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On January 24, 2023, Hindenburg Research, famous for activist short-selling, published a report with the headline, “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History.” This impacted all the stocks of the Adani conglomerate and within a matter of days, brought down his wealth by more than 50%. In response to this, Gautam Adani said that all allegations are baseless. The Supreme Court of India and SEBI gave him a clean chit after an investigation.

Almost two years later, Adani stocks were still recovering from the Hindenburg shock, and Gautam Adani was busy raising fresh funds, and set to launch $600 million of dollar-denominated bonds. 

But around 3 am, early Thursday morning in India, US prosecutors published the allegations that he, along with others, had promised to pay more than $250 million in bribes to Indian government officials to win solar energy contracts. The crux of their case was that he concealed these efforts while he sought to raise money from US investors.

Adani Group’s stocks and bonds plunged, wiping off around Rs 2,50,000 crore of the conglomerate’s total market value. Here at Trendlyne, we follow these market movements closely, and in this article, we will explore the impact of this on retail as well as institutional players who hold Adani stocks in their portfolios.

Domestic and foreign investors hold substantial Adani Group shares

Domestic investors held 17% of Adani stocks, while foreign investors owned 13%

Of the total investments worth over Rs 2 lakh crore by the foreign institutional investors (FIIs) as of October end, around 40% was from GQG Partners. GQG, an investment management firm, saw its shares listed on the Australian Securities Exchange fall by around 20% on Thursday.

Meanwhile, retail investors and mutual funds combined also had investments worth around Rs 2 lakh crore at the end of October.

By design, every passive fund and ETF was exposed to a few Adani Group stocks. However, even the actively managed mutual funds from Quant, ICICI Prudential, HDFC, SBI, and Mirae Asset among others had significant exposure to Adani stocks as of October 31.

Actively managed Quant mutual funds have exposure of ~Rs 5,000 crore to Adani stocks

While FIIs were continuously pressing ‘SELL’ on Adani, DIIs were pressing ‘BUY’

FIIs were right yet again in reducing their exposure to Adani-verse

Except for GQG Partners, most FIIs were quietly cutting their exposure to the Adani group stocks, while active mutual funds and retail investors were mostly sitting on the other end of the trade buying those stocks.

Quant mutual funds find themselves wrong-footed on Adani again

Quant MFs again took a chance with Adani stocks, and got burnt again

You must be wondering who were the ones among the DIIs pressing the ‘BUY’ button. I found the answer exactly where I thought I would — the monthly change page of mutual funds’ holdings on Adani Enterprises’ shareholding page, and I was struck by one name in particular — ‘Quant Mutual Fund’. If you look at the screenshot above, many funds managed by the Quant fund house took fresh positions in Adani Enterprises just last month in October. According to the data from Trendlyne, they invested over Rs 1,963 crore in this single stock and again got their hands burnt along with many investors who trusted them with their savings.

This is the second time Quant has got its fingers burnt. Quant mutual funds were among the biggest holders of Adani stocks during the Hindenburg Saga.

Adani follows the SOP

An Adani Group media release that came around 2 pm on Thursday issued denials regarding the case, “The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied.”

The media release also cited the US Department of Justice, which said, “The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.”

In an interview with Forbes over a decade ago, Gautam Adani said, “Being an entrepreneur is my dream job as it tests one's tenacity. I could never take orders from anyone.” But shareholders, regulators and investors will now play significant roles in deciding what lies ahead for his conglomerate.

1. Hindalco Industries:

This aluminum products manufacturer has gained 4% over the past week, driven by a surge in aluminum prices. The increase follows China’s proposal to reduce or eliminate export tax rebates on commodities like copper and aluminum starting December 1. This announcement pushed London Metal Exchange (LME) aluminum prices up by 8% to $2,730 per tonne on November 18.

The Chinese decision seeks to address the oversupply of Chinese aluminum in global markets, a long-standing issue that has caused trade tensions with the US and Europe. Analysts believe it will reduce China’s exports, tighten global supply, and boost prices, benefiting Indian aluminum companies like Hindalco, Vedanta, and National Aluminium Company (NALCO).

Hindalco posted a 78% YoY increase in net profit to Rs 3,909 crore in Q2FY25, supported by lower power, fuel, and finance costs. Revenue rose 8.5% YoY to Rs 59,278 crore, driven by growth in Novelis, and the upstream, downstream aluminum, and copper segments. Novelis, Hindalco’s US-based subsidiary, reported Q2FY25 revenue of $4.3 billion, with EBITDA at $462 million (-5% YoY). The EBITDA decline was attributed to rising aluminum scrap prices and a loss of $25 million from flood damage at its Sierre, Switzerland plant.

