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New Indian Express
5 days ago
- Business
- New Indian Express
Indian dairy firms to see 11–13% revenue growth this fiscal: CRISIL
CHENNAI: India's dairy industry is poised for robust growth in FY 2025, driven by sustained demand, an increasing share of value-added products (VAP), and favourable input conditions. According to CRISIL Ratings, dairy companies are expected to witness revenue growth of 11–13% this fiscal, outpacing the ~10% growth recorded in the previous year. This expansion is supported by improved product mix, rising consumer demand for protein-rich and nutritious products, and higher retail prices. Key Drivers: Strong consumption patterns, increasing retail milk prices, and accelerated growth in the VAP segment, including cheese, yogurt, paneer, and flavored milk are considered to be the key factors that will drive the growth for the industry. Continued expansion in organised dairy retail and cold-chain infrastructure could also push the growth for the key players. Profitability Trends Operating margin for the companies expected to improve by 20–30 basis points (bps), reaching approximately 5.3%. This is mainly supported by improved product realisations, limited increase in procurement prices (2–3%), thanks to healthy milk supply, and rising share of high-margin VAP in the product portfolio. Stable fodder prices and productivity gains from widespread adoption of artificial insemination will also boost the profitability. Value-Added Products (VAP) Outlook Crisil expect the growth in the value added product segment at 16–18% in FY 2025. The share in product mix is expected to rise to about 45%, up from 40% two years ago. "The VAP segment is expected to clock a strong 16–18% growth this fiscal and an improved product mix, healthy volumes and rising retail prices will be the key growth drivers in this segment, ' says Shounak Chakravarty, Director, Crisil Ratings The other important growth drivers for the Indian diary sector include shifting consumer preferences, rising nutritional awareness, and increasing demand for protein-rich diets. Capital Expenditure (Capex) According to Rucha Narkar, Associate Director, Crisil Ratings, the sector's capex growth is projected to increase by about 10%, reaching approximately Rs 3,400 crore this fiscal. Over 60% of this will be allocated towards expanding VAP capacity and the remainder for enhancing liquid milk processing and supply-chain infrastructure. Despite the capex increase, credit profiles remain stable due to strong cash flows and balance sheets. ' The VAP segment will account for more than 60% of the overall capex — a trend seen over the past three fiscals,' says Narkar. Credit Profile & Financial Metrics Interest coverage ratio in the dairy sector is expected to remain strong at more than 8 times, estimates Crisil. While, the net cash accruals to repayment obligation is estimated at about 2.6 times (vs. 2.8 times last fiscal). These figures reflect a healthy balance sheet condition, with sufficient headroom to absorb higher capex without straining liquidity, expects Crisil. Risks and Watch Factors However the industry is not free from risk. A normal and timely monsoon remains critical to maintain fodder availability and milk productivity, and timely commissioning of planned expansions is essential to meet rising demand and sustain profitability margins, warns Crisil.
Business Standard
14-05-2025
- Business
- Business Standard
Nuvoco Vistas Corporation receives credit ratings for commercial paper
Nuvoco Vistas Corporation announced that India Ratings and Research and CRISIL Ratings have assigned rating of IND A1+ and Crisil A1+, respectively, for the Commercial Paper of the Company for an aggregate amount of Rs.1700 crore (enhanced from Rs.500 crore).The Rating for the other borrowings of the Company remain unchanged. Powered by Capital Market - Live News
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Business Standard
08-05-2025
- Business
- Business Standard
CRISIL puts IndusInd Bank's long-term debt instrument on 'rating watch'
CRISIL Ratings has put IndusInd Bank 's long-term debt instruments on 'watch with negative implications', citing the private-sector lender's review of its microfinance (MFI) business and the resignation of two top executives. The bank's long-term instruments include Rs 4,000 crore of Tier-II and Rs 1,500 crore of infrastructure bonds. CRISIL said the rating action follows the resignation of top two key managerial personnel and disclosure that the bank's internal audit department is reviewing the MFI business to address concerns brought to its attention during finalisation of accounts. Separately, the bank had in March disclosed discrepancy in accounting of derivatives. CRISIL noted that there has been no 'material outflow' in IndusInd Bank's deposits for the last two months. As on March 31, the bank had deposits of Rs 4.11 trillion and CASA (current account and saving account) ratio of 32.8 per cent. Deposits were at Rs 4.09 trillion and CASA at 34.9 per cent on December 31, 2024. There has been some outflow in deposits by retail and small business customers. Such deposits stood at Rs. 1.85 trillion as on March 31, compared to Rs 1.89 trillion on December 31, 2024. 'CRISIL Ratings will monitor and engage with the management to understand the progress with regard to steps taken towards strengthening internal financial controls and to ensure stability and continuity of operations. Further, the impact on profitability and changes in deposit profile will be closely monitored', said the domestic agency. IndusInd, on March 10, told exchanges that an internal review had found discrepancies in its derivatives portfolio and this would have an 'adverse impact' of 2.35 per cent on its net worth as of December 2024. The bank said on April 15 that PwC, engaged by the lender's board to validate the findings of the internal review, had identified discrepancies in its derivatives portfolio and estimated a negative impact of Rs 1,979 crore as of June 30, 2024. Based on PwC's report, the bank said the discrepancies will have an adverse post-tax impact of 2.27 per cent on its net worth as of December 2024. Grant Thornton, an independent professional firm appointed by the board to determine the cause for discrepancies in the derivative portfolio, identified incorrect accounting of internal derivative trades — particularly in cases of early termination — led to the recording of notional profits and that resulted in accounting discrepancies. According to the firm's assessment, the cumulative adverse accounting impact on the profit and loss account of the bank as of March 31, 2025 will be Rs 1,959.98 crore, said IndusInd. 'The net impact (post tax) was similar to the initial estimated impact by the bank management. CRISIL Ratings had earlier estimated that the bank's capital adequacy and annualised pre-provisioning profitability could absorb this impact,' said the rating agency.
