Latest news with #AnilRego
Mint
14-07-2025
- Business
- Mint
Expert view: Nifty EPS may grow at a 13% CAGR over FY25–FY27, says Anil Rego of Right Horizons PMS
Expert view: Anil Rego, the founder and fund manager at Right Horizons PMS, believes the Nifty 50 EPS may grow at a CAGR of nearly 13 per cent over FY25–FY27, making the case for moderate, earnings-driven gains over the medium term. In an interview with Mint, Rego shared his expectations for Q1 earnings and said he is positive about banking, defence, and consumer discretionary sectors, among others, at this juncture. Edited excerpts: Following a sluggish start, Indian markets witnessed a notable recovery in June, spurred by a combination of supportive global developments and decisive domestic policy actions. The Reserve Bank of India's 50 bps rate cut and a 100 bps reduction in the CRR, alongside a 9 per cent monsoon surplus and easing oil prices, have improved liquidity and sentiment. This led to a sharp uptick in rate-sensitive sectors like financials, real estate, and autos, with broader markets outperforming large caps. Globally, while risk sentiment has improved post-ceasefire in the Middle East, geopolitical fragility, policy uncertainty in the US, and tariff tensions remain key overhangs. Despite these risks, corporate earnings remain resilient, and consensus expects Nifty EPS to grow at a CAGR of nearly 13 per cent over FY25–FY27. This supports the case for moderate, earnings-driven gains over the medium term. The US tariff risk is a growing concern for Indian markets, especially after India announced retaliatory tariffs on US steel and aluminium at the WTO. While the risk remains sector-specific for now, impacting exports like IT, pharma, and metals, it does not yet pose a threat of prolonged economic pain due to India's strong domestic fundamentals. However, if trade tensions escalate further, it could hurt earnings in export-oriented sectors and trigger FPI outflows. The Q1FY26 earnings season is expected to show early signs of recovery, but it may not mark a broad-based turnaround just yet. While some sectors are poised to outperform, others are likely to face lingering challenges, suggesting that the worst may be behind us selectively, not uniformly. Banking sector: Banks are expected to report muted earnings growth due to margin compression from the RBI's recent repo rate cuts, seasonally weak fee income, and elevated credit costs, particularly in unsecured and agri loan segments. However, the outlook improves from the second half of the financial year (H2FY26), with expectations of improved loan growth, easing deposit costs, and declining slippages. IT sector: The IT sector is likely to report mixed revenue growth. Tier-1 IT companies may post flat to marginally negative constant-currency (CC) growth, with only a few companies expected to grow sequentially. Mid-tier firms are expected to do relatively better, driven by strength in BFSI, healthcare, and GenAI-led demand. The sector's deal pipeline remains healthy, and margin guidance is stable, indicating resilience despite macro headwinds. The market outlook supports a selective sectoral approach, focusing on areas with strong earnings visibility, structural tailwinds, and valuation comfort. Financials (banks & NBFCs) Banks remain structurally positive, with asset quality stabilising and credit demand holding up. Margins may have peaked, but lower funding costs from RBI rate cuts should aid profitability from H2FY26. NBFCs, especially in retail lending, gold loans, and vehicle finance, are expected to benefit from improved liquidity and demand recovery. Funding diversification and strong disbursement momentum support their outlook. Public and private capex revival, strong order books, and government focus on infrastructure make this sector attractive. Execution momentum is visible across electrification, construction equipment, and engineering segments, backed by rising investments and policy incentives. A structural growth story driven by indigenous procurement (92 per cent of contracts awarded to Indian firms), record exports, and rising capex allocation. Private players are gaining traction alongside DPSUs, supported by a ₹ 40,000 crore emergency procurement push. Hospitals are showing robust growth in profitability, ARPOB, and occupancy rates. Expansion into tier-2 cities and the medical tourism potential offer multi-year tailwinds. Diagnostics and digital health initiatives continue to support earnings resilience. Urban consumption remains healthy, aided by premiumisation and easing input costs. Value fashion, QSRs, electronics, and jewellery segments are doing well. Tax relief and rural revival could further aid demand in H2FY26. EMS firms are benefitting from PLI schemes, China+1 diversification, and rising demand for domestic electronics. Strong capex, growing order books, and operating leverage suggest continued double-digit growth. The Indian wealth management sector is at a pivotal