Hindalco is focusing on Indian upstream projects, including aluminum and copper smelters and an alumina refinery, with a total capex of $4-5 billion over the next 3 to 3.5 years. MD Satish Pai said, "The company will fund this capex through a combination of internal cash and debt, raising $1-1.5 billion over three years. Our capex guidance for this year stands at Rs 6,000 crore, and for next year, we expect it to be around Rs 8,000 crore."

Post results, Motilal Oswal maintains its ‘Buy’ rating on Hindalco with a target price of Rs 780, indicating a potential upside of 19.6%. The brokerage believes that the ongoing capex in Novelis is expected to position Hindalco as a global leader in the beverage cans and automotive flat rolled products (FRP) segments. However, the cost of production in the aluminum business may rise due to higher coal e-auction premiums and increasing scrap prices, potentially impacting margins in the short term.

2. PI Industries:

This agrochemicals company has declined by 3.5% over the past week following the announcement of its Q2FY25 earnings on November 13. PI Industries' revenue grew by 4.9% to Rs 2,221 crore during the quarter, helped by an improvement in the custom synthesis and manufacturing (CSM) segment. However, revenue missed Forecaster estimates by 3.5%. Meanwhile, net profit grew by 5.8% YoY to Rs 508.2 crore, and EBITDA margins were up 220 bps YoY to 28.3%, led by a favourable product mix.

The company’s domestic and pharma businesses continued to witness subdued demand during the quarter. The management highlighted that delayed and erratic rainfall and pricing pressures on inventories weighed on Kharif seed demand and market sentiment. The pharma business was impacted due to the slow offtake of some of its products. However, the company expects volumes to pick up in H2 and targets revenue of Rs 250-270 crore from the pharma business in FY25. PI Industries’ export segment (which contributes over 78% to the revenue) witnessed healthy growth, with its revenue increasing by 8% YoY during the quarter.

Going forward, the company expects lower, single-digit (~7-9%) revenue growth for FY25 compared to its earlier guidance of around 15%. Speaking on this, Mayank Singhal, the Managing Director of the company, said, “The global crop protection industry faces challenges due to volatility in agricultural markets, fluctuating commodity prices, destocking trends, pricing pressures, rising inflation, and delayed purchase decisions. Considering the current global industry scenario, we have re-aligned our overall outlook.”

Following the company’s results, Motilal Oswal maintains its ‘Buy’ rating on PI Industries with a target price of Rs 5,200. The brokerage has a positive outlook on the company, driven by consistent growth momentum in the CSM business, product launches in the domestic market (six to seven new launches in FY25), and ramping up of the pharma API and CDMO segments.

3. Britannia Industries:

This packaged foods company declined by over 2% on 21st November as the Food Safety and Standards Authority of India (FSSAI) issued a notice to the company regarding the use of a preservative in a batch of one of its products and prohibited its sale. 

The company had announced its Q2FY25 result on 11th November. Its net profit declined by 9.5% YoY on the back of rise in raw material and employee expenses, while its revenue rose 5.1% YoY. The company missed the Trendlyne Forecaster estimates for net profit by 11.6% and revenue by 1.6%. It appears in a screener of stocks which are categorised as Expensive Performers  according to DVM scores.

Q2FY25 was a lacklustre quarter for the company due to weak demand and high food inflation numbers, specially for items like cereals (6.9%), vegetables (42.2%), and refined edible oils (35.7%). The company’s rural market however showed mid to high single digit revenue growth, but the urban market including modern trade and e-commerce delivered slower growth as compared to previous quarters. The FMCG market slowdown was significant in urban metros – it contributed 75% of the overall sector slowdown. The FMCG sector grew by just 4.1% in volume during the September quarter, down from 7.2% during the same period last year. Heavy monsoon rains worsened the slowdown, especially for out-of-home consumption. 

Varun Berry, vice chairman and managing director of the company, highlighted the company's plans to implement a 4-5% price hike in select SKUs over the next two quarters to combat raw material cost pressures. On price hikes Berry added, “We are very vigilant about competitive pricing actions because we understand that as market leaders, we need to take the lead. However, we do not want to be uncompetitive, and that is something we are keeping an eye on.” He also noted that Britannia has seen a rise in rural distribution where its number of distributors are now over 30,000 and its focus states are performing better. The company has an estimated 33% market share in India's organised biscuits market.. 

KR Choksey has retained an ‘Accumulate’ rating on Britannia with a target price of Rs 5,601. The brokerage has lowered its FY25 and FY26 EPS estimates by 11.5% and 6.1%, respectively, due to higher-than-expected raw material and employee cost, weaker-than-expected Q2FY25 and heightened competition. However, it also highlights the company’s cost optimization and growth in emerging channels. It expects Revenue, EBITDA, Adj. PAT to grow at CAGR 6.2%, 8.4%, 9.3%, respectively, over FY25-26.

