Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. REITs, beyond the headline numbers

2. The stress test for India’s inflation targeting mechanism

REITs, beyond the headline numbers

Embassy REIT’s buildings earned about 15% more rent this past year than the year before. Those who own Embassy, however, got about 10% more money. Somewhere on the way from the building to the bank account, roughly a third of the growth went missing.

This is fundamental to how a REIT works. Once you can understand why, you can read almost any REIT’s results.

We’ve written, before, about what a REIT actually is. In essence, they’re a way to own a slice of a large pile of rent-earning real estate, listed on an exchange like a stock. This piece is about something narrower: how does one actually read their results, and what that tells us.

We regularly cover company results on The Daily Brief, and rarely do we have the space to go beyond a few scattered observations. But even by those standards, doing justice to three REITs’ quarterly numbers is complicated. There are waterfalls of cash, dozens of leasing metrics, and weird valuation models. An analyst could spend a week on any one of them.

We won’t do that here. Instead, we’ll look through a handful of lenses that (we thought) actually matter, at the results of India’s three biggest listed REITs. We’ll look at Bengaluru-focused Embassy, the biggest of the lot; Mindspace, the fastest-growing REIT this year, which also runs data centres; and Knowledge Realty Trust, or KRT, the newest of the three. Consider this a curious, nerdy tour of how to read their results — not a full-blown research report on the health of Indian office spaces.

At the moment, all of them are in a good place. India is in the middle of an office boom, driven by global firms setting up large captive offices here. Demand for space runs well ahead of new supply. As the tide rises, everyone’s results look strong. This presents an interesting question, however: how do three companies riding the same wave end up giving very different returns?

Let’s dive in.

Forget profit, follow the cash

By law, a REIT has to hand most of its cash — around 90% of it — back to its owners. It can’t retain earnings and reinvest them, the way an Infosys or an HUL would. That rule makes a REIT’s profit figure close to meaningless. What matters, instead, is the cash the properties throw off, and how much of it survives the journey down to you.

Instead, look at two numbers. The first is the income the buildings themselves generate: that is, rent minus the cost of running those buildings. This is their ‘Net Operating Income’ or ‘NOI’. Think of it as what the property earns before any financing or head-office costs are involved. The second is what eventually lands in a unitholder’s account — the distribution. Between those two is a long staircase of deductions, with cash leaking at every step.

The biggest leak, by far, is the interest a REIT pays on its debt.

The busiest REITs leak the most cash as interest. A building under construction has to be financed well before it earns a single rupee of rent. Even when a new building just opens, it usually comes with rent-free “move-in periods”, Accounting rules, meanwhile, spread rent out evenly across the whole lease. So, a REIT’s books may show income, even where the building isn’t yet collecting cash.

As a result, a REIT’s paper income can grow much faster than the cash it pays out — and it can stay that way for years.

This was Embassy’s story this year. Its buildings “earnings” grew much faster than its payouts. The difference came from its construction pipeline. It was building a large amount of space right now, each tower adding financing costs and paper-rent today. Meanwhile, the real cash will only show up later. As its management says upfront, this gap will stick around for a couple of years.

The complexity continues when the REIT starts releasing cash as well, by the way. We won’t get into the weeds here, but there are different ways in which a REIT can pay out to you, each of which are taxed differently. So the shape of a REIT’s distribution — and not just its size — decides how much you walk away with after tax. Two REITs can advertise the same headline payout while leaving you with meaningfully different amounts.

KRT, for instance, runs an unusually tax-friendly mix, making its payout a little more attractive than it first looks. So when you compare REITs on yield, compare them after tax, not before.

Is the growth real?

Eventually, it is a REIT’s distribution that you’re the most interested in. That is how money actually reaches your wallet. How and why does that grow? Here are a few simple ideas to keep in mind:

First, there’s a building’s occupancy, or how full it is. This gives you the pulse of demand.

Second, there’s a REIT’s pricing power. For instance, when an old tenant moves out and a new one signs for the same floor, how much more is the new tenant paying?

Third — and the one that tells you most about the future — is the gap between what sitting tenants currently pay, and what their space would fetch at today’s market rents. Old leases, signed years ago at old rates, tell you of a building’s potential revenue growth. Some day, those leases will expire, and reset to current rates. Then, its income shall jump without the REIT having to lift a finger.

Finally, most leases come with automatic annual increases in rent.

Together, these tell you about the possible growth in earnings a REIT might see.

In the March quarter, of the three REITs we’re looking at, Mindspace saw its income grow the fastest, by a clear margin. This came from two things. One, it just wrapped up some acquisitions. But it also saw an unusually high reset of rents in Hyderabad. Many of its tenants had been sitting on leases far below today’s market rate. When those leases rolled over, there was a dramatic jump. New tenants paid much more than those they replaced.

Part of evaluating a REIT is spotting leaps like this in advance.

Currently, there’s still a lot of upside left to capture at KRT and Mindspace. In contrast, Embassy has already harvested much of its reversion. This is why Embassy’s growth looks more muted.

That isn’t a knock on the company. This picture could change. Market rents in Embassy’s core markets are still climbing.

The biggest cost for a REIT

As we told you before, the biggest leak between what a building earns and what you receive is interest. This makes the rate a REIT pays for its financing one of the most powerful levers for the size of your payout. Every rupee saved in borrowing costs is a rupee that flows almost straight to distributions.

There are three things that shape these costs.

One, there’s the question of how much debt it carries relative to the value of its assets. On one hand, this is a measure of risk. Flipped around, it’s also a measure of how much firepower it can generate to go and buy more buildings.

Two, there’s the direction its borrowing cost is moving in: which gives you the direction in which the lever swings.

Three, you should know how much of its debt carries a fixed rate versus a floating one. This tells you what happens if interest rates move.

When it comes to debt, KRT presents an interesting case. It carries the least debt of the three by some margin. One, it makes it the safest. Two, it also gives it headroom to expand. As a newly listed REIT, KRT spent the year refinancing old, expensive borrowing into cheaper money, cutting its cost of debt sharply, This is a clean, visible tailwind to its payout.

That said, most of its debt floats with interest rates. If interest rates rise, its distributions could suddenly dip. Embassy and Mindspace, by contrast, have locked in more of their debt at fixed rates, so they’re better insulated. In fact, Embassy even sold the Indian REIT market’s first ten-year bond this year, lengthening its runway in the process.

That said, as borrowing costs fell, everyone’s payouts were better. This was a gift of the interest rate cycle. This isn’t something you’ll see every year. All three management teams warned that this trend could reverse if oil prices or geopolitics push inflation back up.

One bet to rule them all

Usually, when we recap a sector’s results, we think of individual companies as a proxy for entire parts of the economy. That’s more complex with a REIT, given the many things happening inside one.

And yet, there’s still a sector-sized bet hidden in there: that India will keep wanting more office space.

There’s a strong case for that. Global firms are increasingly flocking to India to set up new offices for real high-value work, which goes beyond simple back-office tasks. These tenants are sticky, and growing. Demand for office space has been running ahead of new supply for a while. Vacancies are low. For the very first time, in fact, average rents across India crossed ₹100 per square foot per month.

But there’s a bear case too, arising from two letters: AI.

If software can do the same work as armies of IT-services staff, then companies need fewer people, who in turn need fewer desks. For a sector whose tenants are largely technology firms, that’s an existential question.

So much of what we’ve discussed here — cheap debt, underpriced leases, and the like — are all temporary. Over the long term, there’s one question worth watching: does AI make India’s offices busier and more valuable, or simply emptier?

The stress test for India’s inflation targeting mechanism

India has usually fought inflation in food prices with a set toolkit.

When onion prices spike, exports are banned. When wheat gets expensive, the Food Corporation starts selling grain on the open market. When rice runs short, export restrictions tighten. This is how we’ve dealt with food inflation for decades, using supply-side controls, trade restrictions, and fiscal adjustments. These are all government instruments.

A decade ago, though, the country added a brand new layer to this system: monetary policy. That inserts a new party — the central bank — to the mix.

In 2016, RBI adopted flexible inflation targeting (FIT), which entailed a clear mandate: keep consumer price inflation at 4%, within a tolerance band of 2–6%. An independent Monetary Policy Committee was set up and accountability provisions were written into law. The idea was that a credible central bank would anchor inflation expectations in a way that earlier interventions alone never could. As we’ve covered before, the design was rigorous. And for the first few years, it worked.

Then came the first real test.

Between 2019 and 2024, inflation repeatedly breached the RBI’s upper tolerance band. Headline consumer price inflation (CPI) averaged above 5% for the entire period. The MPC had to issue a statutory constitutional explanation to the government after inflation stayed above 6% for three straight quarters as to why they had failed to keep prices in check.

What made this experience unique was that most of the inflation was driven by domestic food prices. Even after CoVID, while global food prices corrected after the pandemic, India’s kept climbing.

A new working paper by economist Renu Kohli at the Centre for Social and Economic Progress has offered a new, systematic account of this episode, and argues that what happened between 2019 and 2024 may not be an anomaly, but a preview of what’s coming.

Food is the whole story

Over 2019-2024, food inflation averaged 8.4% over 2019–2024. Headline inflation, by comparison, only averaged 5%. On average, food prices added 2.5 percentage points to headline inflation every month during this period, compared to 1.6 percentage points in the five years before. That’s a massive shift in the composition of what’s driving prices up.

It wasn’t the result of one bad quarter or one spoiled harvest. Cereals alone, which hold a weight of just over 12% in the CPI basket, accounted for nearly a fifth of total inflation between 2022 and 2024. Vegetables also collapsed repeatedly. The food price index rose more than 50% in those 5 years.

What made this episode different from India’s historical food inflation bouts was the dynamics.

See, in the past, food price spikes tended to be mean-reverting. What that means is that if prices would surge after a bad monsoon, they would correct within a few months as the next harvest came in. But that pattern broke down in this period. After 2019, spikes got bigger, more frequent, and corrections got weaker. The paper documents that price surges became bigger and lasted longer. And while the pandemic disruptions also contributed to this, this effect largely faded by late 2022.

Meanwhile, something strange was happening on the other side of the inflation ledger.

Core inflation, which strips out food and fuel, crashed to a historic low of around 3% by May 2024. The gap between headline and core inflation averaged 148 basis points in 2024, more than three times the historical average of 47 points.

This was no statistical curiosity either. It meant that the non-food economy was cooling rapidly, while the inflation number the RBI is legally bound to target kept flashing red because of food. It created a genuine policy dilemma: headline inflation was too high to cut rates, but core inflation was signalling an economy that desperately needed relief.

When the weather turned

The persistence of food inflation wasn’t a monetary policy failure, though. It was almost wholly a climate story.

Kohli traces the food price pressures to a cascade of extreme weather events that has few historical parallels. Successive heatwaves and significant deficits of rainfall damaged wheat crops and vegetables for three consecutive years between 2022 and 2024. In fact, in 2023, something unprecedented happened: both winter and summer crops — wheat and rice, the two pillars of India’s food security — were disrupted simultaneously. That had not occurred in the previous two decades.

As a result, wheat procurement collapsed by roughly 40% over the episode, and public wheat stocks fell 70%. Official and private estimates of wheat production diverged sharply, adding a layer of uncertainty to an already strained system.

The paper also flags an emerging pattern: statistically, hotter years now correlate more strongly with weaker monsoons than they did historically.

That points to more compounding risks, and less isolated bad luck. In the author’s view, this matters because the standard monetary policy response to food price shocks assumes the shocks are temporary. The RBI’s playbook is to hold rates steady, wait for the next harvest, and let prices correct on their own. That logic falls apart when the next harvest is also bad.

In essence, how does monetary policy solve a problem that channels itself through global warming?

The state intervenes

When food prices started rising in late 2019, the MPC held rates and kept its stance accommodative, betting that supplies would normalise. When the pandemic hit in 2020, the RBI cut rates further and flooded the system with liquidity, which amounts to about 8.7% of GDP in targeted support.

But by mid-2021, food inflation was entrenched, household inflation expectations had crossed 12%, and most emerging economy central banks had already started tightening. India didn’t begin raising rates until May 2022 — nearly a year behind.

In the meantime, government interventions filled the vacuum. The scale of supply-side intervention during this period was extraordinary. Export bans on wheat and rice, stockholding caps on traders and processors, open market grain sales, tariff adjustments, fuel duty cuts, a freeze on retail pump prices — the full arsenal was deployed. The number of agricultural market interventions went from 5 in 2019–20 to 12 in 2021–22 to 28 in 2023–24. At the peak, the government was announcing more than two interventions a month.

The cuts also partly worked. As per the RBI, the fuel duty cuts lowered headline inflation by about 1.5 percentage points. Core inflation came down too.

But food inflation barely budged. Despite all the agricultural interventions, food price growth exceeded 6% in most months for over five years from its initial surge. It’s worth noting that whatever disinflation India did achieve in 2023 was driven almost entirely by the energy side — the fuel duty cuts and the pump price freeze effectively reversed the previous year’s trend.

The controls may have prevented sharper spikes, but they didn’t break the inflationary inertia. After all, climate change is not a factor in their control.

Some of the controls produced their own market distortions, too. For instance, stockholding caps reduced trader participation at price-stabilising auctions. Then, the divergence between official and private wheat production estimates fuelled confusion in markets.

The RBI’s own forecasting struggled to keep up. In April 2022, the RBI projected inflation would decline steadily over the coming quarters to 5.7% for the year. But the actual inflation in March and April came in at 7% and 8%. By June, the annual forecast was revised upward by a full percentage point to 6.7%.

That’s not normal forecast uncertainty. That’s a framework that was systematically underweighting the persistence of food shocks. But moreover, as we shall see now, it also reveals that the inflation targeting framework was heavily reliant on the success of the government’s actions.

Whose expectations are they anyway?

The MPC minutes from 2021 and 2022 are very revealing about how the inflation targeting mechanism worked in practice.

