Reliance Industries Q2 FY26 Results: Net Profit Rises 10% YoY to Rs 18,165 Crore

Reliance Industries Q2 FY26 Results: Net Profit Climbs 10% YoY to Rs 18,165 Crore, Revenue Up 10%

Reliance Industries Limited (RIL), led by Mukesh Ambani, announced a strong performance for the second quarter of FY26, reporting a 10% year-on-year (YoY) increase in consolidated net profit to Rs 18,165 crore compared to Rs 16,563 crore in the same quarter last year. The growth reflects steady performance across key business segments including telecom, retail, and energy.

Key Financial Highlights

• Revenue from operations: Rs 2.59 lakh crore, up 10% YoY from Rs 2.35 lakh crore.
• Gross revenue: Rs 2.83 lakh crore, reflecting a 10% rise YoY.
• EBITDA: Rs 50,367 crore, up 15% YoY with margins improving by 80 basis points to 17.8%.
• Sequential performance: PAT declined 33% from Rs 26,994 crore in Q1 FY26, while revenue grew 4% quarter-on-quarter.

While the profit after tax slightly missed analyst estimates of Rs 18,643 crore, the revenue performance surpassed market expectations of Rs 2.51 lakh crore, driven by broad-based growth across business divisions.

Segment-Wise Performance

Jio Platforms

Jio Platforms Limited (JPL) reported a 14.9% YoY growth in revenue, driven by strong subscriber additions in both mobility and home broadband segments. Continued improvement in ARPU (average revenue per user) and expansion of digital services contributed to the growth. JPL’s EBITDA surged 17.7% YoY on account of revenue gains and a 140 bps increase in operating margin.

Reliance Retail

Reliance Retail Ventures Limited (RRVL) recorded an impressive 18% YoY rise in revenue, supported by double-digit growth across grocery, fashion, and electronics. Grocery and fashion segments led the performance with 23% and 22% growth, respectively. The electronics business also expanded 18% YoY, aided by new product launches and tax rate benefits. RRVL’s EBITDA grew 16.5% YoY due to higher footfall, expansion of store networks, and operational efficiencies.

Oil-to-Chemicals (O2C)

The O2C division posted a 3.2% YoY increase in revenue, supported by a 2.3% rise in production for sale and robust domestic fuel demand. The segment’s EBITDA jumped 20.9% YoY owing to stronger transportation fuel margins and stable domestic volume growth. However, weakness in polyester chain margins slightly offset the gains from higher polymer deltas.

Oil & Gas

The Oil & Gas segment saw a 2.6% YoY decline in revenue, primarily due to lower production in the KG-D6 block and reduced condensate prices. Despite this, higher gas price realization and increased CBM volumes provided some support. Segment EBITDA dropped 5.4% YoY owing to lower production and higher maintenance-related costs.

Finance, Tax, and Capital Expenditure

RIL’s finance costs rose 13.5% YoY to Rs 6,827 crore, largely due to the capitalization of 5G spectrum assets and higher debt balances. Tax expenses were up 17.6% YoY to Rs 6,978 crore. The company reported total PAT and share of profit from associates and joint ventures at Rs 22,092 crore, marking a 14.3% YoY growth.

Capital expenditure during the quarter stood at Rs 40,010 crore, primarily directed toward expanding O2C capacity, enhancing Jio’s telecom and digital infrastructure, retail expansion, and establishing new energy giga factories.

Management Commentary

Chairman and Managing Director Mukesh D. Ambani highlighted that the company’s Q2 performance demonstrated resilience and diversified strength across businesses. “Our consolidated EBITDA grew 14.6% YoY, reflecting the agility of operations and the underlying structural growth of the Indian economy,” he said.

Ambani added that Jio’s continued network leadership and rollout of stand-alone 5G have fueled growth in broadband and mobility services. The retail business, supported by GST reforms, saw higher consumer spending across categories. He also emphasized that RIL’s upcoming ventures in new energy, media, and consumer brands are set to drive the next phase of growth for the conglomerate.

Overall, Reliance Industries delivered another robust quarter, supported by strength across digital, retail, and O2C businesses, despite global challenges in the energy and commodity markets.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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Supreme Court Rejects Roche's Plea Against Natco's Generic Risdiplam

Supreme Court Rejects Roche's Plea Against Natco's Generic Risdiplam: Major Win for Patient Access

The Supreme Court has rejected pharmaceutical giant Roche's request to restrain Natco Pharma from selling a generic version of Risdiplam, a life-saving spinal muscular atrophy treatment. The landmark decision upholds previous lower court rulings prioritizing patient access to affordable medicines over patent exclusivity, reigniting debate about balancing intellectual property protection with public health imperatives in India.

Supreme Court's Landmark Decision

A bench of Justices P.S. Narasimha and A.S. Chandurkar declined to interfere with an October 9 Delhi High Court division bench ruling that had previously denied Roche's injunction request. The Supreme Court found the lower court's findings and reasoning sound, stating that it was "not inclined to interfere with the order passed by the high court for the reason that it is interim in nature and the findings are concurrent."

The Court also rejected Roche's request to bar Natco from exporting the generic drug, though it directed the Delhi High Court to expedite final proceedings on the case merits.

Roche's Response and Disappointment

Roche responded to the Supreme Court's decision with a formal statement expressing disappointment. The Swiss pharmaceutical company stated: "We are extremely disappointed with the Supreme Court's decision to dismiss our plea concerning the Risdiplam preliminary injunction."

The company emphasized its position that strong intellectual property protection is essential for innovation. Roche argued: "Strong IP protection, including patents, is the cornerstone for any innovation to thrive and address critical healthcare challenges. For India to truly emerge as a global life science innovation hub, it must protect and enforce the integrity of IP."

However, Roche declined to specify its next steps or whether it would pursue additional legal remedies.

Natco's Perspective on the Victory

In an exchange filing, Natco stated that the Supreme Court's dismissal of Roche's interim pleas represents a conclusive victory at the preliminary stage. Natco noted: "Having the benefit of the two successive orders, the Supreme Court was not inclined to interfere, therefore dismissed the petition."

The company added: "This marks the final challenge Roche could have posed at the interim stage in the suit, which shall now proceed for trial in accordance with the law."

The Background Dispute

Patent and Evergreening Allegations

Roche initiated legal action against Natco in early 2024 after discovering the Hyderabad-based company's plans to launch a lower-cost generic version of Risdiplam. Roche holds an Indian patent for Risdiplam valid from May 2015 to May 2035, claiming the molecule represents a new chemical entity distinct from earlier patents.

Natco contested Roche's patent, alleging that the company was engaging in "evergreening"—a practice of filing narrowly defined patents with limited novelty to extend monopoly protection beyond the original patent term. Natco contended that Roche's earlier patent already covered similar compounds and that the company had failed to demonstrate substantial technical advancement warranting a separate patent.

The Disease and Market Need

Risdiplam treats spinal muscular atrophy, a rare genetic disorder causing progressive muscle weakness and loss of motor function. SMA is estimated to affect one in 7,744 live births in India and represents a leading genetic cause of infant mortality. The central government has estimated that annual treatment costs for SMA patients could range between ₹6,400 crore and ₹34,000 crore.

Lower Court Rulings Supporting Natco

Both the single-judge bench and division bench of the Delhi High Court sided with Natco's position. Key findings included:

• Patent Validity: Roche's earlier patent already covered similar compounds
• Lack of Novelty: Insufficient technical advancement demonstrated for the contested patent
• Public Interest: Access to affordable life-saving medicine outweighs patent exclusivity
• Patient Impact: Substantial evidence presented by SMA patients regarding inability to afford treatment

The courts emphasized that public interest in ensuring affordable access to critical medicines can override patent protections in specific circumstances.

Dramatic Price Reduction for Patients

Following the Delhi High Court's division bench decision, Natco immediately launched its generic version at dramatically reduced pricing:

• Natco Generic Price: ₹15,900 for 60 mg/80 ml bottle
• Roche Brand Price: Over ₹6,00,000 for equivalent packaging
• Price Reduction: Approximately 97% reduction from branded price
• Additional Discounts: Natco announced supplementary discounts through patient access programs

This dramatic price reduction makes treatment accessible to thousands of patients previously unable to afford the branded medication.

Patient Access Impact

Since Roche launched Evrysdi in India in 2021, approximately 300 patients have received treatment. Of these, 52 patients benefited from free access through Roche's compassionate-use program. The availability of generic alternatives at affordable pricing is expected to dramatically expand access to treatment.

Roche's Legal Arguments

Senior advocate Neeraj Kishan Kaul, representing Roche before the Supreme Court, argued that public interest considerations cannot override patent rights. Kaul stated: "We have cooperated, given millions of drugs free, and participated in the national drug policy of the Government of India. But after spending millions, it is very easy to bring in the public interest element."

Kaul urged the court to at minimum require proper accounting of generic drug sales and prevent export of the medication during proceedings. The court did not accede to these requests.

