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To raise ₹ 15,500 cr. – Fresh Issue, 21 cr. shares (₹ 6,846 cr.) and Offer for Sale, 26.58 cr. (₹ 8,665 cr.)
IPO Applicants can bid for a minimum of one lot of 46 shares, and in multiples of this.
Reasons and Objects of the Issue: 1) TCL was classified as an Upper Layer NBFC by RBI. It was required to IPO by Sept’25 as per these regulations 2) Tata Sons, the promoter of TCL will sell part of their stake in the Offer for Sale 3) TCL will utilize the proceeds from the Fresh Issue to augment their Tier – I capital base, to meet requirements of onward lending, and growth of the business 4) a portion of the proceeds from the Fresh Issue will be used towards meeting Offer Expenses.
The IPO share quotas will be QIBs: NIIs: Retail is 50:15:35. (Qualified and Non-Institutional Investors)
The unofficial/ grey market premium of TCL is ₹ 13/share today thus about 4% over the IPO price.
IPO shares allotment is by Thu, Oct 9th, and Listing Date is Mon, Oct 13, 2025.
TCL is the flagship financial services firm of the Tata Group, a subsidiary of Tata Sons Pvt. Ltd., and is a NBFC. RBI classified it as a Upper Layer – Non-deposit taking NBFC – ICC Investment and Credit Company.
TCL operates across areas of business like: Commercial Finance, Consumer Loans, Wealth Services & distribution, and marketing of Tata Cards. It provides this to retail, corporate and institutional customers.
It 3 key subsidiaries are Tata Capital Housing Finance Ltd., Tata Securities Ltd. and Tata Capital Pte. Ltd.
Tata Capital Pte. incorporated in Singapore, operates fund management and proprietary investments business, directly and through its eight subsidiaries, including Tata Capital Advisors Pte. Ltd.
TCL is being put together as the Finance & Capital flagship of the Tata group. Tata Motors Finance Ltd., formerly part of Tata Motors, is merging with TCL. This was sanctioned by the National Company Law Tribunal, Mumbai by an order in May’25. TCL’s 3 key subsidiaries also have JVs, subsidiaries and partners. This complex organization may merge and simplify over a few years.
Thus a lot of opportunities exist for TCL to grow its loans and product sales, aligning with Tata group companies and their customers in India.
Management – Saurabh Agrawal Ch’man (Non-ED), Rajiv Sabharwal MD & CEO and Rakesh Bhatia CFO.
We analyse the key ratios and financial data for TCL with 2 peers. See table and analyses below.
Fig 1 Benchmarking Annual data is for FY25/ TCL data is as per RHP
By assets, BFL is the largest of the three, next is TCL and smallest is LTF. Valuation wise, BFL is most expensive and LTF the cheapest. TCL is between the two. The pricing appears aggressive.
TCL leads on 3-year Sales growth, while profit growth is highest for LTF. EBITDA margins are highest for TCL but it is low on Profit margins, while BFL is best here. On gross and net NPA, BFL leads. TCL is low on Net NPA. Cost of Funds is higher for TCL. It leads on ROCE but BFL leads on ROE. TCL is weak on Capital Adequacy.
It will take 1-2 years for ongoing mergers to be complete at TCL and key ratios in Fig 1 to stabilize, while BFL and LTF are established well set firms with clear strategies.
Recently RBI has released a circular regarding 15 NBFCs in Upper Layer classification under Scale Based Regulations. NBFCs have witnessed significant growth in size and interconnectedness in recent years.
An RBI UL NBFC is a systemically important firm identified by the RBI for higher regulatory scrutiny.
As per a CRISIL Report, TCL is the third largest diversified NBFC in India. These are in order of loan book
5) Aditya Birla Capital 6) HDB Financial 7) L&T Finance 8) Sundaram Finance
HDFC Ltd which was the largest NBFC, a Housing Finance firm, merged with HDFC Bank last year. Conversely group company HDB Financial was listed this year. Several groups are slowly consolidating their financial firms under the Bank umbrella, such as ICICI Bank, Axis Bank and IDFC First Bank.
As the #3 diversified NBFC in India today TCL already has a good size and diversified loan book.
The Tata brand stands for high ethics, sustainable operations and of late focus and aggressive growth.