They contain repeated requests for fiscal adjustments on the part of the government — like fuel duty cuts and price ceilings — to help anchor inflation expectations that the RBI’s own tools couldn’t reach. The central bank ran special surveys of household inflation expectations after the government announced tax cuts, effectively measuring whether the finance ministry’s actions had done what monetary policy could not.

But this muddles the fundamental idea of inflation targeting. The whole architecture rests on the central bank being seen as the credible, independent anchor. When the anchor’s effectiveness depends on whether the government bans onion exports in time, that credibility frays.

And the paper offers a striking piece of econometric evidence on this point, too. Kohli found that compared to 2014-2018, inflation became more sensitive to food shocks under FIT, not less. In the earlier period, the response was statistically insignificant — food shocks didn’t meaningfully move headline inflation. In the later period, the pass-through was large and highly significant. That’s the opposite of what a maturing inflation targeting framework is supposed to deliver.

Inside the MPC, disagreements sharpened. Some members argued the growth sacrifice from keeping rates elevated, while food inflation raged beyond their control, had become unacceptable. The government’s chief economic adviser publicly questioned whether headline CPI was even the right target for a country so vulnerable to food price volatility. That kind of questioning, during a prolonged inflation overshoot, risks undermining the framework’s institutional legitimacy at precisely the moment it needs it most.

Conclusion

The 2019–2024 episode exposed a structural vulnerability at the heart of India’s monetary framework: the thing that keeps driving inflation — food prices — is the one thing interest rates couldn’t fix.

And the climate trends that made food inflation so persistent are intensifying, not receding. Temperatures are hitting new records more frequently. Simultaneous disruptions to winter and summer crops, once unthinkable, have now happened. The policy arsenal of export bans and stock limits is showing diminishing returns.

The implication is clear: either the monetary framework adapts to a world where supply shocks are structural rather than temporary, or India’s agricultural markets get the reforms that would make them less vulnerable to climate volatility. The second option may not be likely to happen anytime soon. And no one has a good answer for the first.

Tidbits

1. The Coal Ministry has notified the Coal Exchange Rules, 2026, laying the groundwork for electronic coal trading with formal price discovery — similar to exchange-based systems in other commodity markets. The rules mandate a minimum net worth of ₹50 crore for exchange operators, cap individual ownership at 5%, and require existing electronic coal trading platforms to register within six months or shut down.
   Source: Business Standard
   

2. At TCS’s annual general meeting, Chairman N Chandrasekaran said the company could eventually have as many AI agents as its ~500,000 employees, working alongside humans. TCS won’t lay off existing staff but will slow hiring as tasks get automated; its annualised AI revenue has already hit $2.5 billion, growing at a compound quarterly rate of over 22%.
   Source: Reuters
   

3. Adani Energy will purchase 100% of IntelliSmart Infrastructure, a smart-metering JV between NIIF and EESL, for ₹3050 crore. IntelliSmart currently owns and operates over 2.2 crore meters across UP, Gujarat, MP, Bihar and Assam, and its revenue jumped from ₹243.5 crore in FY24 to ₹621.3 crore in FY25. This acquisition will take Adani’s total smart meter portfolio past 4.7 crore units, making it the largest smart meter player in India.
   Source: Economic Times

- This edition of the newsletter was written by Kashish and Manie.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #15

Hi folks, hope you’ve had a great week…

Read more

4 days ago · 13 likes · Zerodha

Ajay Srivastava on India’s place in the fracturing global trade order

The rules-based world trade order as we know it is fracturing, with weaponized tariffs and every country scrambling to secure its place in the new paradigm. We recently spoke to Ajay Srivastava, founder of the Global Trade Research Initiative and a former Indian Trade Service official, to make sense of how India is navigating this high-stakes shift. Our conversation dives deep into what Trump’s tariffs actually mean for global trade, why Bangladesh massively outperforms India in garment exports despite fewer resources, why India’s software giants haven’t made a serious bet on AI, and the broken links in India’s textile supply chain. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. Five ideas from the RBI's annual report

2. India’s tyre boom hits a pothole

Five ideas from the RBI's annual report

Towards the end of last month, the RBI came out with its annual report. It’s a 250-page monstrosity, filled with reams of data — income statements, schedules, payment-volume tables, footnotes on how gold is valued. Most people wouldn’t read something this dense. We wouldn’t either, if we weren’t trying to cover it for you.

If you can brave it, however, this dry report is filled with fascinating nuggets about India, its economy, and its financial system. Some of its headline numbers have made the news — such as the ₹2.86 lakh crore check the RBI handed over to the government. We won’t repeat those to you.

Here are five things you probably didn’t see in the headlines, however.

One: A credit boom without new borrowers

Between April and December last year, the amount banks lent to small businesses grew 23.5% year-on-year. The sector’s outstanding credit to micro, small and medium enterprises went up from ₹29.8 lakh crore to ₹36.8 lakh crore — a difference of ₹7 lakh crore in a single year.

By all accounts, this was a huge boom year. But there’s a twist: even though the money being lent grew immensely, it went to a smaller set of borrowers.

Over the years, the number of micro businesses receiving financing was roughly flat. The sector’s small and medium accounts, meanwhile, actually fell. At the very same time, however, the average borrower, across categories, had received more money.

Why would these two trends play out at once?

We have a few theories. For one, it’s just harder to lend to a new small business. Chances are, a new micro-borrower has no credit history, no audited accounts, and nothing to pledge. Giving them loans takes work — the effort of underwriting a ₹5 lakh loan to an unknown kirana shop is not very different from that in giving a ₹5 crore loan to an established company. The returns, meanwhile, are smaller.

India’s “priority sector lending” laws make banks direct a substantial amount of their lending to small firms. Their targets, however, are linked to the rupees they give out, and not how many borrowers they serve.

Together, these incentives push banks to reach for firms already on their books, handing them bigger checks, rather than finding new borrowers.

What could change this picture?

A major bottleneck many borrowers face is a lack of collateral. This is perhaps why the RBI, from April 2026, doubled the ceiling on collateral-free loans to small firms, from ₹10 lakh to ₹20 lakh. Ultimately, however, a firm with nothing to pledge is asking a bank to lend on trust.

Do banks actually have that appetite? That’s a question worth looking at next year.

Two: Money is getting more expensive for banks

Banks have an odd, convoluted relationship with money: they create money every time they give a loan, but are hemmed in by a series of statutory ratios. The specifics are too complex for what we’re doing here.

In a roundabout way, however, a bank’s fortunes are tied to the rate at which they can procure money. That has been tightening with time.

The cheapest source of money, for a bank, is the deposits people make with them. Over much of the last year, however, banks were increasing their lending faster than they could grow their deposits. In FY 2025-26, bank credit to the commercial sector went up by 15.9%. Just one year ago, that rate was much lower — 10.9%. Overall, bank credit grew by 17.1% through last year.

It isn’t that people aren’t making deposits. In fact, bank deposits, too, grew at a robust rate of 16.2% year-on-year. That’s reasonably quick, but it’s still almost a percentage point below the rate of credit expansion.

What does this gap actually mean?

Banks won’t run out of money. All money, with the exception of hard cash, ultimately sits somewhere in the banking system. If a bank can’t grow the current and savings balances in its account, they can reach for something else. They could, for instance, try getting people to make fixed deposits with them. And if their lending outstrips that as well, they could go for wholesale funding — like certificates of deposit, which are short-term IOUs sold to mutual funds and insurers.

This is precisely what the report shows. In FY 2026, the banking sector’s total issuances of certificates of deposit were at ₹13.5 lakh crore — compared to ₹11.9 lakh crore one year ago. They were effectively scrambling to fund an unending surge in lending.

Different sources of money, however, come with different costs.

Wholesale money, for instance, is pricey, and reprices the instant rates move. In a crisis, it is the first to dry up, making it a path through which funding squeezes can curdle into failures. And over the year, the rates of this wholesale money grew as well.

There’s a common story the newspapers tell you: that banks are starved for money because people keep putting money in mutual funds.

The report clarifies that there’s simply nothing to this. If anything, bank fixed deposits and debt mutual funds are complementary — they move together. Meanwhile, there’s no relationship between deposits and equity funds at all.

Three: What falling inflation means

Over FY 2026, retail inflation averaged 2.1%. It was well below the 4.6% we had seen a year ago, and nearly half of RBI’s 4% target. What does that tell us about RBI’s performance?

Well, try not reading much into it at all.

Judging the RBI by inflation rates is a tricky thing. Nearly half the consumer inflation basket is food, which barely budges when interest rates move. Food prices are a matter of the monsoon, of harvests, and of local logistics networks. The price of money has little to do with it.

Last year, food prices rose by just 0.8% between April to December. Just one year before, it had grown by 7.6% — almost ten times as much. October’s food deflation, in fact, was the steepest in the index’s history. It all sat on top of a costly base. Prices had jumped so much the year before that they seemed flat for much of last year.

Perhaps a smarter number to look at is core inflation: which ignores the prices of things like food and fuel, that the RBI has little control over. That figure came much higher, at 3.7%.

But this number, too, tells us little about the RBI’s performance. Half of it came from the prices of silver and gold, which recently saw a historic rally. Their prices were bid up by global investors buying safe havens because the world felt dangerous. Strip those out, and inflation dropped back to just 2.1%. If anything, that rate was dropping, especially after September’s GST cuts made many durables much cheaper.

Put all this together, and the inflation rate bore little connection to the RBI’s actions. This was simply a freak year. It saw geopolitical upheaval, choked global energy lifelines, jumpy commodity markets, and an unusually benign time for agriculture. None of this is information the RBI can use for policymaking.

Moreover, the RBI is changing its inflation basket, so the coming year will look different either way.

This year, it expects inflation to rubberband back to 4.6%, as base effects wash out and things regress to the mean. But if last year has taught us something, it is that the world is unpredictable. There’s nothing you can take for granted; least of all any normalcy in prices.

Four: The government’s big check

Since 2019, every year, the RBI has been handing over the government a big cheque, the size of which has become a small event. This year, it handed over its largest ever amount — ₹2.86 lakh crore — which people see as a windfall coming out of a good year.

This is often considered a “dividend”. In reality, it’s something different: legally, the RBI, once it covers its costs and sets aside its reserves, is supposed to hand any leftover money to the government.

How do you tell what’s “left over”, though? That’s an interesting story.

The RBI is supposed to set aside a buffer — a cushion of capital that would protect it against risks. A few years ago, after an ugly tug-of-war over the “correct” size of the RBI’s buffers, a committee set a band for how much the RBI could keep to itself. It would have to pay out the rest. That band, incidentally, was reworked last year.

That takes us back to the size of RBI’s check. Last year, the RBI’s income jumped by 26%. The size of its check to the government, on the other hand, increased by just 6.7%. The rest of its extra income — ₹1.09 lakh crore — was kept as part of its cushion. This was a massive increase from the ₹45,000 crore it kept aside the year before.

Why the change?

Much of the RBI’s “earnings”, this year, were paper profits. Its investments and reserves had swollen up through the year. Gold, in particular, ballooned. Although the RBI barely bought any — less than a tonne, in total — the value of its holdings leapt about 64%. This was amplified even further by the fall of the Rupee against the Dollar.

Those paper gains aren’t real, however, until that gold is actually sold. Before that, they can’t be paid to anyone. They’re simply part of what is called the “revaluation account”. This is meant to cushion against a swollen balance sheet. It would be counterproductive to hand that over to the government as surplus profit.

Five: What the RBI is building now that UPI is finished

India’s payments ecosystem has one world-renowned success — the UPI. The system appears unstoppable. The UPI rails carried over 200 billion transactions last year, growing an incredible 30% year-on-year. About 86% of every retail payment in the country went through the system.

This isn’t where the RBI wants it to end, though.

So far, India has built out the financial rails to move money: shuttling between bank accounts in seconds. Next, however, its ambition is to make money programmable. For instance, you can program the rupee to create guardrails around where money can be spent.

The RBI has been experimenting with this sort of thing through its central bank digital currency. In Gujarat, Puducherry and Chandigarh, the RBI paid food subsidies in this programmable rupee, coded to be spendable only on eligible goods at ration shops. This eliminated the need to set up monitoring mechanisms to police leakage and corruption — there was simply nowhere else that money could be spent.

The next goal is tokenisation. It plans to issue financial assets as digital tokens, settled in the wholesale digital rupee. This would allow these assets to change hands at once, the way money currently flows through the UPI. The first of these to be brought on-rail were certificate of deposit — the funding tool banks leaned on so hard this year.

The other big project is around data: specifically, through the ‘Unified Lending Interface’. The ULI lets a lender pull together all sorts of scattered records — land records, GST filings, business registration, even a dairy cooperative’s receipts — making it much easier to take lending decisions. Over last year, the platform crossed 9.6 crore data requests, and signed up 117 lenders.

It’s worth tempering this enthusiasm with a reality check, though: there’s no guarantee that every such project will succeed. For instance, its retail digital currency in circulation actually shrank this year, from about ₹1,016 crore to ₹772 crore.

Even so, this is a fascinating glimpse into what money could look like just a few years into the future.

India’s tyre boom hits a pothole

We all treat tyres the exact same way. They aren’t an exciting upgrade, they are a classic grudge buy. Fuel got more expensive earlier this year. Now, your tyre vendor may be telling you that prices are going up again.

India’s four major listed tyre makers — CEAT, JK Tyre, Apollo Tyres, and Balkrishna Industries (BKT) — closed FY26 with factories running at high utilisation after a demand surge that followed last year’s GST cut on tyres. Then, in the last few weeks of Q4, the raw material picture turned sharply worse, raising the cost bill. The question that remains, then, is how they deal with these costs.

The scorecard

But before we get onto the story, let’s look at the headline numbers.