inflection point, driven by the rapid rise of HNIs and ultra-HNIs. Financial assets held by these segments are projected to grow from $1.2 trillion in 2023 to $2.2 trillion by 2028, reflecting strong wealth creation and rising financialization of assets. Yet, only 15 per cent of India's financial wealth is professionally managed, compared to nearly 75 per cent in developed markets. This vast gap presents a structural opportunity for PMS, AIFs, and advisory platforms to expand. There appears to be selective value emerging in the IT sector, particularly among mid-tier companies, although the broader outlook remains cautious. Early Q1FY26 earnings trends suggest that: Tier-1 IT firms are expected to post muted revenue growth in constant currency terms, with flat to low-single-digit QoQ changes. Deal flow remains intact, but revenue conversion is lagging due to delayed decision-making by clients in the US and Europe. Mid-cap IT players, however, are showing signs of resilience. They are benefitting from niche capabilities in areas like healthcare, engineering services, and AI-linked digital services. Early previews indicate better execution and margin improvement from this segment. From a valuation standpoint, the sector has derated and is trading closer to its long-term average. While high-growth tailwinds of the pandemic years have faded, the sector offers reasonable entry points for long-term investors willing to ride out near-term demand uncertainty. Cost efficiency, GenAI adoption, and vendor consolidation deals could drive outperformance for well-positioned firms. As of June 2025, key indices like the Sensex are trading at nearly 24.7 times trailing PE and nearly 3.7 times P/B, which are above their 10-year averages. This elevated valuation comes after a sharp June rally driven by the RBI's front-loaded rate cuts, falling crude prices, and foreign inflows. In this context, a prudent equity investment strategy would involve: Bottom-up stock selection: Focus on fundamentally strong companies with stable earnings visibility, robust cash flows, and sectoral tailwinds, particularly in financials, manufacturing, healthcare, and select midcap IT. Maintain valuation discipline: Avoid chasing momentum in overvalued stocks or sectors. Seek opportunities where growth is not fully priced in, especially in sectors benefiting from reforms, PLI, or rising domestic demand. Diversify across market caps: While large caps offer safety in uncertain times, select mid and small caps with solid fundamentals and reasonable valuations can provide alpha as the cycle broadens. Use volatility to build exposure: Geopolitical risks, global rate uncertainty, and election-driven policies may trigger short-term corrections. These should be used to accumulate quality names rather than exiting in panic. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
Economic Times
27-06-2025
- Business
- Economic Times
ETMarkets Smart Talk: Have Rs 10 lakh to invest in 2H2025? Anil Rego recommends 65:25:10 asset allocation mix
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel As global markets navigate geopolitical tensions , shifting interest rate cycles, and lingering inflation concerns, investors are seeking clarity on how to position their portfolios for the second half of this edition of ETMarkets Smart Talk, we spoke with Anil Rego , Managing Director and Chief Investment Officer at Right Horizons PMS, to decode the road India continuing to stand out amid global uncertainty — thanks to strong GDP growth , cooling inflation, and policy continuity — Rego believes now is an opportune time to gradually deploy fresh long-term investors with a Rs 10 lakh corpus, he suggests a balanced 65:25:10 allocation across equities, debt, and gold, tailored for a risk-averse this exclusive conversation, Rego shares his insights on market outlook, sector opportunities, interest rate dynamics, and the right strategy to navigate the evolving macro landscape in 2H2025. Edited Excerpts –A) Volatility in June after can be largely attributed to geopolitical concerns and global macro uncertainties, among other ongoing Israel-Gaza and Israel-Hezbollah escalations have rekindled fears of a broader conflict, which can disrupt oil supply routes and global trade Fed's cautious stance on rate cuts has firmed up the dollar and pressured EM flows. While the world faces geopolitical tensions, slow economic growth, high inflation, and elevated interest rates, India tells a different nation is witnessing solid GDP growth, a steady currency, easing inflation and interest rates, and strong corporate may persist in the near term due to global cues, but structural domestic drivers (capex push, consumption revival, earnings growth) remain nominal GDP expanded by 10.8% yoy in Q4 FY25, the fastest pace in the last four quarters, leading to an overall growth of 9.8% for the full fiscal strong performance underscores improving domestic macroeconomic conditions, which are expected to