this.

00:14:32Viewers, understandably, very small companies.

00:14:35It's a little difficult to get you a view.

00:14:37Patel Engineering is the next one.

00:14:38Shahul is holding at levels of 62.

00:14:42Sameer, view on this one?

00:14:44I think one can continue to hold it.

00:14:48The construction and engineering space

00:14:49is going to continue to do well over the next few years,

00:14:51given the fact that we're gonna see

00:14:53a lot of KPECs coming through.

00:14:55They cater to that kind of a business model as well.

00:14:58So when the order flows continue to trickle through

00:15:02and we see the execution continuing to see an uptick,

00:15:04we will see the profitability increasing,

00:15:07which will probably run up the stock a little further.

00:15:09No doubt it's moved up over the historical levels.

00:15:12But remember one thing, this is a cyclical business.

00:15:15So maybe a year, year and a half down,

00:15:18once the positivity of the order books is all factored in,

00:15:22then one should take money off the table

00:15:24because we've seen that historically,

00:15:26whenever these cyclical stocks move up

00:15:30because of strong order book and things,

00:15:32eventually they start coming down.

00:15:34Yeah, okay.

00:15:34This is a question from Roshni

00:15:37and she's bought Reliance Futures at 3,200.

00:15:43Stock is currently at 2,886.

00:15:45I'm assuming she's talking about the August future.

00:15:48Rajesh, what advice would you give her?

00:15:52It's a way below to the stop-loss level

00:15:54because in futures, always one should keep a stop-loss.

00:15:573,200 is very far from the current market price.

00:16:00So already stop-loss, she should be adopt around 3,100

00:16:05but now she's already lost.

00:16:09My advice would be try to exit

00:16:11if you get any pullback towards 3,000 mark.

00:16:14But again, it looks very difficult

00:16:16looking at the market condition

00:16:17because the stock is now slipped

00:16:18below to 20-day, 50-day moving average

00:16:20and looking at the structure,

00:16:22it's now penetrating to its multiple support zone area

00:16:27which is placed at around 2,880.

00:16:29If it slips below to 2,880,

00:16:30then furthermore supply we can see

00:16:32towards 2,800 level also.

00:16:35So I think either they can add some good position

00:16:41at least to hedge this downside.

00:16:45Try to buy at the money put option

00:16:47to hedge at least to protect this downside

00:16:50which is visible on the chart at this level.

00:16:54Quite considerable.

00:16:55A persistent system, Sameer,

00:16:57we're trying to fit in a couple more.

00:16:58We've got Mahesh who's holding 3,500

00:17:02that he's bought at levels off.

00:17:04I'm not very sure about the buy price.

00:17:06He says it's 500,

00:17:08but I haven't looked at the long-term charts

00:17:09to see when he's bought this.

00:17:10He's looking at a two to three-year time frame.

00:17:12Would you suggest holding onto this?

00:17:15Given the kind of purchase price that he has,

00:17:18I think he can continue to hold on.

00:17:21Look, I'm expecting the IT industry

00:17:23to go through a bit of a consolidation

00:17:25because honestly, if you ask me,

00:17:27yes, it consolidated,

00:17:29but you've also seen a bit of a run-up

00:17:31far ahead of what the fundamentals should justify

00:17:33because I don't think there's a very clear picture

00:17:36that is coming out from the international markets

00:17:38that the spending on IT is going to see a big, major uptick.

00:17:41Companies are still guiding from three to 5%.

00:17:43In fact, persistent has been one of the outperformers

00:17:46if you ask me when it comes to the top-line growth

00:17:48and the profitability growth.

00:17:49Hence, you've seen a massive re-rating

00:17:51and straining at valuations,

00:17:53which are similar to the larger caps,

00:17:54if not a little higher than some of them.

00:17:56So there could be a possibility it consolidates,

00:17:59but since your purchase price is 500,

00:18:02right in the way over the next two years,

00:18:03I think there's more money to be made.

00:18:05Okay.

00:18:06Unfortunately, we are completely out of time.

00:18:10Sameer, Rajesh, thanks so much for taking the time.

00:18:12Viewers, I know you have a lot of questions

00:18:14and we will be back tomorrow at 11.30.

00:18:17Of course, we have live market coverage through the day

00:18:20and that continues at 12 today.

00:18:22But lots to talk about, of course,

00:18:25and do stay tuned, keep your questions ready

00:18:27and send them to us.

00:18:28We'll take them tomorrow at 11.30.

00:18:29Do stay tuned.

00:19:05Thank you.

00:19:35Thank you.

00:20:05Thank you.

00:20:35Thank you.

00:21:02Hello and welcome.

00:21:03You're watching Market IQ.

00:21:04I'm Mahima Vachirajani.

00:21:05Well, before we move on to what we have on the show today,

00:21:09we're gonna talk about the IPOs this week.

00:21:12Let's take a quick look at what the markets are doing.

00:21:14Well, it's an extremely choppy day for the markets.

00:21:17Nifty and Sensex have plunged nearly 3%

00:21:21after the kind of global sell-off that has taken place.

00:21:24Even if we see the global indices,

00:21:26the Nika is nearly down 13%,

00:21:28but let's take a look at what Nifty is doing.

00:21:30Nifty is down nearly 3% now as we speak,

00:21:33down 720-odd points.

00:21:36Let's also pull up the Sensex.

00:21:37Sensex is also down nearly 3% as we speak,

00:21:41and it's down around 2,400-odd points.

00:21:44Let's also see what the broader markets are doing

00:21:47because the pain is worse in the broader markets.

00:21:51The Nifty mid-cap 150 is down around 3.7%.

00:21:55The small-cap 250 is down nearly 4% now.

00:22:00Let's also quickly pull up the Nifty contributors.

00:22:04Well, in terms of what is weighing down the Nifty

00:22:07at present, it's Reliance, 87 points,

00:22:10HDFC Bank, 80 points, Infosys, ICICI Bank.

00:22:14It's all the FMCG names that are nearly doing well,

00:22:18which is HUL, Tata Consumer, Britannia, and Nestle.

00:22:21Let's also quickly pull up the sectors.

00:22:23All sectors, as we speak, are trading in red right now.

00:22:27The highest hit has been taken by Nifty Metal.

00:22:30Nifty PSU Bank, Nifty Realty, Nifty IT, Nifty Media,

00:22:34all down 4%.

00:22:35All of these sectors.

00:22:37Let's also quickly pull up what's doing bad

00:22:39in the Nifty Metals.

00:22:40Constituents of Nifty Metals.

00:22:42What are the worst performers on the Nifty Metal?

00:22:45There you go, all in red.

00:22:47SAIL down 6%, NALCO down 6%,

00:22:50Hindustan Zinc down 5.8%.

00:22:53Let's also quickly pull up the breadth of the market.

00:22:55Of course, the breadth of the market

00:22:56is skewed towards the seller today,

00:22:58but let's see what the chart looks like.

00:23:00Oh my God, there you go.

00:23:02There are 20,000-odd declines versus just 106-odd advances,

00:23:08but let's put the spotlight on India's primary markets,

00:23:13which will remain buzzing this week

00:23:16with the opening of two IPOs,

00:23:18Brainbee Solutions and Unicommerce eSolutions,

00:23:21and two IPOs already open for subscription,

00:23:24that is Ola Electric and Seagull India.

00:23:26And also, we have three new listings

00:23:29of acne drugs and pharmaceuticals,

00:23:31Seagull India and Ola Electric.

00:23:33To take this forward,

00:23:35we will be joined by Gaurang Shah

00:23:37of Jiojit Financial Services and Sunny Agrawal.

00:23:40But before I come to both of you gentlemen,

00:23:44I'll quickly move to Mihika

00:23:47and to take this up to the list of IPOs on our watch list.

00:23:52Yes, so up first is Brainbee Solutions,

00:23:54which is the parent firm

00:23:55of online eCommerce platform, FirstCry.

00:23:58Now, the total issue of over 4,190 crores,

00:24:01it has set a price band between 440 to 465 rupees per share,

00:24:06and the initial public offering will open on August 6,

00:24:09which is tomorrow.

00:24:10Then second is Unicommerce eSolutions,

00:24:12which manages commerce operations for brands,

00:24:15sellers, and logistic providers.

00:24:17It will open for subscription tomorrow as well,

00:24:19that is August 6,

00:24:20with a price band of 102 to 108 rupees per share,

00:24:23and it has a total issue size of 277 crores.

00:24:27Also, the much-awaited IPO of Ola Electric

00:24:29has already opened on Friday

00:24:31and was subscribed 35% on day one.

00:24:33As of today, on day two,

00:24:34the total subscription was over 62%, or 0.62 times.

00:24:38We also have Seagull India,

00:24:39which was subscribed 1.23 times on day two,

00:24:43and today's IPO subscription has done better, 2.18 times.

00:24:47And lastly, the three main board IPOs

00:24:48that you need to watch out for,

00:24:50that will debut on national boards this week.

00:24:52First, we have Akam Drugs and Pharmaceuticals,

00:24:54Seagull India, and Ola Electric.

00:24:57Right, Megha, thank you so much

00:24:59for giving us those information

00:25:01and summarizing the IPOs this week.

00:25:04Gaurang, I'll come to you first.

00:25:06Gaurang is the head investment strategist

00:25:08at GOG Financial Services.

00:25:10Gaurang, you know, my first question to you

00:25:13is on BrainV's solutions.

00:25:15You know, what are your views overall on this IPO?

00:25:18Because I want to understand that their revenues

00:25:20have increased 5% year on year.

00:25:22However, you know, they're still running

00:25:25into losses of roughly 320 odd crores.

00:25:27So what is your overall view

00:25:29on the entire IPO that is coming out?

00:25:34Thank you, and good noon to all of you all.

00:25:38Not a direct recommendation,

00:25:39since we've not covered this particular company,

00:25:42but you know, whenever a company goes and hits the street,

00:25:48and if the company is carrying losses,

00:25:52or the company is very close to breakeven,

00:25:54the interest amongst the retail investors

00:25:58tends to be a little bit lackluster.

00:26:01Primarily because a large part of our investor base

00:26:04has got used to looking at listing gains

00:26:08rather than looking at the growth story of the company.

00:26:12So I think the management will have to possibly

00:26:14do a lot more than what they've done

00:26:17in terms of turning around the company's profitability

00:26:21and bringing it in the positive side.

00:26:25In terms of opportunities,

00:26:26well, the company's placed well

00:26:29to take advantage of the opportunity.

00:26:31But at the same time, they need to, you know,

00:26:34do something extraordinary

00:26:36in terms of getting retail investors

00:26:40investing in their company from a long-term point of view.

00:26:42Right, absolutely.

00:26:44You know, we're also joined by Sunny Agarwal,

00:26:46who's the Head of Fundamental Equity Research

00:26:49at SPI Cap Securities.

00:26:51Sunny, I want to understand that, you know,

00:26:53margins for retailers are usually higher.

00:26:57But in this case, since the company's in losses,

00:27:01you know, the margins have not expanded at all.

00:27:04So I want to understand that what is the kind of performance

00:27:07that you're expecting from Brainbees in FY25 overall?

00:27:11Do you see some kind of turnaround story here?

00:27:16Yes, good afternoon and thanks for having me on the show.

00:27:19I think looking at FY24 number,

00:27:21it seems that company has already turned around

00:27:24on FY24 numbers.

00:27:27And it is to be seen whether this performance will continue.

00:27:31Ultimately, what I believe is that

00:27:34in case the sales growth momentum continues in FY25,

00:27:38then operating leverage may kick in

00:27:41and that may lead to the expansion in EBITDA margin.

00:27:44But again, we need to see how things will pan out

00:27:47over the next three to four quarters

00:27:49in terms of sales momentum and profitability.

00:27:54There is no doubt that there is a huge opportunity

00:27:56both online as well as offline

00:27:59in the kids as a segment industry

00:28:02growing at a decent pace.

00:28:04At the same time, looking at a general psychology,

00:28:08I think today parents are willing to go extra mile

00:28:11to spend on educational content

00:28:13as well as on various clothing, apparels

00:28:16and various toys as far as kids are concerned.

00:28:19So I think very interesting category.

00:28:20However, when it comes to businesses,

00:28:22I think ultimately it is the profit

00:28:24which drives the valuation

00:28:26and state will keenly watch for signs of profitability

00:28:30and any commitment on long-term improvement in EBITDA margin

00:28:36will definitely interest a lot of institutional investors.

00:28:39Right.

00:28:40And Sunny, from an investor point of view,

00:28:42from a viewer point of view,

00:28:45who do you think should subscribe for this IPO?

00:28:47Should it be a long-term play

00:28:49or do you think a person can subscribe for this IPO

00:28:53and then exit on the listing day,

00:28:55take the premiums and just exit?

00:28:57What do you think?

00:28:58I think listing is something which I don't believe

00:29:02Fast Cry will have,

00:29:03especially in today's scenario

00:29:05where we have seen a significant collapse

00:29:07in equity markets globally.

00:29:09So I think somebody who is really a long-term investor,

00:29:12when I say long-term,

00:29:13actually it's having a vision of two to three years

00:29:16can invest one tranche through this IPO

00:29:20and then track the company's performance

00:29:21and then gradually add on to the position

00:29:23once the company is delivering on the committed numbers.

00:29:28Right.

00:29:28And Gaurang, coming to you,

00:29:30what do you think about the valuations of the company

00:29:32and how would you, as an investor, play with this IPO?

00:29:38Well, honestly, when you have a situation

00:29:43with the bottom line,

00:29:45that company getting listed at a premium,

00:29:47I think that chances is far, far low.

00:29:50And of course, I'm not equipped to comment

00:29:52from the listing age point of view.

00:29:54But I would say that instead of rushing into it,

00:30:00just wait out for the opportunities

00:30:03that lie ahead of the company to play out.

00:30:06Let the management do something

00:30:08more than what they are doing in terms of profitability

00:30:11and possibly then take the fall.

00:30:14You know, now I'll shift focus

00:30:15to the Unicommercee Solution Limited IPO.

00:30:18It's basically a SaaS platform

00:30:20providing e-commerce solutions to brands and sellers.

00:30:25You know, it's an IPO of roughly 277 odd crores.

00:30:30Sunny, I'll first come to you,

00:30:31you know, your views on the IPO.

00:30:34Since, you know, the profits have doubled

00:30:36as compared to FY23,

00:30:38and margins have also increased by more than,

00:30:41you know, 600 odd points.

00:30:43So what do you think about the IPO overall

00:30:46and whether one should subscribe for it or not?

00:30:49Again, one should subscribe only for a long-term gain

00:30:55rather than looking at a listing gain.

00:30:57Despite of a very robust performance

00:30:59where we have seen revenue doubling from 59 crore

00:31:02to close to 104 crore,

00:31:04profit increasing from 6 crore to 13 crore.

00:31:07I think the IPO is the price that close to 49 times

00:31:10FY24 price to earning multiple.

00:31:13Although return ratios continue to remain healthy

00:31:16close to 20, 25%.

00:31:18I think a good, solid business,

00:31:20but I think everything is in price.

00:31:23So if somebody is a really long-term investor

00:31:26can definitely look at an IPO.

00:31:27I think listing in is something which I don't expect

00:31:31in the current scenario.

00:31:33Got it.

00:31:34And, you know, Gaurang, what do you think about this IPO?

00:31:38Should one subscribe it from a long-term perspective?

00:31:42So it's a new technology-oriented kind of a company

00:31:46and the overall size is somewhere close to about 276 crores.