CEAT’s standalone revenue crossed ₹4,000 crore for the first time, finishing at ₹4,036 crore, up 18% year-on-year. The EBITDA margins stood at 14.5%. Standalone PAT was ₹283.6 crore, up nearly three times from a year ago. But CEAT admitted that they only held margins in Q4 because it was still running on cheaper inventory bought earlier. Their raw material costs are expected to rise 15–20% in Q1 FY27.

JK Tyre turned in its best annual performance on record. Their consolidated revenue for Q4 was up by 12% year-on-year to ₹4,233 crore, with EBITDA margins at 12.9% — 270 basis points wider than the same quarter last year. PAT was ₹188 crore, up from ₹102 crore in Q4 FY25. The company announced a ₹6,110 crore expansion plan to grow truck and car tyre capacity by 24% through FY29.

Apollo Tyres posted the biggest headline numbers, but with a footnote. Consolidated Q4 revenue was ₹7,336 crore at a 14.6% EBITDA margin. The reported PAT includes a one-time deferred-tax benefit of roughly ₹570 crore from a shift to India’s concessional tax regime. Strip that out, and the underlying business is more modest.

BKT had a quieter revenue quarter — standalone revenue was ₹2,894 crore, up just 2% year-on-year. But it also reported its highest-ever quarterly and annual off-highway tyre volumes in FY26. Its EBITDA margin of 22.9% ran significantly higher than peers. That’s because off-highway tyres carry more pricing power than truck or passenger tyres. BKT also admitted it faces near-term margin pressure.

The raw material reset

The West Asia conflict’s effects on crude and freight are covered in depth in our four-wheelers story this quarter. For tyre makers, the exposure to the same is unusually concentrated.

What’s specific to tyres is natural rubber. As we noted last quarter, India imports a significant share of its rubber, so tyre margins are exposed to global rubber prices and currency movements. That linkage meant the rupee’s move to ₹94 against the dollar during Q4 fed directly into domestic rubber prices. International natural rubber moved from about $1,800 per tonne to $2,050–2,100 by the end of the quarter.

The Q4 numbers were mainly insulated from the worst of this because companies generally tend to buy materials in advance. But everyone expects the bill to arrive.

Apollo’s CFO, Gaurav Kumar confirmed the Q4 raw material basket rose only about 1% sequentially. The real reset lands in Q1 FY27, where they expect it to grow to the high-teens. Admittedly, Apollo’s already-announced 6–8% price hike is explicitly not enough to cover it.

CEAT expects those costs to rise to 20% of the bill by quarter-end, while JK Tyre guided to 18–20%. BKT, which had already absorbed a 4–5% rise in Q4, expected another 7–8% in the June quarter.

Can they raise prices without losing buyers?

To stave off some of the impact, every company has already announced price hikes to be borne by their customers.

CEAT, for instance, announced a 5% increase in the replacement tyre market between March and April, and is targeting another 5% through May and June. JK Tyre took a 4-5% price hike in tyre replacement and also flagged more hikes to come. Apollo announced 6–8% for Q1, and BKT took 3–5% across markets.

The problem isn’t that the companies can’t raise prices. It’s that different channels absorb hikes at different speeds.

See, OEM pricing, which is what tyre makers charge vehicle manufacturers, is contractual and adjusts with a roughly 3-month lag. For example, CEAT expected a meaningful OEM increase only from July 1, with only a small single-digit bump in Q1. So for about 3 months, tyre makers bear higher input costs before OEM prices catch up.

Apollo said the first hit from inflation usually shows up in new vehicle purchases, not freight movement. If goods have to move, trucks keep running and higher costs get passed along the chain.

In contrast, replacement demand is an easier channel to push cost increases through. That’s because the customers here will primarily be the end consumers of cars who don’t buy tyres on contractual terms, so there’s no lag. But it does not make it immune. Fleet operators, for instance, can still stretch tyre life, retread more, or delay non-urgent replacements when tyre prices rise sharply. CEAT said truck and bus replacement demand may slow, rather than collapse, if tyre price hikes become difficult for customers to absorb.

Betting big anyway

Still, a potential slowdown of replacement demand matters in an industry running near 90% utilisation and adding fresh capacity. If it slips even modestly, the new capacity may take much longer to pay off. And the scale of the capex wave that we covered last quarter has only grown stronger this time around.

Everyone has fresh capacity to announce, and none of them have pulled back. Apollo has committed to ₹3,500 crore of FY27 capex, nearly 80% toward growth. Most of its FY27 capex is already committed. With utilisation near 90% and April demand still strong, the company sees little reason to pause its expansion plans.

At the same time, JK Tyre has added a fresh ₹4,980 crore to the ₹1,130 crore already announced, bringing its expansion program to ₹6,110 crore through FY29. BKT approved a fresh ₹2,000 crore tranche on top of the ₹2,800 crore it spent in FY26 alone.

The rural demand cushion is a meaningful part of this confidence. JK Tyre’s farm-sector volumes grew 58% year-on-year in Q4, with OEM farm volumes nearly doubling. Industry tractor sales in calendar 2025 crossed 10.9 lakh units, and Tractors and Farm Equipment (TAFE) company reported record sales in FY26.

BKT’s core business is still off-highway tyres for farm, construction and mining equipment, and India has been one of its stronger markets. But that strength depends partly on rural cash flows. If rainfall disappoints across parts of Maharashtra and central India, farm equipment purchases could slow and tyre replacement decisions could get pushed out.

What to watch in FY27

The first real test will come in Q1 FY27. Q4 still had an inventory cushion. Tyre makers were selling into strong demand, but were not yet bearing the full cost of the raw material spike. By the June quarter, that changes. Natural rubber, crude-linked inputs and freight will flow more clearly into the cost base, while the first rounds of price hikes will test how much customers are willing to absorb.

That is why the next quarter matters more than the last one. If volumes hold despite higher prices, the sector’s margin recovery story remains intact. If replacement demand slows, even modestly, the recovery gets pushed out. The companies may still grow, but they will be growing into a tougher margin environment.

FY26 ended with India’s tyre makers running their factories harder than they had in years. FY27 begins with the same factories and commitments, but with a cost base that has shifted meaningfully against them. The companies aren’t wrong to be confident about the long run. But the next two quarters will tell us how correctly the confidence has been calibrated.

Tidbits

1. Green SM Enters India’s EV Cab Market

   Vietnam’s Green SM (Vingroup) launched electric taxi service Green SM Limo in Delhi-NCR, planning a 10,000-vehicle fleet, a year after BluSmart’s collapse raised viability questions about all-electric ride-hailing in India.
   Source: BS
   

2. Heat Stress Costs Indian Farmers 54 Workdays Annually

   Indian agricultural workers lost 163.3 million work hours to heat stress in 2024 — 54 days per worker, up 52% since 1990 — threatening food production and inflation, per an ECIU study.
   Source: Financial Express
   

3. Heatwaves Dent India’s Apparel Export Output

   An NYU Stern study found Indian garment factories supplying Uniqlo, Tesco, and M&S face up to 10% productivity losses from extreme heat, threatening the $39 billion apparel export industry employing 45 million workers.

   Source: BS

- This edition of the newsletter was written by Pranav and Vignesh.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #15

Hi folks, hope you’ve had a great week…

Read more

4 days ago · 13 likes · Zerodha

Ajay Srivastava on India’s place in the fracturing global trade order

The rules-based world trade order as we know it is fracturing, with weaponized tariffs and every country scrambling to secure its place in the new paradigm. We recently spoke to Ajay Srivastava, founder of the Global Trade Research Initiative and a former Indian Trade Service official, to make sense of how India is navigating this high-stakes shift. Our conversation dives deep into what Trump’s tariffs actually mean for global trade, why Bangladesh massively outperforms India in garment exports despite fewer resources, why India’s software giants haven’t made a serious bet on AI, and the broken links in India’s textile supply chain. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. India’s rooftop solar problem

2. What happened to the world’s electricity in 2025

India’s rooftop solar problem

For years, there was one story we told ourselves about rooftop solar in India: that Indians didn’t know enough about it, or didn’t trust it. They found it too expensive, too complicated, too foreign. This pointed to one answer: if only we could get the word out, running campaigns and explaining the savings it could fetch, adoption would follow.

But that story, it turned out, was mostly wrong. The truth is more interesting, as we learnt from two new reports from the Council on Energy, Environment and Water (CEEW) — one on what drives household decisions to install rooftop solar, the other on what happens to the system once it’s up there.

Here’s the short version: India has nearly solved the demand problem. People know about rooftop solar, and a lot of them want it. What it hasn’t solved, however, are two gaps sitting on either side of that desire: one, the gap between wanting solar and actually installing it, and two, the gap between installing it and actually generating power from it. Both these gaps often seem invisible, because the only number anyone usually quotes is “installed capacity”, which tells you nothing about either. Without fixing them, however, we’re likely to find our solar ambitions stuck.

Let’s walk through both.

Wanting solar isn’t the bottleneck

When you hear about Indians not installing enough solar panels on their roofs, one’s impulse is to assume that there isn’t enough awareness, or willingness, to make such a shift. To test this, CEEW went to 17,000 households from 308 districts across India. Their survey demolished the notion.

Indians clearly know about rooftop solar installations and their merits: around 57% of the households they surveyed were specifically aware that this was an option available to them. Moreover, roughly a quarter of all households they surveyed were willing to install solar panels on their rooftops. Not just that: even among the 43% of respondents that didn’t know about this option, roughly half were willing to adopt the technology once it was explained to them.

If there was so much interest, however, where did the problem come from?

Well, as the survey found, of every ten households that are willing to go solar, eight never even begin the process. That’s an 80% drop-off rate between interest and action. It is the main leak that keeps solar adoption at bay. The point where a household is supposed to turn intent into action is the one where they instead check out.

This raises the two questions we’ll try to answer through the rest of this story: one, what’s stopping willing households from installing solar panels? And two: assume they do install them. Do those installations actually work the way they’re supposed to?

The biggest barrier is the cheapest to fix

Put yourself in the shoes of a family that is ready and willing to make the leap. What would stop you? Money? Availability? Logistical challenges?

The biggest reason — one cited by roughly 68% of everyone they surveyed — was that they simply don’t know how to begin. The entire process is a fog. Simple questions — what the first step is, who you call, where you sign up — have no clear, well-publicised answers.

That changes how you would address the problem of low interest. If affordability were the problem, you would try coming up with schemes to make it more attractive. That’s what we’ve done with subsidy schemes like PM Surya Ghar: Muft Bijli Yojana. The actual problem is more basic, however. People know that rooftop solar installations are a problem, but they know little else about it. Only 12% of those who knew about rooftop solar as a concept, for instance, knew that the first step in this journey is to register on a national portal.

Without simple process knowledge being widely available, everything else falls flat.

In some ways, this is good news. Fixing an informational barrier is relatively cheap. We don’t, for instance, need to pump another few thousand crores in subsidies before we can make a dent. As the CEEW says, the gap is “entirely recoverable through targeted communication.” A single, well-designed handholding campaign could move more people into rooftop solar than a massive round of subsidy hikes.

Who actually goes solar

What does a success case look like? How did the roughly 1.4% who actually installed solar panels get there?

Well, there’s one thing they have in common: they’re rich.

Adoption among high-income households runs at about roughly ten times the rate among low-income ones. The typical adopter has an electricity bill about 50% higher than a non-adopter, and runs a much heavier load of appliances, like air conditioners or geysers. For these people, the economics is a no-brainer: they need more electricity, which would otherwise generate higher bills, but a solar installation can cut through those bills fast.

Unfortunately, rooftop solar spreads largely by word of mouth. Word of mouth travels within social networks, and social networks largely cluster by income. If the only pool of adopters is overwhelmingly wealthy and high-consuming, those are the only people to whom word can spread. Left to its own devices, that gap will only widen, with rooftop solar circulating within the affluent, while quietly skipping the low-income and rural households the policy should reach.

Within those affluent adopters, meanwhile, adoption is underpowered. The PMSGY subsidy is capped at a 3 kW system. This creates bad incentives: even though most adopters’ actual electricity needs are larger than 3 kW, they deliberately undersize their systems to make the most of the subsidy.

Meanwhile, the households the scheme most wants to reach — those with low-consumption and smaller bills — barely have an incentive to do so, because with smaller bills, any installation takes much longer to pay for itself, making such an investment unattractive.

That creates a weird paradox: our current subsidy structure doesn’t do enough to attract those that need financial assistance, while those that could afford it anyway end up under-powering their systems.

What happens after that? Assume a system actually does go up, as intended. Does it actually work?

Installing solar and generating power are not the same thing

Solar energy statistics have a problem: it’s too easy to celebrate statistics on installed solar capacity, without a real sense of how much electricity flows out. Often, the two numbers can diverge wildly. A solar panel can make for “installed capacity” even if it does nothing but accumulate dust. That panel might make it easier to hit the paper objectives of government schemes, without actually doing anything.

The ugly truth is that installing solar power only begins a process of generating renewable energy. After that comes maintenance, cleaning, and the diagnostics that determine whether a system can keep performing for the next 25 years.

This harder task is performed by a fragmented, unstandardised private vendor ecosystem. These vendors can decide the difference between a wasted investment, and years of lower bills. Only, the system rarely works as intended.

Often, a rooftop solar system can break down for the insultingly mundane reason of there being too much dust. That dust, along with similar problems like bird droppings, is the single most common and underrated drag on rooftop solar performance. Dust alone can cut down a solar panel’s efficiency by as much as 60%. And if it continues unaddressed, those panels can suffer localised over-heating, which can crack glass or, in the genuinely bad cases, start a fire.

This shouldn’t be such a big problem, in theory. The PM Surya Ghar scheme comes with five years of free maintenance. Every installer is mandated to provide it. This should cover most houses.

Only, in practice, that coverage doesn’t come close to living up to its billing. The scheme, sadly, never defined what that maintenance actually has to include. It defined no minimum scope, and no required frequency of visits. So in practice, that “maintenance coverage” shrinks to the bare minimum.