persist and continue supporting corporate earnings.A) The outlook appears cautiously optimistic. On the macro front, India continues to stand out with stable GDP growth around 6.5%, well-contained inflation, and policy continuity RBI has front-loaded 100 bps of rate cuts this year, which should begin transmitting into lower borrowing costs and potentially support consumption and private capex in the coming cues will play a major role. If the U.S. Fed were to initiate rate cuts by Q4CY25, it would improve global risk appetite and support foreign inflows into emerging markets like geopolitical flashpoints particularly in the Middle East remain key downside risks, especially if crude oil spikes above $90/bbl and disrupts supply corporate earnings, sectors like financials, autos, industrials, and consumer discretionary are likely to drive the next leg of growth, while IT and export-oriented businesses may remain range-bound amid global 2H2025 is expected to see stable economic momentum, gradual recovery in consumption, and greater market depth supported by both domestic and foreign investors.A) Crude oil prices have remained relatively low over the past year due to uncertain demand and sufficient supply, which have outweighed the ongoing effects of the Russia-Ukraine recent Israeli airstrikes on Iran and Iran's retaliatory actions have reignited concerns, pushing prices upward once these events pushed Brent crude briefly above $75/bbl, prices remain below the FY22–25 average, suggesting that global supply is still largely crude movement will likely be shaped by how the conflict evolves if oil infrastructure or shipping lanes are directly hit, Brent could spike a macro perspective, moderate crude prices are a net positive for India. Every $10/bbl rise in crude can shave 30–40 bps off GDP growth and widen the current account corporate earnings, for upstream companies, higher prices could support earnings. OMCs could face margin pressure if retail prices remain unchanged, while inventory gains may offer temporary companies may see a negative impact due to rising LNG prices linked to crude. If prices remain range-bound, the impact on India's FY26 GDP and earnings would be manageable.A) The corporate profit-to-GDP ratio for Nifty 500 held steady year-on-year at a 17-year high of 4.7% in FY25, largely supported by a strong 10.5% growth in corporate profits which was reinforced by a solid 9.8% rise in GDP during the same strong performance in GDP growth in Q4 underscores improving domestic macroeconomic conditions, which is expected to persist and continue supporting corporate corporate earnings are projected to outpace GDP growth. We remain optimistic on sectors with strong structural tailwinds, where policy support, demand visibility, and earnings momentum align to create compelling long-term Capital Goods and Industrial sectors are riding a structural upcycle, supported by the government's infrastructure push and private capex revival. The electrical equipment market is projected to more than double by 2027, while the construction equipment segment is poised to grow at a 15% CAGR. This growth is backed by strong order books, execution tailwinds, and continued momentum in railways, power, and defense. Valuations, particularly in mid-cap names, remain attractive relative to growth prospects. With operating leverage kicking in and policy continuity post-elections, this sector offers a strong combination of earnings visibility and valuation comfort, making it a core long-term consumer discretionary sector continues to benefit from robust urban demand, premiumization, and formalization. Despite rural softness and inflationary pressures, segments like value fashion, QSRs, and jewellery are witnessing strong traction. With consumer spending projected to reach USD 4.3 trillion by 2030, India's aspirational consumption story is intact. Easy credit, digital access, and expanding middle-class income underpin this trend. While valuations for large caps have rerated, opportunities exist in niche mid-cap players with strong brand equity and efficient cost structures. The sector remains structurally sound, but stock selection is key amid divergent growth trajectories across wealth management sector in India is undergoing a significant transformation, driven by a sharp rise in HNI and UHNI wealth. With financial assets projected to grow from USD 1.2 trillion in 2023 to USD 2.2 trillion by 2028, and only 15% of this wealth professionally managed, the runway for growth is immense. Regulatory changes like the revised income tax slabs also support financial product adoption. The sector offers structural tailwinds, though valuations vary. Companies with scalable digital platforms, high-retention advisory models, and diversified product suites stand to benefit the most. This is a long-term theme with potential for strong compounding.A) FIIs are turning constructive on India amid falling global interest rates. As central banks like the move