Author: Mitali Mohite

Mphasis CEO: AI, customer experience, and data modernisation dominate deal pipeline

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Nitin Rakesh, MD & CEO, and Manish Dugar, CFO of Mphasis, spoke with CNBC-TV18 about the company’s deal pipeline and client spending trends.

Rakesh outlined that the majority of deals in the pipeline are concentrated in four key areas.

Firstly, there is a significant emphasis on AI-led operations aimed at infusing advanced technology into both IT and business processes.

Secondly, transforming customer experiences and optimizing contact center operations are pivotal, especially for large banking clients who manage extensive service operations.

Thirdly, there’s a rising demand for data modernisation and data engineering, essential steps for any enterprise looking to implement AI solutions effectively.

Lastly, modernisation across the board is gaining traction, with an increased focus on accelerating cloud and data projects using new technological platforms.

Below is the verbatim transcript of the interview:

Q: All numbers are bang in line – revenues, margins, etc. But deal wins is what I want you to talk about to start. You took about $180 million in new deals, and you described by saying that about 75-80% of this was from new-generation services. So, talk to us a little bit about that and there has also been a little bit of concern whether deal win momentum is starting to slow down a bit, and how this will look in FY25.

Rakesh: For the full year, trailing 12 months (TTM), FY24 over FY23 we had about 5% expansion in total contract value (TCV), all net new. We had a bumper Q1, $700 plus million in deals in that quarter. Obviously, as that happens you rebuild the pipeline through the phases and start converting. So that is one little nuance. We are still consuming a lot of the order books that we sold in the preceding three quarters, in addition to $177 million we sold this quarter. Second, there is an interesting nuance that we have noticed in the last three-four months. The shorter duration, zero to 10 million deals have picked up quite nicely, in fact, on a dollar basis probably the highest we have seen in the last four quarters – that is an early sign for two things, one, some discretionary spending coming in, these are quick bursts deals that convert to revenue very quick and give you, in a year, growth opportunity versus a large deal that is typically a 3-5 year deal and sometimes takes up to 6-12 months to ramp up to. So, that is the nuance that you have to keep in mind as you think about that number per se., we are pretty confident that on a TTM average basis, we will probably revert back to that kind of an average number over the next four quarters as well. Obviously, there will be some lumpiness in some of the larger deals between various quarters of FY25. So, I think that is kind of where we are. We definitely are very pleased with the performance of Q4. It’s a great way to start a new financial year.

Q: Is there a way to guide on the deal wins for FY25?

Rakesh: It’s a little difficult to guide on a quarterly or a full-year basis except that as I mentioned that pipeline is up about 5% on a sequential basis. So that should give you a sense and bulk of the deals in the pipeline are in four major areas. There is a strong focus on artificial intelligence (AI) led ops, which is how do you infuse tech into running operations, both IT and business, customer experience transformation sits right there, and contract centres is a very large focus area for a transformations standpoint right now, especially for large banks because they have some really large operations in that space. We have also seen very big uptick in data modernisation, data engineering deals because that is kind of a precursor to every enterprise trying to implement an AI solution. And finally, I think modernisation is starting to pick up steam because clients are fading out if there is a way for them to accelerate some of their programs around cloud and data using some of these new tech platforms because they can also impact your operating costs and you can reallocate costs from one program to the next. So, necessarily doesn’t require additional funding.

Q: You said smaller and shorter duration deals have picked up, what number was that?

Rakesh: Zero to $10 million; basically, less than $10 million deals.

Q: Is this good news, is this bad news, does it mean that people do not want to commit to larger spends?

Rakesh: I would say, in light of pipeline expansion and large deal expansion in the pipeline, I do not think it is bad news. I think it’s mostly good news because I am reading that as, and we have seen that actually play out in Q4 as well as in the current quarter that gives us the opportunity to see some early signs of quick spend or discretionary spend, which means you do not have to commit to a three year programme; you have got a $10 million funding or a $5 million funding, you want to implement a certain program and you going to get it done in the next 6-9 months or the first phase of the programme. So, it is a combination of a little bit more confidence on the client’s right to take programmes that necessarily do not require a large outlay and by definition, consumption ability for these in the shorter duration is higher. So broadly, for us, at least we are seeing it as a positive.