The most performance-critical task — cleaning the panels — is routinely excluded, treated as the consumer’s responsibility rather than the vendor’s. All a vendor covers is basic electrical checks. This too is reactive — vendors only show up when something visibly breaks, rather than on schedule.

Worse still, none of this is even free, really, as these costs are often baked into the upfront installation price. And because the vendor has already collected the maintenance money upfront, they have no financial reason to ever proactively show up and service the system.

Most people don’t even realise that this is a problem. Of the 93% of rooftop solar adopters that claim they’re satisfied, half don’t even know they have a maintenance contract. Almost half of them never check how much power their system is producing. They notice their bills drop at first, but think little more of it. Sadly, bad maintenance doesn’t announce itself. A panel loses output slowly and quietly, and a household with no way to track generation simply won’t notice.

To be fair, not every vendor plays it this way. Some are building their whole pitch around the opposite approach — proactive maintenance instead of reactive, apps to track real-time power generation, and savings guarantees that only hold up if the panels actually keep performing.

SolarSquare’s “GoodZero” plan is one example: when you promise a household a guaranteed output, O&M stops being an afterthought and becomes core to the business. This is partly why Zerodha’s Rainmatter has invested in SolarSquare.

What underperformance costs

What happens when a system underperforms?

CEEW modelled a well-maintained system against progressively more neglected ones. The damage, they realised, cascades to three groups at once.

Households see a dramatic swing when the system is maintained properly. A well-run 3 kW system pays for itself in about five years, comfortably beating the returns from parking that money in a fixed deposit. A badly neglected one, on the other hand, can stretch the payback past the system’s entire 25-year lifespan. Essentially all of its lifetime savings can vanish.

For the discom, meanwhile, this becomes a lost opportunity. To most discoms, every unit of power they supply to a household is a small loss they have to book. Rooftop solar promises to reduce that burden. Should it fail, however, it causes what the report calls the “grid-rebound effect”: where households simply go back to the grid. This causes a double-whammy — because the discom planned around power that never showed up, it can end up scrambling to buy replacement supply at short notice.

Meanwhile, for the government, that amounts to crores in wasted subsidies, and emissions that are not being cut. Moreover, since many states subsidise residential electricity, the government effectively pays a subsidy twice.

The gap could be a business

There’s a flip side, though: Every panel installed today, from the moment it’s switched on, is a system that will need cleaning and servicing for the next two decades. That recurring need is a market. As installations scale toward the 30 GW national target, CEEW sizes that market at anywhere from the tens to the low hundreds of billions of rupees a year.

With that come jobs: cleaning, diagnostics, inverter servicing, performance monitoring, and more, across millions of rooftops. To CEEW, if we hit the 30 GW residential target, that could create around 3.3 lakh dedicated jobs in operations and maintenance alone.

Two halves of one unfinished job

India spent a decade learning how to make people want rooftop solar, and with PM Surya Ghar, it largely cracked it. Every solved problem, however, only points you to the next, unsolved one. There are two of those ahead: willing households struggle to get started, while installed systems choke on dust and die down. Neither shows up in installed capacity — the one number everyone tracks.

What happened to the world’s electricity in 2025

Every year, the climate research organisation Ember puts out what is probably the most detailed look at how the world’s electricity system changed over the past year. The latest version of the flagship publication — the Global Electricity Review 2026 — came out a couple of weeks ago. That, as you’ve probably realised by now, is a perennial fascination for us, over at The Daily Brief. And so, we thought we would take you through it.

Naturally, we aren’t going to cover every word of a 119-page report. We’ll limit ourselves to a few themes that genuinely stood out to us. If you’re interested in the energy space, however, we recommend reading the full thing.

One of the biggest findings of this report sounds deceptively simple: the world generated more electricity last year, without burning more fossil fuels. This has happened four times before — but those years were marked by something unusual: a recession, a pandemic, or unusually mild weather. This was the first normal, anomaly-free year which saw such a shift.

Why is that a big deal? For that, you have to understand how electricity has always worked.

The iron rule that just broke

Electricity generation, as an industry, has been around for roughly 140 years. That entire period was marked by a consistent pattern: as economies grew, people needed more power, and fossil fuels filled that gap. After all, coal and gas were cheap, reliable, and available at scale. Everything else was marginal.

The intensity of that relationship, however, has dipped with time. In the late 2000s, when the world needed more electricity, fossil fuels provided 73% of that additional generation. Between 2015 and 2019, that share dropped to 36%, as renewables started becoming serious contenders. Between 2020 and 2024, it dropped further to 29% of our additional electricity needs.

Last year, the trend finally reached its logical extension: zero.

What, then, took its place?

Renewables, of course. But not all of them in equal measure. Solar energy singularly powered 75% of all new electrical demand on earth, last year. Most of the rest came from wind. Together they covered 99% of new demand.

The sheer scale of solar’s rise is hard to wrap one’s head around.

As recently as 2015 — a short hop in time away — the entire world generated 256 terawatt-hours from solar. Last year it made 2,778 TW-Hr. In a single decade, our solar energy output had grown over ten times as much. This incredible rally shows no sign of slowing either. In 2025, it grew at 30% — in fact the fastest growth rate in eight years despite starting from a much larger base. The world’s solar output has functionally doubled every three years.

This is also why, for the first time in over 100 years, renewables as a whole generated more electricity than coal did. The last time renewables were ahead was 1919 — when global electricity demand was 300 times smaller than today, and “renewables” basically just meant large hydropower dams. Coal has held the top spot through all of modern industrial history. In 2025, renewables collectively crossed it.

But it’s mostly a China story

If you strip China out of the data, however, the rest of the world’s fossil generation had already been flat since 2018. Europe was retiring coal plants, the US was switching from coal to gas, other economies were mixed. But outside China, there was basically no net growth in fossil generation for seven years running.

China was the one country keeping the global number moving upward. Between 2018 and 2024, China alone added 1,145 terawatt-hours of fossil generation — four times more than India added over the same period. Every year, China’s growth swamped what everyone else was cutting.

Then in 2025, China flipped.

Its fossil generation fell for the first time since 2015. This isn’t because its economy slowed — its energy consumption grew, but its clean energy grew even faster. Solar alone, in China, grew 40% in a single year.

To give you a sense of the scale: China installed 378 gigawatts of new solar capacity in 2025. The United States has built up 274 gigawatts of solar capacity across its entire history. China added more in one year than the US has built in its history.

A more accurate version of the “fossil generation fell globally” story, then, is: China had a historic year for clean energy, and that was enough to tip the global number.

What this means for India

India had its own set of milestones in 2025 that are worth knowing about.

Coal’s share of India’s electricity generation fell from 75% to 71% in a single year. Solar overtook hydropower to become the largest source of clean electricity in the country for the first time ever. It’s now at 9.4% of India’s electricity mix, up from just 5.3% three years ago. India also installed more solar capacity than the United States in 2025, for the first time.

But India’s electricity demand grew just 2.4% last year. That’s the third-lowest growth rate in twenty years. Not because the economy slowed, but because 2025 was an unusually cool year. Summers were much milder than 2024, which had seen brutal heat. Ember estimates that alone reduced electricity demand by about 32 terawatt-hours compared to a normal year.

So what produced the fall in coal was renewables having a record year and demand having an unusually quiet year. Both together. The report itself says the demand slowdown was “likely an outlier.” In each of the four years before 2025, India’s electricity demand grew by more than 100 terawatt-hours. Last year it grew by 49.

Now India does have a big renewable pipeline — 101 gigawatts of solar already under construction, 24 gigawatts of wind, another 23 gigawatts of hybrid projects. Enough on paper to cover two years of expected demand growth. But as we’ve covered before and in the earlier story today, building generation capacity is only half the problem. Actually using it is the other half.

Here’s a concrete example from the Ember report. At noon on the average day in India in 2025, solar was generating over 50 gigawatts — covering about a quarter of national demand during those hours. But then the sun goes down.

From 6pm to 6am, coal still met over three-quarters of India’s demand growth. The evening peak has almost nothing to fill it except coal. We actually covered this in some detail earlier — there were power shortfalls on 13 out of 15 nights in late April, even while midday solar was going to waste.

The reason both happen at the same time comes down to how coal plants work. They have a minimum output level below which they can’t reduce generation without shutting down entirely — and shutting down and restarting is expensive and slow. So even when solar is flooding the grid at noon, coal plants keep running at their minimum because they need to be ready for evening demand. The result is that solar gets curtailed at midday, and coal runs at night regardless. Both wasted, in different ways.

The report notes something that tells you where things actually stand: coal plants in India started inviting bids to install batteries on themselves in 2025. The coal fleet is trying to become more flexible to accommodate solar because there isn’t enough storage yet to replace it at night.

The number that should get more attention

Here’s something that looked very interesting to us. Global power sector emissions in 2025 fell by 0.04%.

Despite solar’s record year, despite renewables crossing coal for the first time in a century, despite China’s fossil generation falling — the actual emissions number barely moved.

Why? Because fossil fuels still generate 57% of the world’s electricity. The system is so large that even a genuinely historic year for clean energy barely shifts the needle. The direction changed — fossil generation stopped growing, which is meaningful — but actual emissions declining significantly is a different story.

We covered the IEA’s World Energy Outlook last year, and the uncomfortable finding there was that even under optimistic scenarios where all stated climate policies come through, we’re heading for 2.5°C of warming. The Ember report’s 2025 data doesn’t change that. What it shows is that things are moving in the right direction. But moving fast enough is a separate question, and the emissions number suggests we’re not there yet.

One more thing

The report makes an observation we found genuinely interesting.

Look at which countries still have growing fossil generation, and you’d expect them to be the ones with no other choice. But that’s the opposite of what the data shows. Almost all of them sit in regions with world-class solar resources. Egypt gets more than twice the sunlight of the Netherlands — and yet the Netherlands generates 1,553 kilowatt-hours of solar electricity per person every year, while Egypt generates 67. Saudi Arabia, Indonesia, Algeria, much of Africa — same story everywhere. The places best suited to solar are the ones leaning hardest on fossil fuels.

And cost is no longer the reason. In 2024, 90% of newly installed renewable projects globally were already cheaper than the cheapest fossil fuel alternative.

So what’s left? Grids that weren’t built for variable solar generation, financing that isn’t reaching the right markets, regulations still written for a coal-and-gas world. These are harder to solve than making solar cheap, and they don’t have a technology fix.

The headline from 2025 is real. For the first time, clean energy grew fast enough to meet all of the world’s new electricity demand without any help from fossil fuels. Ten years ago, fossil fuels were filling 70% of all new demand. That shift is genuine and it matters.

But fossil fuels still generate more than half the world’s electricity. And as the emissions number shows, crossing a milestone is not the same as solving the problem. The direction changed in 2025. Whether the pace changes is the question the next few years will answer.

Tidbits

[1] NVIDIA’s AI PC push could benefit India’s semiconductor ecosystem

NVIDIA has unveiled its new AI-focused RTX Spark superchip, designed for personal AI agents, creative workloads and gaming. Industry experts believe this shift toward AI-first PCs could create new opportunities for India across chip design, semiconductor manufacturing and the broader AI value chain.
Source: The Hindu BusinessLine

[2] Oil India finds another natural gas discovery in Andaman

Oil India has made another natural gas discovery in the Andaman region, strengthening hopes of unlocking India’s offshore energy potential. The find comes as India looks to reduce import dependence and improve long-term energy security through domestic exploration.
Source: Financial Express

[3] India’s economy grows 7.7% in FY26, beats expectations

India’s economy expanded 7.7% in FY26, surpassing estimates and improving from 7.1% growth in FY25. Strong performance in manufacturing and services drove the expansion, although Q4 growth eased slightly to 7.8% from 8% in the previous quarter.
Source: The Hindu BusinessLine

- This edition of the newsletter was written by Krishna and Kashish.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #15

Hi folks, hope you’ve had a great week…

Read more

4 days ago · 13 likes · Zerodha

Ajay Srivastava on India’s place in the fracturing global trade order

The rules-based world trade order as we know it is fracturing, with weaponized tariffs and every country scrambling to secure its place in the new paradigm. We recently spoke to Ajay Srivastava, founder of the Global Trade Research Initiative and a former Indian Trade Service official, to make sense of how India is navigating this high-stakes shift. Our conversation dives deep into what Trump’s tariffs actually mean for global trade, why Bangladesh massively outperforms India in garment exports despite fewer resources, why India’s software giants haven’t made a serious bet on AI, and the broken links in India’s textile supply chain. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. SEBI finds glitters of ₹15 lakh crore that aren’t gold

2. Space II: Earning a living

SEBI finds glitters of ₹15 lakh crore that aren’t gold

On June 3, SEBI issued a 109-page interim order against Rajesh Exports Limited (REL), a gold retailer, and its promoter-chairman Rajesh Mehta. SEBI’s primary allegation is this: Between FY20-FY25, REL reported total consolidated revenues of ₹15.45 lakh crore, 99.8% of which was flat-out misrepresented.

To make sense of those numbers: REL’s annual revenue in FY25 was ₹4.53 lakh crore. That’s the same ballpark as a company like HPCL, which made over ₹4.78 lakh crore in FY26.

REL’s stock peaked at ₹1,028 in February 2023, but was trading at ₹104 when the order dropped. It hit the lower circuit right after this order. SEBI estimates that ₹12,726 crore of public investor wealth has been eroded. Over two lakh shareholders, including LIC, are left holding the bag.

But this isn’t a single allegation. Behind this number is an elaborate architecture that lays out a multi-layered scheme involving unexplained overseas revenue, questionable trades, and round-tripping through personal bank accounts, and some regulatory smoke and mirrors.

Nor has this come out of the blue. A decade ago, the Moneylife team, led by revered financial journalists Debashis Basu and Sucheta Dalal, analyzed REL’s books in their own capacity. There were reports from others that something about REL didn’t sit right.

Then, in 2024, SEBI received a cautionary email from a then-REL shareholder. That started an investigation, whose result is this mammoth order.