00:31:52Valuation in terms of the band that they are offering

00:31:56looks to be a little bit attractive.

00:31:58Again, we've not covered a Unicommerce IPO,

00:32:02so we don't have a coverage.

00:32:04But, you know, in a market condition that we are in,

00:32:08I think investors need to look at

00:32:12the growth story of the company

00:32:15and a little bit of longest time horizon.

00:32:18No doubt, there are plenty of opportunities

00:32:20for the company to kind of encash upon,

00:32:23but that will only be visible to us in terms of numbers.

00:32:27So in terms of e-commerce embedded services

00:32:30and the software services platform,

00:32:33as we go forward, there will be multiple opportunities.

00:32:37But how much the capability of the company

00:32:40is to translate that into numbers

00:32:42in terms of top line and profitability,

00:32:44that remains to be seen.

00:32:45Got it.

00:32:46And Sunny, what about you?

00:32:48Do the current valuations look attractive to you?

00:32:53For Unicommerce?

00:32:53Yes.

00:32:55No, I think it's fairly valued,

00:32:57coming at close to 49 times FI24 price-to-earning multiple.

00:33:02So I think it's fairly valued.

00:33:03I mean, even if I assume that profit will double

00:33:05in the next two, three years,

00:33:07it is trading close to 24 times

00:33:10two-year forward price-to-earning multiple,

00:33:12which is in line with other small-size IT product companies,

00:33:18whether it is Salya Kale,

00:33:20or although there is no like-to-like

00:33:22peer comparison available in the market,

00:33:25but there are many product-based companies

00:33:28which are listed as case-in-point,

00:33:30T-Biotech or Salya Kale solution,

00:33:32which are catering to a niche industry.

00:33:35I think if I take that into account,

00:33:37it is fairly valued at a current juncture.

00:33:39Got it.

00:33:40So from both your point of view,

00:33:43valuations are fairly valued right now

00:33:45for unicommercy solutions.

00:33:47Gentlemen, I'll come back to you,

00:33:49but before we slip into a short break,

00:33:51we spoke to the management of Brainbee Solutions,

00:33:54also known as FirstCry,

00:33:56and Unicommerce Solutions about the outlook

00:33:58and the IPO expectations.

00:34:00Listen in.

00:34:02Just as a backdrop, I would say

00:34:05FirstCry was started in 2010, late 2010,

00:34:10and we are the largest shopping destination

00:34:14for mothers, babies, and kids in the country.

00:34:18We operate in all three demand pockets

00:34:23where young parents or young mothers buy from,

00:34:26which is online, which is 75%.

00:34:29I'm talking about India multichannel,

00:34:31which is 75% of our GMV.

00:34:34We operate also 1,000-plus stores,

00:34:38which gives us almost close to 25, 26% of our GMV.

00:34:42And then we recently forwarded into taking our home brands

00:34:46to pharmacy and grocery stores as well,

00:34:48where that's a third demand pocket.

00:34:51Having said that, our business model is essentially,

00:34:54we are the largest shopping destination

00:34:56for mothers, babies, and kids,

00:34:58but over a period of time,

00:34:59we have also built a very curated

00:35:05and widest assortment of 1.65 million SKUs

00:35:10across 7,500 brands and a growing range

00:35:14of home brands as well that we have been able to build out.

00:35:19Within that home brand, we have Babyhug,

00:35:24which has also become today country's,

00:35:26India's largest multi-category mothers,

00:35:29baby, and kids product brand by GMV.

00:35:32And as a matter of pride,

00:35:37Babyhug has also become the largest product assortment brand

00:35:41in Asia Pacific, excluding China.

00:35:44And with that, with such a massive framework of SKUs,

00:35:49brands, home brands, shopping destination of 1,000 stores

00:35:53online, and grocery and pharmacy stores,

00:35:56we also run India's largest parenting channel on YouTube,

00:36:00plus our entire parenting community,

00:36:03where young mothers come and build a relationship with us

00:36:10right from the time she conceives a child

00:36:12during the pregnancy, post-pregnancy,

00:36:14up to a certain age of the child.

00:36:17And all that relationship is being built

00:36:19through the pediatricians, gynecologists,

00:36:21and all of that help,

00:36:23and all kinds of trackers that she needs.

00:36:27And that relationship transforms

00:36:29into a shopping relationship.

00:36:31So we give a kind of a new age economy,

00:36:34a 360 degree retail framework to build a relationship

00:36:37with young moms and young fathers.

00:36:40So that's the business model

00:36:41that we have been able to establish

00:36:43and built our several modes around,

00:36:45expanding the frameworks around online, offline,

00:36:49and supply chain, investing in brands and technology,

00:36:53and so on and so forth.

00:36:54So that's broadly the essence of our business model

00:36:56that we have been able to establish over the last 13 years.

00:37:01So essentially, in the e-commerce value chain,

00:37:04as a consumer, when you're ordering,

00:37:06you see the interface on which you're placing your order,

00:37:08and you see the delivery boy

00:37:10that's getting the item to your doorstep.

00:37:12Whatever happens in between,

00:37:14we are powering that entire journey.

00:37:16We are this invisible force

00:37:17behind the entire e-commerce backend

00:37:19to make sure that everything happens seamlessly,

00:37:23right from the time the order is placed

00:37:24till the time the item is delivered.

00:37:28We are the largest player

00:37:30in this transaction processing layer,

00:37:32which is this invisible backend that I was referring to.

00:37:38We have, in terms of our business model,

00:37:41we are charging our clients' bases

00:37:43the number of transactions

00:37:45that they process on the platform.

00:37:47So as the number of transactions grow in the country

00:37:50and on our platform, the revenue continues to increase.

00:37:53We serve a very diversified base of very marquee clients,

00:37:56both in India and international markets.

00:37:58We serve digital-first brands,

00:38:00the likes of Mammoth, Lenskart.

00:38:03We serve offline-first brands,

00:38:05the likes of PCNS, Paragon,

00:38:07and also marketplaces such as FarmEasy

00:38:10and logistics players such as ExpressBee.

00:38:12So we have a fairly diversified base of clients

00:38:15and get into multiple categories,

00:38:18as well as varying scale.

00:38:20The platform is flexible to work with a large enterprise

00:38:23which may be processing millions of orders,

00:38:26to a small SME which is processing

00:38:28only a few hundred orders a month.

00:38:31The platform has also been around for more than a decade,

00:38:34so we have built a very comprehensive product suite

00:38:37to be able to cater to a wide variety of use cases

00:38:41and is deeply integrated

00:38:42into the technology stack of a seller.

00:38:45That's why we have very long-term relationships

00:38:47with this customer base

00:38:48and gives us the ability to further cross-sell

00:38:51other offerings.

00:38:52We continue to be a backbone for the entire e-commerce

00:38:56and we are ensuring that we're shielding

00:38:58the entire complexity for the brand.

00:39:01Our motto is to simplify e-commerce selling

00:39:03and that's what our platform does,

00:39:05to enable or free up the brand

00:39:08to focus on their brand and their customers

00:39:10and the entire complexity behind the back-end

00:39:12is taken care of by this solution.

00:39:22E-commerce is the future of e-commerce.

00:39:24E-commerce is the future of e-commerce.

00:39:26E-commerce is the future of e-commerce.

00:39:28E-commerce is the future of e-commerce.

00:39:30E-commerce is the future of e-commerce.

00:39:32E-commerce is the future of e-commerce.

00:39:34E-commerce is the future of e-commerce.

00:39:36E-commerce is the future of e-commerce.

00:39:38E-commerce is the future of e-commerce.

00:39:40E-commerce is the future of e-commerce.

00:39:42E-commerce is the future of e-commerce.

00:39:44E-commerce is the future of e-commerce.

00:39:46E-commerce is the future of e-commerce.

00:39:48E-commerce is the future of e-commerce.

00:39:50E-commerce is the future of e-commerce.

00:39:52E-commerce is the future of e-commerce.

00:39:54E-commerce is the future of e-commerce.

00:39:56E-commerce is the future of e-commerce.

00:39:58E-commerce is the future of e-commerce.

00:40:00E-commerce is the future of e-commerce.

00:40:02E-commerce is the future of e-commerce.

00:40:04E-commerce is the future of e-commerce.

00:40:06E-commerce is the future of e-commerce.

00:40:08E-commerce is the future of e-commerce.

00:40:10E-commerce is the future of e-commerce.

00:40:12E-commerce is the future of e-commerce.

00:40:14E-commerce is the future of e-commerce.

00:40:16E-commerce is the future of e-commerce.

00:40:18E-commerce is the future of e-commerce.

00:40:20E-commerce is the future of e-commerce.

00:40:22E-commerce is the future of e-commerce.

00:40:24E-commerce is the future of e-commerce.

00:40:26E-commerce is the future of e-commerce.

00:40:28E-commerce is the future of e-commerce.

00:40:30E-commerce is the future of e-commerce.

00:40:32E-commerce is the future of e-commerce.

00:40:34E-commerce is the future of e-commerce.

00:40:36E-commerce is the future of e-commerce.

00:40:38E-commerce is the future of e-commerce.

00:40:40E-commerce is the future of e-commerce.

00:40:42E-commerce is the future of e-commerce.

00:40:44E-commerce is the future of e-commerce.

00:40:46E-commerce is the future of e-commerce.

00:40:48E-commerce is the future of e-commerce.

00:40:50E-commerce is the future of e-commerce.

00:40:52E-commerce is the future of e-commerce.

00:40:54E-commerce is the future of e-commerce.

00:40:56E-commerce is the future of e-commerce.

00:40:58E-commerce is the future of e-commerce.

00:41:00E-commerce is the future of e-commerce.

00:41:02E-commerce is the future of e-commerce.

00:41:04E-commerce is the future of e-commerce.

00:41:06E-commerce is the future of e-commerce.

00:41:08E-commerce is the future of e-commerce.

00:41:10E-commerce is the future of e-commerce.

00:41:12E-commerce is the future of e-commerce.

00:41:14TECHNOLOGY ENHANCING SUCCESS

00:41:17TECH NORMALLY

00:41:19TECH NORMALLY

00:41:23COMPETITORY ENHANCING SUCCESS

00:41:26TECH NORMALLY

00:41:31Welcome back! You're watching HOT Money.

00:41:33Well, in this edition of HOT Money,

00:41:35we are talking about all the IPO's

00:41:37that are getting listed,

00:41:38and that are getting opened this week.

00:41:40The most awaited OLA electric IPO

00:41:43Electric IPO did open on Friday and so far the IPO has been subscribed for roughly 45%.

00:41:50But if we take a look, it's a fresh issue of 5,600.

00:41:56The total IPO size is 6,145 and the price band is 72 to 76 per share.

00:42:04Sunny, I'll come to you first.

00:42:07How do you see the valuations for Ola Electric because, you know, the street consensus is

00:42:13that overall the IPO is overvalued.

00:42:22I think you're on mute, Sunny.

00:42:24First of all, disclaimer, our parent company, FDI Securities, is a merchant banker to Ola

00:42:30Electric and hence I won't be able to share any view on the IPO.

00:42:34Yes, on valuation front, compared to other listed incumbent players like Euromotor Corp,

00:42:41TVS Motor, where we have seen a substantial chunk of the business also coming from two-wheeler

00:42:46electric portfolio.

00:42:47Compared to that, yes, definitely valuations are slightly higher for Ola Electric.

00:42:53Got it.

00:42:54Gaurang, you know, the street consensus is that, you know, the current loss of roughly

00:42:591,500 crore is a bit disappointing.

00:43:02But do you think that Ola Electric also has a turnaround story just like Zomato has one?

00:43:08Well, I hope so, to be very honest.

00:43:13So I think, you know, it's like my comparison, Brain Bees was also in not so good condition

00:43:19in terms of profitability and Ola Electric has got somewhere close to 1,500 crore losses.

00:43:25Can't compare for, let me give you a disclosure since you put this question to me, Zomato

00:43:30when the IPO had come, I think it was at 76, if I'm not mistaken, I stand to be corrected

00:43:34if I'm wrong.

00:43:35We had initiated a coverage from a long-term point of view for the IPO.

00:43:39Stock rallied to about 140-150, then it slipped because the numbers are not encouraging and

00:43:44it actually slipped below the IPO price, somewhere close to about 50 or 60 crore rupees.

00:43:48That is Zomato.

00:43:49And then on fallback of earnings and the recent numbers that Zomato reported, I think blanket

00:43:54share to the profitability is only going to go forward from here on.

00:43:57So on Zomato, we are also maintaining a positive coverage, but I mean, honestly, I don't think

00:44:02we can compare both of them.

00:44:04One is an e-commerce food and provisioning delivery company, Zomato.

00:44:09And the other one is into E2W, that is electric two-wheelers.

00:44:14So somewhere close to about 35% market share, a little bit above that Ola Electric.

00:44:20They are going to launch almost about three or four variants of motorcycle, electric motorcycle.

00:44:26Curtains are going to be up on 15th of August for the first one.

00:44:30And in terms of their cell factory, electric vehicle battery factory, they are quite optimistic

00:44:38about the commentary in terms of having an in-house in-built battery, which will actually

00:44:42bring down the cost of the vehicle.

00:44:44The problem is with the durability of the vehicle.

00:44:46There have been a lot of cases that you and me have heard in terms of, you know, Ola electric

00:44:50scooter turning into a fireball.

00:44:53I think for customer satisfaction, you need to address those kinds of issues.

00:44:58So a disclosure from a long-term point of view, that is one and a half, two year plus

00:45:02kind of horizon.

00:45:03We have come out with an IPO note, giving a subscribe recommendation to Ola Electric.

00:45:08And I hope the management is able to turn around the company sooner rather than later.

00:45:13Got it.

00:45:14You know, the next IPO, which is, you know, which is the third day of its opening is Seagull

00:45:22India Limited.

00:45:23And the price band is roughly 380 to 401.

00:45:26And it's a total issue size of 1,252 odd crores.

00:45:30So Sunny, I'll come to you first for this particular IPO, you know, the order book to

00:45:35bill is higher as compared to others, which is a plus point, plus the revenue and net

00:45:42profit growth also as compared to FY23 has been significant.

00:45:45So how do you see this IPO panning out to be?

00:45:48Again, one of the fastest growing EPC company, however, a few negative points, which I would

00:45:54like to highlight are basically, if you see the last three years, we have seen a consistently

00:46:01negative operating cash flow at the same time in terms of geographical concentration, Punjab,

00:46:06UPN, Jammu and Kashmir account for 87% of FY24 revenue.

00:46:11So it's quite concentrated in terms of geographical exposure.

00:46:15So I think at the same time, debt levels are on a higher side, which we believe will

00:46:21reduce substantially post this IPO money.

00:46:25So I think it's a slightly high risk, high return kind of investment, but especially

00:46:30looking at a negative operating cash flow during the last few years.

00:46:35So somebody who's looking for a long term, slightly high risk, high return kind of IPO

00:46:42application, I think Seagull India is for them.

00:46:44Got it.

00:46:45And Gaurang, your views on the IPO?

00:46:47Because, you know, like Sunny mentioned, the net debt to EBITDA is slightly higher than

00:46:52the peers.

00:46:53So, you know, two part question, how do valuations look to you?

00:46:57And should one subscribe for the IPO on the final day or not?

00:47:01So to give a disclosure, we have given a subscribe recommendation to this IPO and valuation,

00:47:08I think possibly the management is able to do well going forward.