Q: The pipeline between BFS and non-BFS – how is it looking right now? Where are you seeing the maximum amount of recovery come through in terms of orders?

Dugar: On an overall level pipeline has grown by five percentage points, and especially if I look at the BFS segment, there also we have seen 19% growth. From a contract win perspective, we had called out that this quarter will be a quarter of growth led by BFS and TMT. And as Rakesh mentioned other than the fact that the overall size of the TCV and the pipeline has become bigger, we have also started seeing green shoots in terms of short-term deals and shorter deals, which contribute a lot more to the revenue in the immediate years. So, overall basis, BFS has started showing signs of positive from where we were maybe a couple of quarters back.

Q: On the margin front what is the guidance right now for FY25?

Dugar: On a reported basis, we will be in the range of 14.6% to 16% and given that acquisitions are impacting almost by 1.1 percentage points right now, that translates to a range of 15.7 to 17.1% versus the 15.25% to 16.25% range that we are given for the last year. This is in keeping with our philosophy of margin being in a narrow and stable band while investing for growth with a northward bias as the gains came.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Click here to follow Lok Sabha Elections 2024 Phase 2 Voting Live updates

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Cyient MD says there are delays in client spending but no project cancellations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Cyient’s Executive Vice Chairman and MD, Krishna Bodanapu, says there are some delays in discretionary spending by clients, but the company has so far not faced any project cancellations.

The Hyderabad-based IT solutions provider reported a 28% sequential growth in profit at ₹197 crore for the January-March quarter.

Bodanapu stated that the company is cautiously forecasting high single-digit revenue growth for the current financial year (FY25).

Read the verbatim transcript of the interview below:

Q: The high single digit growth guidance that you have given out, it has disappointed the street. Can you tell us because your FY24 constant currency revenue growth was around 12.6%, that too missed your own guidance of 13-13.5%? Are we staring at another year where perhaps you could see slower growth than the previous one and what are the big trends looking like now?

A: The guidance that we gave was based on the conditions that we see in the market. In the market, generally in the industries that we are in, calls for this prudence. We did grow 12.5%. Last year, of course, there was an acquisition benefit that was there in that number. But looking at what the market looks like and just being prudent about it, this is the number that we have a line of sight to deliver. Let me be candid about that to say that we have a line of sight to deliver this number. Therefore, it is what we are looking at for the year. Talking about trends, there is a bit of weakness in some sectors, for example, the communication sector has not fully recovered, and you would see that in various results that have come out. The aerospace sector, we had seven quarters of growth, but we had one flat quarter this quarter. But that is expected. We will see some decent growth for next year there. But the big wildcard for us is how the communication sector will recover because having said that there are again some good sectors where we are seeing growth, we have a sector that focuses on sustainability-related industries, that is doing very well, the automotive sector, though small for us, is doing very well. We are well-positioned in the semiconductor sector. But there is still a bit of a challenge in the communication sector, which is about a third of our business. Taking all this into account we think that this is a prudent target for us.

Q: You also said that the conditions in the market call for prudence. Can you just elaborate a little more on that in terms of clients’ spending, how is it now, is it worse off than what we saw 6-8 months ago, are orders getting deferred? You gave us a sectoral view, but any more qualitative views on client spends etc?

A: In general, there is a bit of a delay in some of the spending. The good news is that we still have not seen any cancellations, or we have not seen any stoppage of an existing project or things like that. But it’s a bit sectoral so I will not get into the detail here. But, in general, customers are cautious; customers in the sectors that we operate in are a bit more cautious than they were, say, 6 to 8 months ago. They are still talking about technology deployment, and the capabilities that we do well in the projects that we can support. I would say there was not a mass uncertainty, if I may use that word, but there is definitely a bit of trepidation in certain sectors where people do not necessarily want to make the spend right now or the spend decision. But having said that we are still seeing the conversations leading up to the spending decision and we are quite confident that during the year, of course, assuming that macro remains more or less as it is, during the year we will start the order flow again holding up quite nicely.