Broader Implications for IP Rights and Public Health

The Supreme Court's decision has reignited fundamental debate over balancing intellectual property protection with public health imperatives in India. The case raises several important considerations:

Patent Protection and Innovation

Pharmaceutical companies argue that strong patent enforcement is essential for motivating research and development investments in new therapies. Roche's position emphasizes that weakening IP protection could discourage global pharmaceutical companies from introducing or investing in new treatments in India.

Public Health Access

Patient advocates emphasize that patent protections should not prevent access to life-saving medications for economically disadvantaged populations. The courts' recognition of public interest in affordable medicine reflects this perspective.

Compulsory Licensing Framework

While India's patent laws provide for compulsory licensing in public health emergencies, experts have noted that relying on broad judicial interpretations of "public interest" could create uncertainty for innovators. The question of when public health justifies overriding patent rights remains contested.

Legal Expert Perspectives

Legal analysts have highlighted conflicting concerns raised by this decision:

Support for Patient Access

Many acknowledge that Natco's ability to bring a generic version represents a major victory for Indian patients, potentially making treatment accessible to thousands who previously faced prohibitive costs.

Concerns About Innovation Incentives

Some legal experts caution that unpredictable patent enforcement due to broad "public interest" interpretations may discourage global pharmaceutical companies from introducing new therapies in India. Pharmaceutical firms might prioritize markets with clearer IP protections, potentially reducing treatment options for Indian patients overall.

India's Patent Law Framework

The case illustrates tensions within India's patent legal framework:

• Patent Protection: Laws provide substantial IP protections encouraging innovation
• Compulsory Licensing: Provisions allow public health exceptions in emergencies
• Evergreening Concerns: Concerns about extending monopolies through incremental innovations
• Public Interest: Courts' discretion to prioritize affordable medicine access

Path Forward for the Case

With all interim pleas rejected, the case will proceed to a single bench of the Delhi High Court for final determination on the merits. Key issues for resolution include:

• Final validity of Roche's patent for Risdiplam
• Whether Natco's generic version infringes any valid patent
• Appropriate remedies if infringement is established
• Potential damages assessments

International Context

This case reflects India's position as a critical player in global pharmaceutical debates. India's decisions on patent enforcement and public health balancing influence:

• Global pharmaceutical investment patterns
• Access to medicines for developing countries
• International standards on IP rights versus public health
• Precedents for other emerging market patent disputes

Investment and Industry Implications

The Supreme Court's ruling carries implications for pharmaceutical companies and investors:

For Global Pharma Companies

• Increased uncertainty regarding patent enforcement in India
• Potential reconsideration of drug launch decisions for India
• Greater scrutiny of patent strategy and evergreening allegations
• Need for careful valuation of Indian market opportunity

For Indian Pharma Companies

• Expanded opportunities to manufacture generic versions
• Reduced risk of injunctions restraining generic launches
• Potential for significant business growth in therapeutic areas
• Ability to address public health needs cost-effectively

Conclusion

The Supreme Court's rejection of Roche's interim pleas represents a significant victory for patient access to affordable medicines in India. The decision validates lower courts' findings that public interest in accessing life-saving treatment can outweigh patent exclusivity protections in appropriate circumstances.

The ruling enables Natco to provide Risdiplam at a fraction of the branded price, potentially treating thousands of spinal muscular atrophy patients previously unable to afford expensive branded therapy. However, the decision raises legitimate concerns about impacts on pharmaceutical innovation and investment in India.

The case exemplifies the complex balance between protecting intellectual property rights that encourage research and development, and ensuring that critical medicines remain accessible to economically disadvantaged populations. As the case proceeds to final hearing, courts will continue grappling with these fundamental tensions between IP protection and public health imperatives in emerging markets.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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Lenskart Accelerates Expansion to 450 Stores as $10 Billion IPO Approaches

Lenskart Accelerates Store Expansion to 450 Units as $10 Billion IPO Approaches

Eyewear retailer Lenskart plans to add 450 stores during the current financial year, marking its fastest expansion in three years as the company prepares for a landmark initial public offering. The aggressive expansion strategy would increase Lenskart's total store network to more than 3,150 outlets across 14 countries, representing a 34% rise from the 334 stores opened last year.

IPO Timeline and Valuation

Lenskart expects to complete its public listing before November 12, according to people familiar with the matter. The company aims to raise as much as ₹8,000 crore ($900 million) through the IPO, positioning it as one of India's top-five public offerings this year.

Industry sources have estimated Lenskart's valuation between $8 billion and $10 billion, reflecting strong investor demand for exposure to India's eyewear and retail sector. When contacted, Lenskart declined official comment on IPO specifics.

SEBI Regulatory Approval

The Securities and Exchange Board of India has cleared Lenskart's IPO, approving a primary fundraise of ₹2,150 crore through new share issuance. The offering comprises:

• New Shares: ₹2,150 crore primary capital raise
• Secondary Sales: Up to 132.3 million existing shares from current investors and founders

This structure allows major investors to partially exit while enabling the company to raise fresh capital for expansion and strategic initiatives.

Selling Shareholders and Investor Returns

Among notable selling shareholders are co-founders Peyush Bansal, Neha Bansal, Amit Chaudhary, and Sumeet Kapahi, alongside major investors including:

• SoftBank Vision Fund II
• Schroders Capital Private Equity Asia
• PI Opportunities Fund-II
• Macritchie Investments
• Kedaara Capital
• Alpha Wave Ventures

Major investors including Kedaara, Chiratae Ventures, Ronnie Screwvala's Unilazer Ventures, and KKR are expected to realize significant returns through the IPO process. Notably, Lenskart has already delivered substantial returns to private investors through a $500 million funding round led by Abu Dhabi Investment Authority primarily via secondary share transactions.

Bulge-bracket investors such as SoftBank and ADIA are expected to maintain significant holdings post-listing, indicating continued confidence in the company's growth trajectory.

IPO Fund Utilization Strategy

Lenskart has articulated clear strategic uses for IPO proceeds:

Retail Expansion

• Capital expenditure for establishing company-owned, company-operated (CoCo) stores in India
• Payments for store leases, rent, and licenses
• Infrastructure development supporting retail network growth

Technology and Infrastructure

• Cloud infrastructure investments
• Technology platform upgrades
• AI and digital capability enhancement

Brand and Marketing

• Brand marketing and promotional campaigns
• Business development initiatives
• Market expansion support

Strategic Acquisitions and Corporate Uses

• Potential inorganic growth opportunities
• General corporate purposes
• Working capital requirements

Strong Financial Performance

Revenue Growth

Lenskart demonstrated robust topline expansion in FY25:

• FY25 Revenue: ₹6,652.5 crore
• FY24 Revenue: ₹5,427.7 crore
• Year-on-Year Growth: 22.5%

The sustained revenue growth reflects increasing consumer adoption of eyewear products and successful digital-to-physical distribution expansion.

Profitability Turnaround

A notable highlight is Lenskart's shift to profitability:

• FY25 Net Profit: ₹297.34 crore
• FY24 Net Loss: ₹10.15 crore

The impressive turnaround from marginal losses to significant profits demonstrates improving operational efficiency and unit economics maturation.

EBITDA Performance

Earnings before interest, tax, depreciation, and amortisation excluding other income reached:

• FY25 EBITDA: ₹971 crore
• FY24 EBITDA: ₹672 crore
• Growth Rate: 44.5%

The EBITDA growth rate exceeding revenue growth indicates improving operational margins and business model scalability.

Market Opportunity and Vision Correction Gap

Lenskart operates in a market with substantial untapped demand. By 2030, nearly one billion people in India are projected to require vision correction, yet fewer than 40% are expected to wear prescription glasses.

This significant gap between need and adoption presents a structural growth opportunity. Lenskart's direct-to-consumer focus combined with early investments in AI-led eye tests positions the company to capture incremental demand as vision care awareness and accessibility improve.

Digital Reach and User Engagement

Lenskart has built substantial digital presence reflecting market leadership:

• Mobile App Downloads: Over 100 million globally in FY25
• Website Visitors: 105 million visitors globally
• Strong user engagement metrics supporting online-to-offline integration

These digital metrics demonstrate successful brand building and consumer preference for Lenskart's platform for eyewear purchases.

Competitive Positioning

Lenskart competes with both traditional and modern eyewear retailers including Titan Eyeplus, Specsmakers, Vision Express, Warby Parker, and Italian giant Luxottica Group. The company's competitive advantages include:

• Retail Scale: India's largest eyewear retail network
• Digital Integration: Seamless online-to-offline experience
• Tech Innovation: AI-powered eye tests and smart eyewear
• Manufacturing: In-house production capability
• Distribution: Extensive supply chain network across regions

Company History and Growth Trajectory

Lenskart's journey from startup to pre-IPO scale demonstrates sustained execution:

• Founded: 2008
• Online Launch: 2010
• First Retail Store: 2013 in New Delhi
• Current Status: 3,150+ stores across 14 countries

The company operates manufacturing facilities in Bhiwadi with another under development in Telangana, supported by regional hubs in Singapore and the UAE.