00:47:12Then there should be justification from a long term point of view.

00:47:16But again, you know, Seagull, if you're asking me from a long, you know, listing gains, etc,

00:47:21etc.

00:47:22I'm not qualified to comment on that.

00:47:24But from a long term point of view, we do believe that this may turn out to be a good

00:47:29investment story.

00:47:30Okay, well, Gaurang, you know, one last question before I let you go.

00:47:35You know, Akkam is listing this week.

00:47:38And I want to understand that what is the kind of street expectations for this IPO?

00:47:43Well, street expectation is multiples, isn't it?

00:47:47Whereas the reality is something totally different.

00:47:50But yeah, I mean, I hope, I mean, again, given a disclosure, we have given a subscribe to

00:47:55Akkam's IPO from a long term point of view.

00:47:59Then there could be selling pressure in terms of those investors who are looking at listing

00:48:07gains.

00:48:08So, and for all those investors who have gotten from a long term point of view, I think I

00:48:13would say that don't get disheartened in case if there is selling pressure on listing.

00:48:18Again, not qualified or to comment on the listings gains.

00:48:22But I guess there should be value justified for long term investors.

00:48:27Got it.

00:48:28So there should be value justified for the investors.

00:48:30That makes absolute sense.

00:48:32And well, thank you so much, gentlemen, for coming to NDTV Profit on such short notice.

00:48:38But with that, that's all we have on the show.

00:48:41Stay tuned to NDTV Profit.

00:49:02Thank you.

00:49:32Thank you.

00:50:02Thank you.

00:50:32Good morning and welcome to Earnings Edge right here at NDTV Profit.

00:50:55We're now in conversation with Mr. Katoriya, a president of JK Tyres on the back of the

00:51:00strong quarter one earnings.

00:51:02Good morning, sir.

00:51:03And thank you so much for joining us today.

00:51:05I just wanted to start off with this particular quarter.

00:51:08Now, we've seen revenue degrow by roughly around a couple of percentage points.

00:51:12But the story has continued from quarter four, which is a strong EBITDA as well as a strong

00:51:17profitability in this particular quarter.

00:51:20Talk us through what has been the trends in this particular quarter.

00:51:23We've seen some price hike also, if you could quantify in this particular quarter as well.

00:51:29How have you seen the quarter gone by and especially trends at the end of the quarter

00:51:33and leading into quarter two as well?

00:51:37Good morning and thank you for having me on the show.

00:51:40So regarding the quarter, we saw that our profitability was quite good.

00:51:44In fact, the pad jumped by 33 percent.

00:51:48And it was a strong quarter for us in terms of EBITDA margins as well.

00:51:52We were able to sustain the same.

00:51:55The demand side, yes, the replacement demand was more or less flat for us.

00:52:00The OEM demand, especially when we talk about the commercial vehicle, the medium

00:52:05and heavy commercial vehicles, there we saw some amount of sluggishness.

00:52:10But in my understanding, this is more of a temporary phenomenon.

00:52:14And it would come back maybe in the latter part of this quarter itself.

00:52:19And the next half of the year, the FY25 second half, is expected to be quite robust

00:52:26in terms of demand in the CV industry also.

00:52:30However, our exports were very good.

00:52:33In fact, in quarter one, we saw the exports were up by almost 17 percent.

00:52:39And this definitely helped us to sustain our top line.

00:52:44Just if you could quantify what was the price hike that you had taken in this particular quarter?

00:52:50Because we've seen some commodity cost has risen steadily since the start of the year,

00:52:55but we've seen a sharp rise in natural rubber prices as well in this particular quarter.

00:52:59If you could just quantify what is the price hike that you've taken in Q1 specifically?

00:53:04And until now, in July, have you taken any other as well apart from that?

00:53:10Yeah, so if you remember that, you know, in the quarter four of last year,

00:53:14the raw metal prices have started to harden.

00:53:17And there was further hardening in quarter one.

00:53:21In fact, in quarter one, if you take, there was a further increase of almost three to four percent

00:53:26in the raw metal basket.

00:53:28We have been making our efforts.

00:53:31We have spoken about our efforts on premiumization.

00:53:35We have further continued to work on that.

00:53:37We continuously also improve our operating efficiencies.

00:53:41So some part of the raw material cost is definitely being set off with that.

00:53:46But definitely that's not good enough.

00:53:49So we have been able to take a price increase in the month of April and May.

00:53:55The cumulative price increase for the quarter was around anywhere between one and a half to two percent,

00:54:02depending on which category we're talking about.

00:54:05And this, along with the efforts on premiumization, as well as the improvement

00:54:10in operating efficiencies, were, in a way, we were able to negate the overall impact

00:54:16and thereby maintaining our EBITDA margins.

00:54:20However, going forward in Q2, we expect that there will be further prices.

00:54:25Raw metal costs will further go up.

00:54:28The expectation is that it will be in the range of five to six percent.

00:54:33So definitely we will be working on all the three levers,

00:54:38but there will be a need to pass on this increase in raw metal costs to our customers.

00:54:44We will be watching this very carefully.

00:54:46We have taken a small percentage increase even in the month of July,

00:54:52and we will be watching this very carefully.

00:54:54And definitely our efforts will be to see to what extent this can be passed on to our customers,

00:55:01both in the replacement market as well as in the OEMs.

00:55:05Well, thanks so much, sir, for quantifying the price hikes.

00:55:08Now, just one question.

00:55:10You did touch upon your recovery in the second half of the financial year,

00:55:14especially for the trucking industry.

00:55:16We have seen, you know, in this particular quarter, the share of OEMs by revenue

00:55:21has slightly gone down by a couple of percentage points.

00:55:23But in the second half, most OEM makers in the truck as well as the passenger vehicle industry

00:55:29have guided for a lot of launches in this particular year.

00:55:32How are you seeing this particular share going forward for the full fiscal year in this particular year?

00:55:38Are you seeing the share of OEMs will slightly raise?

00:55:41Because over the last 12 to 18 months,

00:55:43we've seen that the share has largely been stagnant for all tire makers

00:55:47because of lack of launches by most OEMs.

00:55:49How are you seeing this particular view on the number going forward?

00:55:54So first, let's look at the demand, the absolute demand.

00:55:57We expect that in terms of the numbers, it is expected to get better.

00:56:04Actually, the market starts picking up generally from the month of September.

00:56:10And therefore, production of the commercial vehicle should start getting better

00:56:15in the latter part of this month itself.

00:56:17We expect that from the second half, which is quarter three and quarter four,

00:56:23these two quarters are generally very strong in terms of OEM demand for us.

00:56:28And we expect that this year also, we should see the similar trend.

00:56:33The other question was regarding the mix between replacement versus OEM.

00:56:40The replacement market also is expected to be quite strong,

00:56:44definitely with the road infrastructure getting better,

00:56:47the freight availability, which we talk in terms of a billion kilometers,

00:56:52that is also expected to be growing.

00:56:55And this is very closely correlated with our GDP growth.

00:56:59So if the GDP growth rates are expected to be in that 6.5% to 7% range,

00:57:04we expect that even the freight availability,

00:57:07when it is measured in terms of a billion kilometers,

00:57:10should see a cagger of 8% to 9%.

00:57:14And this would definitely auger well for both in creating the demand for vehicles

00:57:21and the OEMs would be able to meet those demands.

00:57:25And also when the freight availability is better,

00:57:28the replacement market also gets to become a little strong.

00:57:33So we expect that the second half of this year should see us getting back

00:57:38to the numbers that we generally see.

00:57:42Now, one question you did highlight,

00:57:45that export growth in this particular quarter has been really strong.

00:57:48I just wanted to get a sense of what are you seeing in terms of competitions

00:57:52from the MNCs that are in India as well as in Europe.

00:57:55Because we've seen that Europe has been lackluster over the last couple of years.

00:57:59But this year, we have seen that finally there could be some growth as well as,

00:58:03you know, premiumization trend has already been playing out for a long time

00:58:07because including SLF.

00:58:09So just how are you seeing the competition specifically with MNCs

00:58:12in terms of premiumization in India as well as in Europe?

00:58:18So first, let's talk about the export market.

00:58:22For us, we have seen a growth of around 17% in our exports revenues.

00:58:27This growth has come, we are broadly quite widespread in the markets that we cater.

00:58:34While around 50% of our revenue comes from the Americas,

00:58:38both the North and South continents put together.

00:58:41And the remaining 50% comes from other markets.

00:58:44So we are quite well spread into these markets.

00:58:47There are a couple of challenges that we need to take cognizance of

00:58:51because we are seeing that both the freight rates,

00:58:54the international freight rates are on the increase.

00:58:57And also there was a little bit of a challenge in terms of availability

00:59:01of vessels and containers.

00:59:03But we expect that by the end of this quarter,

00:59:06things should normalize both in terms of availability

00:59:10and also the freight rate should start coming down from quarter three.

00:59:14So overall outlook for exports, whether it is in the Americas or other markets,

00:59:20including Europe, the Middle East, GCC countries,

00:59:24and even in some of the Southeast Asian markets,

00:59:27we should see that the demand is there and we should be able to meet that demand.

00:59:33Our capacities that we had planned a couple of years back

00:59:38have got commissioned, especially let's talk about the passenger car radial.

00:59:43Here we have not only the capacity,

00:59:46but also the capability to produce the high rim size tires.

00:59:51We have the capability to go up to 24 inches.

00:59:54So both for the domestic market as well as the international market,

00:59:58we are developing a lot of new products in the higher rim sizes.

01:00:03We are working with many of the OEMs,

01:00:06passenger vehicle OEMs, and we are one of the leading suppliers

01:00:10to big OEMs when it comes to the higher rim sizes, 17 inch, 18 inch.

01:00:17And we are working along with them, both in terms of development of tires,

01:00:22which are low RRC or energy efficient tires.

01:00:25And also we are working with them for both their ICE engines

01:00:30as well as the EV vehicles, which will be launched in the latter part of this year

01:00:35or even coming into FY26.

01:00:38Just a follow-up question on what you mentioned, Mr. Kathuria.

01:00:42Specifically, the passenger car segment is something that you are expecting

01:00:45and very bullish on.

01:00:47Do you see the share in revenue for passenger cars going up?

01:00:50It's been around the 28 to 29% range over the last two to three years.

01:00:54Do you see a share because we are seeing also recovery in the truck

01:00:57and bus market in the second half,

01:00:59but we will be seeing a lot of launches starting Q2 itself

01:01:03from major OEM makers in the passenger vehicle space.

01:01:06Do you see a share of passenger vehicle revenue in this particular year

01:01:11to go up from this particular range of 28 to 29%?

01:01:14If you look at the passenger line, what we call as the PLT segment,

01:01:21definitely our revenues are improving year on year,

01:01:25and we expect that this year also with the new capacities

01:01:28that have been put into place,

01:01:30and also our efforts on premiumization,

01:01:33the share of revenue from the PLT segment will definitely be going up.

01:01:38But just to amply clarify,

01:01:41that doesn't mean that the demand for truck and bus will go down.

01:01:46Only as a percentage, the PLT will definitely go up.

01:01:51We saw in the last particular quarter, there was a hit for all tyre makers,

01:01:57especially because of the EPR provision that came into place.

01:02:01Because of that, a lot of tyre makers had to purchase certificates

01:02:05also at that time to meet those guidelines.

01:02:08How are you seeing the impact for this particular year?

01:02:10Will it be limited to around the 100 to 110 crore range

01:02:13as we've seen previously,

01:02:16or any kind of range that you want to specify in this particular year

01:02:19for EPR provision specifically?

01:02:22And also on CAPEX,

01:02:24what is the kind of CAPEX that JK Tyre specifically

01:02:27is commissioning in this particular year?

01:02:31So regarding the extended producer responsibility or EPR as we call it,

01:02:36there was an impact in the previous fiscal

01:02:39because we were not passing it on to the customers.

01:02:43But from this year, we and as well as many of the other players in the industry

01:02:47have decided to make it a pass-through cost.

01:02:50So from the month of May,

01:02:52we have been charging our customers the EPR liability.

01:02:57It is a pass-through.

01:02:58We are not making any profits on that.

01:03:00But whatever is the cost that we incur in terms of certificate purchases,

01:03:05we are passing it on into the replacement market.

01:03:09And we are also in dialogue with all our OEM customers

01:03:13to see how we can quickly come to an understanding

01:03:16as to how this cost can be passed on.

01:03:21Anything? Sorry to interrupt, sir.

01:03:23So basically, since this will be passed on directly,

01:03:26you see no impact in this particular year

01:03:28like we saw in the previous fiscal year

01:03:30specifically for EPR provision?

01:03:32This has started in the replacement market

01:03:35and we are very hopeful that we will also be able to get into

01:03:38a similar arrangement with the OE customers.

01:03:42And any kind of lag that you see in this particular…

01:03:45Do you see not much, maybe a quarter lag and it should be fine?

01:03:49Yeah, at least a quarter lag.

01:03:51And just on debt, sir, if you could.

01:03:53And CAPEX and specifically on debt as well.

01:03:55So CAPEX for this particular year,

01:03:57what kind of targets does JK Tire have?

01:04:00And debt, we have seen a steady, you know,

01:04:04pay down by the company over the last couple of years.

01:04:06That's also improved the net debt to EBITDA ratio.

01:04:08Where are you seeing this at the end of the fiscal year?

01:04:11So first, let's talk about CAPEX.

01:04:13As you remember, a couple of years back,

01:04:16we had announced a CAPEX program of 800 crores.

01:04:20That CAPEX program has played out very well.

01:04:23The facilities have got commissioned

01:04:26and the capacity is being utilized,

01:04:29whether we talk about the passenger car radians

01:04:31or even the truck and bus radians.

01:04:33So that is complete.

01:04:35A couple of quarters back,

01:04:36we had further announced another 1,400 crores,

01:04:39out of which 1,000 crores was more towards the passenger car radian

01:04:44and another 400 crores was,

01:04:47out of which 112 crores was the all-steel light truck radian

01:04:51and the balance was for the TBR.

01:04:53So all these projects have got,

01:04:55we have started working on this

01:04:57and we expect that by the second half of the next fiscal,

01:05:01that is FY26,

01:05:03these capacities should come into being

01:05:07and they will get commissioned.

01:05:10And I think, so timing-wise, this will be appropriate

01:05:13because by that time,

01:05:14we expect that the demand for both PCR as well as TBR,

01:05:19domestically and even in the export market,

01:05:22should be looking robust

01:05:25and these capacities that will be commissioned

01:05:29will be very useful in meeting that increased demand.

01:05:33Well, Mr. Kathuria,

01:05:35thank you so much for joining us today

01:05:36and speaking to us here at NET Profit.

01:05:39Much in detail about the quarter 1 results

01:05:41as well as the next year as well in this particular year.

01:05:44Thank you so much for joining us today

01:05:46and we look forward to our next conversation.

01:05:48Thank you.

01:05:49Well, that's all the time we have on this edition of Earnings Edge.

01:05:52Stay tuned to NET Profit for more.

01:06:09Thank you.

01:06:39Thank you.

01:07:09Thank you.

01:07:39Thank you.

01:08:10Thank you.

01:08:11Thank you.

01:08:12Thank you.

01:08:13Thank you.

01:08:14Thank you.

01:08:15Thank you.

01:08:16Thank you.

01:08:17Thank you.

01:08:18Thank you.

01:08:19Thank you.

01:08:20Thank you.

01:08:21Thank you.

01:08:22Thank you.