Also Read | Cyient Q4 Results | Net profit surges 28.5% over third quarter

Q: We were talking to the TCS CEO earlier and we were talking about the dichotomy, the economy seems to be all the data points, the macro stuff that you spoke about is all looking good and as you were saying, even for TCS, and you were also saying that people are delaying in making those decisions, right? So, I don’t know if you want to address that dichotomy. If you do, please go ahead. But I also want you to address the digital, engineering, and technology (DET) margin. I mean, the guidance for FY25 is 16%. You have laid out aspiration to get to about 18% and 20% over the medium and long term. So, what happens to that, is that still on track?

A: I think that’s an interesting point to bring up – the dichotomy and we are definitely seeing that and some of the dichotomy is also because of the relative nature. If you look at how the economies were coming out of COVID, we were seeing a lot more spending because there was a bit of pent-up or delayed spending from 2020-21 timeframe. So, in that sense in the broader technology sector you do feel a bit of dichotomy. But also, I would say the good news still is there is a lot of technology evolution that is happening, and this technological evolution means that people will have to put in that money, that resource behind implementing the new capabilities, etc, to ride the technology wave. So, in that sense late 2022-2023 we saw some of the pent-up demand. Right now, there is just a bit more stability that is coming in. Most economies are doing reasonably well; in India it is a different story but of course, our client base is not very India-centric, and therefore, the extraordinary growth that we are seeing in India doesn’t necessarily translate to our business. But if we can grow in that high single digits considering what we are seeing right now, it’s a good situation just coming out of, all said and done one or two good years, and therefore, we can see a good trajectory going forward. That also ties into the margin, because our aspiration still remains to be in the 18-20 range, but we have a line of sight, but that also comes as long as we have some good growth because we will have to continue to invest a little bit into making sure that the growth happens, be it around sales, be it around technology development and that is a very important point because a lot of the growth is coming because of evolution in technology. I mean, all of you have heard about generative artificial intelligence (AI) and those kinds of technologies, which also means that we have to put the training and the effort behind us to make sure that we are prepared for that. So that will remain as long as we come back a little bit into the teens for the growth trajectory. And the second thing is, once the shift, which is happening quite a bit of the traditional mechanical data work moving into technology work, because then our investments into some of the things like training, etc, can actually come down a little bit. So that remains, but this is not the year for us to hold back on some of the investments that we will made both from the go-to-market perspective, but also retraining and rescaling people.

Q: Transportation for you is aerospace, which has been doing well, and you have a railway that has been degrowing. I think it’s been under some pressure. So, could you tell us out of this entire mix, how much is coming in from aero, how much is coming in from rail and what have been the growth rates out there and how do you see it shaping up?

A: Aero is the predominant part, it is about 80%, but rail, we have been degrowing, we have some very specific customer issues, but also industry level issues where a significant consolidation is going on in the rail sector. There are a lot of acquisitions that have happened, there is also a lot of divestitures because of the acquisitions in the sense that anti-competitive laws in various countries are kicking in. So, there is just a lot of churn in the rail sector right now. Having said that our aerospace business this year grew 20% year on year compared to last year. So that is great growth for a large part of that business, and we see that continuing into next year; while the Q4 was a bit tepid for the aerospace business, we are seeing that growth is coming back, we won some really good deals that we talked about yesterday also, not just renewables, but significant additions. I spoke about a deal with Airbus on the investor call yesterday, Deutsch Aircraft is a new customer which we also made a press release around and also, we are swaying quite nicely into some of the emerging trends in aerospace like urban air mobility, electric propulsion and so on so forth. So, aerospace will continue, and rail is where we are still a bit wait and watch or cautious because various things are still going on and things have to settle.

Also Read | K Krithivasan of TCS expects margins to sustain at current levels

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Click here to follow Lok Sabha Elections 2024 Phase 2 Voting Live updates

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Standard Chartered expects US Fed rate cut in second half

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

A decline in both growth and inflation in the US in the latter half of the year could pave the way for the Federal Reserve to initiate rate cuts, according to Rajat Bhattacharya, Senior Investment Strategist at Standard Chartered.

The US economy slowed sharply in the January-March quarter to a 1.6% annual pace in the face of high-interest rates, but consumers — the main driver of economic growth — kept spending at a solid pace.