Let’s dive in.

Midas touch

Usually, at the core of most creative financial engineering (or tricks) sits an elaborate corporate ownership structure, where one dark cave leads to another. REL, turns out, is no exception to this.

The parent REL entity owns REL Singapore, which in turn owns 95% of a Swiss holding company called Global Gold Refineries AG (GGR), while the parent entity owns the other 5%. GGR itself owns 100% of Switzerland-based Valcambi, which actually is one of the world’s largest precious metals refineries, processing over 2,000 tonnes of gold, silver, platinum and palladium annually. REL acquired it in 2015 for roughly $400 million.

In REL’s financials, most of its consolidated revenue comes from its subsidiaries. Its standalone business barely makes 1% of revenue. Odd, but maybe not illegal.

Except, many of the discrepancies flagged by SEBI — including the biggest one — come exactly from this difference.

Worth its weight in gold?

Let’s start with the most significant discovery, which involves the Valcambi subsidiary.

Now remember, Valcambi is just a refiner. It doesn’t buy or sell gold on its own account. Banks and bullion dealers send their gold to Valcambi for processing, and Valcambi earns a fee. The gold belongs to other people.

Valcambi’s audited financials, which are prepared under Swiss law, reflected exactly this. In the calendar year 2023, Valcambi reported revenue of about ₹543 crore. In 2024, it was ₹427 crore. That’s normal for a leading business in this industry.

But GGR, the holding company one level above Valcambi, was recording something entirely different. In its consolidated statements, GGR booked the entire market value of the gold passing through Valcambi as its own revenue. For 2023 alone, that came to over ₹2.9 lakh crore. More worryingly, GGR had no actual business operations of its own.

Then, REL took GGR’s massively inflated numbers and consolidated them into its own Indian financial statements, while keeping Valcambi’s actual audited numbers hidden from the public.

When SEBI asked REL to explain this, REL claimed Valcambi only recorded “processing revenues“, while GGR recognised the “true and fair sales revenue“. SEBI found this commercially implausible, and REL couldn’t produce a single document in support of this claim.

To add more fuel to the fire, GGR’s consolidated statements were never subjected to a statutory audit under Swiss law. They were voluntarily prepared under an internal “Group Accounting Manual“. KPMG, which is Valcambi’s auditor, specifically clarified that its opinion on GGR did not constitute a statutory audit. In effect, REL was funnelling unaudited, self-prepared numbers from a shell holding company into its audited Indian filings.

Meanwhile, REL never uploaded the financial statements of any subsidiary on its website — a straight violation of the Companies Act. When SEBI demanded the data, REL cited the Swiss Federal Act on Data Protection, claiming Swiss law prevented it from sharing corporate financial information with Indian regulators. But SEBI took this apart cleanly, stating that the Swiss law only protects personal data of natural persons, not corporate entities.

In fact, GGR sat at the centre of many of REL’s balance sheet oddities. To justify some of their massive revenues, REL claimed that their corresponding trade receivables were on GGR’s balance sheet, but SEBI found no such proof of this.

The investment mirage

Besides Valcambi, there was another similar discrepancy that SEBI found.

On its consolidated balance sheet, REL’s “Other Non-Current Investments” line item ballooned unexpectedly by twelve-fold within 5 years to over ₹10,500 crore in 2025. REL said that this reflected their investments in African gold mines.

It is unusual for a gold retailer, which is a relatively asset-light business, to outright purchase gold mines, which need multiple times more capital. SEBI decided to look into the statements of the REL Singapore and GGR subsidiaries, and lo and behold, they found nothing related to gold mines.

Besides this, REL also failed to adhere to basic Indian accounting laws. For instance, a parent company’s consolidated financials must exclude investments made in its own subsidiaries, or the debts owed to subsidiaries, in order to prevent artificial inflation of the size of the business. However, REL did not follow this rule, keeping ₹2,500 crore of intra-group investments in its consolidated books.

All of this gave retail investors the idea that REL was a behemoth in the gold retail business. But the truth, SEBI says, couldn’t be further from that.

Trouble at home

While the overseas consolidation created an illusion of global scale, REL was simultaneously manipulating its domestic standalone books.

Between FY22 and FY24, REL recorded ~₹11,487 crore of sales and ~₹11,488 crore of purchases with a SEBI-registered stockbroker called Affluence Shares and Stocks. These transactions made up 66% of REL’s total standalone sales.

If you didn’t notice it yet, the oddity lies in the negative difference between the sales and purchases. In sum, the transactions actually lost ₹1.82 crore. Why would anyone do this?

SEBI found that REL was never actually an Affluence client. No transactions were ever conducted with or on behalf of REL. So what were these entries?

It turns out that Rajesh Mehta, REL’s promoter, had been trading gold derivatives through his personal trading account at Affluence. REL transferred ₹7.45 crore to Mehta’s personal bank account as margin money. Mehta traded on 102 days, lost ₹3.50 crore, and the net balance was returned to REL through him. The actual cash that changed hands was less than ₹8 crore.

However, REL booked the gross notional value of Mehta’s personal derivative positions — totalling ₹11,487 crore — as the company’s own sales and purchases. No GST records existed between REL and Affluence. No board approvals were found to have authorised Mehta as a conduit.

Funnily, REL seems to have a habit of booking the gross value of assets that pass through its hands as if they were income — whether it’s gold flowing through Valcambi’s refinery, or the notional value of the derivative trades.

When confronted, REL claimed Mehta acted as a “conduit“ due to litigation with MCX. Again, SEBI found no evidence to support this.

Beyond the Affluence scheme, REL padded its standalone numbers in other ways.

For instance, it classified ₹867 crore of foreign exchange fluctuations as “Revenue from Operations“, instead of recognising them separately as non-operational revenue as per Indian law. It recorded ₹204 crore of interest from fixed deposits and mutual funds as operational revenue as well.

REL also erased ₹2,914 crore of long-outstanding trade receivables by “netting“ them against trade payables. To do so, they used unverifiable email correspondence, telephonic understandings, and confirmation letters, obtained only after SEBI began asking questions. For instance, the email address for one counterparty, Al Jameelat Jewellery, bounced permanently.

One-way round-trip

If the story so far has been about numbers on paper, this part involves actual cash round-tripping the company.

Between April 2020 and September 2025, REL transferred ₹339 crore to Rajesh Mehta’s personal bank accounts, and ₹232 crore came back. Where’s the other ₹107 crore?

When SEBI asked why, Mehta had a myriad of explanations to give, from parking funds for court proceedings, to routing transactions without revealing the origin bank account. None of this was disclosed as related party transactions. None went through the Audit Committee. REL’s annual reports showed exactly ₹1.20 lakh per year as Mehta’s remuneration, while hundreds of crores flowed through his personal accounts.

Interestingly, ₹21 crore went to Rajesh Mehta’s son, Siddharth, who had no formal role in the company. The rationale that REL gave was that the funds paid for operational expenses through his personal credit cards. It furnished 140 credit card statements, but many of them were incomplete, with amounts that didn’t reconcile.

Then there’s Elest Pvt Ltd, a publicly-listed company that Rajesh Mehta incorporated for EV battery manufacturing, separate from REL. In fact, this company also enjoys the benefits of the PLI scheme for EV batteries. Quite odd for a gold company to make such a move.

But what wasn’t believable was Elest’s role. REL transferred ₹565.88 crore to Elest; ₹350.03 crore came back, and the rest couldn’t be explained. Despite this, REL disclosed only ₹12.60 lakh in rental income from Elest in its annual reports.

The Elest rabbit hole goes deeper. In January 2025, Elest was allowed to subscribe to shares of ACC Energy Storage, previously a wholly-owned REL subsidiary. This diluted REL’s ownership to 51% — nearly half of a subsidiary was transferred to a promoter-controlled entity.

Then came a bizarre case of circular funding. Elest sent ₹147 crore to ACC Energy, and ACC Energy returned ₹112 crore the same day. ACC Energy later invested ₹262 crore back into Elest.

This helped engineer a dramatic escalation in Elest’s valuation. In April 2021, Rajesh Mehta bought 15 crore Elest shares at ₹10 per share. Three months later, REL subscribed to 1 crore shares at ₹200 per share. By late 2023, FPIs were paying ₹3,000 per share.

Only guilty when caught

None of this would have survived scrutiny if the underlying data had been made available. But, as per SEBI, REL went out of their way to ensure a lack of transparency.

In December 2024, while investigating REL, SEBI appointed BDO India as the forensic auditor. But REL refused them access to their systems and accounts. For foreign subsidiaries, it hid behind Swiss data protection laws. Even where ledgers were produced, narration columns were only partially visible and corresponding account names were missing.

Out of a selected sample of ₹7,021 crore in purchases, REL provided complete documentation for 2.03% of the sample value. For sales samples totalling ₹12,217 crore, only 35% could be verified.

When SEBI demanded customer-wise sales lists, REL provided three different submissions at different stages of the investigation, and they all contradicted each other. Sales figures for the same customers seemed to vary by hundreds of crores. When confronted, REL asked SEBI to simply “ignore earlier submissions and rely only upon the latest data”.

What happens now

This is an interim order, not a final adjudication. Rajesh Mehta is barred from dealing in REL securities until further orders. A new forensic auditor will be appointed. REL has 30 days to hand over a massive tranche of withheld data.

REL has responded with a five-point clarification calling the order “interim,” claiming its revenues are correct, and attributing the issues to a “communication gap”. The stock hit lower circuit the morning after.

All of this started with one shareholder emailing SEBI in March 2024. What SEBI found blew open the lid on a can full of worms.

Space II: Earning a living

If you were to switch to another tab, at this very moment, without paying anyone or asking permission, you can pull up a satellite photograph of almost any point in India. The Americans give their imagery away. So do the Europeans. Their pictures are a few days old and a little coarse — but they’re free, and they cover the entire planet.

Who, then, would actually pay for the same thing?

In our first part of this series, a few weeks before this, we looked at how a growing number of Indian companies were trying to compete with those free services, beaming in data from space. Space had finally opened up to Indian business five years ago. The law had changed, our space institutions were reconfigured, and a new generation of ambitious private companies now dreamt of owning and operating their own satellites.

But the fact that they can now legally participate in space only opens the way to a harder one: how do they actually make money?

The most expensive way to take a picture

Last time around, we spoke about Mission Drishti. A Bengaluru startup, GalaxEye, had managed to get the 190 kilogram satellite — the largest an Indian private company has ever built — into orbit.

This was the culmination of years of work. Its payload — the “OptoSAR”, or an optical camera paired with an advanced radar that can see through clouds — had consumed most of the company’s five year-long existence. It needed years of testing and redesign, with many discarded prototypes by the wayside, before it would reach anywhere near space. Through that entire period — well before their maiden space voyage — Galaxeye had to pay years of salaries to highly qualified space scientists.

They had to make sure their satellite would survive being shaken, baked in direct sun, frozen in cold space, and starved of air, all to prove that it could handle a launch and the emptiness of space. They couldn’t do this in any ordinary garage. They needed specialised equipment, in buildings that were built for this purpose. Much of this was only possible because of outside support from other organisations — including ISRO, through the doors IN-SPACe opened.

Putting their satellite together, though, was only the first step. Then, they had to get to orbit.

A shared ride on a SpaceX rocket — despite being the cheapest on earth — runs to several thousand dollars per kilogram. For a satellite the size of Drishti, the launch bill alone would run into the millions. And then, before the rocket even leaves the pad, there’s insurance. There’s a very real chance that the whole thing ends in a fireball. And so, you need to pay a premium worth a tenth or more of the satellite’s value upfront.

This is now over. Drishti is in space. That doesn’t mean the costs cease, though.

Now, they need to talk to the satellite from earth, and constantly monitor its behaviour. This either requires ground stations of their own — which cost millions of dollars apiece — or rented time on someone else’s by the minute. The data the satellite sends down must be stored and processed, and the more data a satellite generates, the higher those compute costs go.

And then, on top of it all, is a layer of permissions: the right to use radio spectrum, licences to sell imagery, clearances to handle sensitive data, and so on.

This is the story of any space-faring company. This is not an ordinary business. It involves many years of investment, without a rupee in revenue to show for it. Its output, on the other hand, is often just a stream of data with a dashboard. Its only customers are those that actually have the capacity to use that data.

Finding uses is easy; building markets is hard

This makes space a weird business. It is not that their output isn’t useful: space data can tell you incredible things, which would all be massively helpful on the ground. A satellite can spot stressed crops well before the damage shows up on the ground. It can predict major environmental disasters well before they occur. It can tell you things like whether a mining project is risking land subsidence. All of these things have direct commercial value.

And yet, being useful doesn’t mean you will get paid.

A farmer, for instance, would find a satellite’s data enormously useful in all sorts of ways. But farmers don’t contract with space companies. Most regular folk don’t. Chances are, they wouldn’t know what to do with it if they did. The only avenue for selling that data might be to a government agency, or an insurance company that provides crop insurance. These are the only entities with large enough budgets to onboard a space company as its vendor, where their data feeds can simply become one more recurring expense, slotting into existing processes.

If you’re a space company, this is the sort of customer you’re looking for.

Finding such a buyer, however, isn’t easy. For one, there’s just too much free satellite imagery out there. According to one study, the imagery coming out of America’s Landsat program creates over $25 billion a year in value. That is a tremendous resource to have for free. But anyone entering the space business needs to have a value proposition that trumps that. Your data needs to have something extra — it must be sharper, more specific, or more easily available — for it to make a business case better than free archives.

More importantly, for that value to be realised, it needs to integrate into decision-making. Nobody buys data for its own sake. People buy intelligence, to the extent it helps them take better calls — like better decision-making on pricing loans, or better algorithms to settle insurance claims. Unless satellite data is incorporated into those workflows seamlessly, it isn’t really a saleable product.

And so, much of the work of building a space business has less to do with building satellites, and more with the unglamorous labour of integrating their output into software people were already using.