Smart Eyewear and Technology Innovation

Lenskart is expanding beyond traditional eyewear into technology-enabled products:

Ajna Lens Investment

In July, Lenskart invested in Mumbai-based Ajna Lens, a deep-tech startup specializing in extended reality and AI-powered wearable technology. Though the deal value remains undisclosed, it represents Lenskart's first major commitment to AI-enabled smart glasses development.

B Camera Smartglasses Features

Lenskart's smart eyewear platform includes innovative payment capabilities. The company unveiled a new feature enabling direct Unified Payments Interface transactions through smartglasses—users can complete payments by scanning QR codes without requiring a mobile phone or PIN entry.

This technology advancement positions Lenskart at the forefront of smart eyewear innovation, potentially creating differentiated customer value propositions.

Store Expansion Strategy Details

The planned addition of 450 stores represents aggressive growth with specific characteristics:

• Number: 450 new stores in FY26
• Pace: Fastest expansion in three years
• Target Network Size: 3,150+ total outlets
• Geographic Reach: 14 countries across multiple regions
• Market Focus: Both metros and smaller cities for penetration

This expansion strategy aims to increase market accessibility and capture consumers in underserved geographies.

Market Structure and Competition Opportunity

India's eyewear market presents significant fragmentation and opportunity:

• Total Eyewear Stores: Over 90,000 across India
• Market Access Challenge: Vision care remains inaccessible to large population segments
• Lenskart's Advantage: Tech-enabled supply and distribution network
• Competitive Differentiation: Scale, digital integration, and AI capabilities

The market structure suggests significant consolidation opportunity as organized players with capital and technology compete against fragmented traditional opticians.

Geographic Presence

Lenskart's international footprint demonstrates global ambitions:

• Primary Market: India (largest Asia market)
• Regional Presence: Southeast Asia
• Middle East: Growing presence in Gulf region
• Infrastructure: Regional hubs in Singapore and UAE

Investment Implications

For potential IPO investors, Lenskart presents several attractive characteristics:

• Profitable operations with strong growth trajectory
• Large addressable market with significant penetration gap
• Successful digital business model with strong user metrics
• Technology innovation positioning for future growth
• Experienced investor base with significant retained holdings
• Clear capital deployment strategy supporting continued expansion

Risk Factors

Investors should also consider potential challenges:

• Execution risk on aggressive 450-store expansion plan
• Capital intensity of retail expansion impacting returns
• Competition from established players and international brands
• Technology adoption risks in smart eyewear category
• Macroeconomic sensitivity affecting discretionary eyewear purchases
• International expansion complexity across diverse markets

Valuation Context

The estimated $8-10 billion valuation reflects strong market confidence but carries implications for IPO returns. Key metrics supporting valuation include:

• ₹6,652.5 crore FY25 revenue base
• 22.5% annual revenue growth
• Strong EBITDA margins and profitability
• Large market opportunity with low penetration
• Technology and innovation leadership

Conclusion

Lenskart's planned IPO before November 12 represents a significant milestone for India's retail and eyewear sector. The company's planned $900 million fundraise at an estimated $8-10 billion valuation reflects investor confidence in its business model, growth prospects, and market opportunity.

The aggressive 450-store expansion plan demonstrates management confidence in unit economics and market demand. Strong FY25 financial performance with 22.5% revenue growth and ₹297.34 crore profitability validates the business model scalability.

Technology investments in smart eyewear and AI-powered eye tests position Lenskart for long-term competitive advantage. With a significant vision correction gap in India and early-mover advantages, the company appears well-positioned to capture incremental market share as the organized eyewear retail sector consolidates.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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Zepto Raises $450 Million at $7 Billion Valuation; IPO Planned for 2026

Zepto Raises $450 Million at $7 Billion Valuation; IPO Planned for Next Year

Quick commerce startup Zepto has secured $450 million in a major funding round led by CalPERS, the California Public Employees' Retirement System, marking the U.S. pension fund's inaugural investment in the Indian logistics company. The round valued Zepto at $7 billion and included contributions from existing investors, positioning the company for its planned initial public offering next year.

Funding Round Details

The latest funding round comprised a combination of primary and secondary investments, demonstrating strong demand from institutional investors for exposure to India's fast-growing quick commerce sector. Besides CalPERS' leading participation, the round attracted existing backers including:

• Avenir
• Avra
• Lightspeed Venture Partners
• Glade Brook
• The Stepstone Group
• Nexus Venture Partners

The participation of CalPERS, one of the world's largest pension funds, provides significant validation of Zepto's business model and growth prospects. The investment demonstrates increasing appetite from major institutional players to gain exposure to India's e-commerce and logistics opportunities.

IPO Plans Accelerating

Following this funding round, Zepto has announced plans to pursue an initial public offering next year. The company's IPO trajectory reflects confidence in its business performance, market position, and ability to attract public market investors once it achieves profitability or demonstrates clear paths to sustainable unit economics.

The timing of the IPO announcement suggests Zepto management believes the company has reached sufficient scale and operational maturity to warrant entry into public markets, capitalizing on strong investor interest in India's technology and logistics sectors.

Impressive Growth Metrics

Co-founder and CEO Aadit Palicha highlighted Zepto's remarkable growth trajectory, demonstrating significant scaling of operations. The company has expanded daily order volumes substantially:

• Five Quarters Ago: Approximately 500,000 daily orders
• Current Period: 1.7 million daily orders

This near-quadrupling of daily order volumes within a five-quarter period underscores the velocity of quick commerce market adoption in India and Zepto's competitive execution in capturing market share. The company expects this growth momentum to continue through the coming quarters.

Recent Capital Raises

The CalPERS-led round follows closely on Zepto's earlier capital raising activity. The company recently secured Rs 400 crore (approximately $48 million) from Motilal Oswal Alternates as part of its ongoing capital expansion strategy ahead of the planned IPO.

This layered approach to fundraising demonstrates sustained investor confidence in Zepto and the company's success in securing capital at increasingly attractive valuations.

Total Capital Raised and Deployment

Since its inception, Zepto has raised a cumulative $2.3 billion, demonstrating its success in attracting venture capital across multiple funding rounds. The funding intensity reflects the competitive nature of India's quick commerce market and capital requirements for rapid scaling:

• Total Raised Since Inception: $2.3 billion
• Capital Raised Since January 2024: $1.8 billion

The accelerating fundraising pace over the past year underscores both market opportunity and capital intensity of building competitive quick commerce infrastructure at scale.

Financial Performance Trajectory

Revenue Growth

Zepto's revenue demonstrates strong topline expansion:

• FY23: Rs 2,026 crore
• FY24: Rs 4,454 crore (more than doubled year-on-year)
• FY25: Rs 11,110 crore ($1.3 billion)

The company's revenue has grown more than 5-fold over two years, reflecting rapid market expansion and increasing consumer adoption of quick commerce services.

Loss Trajectory and Path to Profitability

While revenue has expanded dramatically, losses have remained substantial though showing slight improvement:

• FY23 Losses: Approximately Rs 1,272 crore
• FY24 Losses: Rs 1,249 crore

The marginal loss improvement between fiscal years indicates the company is working toward operational efficiency, though significant losses persist. Zepto has not yet disclosed complete FY25 financial results, including profitability metrics.

Business Model Expansion

Beyond its core quick commerce grocery and food delivery operations, Zepto has strategically diversified into complementary categories to capture additional consumer spending:

Pharmacy Services Launch

Zepto Pharmacy represents a significant category expansion, positioning the company to compete with rivals including Swiggy Instamart, Blinkit, and Flipkart's Minutes. The pharmacy vertical capitalizes on:

• High-frequency delivery capabilities
• Established last-mile logistics infrastructure
• Consumer convenience preferences
• Growing telemedicine integration opportunities

Zepto Pharmacy has launched operations in select areas of major metropolitan markets including Mumbai, Bengaluru, Delhi NCR, and Hyderabad, allowing the company to test economics and refine operations before broader rollout.

Competitive Landscape Context

Zepto operates in an intensely competitive quick commerce market alongside well-funded rivals. The sector's major players include:

• Blinkit: Backed by Zomato and established quick commerce leader
• Swiggy Instamart: Leveraging Swiggy's existing customer base and logistics
• Flipkart Minutes: Utilizing Flipkart's retail infrastructure and customer relationships

Despite intense competition, Zepto has emerged as a significant player, reflected in its strong funding support and rapid growth metrics. The company's achievement of 1.7 million daily orders positions it as one of India's leading quick commerce platforms.

