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India Gazette
01-07-2025
- Business
- India Gazette
Banks earnings will be reduced in Q1FY26 due to weak loan growth, lower margins and soft fee: Report
New Delhi [India], July 1 (ANI): Banks are expected to report muted earnings for the first quarter of FY26 because of weak loan growth, lower margins, seasonally soft fee income, and higher slippages weigh on performance, according to a report by IIFL Capital. The report estimates that banks' profit after tax (PAT) will decline by 2 per cent year-on-year and 4 per cent quarter-on-quarter. It said, 'We expect muted loan growth, NIM contraction, seasonally weak fee income and higher slippages to weigh on banks' 1Q PAT (-2 per cent yoy/-4 per cent qoq).' Business momentum remained sluggish during the quarter, with system-wide loan and deposit growth staying somewhat flat on a sequential basis. The report noted that system loan growth slowed to 9.6 per cent year-on-year, down from 11 per cent in the previous quarter. On a quarter-to-date basis, loan growth was just 0.4 per cent until June 13, compared to the usual 1.5-2.0 per cent growth seen in the first quarter of the past few years. Loan growth continued to moderate across segments, except MSME loans which grew at mid-teen levels. Other segments remained weak, with NBFC lending flat year-on-year, large corporates up just 1 per cent, vehicle loans rising 6 per cent, and housing and unsecured loans growing 9 per cent. The report expects net interest margins (NIMs) to contract by 8-25 basis points quarter-on-quarter in Q1. The decline in margins is driven by fall in loan yields of 10-20 basis points, which is more to offsets the decline in deposit rates. Savings account rates have been reduced by 20-350 basis points since December 2024, while retail term deposit rates have fallen by 20-100 basis points. Wholesale deposit rates also cooled off by 1 percentage point in the quarter. The report pointed out that average system liquidity turned into a surplus of Rs 2 trillion in Q1, compared to a deficit of Rs 1.7 trillion in the previous quarter. However, lower loan demand and the reduction in deposit rates have resulted in a fall in average outstanding spreads, by 9 basis points for PSU banks and 26 basis points for private banks till May. Seasonally weak fee income and sticky operating expenses are expected to lead to negative jaws for most banks, resulting in flat core pre-provision operating profit (PPOP) growth. Additionally, credit costs are likely to inch up due to seasonal rise in slippages and ageing provisions. The report expects margins to continue contracting by a cumulative 22-35 basis points till the second quarter of FY26. Margins are likely to stabilise in Q3 and begin to expand again from Q4 onwards. (ANI)
Time of India
01-07-2025
- Business
- Time of India
Banks earnings will reduce in Q1 FY26 due to weak loan growth, lower margins and soft fee: Report
Banks are expected to report muted earnings for the first quarter of FY26 because of weak loan growth , lower margins, seasonally soft fee income, and higher slippages weigh on performance, according to a report by IIFL Capital . The report estimates that banks' profit after tax (PAT) will decline by 2 per cent year-on-year and 4 per cent quarter-on-quarter. It said, "We expect muted loan growth, NIM contraction, seasonally weak fee income and higher slippages to weigh on banks' 1Q PAT (-2% yoy/-4% qoq)." by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo Business momentum remained sluggish during the quarter, with system-wide loan and deposit growth staying somewhat flat on a sequential basis. The report noted that system loan growth slowed to 9.6 per cent year-on-year, down from 11 per cent in the previous quarter. Live Events On a quarter-to-date basis, loan growth was just 0.4 per cent until June 13, compared to the usual 1.5-2.0 per cent growth seen in the first quarter of the past few years. Loan growth continued to moderate across segments, except MSME loans which grew at mid-teen levels. Other segments remained weak, with NBFC lending flat year-on-year, large corporates up just 1 per cent, vehicle loans rising 6 per cent, and housing and unsecured loans growing 9 per cent. The report expects net interest margins (NIMs) to contract by 8-25 basis points quarter-on-quarter in Q1. The decline in margins is driven by fall in loan yields of 10-20 basis points, which is more to offsets the decline in deposit rates. Savings account rates have been reduced by 20-350 basis points since December 2024, while retail term deposit rates have fallen by 20-100 basis points. Wholesale deposit rates also cooled off by 1 percentage point in the quarter. The report pointed out that average system liquidity turned into a surplus of Rs 2 trillion in Q1, compared to a deficit of Rs 1.7 trillion in the previous quarter. However, lower loan demand and the reduction in deposit rates have resulted in a fall in average outstanding spreads, by 9 basis points for PSU banks and 26 basis points for private banks till May. Seasonally weak fee income and sticky operating expenses are expected to lead to negative jaws for most banks, resulting in flat core pre-provision operating profit (PPOP) growth. Additionally, credit costs are likely to inch up due to seasonal rise in slippages and ageing provisions. The report expects margins to continue contracting by a cumulative 22-35 basis points till the second quarter of FY26. Margins are likely to stabilise in Q3 and begin to expand again from Q4 onwards.