US gross domestic product — the economy’s total output of goods and services — decelerated in the January-March quarter from its brisk 3.4% growth rate in the final three months of 2023.

The Fed’s preferred inflation figure is due later today (April 26). Other gauges of price rises in the US remained hotter-than-expected, suggesting the timing of rate cuts may be pushed back.

Indian market, Bhattacharya says, has a unique organic domestic-led growth trajectory, distinct from global trends.

While India’s economic performance is influenced by trends in the US, its robust growth, strong corporate earnings, government expenditure, fiscal discipline, and political stability all play significant roles in enhancing its global standing.

“So, in absolute terms, we are bullish on India, and not just equities we are also bullish on government bonds,” Bhattacharya added.

Also Read | US inflation up again in March in latest sign that price pressures remain elevated

He also highlighted what makes the Indian market valuations explains.

India is still under owned by foreign investors and “as India’s exceptionalism comes through more and more in the coming quarters years. I think you will see more foreign participation in both equity and bond markets, which is what justifies this kind of PE (price to earnings) multiples,” he said.

For the entire interview, watch the accompanying video

Click here to follow Lok Sabha Elections 2024 Phase 2 Voting Live updates.

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indian Hotels CEO says these three growth drivers are yet to kick in

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Puneet Chhatwal, the MD and CEO of Indian Hotels Company (IHCL) is confident that the company will continue to post solid growth as demand continues to outpace supply, and three growth drivers are yet to kick in fully.

First, the foreign tourist arrivals is at an all-time low compared to pre-COVID levels. “I think there is some movement expected to happen there which will help our palaces and our iconic asset portfolio.”

Second, the performance in the US market is also below pre-COVID levels. The Tata Group hospitality firm has already started initiatives aimed at boosting its presence and performance there.

Third, Indian Hotels plans to open over 100 new hotels in the next three to four years. “This will really help because of the balance that we have created in capital heavy and capital light businesses.”

The Mumbai-based company aims to open 25 new properties in the new financial year (FY25). Including the Tree of Life properties, the total will rise to 34.

In February this year, IHCL announced a strategic partnership with Tree of Life Resorts and Hotels, now owned by the Ambuja Neotia Group. The collaboration allows IHCL to use its marketing and distribution network for Tree of Life’s 14 resorts nationwide.

Tree of Life, established in 2009, manages boutique hotels in various destinations, such as Mussoorie, Dared, Naggar, Udaipurwati, Kumaon, Binsar, and more. Situated away from city centres, these resorts offer guests a luxurious and exclusive retreat, providing opportunities to connect with nature and local culture.

“We are not into cost cutting. We are spending, we are supporting our new businesses, and we are looking at 30% plus compound annual growth rate (CAGR) on our new businesses, which requires more advertising, which requires more websites, which requires more, more people,” he said.

He also discussed the company’s strategy to capitalise on the new types of tourism–spiritual, medical, premium or luxury– which have started gathering steam.

Also Read | UBS sees an 18% upside in Indian Hotels on opportunities to accelerate revenue, profits

“We have been in Banaras, and we are doubling the size of the Taj Ganges because the demand level is so high. We have added a second hotel in Tirupathi, we have two hotels in Katra. We are in 50 plus spiritual destinations with 60 plus hotels,” Chhatwal added.

Another key driver of growth that the company is well positioned to capture, he noted, was destination weddings.

On April 24, IHCL reported a 29% year-on-year (YoY) increase in net profit at ₹438 crore for the January to March quarter.

Also Read | Indian Hotels Q4 | Tata Group firm declares dividend of Rs 1.75 per share, net profit surges 29%

The market capitalisation of Indian Hotels is around ₹82,708.53 crore. Its shares have gained close to 71.42% in the past year.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Arvind Sanger’s view on Kotak Mahindra Bank after RBI action

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Arvind Sanger, Managing Partner of Geosphere Capital Management believes that a meaningful pullback in the Kotak Mahindra Bank stock would be a buying opportunity, although it might face challenges for some time.

“It (Kotak) is not a stock that we are currently involved in, but if the stock gets punished too much, we would be interested because this is a high-quality franchise, this will be a bit of an impediment in terms of short-term growth. So short-term growth may suffer, but any meaningful pullback for a high-quality bank like this would at some point be a buying opportunity,” Sanger told CNBC-TV18.