4. Indraprastha Gas Ltd (IGL):

This gas distribution company's shares fell by 23% this week following the government's announcement of a 20% reduction in APM (Administered Price Mechanism) gas allocation. APM is a system designed to regulate prices of essential commodities like petroleum and natural gas in India. The latest reduction, effective November 16, 2024, follows an earlier 21% cut in allocation implemented on October 16.

GAIL, the nodal agency for domestic gas distribution, has curtailed IGL's supply, which directly impacts its operations in retailing CNG for vehicles and piped cooking gas for households in Delhi and nearby cities. 

Company Secretary and Compliance Officer Vivek Sahay said, “GAIL has further reduced IGL's gas supply and this reduction is expected to negatively impact the company's profitability." Domestic gas, priced at a government-regulated $6.5 per MMBtu, is significantly cheaper than imported liquefied natural gas (LNG). As of Q1FY25, the raw material composition for IGL consisted of 62% APM gas and 38% RLNG. The reduced allocation forces IGL to rely more on costly imported LNG, driving up input costs. With gas costs forming a substantial part of CNG pricing, this shift is likely to compress IGL's profit margins.

Looking ahead, the management says that it is focused on balancing supply costs and sustaining profitability. To address the challenge of reduced APM gas allocation which is expected to negatively impact profitability, the company is pursuing long-term contracts to procure gas at prices closer to APM rates. 

Price hikes for CNG and cooking gas are also expected in the near future. If successful, this approach could help restore margins to previous levels and mitigate the adverse effects of reduced domestic gas supply.

Trendlyne classifies this stock as a value stock, under radar. Macquarie has upgraded IGL from 'Neutral' to 'Outperform'. However, they have reduced the price target from Rs 480 to Rs 400, which implies a potential upside of 27.9%.

5. Century Plyboards (India):

Thisplyboard manufacturer fell by 22.4% over the past month and 6.1% on November 13 after announcing itsQ2FY25 results. Its net profit missedForecaster estimates by 41.9% as it declined 58.7% YoY to Rs 40 crore in Q2FY25. However, its revenue increased 18.7% YoY to Rs 1,183.6 crore, driven by strong volume growth in the plywood and Medium Density Fibre Board (MDF) segments during the quarter.

The sharp drop in the net profit wasdue to a 25.8% YoY surge in total expenditure, driven by higher raw material costs, especially timber prices which have been rising due to shortages in South India. Additional drivers included a Rs 13 crore forex loss from imported machinery for a new panel plant and increased marketing expenses in the Laminates segment to regain market share and support the new Andhra Pradesh facility.

During the quarter, the Plywood and Allied Products segment grew 20.9% YoY to Rs 665.2 crore, accounting for 54.5% of the total revenue. Commenting on this segment Sanjay Agarwal, MD and CEO of the companysaid, “We have revised our guidelines for H2 at 12% plus sales growth and EBITDA margins between 12% and 14%”. The company had earlier given a sales guidance of 10% for FY25.

The management alsoexpects over 10% margins in the MDF segment, which grew 36.4% YoY to Rs 268.4 crore contributing 23.9% of the total revenue, this rise was supported by the new facility in Andhra Pradesh. Agarwal also mentioned that the company aims to achieve market share between 13% to 14% from 8% currently.

Following the results, BOB Capital Marketsmaintained a ‘Hold’ rating on Century Plyboards with a target price of Rs 725. The brokerage anticipates the company’s EPS to grow at a 14.8% CAGR over FY25-27, with expected CAGRs of 17.6% for revenue and 34.3% for EBITDA during the same period.

Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.

India has seen the highest number of IPOs among Asian countries this year. In the past six months, 46 companies have collectively raised over Rs 97,000 crore via the mainboard IPO route, according to Trendlyne’s IPO dashboard. 

However, the IPO buzz in India seems to be fading. A performance check of IPOs shows that the listing and post-listing performance in the second half of 2024 has fallen compared to 2023 and the first half of 2024. In the case of IPOs like Hyundai Motors, retail and non-institutional subscription levels have declined, reflecting reduced investor enthusiasm. 

Moreover, quite a few of the mainboard IPOs (about 42%) of the ongoing quarter have listed at a discount. The average listing gains of the IPOs during this quarter is slightly over 16% compared to average listing gains of 33.8% last quarter. The tepid IPO market appears to be caused by various factors ranging from valuations to market sentiments. 

