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The 19th edition of Investor's Edge, released on July 23rd, offers compelling insights. This issue highlights key takeaways from Q1FY26 concalls of noteworthy companies across industries such as CRO, CDMO, Cement, Dairy, etc. Let's dive in!
Growing at double the Industry growth rate
“We have been growing at a healthy CAGR during the last 5 years, and we hope to continue that. We want to give it a push because we have a goal to achieve this year. But I think year-on-year, if you are growing at that rate of 15%, anywhere between 15% to 20%, then it's -- you're growing at a speed that is double that of the industry. So that's a good growth rate to target.”
Getting into other sunrise Industry
“This is a sunrise industry. It's a newer industry, especially the testing services for electronics. I think the major push for these services will come from defense and telecom in the next couple of years. Defense, especially because I think India has announced that they want to indigenize a lot of the defense components manufacturing within India. And Hyderabad is actually quite a big hub for such OEMs. And this is a 3-year-old business for us. It is growing organically. But I think the future is bright because even the regulations are just beginning to be developed. So as the industry matures, as the manufacturing scale matures, I think the opportunities will only increase for testing laboratories.”
Industry trends are quite favourable
“So the pharmaceutical industry is a very mature industry, and it keeps growing at a healthy growth rate year after year. So the opportunities, whether it is preclinical or clinical research or even GMP analytical testing, opportunities are equal across the board. We also see that the outsourcing has increased across the globe for all these kinds of services. So I won't be able to give any margin breakup because that's not something that we share. But I can just say that whatever margins we are experiencing now are very good margins, even by global standards are very high. So in the future, you can expect that we maintain them, plus/minus a couple of percent.”
Demand of The cement industry
“Fundamentally, even if you see the demand model or the growth model in any country, actually, once the infrastructure -- the first trigger is infrastructure growth actually. And once the infrastructure growth happens, then as Atul said, just now the housing, social infrastructure in new cities are coming, there would be a lot of migration of people moving from cities to the suburbs and distant places because the infrastructure becomes very efficient, commuting from one place to another. So we believe it is going to follow at some point of time once we reach a reasonably good impact structure. 2, because as I said and Atul also explained, we are very clear that the country has a huge potential for the overall economy to grow and cement is a basic building block. So we would definitely like to partner actually in this growth journey. And I don't see personally at least this growth is going to taper down, at least in the next 1 decade actually. Nobody knows how -- and you must have seen that recently, the day before yesterday, even our Road and Surface Ministry, Mr. Gadkari also said that now we are targeting 100-kilometer per day rather than 35. Yes, we have challenges in the country in terms of land acquisitions, slow award of contracts, execution and so on. But I think the government is conscious about it and speeding up the -- all infrastructure projects and so on. So huge potential.”
H2 is generally the strongest for the cement industry
“Let me answer the second part of the question first. More than 40% of -- 40% to 45% of demand for cement in the country is in the last quarter. January, March is the biggest quarter. Second point to make is cement is very, very seasonal in India. The real season for cement starts post festivals, post-Diwali, then post-Diwali actually. So when labor starts returning. So it is effectively -- I don't remember when is Diwali this year but let's say, post middle of November till the heat wave start setting in, the real season is November to April or May. That is the real season for cement. I believe, yes, we will grow much rapidly in the subsequent quarters. As to your point on some numbers that you were looking at. I don't think so that's a number. And Pulkit had asked me this question on the call, I don't have the ability to split hair between what is Kesoram sale because now it's all part of our system integrated. There's one billing mechanism excluding ICL.”
Strategic Shift in B2B Sales & Focus on B2C
"coming to the B2B for us will only be powder as the days go ahead because we are actively pursuing and improving our consumer ghee sales. We've also improved our milk sales. I think that because of getting to modern trade and having more presence"
"Mass Premium" Pricing Strategy
"Regarding pricing, I don't think there will be an undercutting of pricing as much as to take on the market share. It won't be that we are not trying to over premiumize our product versus the swap rate. We're trying to maintain a sort of a mass premium, not a super premium. And I think pricing is the reason we keep where it is and not reduce the price for volume."