toward easing, India stands out with its stable macroeconomic environment and robust GDP growth. The RBI's front-loaded rate cuts and improved liquidity conditions have further strengthened the investment to other emerging markets, India offers a compelling combination of policy continuity, structural reform momentum, and resilient corporate earnings. FIIs also value India's demographic strength and rising digital and consumption-driven global bond yields softening and risk appetite improving, India is regaining favour as a long-term allocation. While geopolitical risks remain a watch point, India's relative insulation, stable currency, and strong domestic flows provide FIIs a dependable and scalable growth story in the current global macro cycle.A) It is a favorable opportunity to gradually deploy fresh capital, especially given the evolving macro environment and supportive policy RBI's front-loaded rate cuts, a benign inflation outlook, and the prospect of stable real interest rates indicate a shift toward a growth-supportive as the global monetary cycle begins easing and domestic capex and consumption cycles gain traction, long-term investors can find attractive entry points across asset classes.A staggered deployment is recommended with asset Allocation assuming a risk averse client with exposure towards Equity/Debt/Gold at 65%/25%/10% respectively.A) The RBI's rate trajectory has taken a decisive turn with a surprise front-loaded 50 bps repo rate cut in June 2025, bringing the policy rate down to 5.5%. This move followed two earlier 25 bps cuts since February, marking a cumulative easing of 100 bps in a short RBI also announced a 100-bps cut in the CRR to 3%, aimed at injecting ₹2.5 trillion of liquidity into the banking system by December the 50-bps front-loaded cut is a strong and timely policy signal, its impact on consumption, especially private and rural demand, may be limited in the short lending rates and improved liquidity could support credit flow, ease borrowing costs, and boost urban discretionary segments like housing and also strengthens monetary transmission and may lift business sentiment, aiding capex recovery. A rate cut only helps in stimulating demand to drive a broad-based consumption rebound.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
27-06-2025
- Business
- Time of India
ETMarkets Smart Talk: Have Rs 10 lakh to invest in 2H2025? Anil Rego recommends 65:25:10 asset allocation mix
As global markets navigate geopolitical tensions , shifting interest rate cycles, and lingering inflation concerns, investors are seeking clarity on how to position their portfolios for the second half of 2025. In this edition of ETMarkets Smart Talk, we spoke with Anil Rego , Managing Director and Chief Investment Officer at Right Horizons PMS, to decode the road ahead. With India continuing to stand out amid global uncertainty — thanks to strong GDP growth , cooling inflation, and policy continuity — Rego believes now is an opportune time to gradually deploy fresh capital. For long-term investors with a Rs 10 lakh corpus, he suggests a balanced 65:25:10 allocation across equities, debt, and gold, tailored for a risk-averse profile. In this exclusive conversation, Rego shares his insights on market outlook, sector opportunities, interest rate dynamics, and the right strategy to navigate the evolving macro landscape in 2H2025. Edited Excerpts – Q) We closed May on a high note but witnessed some volatility in June – is it geopolitical concerns weighing on sentiment? A) Volatility in June after can be largely attributed to geopolitical concerns and global macro uncertainties, among other factors. The ongoing Israel-Gaza and Israel-Hezbollah escalations have rekindled fears of a broader conflict, which can disrupt oil supply routes and global trade flows. The Fed's cautious stance on rate cuts has firmed up the dollar and pressured EM flows. While the world faces geopolitical tensions, slow economic growth, high inflation, and elevated interest rates, India tells a different story. The nation is witnessing solid GDP growth, a steady currency, easing inflation and interest rates, and strong corporate earnings. Live Events Volatility may persist in the near term due to global cues, but structural domestic drivers (capex push, consumption revival, earnings growth) remain intact. India's nominal GDP expanded by 10.8% yoy in Q4 FY25, the fastest pace in the last four quarters, leading to an overall growth of 9.8% for the full fiscal year. This strong performance underscores improving domestic macroeconomic conditions, which are expected to persist and continue supporting corporate earnings. Q) As we are about to end 1H2025, what are your expectations or assumptions for the rest of the year? A) The outlook appears cautiously optimistic. On the macro front, India continues to stand out with stable GDP growth around 6.5%, well-contained inflation, and policy continuity post-elections. The RBI has front-loaded 100 