01:08:23Thank you.

01:08:24Thank you.

01:08:25Thank you.

01:08:26Thank you.

01:08:27Thank you.

01:08:28Thank you.

01:08:29Thank you.

01:08:30Thank you.

01:08:31Thank you.

01:08:32Thank you.

01:08:33Thank you.

01:08:34Thank you.

01:08:35Thank you.

01:08:36Thank you.

01:08:37Thank you.

01:08:38Thank you.

01:08:39Thank you.

01:08:40Thank you.

01:08:41Thank you.

01:08:42Thank you.

01:08:43Thank you.

01:08:44Thank you.

01:08:45Thank you.

01:08:46Thank you.

01:08:47Thank you.

01:08:48Thank you.

01:08:49Thank you.

01:08:50Thank you.

01:08:51Thank you.

01:08:52Thank you.

01:08:53Thank you.

01:08:54Thank you.

01:08:55Thank you.

01:08:56Thank you.

01:08:57Thank you.

01:08:58Thank you.

01:08:59Thank you.

01:09:00Thank you.

01:09:01Thank you.

01:09:02Thank you.

01:09:03Thank you.

01:09:04Thank you.

01:09:05Thank you.

01:09:06Thank you.

01:09:07Thank you.

01:09:08Thank you.

01:09:09Thank you.

01:09:10Thank you.

01:09:11Thank you.

01:09:12Thank you.

01:09:13Thank you.

01:09:14Thank you.

01:09:15Thank you.

01:09:16Thank you.

01:09:17Thank you.

01:09:18Thank you.

01:09:19Thank you.

01:09:20Thank you.

01:09:21Thank you.

01:09:22Thank you.

01:09:23Thank you.

01:09:24Thank you.

01:09:25Thank you.

01:09:26Thank you.

01:09:27Thank you.

01:09:28Thank you.

01:09:29Thank you.

01:09:30Thank you.

01:09:31Thank you.

01:09:32Thank you.

01:09:33Thank you.

01:09:34Thank you.

01:09:35Thank you.

01:09:36Thank you.

01:09:37Thank you.

01:09:38Thank you.

01:09:39Thank you.

01:09:40Thank you.

01:09:41Thank you.

01:09:42Thank you.

01:09:43Thank you.

01:09:44Thank you.

01:09:45Thank you.

01:09:46Thank you.

01:09:47Thank you.

01:09:48Thank you.

01:09:49Thank you.

01:09:50Thank you.

01:09:51Thank you.

01:09:52Thank you.

01:09:53Thank you.

01:09:54Thank you.

01:09:55Thank you.

01:09:56Thank you.

01:09:57Thank you.

01:09:58Thank you.

01:09:59Thank you.

01:10:00Thank you.

01:10:01Thank you.

01:10:02Thank you.

01:10:03Thank you.

01:10:04Thank you.

01:10:05Thank you.

01:10:06Thank you.

01:10:07Thank you.

01:10:08Thank you.

01:10:09Thank you.

01:10:10Thank you.

01:10:11Thank you.

01:10:12Thank you.

01:10:13Thank you.

01:10:14Thank you.

01:10:15Thank you.

01:10:16Thank you.

01:10:17Thank you.

01:10:18Thank you.

01:10:19Thank you.

01:10:20Thank you.

01:10:21Thank you.

01:10:22Thank you.

01:10:23Thank you.

01:10:24Thank you.

01:10:25Thank you.

01:10:26Thank you.

01:10:27Thank you.

01:10:28Thank you.

01:10:29Thank you.

01:10:30Thank you.

01:10:31Thank you.

01:10:32Thank you.

01:10:33Thank you.

01:10:34Thank you.

01:10:35Thank you.

01:10:36Thank you.

01:10:37Thank you.

01:10:38Thank you.

01:10:39Thank you.

01:10:40Thank you.

01:10:41Thank you.

01:10:42Thank you.

01:10:43Thank you.

01:10:44Thank you.

01:10:45Thank you.

01:10:46Thank you.

01:10:47Thank you.

01:10:48Thank you.

01:10:49Thank you.

01:10:50Thank you.

01:10:51Thank you.

01:10:52Thank you.

01:10:53Thank you.

01:10:54Thank you.

01:10:55Thank you.

01:10:56Thank you.

01:10:57Thank you.

01:10:58Thank you.

01:10:59Thank you.

01:11:00Thank you.

01:11:01Thank you.

01:11:02Thank you.

01:11:03Thank you.

01:11:04Thank you.

01:11:05Thank you.

01:11:06Thank you.

01:11:07Thank you.

01:11:08Thank you.

01:11:09Thank you.

01:11:10Thank you.

01:11:11Thank you.

01:11:12Thank you.

01:11:13Thank you.

01:11:14Thank you.

01:11:15Thank you.

01:11:16Thank you.

01:11:17Thank you.

01:11:18Thank you.

01:11:19Thank you.

01:11:20Thank you.

01:11:21Thank you.

01:11:22Thank you.

01:11:23Thank you.

01:11:24Thank you.

01:11:25Thank you.

01:11:26Thank you.

01:11:27Thank you.

01:11:28Thank you.

01:11:29Thank you.

01:11:30Thank you.

01:11:31Thank you.

01:11:32Thank you.

01:11:33Thank you.

01:11:34Okay.

01:11:35Thank you.

01:11:36So, I would expect 100 percent of the revenue to be a consumer platform business and within

01:11:37that decisively, you know, 90 percent, 95 percent to be CPCU business.

01:11:42Five percent to be CPCU business, is it?

01:11:45I said over 95 percent to be a CPCU business and it is part of what we define as a consumer

01:11:52platform business, which is largely derived from giving to school advertisements.

01:11:58Right.

01:11:59Okay.

01:12:00Got that.

01:12:01Another question from my side is these Apple OEMs, et cetera,

01:12:05these guys have come out with a new feature wherein

01:12:09they would allow users to ask them

01:12:12whether the app can track their activity or not.

01:12:15So do you see some kind of risk from, say,

01:12:18Apple users because of this kind of privacy issue?

01:12:21Because privacy has now become a very important concern

01:12:24for users.

01:12:25So how does that affect our business?

01:12:28If you look at our track record, over 19 years,

01:12:32Apple has been leading this business consistently.

01:12:35And in fact, the change in Apple's privacy policy

01:12:38that you're talking about happened in early part of 2021.

01:12:43And we have shown that in 2021 itself,

01:12:45we turned it into a competitive advantage

01:12:47by being better prepared, by taking

01:12:50the position in a strong way.

01:12:52Because our IP, which is anchored on 36 patents now,

01:12:58includes forward-looking Gen AI preparation as well.

01:13:02But most importantly, it is fundamentally

01:13:05privacy-compliant by design.

01:13:07Since inception, since April 2005,

01:13:10our company has stood for consumer consent, consumer

01:13:13privacy.

01:13:14In fact, our first patent was filed in April 2005.

01:13:17And it talked about consumer-acceptable advertising,

01:13:21even in this title, it talks about consumer acceptance.

01:13:24So we are very much in favor of consumers' consent,

01:13:28being honorable and responsible, taking privacy seriously.

01:13:32And our IP for the future is also privacy-ready by design.

01:13:37And we have actually turned the Apple privacy changes

01:13:42since 2021 to a competitive advantage.

01:13:44In fact, one of the case studies we

01:13:46have shared in our earnings presentation this time

01:13:50talks about how we are helping advertisers in India

01:13:53to succeed on the Apple platform.

01:13:55And I mean, this is amazing.

01:13:57So we are ready.

01:13:58And another thing that I would like to mention

01:14:01is that Google, just in the last month,

01:14:04has announced that it is no longer

01:14:06going to deprecate the cookies, at least

01:14:07not in the foreseeable future.

01:14:09And this is something Google had said

01:14:11they will do four years ago.

01:14:13And now in 2024, they have said they won't do it anymore.

01:14:17So their privacy sandbox project is also delayed.

01:14:20So I'm not expecting any major, let's say,

01:14:24ecosystem-level changes in the next couple of years.

01:14:26So there's a very clear runway for consistent, predictable,

01:14:30profitable growth for our company.

01:14:33So just a follow-up on that, if this kind of project

01:14:37gets implemented in the next, say,

01:14:40after five years, in the next six to seven years,

01:14:43so will then it affect our business?

01:14:46I mean, not in the near term, as you likely said,

01:14:48because it's not expected.

01:14:49But what after that?

01:14:51So we have already demonstrated that when

01:14:54Apple did this change in 2021, by the way,

01:14:56Apple is always ahead in these changes versus Google.

01:14:59And their change in 2021 made most of the industry players

01:15:04quite nervous.

01:15:05But Apple took it head-on and converted

01:15:07into a comparative advantage.

01:15:09So having dealt with that several times in the 19 years

01:15:13and most recently with the Apple privacy changes,

01:15:17what I'm saying to you is that Apple's platform is already

01:15:20privacy-compliant.

01:15:22What I'm also saying to you is that our future proofing

01:15:25with Gen AI-related use cases covered in the 36 patents

01:15:30that we have filed and the IP portfolio,

01:15:33we are future-ready and privacy-compliant by design.

01:15:36So I'm not worried about data privacy-related changes making

01:15:41as much of an impact because we have already negotiated it

01:15:45and converted it to our competitive advantage in the past.

01:15:50Right, right.

01:15:51So privacy-compliant is what Apple is about.

01:15:54Got that.

01:15:55Okay, so moving on to the inventory part of the company.

01:15:58So largely, Apple pays for mobile ad inventory,

01:16:03regardless of whether a user is generating revenue or not.

01:16:06So can you explain to our viewers

01:16:08how does this affect the dynamics,

01:16:10the profitability dynamics of Apple India?

01:16:14I think we have shown consistency

01:16:16in our bottom-line performance as an organization,

01:16:19and we are absolutely clear

01:16:23that what we are delivering to the advertiser

01:16:26is a bottom-line sensible ROI-focused,

01:16:29deep funnel conversion-based platform capability.

01:16:32So the advertiser only pays us when they see ROI,

01:16:37when they see conversions,

01:16:38and that's the way we command the budgets.

01:16:40As far as our own profitability is concerned,

01:16:46if you look at the last five years or even longer,

01:16:49pre-IPO, post-IPO track record of our company,

01:16:52we, as a DNA, are a bottom-line sensible company.

01:16:57Cashflow-positive operations,

01:17:00profitability is super important to us.

01:17:02We have done acquisitions in the last several years,

01:17:04and those companies were not as efficient on the bottom line

01:17:08and we have consistently brought them up,

01:17:10turned them around to give a consolidated,

01:17:1320% plus a bit of positive performance

01:17:15in the last several quarters.

01:17:17So I am very, very clear about our focus on margins.

01:17:21As far as the inventory costs are concerned,

01:17:26most of the places in emerging markets,

01:17:29as well as in developed markets,

01:17:31there is a significant supply of inventory.

01:17:34As more and more people are using mobile phones,

01:17:36as more and more people are going,

01:17:38you know, using mobile apps even to make payments,

01:17:42everything that you can imagine is going digital.

01:17:45I mean, the consumption habits

01:17:46are going more and more online,

01:17:48and therefore there will be a lot of inventory.

01:17:51What do-

01:17:52What do-

01:17:53What do-

01:17:54What do-

01:17:55What do-

01:17:56What do-

01:17:57What do-

01:17:58What do-

01:17:59What do-

01:18:00What do-

01:18:01What do-

01:18:02What do-

01:18:03What do-

01:18:04What do-

01:18:05What do-

01:18:06What do-

01:18:07What do-

01:18:08What do-

01:18:09What do-

01:18:10What do-

01:18:11What do-

01:18:12What do-

01:18:13What do-

01:18:14What do-

01:18:15What do-

01:18:16What do-

01:18:17What do-

01:18:18What do-

01:18:19What do-

01:18:20What do-

01:18:21What do-

01:18:22What do-

01:18:23What do-

01:18:24What do-

01:18:25What do-

01:18:26What do-

01:18:27What do-

01:18:28What do-

01:18:29What do-

01:18:30What do-

01:18:31What do-

01:18:32What do-

01:18:33What do-

01:18:34What do-

01:18:35What do-

01:18:36What do-

01:18:37What do-

01:18:38What do-

01:18:39What do-

01:18:40What do-

01:18:41What do-

01:18:42What do-

01:18:43What do-

01:18:44What do-

01:18:45What do-

01:18:46What do-

01:18:47What do-

01:18:48What do-

01:18:49What do-

01:18:50What do-

01:18:51What do-

01:18:52What do-

01:18:53What do-

01:18:54What do-

01:18:55What do-

01:18:56What do-

01:18:57What do-

01:18:58What do-

01:18:59What do-

01:19:00What do-

01:19:01What do-

01:19:02What do-

01:19:03What do-

01:19:04What do-

01:19:05What do-

01:19:06What do-

01:19:07What do-

01:19:08What do-

01:19:09What do-

01:19:10What do-

01:19:11What do-

01:19:12What do-

01:19:13What do-

01:19:14What do-

01:19:15What do-

01:19:16What do-

01:19:17What do-

01:19:18What do-

01:19:19What do-

01:19:20What do-

01:19:21What do-

01:19:22What do-

01:19:23What do-

01:19:24What do-

01:19:25What do-

01:19:26What do-

01:19:27What do-

01:19:28What do-

01:19:29What do-

01:19:30What do-

01:19:31What do-

01:19:32What do-

01:19:33What do-

01:19:34What do-

01:19:35What do-

01:19:36What do-

01:19:37What do-

01:19:38What do-

01:19:39What do-

01:19:40What do-

01:19:41What do-

01:19:42What do-

01:19:43What do-

01:19:44What do-

01:19:45What do-

01:19:46What do-

01:19:47What do-

01:19:48What do-

01:19:49What do-

01:19:50What do-

01:19:51What do-

01:19:52What do-

01:19:53What do-

01:19:54What do-

01:19:55What do-

01:19:56What do-

01:19:57What do-

01:19:58What do-

01:19:59What do-

01:20:00What do-

01:20:01What do-

01:20:02What do-

01:20:03What do-

01:20:04What do-

01:20:05What do-

01:20:06What do-

01:20:07What do-

01:20:08What do-

01:20:09What do-

01:20:10What do-

01:20:11What do-

01:20:12What do-

01:20:13What do-

01:20:14What do-

01:20:15What do-

01:20:16What do-

01:20:17What do-

01:20:18What do-

01:20:19What do-

01:20:20What do-

01:20:21What do-

01:20:22What do-

01:20:23What do-

01:20:24What do-

01:20:25What do-

01:20:26What do-

01:20:27What do-

01:20:28What do-

01:20:29What do-

01:20:30What do-

01:20:31What do-

01:20:32What do-

01:20:33What do-

01:20:34What do-

01:20:35What do-

01:20:36What do-

01:20:37What do-

01:20:38What do-

01:20:39What do-

01:20:40What do-

01:20:41What do-

01:20:42What do-

01:20:43What do-

01:20:44What do-

01:20:45What do-

01:20:46What do-

01:20:47What do-

01:20:48What do-

01:20:49What do-

01:20:50What do-

01:20:51What do-

01:20:52What do-

01:20:53What do-

01:20:54What do-

01:20:55What do-

01:20:56What do-

01:20:57What do-

01:20:58What do-

01:20:59What do-

01:21:00What do-

01:21:01What do-

01:21:02What do-

01:21:03What do-

01:21:04What do-

01:21:05What do-

01:21:06What do-

01:21:07What do-

01:21:08What do-

01:21:09What do-

01:21:10What do-

01:21:11What do-

01:21:12What do-

01:21:13What do-

01:21:14What do-

01:21:15What do-

01:21:16What do-

01:21:17What do-

01:21:18What do-

01:21:19What do-

01:21:20What do-

01:21:21What do-

01:21:22What do-

01:21:23What do-

01:21:24What do-

01:21:25What do-

01:21:26What do-

01:21:27What do-

01:21:28What do-

01:21:29What do-

01:21:30What do-

01:21:31What do-

01:21:32What do-

01:21:33What do-

01:21:34What do-

01:21:35What do-

01:21:36What do-

01:21:37What do-

01:21:38What do-

01:21:39What do-

01:21:40What do-

01:21:41What do-

01:21:42What do-

01:21:43What do-

01:21:44What do-

01:21:45What do-

01:21:46What do-

01:21:47What do-

01:21:48What do-

01:21:49What do-

01:21:50What do-

01:21:51What do-

01:21:52What do-

01:21:53What do-

01:21:54What do-

01:21:55What do-

01:21:56What do-

01:21:57What do-

01:21:58What do-

01:21:59What do-

01:22:01So this shows to about 300 points of decline

01:22:03of the 800 points that we're seeing the Nifty 50 down by.