Proactive Procurement & Inventory Management to Mitigate Volatility
"During the quarter, our meal procurement was the highest ever level of around 18 lakh liters per day and average. This is in line with our net seller strategy where we continue to raise our procurement levels whenever there is favorable procurement conditions available in the market.".... "the volume to market growth volatility it will only become more and more stable once we have enough of volume of our own without depending too much on commodity for the B2C business... So that is the reason why we are going for more volume and the volatility will only be sort of evened out more if you're able to get that volume and the sale to be organized."
Resilience and Structural Tailwinds for the Business Model
"We remain confident in our outlook for FY26. Demand visibility across key customers is healthy. Capacity is now in place and product pipelines are expanding. In particular, we see structural tailwinds from de-risking of supply chains by global innovators, increasing adoption of complex APIs and advanced intermediates, growing traction in contrast media, especially with new molecules under valuation”
Expansion into New Segments with a Focus on Peptide Fragments and GLP-1s
"While our focus has historically been on the chronic segment, we had been building capacity to supply building blocks and peptide fragments to innovators. and also the global CDMOS engaged in this field. Given the interest that we are seeing in this segment, we are advancing with a plan to build a multi-purpose plant at Mahar and a state-of-the-art R&D center at Hyderabad"
"We have been working on this type of chemistry for the last two two and a half years. We have a couple of scientists who are extremely good in this type of synthesis. As I mentioned that we are not in the catalog business. As we speak we have we are not we we are not venturing now. We already have about 45 products or 45 peptide fragments which are already ready. They can be commercialized almost immediately and this we this preparation or this you know readiness that we have is based upon customer interests so there's no blue sky gazing in this"
Ambitious Future Capacity Expansion Backed by Client Lock-ins
"In the last four years, we have quadrupled our manufacturing capacity. In the next two to three years, maintaining the same growth momentum, we plan to add another 1,000K capacity to keep in step with our aspiration, to keep in step with our medium-term goals, and to keep in step with the business commitments which have been backed by client lockins. To achieve this, we plan to acquire a large land parcel. There we will lay the foundation of a globally competitive and worldclass CDMO. This land will be developed in three phases. In phase one, we plan four blocks. Two dedicated to contrast media. One for high-intensity sweeteners where we plan to manufacture another sweetener from a successive generation to what we already have for some of our existing clients. And the fourth will be a multi-purpose block"
First quarter was into the headwinds for the company
"The first quarter was a bit subdued due to headwinds in the market primarily driven by unseasonal rains and surplus finished goods inventory in the industry carried away from Q4 FY25. Despite these external challenges, we delivered a resilient performance. We continued to strengthen our core business fundamentals and added 14 new customers during this quarter with supplies already commenced to three of them"
Strategic Entry into New, Non-Consumer Sectors for Risk Mitigation and Stable Revenue
"In line with our strategy to scale and diversify, we also took a significant step in broadening our component segment. During the quarter, we entered the energy meter sector by supplying critical components, marking our entry beyond the consumer space. This diversification is a deliberate move to reduce cons to reduce concentration risk and position ourselves in adjacent high growth industries. We see this as a long-term growth lever that strengthens our portfolio and opens up new opportunities across sectors"
Sustained Industry Trend Towards Outsourcing (OEM/ODM)
“So so a decision for insourcing and outsourcing I think this is a debate which has been going on for ages but overall if we see so there is this is a largely accepted norm wherein brands don't intend to manufacture 100% products in in house and depending on their overall market share there's definitely a a thrush or a push to deisk in-house manufacturing by outsourcing and over last couple of years if we see outsourcing is something which has been gradually increasing from an earlier 20% kind of overall market being outsourced to 25 30 and currently it is anywhere between 30 to 35%. So gradually yes outsourcing or or dependence on OEM ODM has been increasing and this is an industry which continues to outsource and derisk the capacities"
Market Challenges are Transitory and Seasonal
Management attributes the challenging Q1 FY26 to "unexpected weak summer and prolonged subdued consumer demand," specifically impacting cooling products due to a strong base in the previous year. They firmly believe these challenges are "transitory" and expect to "drive revenue growth and margin improvements over the coming quarters". They further clarified that the decline was a "market reality" and not pertinent to one brand or company
Cables and Wires as a Robust Growth Engine
This segment continues to show "robust growth" driven by "infrastructure Industrial-led demand". Havells has significantly accelerated capacity building investments, committing "over 340 crores" in additional capex during the quarter. They are doubling their capacities in "underground cables from FY24 to FY27," anticipating "a good growth traction in the medium term" for this segment. The expansion focuses more on "medium voltage and high voltage" cables and aims to build "new customer base as well as not only in India but outside India as well," seeing "good traction in the export markets".