bps of rate cuts this year, which should begin transmitting into lower borrowing costs and potentially support consumption and private capex in the coming months. Global cues will play a major role. If the U.S. Fed were to initiate rate cuts by Q4CY25, it would improve global risk appetite and support foreign inflows into emerging markets like India. However, geopolitical flashpoints particularly in the Middle East remain key downside risks, especially if crude oil spikes above $90/bbl and disrupts supply chains. On corporate earnings, sectors like financials, autos, industrials, and consumer discretionary are likely to drive the next leg of growth, while IT and export-oriented businesses may remain range-bound amid global uncertainty. Overall, 2H2025 is expected to see stable economic momentum, gradual recovery in consumption, and greater market depth supported by both domestic and foreign investors. Q) Geopolitical concerns weighed on crude oil in the past few weeks. How do you see crude oil moving in the near future and what could be the possible impact on earnings and GDP growth? A) Crude oil prices have remained relatively low over the past year due to uncertain demand and sufficient supply, which have outweighed the ongoing effects of the Russia-Ukraine war. However, recent Israeli airstrikes on Iran and Iran's retaliatory actions have reignited concerns, pushing prices upward once again. While these events pushed Brent crude briefly above $75/bbl, prices remain below the FY22–25 average, suggesting that global supply is still largely intact. Near-term crude movement will likely be shaped by how the conflict evolves if oil infrastructure or shipping lanes are directly hit, Brent could spike significantly. From a macro perspective, moderate crude prices are a net positive for India. Every $10/bbl rise in crude can shave 30–40 bps off GDP growth and widen the current account deficit. On corporate earnings, for upstream companies, higher prices could support earnings. OMCs could face margin pressure if retail prices remain unchanged, while inventory gains may offer temporary relief. Gas companies may see a negative impact due to rising LNG prices linked to crude. If prices remain range-bound, the impact on India's FY26 GDP and earnings would be manageable. Q) In terms of valuation comfort – which sectors are on your radar? A) The corporate profit-to-GDP ratio for Nifty 500 held steady year-on-year at a 17-year high of 4.7% in FY25, largely supported by a strong 10.5% growth in corporate profits which was reinforced by a solid 9.8% rise in GDP during the same period. The strong performance in GDP growth in Q4 underscores improving domestic macroeconomic conditions, which is expected to persist and continue supporting corporate earnings. Further corporate earnings are projected to outpace GDP growth. We remain optimistic on sectors with strong structural tailwinds, where policy support, demand visibility, and earnings momentum align to create compelling long-term opportunities. Capital Goods & Industrials India's Capital Goods and Industrial sectors are riding a structural upcycle, supported by the government's infrastructure push and private capex revival. The electrical equipment market is projected to more than double by 2027, while the construction equipment segment is poised to grow at a 15% CAGR. This growth is backed by strong order books, execution tailwinds, and continued momentum in railways, power, and defense. Valuations, particularly in mid-cap names, remain attractive relative to growth prospects. With operating leverage kicking in and policy continuity post-elections, this sector offers a strong combination of earnings visibility and valuation comfort, making it a core long-term theme. Consumer Discretionary India's consumer discretionary sector continues to benefit from robust urban demand, premiumization, and formalization. Despite rural softness and inflationary pressures, segments like value fashion, QSRs, and jewellery are witnessing strong traction. With consumer spending projected to reach USD 4.3 trillion by 2030, India's aspirational consumption story is intact. Easy credit, digital access, and expanding middle-class income underpin this trend. While valuations for large caps have rerated, opportunities exist in niche mid-cap players with strong brand equity and efficient cost structures. The sector remains structurally sound, but stock selection is key amid divergent growth trajectories across sub-segments. Wealth Management The wealth management sector in India is undergoing a significant transformation, driven by a sharp rise in HNI and UHNI wealth. With financial assets projected to grow from USD 1.2 trillion in 2023 to USD 2.2 trillion by 2028, and only 15% of this wealth professionally managed, the runway for growth is immense. Regulatory changes like the revised income tax slabs also support financial product adoption. The sector offers structural tailwinds, though valuations