01:22:08But as we can see, most stocks continue to be in the red,

01:22:13though these are the key contributors,

01:22:15what marginally in the green is H.U.L, Nestle and Britannia,

01:22:20but there again not too much happening

01:22:22and it is clearly broad based decline

01:22:25that we're seeing on the benchmark indices

01:22:28with nearly 47 currently declining with only about 3 to 4 currently advancing.

01:22:37Let's also take a look at sectoral indices, there again we are seeing a sea of red.

01:22:42Most sectors, nearly all the sectors at this point in the red, metals taken the maximum

01:22:48hit and that's down by over 5% as is Realty and PSU Bank along with Media, but the others

01:22:56not performing particularly well either and Nifty FMCG is down by almost about half a

01:23:03percent but metals seeing the maximum drag.

01:23:09India VIX is also, it's risen by 51% in today's day of trade.

01:23:15Again on the back of extremely weak global cues, we had seen weak data coming in from

01:23:21the US, we are looking at mild chances of the US economy heading into a recession going

01:23:28forward despite talks of rate cuts being advanced, possibly one taking place at the Fed's next

01:23:36meet in September.

01:23:37We are also hearing about chances of a likely emergency meeting being convened by the Fed,

01:23:45but currently that's all hearsay, we will continue to bring more on that if that does

01:23:50actually pan out.

01:23:52But let's also take a quick look at the broader markets and there again not much of an improvement

01:23:57there.

01:23:58The Nifty mid-cap 150 is down by almost about 4%, so the broader markets seeing an even

01:24:05sharper decline than the benchmark indices.

01:24:08The Nifty small cap 250 is down by about 4.7%, so that's pretty much the worst hit among

01:24:16the indices.

01:24:18Let's also speak to Dheeraj Nim, Economist and FX Strategist at ANZ Research to help

01:24:24us unpack what's happening on the street today.

01:24:28Dheeraj, hi.

01:24:29Hi, Pallavi.

01:24:30Thanks a lot for taking time out for us.

01:24:35So, first of all, there's a whole host of weak global cues with what we're seeing taking

01:24:41place in the Asian markets and of course, the weaker cues from the US economy as well.

01:24:48So, you know, starting off with what we've seen in terms of unwinding of the carry trades

01:24:53because of the appreciation in the yen, how does something of this sort typically pan

01:25:00out and how is most of the impact now factored in or can we continue to see some weakness

01:25:09on the Indian currency going forward?

01:25:12Sure, Pallavi.

01:25:14So, I think three factors are currently playing out.

01:25:18The first is, as you mentioned, the unwinding of the carry trade because of the yen appreciation

01:25:23and what's happening to Japan's interest rate after the monetary policy meeting.

01:25:27The second is, of course, the news coming out of the US docket, the weak number, basically

01:25:37flaring concerns that the US could be heading into a recession.

01:25:40Now, I do think that, you know, the yen unwinding trade is sort of having a more dominant impact

01:25:48on the global market sentiment right now and the US concerns have only added to it.

01:25:54Now, how does this pan out?

01:25:55Well, for the longest times, global investors had benefited from the low interest rates

01:26:00in Japan and the weak currency into funding their investments abroad, both of the long

01:26:06term nature as well as the short term nature.

01:26:09And currently, what we are witnessing in terms of the unwinding of that carry trade is the

01:26:14portfolio shock effect.

01:26:16So, basically, as Japan's interest rates have risen and the currency has strengthened, you

01:26:21know, more than expected, you know, the costs faced by these borrowers have increased, which

01:26:27is leading to this unwinding of the carry trade.

01:26:30Now, look, the market reaction has been certainly very negative if you look at the Japanese

01:26:35stock markets.

01:26:36They have crashed really hard.

01:26:38The Asian markets are significantly down, including India.

01:26:41And of course, with what's happening in the US, the things are not looking very nice

01:26:45at the moment.

01:26:46So, I don't think that, you know, there is any silver lining in this particular episode,

01:26:51at least for now.

01:26:52But we have to be very mindful to watch how long does this sell off last, because that

01:26:57is where we can begin to see, you know, some understanding of how the real economy impact

01:27:03would be, because financial markets, you know, to be honest, they do overreact in the wake

01:27:08of events.

01:27:09So, let's wait and watch out on that front.

01:27:11No, sure.

01:27:12That's true.

01:27:13But tell me something, you know, given what it's looking like now, and despite the continuing

01:27:17intervention we're seeing by the Indian Central Bank, are we now looking at the rupee breaching

01:27:23the 84 mark against the dollar?

01:27:26Look, at least in my baseline forecasts, I'm not looking at rupee breaching the 84 mark,

01:27:32but the risks have certainly shifted towards a weakening bias for the rupee.

01:27:38You know, until so far, there were several factors that we were discussing that would

01:27:42determine the rupee's trajectory.

01:27:44One was, of course, the broad dollar strength.

01:27:46The dollar is weakening as of now, as we speak.

01:27:50We had also spoken about the importance of the Yuan's exchange rate.

01:27:53Now, the Yuan has significantly appreciated, you know, in the last few days, towing the

01:27:58line of the Japanese Yen, which is a key Yuan competitor.

01:28:02Now, the question is, what would the RBI do remains a paramount, you know, factor of importance

01:28:08as far as the rupee's trajectory is concerned.

01:28:11Now, given the kind of portfolio effects we are seeing today, the portfolio shock and

01:28:16possibly withdrawal of the FII flows, I think there is a bit of a weakening bias for the

01:28:21rupee in the near term, but the RBI will be able to manage it and should manage it, given

01:28:26their own commitment that they don't want any disorderly moves in the currency.

01:28:31Right.

01:28:31So, and they also do have a very large war chest of FX reserves that they can deploy

01:28:36to sort of stem this volatile episode.

01:28:40Having said that, once there is more clarity as to what the Fed is likely to do at the

01:28:46September meeting, I think there will be clearer cues for where the rupee could go.

01:28:52But to answer your question a bit more succinctly, I think the weakening bias in the rupee that

01:28:57has remained over the last one month is likely to sustain, but I don't expect any runaway

01:29:02moves on the weakening side either.

01:29:05Sure, sure.

01:29:06Okay.

01:29:07But also help us understand.

01:29:08So, I mean, and we understand that, you know, we are still watching out for how the current

01:29:14scenario pans out.

01:29:16But as things stand, in terms of merchandise export impact, again, given a whole host of

01:29:22weak global cues, along with recent geopolitical conflicts, once again, coming to the forefront.

01:29:30Given that in recent months, we have been seeing a little bit of an improvement in merchandise

01:29:35exports.

01:29:36And this is at a time when outlook was expected to get a little bit better.

01:29:40Are there any concerns on that front currently?

01:29:43Well, there are.

01:29:45So I mean, even before we headed into this entire volatile episode, I think the consensus

01:29:51view of was a slowdown in the US economy.

01:29:55And mind you, over the last few years, the US has become so much more important for not

01:29:59just India, but a lot of other Asian economies as well from an external demand point of view.

01:30:04So anyways, our expectations were that, you know, the headwinds that the global economy

01:30:09could face in terms of US slowdown could also mean external demand weakness for Asian economies,

01:30:16including India, and that could temper the export momentum a bit.

01:30:21So if anything, the last data point coming out of the US, the risk is that that could

01:30:25be a bigger concern that factored in so far.

01:30:28And this could impact India's both goods and services exports, right?

01:30:31So India exports a lot of services to the US, US is one of the largest consumers of

01:30:36Indian services exports.

01:30:38So I do think in net terms, the recent developments are negative as far as, you know, external

01:30:45trade is concerned for India.

01:30:48But I do also think that, you know, this slight weakening bias for the rupee, you know, could

01:30:54help prevent a very sharp slowdown to a little extent, to the extent that rupee could be

01:31:00slightly, you know, cheaper than its peers, especially the yuan, etc.

01:31:05It could help, but that would be a marginal positive impact.

01:31:07I think external demand would still be the most dominant factor, which is suddenly not

01:31:13looking very good.

01:31:14But of course, we need to wait and watch out more data coming from the US.

01:31:19Right.

01:31:20We do have commentary coming in from Japan with the Japanese finance minister, putting

01:31:26on record that they're looking at addressing some of the ongoing concerns.

01:31:30They're talking about positive moves in the Japanese economy itself.

01:31:36We will continue to bring more on that.

01:31:38But Dheeraj, before we let you go, I do want to ask you, given, you know, the spate of

01:31:44events we have been seeing and given the impact it's been having on financial markets, like

01:31:50you did say, some of it is not necessarily entirely grounded in global cues, but also

01:31:58a little bit of maybe a knee jerk reaction that we're seeing in the markets today.

01:32:04What do you think will help bring some sense of sanity to the Asian markets as well as,

01:32:11you know, the American markets?

01:32:13Look, I think the market will be very closely watching for more data coming out of the US

01:32:20over the next few weeks and in the run up to the Fed meeting.

01:32:24Our base case is not of, you know, an emergency meeting by the Federal Reserve, so on and

01:32:29so forth.

01:32:30But I do acknowledge that the market is now expecting a lot more from the Federal Reserve.

01:32:35As we speak, I think over the next three months, you know, the market is expecting the federal

01:32:41funds rates to go below 5 percent.

01:32:43Now, that is not our baseline call as far as economic forecasts are concerned.

01:32:48I think, you know, if the current dire situation, volatile situation in the market continues,

01:32:55a lot more would be needed from the Fed to calm the markets.

01:32:59But of course, you know, as you're saying, this could be a knee jerk reaction and we

01:33:02could see some consolidation in the days to come, which is why this week remains very

01:33:07important.

01:33:08And if that consolidation does happen, then maybe we would have some bit of a saner check

01:33:12on, you know, what do we expect from the Fed or what should we expect from the Fed at their

01:33:16September meeting.

01:33:17Right.

01:33:18You know, Dheeraj, while, OK, like you've said that the base case so far, despite the

01:33:24rumours falling in the markets currently, is that the Fed is likely to meet in September.

01:33:29It's, of course, been signalling rising chances of a rate cut when it does meet next.

01:33:35But we are, you know, just a few days short of the MPC putting out its resolution.

01:33:43Given the recent changes we have seen, we have seen a whole host of developments from

01:33:48the last MPC to this one.

01:33:50We've seen a weaker rupee.

01:33:52We have seen easing bond yields.

01:33:55We have seen some improvement on the monsoon outlook, with July having registered surplus

01:34:01rainfall after a very volatile June.

01:34:04That could possibly help ease inflation concerns going forward.

01:34:08But at the same time, we did see a higher print on the last inflation figure for the

01:34:15month of July.

01:34:16So given all of those developments and, of course, today's developments added to that,

01:34:21what's the MPC, what are you going to be watching out for at this meet of the MPC?

01:34:26We do broadly expect a consensus around the benchmark lending rate and possibly even the

01:34:35stance.

01:34:36But what are you going to be watching out for?

01:34:37Look, two things.

01:34:39The first is that I'm not expecting the Monetary Policy Committee to change the stance or the

01:34:44policy rate, like you said, but I do acknowledge that over the past month, since the Monetary

01:34:50Policy Committee last met, two important developments have taken place.

01:34:54The first is that the aggregate quantum of monsoon has been normal or slightly above

01:34:58normal, if I'm not wrong.

01:35:00But I am noticing that there has been a bit of a discrepancy in terms of its spatial distribution,

01:35:06in the sense that some of the wheat and rice growing states in the northwest and somewhere

01:35:11in the east, they have had deficient rainfall.

01:35:13In the sense that the entire array of worries that we usually have from monsoon in terms

01:35:19of its quantum and distribution are not elite.

01:35:21So I think we do require to monitor food prices going forward for a little longer to be more

01:35:27confident that food inflation is certainly easing.

01:35:30And I think that the Reserve Bank of India being such a cautious central bank that it

01:35:34has been all this while will continue to do that.

01:35:37The second and the more important bit is that, like you said, yields have been falling, and

01:35:42I think that the financial conditions in the money market have also eased a bit.

01:35:47If you look at the banking liquidity, it has been averaging in a bit of a surplus of around

01:35:511 trillion rupees the last 30 days, which has meant that the period average call rate

01:35:56has already fallen below the repo rate.

01:35:58So even if the Reserve Bank of India actually does not sound dovish at all or does not change

01:36:03the stance of the interest rate, there has been a bit of a de facto easing in the money

01:36:07market conditions to the tune of around 7 to 10 basis points in the last month.

01:36:12Now, I think this is something which is also expected, that as inflation risks remain contained

01:36:19and monsoon progresses as per expectations, the Reserve Bank of India may incrementally

01:36:24become less hawkish, but not so much in its commentary and rates and stance action, but

01:36:30in liquidity action.

01:36:31So one thing I would really want to watch out in this Monetary Policy Committee meeting

01:36:35is what the Reserve Bank of India does with the liquidity.

01:36:38And does it announce any tools or not is, of course, one thing I'm very interested in.

01:36:44All right.

01:36:45Thanks a lot for that, Dheeraj.

01:36:47We will continue to keep in touch with you to see how these developments pan out.

01:36:54In the meanwhile, the Japanese finance minister trying to assuage markets, they are saying

01:37:00that they're continuing to watch markets with a strong sense of urgency.

01:37:05They are saying that they expect continued moderate recovery in the economy.

01:37:10They're also cautioning investors who are worried to judge the markets with a slightly calmer

01:37:16viewpoint.

01:37:17We will continue to bring more on that.

01:37:19With that, let's slip into a short break.

01:37:21Lots more happening on the other side.

01:37:22Stay tuned.

01:38:35Hello and welcome.

01:38:58In the thick of earnings, you're watching NDTV Profit.

01:39:01I'm Harsh Saita.

01:39:02We have with us the managing director and CEO at Bank of India, Mr. Rajneesh Karnataka

01:39:08to talk to us about Q1 numbers for FY25.

01:39:14So, first off, welcome.

01:39:16Good morning.

01:39:16I want to try and understand what's happening with margins because they've gone up.

01:39:20Any one-offs here?

01:39:22Also, if you can tell us whether this level of margin number is sustainable going forward

01:39:29through FY25 given the deposit growth pressure that's there in the system.