Large issue-size IPOs struggle perform post-listing

On October 15, India saw its biggest IPO ever, with Hyundai Motors India raising Rs 27,870 crore. The world's third-largest automotive original equipment manufacturer (OEM), made its market debut at a 7.2% discount to the issue price. Analysts believe that there were two reasons behind this dull response. First, this was a 100% Offer for Sale (OFS) by the parent company, which did not sit well with retail investors since no fresh funds were being infused into the business. Second, the upper price band for the IPO was set at Rs 1,960, implying a valuation of 26 times the projected earnings per share (EPS) for FY24 and approximately 30 times EPS for FY25, which exceeds the auto industry average P/E ratio of 24x. Market-changing technology is rare in the auto sector, which limits aggressive growth forecasts

Swiggy's Rs 11,327 crore listing was another highlight, becoming the second-biggest IPO of the year. The food delivery giant made its market debut with a 16.9% premium, but has fallen since listing and is currently trading at a premium of 7.8% over its issue price. The profit booking by investors looking for IPO gains and a high valuation gap (at the time of listing) have contributed to this decline. Additionally, the company has struggled with consistent net losses since its inception. For the fiscal year ending March 31, Swiggy reported a loss of Rs 2,350.24 crore, a reduction from Rs 4,179.30 crore in FY23 and Rs 3,628.89 crore in FY22.

Cement and construction companies suffer the biggest losses post-listing

Cement and construction companies, Afcons Infrastructure, Deepak Builders & Engineers and Garuda Construction and Engineering also launched their IPOs this quarter. However, the performance of these listings has been largely disappointing. 

Deepak Builders & Engineers made its market debut at a 20.2% discount. The poor performance of the IPO can be attributed to a cautious market outlook. In contrast, Garuda Construction & Engineering and Afcons Infrastructure had a more promising start, debuting at a 12.5% premium and 2.4% premium, respectively. However, Garuda’s stock is currently trading at a discount of 12.8%. Despite a strong order book and a diversified project portfolio, Garuda's performance is vulnerable to the cyclical nature of the construction industry and ongoing market volatility, which likely impacted its stock value.

KRN Heat Exchanger and Waaree Energies are the best-performing IPOs of the ongoing quarter

Among all the IPOs launched this quarter, KRN Heat Exchangers and Refrigeration and  Waaree Energies stand out for delivering positive returns. The commercial services company got listed at an impressive 117% premium and is currently trading at a premium of 238%. Whereas, Waaree energies, a consumer durables company made a strong debut, listing at a premium of 55.6% and currently trading at an impressive 96.6% premium to its issue price. 

Waaree is also expanding its global reach by setting up a 3 GW manufacturing facility in the United States to cater to rising international demand for solar energy. In FY24, the company reported the second-highest operating income among domestic solar PV module manufacturers in India. Waaree also reported a 69% year-on-year revenue increase, reaching Rs 11,398 crore, while its profit after tax more than doubled to Rs 1,274 crore. 

The recent downturn in India's IPO market is part of a broader trend affecting the equity markets. Both the Sensex and Nifty have entered a correction phase, with declines exceeding 10% from their recent highs. This decline has been driven by  continued selling by foreign institutional investors (FIIs) and muted macro numbers. In November alone, FIIs withdrew Rs 22,420.3 crore, contributing to a total outflow of Rs 1.2 lakh crore since Nifty peaked in September. Additionally, rising US bond yields, weak corporate earnings, and ongoing global economic uncertainties have further soured market sentiment.

A defensive sector - healthcare - dominates this week’s analyst picks, with three out of five stocks from this space. 

1. Healthcare Global Enterprises:

ICICI Direct maintains a ‘Buy’ rating on this hospital operator with a target price of Rs 600, indicating an upside of 28.3%. Healthcare Global Enterprises (HCG) specializes in establishing and managing hospitals and medical diagnostic services, focusing on advanced cancer treatments. In Q2FY25, the company reported a revenue growth of 14% YoY to Rs 553 crore, supported by a 15% rise in its hospitals business. The average revenue per occupied bed (ARPOB) stood at Rs 45,188, marking a 7% increase.

HCG’s EBITDA margins stood at 17.3%. The company’s management anticipates margins to gradually improve to around 20% by Q4FY25, supported by higher occupancy rates and an improved payee mix. Analysts Siddhant Khandekar, Shubh Mehta, and Vedant Nilekar highlight that rising margins at new centres and the integration of Vizag Hospital, which holds over 30% market share in Vizag, will drive growth.

The company is developing two advanced hospitals in North Bangalore and Whitefield, with a combined capacity of 125 beds, expected to be fully operational by early FY26. It plans to expand its total bed capacity to 900 within three years. The analysts project a revenue CAGR of 6.8% and a net profit CAGR of 15.1% for FY25-26.

2. DOMS Industries:

Axis Direct maintains a ‘Buy’ rating on this stationary products company with a target price of Rs 3,120. This indicates a potential upside of 14.4%. Analysts Preeyam Tolia and Suhanee Shome are positive about the company's growth, highlighting its efforts to diversify its product range. DOMS is expanding into the larger pens category, moving beyond its focus on small pencils, and entering fast-growing sectors like bags, toys, and diapers.