On Wednesday, April 24, the Reserve Bank of India (RBI) ordered the private lender to halt new customer acquisitions through online and mobile banking channels and stop issuing new credit cards, citing concerns over compliance and risk management.

The Kotak Mahindra Bank stock crashed 10% today (April 26), its biggest single-day drop since March 23, 2020, hitting a 52-week low. It shed nearly ₹30,000 crore in market capitalisation.

Also Read | RBI bars Kotak Bank from onboarding new online customers, issuing new credit cards

Sanger prefers high-quality private banks as he believes that for a sustained economic cycle, private sector banks in the country will have to be at the forefront in terms of driving the financing needed for the growth.

However, he also advises being careful and flexible when investing, especially with the changes brought by artificial intelligence (AI).

Also Read | Kotak Mahindra Bank to see de-rating post RBI action? Here’s what analysts said

In the tech space, Sanger finds it difficult to figure out which companies will succeed.

He believes that many IT companies catering to the general public will struggle due to AI advancements in the next couple of years.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tejas Networks expects substantial benefits from PLI scheme over the next four years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Tata Group company Tejas Networks, on April 23, reported its first profit in five quarters, at ₹147 crore.

In a post-result interaction with CNBC-TV18, Anand Athreya, MD & CEO and Arnob Roy, COO & ED of the company that designs and makes products for wireless networking talked about the company’s strategy for the future.

Roy pointed out how the company benefits from the government’s focus on producing goods within the country and the production-linked incentive (PLI) scheme.

Read the verbatim transcript of the interview below:

Q: What are you expecting to do in FY25?

Athreya: It has been a good quarter and a good year, and it has been the best quarter ever for Tejas and a profitable one too. Yes, we have strong revenue across all of our products and the pipeline is healthy. We do not give guidance on where we are going to end up, but we are insanely focused on execution and building the pipeline.

Q: Is FY25 going to be a transformational year where the topline grows in multiple?

Athreya: We have a healthy order book already in the back, and we are continuing to execute flawlessly. So, the result will take care of itself. .

Also Read | Tejas Networks shares jump 40% in two sessions to a record high post Q4 profit

Q: To understand a bit about the businesses on the international front, the growth has been at a slower pace. So, when do you see it pick up? Also, if you look at the government-led business, and the private-led business, can you give us some updates on what the growth could look like in FY25?

Athreya: We do not give guidance on growth, but all we can say is we are investing well to grow the international markets, which means we are investing in sales, partnerships, and other relationships. As we announced recently, we signed an MoU with Telecom Egypt. So, we would like to expand internationally. We intend to grow on all fronts, and we will make that investment to get there.

Q: What the impact of the PLI would be and the manufacturing of telecom equipment? What is the kind of opportunity that you see because of the replacement since so many are reducing Chinese equipment? What is the kind of opportunity that you see for your own business?

Roy: I think that is a big opportunity in terms of replacing with what we call trusted equipment, that opportunity, both not only in India, but in a lot of the foreign markets as well where those opportunities are there, and we are targeting all of that because products from India and internationally also are considered as trusted, reliable equipment kind of thing. So, yes, there is a significant opportunity for us. As regards PLI, I think PLI is a really good incentive for manufacturing investments, and we have been one of the applicants who have been approved. Our applications for FY23 as well as for FY24 have been approved and it’s for 5 years from FY23. So, for the next four years, we see a significant impact and value coming out of this PLI scheme, which is connected to not only our investments in manufacturing but also to the revenue growth that comes out of it.

For more details, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Consumer CEO discusses revenue targets, new businesses, and more | Q&A

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Sunil D’Souza, MD & CEO of Tata Consumer Products, says the integration of the two recently-acquired businesses, Organic India and Capital Foods, is on track. “Generating value out of that is priority number one.”

In a conversation with CNBC-TV18 following the company’s fourth quarter results, D’Souza talked about the company’s strict nutrition policy and top-notch product quality.

He also outlined the segment-wise revenue targets for the current financial year (April to March 2024-25).