01:39:34Yeah.

01:39:34So, margins have improved for the bank.

01:39:37If you see the NIM, it has been closed at 3.07 and it has been increasing sequentially

01:39:42and on a YOY basis.

01:39:44So, if you see March 24 for Bank of India, our margin was at around, NIM was at around

01:39:482.92 and in June 23, we were at around 3.03.

01:39:53So, margins are improving and it is improving because our yield on advances has now touched

01:39:578.60% and we have thrown the yield on advances by 50 basis point on a YOY basis.

01:40:03Cost of deposit is also 4.82% and that cost of deposit has increased by only 60 basis

01:40:09point and the gap between the two is around 3.6 basis point because of which the NIM is

01:40:14around 3.7%, 0.7%.

01:40:17But definitely, this NIM is also improved because of some recoveries happening in the

01:40:21return of accounts where the same is going to be non-interest income.

01:40:25That is one of the reasons.

01:40:26So, considering the fact that there is pressure on the resources and the interest rates are

01:40:32rising in the deposit side, domestic deposit side and the CASA and retail term deposit

01:40:36is a challenge, we feel that margins will be under pressure.

01:40:39But still, we will like to maintain our margins at shade below 3% for the current financial

01:40:44year.

01:40:45Understood.

01:40:46So, margins likely to cool off over the next two to three quarters is the sense I am getting

01:40:51from you.

01:40:53Your yields have gone up, you suggested.

01:40:56Talk to us about what has changed in terms of the book.

01:40:59Is there a change in book composition?

01:41:00Is there a change in focus with regard to what areas you are growing in?

01:41:05Is this a conscious effort or is this something that has just happened in a one-off quarter?

01:41:12No, it is not a one-off situation which is there.

01:41:15It is a conscious call at the top management level that top line is important for us but

01:41:20equally important is the bottom line.

01:41:22So, if I tell you that the last time the Reserve Bank had raised the repo rate was

01:41:26in January 2023 from 6.25% to 6.50%.

01:41:30Since February 23 till date, as we speak, we have raised our MCLR by 6 to 7 times and

01:41:36presently the MCLR has gone up from 8.4% to presently 8.95% on a one-year MCLR.

01:41:42So, we have increased by nearly 55 basis points.

01:41:45So, transmission to the lending side has happened from our bank side.

01:41:49Another thing that we have done is in the corporate book, we are not lending at repo

01:41:52rate or any advance which is up to 180 days.

01:41:55So, anything which is above 180 days, we are lending on the MCLR side and our MCLR, the

01:41:59lowest MCLR is the overnight MCLR which is 8.15%.

01:42:04So, we are very conscious of the margins that we are trying to maintain and there is no

01:42:08particular shift in the overall credit numbers in the sense that 55% of our book will continue

01:42:14to be the RAM book and 45% will be the corporate book.

01:42:17Within that, MSME, retail and agriculture is there and the other portion is there as

01:42:23regards the interest rate composition in the book, credit book, standard book which is

01:42:26there.

01:42:27Fixed book is only 6%.

01:42:29Remaining 94% is floating which is linked to the deposit market rates.

01:42:33So, we are very conscious of the margins which is there per se and the NIMS we will try to

01:42:39protect as much as possible despite of the pressure which is there.

01:42:43Incrementally, you are not doing riskier product to push yields.

01:42:48That's what I was trying to gauge.

01:42:51Are you pushing yields through riskier product?

01:42:55We are trying to keep a balance on the credit growth side after due diligence and other

01:43:00things.

01:43:00So, if you see our corporate book also where 80% plus is on the investment side, the external

01:43:07benchmark rate and external rating advances.

01:43:10So, there we are trying to grow our credit book with BBB advances also, A advances also

01:43:15where margins are better on the interest rate side and non-interest income process fee and

01:43:19other LCBG commission is also better.

01:43:22So, in a very nuanced approach, we are trying to grow our corporate book also and also our

01:43:26RAM book.

01:43:28Understood and advances growth as well as deposits growth quite strong for you when

01:43:32I am looking at it sequentially.

01:43:34Talk to us about what's driving the kind of growth that you are seeing because not too

01:43:39many banks showing at least growth on the deposit side which you have shown this time.

01:43:45Deposit has always been a very strong franchise for Bank of India.

01:43:49So, if you see our slides which are also there, only 14% of our total domestic deposit is

01:43:55bulk deposit.

01:43:55Remaining 86% of our deposit is either CASA deposit or retail term deposit.

01:44:00In fact, we have closed our CASA number at around 43% of the CASA book that is there

01:44:05and 60% of our branches are in rural and semi-urban areas which are giving us good

01:44:11CASA numbers and the retail term deposits.

01:44:13So, as far as our bank is concerned, there is no much challenge as far as the increase

01:44:18in deposit is concerned.

01:44:19If you see sequentially also from our slides, we have grown our deposit more than the advances

01:44:25on a sequential basis from March 24 to June 24.

01:44:29But on a year-on-year basis, our credit has grown more than the deposit but sequentially

01:44:34since we have given more concentration on raising deposit in the Q1 quarter of this

01:44:38financial year, our deposit growth was more than the advances growth in Q1 quarter.

01:44:42Understood.

01:44:44And I want to try and tie this in with what's happening on the provisioning as well as credit

01:44:51cost front.

01:44:51So, while growth has been likely quite a strong driver in that sense, margins have also gone

01:44:58up.

01:44:59But what's happening on credit costs?

01:45:01Where should they lie on a normalized basis?

01:45:04Because they've come off quite sharply.

01:45:06And tell us just what's happening there and what can the full year FY25 guidance be?

01:45:12On the credit cost side, if you see our credit cost, we closed at 0.85%.

01:45:17Sequentially, it is improving.

01:45:18If you see the credit cost which was there in March 24, it was 1.4%, around 1.4%.

01:45:25So, provisions we have made in this quarter as a matter of prudence.

01:45:28In fact, if you see that our provision coverage ratio has now improved to 92%.

01:45:33Our gross and net NPAs have also come down sequentially.

01:45:37Gross NPA, which was a year much above 5%, now it is 4.62%.

01:45:41We were already below 5% as on March 24.

01:45:44It has come down further to 4.62%.

01:45:47Net NPA, we have for the first time gone below 1% and we are at 0.99%.

01:45:53So, that is another number which is there.

01:45:55So, provisions definitely in this quarter credit cost was high.

01:45:58But overall, in the entire year, I think the credit cost would be at around

01:46:030.70% on an annualized basis because most of the provision which was there has been made.

01:46:09And good recoveries are also happening.

01:46:11If I tell you on the recovery side also, we have a fresh slippage of only 1,900 crores.

01:46:16Against that, we have done a total recovery of 2,700 crores,

01:46:20which does not include the write-offs.

01:46:22This recovery is from upgradation through cash recovery and recovery from

01:46:26return of accounts or in the interest income in the NPA accounts.

01:46:29So, 2,700.

01:46:30And if I include the write-offs also, then the total reduction in the NPA book is

01:46:35around 4,000 crores in this quarter itself as again fresh slippage of 1,900 crores.

01:46:41And our cash recovery to slippage ratio within that is already 1.4042%,

01:46:47which is excluding the return of.

01:46:49So, already we are at a healthy number, which means that against 100 crores of slippage,

01:46:53we are doing a recovery, cash recovery, upgradation and recovery from the return

01:46:58of accounts of 1.4042%.

01:46:59So, that is the kind of runway we have built now from this quarter.

01:47:03But yeah, so I noticed that metric and it was very impressive.

01:47:06I agree with you, Mr. Karnataka.

01:47:08But is that sustainable is what I want to ask.

01:47:10And also, what's the full year FY25 guidance on recoveries?

01:47:14So, this number will be sustainable for the reason that we have a lot of put efforts.

01:47:19Our ARB branches and our recovery setup has been tightened.

01:47:22The entire organizational setup has been revamped.

01:47:24So, we have a lot of OTS schemes also, which are the fields are doing not only from the

01:47:30normal OTS, which are there for small accounts, mid corporate account and large accounts.

01:47:34But even for the return of accounts, targets have been given to the field.

01:47:37In fact, internally, we have given a target that our total recovery should be twice the

01:47:42number of slippage, which is there.

01:47:44So, overall, the end of the year, you will see a better number as far as the slippage

01:47:49ratio is concerned.

01:47:50Present slippage ratio is already down at 0.35%.

01:47:53So, we on the annualized basis, if I can say that we will be trying to maintain our slippage

01:47:58ratio at around 1.10%.

01:48:01Understood.

01:48:03So, what's your full year loan growth as well as deposit growth guidance, if I may ask?

01:48:08So, as far as the credit growth is concerned, on the global credit growth side, we will

01:48:12be growing at around 13 to 14%.

01:48:15And on the deposit side, global deposit side, we would be growing at around 10 to 11%.

01:52:07Welcome, you're watching the Mutual Fund Show.

01:52:14I'm Tamannaah Enamdar.

01:52:15Today on the Mutual Fund Show, I think we're going to focus on the question that is on

01:52:20every investor's mind.

01:52:22It's that time of the month when a lot of SIPs go out.

01:52:25It's also that kind of a day when portfolios are looking bruised and battered.

01:52:31It's not just the Indian markets that have seen a sharp cut, but it is a global kind

01:52:37of an impact that we're seeing.

01:52:38So, a lot of questions right now that we've been talking about all day, is this something

01:52:43that's going to persist?

01:52:44Is the US going to go into a recession?

01:52:46What happens to India?

01:52:47What happens to global markets?

01:52:48What happens to the nifty?

01:52:49But in this particular show, we're going to be talking about what happens to your portfolio.

01:52:55Is this a good time to buy the dip?

01:52:58Because remember, Indian retail investors are also very smart at doing that.

01:53:02What is the kind of strategy that you should employ in order to navigate the ongoing market

01:53:07sell-off?

01:53:09There are two ways of looking at it.

01:53:11In fact, various views on what you should do.

01:53:13And we're going to be speaking today with Hemant Rustagi, CEO of Wise Invest and Pankaj

01:53:18Mattpal, founder and CEO of Optima Money Managers.

01:53:21Welcome to both of you.

01:53:22Thank you so much.

01:53:23Pleasure to speak with you on the Mutual Fund Show today.

01:53:26Hemant, let me come to you.

01:53:28It's a tough day on the street for investors of every kind.

01:53:32But for mutual fund investors, I think at the end of the day, they would be the most

01:53:38secure knowing that their SIPs are going out on time.

01:53:40Is that the way you should look at it?

01:53:43Well, absolutely, Tabanna.

01:53:44I think you're right.

01:53:46This is a tough day.

01:53:47And in fact, this is the third time in the recent times that we see such a day.

01:53:50And we saw that there was a deep cut in the market when the election results were announced.

01:53:56And also on the day when the budget was presented.

01:53:58And this is the third time.

01:53:59And as you rightly mentioned, I think this time the reasons are slightly different.

01:54:02They're more basically global reasons than the domestic reasons.

01:54:06But you're absolutely right.

01:54:07If you see, if you analyze the way that investors have been investing in mutual funds in our

01:54:11country in the last few years, most of them are investing through SIP, which means that

01:54:16they are following a disciplined approach.

01:54:18They are committed to kind of hold this money for a longer period.

01:54:21And I think one important thing is that most of them have aligned these investments to

01:54:26their goals.

01:54:26So they have much more clarity in terms of how long they can hold these investments.

01:54:31So I think any investor who has kind of been investing in a disciplined manner has done

01:54:37the right thing by selecting funds as in line with the asset allocation.

01:54:41I think I would say that those investors need not really worry about the kind of deep cut

01:54:46that we're seeing in the market, because we know that volatility in the market is a natural

01:54:50phenomenon.

01:54:51And these signs will come and go.

01:54:53But the only difference this time is that the reasons are global and we need to really

01:54:57wait it out, whether the recovery that we saw in the earlier two occasions, whether

01:55:02we'll see that kind of recovery or it's going to take some more time.

01:55:07Pankaj, let me come to you.

01:55:10So wait it out is, you know, some of the advice that is coming in.

01:55:14What about the question of buying the dip?

01:55:18Look at the next few days and what is going to happen here on.

01:55:22You are going to hear from central bankers.

01:55:23You'll probably hear from the Federal Reserve in September.

01:55:26You could see a rate cut.

01:55:27You could see a reversal of this trend.

01:55:29Is this a good time to start lump sum investment or bump up SIPs or start a new SIP?

01:55:37Yes, Tamanna, see, when we talk about mutual fund, generally, especially in equity, we

01:55:41expect a long term horizon, means investors invest with a long term view.

01:55:45Considering that fact, I'll say that it can be an opportunity for investors.

01:55:49I'll not say that you invest the total amount in a single day, but definitely every dip

01:55:56is an opportunity for investors for investing in mutual funds.

01:56:00But Tamanna, I'll say one thing that considering the recent trend, investors have invested

01:56:09more in the small cap, mid cap and especially in some teams like PSU or defense.

01:56:16And we have been advising this that investors should maintain a balanced portfolio or proper

01:56:23asset allocation.

01:56:24So if investors have more investment or more allocation in a small cap or teams like defense

01:56:31and PSU is the time that they should realign their portfolio with their financial goals

01:56:39and reduce their exposure in these sectors and teams.

01:56:42But yes, they should stay invested.

01:56:44OK, so you should stay invested.

01:56:46But, you know, I'll just take that forward to Hemant.

01:56:49The whole rage, two part rage, one of NFOs, one of thematic funds, and especially in some

01:56:55of the sectors that Pankaj mentioned, defense, infrastructure, all of these teams which have

01:57:01really been running up.

01:57:03Is it the right time for investors to relook and reallocate, stick to basically the good

01:57:10old bread and butter, your large cap stocks?

01:57:14Well, Tamanna, it depends on the kind of investor you are.

01:57:17Look, the fact is that people who have been investing over the last many years have built

01:57:22a decent sized portfolio.

01:57:23They're comfortable with how equity market behaves.

01:57:26They understand the nuances of how equity market functions.

01:57:29Obviously, they reach a stage where they think that they have a risk profile to invest in

01:57:32these kind of funds.

01:57:34I mean, they can be fine, provided, again, of course, the important aspect always is

01:57:38how much exposure do you have to sector and thematic fund.

01:57:42While there are some rules which say that 10% to 15% can be invested, for the thumb

01:57:46rule, obviously, you always do not take into consideration your own personal situation.

01:57:50So it depends on, like I said, the kind of investor you are.

01:57:53But for the retail investors, if someone has been investing here thinking that there is

01:57:58an opportunity to make a quick buck, obviously, not because there is a correction.

01:58:03Even otherwise, also, I think there is definitely, I feel that an opportunity or also the time

01:58:11for investors to rethink their strategy as to how much investment they should be having,

01:58:16or if at all they should be having in that.

01:58:18Because my belief always is that if there are certain themes, certain sectors, they

01:58:23have the potential to do well going forward.

01:58:26And if you're invested in well diversified fund, which have been performing consistently

01:58:31well, surely, the fund manager will have exposure to these two or three or four sectors or segments

01:58:38that have the potential.

01:58:39Of course, it may not be as much as you actually can get when you invest directly into those,

01:58:44but they will definitely be participating through this diversified fund.

01:58:47So my point is that not because there is a correction in the market that we need to relook.

01:58:53I feel that someone who is trying to build a portfolio over a longer period to smaller

01:58:58contribution should always stay away from sector and thematic fund.