The NBFC structure provides the flexibility for fast growth, partnerships and JVs for TCL.
Weaknesses
The other financial services firms of Tata group are Tata Asset Management, Tata MF, Tata AIG, Tata AIA Life and Tata Invest. Corp. are subsidiaries of Tata Sons, they may not become part of TCL.
TCL is a complex group with an ongoing merger and reorganization. It may take some time to stabilize.
As a non-deposit taking NBFC, TCL will face a higher cost of funds raised as wholesale deposits.
For several years, the Tata group struggled to set up the Finance arms, its only taken shape recently.
Opportunities
The Tata Group is a diversified conglomerate, with 29 listed and 100s of group companies. There exists opportunity for TCL to align with these firms and their customers to provide loans and financial services.
Wealth management and new categories such as Gold loans hold potential. From just Tata Motors loans, TCL will expand to provide loans across OEMs, and this can be a large business.
Threats
Competition – Bajaj Finance as the leader in the NBFCs has shown high growth rates and return ratios.
Other firms in the industry have strong sector focus such as Commercial Vehicles or housing loans.
Banks are free to compete in all sectors as NBFCs and also have lower cost of funds.
TCL has priced its IPO aggressively. While pricing is close to BFL on P/B, it is a far smaller firm by loan book. Also TCL is taking shape now, and it will be 1-2 years by the time its mergers and new divisions are complete, and performance ratios stabilize.
Opinion: BUY with a 2-year perspective
Addendum – Other useful reports we have made from this sector are
Punit Jain discloses that he has no shareholding in TCL. He does have shareholding in BFL (<1%) since 2003. Similarly, JainMatrix Investments Bangalore (JMI) and its promoters/ employees have no shareholding in TCL, and no known material conflict of interest as on date of publication of this report. This document has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an RIA – Registered Investment Advisor.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors. Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logos / brand name –
Last week I sold my car. It was a beautiful machine. I bought this Hyundai i10 in 2013. It became the default safe ride for work commutes, local errands and weekend joyrides. Occasionally we travelled intercity in it. Then my son grew old enough, and he learnt to drive in it. He added college commutes and meetings with friends, to the list of activities.
Now 12 years after the purchase, it was time to ring out the old. Selling your used car has also changed over the years. So a call to Spinny and another to Cars24 helped evaluate my options. I got a better offer from Cars24, so I sold it to them.
I felt a little sad to see it go. But I thought I can take my case and put some numbers to my car purchase, usage and sale decisions. And see if something useful comes out of it.
Should one really evaluate a car purchase in numbers? I’m not sure, but lets give it a shot.
Purchase, Sale and Line Items
Purchase – Rs 5,73,000 in 2013 in Bangalore
Annual maintenance – first year 0, from 2014 Rs 6,000, rising to Rs 12,000 recently. Lets assume no major accidents and no major parts replacements, just more repair and wear & tear recently.
Petrol costs – My usage over 12 years was less, just 28,000 km. This can vary widely from person to person. But lets calculate for this. This usage becomes 2,333 km/ year. Petrol prices rose from Rs 72 /lit in 2014 to Rs 100/lit now. Assuming an efficiency of 12 km/lit., one can calculate annual costs.
Sale – Rs 2,90,000 in 2025 in Bangalore
Totaling these in excel and using the IRR function, I got a -12.3% annual return for my car purchase.
However petrol usage is widely different for different folks, so lets remove this and recalculate.
Without petrol, I got a -7.66% annual return on my car purchase.
One missing factor is inflation. Obviously Rs 1 lakh was worth much more in 2014 than today. Lets factor in a 5% annual inflation to all transactions.
The Without Petrol calculation with a 5% inflation now is -12.1% annual return on the car purchase.
Excel Snapshot
Here’s a snapshot of the excel calculations. Click image below to see bigger.
Conclusions and Closing Thoughts
Added this point on 17/08 – Some of my blog’s brilliant followers have pointed out – Insurance and auto loan costs should be added here too. Insurance of course is mandatory, and more has to be added on if you want good coverage. I peg this at about 2% additional costs per year. A car loan is optional, so it depends on the buyer if he needs one. Here a loan costs about 9-11%, so this will add substantially to costs. Thanks Bala and Nandu !!