Below is the verbatim transcript of the interview:

Q: What is the key guidance for FY25 and the scalability of the acquisitions etc?

A: Coming specifically to our targets for next year, the single biggest important objective is we have done two acquisitions. One, we closed during the last financial year and the other we closed just this month, which is Organic India. Integrating them, we have said that we will integrate it in 100 days, and that is on track. Capital Foods’ frontend-backend is done and now it is for value creation. Organic India, we are starting on the frontend-backends. Again, we will complete the whole integration in 100 days. Generating value out of that is priority number one. Priority number two would be jump-shifting the volume growth in India, specifically, focusing on beverages.

Salt, we have always maintained, that about 5% will be the secular long-term growth in volume, we are at four. So almost there. The growth businesses, we have said now with Capital Foods, and Organic coming in would be 30% of the portfolio, delivering a 30% growth, I think focusing on that. We have said 15% EBITDA (earnings before interest, tax, depreciation, and amortisation) is par now, and we have got to improve from there.

We have got to continue to improve our working capital days, we have said double-digit topline growth and EBITDA ahead of the topline. RoC last year was a very pleasing figure. Last quarter, we upped by 380 bps. Continuing to work on that number. Most importantly, continuing to fuel all the pieces that will drive growth, advertising and promotion, innovation, distribution, and most importantly building out that talent for the next leap forward.

Q: So, let’s get a little more specific about the numbers. You said double-digit revenue growth is what you are targeting. If you could tell us what does that mean? Is it mid-teens, low teens, low double-digit, or above 20% sort of growth that you are targeting? If you could break that up for both India as well as international and in India as well, what would beverages grow at, and what would food grow at?

A: So, beverages, if I take the base core business, volume at about mid-single digits, a couple of basis points on value. Similarly for salt, mid-single digits, and a couple of points on value. The growth businesses, which now account for 30% of India growing at 30%, would be the guidance. And our international businesses, we said mid to high single-digit growth while continuing to deliver top-notch margins. That would be broadly what we would look at.

Q: On international, what kind of margins are sustainable over the next year? And you said 15% is your benchmark for the entire year. Last quarter, you did about 16.1%. So, should we see an improvement of upwards of 16% in FY25 given the scale-up of your acquisitions too?

A: For the full year we have delivered 15.3%, I would target upward revision from 15.3 for the full year. There will be a little bit of ups and downs, but broadly we are very confident that 15.3 is the base now and we will continue to improve from there.

Also Read | Tata Consumer Products Q4 Results | Net profit dips 22.5%, misses estimates

Q: Let’s talk about Capital Foods. The two months that were integrated in this financial year did about ₹80-85 crore of revenue. If we were to look at it being now available in 95% of your overall distribution chain, it amounts to about ₹100-120 crore per month in terms of revenue. So, are those targets that you are looking for in FY25 when it comes to Capital Foods, around ₹1,000-1,200 crore on the topline? For Organic, what is the revenue target for this year?

A: For Capital Foods, we have delivered about ₹85 crore of topline for the first two months, but you have to also remember that for the first two months, there was a lot of integration work in process. We re-indexed a lot of channel inventory, we restructured a lot of systems and processes out there. Now going forward, as I said the focus will be on value creation, distribution, expansion, fueling, advertising and most importantly, they have got to one very strong brand and one decently strong brand – Ching’s Secret is strong and Smith & Jones, we have got to polish it a bit. However, a good innovation pipeline for both of these expands the innovation pipeline. On the Organic India piece, the critical piece, as I said was only 24,000 outlets; getting it to our distributors, work has already started, expanding the distribution and jump-shifting the topline. I think those would be the big focuses.

Q: If around ₹1,200 crore, which is about ₹100 crore per month possible for Capital Foods in FY25 and what is the aspirational revenue target for Organic in FY25?

A: I think about ₹650-700 crore is where Capital Foods ended for the last year given all the upheavals of the fact that they were in the market for a long time and then we had a lot of channel correction, etc. I would say significant double-digit growth on Capital Foods is what we would be targeting. Organic India, including international delivered about ₹350 crore of revenue. Again, a substantial double-digit increase from there is what we are targeting.