Blinkit becomes bigger than Zomato as said by Deepinder in the past
“NOV of our B2C businesses grew 55% YoY (16% QoQ) to INR 20,183 crore in Q1FY26. This was the first quarter where our quick commerce NOV exceeded food delivery NOV for the full quarter. On an annualized basis, we are now at almost $10 billion of annual NOV across our B2C businesses and quick commerce is now our largest B2C business contributing to almost half of this annualized NOV.”
Food delivery growth to come back from a broader consumer slowdown
“I think the YoY growth is likely to bottom out now as we recover from the demand slowdown we started seeing in late 2024. For FY26, it looks unlikely that the business will deliver a 20%+ NOV growth but we should be north of 15% and hopefully trending towards 20% YoY growth in FY27. In response to the sluggish demand environment, we saw a QoQ increase in restaurant funded discounts (as a % of GOV) in Q1FY26, which led to the slightly lower NOV growth vis-à-vis GOV growth during the quarter (NOV = GOV minus discounts). We expect such quarterly fluctuations to be a regular feature as restaurants calibrate their investments in discounts in response to changes in the demand environment.”
Long-Term Vision for Banking Franchise Development
Management holds a long-term view on building a robust banking operation, indicating that stability, strength, and scalability require significant time. "Banking franchises require at least 10 years to get a stable, stronger and scalable right. So we are on that path."
Strategic Shift Towards Stricter Credit Culture for Sustainability
The bank is consciously moving away from an NBFC-like approach to a more stringent banking credit culture to ensure sustainable growth at scale. This involves clear separation of duties between sales and credit functions and elevating credit leadership. "rather I would say we have become more stringent you know like like you know previous days it was more about NBFC kind of culture now we have actually adopted the the whole arms length kind of working where sales don't have credit powers you know credit guys don't have a sales target or anything so rather we are working on our credit team”
Acknowledged Pain & Strategic Shift
"credit card cost is giving us more pain than an MFI cost... So a couple of corrections have already happened. You know there's a leadership change there... The idea is to really understand with the new lenses and with the new fresh approach and if you ask me you know I will be better off by this year end that how we are looking towards this business as of now the idea is to remain again to control the whole losses and and and come on the BP first and then look for the growth you know so I would want time for my investors that they should support us in this in this journey
Aggressive Risk Mitigation in Microfinance (MFI) for Future Stability
"Incrementally 97% of Q1 disbursements are covered under CGFMU taking the portfolio coverage to over 50% by end of Q1. We are observing asset quality improvements sequentially after Min Guardrail implementation." "By next year you know our entire MFI book will be covered under credit guarantee right so the maximum credit cost if the environment remains like this... should not be about 3 to 3 and a half%. And of course the credit card business also by the time you know will be in better shape right and so it depends on this two variables also to achieve 1.8 kind of ROA"
As we close this 19th edition of Investors’ Edge, it's clear that the corporate landscape is a dynamic tapestry of strategic shifts, technological integration, and a keen eye on future growth. From Vimta Labs' double-digit industry growth and expansion into sunrise sectors to Ultratech Cement's anticipation of sustained infrastructure-led demand, and Dodla Dairy's strategic pivot to B2C with "mass premium" pricing, companies are adapting and innovating. Blue Jet Healthcare is poised for significant expansion with new segments and client lock-ins, while Epack Durable navigates headwinds with strategic diversification into non-consumer sectors. Havells continues to rely on its robust Cables and Wires segment for growth, and Eternal sees quick commerce outperforming food delivery. Finally, Aubank is undertaking a deliberate, long-term journey to build a stronger banking franchise with a stricter credit culture and aggressive risk mitigation in MFI. These insights from Q1FY26 concalls paint a vivid picture of resilience, calculated risk-taking, and an unwavering commitment to long-term value creation across diverse industries.
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This blog post is intended for informational purposes only and does not constitute financial advice. The content provided is based on publicly available information and personal interpretations, and should not be considered a recommendation to buy, sell, or hold any securities. Always conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions.
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