vary. Companies with scalable digital platforms, high-retention advisory models, and diversified product suites stand to benefit the most. This is a long-term theme with potential for strong compounding. Q) How are FIIs looking at India amid falling interest rates globally? A) FIIs are turning constructive on India amid falling global interest rates. As central banks like the move toward easing, India stands out with its stable macroeconomic environment and robust GDP growth. The RBI's front-loaded rate cuts and improved liquidity conditions have further strengthened the investment case. Compared to other emerging markets, India offers a compelling combination of policy continuity, structural reform momentum, and resilient corporate earnings. FIIs also value India's demographic strength and rising digital and consumption-driven economy. With global bond yields softening and risk appetite improving, India is regaining favour as a long-term allocation. While geopolitical risks remain a watch point, India's relative insulation, stable currency, and strong domestic flows provide FIIs a dependable and scalable growth story in the current global macro cycle. Q) If someone plans to allocate say Rs 10 lakh (30-40 years) in 2H2025 – should they put fresh money to work? What is the ideal asset allocation? A) It is a favorable opportunity to gradually deploy fresh capital, especially given the evolving macro environment and supportive policy signals. The RBI's front-loaded rate cuts, a benign inflation outlook, and the prospect of stable real interest rates indicate a shift toward a growth-supportive stance. Moreover, as the global monetary cycle begins easing and domestic capex and consumption cycles gain traction, long-term investors can find attractive entry points across asset classes. A staggered deployment is recommended with asset Allocation assuming a risk averse client with exposure towards Equity/Debt/Gold at 65%/25%/10% respectively. Q) How is the rate trajectory looking from the RBI? Do you think the front-loaded 50 bps cut was enough to boost consumption? A) The RBI's rate trajectory has taken a decisive turn with a surprise front-loaded 50 bps repo rate cut in June 2025, bringing the policy rate down to 5.5%. This move followed two earlier 25 bps cuts since February, marking a cumulative easing of 100 bps in a short span. The RBI also announced a 100-bps cut in the CRR to 3%, aimed at injecting ₹2.5 trillion of liquidity into the banking system by December 2025. While the 50-bps front-loaded cut is a strong and timely policy signal, its impact on consumption, especially private and rural demand, may be limited in the short run. Lower lending rates and improved liquidity could support credit flow, ease borrowing costs, and boost urban discretionary segments like housing and auto. It also strengthens monetary transmission and may lift business sentiment, aiding capex recovery. A rate cut only helps in stimulating demand to drive a broad-based consumption rebound.
Mint
27-06-2025
- Business
- Mint
PSUs show dividend fatigue as payout ratios hit decade's low in FY25
India Inc. may have celebrated a record ₹4.9 trillion dividend bonanza in FY25, but the party was noticeably quieter in one corner: the public sector. Behind the headline numbers, state-run enterprises showed clear signs of dividend fatigue, both in payout ratios and growth. Dividends, which had seen strong double-digit gains in previous years, contracted, while payout ratios plunged to multi-year lows. The shift points to a change in priorities: public sector firms are increasingly favouring reinvestment, capital discipline, and long-term value creation over generous near-term distributions. Earnings pain A Mint analysis of 496 BSE 500 companies, based on Capitaline data covering audited, unaudited, and proposed dividends, shows that public sector undertakings (PSUs) accounted for just 30% of total dividends in FY25—down from 35% in the previous year. Their dividend payout ratio also dropped to 29.8%, the lowest since FY15 and well below the historical average of around 50%. In fact, these government-owned companies have seen a secular decline in their payout ratios over the past five years. 'This appears more like a cyclical pause than a fundamental reset," said Harshal Dasani, research analyst at Invasset PMS. 'FY25 earnings were weighed down by volatile commodity prices, oil under-recoveries, and heavy capex commitments. Many PSUs have opted to reinvest profits internally, especially in strategic sectors such as energy, infrastructure, and defence." The data corroborates his claims: The aggregate net profits of the PSUs saw a pale growth of 1.3% in FY25 after witnessing a 43% jump last year. Also read Dividends grew faster than profits in FY25. Is that a good or bad thing? Echoing this sentiment, Anil Rego, founder and fund manager at Right Horizons PMS, said, 'The sharp decline in PSU payout ratios in FY25, down from the historical average of around 50%, appears more cyclical than structural at this stage." Shifting focus The decline in payout ratios also reflects a broader push among state-run firms to deploy capital for future growth. 