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Reuters
18-07-2025
- Business
- Reuters
India's Hindustan Zinc beats quarterly profit estimates
July 18 (Reuters) - Hindustan Zinc ( opens new tab posted a bigger-than-expected first-quarter profit on Friday, as strong demand for the metal helped cushion the impact of prices that were pressured by geopolitical uncertainties. India's top refined zinc producer's consolidated net profit fell 4.7% to 22.34 billion rupees ($259.2 million) for the quarter ended June 30, beating analysts' estimate of 21.02 billion rupees, per data compiled by LSEG. Demand for zinc, which is commonly used to coat steel to prevent corrosion, grew on the back of strong local demand for the alloy, with crude steel production rising 8.6% on-year in the country, analysts said. However, metal prices came under pressure in the reported quarter as geopolitical tensions and uncertainty around U.S. trade policies dragged down industrial metals like zinc, copper and aluminum, squeezing producer margins. Domestic zinc prices fell about 6% year-on-year and 7% quarter-on-quarter in the June-quarter, in line with global trends, according to brokerage Systematix Research. In April, Hindustan Zinc CFO Sandeep Modi told Reuters that uncertainties over U.S. tariffs would delay a stabilisation in metal prices, but he maintained that "fundamentally prices will remain strong." Benchmark zinc prices on the London Metal Exchange fell 3.5% in the quarter ended June 30. Hindustan Zinc, which commands roughly three-fourths of India's zinc market, reported a 4% drop in total revenue from operations to 77.71 billion rupees. ($1 = 86.1750 Indian rupees)
Mint
14-07-2025
- Business
- Mint
Margins pressure, credit costs may plague banks in Q1; asset quality seen largely stable
Mumbai: Banks are expected to see weak growth in the first quarter of FY26 due to pressure on margins, rising credit costs and cyclically slower business during this period. 'Q1FY26 is expected to be a muted quarter with most banks juggling with many adversely moving aspects such as slowing advances growth, margin pressure from consecutive repo rate cuts, seasonally weak fee income, annual appraisal-related expenses in operating expenses, and sustained elevated credit costs for unsecured credit segments," Systematix Research said in a pre-earnings note. Provisional business updates by banks for Q1FY26 showed weak loan growth in Q1 even as deposits picked up pace, Mint reported on 4 July, 2025. Initial estimates showed sequential loan growth of 0.2-5% and deposit growth of 0.1-1.3%. This led to private banks' credit-deposit ratio improving to 92% and for public sector banks remaining stable at 78%. Loan growth for these banks was 5-32% year-on-year, barring IndusInd Bank, which saw a decline on a sequential and annual basis. Deposit growth, meanwhile, is estimated to be around 13% year-on-year. As per RBI data, system loan growth has decelerated to 9.6% on-year in June 2025 from 11% in Q4 FY25, with advances slowing for most segments except MSME loans. 'This quarter has been characterized by subdued credit growth, with lending activity yet to gain meaningful traction," brokerage firm Centrum said in a note, adding that the repo rate cuts have further intensified downward pressure on lending yields. Net interest income–income from the core lending business–is seen rising 1-7% on year but falling 0.6-3.4% sequentially, as per estimates by four brokerage firms. Profitability 'Pre-provision profit (PPoP) should increase 5.2% on-year and register a growth of -1.5% on quarter," according to Phillip Capital. Core operating profit (excluding treasury impact) is expected to fall 2.5% on year and 4.1% on quarter, it added. Analysts said profitability is expected to be muted due to lower business and income growth, pressure on margins, and higher provisions. They peg profit after tax for the system at around 0-4.8% year-on-year and 0.8% quarter-on-quarter, with a decline of up to 12%. Within this, private banks are seen posting net profit of 1.4% on year, and public sector banks 7%. Kotak Mahindra Bank, State Bank of India and ICICI Bank are analysts' top picks among large banks, whereas IDFC First Bank and RBL Bank are the top choices among mid to small banks. Bank of Maharashtra will kickstart the Q1 earnings season for banks on Tuesday. Among private banks, Axis Bank is set to be the first to declare its results on 17 July, followed by HDFC Bank and ICICI Bank on 19 July. The Nifty Bank Index rose nearly 12.7% in the April-June quarter. In comparison, the benchmark Nifty 50 gained 9.3% during the period. Margins Margins of banks will be under pressure as they face the impact of the cumulative 100 basis point rate cut by the Reserve Bank of India between February and June 2025. While much of the impact of the lending side is expected to be borne in this quarter given that a significant portion of the loan book is linked to an external benchmark–usually the repo rate–the deposit side impact will be limited. The share of external-benchmark linked loans is estimated to be around 46% for state-owned banks and at around 87% for their private sector peers. Banks are expected to benefit from the first phase of savings and fixed deposit rate cuts (in April 2025) in this quarter, and then from the second phase (in June 2025) of rate cuts in the second quarter. The impact of cuts in savings account rates is typically faster than those on fixed deposits given the longer tenure of the latter. Margins will also be under pressure due to adverse asset mix led by lower unsecured disbursements, weak liability mix due to slower CASA growth, and interest reversals on higher slippages in unsecured credit and agri credit. Net interest margin for banks is seen falling 5-15 basis points on a sequential basis, as per estimates by several brokerage firms. 