DOMS has recently acquired a 51.8% stake in Unilcan Healthcare for Rs 55 crore, which makes baby diapers and wet wipes under the ‘Wowper’ brand. The diaper market, valued at $2 billion, is expected to grow to $3 billion in the coming years. The company's distribution network is expected to expand Unilcan’s reach across India, increasing market penetration beyond its current 12-state presence.

In Q2FY25, the company’s revenue grew by 19.7% YoY to 458 crore, driven by higher average selling prices, expanded distribution, and the integration of the Unilcan portfolio, which added Rs 14.3 crore (3% of sales) over 15 days. Its distribution reached 135,000 outlets, up from 125,000 in Q1FY25, a 10,000-outlet increase. 

For FY25, the management expects revenue growth of over 20% and EBITDA margins of 17-17.5%, down from 18.8% in Q2, due to higher costs of polymers, waxes, and the integration of the lower-margin Unilcan acquisition.

3. Krishna Institute of Medical Sciences:

Edelweiss reiterates its ‘Buy’ rating on this healthcare facilities company with a target price of Rs 630, indicating a potential upside of 11.1%. The company reported a 19% YoY revenue growth to Rs 777.3 crore in Q2FY25, exceeding the Trendlyne Forecaster estimates by 4.8%. Net profit rose by 19% to Rs 121 crore, while EBITDA margins improved by 89 bps to 28.1%. Analysts Ranvir Singh and Pawan Bhatia said “The margins are expected to remain stable for H2FY25, with the ramp-up of newly launched units likely to drive further improvements."

Krishna Institute of Medical Sciences (KIMS) has expanded its operations with the launch of its Nashik unit (325 beds) and the newly acquired Queen’s NRI Hospital in Vizag (300 beds) during Q2, increasing its total bed capacity to 4,610. Additionally, the company signed operations and management (O&M) agreements with two hospitals, Kannur (200 beds) and Guntur (200 beds), set to begin operations in Q3FY25. With these O&M hospitals, KIMS' total bed capacity is projected to reach ~5,000 in FY25, up from 3,975 in FY24.

Singh and Bhatia are optimistic about the upcoming projects in Thane, Bangalore, Srikakulam, and Ongole, expected to commence operations in H2. They note that a 22% YoY growth in average revenue per occupied bed (ARPOB) during H1 indicates the potential for better-than-expected ARPOB performance for the full year.

4. Archean Chemical Industries:

KR Choksey maintains its ‘Buy’ rating on this chemical firm with a target price of Rs 890. This indicates an upside of 31.3%. Archean Chemical Industries’ (ACI) revenue fell 17% YoY in Q2FY25 due to a 19% drop in the industrial salt segment, which accounted for 62% of total sales. The decline was mainly caused by inventory losses worth Rs 40 crore due to a cyclone. Poor road conditions also disrupted logistics, reducing export volumes to 7.5 lakh tonnes, as ACI depends on over 300 trucks for salt transportation.

The company’s bromine business, however, grew 11% YoY in Q2FY25, with volumes rising to 4,800 MT from 3,400 MT in Q2FY24, supported by steady domestic demand. Analyst Dipak Saha highlights that ACI’s growing bromine derivatives business could help shift its focus from basic commodities to more value-added specialty products, offsetting weaknesses in its core operations.

ACI targets over 10 lakh tonnes of industrial salt per quarter in H2FY25, recovering from disruptions in H1. The company’s management also aims to produce 20,000 tonnes of bromine in FY25, driven by strong domestic demand and better market conditions, with plans to increase production to 25,000 tonnes in FY26.

5. Jupiter Life Line Hospitals:

Anand Rathi initiates its ‘Buy’ rating on this hospital chain with a target price of Rs 1,740, indicating an upside of 16.8%. The company reported a 9% YoY rise in average revenue per occupied bed (ARPOB) during H1FY25, led by ARPOB at Rs 66,700, Rs 55,000, and Rs 44,700 for its Thane, Pune, and Indore units, respectively. Analysts Himanshu Binani and Rohan Shukla mention “The recent insurance rate revisions at the Pune hospital and new insurance tie-ups at the Indore facility should further enhance ARPOB and occupancy rates.”

In Q2FY25, Jupiter Lifeline Hospitals reported a 23% YoY increase in revenue to Rs 322.6 crore and a 53% rise in net profit. The results were in-line with the brokerage’s expectations, with revenue surpassing Trendlyne Forecaster estimates by 5.2%, though net profit missed by 1.5%. The growth was driven by higher occupancy across hospitals. Binani and Shukla project 14% revenue and 21% EBITDA CAGR over FY25-27, supported by increasing occupancy at Pune and Indore hospitals.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.