So there we go. The cost of a car like Hyundai i10 for me over this period was 14.1% annualized on the invested capital, adding insurance, not including petrol and car loan.
To some extent, a car purchase could be both a functional and a status purchase. The latter is difficult to quantify. And widely varies from person to person. Lets leave it at that.
This was a good hatchback, but not a luxury car. Numbers could be quite different for this.
Conversely, don’t forget how useful a car can be. It is quite safe. Its convenient and always available. Good in rainy weather. Its more useful for groups of 2-5 to travel together. Once you do own a car, you may as well use it extensively, for your work and travel.
I haven’t factored in depreciation. Not everyone can get this benefit. The dep. rate for vehicles in India is around 15-20% every year for the first 3-5 years. The highest car dep. rate occurs in year 1 of ownership and can go up to 30%. This can certainly lower the cost of ownership.
This is of course a 2013-25 story. For a car purchase now, all the numbers will change, but I suspect the annualized costs may be similar for a similar car.
The option we have is to take a cab / auto / bus / train / Metro, or personal 2 wheeler for travel. In fact as public transport improves and becomes convenient, the need for personal transport reduces.
For wealth building, buy appreciating assets. For utility and fun, go shopping, including for your car. But don’t forget that a car is definitely a depreciating asset.
Hope this was interesting. Do comment and critique below.
Punit Jain discloses that he has no shareholding in any of the firms mentioned in this article. This is written from the consumer PoV. He has no other financial interest or transactions, with any firms mentioned here or any group company. In addition, other than that mentioned above, JMI and its promoters/ employees have no direct or financial interest in these companies, and no known material conflict of interest as on date of publication of this report, to the best of his knowledge.
This document has been prepared by JainMatrix Investments Bangalore (JMI), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security or asset. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a SEBI RIA Registered Investment Advisor. JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logo/brand name –
This article investigates a trend in Indian markets — listing of subsidiaries by Corporates that are large conglomerates and sector leaders. Who really benefits from these listings? Are they a source of genuine value creation? To understand this, we map the data on subsidiary IPOs by reputed Indian Corporates between Jul’23 and Jul’25. Building on ourearlier analysis, which focused on a few prominent examples, we now expand the scope to 10 IPOs across diverse industries. This deeper dive presents more robust insights into the value creation effects of these IPOs for the Corporates, their shareholders, and IPO investors.
Subsidiary Listings over 2023-25
We identified 10 IPOs over the last 2 years, of subsidiaries of well known, listed, Corporates. We share the Market Capitalization data over this period (Jul’23 – Jul’25) at three key timelines – See Table 1:
Market Cap of the firm prior to listing of Subsidiary (5 days before IPO listing)
Post-listing of Subsidiary (30 calendar days after the listing day)
Current levels as on (15th July 2025) to uncover whether value is truly created so far.
Table 1 – Market Cap Data (click image to enlarge)
Some Findings:
Table 2 – Average Parameter Performance
The combined firms Market Cap one month Post Listing rose by 16%. In 9 of 10 cases, the combined firms market cap rose within 30 calendar days of the subsidiary IPO. See Table 2.
The highest post-listing rise was in Tata Motors + Tata Tech, with a combined gain of 33%.
Other notable increases include TVS Motor + TVS SCS: 26%
Federal Bank + Fed bank Financial: 20%
Bajaj Finance + Bajaj Housing Finance: 20%
This confirms a pattern: listing a subsidiary can unlock immediate shareholder value, especially when the market perceives the spinoff as a high-potential, distinct scalable business.
The average of gains & losses in the IPO subsidiary firms in the period from listing to today was 9%.
Only 4 out of 10 firms that IPO’d had positive gains as of today; remaining 6 had losses. Thus there are uncertain returns from IPOs, the firms appear to lose market cap after listing.
This is tough to generalize. It could be due to aggressive valuations. Or excess IPO demand.
The combined market caps of all the 10 firms (including subsidiaries) gained by an average of 34% in the period from Pre IPO to today. This is a very high number. Even benchmarked against the average Sensex gain of 16% in this period, the combined market caps gain is excellent.
Observations and Patterns
Value creation is visible in most Subsidiary listings, for the combined firms.
The Corporates often benefit despite initial volatility in market cap.
