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Express Tribune
4 days ago
- Business
- Express Tribune
Navigating towards sustainable growth
Listen to article In this article, I offer some insights into Pakistan's current economic trajectory and the challenges that lie ahead. This review highlights key areas such as growth, stability, inflation, tax policies and fiscal discipline, providing a nuanced understanding of the nation's economic health. Over the past three years, Pakistan's economy has shown resilience, moving from a state of high inflation and low growth to a phase of low inflation and recovery. While the economy has averted a crisis, growth forecasts remain subdued. This transition signifies a move in the right direction but also indicates that sustained efforts are required to achieve robust and lasting growth. The subdued forecasts suggest underlying structural issues that need to be addressed for more optimistic projections. The country's journey from near-collapse to a recovery mode is a testament to its resilience but also a reminder of the vulnerabilities that persist. Stability and C/A dynamics Pakistan's current account has achieved stability, a crucial development for maintaining economic equilibrium. However, this stability hinges on timely rollovers and meeting export and remittance targets. Dependence on external factors for maintaining stability highlights potential risks and uncertainties. Any disruptions in these areas could destabilise the economy. In the short term, uncertainties around the Trump Tariff remain one possible source, though it can also trigger opportunities. In the medium term, continued access to the EU market in the wake of India-EU free trade agreement (FTA) should remain an important goal. Diversifying sources of income and enhancing domestic productivity are vital to ensure long-term stability and reduce reliance on external aid and remittances. Inflation and monetary policy The headline inflation has declined significantly, but overall price levels have not followed suit. Core inflation, which is almost 9%, continues to be the linchpin of monetary policy, indicating the challenge of managing inflationary pressures. The reduction in headline inflation is encouraging, but the persistence of high price levels suggests underlying structural issues in the economy. Managing core inflation requires a multifaceted approach that addresses demand-side and supply-side constraints. Furthermore, transparent and data-driven monetary policies are crucial for maintaining public confidence and ensuring economic stability. A reduction in interest rate from 22% to 12% is a significant positive development and private sector credit has started to increase. Tax policies and tariffs reform Pakistan's tax policy is undergoing positive changes with the expansion of the tax net to more sectors. However, tax rates remain "punitively high." The government's intention to abolish the non-filers category is a step in the right direction, however, half of the current tax filers do not contribute anything. This structural problem of tax collection needs to be addressed to maximise revenue. Customs tariff reforms have also been initiated, indicating a broader effort to overhaul the tax system. Reducing tax rates while broadening the base could stimulate economic activity and increase overall tax revenue. The tax structure has significant implications for businesses, investments and overall economic activity. Fiscal discipline, public expenses Historically, the actual current expenditures have surpassed budgeted levels, while development spending has fallen short. Currently, the fiscal trajectory aligns with the budget, which is a positive development. Public expenditures on subsidies have declined from 16.2% in 2022 to 7.2% in 2024, indicating a more focused approach to resource allocation. Defence expenditures have also seen a reduction, falling from 22% to 12.4% of total expenditures, though a substantial increase is imminent. However, the increasing gap between budgeted and actual expenditures on the Public Sector Development Programme (PSDP) is concerning. Efficient allocation of funds can significantly boost economic growth. Revenue losses, tax evasion On the upside, almost Rs9 trillion is stuck in the system and even a partial recovery can bring dividends without burdening the existing taxpayers. The Tax Expenditure Report 2024 indicates a revenue loss of Rs3,879 billion due to tax concessions and exemptions. Income tax, sales tax and customs duty losses are substantial, highlighting significant gaps in tax collection. Additionally, the annual tax revenue loss due to illicit trade is estimated at Rs750 billion. Furthermore, Rs4,457 billion in tax revenue is stuck in over 100,000 court cases. Addressing these issues