One big customer

Invariably, most space companies chance upon the same answer to this issue: finding an anchor customer — often the government — that can cover most major costs.

That’s the case even in the United States — arguably the world’s most mature space market. In May 2022, for instance, the National Reconnaissance Office, the part of the US government that runs spy satellites, signed massive contracts with three of the world’s biggest commercial imaging companies — Planet, BlackSky, and Maxar. Of these, a single company, Maxar, was given a commitment worth up to $3.24 billion over ten years, with an annual guarantee of $300 million in the first five years. Effectively, a single government agency backstopped an entire industry.

The industry’s economics simply demand such a structure. This business is so expensive, and customers are so hard to land, that your fortunes can depend on whether you can secure one of a handful of government contracts.

Once you do, things can stabilise quickly. A satellite costs roughly the same whether one customer uses it or fifty. If you have one large, committed buyer, everything else can fall into place.

But getting there isn’t easy. The commercial earth-imaging companies that bagged NRO contracts didn’t do so out of nowhere. First, they had to raise money, build constellations, and operate them over years. It was only once they had a track record that they could graduate to these marquee contracts. Maxar, for instance, had been supplying imagery to the NRO for over a decade before the deal fell into place.

That makes space an ugly business. You need to spend your first many years climbing a steep cliff, carrying out rocket science in the face of astronomical costs. Only then does stability arrive. Take Planet, arguably the world’s best known commercial earth imaging company. It was founded in 2010, but only touched profitability fifteen years later, in 2025. For every company that survives this long voyage, many others — capable, space-faring enterprises — die before they can get there.

What India is building

In recent years, ever since the sector was liberalised, India has seen a fascinating new crop of pioneering space companies emerge to the fore. Before they become stable, profitable giants, however, they must first climb that cliff.

Their capabilities are world-class. Many of them have come up with innovations that are global firsts — like Galaxeye’s OptoSAR, or Agnikul’s 3D printed cryo-engines — and have managed to get these into orbit. The data they generate is fascinating. Now, however, comes the challenge of turning those early successes into a business.

There are some nascent signs, however, that they might make that climb.

Last August, IN-SPACe — the body that now authorises private space activity — awarded the country’s first contract to build a national fleet of commercial imaging satellites.

It did not go to a single company. Instead, it pushed four pioneering space companies to form a consortium: Pixxel, KaleidEO, PierSight, and Dhruva Space. Together, these companies shall build a constellation of twelve satellites in the next five years, a project that shall cost them more than ₹1,200 crore. Each of these companies come with complementary abilities: radar sensing, different types of optical imaging, building the platform, and so on. They’re all coming together in a single mission, with no firm owning the whole stack.

The contract comes with a national mandate, and the government committed as a priority customer. It is the closest thing to a stable foothold the industry has found, so far.

Only, so far, this is nothing like the NRO’s guaranteed multi-billion dollar contracts. There’s no guaranteed check-size for the consortium. In fact, the government offered a repayable loan of up to ₹350 crore to get the project started, but the consortium refused the financing — relying on the backing of funders instead. Ultimately, the consortium will have to build the markets that will make the project viable.

For now, these companies are still finding ways to bridge the gap. Galaxeye, for instance, has signed up with NSIL to distribute the data its satellites generate — using the government as an extended sales arm. Others are opting to sell the picks-and-shovels the industry needs instead. For instance, Dhruva Space — one of the four members of Pixxel’s consortium — builds and sells the satellite platforms and ground systems other operators need.

For all that, though, it’s still early days.

What’s working, and what’s still a bet

That is where, five years in, India’s fascinating new private space industry sits.

It is currently assembling a world-class technological backbone, and making its maiden forays into space. At this nascent moment, it shows a lot of promise.

But space is hard, and so is the space business. The world’s leading space companies took decades to find their footing. That will be true of India as well. These companies all have a long ascent, where revenues will be scarce. They will require patient investment that can wait around for years before the results show up.

There’s an old Roman saying: per aspera ad astra. Through hardship, to the stars.

These companies are clawing their way through hardship. Some day, we hope, they reach the stars.

Tidbits

1. India launches a new price stabilization scheme for airline fuel aimed at shielding carriers and passengers from a surge in global fuel costs. The price of aviation turbine fuel (ATF) is now fixed at ₹86.32 per litre for up to three years, taking the effective selling price to ₹115 in Delhi and Mumbai. Those not opting for the scheme can buy it at the international rate of ₹142 per litre.
   Source: Business Standard

2. The CDSCO has flagged the continued detection of banned antibiotics, including chloramphenicol and nitrofurans, in Indian shrimp exports. With major markets like the US, EU, and Japan rejecting consignments linked to over 40 aquaculture farms, the regulator has directed state authorities to tighten surveillance on veterinary drugs to protect India’s seafood export industry.
   Source: Business Standard

3. RBI has increased the investment limits for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and other non-resident individuals to invest in the Indian stock market without requiring SEBI registration. The move is designed to simplify access to Indian equities and attract greater foreign capital by reducing compliance hurdles for overseas individuals who want exposure to listed shares without registering as FPIs.
   Source: Economic Times

- This edition of the newsletter was written by Manie and Pranav.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #15

Hi folks, hope you’ve had a great week…

Read more

4 days ago · 13 likes · Zerodha

Ajay Srivastava on India’s place in the fracturing global trade order

The rules-based world trade order as we know it is fracturing, with weaponized tariffs and every country scrambling to secure its place in the new paradigm. We recently spoke to Ajay Srivastava, founder of the Global Trade Research Initiative and a former Indian Trade Service official, to make sense of how India is navigating this high-stakes shift. Our conversation dives deep into what Trump’s tariffs actually mean for global trade, why Bangladesh massively outperforms India in garment exports despite fewer resources, why India’s software giants haven’t made a serious bet on AI, and the broken links in India’s textile supply chain. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. Marred by turbulence: Indigo’s Q4

2. What does better access to Indian banking really do?

Marred by turbulence: Indigo’s Q4

For years, Indigo Airlines’ would post rather predictable results. Aside from moments like the COVID rupture, its growth seemed mechanical. Quarter over quarter, the airline would add planes, more passengers would choose it, and more profits would flow through. And with a market share so large that it catered to two in every three Indian flyers, Indigo’s story was the story of Indian aviation as well.

Recently, however, that story appears to have gone awry. In December, the airline’s operations suffered a catastrophic failure, leaving hundreds of thousands of passengers stranded in airports across the country. Then, in the March quarter, Indigo reported a massive loss — bleeding just over ₹2,500 crore in the three months. This was a sharp reversal in fortunes; the same quarter one year ago, it had profits of ₹3,000 crore.

There’s a simple version of this story: that the company is in trouble.

That isn’t what we think is happening. Very little of this loss, from what we can tell, has to do with flying planes. But it does tell us a lot about the peculiar risks of Indigo’s business model — the way it interacts with fuel prices, the Rupee, and everything happening in the world outside.

The quarter in numbers

From its topline alone, Indigo seemed to have a normal quarter. Its revenues barely moved one way or another — rising by a few percentage points, to about ₹23,800 crore. It was roughly the same last year.

Shift your eyes to its bottom line, however, and its post-tax profits have cratered, from a healthy profit last year, to a ₹2,500-crore loss.

How did a business with roughly the same sales figures as before see its profits collapse? There are two parts to this story. Most of the damage came from something the airline had little control over — a collapse in the rupee. But there’s a quieter story in there: one where India’s leading airline has a slightly softer belly than a year ago, tortured by the Iran war and the long shadow of its December nightmare.

Two airlines; one set of books

IndiGo, like most airlines, lives between two currencies: most of what it earns is in rupees, but most of the money it owes is priced in dollars. An overwhelming majority of its planes are leased, and those leases, along with the cost of maintaining that fleet, are all billed in dollars.

It’s always a challenge to manage the split. But in a quarter where the rupee saw one of its steepest falls in memory — sliding by ~5% in just three months — its dollar-based bills suddenly pinched much more than before.

That isn’t just true for bills that were due this quarter. Under accounting rules, if you have a dollar-linked liability on your balance sheet, and it suddenly looks much larger in rupees because of the exchange rate, that’s a loss you need to book immediately — even if the money itself is to be paid off over years.

For Indigo, that translated into a sudden paper loss of ₹4,800 crore; enough to pull its quarter into the red.

Strip currency movements out, and the picture looks much better. Without it, the airline saw a profit of around ₹1,670 crore. That too, was only after some one-off charges — like a ₹250-crore provision the airline had to make to accommodate the new labour laws. Set that aside too, and the company made a profit of ₹1,920 crore.

That figure is much less worrying.

Then again, it’s more than ₹1,000 crore short of the ₹2,980 crore it made in profits the same quarter last year. You can see signs of that all through the company’s business. The company’s core operating margin — what it keeps before major fixed costs like aircraft rentals or interest — slipped from about 31% to a little under 29%. Its seat occupancy dipped slightly, as did the average fare for the seats it did fill. At the same time, its costs per kilometer, other than fuel, went up by more than 7%.

That is, even once you strip out all the quarter-specific weirdness, the airline did have a softer quarter, even if it wasn’t drowning in losses.

As the airline’s management admitted, the sceptre of its December catastrophe weighed on the company. Early in the quarter, the memory of those days cost the airline some market. It did start clawing that share back by January itself. But the memory of that crisis still lingered.

The exposure underneath

There’s one question worth asking the company: why was the company so vulnerable to a currency hit. Why did one bad quarter for the rupee blow a half-billion dollar hole through its balance sheet?

The answer, it turns out, is fundamental to Indigo’s business model. Indigo has always kept its books light. It has overwhelmingly leased its planes rather than buying them, so that it could expand quickly, while keeping enough cash on hand. This is how it became the giant it is.

Only, these leases are overwhelmingly denominated in dollars, which ties Indigo’s fortunes to the USD-INR exchange rate. All told, IndiGo’s net exposure to dollars amounts to about $10 billion. A 5% dip, then, mechanically burnt through half a billion dollars.

The airline is beginning to rethink its approach, however.

A year ago, it owned fewer than ten of the planes it flew. Today it owns thirty-six. It has also been prepaying aircraft loans, routing money through a financing arm in Gujarat’s GIFT City. It even skipped a dividend this year to help fund this shift. This is partly simple arithmetic: it’s paying more in financing those loans than the interest it earns on its cash. Prepaying just makes sense.

But partly, this is all meant to fix its interest exposure.

This move is still early. For the 36 planes it owns, it still leases over 400 — it is still overwhelmingly a company that leases planes. But it does point to a shift in philosophy: a company that was once laser-focused on staying asset-light is coming to terms with the costs of that approach.

Will that shift work? That question will be answered over the course of years.

A quarter out of time

There’s another serious issue that was obscured, somewhat, in the company’s March quarter results: the Iran war.

Just as Indigo started recovering from its December crisis, this new crisis erupted. Almost one-fifth of the airline’s total capacity — 160 daily flights to the Gulf and Europe — came within its cross-hairs. Roughly four-fifths of that simply stopped. Over January and February, Indigo was flying 10% more than a year ago. After the Iran war broke out, that dropped to just 3%.

The bigger problem, however, was jet fuel. Fuel is the single biggest cost for an airline. Even in normal times, two-fifths of an airline’s costs are just fuel, and a crisis can send that fraction far higher. When the war broke out, crude prices began rising rapidly. Jet fuel prices went up with it. Over those three months, they went up two-and-a-half times: from ₹60 a litre to ₹142.

You don’t yet see that in Indigo’s numbers. In India, jet fuel prices adjust with a lag of a month, so the company hadn’t seen the full brunt of those costs when the quarter ended. But that grace period closed with the quarter. Next quarter, you should expect those prices to bite.

In short, the March quarter results describe a time that has already disappeared into the past. The challenges have only mounted since. The rupee has weakened further, while fuel prices have remained high.

To cope with this, Indigo has started passing those costs on to its customers. So far, its passengers have been willing to foot the bill. This is something the company will keep testing — increasing fares until they hit a point where this stops working. Chances are, your next flight will be much more expensive than your last.

The government, however, is trying to bring back some stability.

A couple of days after Indigo‘s results, the government approved a ₹10,000-crore fund, intended to keep the price of domestic jet fuel at ₹75.60 a litre. This fund will help state oil companies absorb the price rises for now, and recover it at a later date, when prices come back down.

After the dust settles

None of this gloom changes a fundamental fact, however: Indigo is still India’s biggest airline. It still carries two of every three Indian air passengers. In a year where it looked as though it was stumbling, it still carried a record 123 million people.

If recent events hit Indigo, it hit its rivals much harder. Over June and July, for instance, Indigo plans to cut around a tenth of its flights. But at the same time, Air India — facing the same headwinds — is cutting more than a fifth of its schedule. Indigo might enter a lean phase by its standards, but unlike its rivals, it still has more than ₹51,000 crore of cash to ride such crises out.

There’s nobody, yet, who can threaten Indigo’s crown.

What does better access to Indian banking really do?

By any standard metric, India has made enormous strides in getting financial services to its people. Around 80% of Indian adults now have a bank account. UPI processed over 23 billion transactions in May 2026 alone.

But here’s a question we don’t fully have the answer to: what does all of this actually do?

When a bank branch opens in a village, or a farmer downloads a payments app, does it change the way they farm, the risks they take, the shocks they can absorb? The relationship between expanding financial access and improving economic outcomes — especially in rural India, where nearly half the workforce still depends on agriculture — is one that’s surprisingly hard to pin down. Financial inclusion is easy to measure in terms of accounts opened and credit disbursed. It’s much harder to measure in terms of what it changes on the ground.

A new paper published in the Journal of Banking and Finance, by researchers Liang Bai, Camille Boudot-Reddy et al., takes a serious crack at this question. They study one of the largest bank branch expansion programmes any single country has ever undertaken — the Indian government’s drive to force banks into rural India during the 1980s. It is as natural as an experiment can get.