Valuation Analysis

The $7 billion valuation at the latest funding round reflects significant premium valuations typical of high-growth technology platforms in India. This valuation reflects:

• Rapid revenue growth exceeding 100% annually
• Large addressable market opportunity in quick commerce
• Competitive moat from logistics infrastructure
• Investor confidence in eventual profitability achievement
• Expected IPO pricing at premium to current private valuations

IPO Readiness and Market Conditions

Several factors support Zepto's 2026 IPO timing:

Market Receptivity

• Indian capital markets showing strong appetite for technology IPOs
• Investor interest in Indian e-commerce and logistics companies
• Track record of successful Indian startup IPOs
• Expected market conditions accommodating growth company valuations

Company Maturity

• Achieving scale in core business with 1.7M daily orders
• Establishing operational metrics and unit economics
• Demonstrating business model viability across geographies
• Building management depth and governance structures

Strategic Implications of CalPERS Investment

CalPERS' participation carries multiple strategic advantages:

• Credibility Signal: Validation from tier-one institutional investor
• Long-term Capital: Pension fund focus supports business building
• US Market Connection: Potential bridge to American institutional investors
• Governance Insights: Access to institutional investor perspectives on corporate governance
• IPO Preparation: Institutional investor involvement strengthens public market readiness

Investor Perspective and Risks

While Zepto's growth metrics are impressive, potential investors should consider:

Positive Factors

• Exceptional revenue growth trajectory
• Large market opportunity in quick commerce
• Strong customer adoption and daily order volumes
• Institutional investor backing from tier-one funds
• Management team execution quality

Risk Factors

• Continued substantial losses despite scale
• Uncertain timeline to profitability
• Intense competition from well-funded rivals
• Unit economics challenges in logistics businesses
• Regulatory risks in e-commerce and food delivery sectors
• Macroeconomic sensitivity affecting discretionary spending

Market Opportunity

The quick commerce sector in India represents a significant opportunity driven by:

• Urbanization increasing convenience preferences
• Smartphone penetration enabling seamless ordering
• Logistics infrastructure improving delivery capability
• Consumer willingness to pay premiums for rapid delivery
• Adjacent category expansion (pharmacy, electronics) broadening TAM

Future Growth Drivers

Zepto's medium-term growth prospects are supported by:

• Category Expansion: Pharmaceutical, electronics, and other categories
• Geographic Expansion: Penetration of tier-2 and tier-3 cities
• Customer Monetization: Premium services and subscriptions
• Operational Efficiency: Margin improvement through scale
• Technology Leverage: AI and data analytics optimization

IPO Expectations

When Zepto approaches IPO in 2026, investors can expect the company to emphasize:

• Revenue growth rate and market share metrics
• Pathway to profitability and unit economics improvement
• Competitive advantages and moat strength
• Management team and organizational capabilities
• Capital deployment plans for post-IPO growth

Sector Trends

Zepto's fundraising reflects broader trends in Indian technology sector:

• International institutional investors actively deploying capital in Indian startups
• Quick commerce achieving mainstream market acceptance
• Log-stage private companies preparing for public markets
• E-commerce and logistics sectors attracting significant capital
• Exit mechanisms increasingly important for venture capital ecosystem

Conclusion

Zepto's $450 million funding round at $7 billion valuation and announced IPO plans demonstrate the company's emergence as a significant player in India's quick commerce sector. With 1.7 million daily orders and revenue exceeding Rs 11,000 crore, Zepto has achieved impressive scale despite the competitive market landscape.

CalPERS' participation validates Zepto's business model while signaling strong institutional investor interest in Indian e-commerce and logistics opportunities. The planned 2026 IPO will provide an opportunity for public market investors to gain exposure to India's high-growth quick commerce sector.

However, investors should note that despite impressive revenue growth, the company continues reporting substantial losses. The path to profitability and unit economics sustainability will be key metrics to monitor as the company approaches public markets.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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Sebi Uncovers Rs 173 Crore Insider Trading Scheme in IEX Shares

Sebi Uncovers Major Insider Trading Scheme in IEX Shares: Rs 173 Crore Case

The Securities and Exchange Board of India has passed one of its most significant insider trading orders in recent times, uncovering an elaborate scheme involving illegal gains exceeding Rs 173 crore from trading in Indian Energy Exchange shares. The investigation revealed how confidential information from Central Electricity Regulatory Commission meetings was systematically leaked and exploited for personal profit, compromising market integrity and investor confidence.

Scope and Scale of the Violation

Sebi's interim order, passed by Whole-Time Member Kamlesh Chandra Varshney on Wednesday, identified insider trading transactions worth over Rs 173 crore involving eight individuals. The case represents a sophisticated operation where unpublished price-sensitive information regarding market coupling policy decisions was deliberately accessed and misused to generate illicit trading profits.

The regulator's swift investigation and search operations, conducted approximately one month prior, successfully traced the flow of confidential information and documented the resulting illegal transactions.

Eight Individuals Barred from Securities Market

Sebi has restrained eight individuals from accessing the securities market until further notice. Those barred include:

• Bhoovan Singh – Primary beneficiary of insider information
• Amar Jit Singh Soran – Father of Bhoovan Singh
• Amita Soran – Mother of Bhoovan Singh
• Anita – Aunt of Bhoovan Singh
• Narender Kumar – Conspirator in trading scheme
• Virender Singh – Participant in insider trading
• Bindu Sharma – Participant in insider trading
• Sanjeev Kumar – Managing Director and CEO of GNA Energy Ltd.

How the Information Leaked

The investigation revealed that Bhoovan Singh and his family members maintained close personal connections with Yogeita S. Mehra, Chief of the Economic Division at CERC. Mehra attended CERC committee meetings where unpublished price-sensitive information regarding market coupling policy was discussed and actively shaped.

Through these personal relationships, confidential CERC deliberations were accessed and shared with conspirators. During search operations, Sebi recovered documents pertaining to CERC's internal deliberations from devices belonging to Bhoovan Singh. These documents were systematically shared through a WhatsApp group named 'OTC' with other conspirators including Sanjeev Kumar and Narender Kumar.

Role of Key Conspirators

Bhoovan Singh

Bhoovan Singh emerged as the central figure in the conspiracy. As majority shareholder of GNA Energy Ltd.—a CERC-regulated entity—he maintained frequent professional and personal interactions with multiple CERC officials. He leveraged these connections to access confidential policy information and used trading accounts of family members to conceal his activities.

Sanjeev Kumar

As Managing Director and CEO of GNA Energy Ltd., Sanjeev Kumar maintained regular communication with CERC officials through his professional role. During Sebi's examination, he admitted to placing trading orders in IEX shares using his wife's trading account to disguise his involvement. His regulatory position provided direct access to emerging policy information.

Narender Kumar and Others

Additional conspirators participated in the scheme by receiving insider information through the WhatsApp group and trading on confidential details to generate illicit profits from advance knowledge of market-moving policy decisions.

Breakdown of Illegal Gains

The Rs 173.14 crore in collective illegal gains was distributed among conspirators as follows:

• Bhoovan Singh: Rs 72.03 crore (largest individual beneficiary)
• Narender Kumar: Rs 34.53 crore
• Amita Soran: Rs 31.59 crore
• Amar Jit Singh Soran: Rs 22.65 crore
• Virender Singh: Rs 7.04 crore
• Anita: Rs 3.09 crore
• Bindu Sharma: Rs 2.18 crore

The distribution pattern demonstrates that Bhoovan Singh's privileged access to information and trading account control resulted in substantially larger profits compared to other conspirators.

Investigation Timeline and Market Impact

July 2025: CERC Announcement

On July 23, 2025, CERC issued directions for implementing market coupling under the Central Electricity Regulatory Commission Power Market Regulations. The announcement was expected to negatively impact IEX trading volumes by consolidating fragmented markets.

Immediate Market Reaction

Following the announcement on July 24, 2025, IEX shares declined sharply by 29.58% on a close-to-close basis, reflecting the significant adverse impact of the policy decision on the exchange's business prospects.

Sebi Investigation Triggers

Analyzing trading data between July 1 and August 14, 2025, Sebi identified suspicious patterns including sharp price declines accompanied by unusual trading volumes in days preceding the official announcement. The anomalies triggered comprehensive investigation into possible insider trading activities.

Evidence of Advance Knowledge

Critical findings included that several entities had taken large positions in IEX put options—derivative instruments that profit from share price declines. These positions contradicted the traders' regular trading behavior, suggesting they possessed advance knowledge of adverse developments affecting IEX shares.

The timing and magnitude of put option positions, coupled with subsequent official announcements causing share decline, provided compelling evidence of insider trading based on non-public information.

Search and Seizure Operations

Between September 18 and 20, 2025, Sebi conducted coordinated search and seizure operations across multiple locations linked to the suspected conspirators. Operations yielded:

• Digital evidence from computing devices and communications
• Documented records of WhatsApp communications sharing confidential information
• Trading account records demonstrating suspicious transactions
• Personal statements from individuals under investigation

Regulatory Actions and Penalties

Sebi's interim order directed multiple remedial measures:

Market Access Restrictions

All eight individuals have been barred from accessing the securities market indefinitely until further notice. This prohibition prevents them from conducting any trading activities or accessing market infrastructure.