(You can find all analyst picks here)

Donald Trump is set to return to the White House. His ‘Agenda 47’ has 20 core promises that aim to “Make America Great Again.” And if you’ve read those, there's one question worth asking — will these ideas steer America’s wealth in the right direction? From the presidential election result, we can conclude that about 51% of voters think so, while the rest aren't on board with Trump and his ideas.

On one hand, Trump says that he will end inflation and make things affordable again, but at the same time, he plans to impose tariffs and cut outsourcing. These promises are contradictory, since bringing everything back to the US will inflate prices. Even with “hugely lucrative” IRA subsidies, BloombergNEF estimates for example, that “US-made solar cells and modules will cost 18.5 cents a watt, compared with 15.6 cents for a product from Southeast Asia.”

Secondly, Trump wants to make America the dominant energy producer in the world (which it already is). He aims to do this by increasing the production of fossil fuels, further accelerating the risk of climate change. All this after America was hit hard by many calamities just this year, like Hurricanes Helene and Milton, which resulted in over $100 billion in damages, according to USA Today. 

In an attempt to answer the query of this gentleman on X (formerly Twitter) and many others like him, I decided to take a closer look at these policies and their impact on the US national debt.

Stretching legs beyond the coverlet

Let me add some context on what could happen if the government does not use its finances responsibly and the debt problem that might result. The national debt is currently at around $36 trillion, which is 1.3 times the GDP as of 2023. The interest payments for this debt stood at 15% of revenue from taxes as of last year and the Congressional Budget Office (CBO) forecasts it to be around 22% of revenue by 2034.

In a given fiscal year, when a government spends more money than it earns, it runs into a budget deficit. To cover this gap, the government borrows money by selling bonds. The national debt is the accumulation of this borrowing along with the interest owed to investors who purchased these securities.

The CBO projects that by the mid-2030s, all the revenue earned will be required to fund mandatory government spending alone – which is largely Medicare, Medicaid, Social Security, and interest on debt. At that point, the only way to finance basic functions such as defense, law enforcement, infrastructure, and education would be to borrow more or cut back on discretionary spending.

CBO projects that by 2034, the US will need to borrow more just to pay interest on debt

The runaway debt problem

The public debt level has risen significantly over the past decade. You can blame the financial crisis or pandemic or high inflation and maybe going forward, the tax cuts or natural calamities, but the fact remains that it currently stands at near all-time highs. The forecast laid out by the CATO Institute suggests that even with deficits staying steady for the next 30 years, the total public debt will keep rising, thanks to the accruing interest on the debt.

Public debt of the US to breach WW2 level around 2028

Both Trump and Harris shrugged the debt question off during their campaigns and didn’t bother talking about how they might tackle this. Instead, both candidates were busy unveiling costly new proposals.

Trump is vocal about cutting taxes and aims to deliver large tax cuts for workers and corporations, which might decrease their revenue from tax collections and hence increase their deficits. He’s talked about abolishing the income tax entirely, and funding the government entirely through tariffs.

The effect of all this talk has been yields rising in US 10-year bonds since September ‘24, which means rising borrowing costs for the government. That rate grew steadily with the chances of Trump winning. It's mainly because investors fear that rising budget deficits during the Trump presidency would require funding through increased Treasury issuance.

US 10-year bond yield grew as chances of Trump winning increased

A rocky road ahead

Unfortunately, there’s no easy fix for this debt issue. It will require a mix of spending cuts and higher taxes. The longer we delay, the tougher the solution will get. Moody’s has warned of a potential downgrade if America’s fiscal health deteriorates.

Trump's administration has a challenge ahead - manage the ballooning deficit, but also address long-term issues like healthcare reform, infrastructure spending, and military expenditures

Frankly speaking, nobody can accurately tell you how soon or late this debt issue might turn into a crisis. One way to manage this risk is to invest in the most durable companies that are currently trading at the right valuation and are trending upward. Investors and central banks have also been recently turning to the ultimate defensive investment - gold.

1. Indian Hotels Company:

This hotels chain has risen by 8.3% over the past week following the announcement of its Q2FY25 earnings on November 7. Indian Hotels’ net profit surged by 3.3x YoY to Rs 554.6 crore in Q2FY25, mainly due to an exceptional gain of Rs 307 crore from the incorporation of Taj SATS as a subsidiary of the company. Taj SATS is a joint venture (JV) between Indian Hotels and Singapore Airport Terminal Services (SATS) specialising in airline and institutional catering. IHCL holds a 51% stake in the JV. 