'We expect double-digit NIM decline for all banks under our coverage in Q1 FY26," Motilal Oswal Securities said adding that margins should improve in the second half of the financial year led by a phased reduction in deposit rates and the 100 bps cut in banks' cash reserve ratio which will come into effect from September 2025. Other income Despite frontline banks pulling back on employee and branch additions, opex should remain sticky due to tech expenses, annual increments and still elevated collections related costs, IIFL Capital said, adding that fee income growth is expected to decline 15% on quarter and 11% on year, following distribution led seasonally high base in Q4 FY25. However, with decline in government bond yields, trading gains should be high and aid overall non-interest income–which is seen growing 17% on year. While some banks are expected to see gains in their treasury portfolios owing to the sharp rate cuts, overall outlook for fee and other income remains muted. As such, treasury gains too are seen limited due to change in accounting for AFS (available for sale) book, analysts said. 'The impact on P&L will be limited due to the implementation of the new investment guidelines (effective 1-April'24) wherein the MTM gains on the AFS portfolio will not be recognised in the P&L statement but will augment the AFS capital reserve," brokerage firm Systematix said. The yield on the benchmark 10-year government bond declined by 75 bps in Q1FY26 compared with 10 bps in the previous quarter. Asset quality While the system's asset quality is largely stable, provisions and subsequently credit costs are elevated for banks, especially those with higher exposure to unsecured retail and microfinance loans, as they absorb the impact of small-ticket delinquencies. According to analysts, credit cost for banks is likely to be 59 bps for Q1 FY26 compared with 64 bps in the previous quarter and 52 bps in the year ago period. 'Slippages have been moderately on the rise sequentially earlier for the system but Q1 FY26 may be flattish, adjusted for agri non-performing loans," YES Securities said in a note. Typically, lenders tend to see higher agriculture slippages in the first and third quarter of a financial year owing to the cyclical nature of the business. 'Sequential evolution of provisions would be a function of not only slippages but also of recoveries and upgrades and pre-existing provision buffers," the note said, adding that it expects a marginal rise in provisions for HDFC Bank, ICICI Bank, IndusInd Bank and Federal Bank. Gross non-performing assets (NPA) ratio for the sector is pegged at 1.87% for the quarter, whereas net NPA ratio is seen at 0.49%. 'Peak MFI slippages are behind us with improving X-bucket collection efficiency and net forward flow rates, but they have not completely normalized yet. While personal loans and credit card NPAs may rise further, vintage analysis and early bucket delinquencies suggest that stress is peaking out," IIFL Capital said. Stress in the 'micro' SME segment is also rising, which will impact PSU banks more.
Fibre2Fashion
21-06-2025
- Business
- Fibre2Fashion
Long-term prospects of India's textile industry seem strong: Report
The long-term prospects of India's textile industry seem strong as channel inventories seem to be normalising at the global retailer level, the United States may raise tariffs for China, labour costs are rising in Vietnam and Bangladesh is seeing political instability, according to a report by Systematix Research. Indian companies may pass on part of rise in costs to consumers, potentially leading to higher prices for textiles and apparel. This could dampen demand in key markets like the United States. Nevertheless, larger macroeconomic trends are beginning to tilt in India's favour, positioning it as a more appealing sourcing hub for global retailers, said the report. The Indian textile industry's long-term prospects seem strong with normalising global retail inventories, probable US tariff rise for China, rising labour costs in Vietnam and Bangladesh's political chaos, Systematix Research said. Indian textile-apparel prices may rise. Stable cotton prices, favourable forex rates and operational efficiency may bolster Indian firms' profitability in the long run. However, Indian textile firms have reported a lacklustre performance in the fourth quarter of fiscal 2024-25 (FY25). Revenue of such firms witnessed a modest 5-per cent growth year on year (YoY), while earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 3 per cent, and profit after tax only slightly increased by 3 per cent YoY, primarily due to ongoing tariff uncertainties and weak sales volumes. Spinning companies experienced a slight improvement in gross margins because of falling cotton prices and steady yarn prices, while garments benefitted from normalised retailer inventories, boosting sales volumes, the report noted. In contrast, India's home textiles segment continued to experience reduced demand, with significant volume declines when compared YoY and quarter on quarter. However, stable cotton prices and favourable foreign exchange rates, along with continued focus on operational efficiency, are expected to bolster profitability for Indian textile companies in the long run, it observed. Systematix Research expects the prevailing cotton-yarn spread of 0.70 per pound to sustain and the Cotton Corporation of India (CCI) to remain as the sole supplier of cotton, unless the government decides to waive off the import duties on cotton. Fibre2Fashion News Desk (DS)