Illegal Gains Impounding

Sebi directed that illegal gains totaling Rs 173.14 crore be impounded and deposited into fixed deposit accounts opened in the names of the conspirators, with liens marked in favor of Sebi. No withdrawals are permitted without explicit regulatory approval.

Bank Account Restrictions

No debits shall be made from the bank accounts of barred individuals except for transferring funds to the fixed deposit accounts with regulatory liens. This prevents access to impounded proceeds pending final adjudication.

Broader Investigation Continuing

Sebi's interim order suggests additional individuals may face enforcement action. Whole-Time Member Varshney stated that detailed investigation regarding insider trading against the named noticees as well as other suspects is ongoing, along with examination of potential violations beyond insider trading provisions.

This indicates the investigation scope may expand to examine potential securities law violations by CERC officials or others who may have participated in information leakage or benefited from the scheme.

Market Integrity and Investor Protection Implications

Sebi emphasized that insider trading conduct creates information imbalance among investors, leaving the public at significant disadvantage due to lack of access to confidential information. Such misconduct leads to imperfect and inequitable markets, exposing innocent retail investors to financial risks.

The case demonstrates how regulatory agency information can be weaponized for personal profit, undermining confidence in market integrity and fairness. Retail investors trading in IEX shares on publicly available information suffered losses while conspirators profited from advance knowledge of adverse developments.

CERC Referral and Follow-up Action

Sebi has directed that a copy of its order be sent to the Central Electricity Regulatory Commission for necessary action. This enables CERC to investigate potential information security breaches, unauthorized disclosure of confidential deliberations, and potential misconduct by its officials.

CERC may separately pursue disciplinary action against officials who participated in information leakage or investigate systemic vulnerabilities that permitted unauthorized access to confidential meeting deliberations.

Modus Operandi: Information Flow Chain

The investigation documented a systematic information flow chain:

1. Access: CERC officials attended committee meetings where market coupling policy was discussed and formulated
2. Personal Connection: Confidential information was shared through personal relationships with Bhoovan Singh and family
3. Distribution: Information was deliberately shared through WhatsApp group 'OTC' to coordinate trading activities
4. Trading Execution: Family members and associates placed orders using nominee/wife accounts to obscure beneficial ownership
5. Profit Realization: Conspirators profited when the announced policy caused IEX shares to decline

Regulatory and Market Surveillance Lessons

The case highlights several insights for market regulation:

• Surveillance Effectiveness: Unusual trading patterns in derivatives markets provide early warning signals for potential insider trading
• Information Security: Regulatory agencies must implement robust access controls over confidential meeting materials
• Communication Monitoring: Digital forensics can trace information flow through messaging platforms and communications
• Account Analysis: Trading through family member and nominee accounts requires enhanced scrutiny and beneficial ownership verification
• Regulatory Coordination: Cross-agency coordination between capital markets regulators and operational regulators is essential

Investor Protection and Confidence

This enforcement action sends important signals to market participants:

• Sebi actively monitors for suspicious trading patterns preceding regulatory announcements
• Insider trading conspiracies, however sophisticated the concealment methods, will be detected and prosecuted
• Illegal gains from insider trading will be recovered and impounded
• Market participants engaging in insider trading face permanent market access restrictions
• Regulatory agencies coordinate closely to identify information security breaches

Pending Developments

The case remains under investigation regarding potential additional violations and persons involved. Future developments may include:

• Final adjudication orders replacing the interim order
• Additional enforcement actions against other identified conspirators
• CERC investigation findings regarding official misconduct
• Potential criminal referrals for prosecution
• Disgorgement of illegal gains to affected investors

Systemic Implications

The IEX insider trading case underscores the importance of information security at regulatory agencies. Unauthorized access to confidential policy deliberations can compromise market integrity and create opportunities for sophisticated financial crimes.

Going forward, regulatory agencies must implement enhanced access controls, audit trails for information access, secure communication protocols, and periodic security assessments to prevent unauthorized disclosure of market-sensitive information.

Conclusion

Sebi's Rs 173 crore insider trading order against eight individuals represents a significant enforcement action exposing a sophisticated information leakage and trading scheme. The case demonstrates how confidential regulatory information can be systematically exploited through personal relationships and concealed through nominee trading accounts.

The comprehensive investigation and decisive enforcement action reinforce Sebi's commitment to maintaining market integrity and investor protection. By impounding illegal gains and restricting market access, Sebi has sent clear signals that insider trading—regardless of sophistication or concealment methods—will be detected, prosecuted, and penalized.

For market participants, the case serves as a reminder of the importance of trading on publicly available information and the severe consequences faced by those who exploit non-public information for personal profit.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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Rupee Rallies 1% on RBI's Aggressive Dollar Selling Intervention

Rupee Rallies Nearly 1% Following RBI's Aggressive Dollar Selling Intervention

The Indian rupee staged a dramatic recovery on Wednesday, surging nearly 1% after the Reserve Bank of India shifted to an aggressive stance by actively selling dollars in both offshore and onshore markets. The decisive intervention marked a significant departure from weeks of defensive currency management and sparked market speculation about a potential policy recalibration by the central bank.

Strong Rupee Recovery

The rupee delivered its strongest intraday performance since June 24, rallying from near-record lows to demonstrate renewed strength. The currency climbed as much as 0.9% to 87.99 per dollar before retreating slightly from its intraday peak.

This recovery proved particularly significant given that the rupee had weakened to 88.8 per dollar on Tuesday—dangerously close to historic lows that had prompted growing concerns about currency stability. The one-day rebound of nearly 1% represented a substantial move in foreign exchange markets where daily movements typically measure in basis points rather than full percentage points.

Shift from Defensive to Offensive Posture

After weeks of passive currency defense primarily through interest rate management and gradual intervention, the RBI moved decisively to address rupee weakness through active dollar sales. People familiar with the matter indicated the central bank sold significant dollar volumes across both the offshore non-deliverable forwards market and the onshore spot market.

This offensive approach marked a clear policy shift, signaling that RBI decision-makers concluded that more forceful intervention had become necessary to stabilize the currency and reverse deteriorating market psychology regarding rupee direction.

Market Speculation on Policy Rethink

The aggressive intervention sparked widespread market speculation that the RBI might be reconsidering its broader approach to currency management. Multiple interpretations emerged:

• Intervention Strategy: Greater willingness to deploy reserves for rupee support
• Tolerance Levels: Possible redefinition of acceptable rupee weakness ranges
• Communication Shift: More explicit signaling of rupee management priorities
• Policy Coordination: Enhanced government-RBI alignment on currency policy
• Reserve Protection: Recognition of need to arrest further depreciation

Historical Precedent: February 2024 Intervention

The current intervention echoed a previous episode in February when the RBI had conducted aggressive dollar sales spanning several billion dollars to support the rupee during a period of pronounced weakness. That intervention had successfully arrested rupee depreciation and restored market confidence in central bank commitment to currency stability.

The repetition of this aggressive playbook suggests the RBI views the current rupee weakness as sufficiently concerning to warrant extraordinary measures, despite potential costs in terms of reserve depletion and signaling effects.

Context: Weeks of Defensive Currency Management

The aggressive Wednesday intervention contrasted sharply with the RBI's recent approach. For several weeks, the central bank had primarily relied on defensive measures including:

• Supporting domestic interest rates to attract foreign investment
• Gradual spot market interventions
• Management of onshore/offshore spread to discourage excessive depreciation pressure
• Coordination with market participants on orderly currency adjustment
• Limited disclosure of intervention frequency to avoid market manipulation perceptions

The shift to more visible, aggressive dollar selling represents an acknowledgment that defensive measures had proven insufficient to prevent rupee weakness from accelerating toward concerning levels.

Currency Market Dynamics

The rupee's recent weakness reflected multiple pressures:

External Factors

• US Interest Rates: Higher Fed rates attracting capital away from emerging markets
• Dollar Strength: Broad US dollar appreciation pressuring multiple currencies
• Global Risk-Off: Flight to safety benefiting reserve currencies
• Emerging Market Flows: Portfolio outflows from India affecting supply-demand

Domestic Factors

• Current Account: Services export strength offset by merchandise imports
• Foreign Investment: Mixed signals from FDI and FPI flows
• Policy Uncertainty: Global trade tensions affecting investment confidence
• Inflation Dynamics: Relative price movements affecting competitiveness

Reserve Depletion Concerns

While the aggressive intervention successfully stabilized the rupee in the short term, it involves deploying India's foreign exchange reserves—a finite resource. The RBI must balance multiple objectives:

• Maintaining currency stability to support economic activity
• Preserving reserve adequacy for external shock resilience
• Avoiding excessive reserve depletion that could concern credit rating agencies
• Managing market expectations about intervention capacity and commitment
• Ensuring intervention doesn't encourage excessive rupee depreciation betting

Market Reaction and Forward Guidance

The aggressive intervention sent several signals to market participants:

To Foreign Exchange Traders

• RBI has clear comfort levels and will defend them
• Excessive rupee shorts face significant downside risk
• Dollar-rupee trading could see increased volatility near key levels
• Speculation about further depreciation may face intervention-driven reversals

To International Investors

• Currency stability concerns are being actively managed
• RBI retains adequate reserves and willingness to deploy them
• Investment in India benefits from central bank currency support
• Downside currency risk may be more limited than recent weakness suggested

Policy Options Going Forward

The RBI faces several strategic choices regarding ongoing currency management:

Continued Aggressive Intervention

Pursuing additional dollar sales if rupee weakness resumes, potentially depleting reserves but firmly anchoring expectations about acceptable weakness levels.