'This steep fall in outflow in the form of dividends is mainly due to a larger focus on capital expenditures by PSUs, ' said G. Chokkalingam, Equinomics Research founder and managing director. 'A vast majority of manufacturing PSUs have announced several major capital expenditure plans—some aimed at expanding existing operations and others exploring new businesses or geographies." Companies like Coal India exemplify this shift. The company not only plans to expand its coal mining operations but has also proposed ventures into non-coal minerals such as graphite and acquisitions abroad. 'Many PSUs have good medium- to long-term business prospects, and they are prioritizing reinvestment over short-term distributions," he added. The changing priorities of these traditional dividend payers is also reflected in their lower giveaways. PSUs distributed 6% lower dividends in FY25 after a sharp 43% surge in FY24. and consistent gains ranging from 27% to 62% in the preceding years. 'Multiple PSUs faced earnings pressures amid sector-specific challenges, particularly in energy combined with elevated capex requirements in infrastructure, defence and energy transition initiatives. This likely influenced the decision to retain a higher share of profits to fund growth internally. This can be viewed as a pivot toward fiscal prudence or a prelude to privatisation readiness," Rego said. Also read Promoters pocket half of India Inc's massive dividend payouts despite sluggish earnings Revenue buffer Dividends from public sector enterprises and the Reserve Bank of India provide the government with a crucial revenue buffer. However, against the backdrop of slowing dividend payouts, its budget target might seem optimistic. The Union Budget has pegged a revenue target of ₹3.25 trillion from dividends in 2025-26, a 12.4% increase compared to the revised estimates of ₹2.89 trillion in 2024-25. 'The FY26 Budget's projection of a 12.4% rise in PSU dividend revenue to ₹3.25 trillion may seem optimistic after FY25's softness, but underlying fundamentals support this outlook," noted Dasani. 'Key sectors like power, coal and oil show improved cash positions, setting the stage for a rebound in profitability. The Budget's optimism likely reflects a catch-up from under-distribution and a strategic push to balance fiscal needs without stifling PSU growth." Rego also acknowledged the projection may appear ambitious amid weaker FY25 trends but noted, 'Several PSUs maintained or enhanced their dividend payouts, reinforcing the fiscal importance of these state-run enterprises." However, with a substantial dividend from RBI ( ₹2.7 trillion) and strong payouts from public sector banks, the government is set to benefit from a solid revenue buffer in FY26. 'Some rebound in profitability is anticipated across oil and gas and utilities," Rego added. 'The estimates reflect a growing reliance on dividends as stable revenue. While care is needed to avoid straining PSU growth capital, improved profitability and efficient capital use can support fiscal consolidation—if backed by sustained earnings recovery," he added further. This is the third part of a four-part series of data stories on the dividends declared by India Inc. Read the first part here and the second part here.
Time of India
17-06-2025
- Business
- Time of India
Nifty Internet index outperforms peers with 19% returns since Feb launch. Is the dotcom boom here to stay?
The Nifty India Internet Index has shown impressive growth since its inception in February, outperforming the Nifty 50 and many sectoral indices. This growth is fueled by increasing investor confidence in digital-first business models and the shift towards online platforms. While some internet stocks have struggled, consumer-facing digital disruptors have largely driven the index's positive performance. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Index composition & key stocks Sector leaders Tired of too many ads? Remove Ads Internet Duds Outlook Launched on February 28 this year, the Nifty India Internet Index , designed to track the performance of India's burgeoning new-age stocks , has already delivered impressive returns. It has outpaced the broader Nifty 50, clocking a 19% gain since inception, compared to 12% by the latter. However, it still trails many of its more established sectoral Nifty India Internet Index became operational on March 3, and the 19.4% return is calculated based on the closing level of 1,109 on that day. During this period, the 21-stock index has outperformed several key sectoral indices, including Nifty Bank, Nifty Financial Services, Nifty Private Bank, Nifty Auto, Nifty Commodities, Nifty India Tourism, Nifty India Consumption, Nifty Metal, Nifty Healthcare, Nifty Pharma, Nifty FMCG, and Nifty IT, which delivered