Revenue increased by 27.6% YoY to Rs 1,890.2 crore, driven by improvements in the hoteliering and air & institutional catering segments. Revenue beat Trendlyne’s Forecaster estimates by 8.6%, and was higher than the industry growth of 10.2%. EBITDA margins expanded by 270 basis points to 27.5%. During the quarter, growth was fueled by strong demand, which had slowed in Q1, due to elections and heatwaves. Additional wedding dates also boosted performance.

The company’s revenue per available room (RevPAR) for Q2FY25 grew by 12% YoY to Rs 7,200, outperforming its industry and competition with a premium of 66%. Occupancy stood at 71% during the quarter, much higher compared to the industry’s 61%. 

Indian Hotels signed 23 and opened six hotels in Q2FY25; it targets to open 25 new hotels in FY25. Presently, the company's portfolio of hotels stands at 232 operational hotels with 118 new hotels in the pipeline. Going forward, the company targets double-digit revenue growth for FY25. Commenting on this, Puneet Chhatwal, the CEO of the company said, “During the first half, which is the weaker half, we've already achieved 11% YoY revenue growth and hope to deliver on the double-digit promise on a much higher base going forward in Q3 and Q4. With 30% higher wedding dates and an increase in foreign tourist arrivals (FTAs) expected in H2, we remain confident of comfortably delivering double-digit revenue growth”.

Axis Direct has a ‘Buy’ rating on Indian Hotels with a target price of Rs 800. The brokerage believes the increase in FTAs is expected to positively impact ARRs (the company’s average room rate stood at Rs 10,100 during Q2). It has a positive outlook for the overall industry as the steady growth in the Indian middle class and their increased spending power is projected to contribute an additional Rs 5,200 crore annually to the hospitality market.

2. Eicher Motors:

This motorcycle producer surged 6.4% on Thursday following the announcement of its Q2 results. Eicher reported a 5.2% YoY revenue growth at Rs 4,617 crore, with net profit increasing by 8.3% YoY to Rs 1,100 crore. Both revenue and net profit beat Forecaster estimates by 3.8% and 1.5% respectively.

In the first half of this fiscal year, Royal Enfield’s market share in the premium segment (greater than 250cc motorcycles) dropped to 7.5% from 8.2% a year ago as the sales volumes came in flat at 4.5 lakh motorcycles. In a bid to gain market share, the company announced its plans to enter into the EV segment with its new sub brand - The Flying Flea.

Meanwhile, Eicher’s joint venture with Volvo, VECV, has the highest market share in the Light & medium duty (LMD) segment at 36.4%, and contributes over 10% to Eicher Motors’ net profit. VECV saw its market share on a consolidated basis rise from 15.9% a year ago to 18.9%, thanks to volume growth of 6.3%. The LMD buses outperformed other segments, with volume growth of 22.3% YoY in Q2FY25.

Commenting on the outlook, MD & CEO of Eicher Motors, Siddhartha Lal, said, “The first half has not been so good for the industry because of low government spending on capex and uneven monsoon, but we expect a better second half.” This optimism is reflected in the October sales volume, where the company sold over 1.1 lakh motorcycles, 30% higher than its monthly average of around 80,000.

Jefferiesmaintains a ‘Buy’ rating on the stock as they expect Royal Enfield to be a key beneficiary of the two-wheeler premiumisation trend. They believe that the toughest phase of competition for Eicher Motors is over, as volumes show signs of growth. With a target price of Rs 5,500, the stock has a potential upside of 12.6%. 

3. Asian Paints:

This paints company fell by over 12% in the past week. The company declared an underwhelming Q2FY25 result on 9th November. Its net profit fell by 42.4% to Rs 694.6 crore on the back of a rise in cost of raw material, while its revenue fell by 5.1%. The firm missed Trendlyne’s Forecaster estimates for revenue by 6.3% and net profit by 36.8%. The stock appears in a screener for stocks with PE higher than the Industry PE.

Q2FY25 was weaker than expected for the company due to sustained sluggish demand. The company’s domestic business took a hit as its decorative and home decor segment (which constitutes over 88% of net revenue) saw a 6.7% YoY revenue decline mainly on the back of the price cuts taken last year, and weak consumer sentiment due to heavy rains & floods. The company’s international business remained flat due to currency devaluation in Ethiopia and political unrest in Bangladesh. However, the Middle East and Sri Lanka markets showed strong growth. To counter inflation, the company implemented a price increase of around 1.2% in Q2FY25, but expects to see its full impact in H2FY25.