Gradual Normalization

Testing whether Wednesday's aggressive intervention succeeded in reversing speculative positioning, allowing for more measured approach if rupee stabilizes through improved fundamentals.

Policy Rate Adjustments

Potentially raising interest rates further to attract capital inflows and reduce depreciation pressure organically through return differentials.

Market Structure Changes

Potentially implementing regulatory or operational changes to discourage excessive rupee shorts or encourage greater participation in supporting the currency.

Implications for Different Stakeholders

For Exporters

• Weaker rupee increases competitiveness but intervention may prevent further depreciation benefits
• Hedging strategies require reassessment as rupee stability improves
• Forward premiums may adjust as intervention expectations evolve

For Importers

• Rupee strength reduces import costs and purchasing power
• Greater currency predictability supports supply chain planning
• Input cost stability improves margin predictability

For Investors

• Reduced currency depreciation risk supports domestic investment returns
• Improved confidence in rupee stability benefits long-term investment plans
• Forward-looking currency expectations stabilize around supported levels

For Borrowers

• Stronger rupee increases debt servicing burden for external borrowings
• Reduced depreciation expectations may support lower forward premiums
• Improved currency stability reduces hedging costs

Broader Economic Implications

The rupee's stabilization through RBI intervention carries significance beyond currency markets:

• Import Costs: Stronger rupee helps moderate inflation by reducing import expenses
• Capital Flows: Improved currency stability may attract additional foreign investment
• External Position: Rupee strength improves competitiveness but requires watchful reserve management
• Monetary Policy: Reduced depreciation pressure provides more policy flexibility

Market Watch Going Forward

Key indicators to monitor for rupee and RBI intervention strategy include:

• Rupee direction and whether recovery sustains without additional intervention
• Foreign exchange reserve levels reflecting intervention intensity
• Onshore-offshore spread in rupee pricing signaling market pressures
• Capital flow data showing investor appetite for Indian assets
• Global dollar strength and Fed policy expectations
• RBI communication and forward guidance on currency management

Risk Factors

Several developments could challenge the RBI's currency management approach:

• Renewed global risk-off sentiment pressuring emerging market currencies
• Further US interest rate increases attracting capital away from India
• External shocks affecting India's services export competitiveness
• Capital flow reversals requiring larger intervention responses
• Reserve adequacy concerns if intervention depletes holdings significantly

Conclusion

The Indian rupee's nearly 1% rally on Wednesday following aggressive RBI dollar sales marked a significant policy shift toward more offensive currency management. After weeks of defensive measures, the central bank's decisive intervention successfully reversed the rupee's deterioration from near-record lows, demonstrating commitment to currency stability.

The move echoes previous successful interventions and signals that the RBI views current rupee weakness as sufficiently concerning to warrant deploying reserves. While the near-term impact appears successful, the sustainability of this improvement will depend on underlying economic fundamentals, global capital flow trends, and Fed policy trajectory.

For market participants and stakeholders, the intervention reinforces that the RBI retains both the capacity and commitment to prevent excessive rupee depreciation, though continued reliance on reserve depletion requires balancing currency stability with adequate reserve buffers.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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IMF Raises India GDP Forecast to 6.6% for FY26 on Strong Q1 Growth

IMF Raises India's FY26 GDP Growth Forecast to 6.6% on Strong Q1 Performance

The International Monetary Fund has upgraded India's economic growth forecast for fiscal year 2025-26 by 20 basis points to 6.6%, citing robust first-quarter performance that more than offset the impact of US interest rate increases. In its latest World Economic Outlook report released Tuesday, the IMF also revised its FY27 growth projection upward by 20 basis points to 6.2%, reinforcing India's position as a global growth leader.

Strong First Quarter Drives Upward Revision

The IMF's improved forecast reflects India's resilient economic performance during the first quarter of FY26, which demonstrated strength despite global headwinds. The upgrade acknowledges that domestic growth momentum successfully countered external pressures including tighter monetary policy in the United States and evolving global trade dynamics.

This marks the second consecutive upgrade by the IMF this year. In July, the fund had raised India's growth projection by 20 basis points to 6.4%, citing reform momentum, robust consumption growth, public investment push, benign external environment, and lower inflation.

Comparison with World Bank Projections

The IMF's forecast aligns closely with other major international institutions' assessments of India's economic trajectory. Last week, the World Bank increased India's FY26 GDP forecast to 6.5% from 6.3% projected in June, while lowering the FY27 forecast by 20 basis points to 6.3%.

The World Bank noted that despite tariff-related challenges affecting exports to the United States, India is expected to maintain its status as the world's fastest-growing major economy, supported by continued strength in consumption growth and robust domestic demand.

India Remains Fastest-Growing Major Economy

Both international financial institutions concur that India will continue leading global growth among major economies. This distinction reflects several fundamental strengths:

• Demographic Advantage: Young, growing workforce driving productivity
• Consumption Growth: Rising middle-class spending supporting demand
• Reform Momentum: Continued policy initiatives enhancing business environment
• Infrastructure Investment: Public capital expenditure stimulating economic activity
• Digital Transformation: Technology adoption accelerating across sectors

Global Economic Context

The IMF revised its global growth projection for 2025 upward by 20 basis points to 3.2%, while maintaining the 2026 forecast unchanged at 3.1%. This modest global outlook underscores India's outperformance relative to worldwide economic trends.

According to the IMF report, "The global economy has shown resilience to trade policy shocks, partly because these shocks materialized on a smaller scale than expected, but the drag from shifting policies is becoming visible in more recent data."

IMF Official Perspectives on Growth Drivers

Pierre-Olivier Gourinchas, IMF's Economic Counsellor and Director of the Research Department, emphasized that sustainable economic growth requires building resilience through fiscal buffers, strong institutional frameworks, and active participation in the global economy.

Addressing a press briefing, Gourinchas observed that growth is fundamentally driven by private sector activity and technology adoption. He stated, "Countries need to make the right efforts to scale their labour force and invest in infrastructure so that they can grow rapidly and unleash private sector innovation and entrepreneurship."

These comments underscore the importance of continued investments in human capital development and physical infrastructure—areas where India has been focusing policy attention and resource allocation.

Uncertainty as the "New Normal"

Gourinchas' remarks follow recent observations by IMF Managing Director Kristalina Georgieva, who characterized uncertainty as the "new normal" requiring countries to enhance preparedness for economic volatility. This assessment reflects the contemporary global environment marked by:

• Geopolitical tensions affecting trade flows
• Technology disruptions transforming industries
• Climate change creating economic risks
• Policy shifts across major economies
• Supply chain reconfiguration pressures

Domestic Growth Projections

The Economic Survey has projected India's GDP growth at between 6.3% and 6.8% for FY26, providing a range that encompasses the IMF's revised forecast. Chief Economic Advisor V Anantha Nageswaran recently indicated optimism about growth outcomes, stating:

"While I could actually be looking at revising my GDP numbers upwards, given my cautious nature, I am more comfortable now in saying that we are tending towards the upper end of this range."

This cautiously optimistic stance from India's top economic advisor aligns with improved international assessments and suggests domestic economic indicators are supporting positive growth momentum.

Challenges from US Trade Policies

Despite the upgraded growth forecast, India faces headwinds from United States trade policies that could impact specific sectors and overall export performance. Key challenges include:

Tariff Pressures

India currently faces a 50% tariff from the US on various products, particularly affecting labor-intensive sectors including:

• Textiles: Traditional export strength facing market access barriers
• Footwear: Competitive advantage diminished by high duties
• Marine Products: Seafood exports encountering price disadvantages

These tariffs create challenges for export-oriented manufacturers and could affect employment in labor-intensive industries that have been significant contributors to India's export basket.

Technology Services Sector Risks

The Trump administration's proposed one-time fee of $100,000 on new visa applications for skilled workers poses potential risks to India's $280 billion technology services industry. This policy could:

• Impact thousands of IT sector jobs
• Affect project deployment capabilities
• Influence service delivery models
• Impact future remittance flows
• Affect India's service trade surplus

The Finance Ministry has acknowledged that these restrictions require close monitoring, particularly regarding implications for remittances and service trade balances that have been significant contributors to India's external account stability.