is critical for increasing government revenue and improving the fiscal health. The government needs to strengthen tax enforcement, streamline legal processes and formalise the undocumented economy. Conclusion The budget 2025-26 presents an opening. While progress has been made in certain areas, significant challenges remain. The government must focus on maintaining stability, controlling inflation, reforming the tax system and ensuring fiscal discipline. Addressing tax evasion and the undocumented economy is also crucial for enhancing revenue collection. These efforts will pave the way for sustainable economic growth and prosperity. The nation's ability to navigate these economic challenges effectively will determine its future trajectory. The writer is the founder and executive director of PRIME, an independent economic policy think tank
Mint
26-05-2025
- Business
- Mint
Commercial services stocks to trade on 26 May as recommended by expert Raja Venkatraman
From supplying factories with vital components to helping offices run smoothly, India's commercial services & supplies sector plays a quiet but crucial role in the economy. In 2025, these business enablers are adapting to shifting policies at home and abroad, including Reserve Bank of India's (RBI) liquidity push, tax tweaks in Budget FY26, and new US tariffs on RBI's 50-basis point cut in the Cash Reserve Ratio (CRR) aims to inject liquidity and maintain economic momentum. Meanwhile, the FY26 Budget has provided tax relief for salaried employees--stimulating consumption-driven sector--while prioritizing infrastructure and automation investments. However, the Trump Tariff, which imposes a 26% duty on Indian exports to the US, has disrupted global supply chains. This has particularly impacted logistics, automation, and consumer durable exports. Indian firms are responding with regional trade diversification and cost optimization, but pricing volatility and demand fluctuations remain challenges. Despite these hurdles, the sector's long-term growth prospects are supported by ongoing digitalization and strong domestic policy backing. Following are the key sectoral trends: - Sector Dynamics and Consolidation: - Cost Savings and Price Stabilization: - Challenges: Demand Revival, Pricing Trends, and Growth Prospects: Based on the above, Raja Venkatraman has recommended the following two stocks: Centum Electronics Ltd (current market price: ₹2,320) Centum Electronics Ltd specializes in Electronic System Design and Manufacturing (ESDM). They design, manufacture, and export electronic products, including systems, subsystems, modules, and printed circuit board assemblies. The company caters to various sectors like defence, aerospace, space, medical, transportation, and industrial. Centum Electronics has demonstrated strong financial performance in Q4 2025, driven by strategic consolidation and operational efficiency. The company reported a 23.85% year-over-year revenue growth, increasing from ₹300.66 crore in Q4 FY24 to ₹372.38 crore in Q4 FY25. Additionally, its net profit turned positive, shifting from a ₹6.89 crore loss in Q4 FY24 to a ₹21.53 crore profit in Q4 FY25. This turnaround was largely due to cost-saving measures, including logistics optimization and supplier contract renegotiations, which led to 5-7% operational cost reductions across key verticals. After some major decline in the since December 2024 the prices saw a 'V' shaped recovery from March 2025 that slowly but steadily caught the attention of the retail participants. Further the steady interest that has been seen in the Defence space has managed to attract some strong attention to this counter. Since the last few weeks, the stock has witnessed a steady participation that saw the volume build up ahead of the numbers helping the prices nearly double from the lows. Read this | IndiGo's Q1 turbulence to be temporary as crude oil prices soften, capacity grows The revival seen in the last few days in May 2025 was indicating a upward climb coupled with some genuine buying at lower levels has once again triggered some upside. With the prices clearing the resistance zone (marked in a rectangle box) probability of heading higher is much higher. The long body candle formation and an uptick in momentum in the sector as a whole can be looked upon as an indication to go long. With the recent price move forming a nice long body formation suggests a potential rise towards 2700. The Trump Tariff, imposing a 26% duty on Indian exports, has posed challenges, particularly in the defence and aerospace segments. However, Centum Electronics has mitigated risks through regional trade diversification and enhanced credit guarantees for MSMEs, strengthening its financial stability. Linc Ltd (current market price: ₹150) Linc Ltd is a prominent manufacturer