KRChoksey Broker Research reports

TCS’s Q4FY25 revenue (-1.1%) came below our estimates. Revenue grew to INR 644,790 Mn (+0.8% QoQ /+5.3% YoY), driven by strong performance across the Asia Pacific, India and MEA region, which was partly offset by weakness in North America.

The RBI has cut the benchmark repo rate by 25 bps to 6.0%, marking the lowest level in the policy rate since Sep’22. The central bank also changed its stance from neutral to accommodative. This decision aligns with market expectations and shifting focus from inflation control to growth revival.

In Q3FY25, volume growth remained a primary driver for the sector, however, price realisation has
been under strain due to sluggish global demand, increased competition, particularly from China,
and ongoing global uncertainties. In Q4FY25E, we anticipate that revenue growth for most companies will be driven primarily by higher volumes, with limited margin expansion owing to continued competitive pricing pressure.

In Q4FY25, India’s banking sector has witnessed a decline in credit growth led by slowdown in economic activities across sectors, slower pickup in government spending and regulatory caution on retail funding risks.
As per the provisional reporting, Public sector banks (PSBs) drove credit expansion aggressively in Q4FY25, led by robust demand in retail, MSME, and a healthy corporate loan pipeline.

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The life insurance sector is poised to deliver a strong performance in Q4FY25E, supported by a
seasonal surge in new business volumes and steady growth in renewal premiums. However,
margins are expected to remain broadly stable or may see slight compression due to product mix
and pricing dynamics.

High Conviction Stocks Ideas

Auto industry sales in Q4FY25E exhibited a mixed trend. January recorded healthy traction, supported by beginning-of-year momentum and ongoing promotional schemes. However, demand gradually tapered in February and is expected to remain muted in March, with no major catalysts to drive retail acceleration.

In February 2025, the mutual fund industry's net AUM declined from INR 67.25 Tn to INR 64.53 Tn, despite reporting net inflows of INR 400.6 Bn during the month. The contraction was primarily due to valuation losses in equity-oriented funds, which offset the positive impact of inflows.

The demand environment in Q3FY25 reflected early signs of stabilization, with slightly improved Total Contract Value (TCV) momentum, supported by small and mid-sized deal conversions. However, large deal closures remained muted, indicating that enterprises continue to maintain a cautious stance, particularly for discretionary-led digital transformation initiatives.

Consumption trends in Q4FY25E remained mixed, with staple companies expected to report marginal volume growth. Inflationary pressures on discretionary spending weighed on major FMCG players such as HUL, Nestlé India, Britannia, and Tata Consumer Products.

As per AIOCD and AWACS data, in January 2025, the Indian pharmaceutical market (IPM) grew 8.7% YoY, led by price hikes (+5.3%) and new launches (+2.6%), but posted muted volume growth (+0.9%). In February 2025, the Indian pharmaceutical market (IPM) grew 7.5% YoY, driven by price hikes (+5.2%) and new launches (+2.7%), while volume declined marginally (-0.2%).

We anticipate industry credit growth to moderate to ~11.0% by end of FY25E, marking a sharp decline from 20.2% in FY24. This slowdown is largely attributed to a deceleration in unsecured loan expansion and persistent stress in the Microfinance (MFI) segment, which has prompted a more cautious lending approach across the sector.

Cement prices exhibited early signs of stabilization, following a subdued pricing environment through October and November 2024, driven by weak demand dynamics. However, a turnaround materialized in December, supported by rural housing expansion, and infrastructure-driven demand,
leading to a moderate recovery in prices.

Varun Beverages Limited (VBL) delivered a robust performance in CY24, driven by organic volume expansion, an improved product mix, and contributions from recent acquisitions. Consolidated sales volume grew by 23.2% YoY, while net realization per case increased by 1.3% YoY, leading to a 24.7% YoY rise in revenue and a 25.3% YoY growth in PAT.

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IndusInd Bank (IIB) disclosed a derivative accounting discrepancy, impacting 2.35% (~ INR 15.0-16.0 Bn) of its net worth as of December 31, 2024, arising from internal hedging trades linked to foreign currency borrowings and deposits.

Waaree Energies Ltd (WEL) is enhancing vertical integration by expanding into solar cell manufacturing,
aiming for 11.4 GW capacity by FY27E. This includes a 5.4 GW facility at Chikhli by FY25E and a fully integrated 6.0 GW plant in Odisha, reducing dependence on third-party suppliers and securing a captive supply of cells for module production.

CreditAccess Grameen Limited (CREDAG), in its interim business update, reported a healthy recovery in its loan portfolio growth, with its Gross Loan Portfolio (GLP) increasing by 2.36%, reaching INR 253,950 Mn in February 2025, compared to INR 248,100 Mn in December 2024.
The expansion was driven by borrower additions of over 0.15 Mn onboarded in January and February 2025.

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