Time of India
30-04-2025
- Business
- Time of India
Large section of bank loan borrowers yet to gain from RBI rate cuts
Despite the RBI's 50 bps repo rate cut and liquidity infusion, a significant portion of borrowers haven't benefited due to reliance on MCLR-linked loans. MCLR remained unchanged at 9% in April, particularly affecting public sector borrowers. Banks' deposit costs and competition for funds are hindering faster transmission of rate cuts, impacting net interest margins. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads A large section of bank loan borrowers is yet to see the benefit from the Reserve Bank of India's two consecutive policy rate released by the RBI Wednesday showed that one-year median marginal cost of fund-based lending rate (MCLR) remained unchanged at 9% in April. MCLR has been at 9% since November, except February when it rose to 9.05%, the data central bank has reduced policy repo rate by a total of 50 basis points since February. It has also infused liquidity to the tune of Rs6.5 lakh crore in the banking system to ensure effective transmission of policy rate cuts into both lending and deposit latest RBI data showed that sections of existing borrowers may not have benefited in the form of reduction in their EMIs. This is because nearly 36% of all floating rate loans are priced on MCLR, while over 60% are on external benchmarks (EBLR) like repo rate. In the case of the public sector, the share of MCLR loans is at 51%, while it is just 13% for private weighted average lending rate (WALR) on fresh rupee loans as well as outstanding loans of banks fell month-on-month by 5 bps and 3 bps, respectively, to 9.35% and 9.77% in March, the data reflects loans priced to external benchmarks as well as those linked to banks' marginal cost of transmission of regulatory rate cuts happens quickly in case of repo-linked benchmark rate. The transmission in case of MCLR-linked rates, which depend on banks' deposit costs, takes a longer time of at least two quarters for the effect to play out, industry executives released Wednesday by the RBI showed that the weighted average domestic term deposit rate on fresh deposits of banks rose to 6.65% in March from 6.49% a month ago. On the outstanding deposits, the rate rose slightly to 7.03% from 7.02% in said that banking system liquidity was in deficit for a large part of March. This along with intense competition to raise liabilities, kept fixed deposit rates conditions eased from late March, which in turn prompted banks to reduce rates on term deposits. A few large banks have also reduced savings deposit rates in a bid to protect their net interest margins (NIMs).According to CRISIL Ratings, the extent of reduction in NIMs will therefore depend on the ability of banks to manage their deposit costs. But given the competition for deposits seen of late, that ability will be to CRISIL Ratings, any reduction in term deposit (TD) rates will apply only to incremental deposits and renewals, resulting in a slower transmission of the reduction to the liability side. Data shows only ~21% of TDs are maturing in a year, which means the rest will be due for repricing only after this fiscal.
Time of India
30-04-2025
- Business
- Time of India
Falling interest rates to pressure bank earnings; RoA to moderate from FY24 highs
Faster reduction in loan rates compared to deposit rates in a falling interest rate scenario is expected to squeeze banks' net interest margins, in turn exerting pressure on the profitability of lenders . #Pahalgam Terrorist Attack PM Modi-led 'Super Cabinet' reviews J&K security arrangements Pakistan's General Asim Munir is itching for a fight. Are his soldiers willing? India planning to launch military strike against Pakistan within 24 to 36 hours, claims Pak minister The return on assets (RoA), a profitability metric, is seen moderating 10-20 basis points to 1.1-1.2% in FY2026 from an over-two-decade peak of ~1.3% in fiscal 2024 and 2025, according to CRISIL Ratings . Overall, bank NIMs will see a 10-20 bps compression to 2.8-2.9% in fiscal 2026, the rating agency estimates. 'With other income and operating expenses — the other major components of earnings — seen flat, the compression in NIM will directly translate to a moderation in RoA after accounting for the tax impact,' the rating agency said in a note Wednesday. 'Apart from NIMs, credit costs also have a bearing on bank earnings. While a secular decline in credit costs has supported profitability in the past few years, Crisil Ratings estimates that they have bottomed out.' Live Events The Reserve Bank of India has reduced policy repo rate by 50 bps since February. According to Crisil, around 45% of loans are linked to an external benchmark, primarily repo rate. Typically, these are repriced rapidly after rate cuts. On the other hand, transmission of rate cuts is slow on the deposit side because the reduced term deposit rate is applicable only to incremental deposits and renewals. Data shows only ~21% of TDs are maturing in a year, which means the rest will be due for repricing only after this fiscal, it added. The extent of reduction in NIMs will depend on the ability of banks to manage their deposit costs. But given the competition for deposits seen of late, that ability will be curtailed, CRISIL said. A few large ones have reduced not only the TD rates but also their savings account rates. 'If all banks were to implement a 25 bps cut in their savings account rates, it would, ceteris paribus, result in a 6-7 bps NIM benefit this fiscal. A similar cut in the TD rates would yield an ~4 bps NIM benefit,' said Vani Ojasvi, Associate Director, Crisil Ratings. On asset quality , the rating agency estimates banks' gross non-performing assets ratio in the range of 2.4-2.6% by March 2026 compared to around 2.4% on March 2025. While corporate NPAs are expected to remain low, in retail and some MSME segments, borrower over-leveraging bears watching. Hence, credit costs are unlikely to reduce further from here.