returns ranging from 2% to 17%.However, it lagged behind six sectors: Nifty India Defence (69%), Nifty Realty (26%), Nifty Media (24%), Nifty PSU Bank (24%), Nifty Oil & Gas (20%), and Nifty Energy (20%)."The index has delivered strong returns since its launch, outperforming broader markets and most sectoral peers. This outperformance highlights growing investor confidence in digital-first business models and the structural shift toward online platforms in both consumption and financial services. Given the sector's growth potential and supportive macro trends, it presents a credible thematic investment opportunity," Anil Rego, Founder & Fund Manager of Right Horizons Nifty India Internet Index is a diverse basket of 21 stocks primarily from the consumer services (63.10%), financial services (35.37%), and media, entertainment & publication (1.53%) sectors. Leading the pack in terms of weightage is Eternal (erstwhile Zomato), holding the largest share at 20.27%. It's followed closely by PB Fintech (Policybazaar) at 16.48% and Info Edge (India) at 15.66%.Other significant constituents with weights between 8.57% and 2.01% include One 97 Communications (Paytm), FSN E-Commerce Ventures (Nykaa), Indian Railway Catering and Tourism Corporation (IRCTC), Angel One, Swiggy, Motilal Oswal Financial Services (MOFSL), and Indiamart total weight of these 10 stocks stands at 83.69%.The other 11 stocks viz. RattanIndia Enterprises, IIFL Capital Services, Le Travenues Technology, Nazara Technologies, Thomas Cook (India), Infibeam Avenues, TBO Tek, CarTrade Tech, Just Dial, Brainbees Solutions, and Easy Trip Planners together carry a weight of 16.31%.Out of the 21 stocks in the index, a dozen counters have outperformed the index while 14 have surpassed the returns given by Enterprises and IIFL Capital Services were the top gainers, both surging nearly 60%. This impressive run came despite RattanIndia reporting widened losses and IIFL Capital Services seeing declining earnings, suggesting that market sentiment or future growth prospects played a significant majors Motilal Oswal and Angel One also saw substantial increases, each up over 40%, even as they navigated challenges with significant profit and revenue the true earnings winners among the top performers were the consumer-facing digital Travenues Technology (ixigo), the ticketing platform operator, surged 40%, backed by a robust 92.5% jump in net profit and over 72% revenue growth in Q4 FY25. Meanwhile, Policybazaar stock soared 29% on the back of a remarkable 181% earnings jump and 39% sales & personal care player Nykaa posted a 95% profit after tax (PAT) jump, contributing to its nearly 25% stock Edge, which operates 'Naukri', rallied 8% during the period, driven by a whopping 570% year-on-year rise in PAT in Q4 FY25, alongside 14% bottom-line and content platform Nazara Technologies rose 40% with a 95% jump in revenue, while IRCTC, a more traditional online player, posted modest 17% gains, with PAT and revenue growth of 26% and 10%, respectively, in the January–March the overall positive trend, some digital players experienced a downturn. For instance, travel platform EaseMyTrip shares slipped nearly 6%, struggling with both falling sales and profits. Others like Swiggy and Brainbees Solutions (FirstCry) also saw their stocks underperform despite reporting strong revenue growth, as they were weighed down by deepening warns against any focused strategy on internet stocks, arguing that it carries concentration risk. He suggests investors evaluate their exposure based on individual risk tolerance and investment said that the recent performance trends in consumer and financial sectors provide important cues for their near-term outlook."Within consumer discretionary, categories like hotels, value retail, and jewellery are expected to maintain growth momentum, supported by domestic demand, store expansion, and favourable pricing dynamics. Meanwhile, premium retail, QSRs, footwear, and textiles may see a gradual recovery as inflation stabilizes and discretionary spending improves," the analyst financial services are likely to continue their earnings growth trend, driven by strong credit demand, he opined."Given this Q4 backdrop and the index composition, the Nifty India Internet Index could serve as a thematic proxy for both consumer demand trends and the ongoing digital transformation in financial services," he RBI's continued accommodative stance and the government's tax relief measures in the February 2025 Budget are expected to improve liquidity and increase disposable rise in income is expected to stimulate consumer spending, particularly in digitally enabled services, Rego said. The Nifty India Internet Index, which comprises companies that operate primarily through online platforms such as e-commerce, digital payments, and internet-based services, stands to gain from this shift, the Right Horizons PMS founder added.: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