of writing instruments and stationery, with a strong national and international presence in over 60 countries. They have a wide range of products, including ball pens, gel pens, and other stationery items, and are the exclusive distributor for brands like Uni-ball and Deli in India. Linc has continued its strong financial growth in FY25, driven by strategic product diversification and operational efficiencies. The company reported a total income of ₹54,819 lakh, reflecting a 6.4% year-over-year increase, underscoring its resilience in a competitive market. A key driver of this expansion has been the Pentonic brand, whose contribution to overall sales rose from 34.3% in FY24 to 35.6% in FY25, strengthening Linc's foothold in the premium stationery segment. The company has maintained a healthy gross profit margin of 31.8%, supported by optimized manufacturing processes, raw material procurement strategies, and cost-saving initiatives that have boosted profitability. Net profit stood at ₹3,804 lakh, marking an 11.2% increase compared to the previous fiscal year, reinforcing its sustained profitability. This growth comes as Linc strategically expands beyond pens into markers, highlighters, and pencils, tapping into the broader stationery market, which is expected to surge from ₹6,640 crore to ₹38,500 crore. Read this | Nalco's growth streak hits speed bump on price slide, project delay fears The company's focus on premiumization, product innovation, and increased brand visibility has solidified its market positioning. Conclusion In summary, the Commercial Services & Supplies sector is poised for steady growth through FY26. Also read | This Murugappa Group stock is down 38% from its peak. But why are investors turning bullish again? Government-backed infrastructure investments, digital transformation, and evolving consumer demand patterns offer long-term resilience. While challenges such as pricing pressures and global trade headwinds persist, adaptive strategies, driven by consolidation, cost control, and innovation, are setting the stage for sustained expansion. Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
Mint
21-05-2025
- Business
- Mint
Hindalco share price: Should you Buy, Hold or Sell post Q4 Results, Dividend announcement
Stock Market Today: Hindalco share price was trading rangebound and almost flat in the morning trades on Wednesday post Q4 Results, dividend declared by the company on Tuesday. Should you Buy Hold or Sell the stock ? Here is what analysts say- Hindalco Industries announced on Tuesday that its consolidated net profit for the March quarter increased by 66% to ₹ 5,283 crore from Rs3,174 crore during the same period last year. Revenues from Operations in Q4FY25 stood at ₹ 64,890 crore, which was about 16% higher than the ₹ 55,994 crore recorded in the same quarter of the previous fiscal year. The Upstream operations in the Aluminium Business lifted the show. In comparison to the same quarter previous year, the fourth quarter's consolidated EBITDA or earnings before interest tax depreciation and amortisation increased by 43% to ₹ 10,296 crore. Analysts while stay positive on domestic Aluminum business (both upstream and downstream), however are watchful on its US subsidiary, Novelis performance in the back of Trump Tariff announcements YES Securities post Q4 Results said that the downstream capacities are ramping up but near-term headwinds persist for Novelis, leading them to, assign NEUTRAL Ratings. Hindalco delivered a strong Q4FY25 performance, surpassing consensus expectations, which as per Yes Securities was driven by firm aluminium and copper prices, a supportive macro environment, and a largely stable cost structure on a sequential basis. With the upstream Aluminium Segment posting a strong EBITDA/tonne of $1,684, up from $1,480 in Q3FY25 and much higher than $967 in Q4FY24, the Indian aluminum Business for Hindalco continues to reach new operational milestones. Sequential improvement was also seen in the downstream aluminum business, where EBITDA/tonne increased from $179 in the prior quarter to $240. They value Hindalco on a SOTP basis to arrive at revised target price of ₹ 721/share. Motilal Oswal Financial Services exects a healthy consolidated performance for FY26 or 27, mainly driven by the strong domestic operations. They thereby have increased their Earnings before interest tax depreciation and amortisation or EBITDA estimates for FY26 and FY27 by 3% and 2% respectively. The stock as per MOFSL trades at 5 times Enterprise Value by Ebitda and 1.2 times Price to Book value on FY27 estimates. They reiterate their BUY rating on Hindalco with a revised SoTP-based TP of ₹ 790. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Mint
17-05-2025
- Business
- Mint