Combined value generally grows faster than Nifty or Sensex.
So, Who Really Gains from a Subsidiary Listing?
Corporates: The Parent company benefits from improved market visibility and simplification of the business. Valuation of the subsidiary is easier, and due to value unlocking, the Post-listing combined valuation has risen. Only in 2 of 10 cases, the combined valuation was flat Post listing of subsidiary.
Existing Shareholders of Corporates: Shareholders of Corporates don’t automatically benefit from the subsidiary IPO. To get gains, they have to invest additional capital in the subsidiary IPO. There is an IPO quota that helps parent company shareholders to get good allotment.
For Subsidiary IPO Investors: The reputation of the parent, coupled with listing of a firm with simpler business, sometimes from high potential sectors, has seen some of these IPOs do well. But with just 9% average gains as of today since listing, and with only 40% of the IPO firms positive today, investing in IPOs must be done carefully.
Conclusion: Value Unlocking, Risks and final thoughts
Subsidiary listings unlock value — the data supports this. For Corporates, it’s a clean move that sharpens focus and delivers a mkt. cap. growth. For investors, gains may depend on taking some action. Passive investors in the Corporate may experience short-term stagnation or dips. Active investors in the Corporate, and IPO participants, however may see faster capital appreciation.
The best strategy for Corporate shareholders is to actively invest in subsidiary IPOs in good offerings.
IPO investing in general is High Risk, but investing in the IPO of a listed company’s subsidiary is a much safer bet, due to past listed history, transparency and better available information.
The subsidiary being listed often has a simpler structure & business model, so is easier to value.
As India’s capital markets mature, we observe that legacy structures of complex conglomerates morph and simplify by way of subsidiary IPOs. These may evolve into a strategic norm — not just for restructuring, but as a deliberate value creation mechanism. The IPO of a subsidiary may also be a regulatory requirement (eg. Bajaj Housing Finance, perhaps a few more) so its a compliance activity, not driven by market cap objectives.
Excess demand has returned to the IPO market, and so IPO investors need to expect over-subscription and high IPO valuations while evaluating IPO opportunities.
These are 10 recent IPOs, from widely different industries, offered at different valuations, we cannot generalize results with high confidence, every new IPO case could be a different situation.
Several cases have emerged of firms preferring to raise funds by QIP rather than debt – an aggressive move. This also may result in several equity dilutions in a short time period. Conservative and well run firms prefer to not dilute their Equity Share Capital for years, giving better ROE.
Punit Jain discloses that he has no shareholding in any of the firms mentioned in this article except Bajaj Finance (since April 2003, ownership <1%) and Bajaj Housing Finance (since Sept’24 IPO, ownership <1%), and these have been mentioned here only as one of the 10 samples/ examples chosen. He is also a telecom consumer with services from Bharti Airtel and Reliance Jio. Other than these, he has no financial interest or transactions, with any firms mentioned here or any group company. In addition, JMI and its promoters/ employees have no direct or financial interest in these companies, and no known material conflict of interest as on date of publication of this report, to the best of his knowledge.
This document has been prepared by JainMatrix Investments Bangalore (JMI), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a SEBI RIA Registered Investment Advisor. JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logo/brand name –
IPO application dates: 21 – 23rd May’25, with Price Band of ₹ 85 – 90 per share, FV: ₹ 5. Lot Size: Investors can bid for a minimum of one lot of 166 shares, and in multiples of this.
IPO Size is ₹ 2,150 cr.; it’s entirely a Fresh Issue of shares, no OFS.
This IPO will expand the Equity Share Capital of Belrise as it is a Fresh Issue of shares.
Objects of Issue: 1) ₹ 1,618 cr. will be used repay or prepay certain borrowings, reducing its debt burden, currently D/E is 1.01 2) A portion will fund capital expenditure to expand and modernize its mfg. facilities, especially for EV and aluminium components. Some funds will support working capital needs, while 3) the rest will go toward general corporate purposes.
The IPO share quotas of QIBs: NIIs: Retail is 50:15:35. (Qualified, Non-Institutional Investors)
The unofficial/ grey market premium of HMI is ₹ 18/share over the IPO price.
IPO allotment is by 26th May, crediting shares/ refunds by 27th, and listing on BSE / NSE on May 28th.
Summary
Why Belrise Industries: The Indian auto sector is growing impressively and India is #1 in 2-wheelers and a leader in small cars globally.Belrise is one of India’s largest auto component suppliers, with a diversified portfolio spanning sheet metal, chassis, suspension, plastic/polymer, and EV systems. It has a 24% market share in metal parts of Indian 2W segment, and is #3 here. It caters to leading OEMs such as Bajaj, Hero, TVS, and Tata Motors. With 15 mfg. plants in India, it benefits from proximity to OEMs. Belrise has pivoted towards EV parts like battery packs and electric chassis assemblies, this positions it well for the next phase of auto growth in India and abroad.
Why now in IPO: The IPO is a fresh issue, and will help the firm repay debt and fund capex. At current valuations with PE of 27 times, it is reasonably priced among auto component peers, with significant upside potential as volumes scale in India and globally. Belrise is now focusing on CVs and 4W which provide higher volumes and revenue per vehicle.
Risks: 1) High dependence on a few OEM customers 2) RM price fluctuations can impact margins 3) Execution risk in scaling up EV and aluminium divisions 4) Supply chain disruptions or cost inflation 5) sector or economic downturn 6) Shift in OEM product design preferences 7) Regulatory risks around import-export policies and tariffs. 8) Location risk – 7/15 of plants are in Mah.
Punit Jain discloses that he has no shareholding in Belrise Industries Ltd., or any group company. In addition, JainMatrix Investments Bangalore (JMI) and its promoters/ employees have no direct or financial interest in this company, and no known material conflict of interest as on date of publication of this report. We may apply for the IPO through a stock broker in line with our recommendations.
This document has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.
Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logos / brand name –
Why IRCTC: This next gen Railways PSU has monopolies in internet rail ticketing, food and catering and Rail Neer. High potential segments include Tourism, travel packages and running luxury trains. Indian Railways is making high investments in train networks for speed, safety, passenger amenities and eco-friendly operations. These will accelerate trains as a preferred travel mode. IRCTC has a key passenger facing role in this.
Why Now: IRCTC has recovered post Covid and has excellent FY23-25 results. At a PE of 47 times, it is below historical average PE of 55 times, so undervalued. It has also invested on new capacities, new initiatives and better services. Across India we see a travel and tourism rebound at airports, tourist destinations and train stations. Its internet ticketing business is growing share of overall rail tickets, adding to convenience and access. PSUs are safer investments, in a volatile market.
Risks: 1) PSUs are slower to respond to market opportunities 2) Frequent transaction failures and website crashes, especially in Tatkal hours 3) It has vast user data and centralized systems, so is exposed to cyber-attacks, which can be damaging 4) Regulator is GoI and regulatory changes is an issue like loss of monopoly 5) Private online travel firms are raising competition 6) Absolute valuations of PE and EV/EBITDA ratios are high, even after a large recent fall.
Opinion: Buy with a price Target of ₹ 1,179 by May’27, a 65% upside.
IRCTC (Indian Railway Catering & Tourism Corporation) is a listed subsidiary of Indian Railways (IR). Incorporated in 1999, IRCTC has its HO in New Delhi. It operates in 4 business segments of Catering, Internet Ticketing, Tourism, and packaged drinking water under the name “Rail Neer”.
It reported total revenue of ₹ 4,270 cr. and PAT of ₹ 1,111 cr. for FY24. For the last 8 years the Revenue, EBITDA and PAT grew at 17%, 23% and 27% CAGR. It has 2,726 employees.
IRCTC runs operations for Indian Railways (IR) in catering services, online railway tickets and packaged water. It has streamlined the ticket booking process with its Online Ticket Booking system, called the advanced Next Generation E-Ticketing (NGeT) System.
IRCTC has established strategic partnerships with leading online travel agencies, including MakeMyTrip, RailYatri, and Goibibo to enhance accessibility and convenience in online tickets. It has 5 zonal offices and 10 regional offices; 1 internet ticketing office, 19 Rail Neer Plants, 11 base kitchens and 1 tourism office across India.
Revenue from Catering services is 46%, Internet ticketing-30, Tourism-16; Rail Neer 8%.
Management team – Sanjay Kumar Jain (CMD), Neeraj Sharma (Govt. Director), Rabindra Nath Mishra (Dir- Finance) and Dr. Lokiah RaviKumar (Dir – Catering & Services). Shareholding of IRCTC is Promoter (President of India) 62.4%, FIIs 7.45%, DIIs 13.72%, Public 15.33, Others 1.1%.
The rest and entire equity research report is available as a PDF, please feel free to download. More such quality reports are available with the JainMatrix Investments paid subscription.
Punit Jain discloses that he has no shareholding in IRCTC as on date of report. In addition, he has no financial interest or transactions with IRCTC, except occasional train travel bookings. In addition, JainMatrix Investments Bangalore (JMI) and its promoters/ employees have no direct or financial interest in IRCTC, and no known material conflict of interest as on date of publication of this report.
This document has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor. Registration granted by SEBI to JMI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logo/brand names –
07th April – Time to read article – text 10 min, video 43 minutes.
Today the Indian markets fell sharply, up to 5%, but lets look at this event in the global context.
I came across this wonderful video by Ray Dalio recently, (43 minutes) and this helps us put the current market scenario in context.
My lessons from this video:
The USA is in a down cycle and is showing the classic signs of this – more expenditure than revenue, high and rising debt, signs of domestic unrest and discomfort, and now this big one, new tariffs that are trying to curb imports and hopefully boost domestic production.
China has been rising for long in trade and defense, with strong manufacturing, and till now was a big exporter to USA and ran a massive trade surplus.
As USA fights China in the trade war, there may be bumps here, but this is a period of transition as China finds other markets and continues its rise.
In an era of extended cold wars (USA-Russia) and nuclear powered countries, my expectation is that modern transition of Big Cycles will happen in the form of Trade wars and slow stagflation of economies.
One example here is of Japan, which was a rising economic power till the 1980s, and could not sustain the rise, but has preserved its economy, and GDP has grown at about 1-2% p.a for 2-3 decades
So where is India and what is India’s play?
China is a manufacturing giant, making products in high volumes, from metal – steel and aluminium, to cars, EVs, toys, furniture, ships, trains, etc.
India’s play is in services –
Indian IT services industry is a miracle, with customers in over 150 countries. It gained momentum in the 1990s, and is today a massive industry commanding 50% of the global outsourced IT services market.
The second generation of Outsourced services has already rolled out – consisting of – Engineering services, contract medical & pharma services and Knowledge Process Outsourcing.
Global Competency Centers (GCCs) of many MNCs present in India also provide additional services like Marketing, Legal, HR, transaction processing, Finance and Accounts, etc.
The following Services sectors must learn from the Indian IT services giants and look at the global market potential:
Banking, Financial Services and Insurance – We have yet to see Indian BFSI firms grow aggressively abroad and establish a global brand. Given the domestic strengths and penetration, this is possible.
Hotel Chains – not just Taj hotels, but also Oberoi, ITC, Leela, etc. can also expand globally.
Education – Indians spend $60 billion (₹5.1 lakh cr.) per year on education abroad, mostly graduation and post grad degrees. This is 4X the entire GoI annual education budget. Quality education should be available more easily domestically, at a fraction of the cost in USA, UK or Australia. This will save outflows, and can even earn inflows.
Tourism – If packaged well, tourism to India can attract large numbers. The Himalayas in Kashmir, HP and Arunachal, the Goan and Kerala beaches, the Taj Mahal, historic forts and monuments, food and rich culture, etc. can draw in millions for the exotic Indian holiday.
Healthcare – the opportunity exists not just for domestic services, but medical tourism in India, and also hospital chains in the developed world, where there is a shortage. Yoga and Ayurveda are traditional Indian healthcare systems already admired globally.
Telecom – Bharti Airtel ventured successfully to Africa, the next stage is a global brand, and even other companies can roll out the India success model.
Aviation – Indigo & Air India have the opportunity to grow globally, building on the India base.
Retailing – the success by Reliance Retail, Zudio (Trent) and DMart can expand globally. Titan with Tanishq can also be in this category.
Food services – the Jubilant Foodworks franchise in India is a scalable QSR model, and Indian chains can expand abroad. Saravanaa Bhavan has expanded into several countries. Indian food is popular internationally, so there is a demand that can be tapped.
Infrastructure services – firms like L&T already have global footprints, and other firms with a good domestic projects roster can grow internationally.
Logistics – as India itself improves its infra, expands domestic capacities and cuts the costs of logistics, opportunities exist globally in Ports, Shipping and Railway services, where we can deliver projects to friendly nations through GoI.
Shipping – Indian shipmen dominate global merchant navies & shipping. India’s coastline stretches for 7,500 km. But how big is the Indian merchant shipping industry? There is massive potential here.
How can this play in Services be accelerated?
The need is for Industry focused colleges, universities and education, practical training with industry participation, and for skills development of the students at scale.
GoI should provide Plug and play industry infrastructure – Offices and Factory parks, ready with connections of water, electricity, road connectivity access and ready to occupy workspace.
Focus on growth in Tier 2 cities and towns by Govt. and current industry players.
Exports have to be encouraged more. The IT Services industry grew on the basis of all exports being Income Tax free in the 1990s. While GST is exempt today, broader encouragement like Global Sales Support desks, Trade Commissions, Think Tanks on exports markets, desks by Ministry of External Affairs, and various Ministries of GoI, and loans / funding will help.
While english speaking is an advantage for services, competence in Japanese, German, Spanish and French may also help in communication and business. A case – In a recent Vietnam holiday, we visited a mid sized Suits and Garments Tailoring showroom. A few minutes later, a batch of 20 odd Italian tourists walked in. I was stunned to see, a showroom sales staff made a fluent 20 minute presentation in Italian to them. Selling them 8 hour turnaround formal suits and traditional women’s dresses. No doubt the tourists bought lots of clothes that day.
Manufacturing and related thoughts
Manufacturing in India remains a massive opportunity, with the first objective to meet domestic needs. Here the sectors with potential are Defense, Shipping, Railways, airplanes, electronic products – mobiles, laptops, TVs, music equipment, Air conditioners and gadgets. Silicon chips are a key input which also can be made domestically.
Assembly in India is just the first step to get the supply chain and value add to increase in India.
We have to build on our success stories in automotive and pharmaceutical mfg. When will we be able to see an Indian made car succeed all over the world? Who will do this – Tata Motors? M&M?
The success of Indian 2W is admirable – Bajaj Auto, Eicher Motors and Hero Motors are doing well.
Why do Indian companies not list abroad? A quick check on ADRs and GDRs from India reveals a very short list of 10-11 companies. Any Indian company with significant global presence should list in USA or Europe.
Many years ago Cognizant listed in USA. It was riding global trends – HQ and listing in USA, IT workforce primarily in India, and customers in USA and spread across the world.
Chinese companies have long exploited this trend. A quick search reveals 286 Chinese companies listed in USA. Why have Indian companies missed this trick? The deepest stock market in the world is USA, listing here can give rich valuations, and help raise growth funds for Indian firms.
A large number of MNCs operate in India with subsidiaries, GCCs and factories or development centers. Like Hyundai India and Schneider Electric Infra., can they be nudged to list in India? This would cement their presence and commitment to India, and help to deepen Indian markets.
India has benefited from the free markets of the last few decades. With USA imposing tariffs for protection, India should continue trade with USA while growing free markets and trading with other countries and gain from global trade growth. To do this, it will have to lower tariff and non tariff barriers and sign Free Trade Agreements. At present 6-7 FTAs are under negotiation.
Japan can be an excellent target country, for Indian firms to partner with Japanese MNCs, and help them develop India as a manufacturing base for global sales, with success stories like Maruti Suzuki.
Conclusions
So Mr Leading Indian Bank CEO. USA isn’t just the place where you go on annual vacation to your brother’s house to admire the opulence and great roads. It’s the place you go with a crack team of CFO, CMO, retail head and CHRO, and plot your company’s 40% annual growth for the next decade.
In the wake of Trump Tariffs, we see a change in global order, with China emerging strong.
As some doors close, others can be opened. Indian firms have an opportunity to grab large chunks of the global services pie, while some can excel in select manufacturing opportunities.
We see a future of the parallel rise of China and India, CHINDIA, in the next BIG Cycle.
However there is little hope of cooperation, their rise will be independent and mutually exclusive, offering different products and services.
Any mention of companies in this article are purely to explain and illustrate a point, and these are not investment suggestions.
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