And you are right. When these two businesses come in our percentage, EBITDA margins should improve significantly. Capital Foods, already in the first two months we are seeing gross margins, more or less where we expected them, which is a significant increase to what we have on our portfolio. Organic India goes one step further, especially with a supplement portfolio etc.

Q: When we spoke around the same time last year, you had given a guidance of ₹1,000 crore for FY24 for NourishCo because of seasonal issues, etc. You are short of that, at around ₹825. What is the realistic target for NourishCo in FY25?

A: NourishCo remains on a very strong wicket. We have added about 50% more outlets from where we started for the year. Our innovation is now 20% of their revenue. We had guided for ₹900-1000 crore for the year but ultimately fell a little bit short because it is a very anecdotal piece in India/ Especially in the north, summer starts when Holi starts and Holi was about 20 days behind where it was last year, and this will be a good summer so far. So, I would expect topline growth to be significant; 30% plus would be the guidance for us going forward.

Q: For Starbucks, the fourth quarter growth was at 7% versus the full-year growth of 12%. Are you expecting it to pick up at some point?

A: If you look at the QSR (quick service restaurant) space in India, it runs through a slightly rough patch in Q3-Q4. Overall traffic has been the issue not as much as the average ticket. But we remain focused on the longer-term opportunity for Starbucks in India. Yes, overall, revenue growth was a bit tepid, but the good part is that March was better than February in terms of traffic in outlets and April so far has been better than March. So, we remain confident that this business will come back.

Q: With 1,000 stores by the end of FY28, would it make sense to list Tata Starbucks separately outside of TCPL?

A: Right now, our task is cut out to deliver those 1,000 stores by FY28 and a profitable business at that. We remain focused on that. We will make decisions on what we want to do in the long term at a later point in time.

Q: We have seen a lot more news around spices. Food regulators coming in for prepared dishes, etc., the quantum of sugar. Would you have any comment on this to make from where you stand at the portfolio level? Would there be a risk for some of your products on this as well?

A: A couple of points on that. As the economy develops and consumers become more aware, we would expect regulatory standards to go up. So, it’s no surprise that it is starting to pick up. Second, we are a Tata company, we are very clear that we will follow regulations. Most importantly, we have set ourselves a clear nutritional policy in all our products, making sure that what we offer to consumers is in line with long-term aspirations while making sure that our quality standards are top-notch. Tata name denotes trust, and we will deliver that trust to consumers.

For more details, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Vinit Sambre advises caution with midcaps and smallcaps

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Vinit Sambre, Head of Equities at DSP Mutual Fund advises caution while investing in midcaps and small caps. “Our advice to investors has been that if one has to allocate in terms of the asset allocation, it has to be through the SIP (systematic investment plan) route.”

He noted that the mid and small companies have growth their earnings at a compounded annual growth rate (CAGR) of roughly 20% over the last five years, excluding the Covid period, and this has reflected in their stock prices.

Also Read: This mutual fund has turned ₹10,000 SIP into ₹5.34 crore in 19 years

Sambre expects the earnings growth to slow down over the next year.

“I would say that we are at a high point in the valuations. There is some bit of consolidation or moderation in the earnings likely over the next one year or so. And hence it makes a case to be slightly more conservative as far as a large allocation is concerned. Maybe an SIP is a better way to approach this segment, ” he said.

Sambre also shared his views on various sectors.

In the auto space, he recommends focusing on the ancillary space.

Within the auto ancillary sector, he advises focusing on companies that supply components for various types of vehicles, including electric vehicles as well as internal combustion engines (ICEs).

When it comes to electric vehicles (EVs), the level of acceptance has been lower than expected both in India and globally. Therefore, he says, there is a possibility of misjudging the investment timing. That’s an important point to consider.

Also Read | Exide Industries shares jump over 16% in their biggest single day gain since June 2006; Here’s why

Sambre believes the telecom industry has been resurgent. The rising average revenue per user (ARPU) is a positive.

Also Read | Vodafone Idea shares surge over 14% after strong FPO subscription; Here’s what it means

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Emerging markets expert Geoffrey Dennis optimistic about India despite expected pullbacks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Geoffrey Dennis, an Independent Emerging Markets Commentator, is positive on the Indian market, even though he thinks there might be some setbacks along the way.