Amit Syngle, MD & CEO of the company, noted the weaker performance in metro towns, larger cities, and the B2B market, where Asian Paints holds a 15-20% share. The industrial segment however, performed well. He remains cautious about demand recovery in Q3FY25 due to challenges in urban markets but is optimistic that stronger rural demand and infrastructure spending will drive growth in the second half of the year. Syngle also added, “Our expansion continues strongly, with more retailers opening in urban suburbs and newer towns. We now have nearly 1.67 lakh retail touchpoints, reflecting a robust market footprint.” On FY25 guidance he said, “For H1, we've ended up at about 18.5% EBITDA margin. So we are still within our previously mentioned overall guidance range of 18-20% for FY25. “

KR Choksey has retained a ‘Hold’ rating on Asian Paints with a target price of Rs 2,566. The brokerage has lowered its FY25 and FY26 EPS estimates by 9.1% and 14.2%, respectively, due to a miss in Q2FY25 estimates and margin pressures from increased competitive intensity. However, it highlights that despite higher costs and margin contraction, the company's focus on innovation, rural demand, and infrastructure spending offers hope for a recovery in the second half of FY25.

4. Alkem Laboratories:

This pharma company rose by 1.2% on November 13 after announcing its Q2FY25 results. The company’s net profit grew 11% YoY to Rs 688.6 crore in Q2FY25, driven by inventory destocking, beating Trendlyne Forecaster estimates by 2.8%. However, revenue decreased marginally to Rs 3,414.7 crore due to lower US sales. The company appears in a screener of stocks where mutual funds increased their shareholding in the last quarter.

The Q2 revenue was hit by a drop in international sales, which fell by 12.9% YoY to Rs 920 crore. US sales, which contribute 17.7% to total revenue, declined by 25% to Rs 570 crore due to limited new launches, price erosion, and volume decline in existing products. Sales from other international markets, including Latin America, Australia, and Europe, made up 9.5% of total sales. India sales grew by 5.7% YoY, reaching Rs 2,461 crore.

In H1FY25, the company launched two products and received eight ANDA approvals, bringing the total number of ANDAs filed to 178, with 152 final approvals to date. Alkem has also started operations at its contract development and manufacturing organization (CDMO) plant in the US, which is expected to drive growth in the medium term. Additionally, it has completed phase 3 clinical trials for the Denosumab drug in the US, which has a global market size of $3.3 billion and is expected to reach $5.1 billion by FY28.

Speaking after the results, the company’s CEO, Vikas Gupta, said “We have tackled our past supply challenges by improving inventory levels, bringing back orders in the US down from 38% to just 2%. These improvements position us well for stronger US performance in H2.” He also expects mid-single-digit growth in overall revenue and aims for a 100 basis point improvement in margins, targeting around 18.5-19.5% for FY25.

Post results, Motilal Oswal reiterates its ‘Neutral’ rating on Alkem with a target price of Rs 5,720, indicating an upside of 3.5%. The brokerage notes that Alkem is refocusing its US generics business by reducing low-margin products and concentrating on products with less competition. Additionally, it is gearing up for CDMO opportunities, expanding its biotech manufacturing capabilities starting from Q4FY25 to Q1FY26.

5. Relaxo Footwears:

Thisfootwear manufacturer has fallen 12.9% over the past week following the announcement of itsQ2FY25 results on November 8. Relaxo Footwears net profit has declined 16.9% YoY to Rs 36.7 crore, missing Forecaster estimates by 14.4%. Revenue decreased 5%YoY to Rs 679.4 crore during the quarter.

The drop in revenue was largely due to weak demand in both general and modern trade channels. In general trade, distributors faced high inventory levels, while Relaxo intentionally reduced e-commerce sales to counter excessive discounting from platforms like Flipkart and Amazon.

Chairman and Managing Director Ramesh Kumar Dua,said, “During the quarter, the industry witnessed an increase in lower priced, unorganised competition, which led to downtrading by consumers in a high inflation environment.” He also mentioned that the company chose not to lower prices or margins to unsustainable levels, which helped maintain operating margins during the quarter. However, higher depreciation costs impacted the company's net profit.

Instead of e-commerce sales, the company is expanding its distributor network across the country to improve its retail network. It is strengthening ties with retailers through the "Relaxo Parivaar" app, which serves over 70,000 outlets. For FY25, the company has allocated Rs 100 crore for capex, primarily for molds and machinery, with no plans for new capacity additions this year.

Looking ahead, the management is anticipating flat volume growth overall for FY25, with a target of 8-10% growth in the Sparx product line. Sparx is a budget footwear line that offers closed footwear at competitive prices, generally lower than competitors. This focus on closed footwear continues to drive its momentum and distribution.

Post results, Yes Securitiesmaintained its ’Sell’ rating with a target price of Rs 636. The brokerage projects a 4% volume growth CAGR from FY25-27, as the company aims to regain market share. It also expects a 3% annual increase in average selling price during this period due to a better product mix. Margins are expected to return to 14% by FY27. Overall, revenue, EBITDA, and net profit are forecasted to grow at a CAGR of 7%, 7%, and 10%, respectively, over FY25-27.

Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.