India Gazette
17-06-2025
- Business
- India Gazette
India's textile sector competitiveness may gain edge as Vietnam fights rising labour costs, Bangladesh grapples with political instability: Report
New Delhi [India], June 17 (ANI): India's textile sector may gain a competitive edge in the global market due to rising labour costs in Vietnam and ongoing political instability in Bangladesh, two of its key export rivals, according to a report by Systematix Research. The report, however, highlighted that the near-term outlook for the sector remains challenging. Tariff-related uncertainties may force exporters to absorb part of the additional costs, putting pressure on margins. Companies are also expected to pass on a significant portion of these costs to consumers, which could lead to higher textile and apparel prices and potentially reduce demand from key markets like the US. The report pointed out that global macroeconomic shifts are gradually working in India's favour. With Bangladesh facing political instability and Vietnam seeing a rise in labour costs, India is expected to become a more attractive sourcing destination for global retailers. It said 'India's textile industry seem strong, as channel inventories seem to be normalizing at the global retailer level, there is a likelihood of the US raising tariffs for China, labour costs are rising in Vietnam, and Bangladesh is seeing political instability'. Despite these long-term positives, Indian textile companies reported a muted performance in the fourth quarter of FY25. Amid tariff uncertainty, the revenue of the companies rose by 5 per cent year-on-year (YoY), EBITDA declined by 3 per cent, and profit after tax (PAT) grew by only 3 per cent YoY, mainly due to weak volumes and ongoing uncertainty around tariffs. 'Textile companies reported muted revenue/EBITDA/PAT performance of +5 per cent/-3 per cent/+3 per cent YoY, respectively, due to tepid volumes, amid tariff uncertainty,' the report stated. Spinning companies, however, saw a marginal improvement in gross margins, supported by a 10 per cent YoY and 2 per cent quarter-on-quarter (QoQ) drop in cotton prices, and stable yarn prices, which were down 3 per cent YoY and flat QoQ. Garments showed strong recovery, with normalizing retailer inventories pushing up sales volumes by 10 per cent YoY and 20 per cent QoQ. On the other hand, home textiles continued to witness weak demand, with volumes falling by 9 per cent YoY and 6 per cent QoQ. Nevertheless, stable cotton prices, favourable forex rates, and a continued focus on operational efficiency are likely to support profitability for Indian textile firms. (ANI)
India Gazette
03-06-2025
- Business
- India Gazette
Cement demand to grow 6-7.5% in FY26 amid recovery in infrastructure and housing: Report
New Delhi [India], June 3 (ANI): The Indian cement industry is likely to see a demand growth of 6 to 7.5 per cent in the current financial year (FY26), according to a report by Systematix Research. The report highlighted that with consolidation-led discipline taking hold and strong momentum in infrastructure and housing sectors, the industry is entering a more stable and profitable phase. It said, 'With consolidation-led discipline settling in and momentum building in infrastructure and housing, industry demand is expected to grow by 6-7.5 per cent in FY26'. The report noted that the sector exited FY25 on a stronger footing. The last quarter of the previous financial year saw a visible recovery in both demand and pricing after a slow first half. Increased government capital expenditure towards the end of FY25 helped revive construction activity in major markets. The report said 'Cement volume for companies under our coverage grew by 11 per cent after a slow H1 due to an upswing in commercial activity and a ramp-up in government execution. In FY25, the cement industry ended with a capacity of about 655 MTPA (+4.8 per cent YoY). This also supported price hikes, which were partially absorbed in regions like the East and North. In May 2025, the report added that the cement companies attempted price hikes across different regions, ranging from Rs 5 to Rs 10 per bag. However, due to weak demand in several areas, the absorption of these hikes remained limited. Regional factors such as early monsoons and heat waves played a key role in affecting demand. In the East, demand dropped sharply due to early monsoons, but prices still rose by Rs 46 per bag. The South faced flat demand conditions as heat waves impacted construction activities. As a result, price hikes in the region are expected to be postponed to the second quarter of FY26, since the fourth quarter remained muted. Meanwhile, the report mentioned that central India recorded a modest hike of Rs 2 per bag, and Northern markets saw better traction, with prices increasing by Rs 20-30 per bag. Despite these regional challenges, the average cement price across India rose 1.6 per cent month-on-month in May 2025, reaching Rs 367 per bag. The industry also benefited from a favourable cost environment and improving capacity utilisation, further supporting a positive outlook for FY26. (ANI)