Economic Times
24-06-2025
- Business
- Economic Times
Swiggy shares jump over 20% in a month: Is a bigger rally brewing?
Swiggy shares have jumped over 20% in the past month, fueled by technical strength, positive brokerage views, and macro tailwinds like festive demand and the upcoming 8th Pay Commission. Analysts see room for further gains, especially with improving margins and growth in its quick commerce vertical. Synopsis Swiggy shares have jumped over 20% in the past month, fueled by technical strength, positive brokerage views, and macro tailwinds like festive demand and the upcoming 8th Pay Commission. Analysts see room for further gains, especially with improving margins and growth in its quick commerce vertical. Swiggy shares have surged over 20% in the past month, reflecting renewed investor optimism after a prolonged consolidation phase. From its May 2025 lows, the stock has steadily recovered, riding on improved technicals, a positive outlook from top brokerages, and broader tailwinds such as the upcoming festive season and the likely rollout of the 8th Pay Commission. ADVERTISEMENT The recovery in Swiggy's stock price has been supported by improving technical strength. Amit Trivedi, Vice President, Technical Analyst at YES Securities, believes the trend remains "moderately positive." 'Swiggy, which debuted in the latter part of 2024, experienced a multi-month price correction between Dec'24 and May'25. However, since June 2025, the stock has demonstrated gradual recovery, managing to clear resistance levels in the 360–380 zone,' said Trivedi. He noted that the formation of multiple bullish candles indicates strong support at Rs 350, while sustained stability above Rs 380 could unlock upside potential toward the Rs 430 Bhojane, Equity Research Analyst at Choice Broking, echoed this view, recommending a buy-on-dips strategy. 'Swiggy has recently given a breakout from a parallel range on the daily chart. After a successful breakout and retest, the stock made a new high, indicating strong bullish sentiment,' he said. ADVERTISEMENT With RSI at 72.24 and a positive crossover in the Stochastic RSI, Bhojane expects the rally to continue, targeting Rs 440–460. He advises existing holders to trail stop-losses at Rs 365 and look for buying opportunities near Rs 375. Brokerages IIFL Capital and BNP Paribas have initiated coverage on Swiggy with bullish views, citing strong fundamentals and underappreciated potential in the quick commerce (QC) space. ADVERTISEMENT IIFL Capital has recently assigned a 'buy' rating with a target price of Rs 535, highlighting Swiggy's improving execution and strong positioning in food delivery. While the platform saw its food delivery market share dip from 46.5% in FY22 to 42.4% in Q1FY25, IIFL attributes this to short-term execution issues.'We expect Swiggy's food delivery vertical to grow at 18% CAGR over FY25–28, with Adjusted EBITDA margins expanding to 20% by FY28,' IIFL said. Contribution margins have already improved from 7.1% to 7.8% of gross order value (GOV) between FY25 and Q4FY25, aided by better monetisation, ad revenue, and cost optimisation. ADVERTISEMENT Quick commerce remains a key growth driver. IIFL believes that Swiggy's 10-minute delivery service, Bolt, now accounting for 12% of orders, along with strong execution, gives it an edge in a duopoly market. Notably, IIFL sees Swiggy's non-food business as significantly undervalued compared to rivals like Paribas, too, has given an 'Outperform' rating to Swiggy, expecting it to outpace competitor Eternal in both sales and EBITDA growth by FY28. It points to a turnaround in execution, faster deliveries, and better monetisation strategies, particularly in quick commerce via Instamart, which it believes is not fully priced into current valuations. ADVERTISEMENT 'Despite near-term losses, Swiggy's QC play is part of a land-grab strategy. With profitability triggers such as better volumes and brand partnerships, a re-rating is possible,' BNP internal improvements, two broader tailwinds could further support Swiggy's growth trajectory in the coming the upcoming festive season, which typically sees a surge in online food and grocery orders, is expected to boost volumes across both food delivery and QC platforms. Analysts anticipate increased consumer spending and a rise in average order values as disposable incomes rise during this the expected implementation of the 8th Pay Commission—which is likely to benefit millions of government employees and pensioners—may lead to a broader consumption boost. Increased discretionary spending could flow into categories like online food ordering and quick commerce, especially in urban centres where Swiggy has a strong Swiggy's recent price action and analyst coverage suggest growing investor confidence, the road ahead will depend on its ability to execute consistently in both food delivery and quick festive demand, potential pay commission-led consumption, and margin improvement offer tailwinds. However, competition, customer retention, and sustained profitability remain critical areas to watch. Also Read: Is the grey market premium misleading? Decoding the valuation gap in HDB Financial's IPO With sentiment improving and brokerages projecting robust earnings and market share gains, investors may continue to ride the Swiggy wave—but with an eye on delivery. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. 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Economic Times
23-06-2025
- Business
- Economic Times
Why are FPIs selling off FMCG and power stocks in June?
Mumbai : Fast-moving consumer goods, power, consumer durables, and information technology were the sectors that saw the highest selloff by overseas funds in the first-half of June, according to data from NSDL. The fast-moving consumer goods (FMCG) sector witnessed the highest outflows at ₹3,626 crore, after receiving inflows worth ₹815 crore in May. Between January and May, the sector saw selling worth over ₹14,000 crore. ADVERTISEMENT "Continuing with the trend seen in the first quarter of this calendar year, FMCG companies saw foreign selling and preference for rate-sensitives and beta plays were the few reasons driving this trend," said Sriram Velayudhan, senior vice president, IIFL Capital. "Foreign investors are looking for better opportunities across sectors." Foreign investors extended their selling in the power sector, offloading shares worth ₹3,120 crore in the first 15 days of June, after selling ₹2,494 crore last month. The sector has seen outflows worth over ₹9,000 crore between January and May. "Power companies had run up in the recent past, but the valuations are rich and not sustainable," said Siddarth Bhamre, head of institutional research at Asit C Mehta Intermediates. Foreign BuyingThese investors allocated ₹9,674 crore across 10 sectors in the first-half of June, with financial services receiving the highest inflows-₹4,685 crore during the period-after witnessing a similar amount of inflows in May. ADVERTISEMENT Between January and May, the sector, with the highest foreign investor holding, saw ₹4,771 crore worth of foreign said that the interest rate and Cash Reserve Ratio (CRR) cut by the RBI has prompted inflows into the financial services sector. ADVERTISEMENT Beyond banking and financial services, their purchases in most of the other sectors were relatively modest."While it is tough to predict further flows, foreign investors are likely to be nimble-footed, so no major flows are likely amid the geopolitical tensions in the Middle East and the trade situation between US and China," said Bhamre. ADVERTISEMENT Chemicals, oil & gas, and capital goods were among the other sectors that received flows in the first- half of June. Bhamre said that the premium attached to the Trump tariffs is expected to come off given the back and forth on tariffs by Trump. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
23-06-2025
- Business
- Time of India
Why are FPIs selling off FMCG and power stocks in June?
Mumbai : Fast-moving consumer goods, power, consumer durables, and information technology were the sectors that saw the highest selloff by overseas funds in the first-half of June, according to data from NSDL. The fast-moving consumer goods (FMCG) sector witnessed the highest outflows at ₹3,626 crore, after receiving inflows worth ₹815 crore in May. Between January and May, the sector saw selling worth over ₹14,000 crore. "Continuing with the trend seen in the first quarter of this calendar year, FMCG companies saw foreign selling and preference for rate-sensitives and beta plays were the few reasons driving this trend," said Sriram Velayudhan, senior vice president, IIFL Capital. "Foreign investors are looking for better opportunities across sectors." by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Access all TV channels anywhere, anytime Techno Mag Learn More Undo Foreign investors extended their selling in the power sector, offloading shares worth ₹3,120 crore in the first 15 days of June, after selling ₹2,494 crore last month. The sector has seen outflows worth over ₹9,000 crore between January and May. "Power companies had run up in the recent past, but the valuations are rich and not sustainable," said Siddarth Bhamre, head of institutional research at Asit C Mehta Intermediates. Agencies Foreign Buying Live Events These investors allocated ₹9,674 crore across 10 sectors in the first-half of June, with financial services receiving the highest inflows-₹4,685 crore during the period-after witnessing a similar amount of inflows in May. Between January and May, the sector, with the highest foreign investor holding, saw ₹4,771 crore worth of foreign investment. Velayudhan said that the interest rate and Cash Reserve Ratio (CRR) cut by the RBI has prompted inflows into the financial services sector. Beyond banking and financial services, their purchases in most of the other sectors were relatively modest. "While it is tough to predict further flows, foreign investors are likely to be nimble-footed, so no major flows are likely amid the geopolitical tensions in the Middle East and the trade situation between US and China," said Bhamre. Chemicals, oil & gas, and capital goods were among the other sectors that received flows in the first- half of June. Bhamre said that the premium attached to the Trump tariffs is expected to come off given the back and forth on tariffs by Trump.