Sectoral Growth Dynamics

India's projected 6.6% GDP growth for FY26 reflects contributions from multiple sectors:

Consumption Drivers

• Rising household incomes supporting demand
• Urban consumption remaining robust
• Rural recovery gaining momentum
• Festive season spending indicating consumer confidence

Investment Activity

• Government infrastructure spending continuing at elevated levels
• Private sector capital expenditure showing improvement
• Foreign direct investment in key sectors
• Real estate sector recovery supporting construction

External Sector

• Services exports maintaining strength
• Goods exports facing headwinds from tariffs
• Tourism and hospitality recovery underway
• Remittances supporting current account

Policy Implications

The upgraded growth forecast provides policymakers with validation of current economic strategies while highlighting areas requiring continued attention:

Fiscal Policy

• Maintaining infrastructure investment momentum
• Balancing fiscal consolidation with growth support
• Enhancing social sector spending efficiency
• Supporting sectors affected by trade headwinds

Monetary Policy

• Managing inflation while supporting growth
• Responding to global monetary policy shifts
• Ensuring adequate liquidity for credit growth
• Monitoring external sector stability

Structural Reforms

• Continuing ease of doing business improvements
• Labor market reforms supporting employment
• Technology adoption across government services
• Trade policy adjustments addressing tariff challenges

Comparative International Performance

India's 6.6% projected growth significantly outpaces major global economies:

• More than double the projected global growth of 3.2%
• Substantially higher than advanced economies' growth rates
• Leading among major emerging markets
• Maintaining consistent high-growth trajectory

This outperformance reflects India's structural growth potential and successful navigation of global economic challenges through balanced policy approaches.

Medium-Term Outlook

The FY27 forecast of 6.2% growth suggests sustained momentum beyond the near term, though at a moderately slower pace. This trajectory reflects:

• Base effect normalization from elevated FY26 growth
• Potential global growth moderation
• Impact of policy transitions in major economies
• Continued domestic reform implementation

Investment and Market Implications

The upgraded growth forecast carries positive implications for various stakeholders:

For Equity Markets

• Support for corporate earnings growth expectations
• Validation of India's growth premium in valuations
• Attraction for foreign portfolio investors
• Domestic institutional investment confidence

For Fixed Income

• Sovereign credit rating outlook support
• Corporate debt market stability
• Government borrowing program manageability
• External debt servicing capacity reinforcement

For Currency Markets

• Fundamental support for rupee stability
• Foreign investment inflow expectations
• Current account financing confidence
• Reserve accumulation potential

Key Monitoring Areas

Several factors warrant continued attention as they could influence actual growth outcomes:

• Global Trade Environment: Evolution of tariff policies and trade tensions
• Monsoon Performance: Agricultural output affecting rural demand
• Inflation Trajectory: Price stability supporting purchasing power
• Financial Sector Health: Credit growth and asset quality trends
• Geopolitical Developments: Regional and global tensions affecting sentiment

Conclusion

The IMF's upward revision of India's growth forecast to 6.6% for FY26 reflects international confidence in the economy's resilience and structural strengths. The upgrade acknowledges strong first-quarter performance that offset external pressures, while recognizing challenges from trade policy shifts and global uncertainties.

India's sustained position as the fastest-growing major economy validates policy approaches emphasizing infrastructure investment, reform momentum, and private sector dynamism. However, realizing the growth potential requires continued focus on building economic resilience, managing external vulnerabilities, and ensuring inclusive growth that benefits all segments of society.

As the global economy navigates uncertainty, India's growth story remains compelling—supported by favorable demographics, expanding consumption base, technological transformation, and proactive policy frameworks. The challenge ahead lies in sustaining this momentum while managing risks and ensuring growth translates into improved living standards across the population.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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HCL Tech Q2 Results: Net Profit Flat at Rs 4,235 Crore, Revenue Up 10.6%

HCL Tech Q2 Results: Net Profit Flat at Rs 4,235 Crore, Revenue Grows 10.6%

HCLTech reported consolidated net profit of Rs 4,235 crore for the quarter ended September 30, 2025, remaining flat year-on-year. However, the IT major demonstrated strong sequential growth of 10.2% compared to the June quarter's net profit of Rs 3,843 crore, indicating improving business momentum during the second quarter.

Revenue Performance Shows Healthy Growth

The company's consolidated revenue increased by 10.6% year-on-year to Rs 31,942 crore during the reported quarter, up from Rs 28,862 crore in the corresponding period last year. This double-digit revenue growth reflects sustained demand for HCLTech's services across most business segments and demonstrates the company's ability to capture market opportunities.

The sequential revenue growth, coupled with improved profitability quarter-on-quarter, suggests that HCLTech is navigating the current business environment effectively despite sector-specific challenges in certain verticals.

Major HR Policy Changes Announced

In a significant employee compensation restructuring, HCLTech announced plans to merge variable pay of all employees into their salaries as fixed pay. This policy change represents a major shift in compensation structure that will provide greater income stability and predictability for employees across the organization.

Additionally, the company will roll out salary increments starting from October onwards. This combination of fixed pay conversion and increments signals the company's confidence in business stability and commitment to employee retention amid competitive talent markets.

Implications of Compensation Restructuring

The move to convert variable pay into fixed compensation carries several implications:

• Employee Benefits: Greater income predictability and financial planning stability
• Talent Retention: Enhanced compensation structure to retain skilled workforce
• Competitive Positioning: Improved ability to attract talent in competitive markets
• Financial Impact: May affect quarterly margin volatility patterns
• Industry Trend: Potentially influencing similar moves by other IT companies

Auto Segment Challenges Persist

HCLTech CEO and Managing Director C Vijayakumar acknowledged that the company's automotive segment business continues to face difficulties. The auto sector has been experiencing headwinds globally due to various factors including economic uncertainties, changing technology landscapes, and evolving customer preferences.

However, the CEO emphasized that business performance remains strong across other segments, with the rest of the portfolio demonstrating healthy growth trends. This sectoral diversification has helped the company maintain overall revenue momentum despite auto segment struggles.

Sectoral Performance Analysis

Challenges in Automotive Vertical

The automotive industry globally faces multiple pressures:

• Slowdown in vehicle production and sales
• Transition to electric vehicles creating technology disruptions
• Supply chain challenges affecting manufacturing
• Economic uncertainties impacting consumer demand
• Technology spending rationalization by auto manufacturers

Strength in Other Segments

While specific vertical-wise breakdowns weren't disclosed, HCLTech's other business areas likely benefiting from strong performance include:

• Financial Services: Digital transformation and modernization projects
• Technology & Services: Cloud migration and infrastructure services
• Healthcare & Life Sciences: Digital health and R&D services
• Manufacturing (Non-Auto): Industry 4.0 and automation initiatives
• Retail & CPG: E-commerce and omnichannel solutions

Sequential Growth Momentum

The 10.2% sequential profit growth from Q1 to Q2 FY26 represents significant quarter-on-quarter improvement. This progression suggests:

• Effective execution of large deals signed in previous quarters
• Improved operational efficiency and cost management
• Better revenue mix with higher-margin services
• Successful client additions and wallet share expansion
• Resolution of one-time factors that may have affected Q1 results

Year-on-Year Profit Comparison

While net profit remained flat year-on-year at Rs 4,235 crore, this should be viewed in context of:

• Investments in talent and capability development
• Wage increases and employee compensation adjustments
• Business mix changes with auto segment pressures
• Currency fluctuations affecting dollar revenues
• Strategic investments in emerging technologies

The ability to maintain profitability levels while growing revenue by over 10% demonstrates operational discipline and effective cost management.

Market Context and Competitive Landscape

HCLTech's results arrive during a crucial period for the Indian IT services sector, with companies navigating:

• Global economic uncertainties affecting client spending
• Generative AI creating both opportunities and disruptions
• Pricing pressures in traditional services
• Talent cost inflation and retention challenges
• Currency volatility impacting margins

The company's double-digit revenue growth and strong sequential profit improvement suggest effective navigation of these challenges compared to industry averages.