01:59:03And if someone has included, surely, it's time to kind of relook at that.

01:59:07But today, what about today and now?

01:59:10You know, it's very timely that we're doing this show today, you know, on the fifth of

01:59:15the month.

01:59:15And people are figuring out what to do.

01:59:18They're probably looking at their portfolios and saying that, yes, I have made money over

01:59:22time.

01:59:23And I'm seeing some of those gains, which are still right now notional, evaporating.

01:59:29Do they have to wait?

01:59:30Buy, sell, hold is a very simple, basic kind of a query, which viewers have been asking

01:59:35us.

01:59:35And let me put that to you now first, Pankaj.

01:59:38Yeah, I suggest that investors should add or top up their Flexicap fund or they should

01:59:43add Flexicap funds to their portfolio.

01:59:45And they can book profit from a small cap fund, especially even then they have lost

01:59:50some good amount today.

01:59:51But still, I'll say that it's the time that you should book profit from small cap or exit

01:59:57from small cap if you have a large exposure.

02:00:00And Flexicap within diversified category looks better or large cap index funds can be

02:00:07considered.

02:00:08And if you want to add theme, for example, you do not have exposure to theme, then I'll

02:00:13say that health care or consumption, these things could be better compared to your defense

02:00:20or PSU because see thematic funds perform better within a certain period of time.

02:00:27So when we are seeing that these themes have outperformed the broader market, so now is

02:00:32the time that you should exit from those themes and add such themes where you are

02:00:37looking, where you can expect better performance.

02:00:40OK, so let me recap that very specific and important advice from Pankaj Matpal.

02:00:44He's saying move from your small cap funds and increase allocation in your Flexicap funds.

02:00:51You can look at large cap funds.

02:00:52If you're keen on thematic funds, then look at health care and consumption, which haven't

02:00:58run up as much as others.

02:01:00And remember, it's a recession proof story.

02:01:03Right.

02:01:03So that's why they call the defensives.

02:01:05Hemant, you have similar advice?

02:01:09Yes, I think.

02:01:10But like I mentioned earlier, I think it's important for investors to realize what will

02:01:14work for them in the long run.

02:01:16If you are doing, you're making a decision based on what is happening in the market today,

02:01:20trust me, if you see a recovery, if there is an unscheduled rate cut by the US and then

02:01:26suddenly if you see a recovery, then the thought process will change again, saying everything

02:01:30is fine now, why should I make a change?

02:01:31So I think it's important not necessarily to look at only the market mood and how the

02:01:36markets are behaving, then make changes.

02:01:38As I mentioned earlier, I think one needs to really look at what will work in the long

02:01:43run.

02:01:43In the long run, for a retail investor, for someone who's trying to build a portfolio,

02:01:48as I mentioned earlier, I think the key is always to go into well diversified category.

02:01:53And I think that if someone was keen on having exposure to all the three market segments,

02:01:58for example, the multi-cap funds can be a great addition, then there are a large and

02:02:02mid-cap fund and of course, the flexi-cap fund.

02:02:05So my view is that, like I said earlier, not because there is a correction in the market,

02:02:10but otherwise also I think investors should re-look at their portfolio, realign if there

02:02:15is a need and try to build portfolio with a well-diversified fund.

02:02:20Of course, those who have the risk profile, who understand attendant risk can obviously

02:02:25have exposure to different markets, different sectors or different themes.

02:02:31Okay.

02:02:31So, you know, keep it steady, hedge your risks.

02:02:35And at the end of the day, remember, it is the domestic investor who's been putting his

02:02:39faith or her faith in mutual funds that has kept Indian markets relatively fine.

02:02:46I mean, I know you're looking at 600 plus point cut on the Nifty today and it's seeming

02:02:51painful, but if you compare with what's happening in the rest of the world, it's definitely

02:02:55not that bad.

02:02:56All right.

02:02:56Let's take specific queries.

02:02:57And remember, if you want to write into us or you want to ask our experts your questions,

02:03:02the numbers on your screens, let's start with Piyush Dhule's question.

02:03:06He's 28 and asks that I have 60% exposure to mid-cap and small-cap sectors, but should

02:03:13I reduce the exposure in the current market scenario?

02:03:17Thank you for your question, Piyush, and thank you for watching.

02:03:20Pankaj, let me come to you first for your response.

02:03:22So it's not unusual to have investors like Piyush, and especially he's 28 only, who have

02:03:28a larger exposure to mid and small caps.

02:03:32Do you think it's time to re-look at that strategy?

02:03:36Exactly, Tamanna.

02:03:37Actually, 60% allocation in mid-cap and small-cap is not a good choice.

02:03:43And now also means my suggestion, he should reduce exposure from small-cap at this moment,

02:03:48if he wants to exit even, that is good.

02:03:51Because we are seeing that small-cap have run well and is the time that should have

02:03:58larger exposure in large-cap, flexi-cap.

02:04:01Flexi-cap category, because fund managers have choice, they can allocate funds according

02:04:07to situation.

02:04:08So flexi-cap can be a better choice at this moment.

02:04:12But definitely from mid-cap and small-cap, Piyush should reduce his exposure.

02:04:16Okay, so reduce your exposure in small-cap and mid-cap.

02:04:20Anyway, it was not a great idea to have 60% exposure to these sectors.

02:04:23Hemant, what would be your advice for Piyush?

02:04:26Well, Tamanna, I would say there are three segments in the market, large-cap, mid-cap

02:04:30and small, and all three have an important role to play.

02:04:33Of course, the key is to have them in the right proportion.

02:04:35How do you decide the right proportion?

02:04:37One is to follow a cover rule, which says that for any investor who's investing over

02:04:41a longer period and was not very well experienced should always have a bias towards the large-cap.

02:04:47But that can be either through your large-cap fund or it can be through a flexi-cap fund

02:04:51or even a large and mid-cap fund.

02:04:54So that again depends on the kind of investor you are.

02:04:57So I think someone like him, if he's investing for a long term, even then I think the exposure

02:05:02is high.

02:05:02He needs to kind of cut down that exposure.

02:05:05Now that can be done in a phased manner.

02:05:07It need not be done on a single day or immediately.

02:05:11It also depends on whether he's looking to increase his SIP.

02:05:15For example, if he's investing, let's say, 10,000 rupees and 6,000 is going into small

02:05:20and mid and he wants to add another 10,000, he can actually invest that money in the large-cap

02:05:25or a flexi-cap or a large and mid-cap rather than kind of stop investing in this.

02:05:30So I think there needs to be some clarity on how you look at your investment process

02:05:34going forward and what is the size of the investment and how much money are you investing

02:05:39in this because the percentage does not always give you the right idea.

02:05:44All right.

02:05:44One more question coming in and this is from Mahindra, age 36, asks, is it a good idea

02:05:50to invest in foreign funds right now given they may consolidate further and could be

02:05:55up for grabs for lower valuation?

02:05:57Excellent question, Mahindra and Pankaj.

02:05:59This is what I say about the Indian investor who is largely optimistic.

02:06:03They're looking at Nvidia, all the mega-cap stocks which have been completely liquidating

02:06:10and saying that I watched these stocks from afar and thought they were out of reach.

02:06:14Are they in reach now?

02:06:15What would be your advice?

02:06:17Tamanna, adding international funds to your portfolio is a good idea.

02:06:21But at this moment, if somebody wants to invest, I'll say Indian markets are looking better.

02:06:25So have larger exposure in Indian market only because you do not know the bottom of these

02:06:31funds.

02:06:32So not a good idea to add at this moment these Nasdaq or this kind of funds, especially US

02:06:40market I'm talking about, better invest in Indian market.

02:06:44Okay.

02:06:44All right.

02:06:45So it is a good idea, but not right now.

02:06:47And an important point over there that in relative terms, do the Indian markets fundamentally

02:06:52look better?

02:06:52Well, absolutely, perhaps they do.

02:06:54We'll take a very short break, but we're coming back with your queries.

02:06:57We're going to focus on your queries in today's show.

02:06:59It's a day when people want to know what to do with their portfolio, and we'll try and

02:07:02help you out as best we can.

02:07:04Very short break, and we're right back.

02:09:29Welcome back.

02:09:44You're watching the Mutual Fund Show.

02:09:46Now, this is the portion of the show where we take your queries.

02:09:49Ananya has written in, age 35, says, I want to buy the dip, but do not believe mutual

02:09:55funds are the right avenue.

02:09:57So is it a good idea to rely on ETFs to buy the dips?

02:10:01Ananya, excellent question.

02:10:02Thank you for writing in.

02:10:03Imant, let me come to you first on this.

02:10:07People do want to buy the dip.

02:10:09Ananya's point is a valid one.

02:10:11Why should she go through mutual funds, pay that fee?

02:10:15Should she just look at ETFs right now?

02:10:19Well, I think this is an important question.

02:10:21It's not only because on a particular day you want to buy a dip, and this is an issue

02:10:25that we keep discussing again and again, whether I should go for active fund or passive

02:10:29fund.

02:10:30Again, I think there are pros and cons of investing in both.

02:10:33Of course, there is no doubt about the fact that if you are buying an ETF or an index

02:10:37fund, because there is a cap of expenses, the costs are lower.

02:10:41And of course, there is no human bias because these ETFs and index fund, they track the

02:10:46particular index.

02:10:48So in that sense, yes, I mean, there are advantages of that.

02:10:50But I think, again, there have been occasions, there will be occasions even going forward

02:10:56where you'll see that actively managed funds, not necessarily maybe in the large cap, but

02:11:00in the small and mid cap.

02:11:02And also those options which give you a mix of different segments can do better.

02:11:07So it clearly depends on, as an investor, whether you want to go in for a passive fund

02:11:12or active fund.

02:11:13But I think both have pros and cons.

02:11:16And also, let's not forget that in the rising market, you may see that the passively managed

02:11:22fund will do better.

02:11:23But in the market, when the market turns choppy, or if you see a steep fall, there is no protection

02:11:28because the index funds have to be fully invested in all time.

02:11:31Whereas in the active fund, the fund manager does have the liberty to kind of be in cash

02:11:36for some time.

02:11:36So like I said, there are pros and cons of both.

02:11:39You can always have a portfolio which has a mix of active and passive funds.

02:11:43But Pankaj, right now, the question is that Ananya wants to buy the dip.

02:11:48To buy the dip, should she look at ETFs?

02:11:52Not exactly.

02:11:53As Hemant said, I agree with him, that ETFs as well as mutual funds, both are important

02:11:59in a portfolio.

02:12:00So at the dip, you can even buy mutual funds because when you invest in mutual funds and

02:12:04markets are down, the NAV will be low.

02:12:07So that can also be a good choice.

02:12:09So both can be in your portfolio.

02:12:11And the advantage with the actively managed mutual fund is that fund managers, they try

02:12:16to reduce the risk.

02:12:17They try to manage the risk.

02:12:19So that is why you cannot ignore active mutual funds.

02:12:22As you want to build your portfolio, you have space for both the things.

02:12:29Okay.

02:12:29Manish writes in, age 25, asks, I don't feel much comfort in equity valuations right now.

02:12:36Can you suggest some safer mutual fund bets for someone waiting for a correction?

02:12:40I think Manish, your question has come to us or you've sent this question to us before

02:12:44that correction.

02:12:45Having said that, many will argue a 2-2.5% cut in the Nifty is not really a correction,

02:12:50even in your broader markets.

02:12:52But Hemant, I'll let you field that question first.

02:12:55What are safer bets for someone waiting for a correction?

02:12:59And is that wait now over or has the correction just started?

02:13:04Not so much.

02:13:05We can't say that the wait is over.

02:13:06I mean, we just discussed that there are global issues right now.

02:13:10We need to really see how the market pans out from here.

02:13:13But if someone is looking at a safer option where the money can be kept and invest in

02:13:19equity at the right time, the question is what is the right time, whether you're able

02:13:23to time it properly or not.

02:13:24But I think the options would be maybe a liquid fund where the money can be kept.

02:13:30And as one feels that there is an opportunity to get in to equity, one can do that.

02:13:35But I think timing that is always very, very difficult.

02:13:38So maybe one way, I would say, is to kind of do a systematic transfer plan.

02:13:44And maybe you can do it on a weekly basis, you can do it on a fortnightly or even monthly

02:13:47basis.

02:13:48And within that, if you see a dip in the market, then maybe you can switch a larger portion

02:13:53of that rather than time to time in market, because it has happened on so many occasions

02:13:59that investors have been waiting for correction.

02:14:01When the correction does happen, they feel that this will go down further.

02:14:05And suddenly there is a u-turn in the market and they lose their opportunity.

02:14:07So I think timing that can be a bit difficult.

02:14:09SIP can be a good option, like I said.

02:14:12In the process, if you see that there is a fall, try and kind of transfer a larger sum

02:14:17through switch.

02:14:18Timing the market is actually a losing proposition one way or the other, which is why the good

02:14:24old SIP investors at the end of the day always feel that comfort.

02:14:28Perhaps they're not really crying buckets today, like a lot of investors may be.

02:14:33Pankaj, would you agree with that, that it's tough to time the market and wait for a further

02:14:38correction?

02:14:39But the question specifically was, suggest some safer mutual fund bets.

02:14:43What would you reply there?

02:14:44Exactly.

02:14:46See, I'll say two options.

02:14:47One, as Hemant said, that one should invest in a staggered manner, so STP can be a good

02:14:51choice.

02:14:52Second is, one category is there, which is called a balanced advantage fund.

02:14:57So this category gives you this opportunity that you invest in one fund and fund managers,

02:15:02they take a call that how much equity, how much in debt.

02:15:06So balanced advantage fund can be a good choice that you invest your money and leave it on

02:15:11the fund managers.

02:15:12But within this category also, funds are managed differently.

02:15:15So select a fund which has lesser allocation in equity at this moment, like ICICI potential

02:15:22balanced advantage fund can be a good choice in this category or Kotak balanced advantage

02:15:28fund.

02:15:29So this kind of category can be a good choice.

02:15:32Or if you want lesser risk compared to this even, then there are conservative hybrid funds

02:15:38or equity savings fund.

02:15:40These kind of categories can be considered.

02:15:43Okay.

02:15:45So you have to look at, you know, various categories at this time and STP is a good

02:15:49idea because tough to time a correction.

02:15:51It could be today.

02:15:52It could not be today.

02:15:53I mean, you will hear people saying with complete confidence that this is just the beginning.

02:15:59If things turn by tomorrow, then, you know, they're not going to be really able to tell

02:16:03them anything.

02:16:04Let's take this question from Sahara Nagraj says they've received a security deposit of

02:16:0912,000 rupees looking to invest this amount into mutual funds.

02:16:12Where can I invest in?

02:16:13Let me just add one bit to that question and take it to Pankaj first.

02:16:17If Sahara was sitting today with this 12,000 rupees, would you say deploy the cash today

02:16:23or stagger it over the next few days?

02:16:26Again, it depends on how much money he has already invested in his portfolio size.

02:16:32But if somebody wants to build a portfolio now and the horizon is longer, this amount

02:16:37can be invested in one go today.

02:16:40Okay.

02:16:41Can be invested in one go today.

02:16:43That's interesting.

02:16:44Hemanth, someone sitting with a bit of money and anyway looking to deploy today is a good

02:16:48day.

02:16:51Well, today is a good day, but we don't know whether it's stopping here or the correction

02:16:54will continue.

02:16:54It should be that tomorrow you start feeling that, okay, I kind of acted very fast.

02:16:59So again, you can stagger it.

02:17:02Like I said earlier, it's very, very difficult to time it to perfection.

02:17:06Maybe if you want to invest 100 rupees, maybe 30, 40 rupees, you can begin investing and

02:17:11then maybe wait and see how the market pans out.

02:17:13But in this particular case, if he's saying he has a security deposit of 12,000, I don't

02:17:18know if he has to get a refunded after a year or what is the time horizon, I think all that

02:17:23is important.

02:17:24Even if the market presents a great opportunity, if the time horizon is not long enough, I

02:17:29would say stay up.

02:17:30Yeah.

02:17:31But I mean, at the end of the day, they already want to deploy that 12,000 rupees.

02:17:35The question is about whether they should do it now and at one go.

02:17:39If you have a longer term perspective, then there's no harm in doing that because trying

02:17:44to time the exact bottom of any market is near impossible and maybe a fool's chore.

02:17:49But steady and slow does win the race and will continue to do so even on a day like

02:17:55today.

02:17:56Thank you so much, Pankaj.

02:17:57Thank you so much, Hemant, for joining us.

02:17:59Thank you for all of our viewers who've tuned in.

02:18:01If you have a question for us, those WhatsApp numbers are on your screen.

02:18:05Until we see you today, same time, same place.

02:18:07That's all the time we have on The Mutual Fund Show.

02:18:09But stay tuned.

02:18:10A lot more coming up on the other side on NDTV Profit.

02:20:37Hello and welcome.

02:20:54You're watching Earnings, I'm Anushi Vakharia and with me is Varsha.

02:20:59So we are going to be speaking about two interesting managements today.

02:21:02I'll start off with Sami Hotels.

02:21:03Now, Sami Hotels came out with its Q1 FY25 numbers.

02:21:06They reported a 31% of revenue growth while the Asset Albedo in line with this was about

02:21:1231.7% growth.

02:21:13The margin stood at 37.7% as compared to 37.6% last year.

02:21:18Coming to the ESOP and one-time expenses, now they've gone down by about 75.2% at 4.4

02:21:24crore, but the net profit remained in the positive range at 4.2 crore as compared to

02:21:29a loss of 83.5 crore last year.

02:21:31But to discuss more on the Q1 FY25 performance and the outlook going forward, we are now

02:21:36joined in by Ashish Chakanwala, the Chairman, Managing Director and Chief Executive Officer

02:21:41at Sami Hotels.

02:21:42Hello and welcome to the show, Mr. Ashish Chakanwala.

02:21:45Thank you so much.

02:21:46So my first question to you is on the Q1 FY25 number.

02:21:49We've seen a decent set of numbers over here, revenue 31% growth, EBITDA margins also excluding

02:21:55the ESOP expenses and the one-time expenses have remained major in line.

02:22:00I want to understand what's the trajectory going forward.

02:22:02You expect an improvement in the EBITDA numbers going forward as well.

02:22:06So can you share your outlook on this?

02:22:08And along with this, how has the quarter been for you?

02:22:12Thanks so much.

02:22:13So let's break up the existing quarter so that we have a good base for the coming next

02:22:18few quarters.

02:22:19So if you look at our room revenue, which is typically measured in terms of REF bar

02:22:23or revenue available per room, we saw a room revenue growth of about 13% on a year-on-year

02:22:29basis for comparable hotels, same set of hotels, as we call it.

02:22:32Total revenue growth for the same store was about 7%.

02:22:36The reason why 13% revenue growth led to a 7% total growth was because this quarter

02:22:41was slightly weak in terms of food and beverage because of elections.

02:22:44So large groups, conferences, all of that got deferred.

02:22:47So we actually had a great start in the quarter one with a 13% REF bar growth.

02:22:51That pretty much sets the tone, Anushi, for the rest of the year.

02:22:56We feel that maintaining a high single-digit to early double-digit revenue growth is what

02:23:01we would target and we should be satisfied with.

02:23:03And we have already started seeing that starting July, we've started seeing the revenue growth

02:23:08kind of ramping up to what we had achieved in quarter one.

02:23:11So all in all, we feel that whatever REF bar growth we achieved in quarter one will start

02:23:16reflecting and being actually total revenue growth in the subsequent quarters.

02:23:21Well, that's fair to understand.

02:23:22But can you quantify in terms of EBITDA margins?

02:23:25Now, where do we see this number going forward for the overall of FY25?

02:23:29And even in terms of revenue growth, now we are adding about 302 more rooms in Q3 of FY25.

02:23:35Along with that, there's some renovations and rebranding which is taking place.

02:23:39So with the effects of all of these taking place in the second half of the year,

02:23:43what is the trajectory of the company in terms of its margins as well as its revenue growth?

02:23:49So in terms of EBITDA margins, if you see our stable portfolio did about 38.5% EBITDA margin,

02:23:56overall reported slightly lesser because of the acquisition we had made last year, which was ACIC.

02:24:02ACIC has been showing tremendous margin improvement for the last four quarters post-acquisition.

02:24:07We feel that by the end of the year, our overall portfolio should be in the zip code of about 40%

02:24:13EBITDA margin, largely happening because ACIC keeps correcting every quarter post-acquisition.

02:24:18So in terms of EBITDA margins, we think 40% is the zip code that we are targeting before we end

02:24:23the fiscal year. All right, that's fair. And now you mentioned a very interesting point about the

02:24:28REFBAR growth, which was at 13%. But if I go back a couple of quarters ago, the REFBAR growth has

02:24:34remained in the 15 to 20% of range. So from there on, now it is at 13%. Are we seeing this sustaining

02:24:41forward? Are we looking at the 13% number as the range going forward or what's the outlook over

02:24:46year now? Mr. Ashish, I hope I'm audible to you. Mr. Shakanwala, I think you're on mute. Can you

02:25:01please unmute so we can listen to your response? Can you hear me now? Yeah, you're audible now.

02:25:11Sorry, I had some issues. So I think if you take a three-year view, three to five-year view,

02:25:17we feel and we reiterate that anywhere between high single digits to early double digit is a

02:25:23very achievable and sustainable REFBAR growth target, not just in the short term, but in the

02:25:28longer term. All right. And now if I were to do a segmental breakup, now the upper upscale continues

02:25:35on this 21% of growth, while the mid-scale range of hotels has seen about a 4% growth.

02:25:41What's the contrast over here? While one segment has shown a tremendous growth over here, the other

02:25:47one seems on a muted path. Is it because of the cities in which they are placed or what's the

02:25:53colour on this, if you can share? No, so thank you for giving part answer. It's not just that

02:25:58the segment is underperforming or outperforming. Each segment has a certain diversification or

02:26:05concentration in cities. What we've seen is that the big office markets like Bangalore, Hyderabad,

02:26:10Pune, Delhi, they have outperformed the rest of the cities in terms of REFBAR growth. And because

02:26:15all of our upscale hotels are in these core markets, you see a concentration of the growth

02:26:19being there. And a bunch of our mid-scale hotels are dispersed across markets like Nasik and

02:26:25Coimbatore and Vizag, which are not core office markets in India. And therefore, you've seen their

02:26:30REFBAR growth being relatively lower. So instead of the segment, if you were to look at cities

02:26:35in our portfolio, we've seen Hyderabad leading the pack, Bangalore leading the pack at about 17%

02:26:40REFBAR growth. Hyderabad, Pune would be in the zip code of 16, NCR at about 10%. And then of

02:26:44course, then it starts tapering down into other markets. So it's more how cities have performed

02:26:49in terms of REFBAR growth. And that shouldn't be a surprise, right? If you see almost 65,

02:26:5470% of new office absorption happens in those four or five key markets. And that's been a big

02:26:59driver for demand for lodging services. So it's all about the cities and mid-scale just tends

02:27:04to get a little muted because of the fact it's got presence in broader markets.

02:27:09Okay. So the concentration remains on city level growth as compared to the segment level,

02:27:14as you've mentioned. Absolutely.

02:27:15Yeah. So now if I were to look at the net debt to EBITDA figure, now this has come down tremendously

02:27:19with the IPO proceeds, of course, which have taken place last year. 8.8X number last year,

02:27:25comparing that with this quarter, we've seen this going down to 4.9X, same as last quarter.

02:27:31But now I want to understand on the way ahead, you aim this number to come down to 3.5X. So what

02:27:37levers have you put in place to ensure that there is a further reduction that we are seeing place

02:27:42in the net debt over here? See really, there are really two levers for net debt to EBITDA.

02:27:47One is EBITDA and the other is how we reduce the debt. We are seeing the business producing

02:27:52reasonable amount of free cash. Our own estimate is that for FY25, we remain fairly comfortable in

02:27:58the range of 225 to 250 crores of free cash before any material capital expenditure or acquisition.

02:28:04That means our net debt goes down by that much. At the same time, you've seen our EBITDA growth

02:28:09being extremely, extremely humbling, and we expect to maintain a very high EBITDA growth

02:28:14during the course of the current year. So combined effect of a very high growth in EBITDA, and of

02:28:20course, the free cash that's building in the company helps us achieve the targeted net debt

02:28:25to EBITDA number. In addition to that, it's worthwhile to mention that even the growth

02:28:31opportunities that we are pursuing or what we've pursued over the last decade, you've seen that

02:28:35they are largely acquisition led. We don't do greenfield development per se. And therefore,

02:28:40if at all we invest any incremental capital in acquisitions, it actually leads to a very

02:28:45quick turnaround of that capex into revenue and EBITDA. Therefore, any capex that we deploy,

02:28:50unlike a greenfield development, tends to actually help our cause of deleveraging the

02:28:55balance sheet sooner than later. So it's really multiple levers that we have put in force. We

02:29:00remain fairly convinced as to where our balance sheet is headed, and it gives us the flexibility

02:29:05now to look at growing the business. Okay, well, that was insightful. Now,

02:29:09a final question to you is about the pipeline of opportunities that we are looking at for the next

02:29:14one, two years. Of course, in the second half, we are seeing a lot of it taking place, but what's

02:29:18the way forward over here? Are we planning to add more geographies? What's the course of which

02:29:23hotels are we targeting? Is it in the upper upscale segment also going forward? And also

02:29:27about the F&B mix, are we planning to increase our F&B mix also as we move forward?

02:29:33So I think we look at opportunities in really two buckets. One is internal and the other is

02:29:38external. We have a very good pipeline of internal growth opportunities. One you have mentioned,

02:29:44which is opening in the next two months, which is 302-odd rooms. In addition to that, we have

02:29:49incremental inventory being added in our hotel in Pune, our hotel in Hyderabad, and our hotel in

02:29:54Chennai. All of this is well within the control of the company. Most of the investment in the asset

02:29:59has already been incurred. It's about implementing additional inventory. In addition to that, we are

02:30:04looking at some pipeline, and that pipeline, as I mentioned earlier, is a combination of acquisitions

02:30:10and turnaround, something we've done for the last decade, but also some long-term variables,

02:30:15which tend to be very capital efficient. I'll hesitate to use the word asset light, but they're

02:30:20very capital efficient. So we continue to look at those opportunities. In terms of geographical

02:30:25selection, I think our numbers have taught us and further reinforced the belief that we feel that

02:30:32the best use of capital continues to be in core markets, where we feel that for the next several

02:30:37years, the expansion of the economic activity reflected in the growth of the office and the

02:30:42aviation market will make sure that there's adequate margin for safety for us to deploy

02:30:47capital. So it will be within the markets that we operate in right now. At this point of time,

02:30:52we don't expect diversification of markets beyond the core cities. In terms of segment,

02:31:00we have a pretty balanced approach. About 50% of our income comes from upper-upscale, upscale assets.

02:31:06You know, on a year-on-year basis, you may see some variation because acquisition is a very

02:31:10opportunistic-led business, but in the long-term, we expect to maintain a balance between our

02:31:15upscale and a broader mid-scale portfolio. Coming to your last bit, which is on food and beverage,

02:31:21that's a very interesting question. You know, what we have realized is that a bunch of our assets,

02:31:27especially in the upscale space, they have tremendous opportunity of us improving our

02:31:32market share in the food and beverage segment, and that's where a lot of our

02:31:35CAPEX is going to help ensure that we increase our F&B income. Right. Thank you so much,

02:31:40Mr. Ashish, for giving us those insights, and the focus remains on the upscale segment. But now,

02:31:46we move forward to Dhanuka Agritech, and Varsha is going to be addressing this. Varsha,

02:31:50it came out with Q1 FY25 numbers. Yeah, well, thanks, Anushi, for that. So yes,

02:31:55if you see Dhanuka Agritech's revenue, revenue was up 33%, while EBITDA margin is at around 15%.

02:32:03So to talk to us more about the numbers and the outlook going forward, I am joined by Mr. M.K.

02:32:09Dhanuka, who is the Vice Chairman and MD of the company. Happy to have you, sir, on the show.

02:32:15Thank you very much. Let me clarify that in the recent meeting of the Board of Directors held on

02:32:222nd of August, I have been nominated as the Chairman instead of the Vice Chairman of the

02:32:29company. So from 3rd onwards, I am the Chairman. And Mr. R.G. Agarwal, who was the Chairman,

02:32:35he has become Chairman Emeritus. And Rahul Dhanuka, son of the Chairman, is now the Managing

02:32:41Director. Congratulations for that, sir. Thank you. Okay, starting with my first question,

02:32:49given the strong momentum that we have seen in Q1 with 34% year-on-year revenue growth,

02:32:55do you believe that this is the right time to just revise the guidance from 18% to maybe 20%

02:33:00to 25% for FY25? No, actually, the July has not gone well. We were expecting good rainfall in July,

02:33:10but scattered rainfall was there in the month of July. And from 25th July onwards, the rainfall

02:33:18has picked up. So the consumption of VD side has basically been very low. And the VD side,

02:33:27which was placed in the month of May and June, that has been returned back. Some quantities of

02:33:34that has been returned back by the dealers and distributors. So that's why we are continuing

02:33:39with our guidance of 18% to 20% growth in the top line for FY25. Alright. And also, on your EBITDA

02:33:49margin side, so do you see your EBITDA margin going to around 21% to 22% given the current

02:33:54performance? No, we have rather given the guidance of 100 pips degrowth in the EBITDA margin because

02:34:03of the introduction of new molecules and expenses being incurred on marketing for promotion of

02:34:11new molecules. So that's why there can be a dip of 100 pips approximately in the EBITDA margin over

02:34:18last year. Is there a chance that we go to our EBITDA margin of 22% to 23% because I think in

02:34:27last September 2023, we had around 23% of EBITDA margin. So was that a one-off or extraordinary

02:34:33thing that we did last year? You see, the second quarter is the best quarter, ours is a seasonal

02:34:41industry. So quarter-wise, the revenues and the EBITDA margin differs. So second quarter is the

02:34:49best. So that's why the EBITDA margin in the second quarter is also higher. But overall,

02:34:55we are given guidance of 18% EBITDA margin for the whole year. Alright, also regarding

02:35:02company's engagement with innovative partners for manufacturing patented technical molecules,

02:35:09how has the engagement been progressing? No, it is at initial stage only we are having

02:35:17discussions with our Japanese partners and considering our relationship of more than 25 years,

02:35:23we do hope that sooner or later we will get the molecule from the Japanese companies. Japanese

02:35:30companies are slow in taking the decision, but once they decide, then it is for long term. So

02:35:37let us wait for some time and we hope that something will...

Ask Profit | Yen Carry Trade In focus | NDTV Profit

Category

Transcript

Recommended