Vedanta, Hindalco Nalco share prices rise: US- China tariff talks raise hope but caution persists on base metal prices
Metal Stocks: Vedanta, Hindalco, Nalco share prices rebounded 4-13% during week ending 16 May 2025. While the US- China tariff talks raise hopes on improvement on base metal prices, however caution still prevails. say analysts Vedanta, Hindalco, Nalco share prices saw a good rebound with 4-13% regained during week ending 16 May 2025 over the week ending 9 May 2025. The National Aluminium Company Ltd or NALCO share price was the largest gainer follower by Vedanta share price that too registered slightly more than 7% gains The progress in the US-China tariff talks has lifted sentiments. The China remains the largest consumer of commodities and thereby influences the pries on most commodities including metals The Aluminium price on the London metal Exchange or the LME that had dipped to below $2300 a tonne in the first fortnight of April, on Aluminum demand concerns led by Trump Tariff, however have improved to around $2475 a tonne levels now. However the same are lower than near term peaks of more than $ 2700 a tonne levels in March 2025. The Copper LME prices too have improved from sub $8600 a tonne levels in first fortnight of April 2025 to $9475 levels now All the improvement in base metal prices has been led by easing tariff concerns though negotiations between US-China and other countries still continue. According to a report by Motilal Oswal Financial Services, base metals have been caught in between supply surplus forecasts for most metals, weakening PMI figures, and constant updates on negotiations between US-China, keeping market participants on edge and uncertain about the future path. They add that positive shift in US-China trade relations, provide temporary relief to base metal prices, however the caution remains necessary. The strengthening of the dollar, driven by optimism around the tariff deal, could present headwinds for metal prices, said MOFSL. Though the newly announced tariff rates are less severe than expected, they still represent a significant obstacle to global trade, potentially dampening demand for raw materials. Copper prices are expected to fluctuate between $9,000 and $10,200 on the LME, with persistent volatility anticipated. A cautious, well-informed approach is advised for market participant, they said
Mint
17-05-2025
- Business
- Mint
Vedanta, Hindalco, Nalco share prices rise: US- China tariff talks raise hope but caution persists on base metal prices
Metal Stocks: Vedanta, Hindalco, Nalco share prices rebounded 4-13% during week ending 16 May 2025. While the US- China tariff talks raise hopes on improvement on base metal prices, however caution still prevails. say analysts Vedanta, Hindalco, Nalco share prices saw a good rebound with 4-13% regained during week ending 16 May 2025 over the week ending 9 May 2025. The National Aluminium Company Ltd or NALCO share price was the largest gainer follower by Vedanta share price that too registered slightly more than 7% gains The progress in the US-China tariff talks has lifted sentiments. The China remains the largest consumer of commodities and thereby influences the pries on most commodities including metals The Aluminium price on the London metal Exchange or the LME that had dipped to below $2300 a tonne in the first fortnight of April, on Aluminum demand concerns led by Trump Tariff, however have improved to around $2475 a tonne levels now. However the same are lower than near term peaks of more than $ 2700 a tonne levels in March 2025. The Copper LME prices too have improved from sun $8600 a tonne levels in first fortnight of April 2025 to $9475 levels now All the improvement in base metal prices has been led by easing tariff concerns though negotiations between US-China and other countries still continue. According to a report by Motilal Oswal Financial Services, base metals have been caught in between supply surplus forecasts for most metals, weakening PMI figures, and constant updates on negotiations between US-China, keeping market participants on edge and uncertain about the future path. They add that positive shift in US-China trade relations, provide temporary relief to base metal prices, however the caution remains necessary. The strengthening of the dollar, driven by optimism around the tariff deal, could present headwinds for metal prices, said MOFSL. Though the newly announced tariff rates are less severe than expected, they still represent a significant obstacle to global trade, potentially dampening demand for raw materials. Copper prices are expected to fluctuate between $9,000 and $10,200 on the LME, with persistent volatility anticipated. A cautious, well-informed approach is advised for market participant, they said Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