Strategic Implications

Compensation Policy Shift

The decision to merge variable pay into fixed salaries represents a strategic choice that could:

• Simplify compensation structures and administration
• Reduce quarterly margin volatility from variable pay fluctuations
• Enhance employee satisfaction and retention
• Potentially increase near-term cost base
• Align with evolving employee expectations in post-pandemic era

Sectoral Portfolio Management

Acknowledging automotive segment challenges while highlighting strength elsewhere demonstrates:

• Transparency in communication with stakeholders
• Effective diversification reducing concentration risks
• Ability to compensate weakness in one vertical with strength in others
• Proactive management of troubled segments

Financial Health Indicators

The quarterly results reveal several positive indicators about HCLTech's financial health:

• Revenue Growth: 10.6% YoY indicates healthy top-line momentum
• Sequential Improvement: 10.2% profit growth suggests operational leverage
• Investment Capacity: Ability to implement compensation increases while maintaining profitability
• Business Resilience: Managing vertical-specific challenges without overall deterioration

Outlook and Future Considerations

Several factors will influence HCLTech's performance in coming quarters:

Growth Drivers

• Deal pipeline conversion and execution
• Demand recovery in automotive segment
• Continued strength in non-auto verticals
• Generative AI services adoption by clients
• Digital transformation spending momentum

Potential Headwinds

• Global economic slowdown affecting discretionary spending
• Continued automotive sector weakness
• Margin pressures from compensation structure changes
• Currency volatility affecting realizations
• Competitive intensity in key service lines

Investment Perspective

For investors evaluating HCLTech, the quarterly results present a mixed picture requiring nuanced interpretation:

Positive Factors

• Strong sequential profit growth showing momentum
• Double-digit revenue expansion
• Proactive employee compensation measures
• Diversified portfolio limiting vertical concentration risks
• Transparent communication about challenges

Monitoring Points

• Automotive segment recovery timeline
• Margin impact from compensation restructuring
• Deal wins and pipeline conversion rates
• Competitive positioning in key verticals
• Management commentary on demand outlook

Industry Implications

HCLTech's compensation policy changes may influence broader industry trends. If the fixed pay model proves successful in talent retention and employee satisfaction, other IT companies might consider similar restructuring, potentially resetting industry compensation norms.

The automotive segment challenges also highlight sector-specific risks that IT services companies face, underscoring the importance of portfolio diversification for sustainable growth.

Conclusion

HCLTech's Q2 FY26 results demonstrate a company successfully managing mixed business conditions—maintaining year-on-year profitability while growing revenues substantially, and showing strong sequential improvement. The bold move to restructure compensation by converting variable pay to fixed salaries signals confidence in business stability and commitment to employees.

While automotive segment challenges persist, strength across other verticals validates the benefits of diversification. The 10.2% sequential profit growth particularly stands out as evidence of improving operational momentum and effective execution.

As the IT services sector navigates global uncertainties and technological disruptions, HCLTech's results position it as a company adapting to changing circumstances while investing in its workforce—a balance that will be crucial for long-term competitiveness and growth.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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India CPI Inflation Falls to 8-Year Low of 1.54% in September 2025

India's CPI Inflation Drops to 8-Year Low of 1.54% in September 2025

India's retail inflation measured by the Consumer Price Index reached an impressive 8-year low of 1.54% in September 2025, marking the lowest year-on-year inflation rate since June 2017. The significant decline from August's 2.05% was driven by cheaper food items and fuel prices, according to data released by the Ministry of Statistics on Monday.

Food Inflation Remains in Negative Territory

Food inflation continued its downward trajectory for the fourth consecutive month, recording a deflation rate of -2.28% during September. This sustained decline in food prices has been the primary contributor to overall inflation moderation, providing significant relief to household budgets across the country.

The official statement attributed the decline in both headline and food inflation to several factors:

• Favorable base effect: Year-on-year comparison against higher prices in 2024
• Vegetables: Significant price reductions
• Edible oils: Declined inflation rates
• Fruits and pulses: Lower prices
• Cereals and eggs: Reduced inflation
• Fuels: Cheaper prices during the month

Structural Factors Supporting Benign Inflation

The inflation outlook for fiscal year 2025-26 has become increasingly favorable due to multiple positive developments:

Agricultural Success

• Good southwest monsoon: Adequate rainfall supporting crop production
• Healthy kharif sowing: Strong planting of summer crops
• Adequate reservoir levels: Sufficient water storage for irrigation
• Comfortable buffer stocks: Ample foodgrain reserves

GST Rate Cuts Impact

The GST rate rationalization that took effect on September 22 is contributing to price reductions across numerous goods. This tax reform is expected to further reduce inflation in the coming months as the full impact filters through to consumer prices.

RBI Monetary Policy Implications

The declining inflation rate provides the Reserve Bank of India with enhanced policy flexibility to support economic growth through accommodative monetary measures. Lower inflation creates headroom for potential interest rate cuts and increased liquidity injection to stimulate economic activity.

Updated RBI Inflation Forecast

On October 1, the RBI's Monetary Policy Committee significantly revised its inflation projection for FY 2025-26 downward to 2.6% from the 3.1% forecast made in August. This substantial revision primarily reflects:

• Impact of GST rate rationalization
• Benign food price trends
• Favorable base effects
• Strong agricultural fundamentals

RBI Governor's Assessment

RBI Governor Sanjay Malhotra emphasized that the recently implemented GST rate rationalization would lead to price reductions for several items in the CPI basket. He noted that overall inflation outcomes are likely to be softer than projected in the August monetary policy resolution.

Addressing journalists following the MPC meeting, Governor Malhotra observed that "the overall inflation outlook has turned even more benign in the last few months," highlighting the positive trajectory of price stability.

Inflation Trends Through 2025

The Governor provided context for the current inflation environment:

• July 2025: Headline CPI inflation reached 8-year low of 1.6% year-on-year
• August 2025: Modest uptick to 2.1% – first increase after nine months
• September 2025: Further decline to 1.54%

The benign inflation conditions during 2025-26 have been primarily driven by sharp decline in food inflation from its peak in October 2024, when elevated prices had pressured household budgets.

Sectoral Inflation Breakdown

Fuel Group Inflation

Fuel inflation remained relatively stable, moving within a narrow range of 2.4-2.7% during the June-August period. The moderation in fuel prices has provided relief to transportation costs and manufacturing input expenses.

Core Inflation Trends

Core inflation—which excludes volatile food and fuel components—remained largely contained at 4.2% in August. When precious metals are excluded from core inflation calculations, the rate stood at an even lower 3.0% in August, indicating underlying price stability across goods and services.

Policy Space for Growth Support

Governor Malhotra stated that current macroeconomic conditions and the favorable outlook have "opened up policy space for further supporting growth." This statement signals potential for accommodative monetary policy measures including:

• Interest rate reductions to lower borrowing costs
• Enhanced liquidity provision to support credit growth
• Continued focus on balanced growth and inflation objectives
• Flexible response to evolving economic conditions

Economic Significance

The 8-year low inflation rate carries multiple positive implications for the Indian economy:

For Households

• Enhanced purchasing power as prices remain stable
• Relief from food and fuel cost pressures
• Improved real income growth
• Support for consumption-driven economic growth

For Businesses

• Stable input cost environment aiding planning
• Potential for lower interest rates reducing financing costs
• Improved consumer demand from higher real incomes
• Favorable conditions for capacity expansion

For Policymakers

• Achievement of price stability mandate
• Flexibility to support growth through monetary easing
• Validation of fiscal and monetary policy coordination
• Confidence in inflation management framework

Comparison with Historical Context

The September 2025 inflation rate of 1.54% represents the lowest reading since June 2017, when inflation was similarly subdued. This achievement is particularly notable given:

• Global inflationary pressures in recent years
• Supply chain disruptions from geopolitical tensions
• Previous episodes of elevated food inflation
• Volatile international commodity prices

Looking Ahead: Inflation Trajectory

Several factors support continued benign inflation in the near term:

Supportive Factors

• GST Impact: Full pass-through of rate cuts to consumer prices
• Agricultural Production: Good harvest from strong monsoon
• Base Effects: Favorable year-on-year comparisons
• Supply Management: Adequate buffer stocks preventing price spikes
• Global Commodity Prices: Relative stability in international markets

Potential Risks

However, some factors warrant monitoring:

• Potential weather-related agricultural disruptions
• Global commodity price volatility
• Geopolitical tensions affecting supply chains
• Domestic demand recovery potentially increasing price pressures
• Currency movements affecting import costs

Monetary Policy Outlook

The benign inflation environment suggests the RBI may have room to implement accommodative measures supporting economic growth. Market participants are watching for signals about:

• Timing and magnitude of potential interest rate cuts
• Liquidity management strategies
• Balance between growth support and inflation vigilance
• Response to global monetary policy trends

Investment and Market Implications

The low inflation environment carries implications for various asset classes:

• Fixed Income: Potential for bond price appreciation if rates decline
• Equities: Support from improved consumer demand and lower borrowing costs
• Real Estate: Benefits from lower financing costs and stable prices
• Gold: Reduced inflation hedge demand but support from rate cut expectations

Conclusion

India's achievement of 8-year low inflation at 1.54% in September 2025 represents a significant macroeconomic success, reflecting effective policy coordination, favorable agricultural conditions, and structural reforms like GST rationalization. The benign inflation outlook provides the RBI with enhanced flexibility to support economic growth while maintaining price stability.

For households, businesses, and investors, the low inflation environment creates favorable conditions for consumption, investment, and financial planning. As the economy balances growth acceleration with price stability, continued monitoring of inflation trends will remain crucial for policy decisions and investment strategies.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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