Did they make farmers more productive? Did they improve their access to liquidity? Those are the interesting questions the paper seeks to explore. And the findings are very intriguing.

The experiment

To understand the paper, you need to understand the sheer scale of what India attempted. That needs a small history lesson.

After nationalising 14 commercial banks in 1969 and another 6 in 1980, the government controlled over 90% of the country’s banking business. And it decided to use that control for a specific social mission: getting banking infrastructure into the underserved corners of the country.

The thinking behind it was that once you put a bank in every underserved district, rural prosperity would follow. Farmers would save more, borrow for better seeds and fertiliser, invest in irrigation, and produce more.

So, to conduct this expansion, between 1979-1990, the Indian state undertook three Branch Licensing Policies (BLPs). To find the parts of India that should qualify for such a program, the RBI calculated a simple ratio for every district: rural population (RP) divided by number of bank branches (BB). Any district where that ratio exceeded the national average was labelled “deficit“.

Then, these deficit districts were put on a branch expansion programme — new banking licences were issued exclusively for unbanked locations within them. At the end of each three-year period, districts were reclassified based on their updated ratios, and the cycle repeated.

Over the decade, around 12,000 new rural bank branches were opened across the country, growing at a rate of around 10% a year. The average population-per-branch ratio plummeted from 53,000 people per branch in 1979 to just over 15,000 by 1988.

What makes this programme particularly valuable is that bank growth in a given district during the 1980s was determined primarily by a bureaucratic formula — its deficit status — rather than by market forces.

In a normal setting, studying the effect of bank branches on farming is messy, because banks don’t open branches at random. They go where the money already is, or where they expect it to be. That means you can never be sure whether a district did well because the bank arrived, or whether the bank arrived because the district was already doing well. But due to the deliberate lack of market factors in their design, the BLPs mostly sidestep this situation naturally.

Moreover, after 1991, the government changed course toward liberalisation. This also meant putting the brakes on public-sector banking expansion and prioritizing financial discipline. Branch growth in previously-unbanked locations flatlined completely, even as branches in already-banked locations continued to grow. If banks had been going to these rural areas because they saw commercial opportunity, they would have kept going, but they didn’t. The BLP expansion was primarily policy-driven.

What the banks didn’t do

Now that we know how the experiment worked, let’s look at the headline metrics being tested.

The primary result the researchers check is output: did more bank branches boost agricultural output or input use on average? The answer was broadly no.

Yields and total production showed positive signs, but the effects were statistically weak. Farmers didn’t dramatically ramp up their use of fertilizer, expand the land they irrigated, or shift to new cropping patterns in any meaningful way. And if they did, you couldn’t attribute it to the BLPs. But there was one notable exception — there was an increase in the adoption of high-yielding variety (HYV) seeds.

So, why did HYV seeds in particular benefit, but not overall agricultural output? The paper’s explanation is that access to banking does boost liquidity.

The strongest evidence is that households accumulated more savings. That gave them a larger financial cushion, even if it wasn’t enough to finance transformative investments. The paper estimates that the BLP program increased savings by roughly ₹400 per household over the decade. That was enough to buy HYV millet seeds, which cost about ₹200, or to cover some fertiliser, which ran to about ₹1,000 for an average holding.

But a groundwater irrigation pump — the kind of investment that could genuinely transform a farm’s productivity — cost around ₹4,000 at the time. And without expensive irrigation, farmers couldn’t undertake large-scale planting in the dry winter season that can significantly boost annual income. There was also no significant shift toward riskier cash crops like cotton, sugarcane, or oilseeds.

In other words, banks didn’t make farmers more adventurous in what or when they planted. On average, farming in banked districts looked a lot like farming in unbanked ones.

If this were the whole story, the paper would be a cautionary tale about the limits of supply-side financial inclusion. But it isn’t.

Climate resilience

The paper’s most important discovery is primarily about what happens when things go wrong.

See, in India, the monsoon season runs from roughly June to September. But its importance extends well beyond the summer Kharif harvest. The monsoon replenishes groundwater aquifers, fills tanks and reservoirs, and saturates the soil with moisture. All of this stored water is what the winter Rabi season, which runs from October to March, depends on for irrigation. Wheat, barley, chickpea, mustard, and sesame are all winter crops, and they need water that the monsoon left behind.

So when there’s a bad monsoon, it doesn’t just hurt you once. A drought year depletes the water reserves that the next season’s crops need, creating a one-two punch: first the summer harvest suffers, and then the winter harvest suffers too, because the irrigation water simply isn’t there.

The researchers tested whether bank presence affected this cascading relationship — specifically, whether faster bank growth weakened the link between a bad monsoon in one period and poor agricultural output in the next. And this is the most important finding of the paper.

In districts with faster bank branch growth, the damage from rainfall shocks was significantly less persistent. Farmers in these districts were better able to keep irrigating and planting through the dry winter months, even after a drought year. The magnitude of this effect is large: a 10% increase in bank branches was sufficient to reduce the yield impact of a standard negative rainfall shock by roughly 45%.

How did this work in practice? The paper points to irrigation — specifically, to the fact that farmers in districts with better banking access could afford to substitute stored rainwater with costlier groundwater pumped from wells. But if they didn’t have enough to own one, what did they do?

Well, by the 1980s, a groundwater rental market had begun to emerge across rural India, where pump owners hired out their equipment to neighbours. In fact, as per a survey by the National Sample Survey Organisation which covered 82 million farming households, 21 million owned an irrigation pump while 24 million reported hiring irrigation services from others. Even modest access to savings or credit could make the difference between renting some pump time and watching your winter crop wither.

The data also shows that bank presence specifically attenuated the link between bad monsoons and winter cropping. In districts where banks grew faster, farmers continued to plant Rabi crops even after poor rainfall — instead of abandoning the winter season altogether, which is what happens when households lack the liquidity to pay for irrigation in a drought year.

So the banks didn’t make farming more productive in normal times. But they made it dramatically less fragile in bad times. They acted as a buffer that absorbed the shock of a bad year and prevented it from cascading into the next one.

By the metric of output alone, India’s 1980s branch expansion looks underwhelming. But if the question is whether financial access improves the climate resilience of rural households, the answer from this paper is a clear yes.

What this means today

India is more financially included than it has ever been. Jan Dhan accounts, UPI, and digital banking have reached corners of the country that the BLP programme’s architects could never have imagined. But climate variability is also getting worse — monsoons are becoming more erratic, and rural India still depends heavily on rainfall for its livelihood.

This paper suggests that financial access may matter most not for its average effect on productivity, but for its role as a shock absorber. If that’s right, it reframes what we should be measuring when we talk about financial inclusion. Not just how many accounts were opened or how much credit was disbursed, but whether, when the next drought hits, farmers have enough of a cushion to plant again the following season.

Tidbits

1. Aurobindo Pharma has entered the biologics contract manufacturing space with the launch of TheraNym, a Rs 1,200-crore facility in Telangana. US pharma major MSD is the anchor customer for the plant, which will produce biologic medicines for global markets.
   Source: Economic Times
   

2. The OECD has raised its growth forecast for India by 20 basis points to 6.3% for the current financial year (FY27), up from its earlier March estimate of 6.1%. While the multilateral institution cautioned that energy price shocks and West Asia tensions are rekindling inflation, it maintained that the Indian economy remains resilient even as growth moderates from the 7.6% recorded last fiscal year.
   Source: Business Standard
   

3. India recorded an 18% increase in foreign direct investment (FDI) inflows during FY26, with total investments reaching $58.85 billion. Singapore retained its position as the largest source of FDI equity capital, while inflows from the United States more than doubled year-on-year, reflecting sustained global investor confidence in India’s digital economy, manufacturing capabilities, and long-term growth potential. Source: India Briefing

- This edition of the newsletter was written by Manie and Pranav.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #14

Hi folks, hope you’ve had a great week…

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11 days ago · 7 likes · 1 comment · Zerodha

Rosa & Tamoghna on India’s Youth Employment Crisis

In India, the more educated you are, the more likely you are to be unemployed. Graduate unemployment among the youth sits at 40%. For those with no education, it’s 3%. We recently spoke to Rosa Abraham and Dr. Tamoghna Halder, two of the authors behind the Azim Premji University’s State of Working India 2026 report, to understand why. Our conversation goes into what’s really driving this paradox — the role of caste and social signalling in education choices, whether waiting for a good job is rational, why the “missing middle” of Indian firms matters, and what the demographic dividend window really means for policy. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. India’s fuel-blending machine enters its next costly phase

2. India’s wet waste problem is a $50 billion opportunity

India’s fuel-blending machine enters its next costly phase

On 29 May, the Road Transport Secretary of India, V. Umashankar said that India is likely to bring a mandate for blending a biofuel named isobutanol into diesel later this year.

A week before that, the Bureau of Indian Standards had notified fuel specifications for E22, E25, E27 and E30 petrol blends, all of which contain higher proportions of ethanol than the E20 that India currently uses.

And then, later this week, Maruti Suzuki is expected to launch India’s first mass-market flex-fuel car that can run on any levels of ethanol, be it E20 or E100.

All of these announcements took place within a span of a week. Some of these moves may have been in the works for years, but there’s also an unmistakable sense of urgency involved here.

We’ve covered India’s ethanol blending program before. It dates back to a National Policy on Biofuels that dates all the way back to 2018. That policy has achieved a key milestone of 20% ethanol (E20) in all petrol-based vehicles, in an attempt to reduce our oil import bill.

The Strait of Hormuz crisis, to which India has found itself acutely exposed, speeded up some of those timelines. Petroleum minister Hardeep Singh Puri told Parliament in March that the disruption was unlike anything seen in modern energy history.

It is in that context that biofuels are no longer just a climate or farm policy. They are being framed as a strategic hedge to preserve independence.

However, the ethanol blending programme has proven to be a very costly affair on multiple fronts. While those costs are yet to go away, India is seriously considering what comes after E20. This story attempts to make a cohesive narrative out of all these announcements.

Let’s dive in.

Ethanol overcapacity

India went from 1.5% ethanol blending in 2014 to 20% by November 2025. From April 2026, E20 is mandatory nationwide. Over the last decade, as per government statistics, the program has substituted around 245 lakh metric tonnes of crude oil. As far as these objectives matter, this has been a successful industrial policy.

But the incentive machine that made it possible doesn’t have an off switch.

See, starting in 2018, the Centre rolled out an interest subvention scheme where the government bore up to 6% per annum (or 50% of the interest rate, whichever was lower) on loans taken to build new ethanol distilleries or expand existing ones. Over 1,100 sugar mills received in-principle approval. Oil marketing companies (OMCs) like IOCL and BPCL signed long-term procurement agreements at government-fixed prices.

So investors saw three things at once: subsidized capital, a captive buyer, and a government target (E20 by 2025) that implied demand would keep rising. Everyone built at once.

However, this has now caused overcapacity in ethanol. India now has installed ethanol capacity of roughly 2,000 crore litres — against E20 demand of only about 1,100 crore litres. Another 400 crore litres of capacity is expected to come online by FY27. OMCs are absorbing only about 60% of the ethanol being offered to them, and CareEdge expects utilisation to stay at 65-75% for the next three years.

In other words, the government aggressively expanded supply, but without adequate support on the demand side. Part of this also stems from government-fixed price floors for farmers.

This surplus is the engine driving everything that follows. The policy system has to find new demand, or watch those investments go bad. Meanwhile, the procurement agreements are still in place, and the subsidies and administered prices still apply. That will certainly keep capacity coming.

Beyond E20

The most intuitive answer to the surplus problem is to put more ethanol into fuel. That’s what the new ethanol standards launched by BIS solve.

At the same time, the government is pushing flex-fuel vehicles — cars and motorcycles that can run on E85 (85% ethanol) or even E100 (pure ethanol). The Central Motor Vehicle Rules have been amended to recognise these fuels, and E100 is now part of official testing and certification standards in April 2026. IndianOil already sells E100 at 183 retail outlets.

But how meaningful is this, really?

The practical constraints are significant. E85, for instance, delivers nearly 30% worse mileage than petrol, simply because ethanol has less energy per litre — about two-thirds of gasoline’s calorific value. Additionally, a flex-fuel upgrade adds an estimated ₹40,000-50,000 to a vehicle’s price.

Maruti’s own executive, Rahul Bharti, has cautioned that flex-fuel volumes are “unlikely to be significant in the near term“ due to limited models and limited pump availability. It’s a chicken-and-egg problem: OEMs won’t build flex-fuel cars without fuel at pumps, and OMCs won’t invest in E85 or E100 pumps without enough cars on the road.

Even if India raises ethanol blending from E20 to E30, the incremental energy-security gain diminishes with each step-up. As per NITI Aayog’s own planning assumptions, E20 requires 1,016 crore litres of ethanol, while E30 would require above 1,520 crore litres. Those extra 500 crore litres of ethanol displace only about 339 crore litres of petrol on an energy-equivalent basis.

Naturally, these crude numbers assume there won’t be technological innovation to ensure higher ethanol blends work. But even then, innovation also requires a lot of risk capital. And OEMs will be hesitant to spend huge amounts of money on such innovation without assured supply, especially when other proven technologies like EVs and CNG already exist.

Most importantly, petrol is not where India’s real oil vulnerability lies. We consume more than double the diesel compared to petrol. Trucks, buses, agricultural equipment, railways, gensets — all of them run on diesel. A petrol-blending strategy, no matter how ambitious, can only address a fraction of India’s crude oil dependence.

The isobutanol pivot

India did try to do for diesel what it did for petrol. The government ran trials blending ethanol into diesel, and failed. And the reasons for this are entirely technical.

See, diesel engines work on compression ignition: the fuel-air mixture ignites from being compressed, not from a spark plug. This requires a high cetane number, which is a measure of how easily a fuel ignites under compression. Ethanol has a very low cetane number. When you put it in a diesel engine, you get incomplete combustion, engine knocking, and power loss.