He says India is still the most exciting opportunity among all the developing countries.

“I am bullish about India but will have pullbacks and we are still at the mercy of the Federal Reserve. But assuming that narrative of mind plays out with rate cuts in the second half of the year, you have got to buy any decent sell-off that you have, and I think will go higher over the rest of the year,” he said.

Also Read | CLSA India expects first US Fed rate cut in November

Dennis expects two rate cuts by the US Federal Reserve this year; first in July, well before the election and the second in December, after the election.

The persistently higher than projected inflation figures in the US have prompted experts to reassess their forecasts. Many now anticipate fewer rate cuts from the Fed this year, down from the previously expected 5-6 cuts, or even no rate cuts at all.

Brokerage firm CLSA, for instance, now expects the first rate cut in November.

James Knightley, Chief International Economist at ING also recently mentioned that any expectations for a rate cut in June have been dashed. Now, they are considering September as the earliest opportunity for a rate cut.

However, Ed Yardeni of Yardeni Research does not foresee any cuts this year.

For more details, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CP Gurnani teases exciting developments following collaboration with Rahul Bhatia for new AI venture

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Rahul Bhatia, the Group Managing Director of InterGlobe, and CP Gurnani, Chairman of Assago Group and former MD & CEO of Tech Mahindra, have teamed up to delve into the world of technology through Artificial Intelligence and launched a joint venture firm, AIonOS. In a CNBC-TV18 interview, they discussed extensively about AI implementation and transformation.

Below is an edited transcript of the interview:

Q: How did this partnership come about?

Bhatia: I have known CP for a long time, and I knew he was coming off his obligations at Tech Mahindra. We were having this conversation about trying to team up together. We used to have a technology business which we had sold in 2018. We wanted to go back into the space. But obviously, we were looking for the right sort of partnership. And here we are.

Q: How do you differentiate this venture from what is around us at this point in the IT sector?

Gurnani: I was always a corporate entrepreneur. I did create ventures, and I did scale up ventures, but it was never where I was responsible for contributing right from day zero. So, I said now I need to become an entrepreneur myself. That was my first driver. The second driver was we built a great industry… we deliver global-scale products, and we do global-scale customer work. But more often than not we are dependent on products and platforms, which have not been made in India. Why is it that we cannot create a software-as-a-service (SaaS) venture that addresses the global market? I am not saying it has never been done, but it is more than when I started researching the subject and thanks to my knowing Rahul Bhatia, it was very clear that travel, transformation, logistics and hospitality (TTLH) is a market which probably can benefit from new intervention.

Also Read | IndiGo’s Rahul Bhatia and former Tech Mahindra CEO CP Gurnani join hands for an AI venture

Q: Do you already have clients on board?

Gurnani: A few clients with whom we are doing proofs of concept. The reason is that a product takes a little longer to evolve and build, but when you are trying to integrate products and improve a particular process, thanks to artificial intelligence (AI), I think it is easier to do proofs of concept. So, our current boardroom conversations are – a) sharing the vision of the products and b) what and how soon can we show you what AI will be able to do for your businesses.

Q: How long will it take for you to be able to deliver on the promise that you are holding up?

Gurnani: I left Tech Mahindra on December 19 (2023) and since then most of the days when we have been working together, listening to the customers, talking to the prospects, and building teams. Over the next one year, you will see a lot of good announcements. This is just the beginning.

Q: What is the kind of capital that you are putting into this business as it gets started?

Bhatia: Without going into the numbers, we are well-funded for several years to come. We will see how things go.

Q: What are the pain points that you hope to address? What are the big challenges you face within each of these industries that you hope to solve?

Gurnani: The best part of these few months is listening to the customers, listening to some of the young startups and also talking to some of the large hyper scalers because all of us are trying to solve some of the challenges. So, let’s take this example, you go to the airport, I go to the airport, we use Digi Yatra, but it does not connect to the last gate; somewhere there is an integration challenge, somewhere there is a data sharing challenge, somewhere there is a work to be done between three or four different applications that the airline or the aircraft is using. It’s a beautiful product. It’s just that it requires a little more interfaces and products.

For the full interview, watch the accompanying video.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow