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Welcome to Investors’ Edge— your daily dose of business insights, trends, and updates that matter. In this space, we go beyond the headlines to explore the evolving world of companies and industries. Each day, we bring you thoughtfully curated insights, sharp observations, and key developments shaping the business landscape.
Whether it's a strategic pivot by a market leader or an under-the-radar company making waves, we break it down for you — clearly, concisely, and consistently.
The 20th edition of Investor's Edge, released on July 26th, offers compelling insights. This issue highlights key takeaways from Q1FY26 concalls of noteworthy companies across industries. Let's dive in!
Next big cap‑ex bet is NVIDIA Blackwell
“We are nimble about our capacity expansion. We definitely want to invest in Blackwell… if we start adding the capacity on the Blackwell… potentially in the last quarter we could see the capacity expansion.”
Stretch EBITDA ambition once scale kicks in
“With the capacity that we are expecting to convert to revenue by March… 65%‑75% EBITDA margin should be doable.”
Key reason for the costs to hit and bad performance for the company
“Practically doubled because we have balanced ourselves across North and South regions. Now, North continues to generate the revenue, but South obviously we have run into some hiccups in terms of our rollout, which we are resolving both on the GPU side as well as on the network security side, etc. So, all of that is expected to be resolved early this quarter and hopefully by the end of this month or at the latest by before our 15. And we should start seeing that capacity going online in a big way. And that will result in the rebalancing of our revenue along with the cost. Now the cost we started incurring for the new facility starting from April, now that should not super drastically change. Obviously, with higher utilization, some costs will change, but not too drastically over the next couple of quarters. But yes, that has hit our numbers hard this quarter”
Collection momentum to improve going forward as the construction picks up
“So, if you look at the collections, both on a Q-on-Q basis and on a year-on-year basis, our collections have gone up and in the coming quarters you will see these collections improving even further, as you are witnessing our pre-sales is coming from newly launched projects. So, as the construction moves ahead, you will see collections momentum gaining further strength going forward.”
New Launch project target of 110 bn in next 9 months
“So, this is the launch from ODC 5th Avenue, Sunteck City, which is close to more than Rs. 1,500 crores. And then Bandra Bandstand, which is more than Rs. 1,000 crores. Andheri, this Western Express Highway, which is the new acquisition, which is again Rs. 1,100 crores. Mira Road, we are looking to launch one more new tower, which is again Rs. 1,000 crores. Vasai, Sunteck Beach Residences, which is again two more new towers, because from the old inventories we are almost exhausting most of the inventories, so two more new towers there, close to Rs. 500 crores, Rs. 600 crores there. Naigaon, Sunteck World, the one more new phase, from there we are looking to again garner another Rs. 500 crores launch, a new launch of GDV value of Rs. 500 crores. So, total GDV value from this launch pipeline, including Nepean Sea Road should be close to Rs. 11,000 crores, what we look at these three quarters.
Strategic Acquisition Driven by Unlocking Untapped Growth Potential and Full Control
"We are excited to share a strategic development that strengthens our control over a high-performing retail and office platform and reinforces our long long-term vision. We are glad to share that our board of directors has approved a proposal to acquire 100% stake in Island Star Mall Developers Private Limited platform which the group has seated and grown over the past decade."
"The idea of looking to acquire this 100% stake stems from the management's belief that the untapped growth potential in this platform can add significant value for shareholders over a period of time as we complete the projects under construction and undertake expansion based on the unutilized development potential or FSI potential."
Strategic Repositioning and Premiumization of Legacy Retail Assets
"I would also like to highlight that this strong growth was despite a temporary and a strategic dip in trading occupancy during the quarter... We are actively reshaping the brand mix across these key centers and the broad goal here is to replace low efficiency formats with stronger better trading brands while also creating more room for high performing flagship inline stores and other key categories... This churn has a temporary impact on occupancy and renter income but it is a plan investment in creating sustainable long-term value for our retail assets."
"Currently um you know as you would know we are undergoing a significant repositioning and premiumization change for most of our legacy assets which are completing close to 14 15 years and we see that um there is a lot of headroom and appetite for increasing rental for a lot of these older deals."
Significant improvement in asset quality
“Overall gross NPA reduced by 135 basis points from 4.5% to 3.15%. Net NPA reduced by 76 basis points from 1.44% to 0.68%. Slippage for the quarter was 20 basis points in the amount of INR182 crores.”
ROA now at ~1% — aim to hold ~1% in FY26 and move to ~1.15% next year
“Return on assets for the quarter was 1.01%… We should be able to return RoAs in the 100 basis points neighborhood… as the environment becomes a little bit more benign… we will be closer to about 115 basis points or thereabouts.”
NIM pressure to bottom in Q2; spreads to widen from Q3 (unless repo changes again)
“I think the bottoming out of all of this is going to happen in Q2 unless RBI changes repo rate again… the repricing on the existing deposit book will take place… the spread will start widening again in Q3 going forward.”
From opex cuts to calibrated re-hiring — still targeting positive operating leverage
“We have reached I think the limit to how far this can be taken. So, we are now contemplating renewed hiring… we again have positive operating leverage; our revenues grew 13%, expenses were flat and therefore, pre-provisioning operating profit grew 32%… we continue to think that we will have positive operating leverage as we go through this year.”
Ambitious Quality Targets and Performance
"We have now set a target of six sigma level quality processes in thyroid care and we track our complaints per million with a goal to bring it below 3.4 complaints per million. I'm very happy to say we have already made tremendous progress on this dimension with our complaints per million at four versus 6.4 last year when we began tracking this and we are confident we will very soon reach 3.4 making us the first lab chain to achieve six sigma processing and we believe we will soon be best-in-class on this dimension not just in diagnostics but in healthcare"
Strategic Franchisee Expansion and Relationship Management
"It's been 2 years since we implemented the pay for performance structure which has led to an increased energy within our franchisee network with motivation for them to move up volumes and enter highest laps. I'm very happy to report that our franchisee base is at its highest ever. With a steady growth in the franchisee base over the last two years, encouraged by this success, we are now expanding our field and central teams to accelerate the franchisee addition journey"
Prudent Financial Management through Capex Model
"There's no free lunch when someone gives you on reagent rental they are typically loading their capital cost. We are a completely debtfree company with a high operating cash flow. Our cost you know is significantly lower than the loading that they put on the rental model. So we find it much better to finance our own equipment than take financing you know at a very high rate in the reagent rental model"
Strategic Shift to Defense Production for Long-Term Value and Confidence in Government Licensing
"License I I will tell you license is government priority. They are more in a hurry to issue the license. Then we are in a hurry to receive the license. So we expect to get the license as soon as possible but there are some procedural delays which we are seeing should the license come any day."
Diversified Product Basket and Continuous Market Adaptation as a Unique Selling Proposition (USP)
"your company has a diversified product basket from pipes to bridges to defense products our USP is continuous reshuffleling of products and markets to take over the market changing conditions as we have been working on value added versus nonvalue added sector our focus has been on increasing value added sector"
Efficient Capacity Expansion through Debottlenecking
"In our kind of industry there is debottlenecking. That is a term we use... Not only by installing the new machines can we increase the capacity. We can increase the capacity by debottelnecking and in this regular process we are upgrading our old plants to take maximum production by debottelnecking some by adding some instruments by adding some systems by adding some labor."
Ambitious Growth Targets Supported by Multi-Sectoral Contributions to a Billion-Dollar Vision
"the guidance of 15 20% is excluding the defense contribution"... "Definitely defense will be a part of it but at the same time our other products of hydraulic tubes, our infrastructure they will also give and solar industries so they will also give an equal contribution to it."... "The future is clear but step by step."
High Expectations and Clear Potential for New Hydraulic Tube Business
Management reports achieving approximately 50% utilization in Q1 FY26 for this new plant and projects reaching around 70% utilization by the end of the financial year. They provide a clear revenue outlook for this segment, stating that "when it goes to 90% we hope a turnover we will get in this segment will be almost 1250 to 1300 crores". The expected EBITDA margin for hydraulic tubes is also high, in the range of 15-16%, indicating a profitable new venture.
Q2 looks goods for the company
“So our order book, Ankur, is looking good for smartphones. As Saurabh just shared the number, we did around 9.5 million and 9.6-odd million in the Q1. And the order book is, I think we should be somewhere at around 11 million to 12 million in Q2. Now this is a mix of better performance of our customers, both in the domestic market and also a significant flip of our anchor customer for global markets. This is a combination of. So Q2 looks good. And we are confident that our final numbers of 42 million, 43 million, we're going to hit. And please appreciate all these numbers we are talking about without the Vivo share.”
Expansion in all the verticals to drive growth for the company
So when you're looking at the non-mobile business, we feel that our telecom business in a year or so can touch a revenue of almost INR 5,000 crores. We feel that in a couple of years, our refrigerator business, because in Phase 1, we are expanding our capacity from 1.2 million to 2 million and then to 3 million, it can be somewhere between INR 2,000 crores, INR 2,500 crores. Washing machines, we are further expanding the capacity from 3-odd million to 3.8 million. The current revenues of almost INR 1,200 crores can go to INR 1,800 crores, INR 2,000 crores. Lighting through a JV, we are confident that from INR 850 crores, INR 900-odd crores can double to INR 2,000 crores. So these are the numbers. Similarly, with the hearable and wearable business, there is going to be an organic kind of growth. The new vertical which we are pursuing is mainly the IT product, which we are really focusing on to ramp up. We feel that in a couple of years' time, that again, revenue can be somewhere in the range of INR 3,000 crores, INR 3,500 crores.
Retail Rentals Driven by Negotiation, Demand-Supply Dynamics—Growth Aligned with Disciplined IRR Focus
“We have been always saying that renting is a game, which is always a negotiation power, negotiation skill game and the kind of property that you look forward to. It is also an expectation that the brand has and the kind of space that the brand gives forward. Not that every property couldn't be consumed by a few retailers. There are a lot of properties which are getting built also, because as the market is growing, as the consumers for the properties are growing or the retailers are growing.
Similarly, the developers and the small-time developers are also growing and the land is getting consolidated to build those kinds of properties, which could be let out to the retailers. So, I think it is ultimately a demand and supply game, and it is always going to be whenever the demand is higher, the supply is also going -- will become higher. So, it is a temporary phenomenon. There is definitely a rise in rental that we could see. We have seen that. There is a rise in rental of our existing stores also whenever we are going for renewal. So that is definitely happening. And similarly, we need to expect the market to also grow. So, we are not raising our bar too much. We definitely work towards our IRR mechanism. We don't want to go beyond what we could queue and digest. So, we are very conscious of that fact. We will not grow too much if that becomes a bottleneck.”
Massive Headroom Ahead: Scaling Distribution AUM Alongside Broking Through Tech, Talent & Trail-Based Growth
“As we know that the distribution AUM is still very small in the overall scheme of things when you look at our holding in our DP, we have got more than INR 3 lakh crore of assets. AUM is just around INR 40,000 crores. So a huge room to grow from here. At the same time, we look at our broking business, the overall presence, we have a huge scope and we are invested in the broking. But that doesn't stop us from building on the distribution AUM. And in the last few years, we have consistently seen consistent growth in the AUM business in a big way. And as Navin said, we are investing in a big way in terms of people, in terms of technology and in terms of building an overall [ trial-based ] book, which will be over and above the broking business growth, which we are building on to. So that will be a continuous growth on both sides. That is how we are looking at it.”
High-Growth Business with 8-10x Headroom Fueled by Strong Tailwinds and Ongoing RM Investments
“There has been a very substantial ramp-up in the second half and the fourth quarter of last year. And so -- and usually also, as I mentioned, the fourth quarter is seasonally the strongest quarter for certain products. And so all of this has led to a very strong growth last year as well. And this year, again, we have a robust 50% top line and bottom line growth in this business. We are seeing very strong tailwinds for this business and expect this business to continue to perform strongly in the coming quarters of the year as well. And as I guided, this business is very under-indexed in terms of the headroom to grow. If you benchmark us to the market leader, you will see that there is almost 8 to 10x multiplication that is possible in this business. And that's why we have been investing. I have guided in the past that almost 10% EBITDA margin sacrifices on the back of strong RM hiring, where only 33% of the relationship manager base is of a vintage greater than 3 years. So we see all of this continuing to serve as strong tailwinds, the headroom as well as the investments that we are making in the RM base, and the growth will continue to be strong in the coming quarters as well.”
Business Designed for 20% Revenue Growth and 30% Profit CAGR with ₹4,000 Cr Topline & ₹1,000 Cr PBT Target in 3 Years
“Yes. So I think the way we have designed the business is to keep the growth bag around 20%. We achieved 15%. We achieved 14%, but we designed the business for 20% growth year-on-year. So that's the first principle. The second principle is we are 20% of the business from a design perspective, but economic conditions may be different. Customer conditions may be different. We may -- but the margin will be close to 30% growth. So if I look at it, 1 to 1.5 is a difference between revenue growth and profit growth as a number. If you're looking from a 3-year perspective window, achieving INR 4,000 crores revenue and INR 1,000 crore margin is what we are looking to design the company for. So from your investment banking, PBT of INR 1,000 crores and INR 4,000 crores as a top line number in 3 years' time. is very much possible. It's not guidance, but this is what we are striving for.”
To make Canada third home market for the company
No, it adds up to Canadians starting to feel very comfortable. Our size of operation. Our intent is, it's like we're calling this as one of our 3 home markets. India is the home market, the U.K. is a home market. Canada is now becoming that home market. And the intent is to scale each one of these 100 million businesses in the near future. So it's on the right path.
Strategic Rationale for High Margins: Fundamental Operational Changes, Not Just Opportunistic Sales
The management clarifies that the significant jump in margins is not a one-off event due to short-term market conditions but rather a result of sustained efforts in enhancing operational efficiencies and a strategic shift towards higher-value products over several quarters. This indicates a deeper, more sustainable improvement in their business model.
Strategic Approach to Capacity Expansion and Acquisitions
The company is undertaking a phased expansion of its lead production capacity at the plant, adding 72,000 tonnes per annum in two phases. Phase 1 commenced in Q1 FY26 and is operating at 40-45% capacity utilization, expected to increase to 70% in upcoming quarters. Phase 2 is scheduled for commissioning in the second half of FY26.
Optimistic View on Domestic Scrap Availability and Regulatory Tailwinds
Despite global talks of restricting scrap exports, the management believes that India's increasing formalisation of waste disposal will lead to greater domestic scrap availability, balancing potential supply tightness from imports. Regulatory changes like BWMR (Battery Waste Management Rules) and potential GST reductions are seen as positive tailwinds that will shift the market from unorganised to organised sectors.
Cost controlled measures improvising sustainable ebitda per ton
“Going forward as the capacity utilization improves across our units the business is expected to benefit from operating leverage We remain optimistic that our ongoing initiatives such as optimizing the freight through reduced lead distances lowering the clinker factor upgrading Andra plant and increasing the share of renewable energy in our power mix will further enhance our cost efficiencies and support our overall profitability”
Infra spends by Govt , real-estate activities driving industry growth
“Overall the industry witnessed healthy volume growth supported by a pickup in infrastructure activities driven by the government spending and improving demand from the individual house builders Additionally the low base in the corresponding quarter last year due to the Lok Sabha elections and some of the state elections also contributed to year-on-year volume uptake On the cost front key input prices particularly power and fuel remain largely stable”
Healthy growth in spite of early monsoon
“You will be very surprised in spite of early monsoon the entire south grew close to around 8 to 9% in the Q Q1 Obviously this growth is purely because last year was very very bad because last year the market more or less was flat across south but but if you see the net gain we we are actually close to 5%”
Region specific growth Central and south saw better growth
The growth in the performance is led by a 15% growth in the grey cement volume during this
quarter year-on-year, which was mainly on account of substantial growth in Central India, where we grew by over 50%, attained growth in the South region, where the base was low and there has been a good growth, a good sale of clinker during this quarter. However, there has been some de-growth in the North, mainly on account of the market conditions, as the North did not grow that much. So, if you look at the white cement, the white cement year-on-year grew by 8%.
Higher marketing spends prior to festive season and plant maintenance shutdown during monsoon
So, actually, it will be higher going forward because all our major marketing spends, we have these dealer tours and all. So, normally we plan the tours, everything in the second quarter, which is the lean period. So, the marketing and other expenses will increase sequentially. So, this is what we see that this second quarter would be a tough quarter where there is also scheduled maintenance of the kilns as well as the grinding expenses pre just the festive season. So, all that gets started in this season. So, we would be seeing an increase in the expenses in Q2.
Continues efforts to have increased distribution in Pan India
I think I made it very clear in my call that our overall strategy is to create a pan-India footprint while creating a significant presence in each of the markets that we operate in. So, I think we are not going to choose one or the other. I think I also made it clear that our Kadapa plant is operating at high utilization levels. So, it is important for us to continue to deepen our presence in Northern Tamil Nadu, Southern Karnataka and Andhra Pradesh. And we are developing projects in regions that we don't operate in. So we spoke about Jaisalmer, we spoke about Jaypee, which is Central India. So I think we are looking at all of this in a very holistic manner and both the things in terms of pan-India footprint as well as significant presence in our existing markets are important to us
Consolidation aiding pricing discipline in the industry
Okay. So I think let me first take the pricing issue. I personally think that, as I've said earlier, at the current margin levels, no new capacity creation is viable. So our belief is that as consolidation happens, it will boost pricing power in the industry and the margins will become respectable to give a good return on capital employed. This has happened in every sector. And we have also seen that the top players are taking a disproportionate share of the growth. So I'm convinced that the entry barriers are rising and the margin profile of this industry and the return profile of this industry is going to get increasingly attractive in the future. Now having said this, there will be blips along the way, and this is not a linear curve. There will be times when you will make low utilization, low return on capital. There will be times when you will have low utilization, but very high return on capital because prices are good. And I think we should not get swayed by quarter-on-quarter volatility in this sector.
Huge capex plans ahead covering regions across nation
In line with the above, the broad overview of our road map is as follows: to start with, in February 2025, we have already announced an investment to establish a 3.6 million ton per annum clinker unit in Belgaum, along with a 3 million ton per annum grinding unit at our existing Belgaum plant, coupled with new 3 million tons greenfield grinding unit in Pune. The Belgaum grinding units will primarily cater to the markets of North Karnataka and Southern Maharashtra while the Pune grinding unit will serve the untapped Western Maharashtra market. Second, the Board has approved an investment of 3.6 million tons per annum clinker unit with a 6 million tons per annum grinding unit at our existing Kadapa plant, supported by 3 million tons per annum bulk terminal in Chennai at an estimated capex of INR3,287 crores. Our Kadapa plant is already operating at high utilization levels. And this investment will help us strengthen our presence in Andhra Pradesh, Southern Karnataka as well as Northern Tamil Nadu markets. Third, with the upcoming commissioning of a new clinker line of 3.6 million tons per annum at Umrangso in Assam, we will become clinker surplus in the Northeast region, and we are evaluating the best location to add additional 2 million to 2.5 million tons per annum of grinding capacity, which will be a split grinding unit. This can be done within 12 to 15 months of the date of commencement. With these 3 projects, Belgaum, Kadapa, and further expansion supported by Northeast clinker, we would add 14 million to 14.5 million tons per annum of cement capacity, and this would take our total cement capacity to around 63.5 million to 64 million tons per annum by financial year '28.
As we conclude this 20th edition of Investors’ Edge, it's clear that the business landscape is in constant motion, presenting both challenges and opportunities. From E2E Networks' strategic investments in NVIDIA Blackwell and EBTIDA ambitions to Sunteck Realty's improving collection momentum and ambitious new launches, companies are actively navigating growth and market dynamics. Phoenix Mills is strategically acquiring for untapped potential and repositioning assets, while South Indian Bank demonstrates significant improvements in asset quality and a positive outlook for ROA and NIM. Thyrocare is setting new benchmarks in quality and expanding its franchisee network, and Goodluck is strategically shifting towards defense production and leveraging debottlenecking for capacity expansion. Dixon Tech looks poised for strong Q2 performance and growth across all verticals, and VMART is adeptly managing retail rentals with a disciplined IRR focus. Motilal Oswal sees massive headroom in scaling distribution AUM, and Intellect Design Arena is aiming for aggressive revenue and profit growth while making Canada a key home market. Finally, Pondy Oxides Limited is focusing on sustainable margin improvements, strategic capacity expansion, and is optimistic about domestic scrap availability and regulatory tailwinds
These insights, drawn directly from Q1FY26 con-calls, offer a glimpse into the strategic thinking and future plans of these noteworthy companies. Understanding these nuances is crucial for staying ahead in today's dynamic investment world.
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Disclaimer: This blog post is for informational purposes only and does not constitute a recommendation to buy or sell any securities mentioned herein. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.
Welcome to Investors’ Edge— your daily dose of business insights, trends, and updates that matter. In this space, we go beyond the headlines to explore the evolving world of companies and industries. Each day, we bring you thoughtfully curated insights, sharp observations, and key developments shaping the business landscape.
Multibagger Learnings for September 2024
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