Moreover, ethanol and diesel just don’t mix. Ethanol absorbs moisture quite easily, which is not good for diesel ignition.

So, the government pivoted to isobutanol.

Just like ethanol, isobutanol is also an alcohol. Both can be made from the same raw materials, like sugarcane molasses and maize. They share much of the core infrastructure. But they are not the same molecule. They are produced through different biological processes.

Ethanol is made through the glycolysis fermentation pathway that yeast has been performing for ages. But no organism in nature evolved to produce isobutanol in large quantities. To make useful quantities of isobutanol, you need genetically-engineered organisms.

Isobutanol is better in every way that ethanol isn’t. It has higher energy density than ethanol, mixes with diesel much better, and doesn’t turn into vapour easily under pressure — which is exactly what a compression-ignition engine needs.

The industrial infrastructure for this is starting to take shape. The Automotive Research Association of India (ARAI) is testing 10% isobutanol-diesel blends. BPCL is involved in the validation. In fact, Praj Industries, India’s largest ethanol plant EPC company, has a partnership with Gevo, a US biotech firm that developed a proprietary yeast capable of fermenting sugars into isobutanol instead of ethanol. They’re setting up a demonstration-scale fermentation module at a sugar mill in Maharashtra.

As per the Indian Sugar Mills Association, a 150 kilo-liters (kL) per day ethanol refinery can pivot, with modest investment, to produce 125 kL ethanol plus 20 kL isobutanol each day. The existing surplus capacity becomes the foundation.

Proof of concept

This is where the story needs a reality check. The pitch that isobutanol is a straightforward bolt-on to India’s existing ethanol infrastructure is appealing. But it understates the difficulty considerably.

What India is attempting with isobutanol doesn’t have a powerful precedent. One of the key inspirations for our biofuels policy was Brazil, the most successful case of an ethanol industrial policy, and a pioneer in flex-fuel vehicles. But there is no Brazil for isobutanol. No country has commercialised isobutanol-diesel blending at scale yet.

The biggest bottleneck to that is obviously biological. In wild-type yeast, which generates ethanol at scale, isobutanol is a byproduct produced in very minimal quantities. To make useful amounts, you need engineered microbes with the isobutanol pathway bolted onto their metabolism.

But unfortunately, isobutanol itself is toxic to the very organisms that produce it. At concentrations of just 1-2% in the fermentation broth, isobutanol starts killing the microbes. Compare this to ethanol, where industrial yeast happily tolerates concentrations of 15-20%. What this means in practice is that with isobutanol, you get a far more dilute broth with lots of unwanted byproducts, which also makes separation and purification more expensive.

Gevo, which is Praj’s partner, seems to have developed a technology that prevents the concentration from ever reaching toxic levels. But this adds capital cost and process complexity that ethanol doesn’t need.

Which is where we also address the matter of cost.

Bolting on isobutanol capabilities to an existing ethanol plant may cost only 20-30% of that plant. But a new ethanol plant costs several hundred crores. A 20-30% retrofit across India’s surplus distilleries is not a trivial investment, especially when the economics of isobutanol production at Indian sugar mill conditions have not been demonstrated at commercial scale.

Additionally, you need significantly more glucose to produce one litre of isobutanol compared to ethanol. That also means you need a lot more maize and other foodgrains (which contain glucose) to make a given amount of isobutanol. And we make most of our ethanol through foodgrains rather than sugarcane.

In our primer, we covered how the ethanol industrial policy is draining our foodgrains, even making us import-dependent on maize — a crop we’ve always been self-sufficient in. In fact, the Economic Survey 2025-26 itself flagged a tension between self-sufficiency in energy and that in food. Isobutanol could worsen this tension further.

Now, isobutanol can also be made through chemical synthesis rather than biological fermentation. But the former would be an expensive process for India. At least with fermentation, existing ethanol plants can be modified. But chemical synthesis will require building new capacities from scratch.

The distance between a validated demo plant and a nationwide-blending mandate backed by commercial-scale production is still significant. And we haven’t even delved into the changes that automakers would need to make to their engines for isobutanol, eventually creating a similar version of the chicken-and-egg problem that plagued ethanol in the first place.

What this means

India’s biofuel programme stands at an inflection point. The energy-security logic has become more urgent than ever, and sugar-based alcohols like ethanol have become part of a serious consideration that involves coal, solar, wind, and nuclear.

But ethanol is hardly a foolproof solution. It delivers less energy per litre than petrol, imposes a mileage penalty that consumers notice, and takes away resources from other parts of agriculture.

At the same time, EVs are catching up. NITI Aayog’s own modelling shows that faster electric two-wheeler adoption materially lowers ethanol demand, just as our industrial policy tries to match it with supply. We also have an industrial policy for EV adoption, but India’s fiscal resources are finite.

The more it invests in a distillery-and-flex-fuel ecosystem, the harder it becomes to pivot if electrification overtakes the ethanol thesis. Industrial lock-in is a real risk with India’s strategy, and the next few years will determine which path India has committed to.

India’s wet waste problem is a $50 billion opportunity

For twenty-five years, India has had a rule on the books: households must keep their wet waste separate from their dry waste. For twenty-five years, almost nobody has bothered. Our kitchen scraps, vegetable peels, and leftover food go into the same bags as plastic and paper. They’re loaded on the same truck, and dumped onto the same growing mountain at the edge of town.

On the 1st of April this year, the government decided to try again, harder. This time around, the new Solid Waste Management Rules, 2026 require four separate streams — wet, dry, sanitary, and “special care” items like batteries or old medicine. They make bulk generators of waste, like apartment complexes or commercial set-ups, legally responsible for processing their own wet waste. And they back the whole thing with penalties, with a digital system that tracks garbage from your bin to its final destination

There are many reasons this might not work out. But a Delhi-based think tank — the Council on Energy, Environment and Water, or CEEW — has put a number on what happens if we do get this right. The wet half of India’s urban garbage, it argues, could become a $50 billion industry, generate 26 lakh jobs, and flip our waste from one of our fastest-growing sources of emissions into something that’s net-negative — in just two decades.

Those are the table stakes we’re playing for. But reading their report also tells you why that bet is so hard to win.

Why the wet stuff is the whole game

Roughly half of everything Indian cities throw away is “organic” — kitchen waste, market waste, garden trimmings. Technically, this is called the “organic fraction of municipal solid waste”. But you can just think of it as “stuff that rots”. By 2047, CEEW thinks India’s cities will be generating around 208 million tonnes of it every year.

That discarded, rotting material is the single most important thing in the entire waste system, because it’s a contaminant. Mix it in with dry waste and it soaks into paper, rusts metal, and coats plastic in slime. This pushes recyclable material beyond the pale of recovery. On the other hand, if you separate this wet waste out cleanly, the rest of your garbage suddenly becomes worth recovering.

Fixing wet waste, in other words, doesn’t just fix half the problem. It unlocks everything else.

How do we fix it, though? There are two serious options we have. One, we can compost it — let it break down in the open air, with oxygen, into a soil-like manure. Or you can run it through “biomethanation” — seal it in a tank without oxygen and let bacteria turn it into biogas. This, as we wrote earlier, creates fuel that can run everything from CNG buses and PNG kitchens.

Composting gives you fertiliser. Biomethanation gives you fertiliser and fuel.

Right now, the split is wildly lopsided. Composting handles about 96% of India’s treated wet waste; biomethanation just 4%. CEEW’s report is, essentially, an argument about how fast that ratio could shift towards biomethanation — and what we gain, and lose, depending on this.

The greener the plan, the fewer the jobs

There are, essentially, three futures ahead of us.

We could stick to business as usual. We keep muddling along, get nowhere, and the sector stays a net emitter. If we aspire for more, though, we could move to an ambitious-but-balanced path: where we collect everything, treat almost all of it, and split it evenly between composting and biogas. And if we really get our stuff together, there’s a flat-out green path: we treat all our wet waste, and tilt the mix hard toward biomethanation — let’s say two-thirds gas, one-third compost.

The greener you go, the deeper the emissions cuts are, and the bigger the market becomes: from a $10 billion business at the bottom to over $60 billion at the top. Take those numbers as ballpark figures, not forecasts.

That said, a bigger market does not always translate into more jobs. If we stick to how we do things, our waste industry will employ 2.1 million people. A balanced path could lift that to 2.6 million. But the greenest, most ambitious path — the one that creates the biggest market and brings the deepest emissions cuts — only creates 1.9 million jobs.

That is, the most aggressive green scenario produces fewer jobs than doing nothing at all.

This is the central tension of the whole transition. It comes from a simple difference between the two technologies. Composting is labour intensive. It keeps people employed across thousands of small and mid-sized sites.

Biomethanation, on the other hand, is capital intensive. It needs sealed industrial plants with pumps, digesters and gas-cleaning units, all run by a small crew of technicians. It creates more value. It is also environmentally better; biogas can displace fossil fuel and chemical fertilisers more powerfully than compost alone. But every step in that direction replaces a crowd of low-skill compost workers for a handful of trained plant operators.

So India faces a genuine choice: do we want to give people employment in bulk, or do we choose a path that cuts the most carbon? You can’t have both. This is ultimately a political choice, not a technical one.

But who’s actually buying?

There’s another even more basic problem. That $50 billion “market” will only exist if there are buyers. And there’s a distortion that can keep them away. The two things this industry produces — manure and biogas — both must compete against products the government deliberately keeps cheap.

The manure that comes out of a composting plant, or the wet slurry left over from a biogas digester, is principally a direct substitute for chemical fertiliser. It can also rebuild the organic carbon that decades of urea have stripped out of India’s soil. But it comes at a price. Meanwhile, in 2025, the government spent over ₹1.7 lakh crore subsidising chemical fertilisers. A bag of urea is so cheap, and so familiar, that asking a farmer to buy heavy, bulky organic manure instead is like asking them to set their wallet on fire. After all, city compost has existed for decades; but most of it sits unsold.

This problem is why the government now pays ₹1,500 a tonne in “market development assistance” to help organic manure sold out of registered plants close the gap. Only, the subsidy on chemical fertilisers runs into tens of thousands of rupees a ton. In giving a smaller subsidy for a bulkier substitute, we might give it a gentle nudge, but we’re unlikely to genuinely shift a farmer’s choice.

Then, there’s the question of trust: as long as we struggle to cleanly segregate our waste, there’s no guarantee what people get. Compost made from mixed municipal waste, currently, can carry heavy metals or glass shards. A farmer who gets one bad batch won’t risk their livelihood on it again.

The report suggests testing as a possible fix: every batch of compost could be certified at an NABL-accredited lab before it’s sold. That’s the same level of national accreditation that backs medical and industrial testing. This is expensive and unglamorous, but without a credible quality stamp, “organic manure” is just a sack of unknown sludge, and no subsidy can fix that.

Fuel comes with a rhyming issue. Biogas could, in theory, insulate Indian households from the LPG import bill. India brings in about two-thirds of its cooking gas from abroad, leaving our poorest families exposed to global price spikes, like the one currently being pushed by the Hormuz crisis. For the moment, though, LPG cylinders are themselves subsidised, and the gas grid hasn’t reached most homes. That’s a hostile environment for biogas-for-cooking to reach the scale we need.

The entire “market” of its $50 billion rests on the bet that India will reform its fertiliser and fuel subsidies, so that alternatives have room to look more attractive.

Which brings us back to the rules

Notice that none of the hard parts, here, are technological. We know how to compost. We know how to build a biogas digester — Indore runs Asia’s largest plant of its kind. The technology has been proven to work.

What doesn’t work reliably is everything around it. We struggle to arrange for clean feedstock, sign workable contracts, or incentivise buyers to embrace their output. In other words, the barriers to this $50 billion market opportunity aren’t technological, but human.

This is why the new rules matter so much. It is also why they may not be enough.

The biggest bottleneck, here, is feedstock quality. A biomethanation plant fed mixed, contaminated waste can crash completely. These plants are biological; they rely on having the healthy bacteria of the right types. Upset or stress them, and the plants collapse. Composting is more forgiving, meanwhile, but contaminated compost is unsellable.

There’s only one answer: get clean, segregated wet waste in. If we fail that step, everything else fails. The SWM Rules 2026 are, fundamentally, the government’s attempt to legislate away the input problem — getting clean wet waste, separated at the source.

Clean feedstock, though, is only half the issue. The other half is how cities hire the people who run these plants. Most municipal tenders are still awarded on what’s called “L1” — where the lowest bid wins. On paper, this looks prudent. In practice, it’s a race to the bottom. Operators quote prices too thin to actually run a plant well, cash in on whatever subsidy comes with building it, and then let the facility limp or die. Worse, many contracts still pay operators by the tonne of waste they haul, not the quality of what comes out. They’re incentivised to mix in heavy rubble to bump up the weight of their intake, ruining the very feedstock the plant needs.

CEEW thinks L1 procurement should be replaced by QCBS — quality-and-cost-based selection — where a bidder’s track record and plant performance count for most of the score, with price only counting for the rest. It also suggests tying payments to output: clean compost and delivered gas, not tonnes trucked.

Sadly, experience teaches one not to be too hopeful. Rules requiring segregation have existed, in one form or another, since 2000. The reason Indore became a standout national success isn’t that it had better technology than anyone else. In the words of one expert CEEW interviewed, success stories like Indore tend to come down to “strong administrative leadership rather than widespread compliance.” A determined municipal commissioner actually went door-to-door until the city started segregating its waste.

But you can’t base an industry on the promise of determined civil servants.

Nothing about India’s wet waste problem is unsolvable. The only thing keeping us from a $50 billion industry is the least glamorous capability there is — of pushing people to get the basics right. That’s often the hardest thing to solve.

Tidbits

1. ARAI has rolled back a requirement that forced automakers to obtain separate domestic value addition (DVA) certificates for export models under the auto PLI scheme. If an export variant’s bill of materials is identical to the domestic version, the existing DVA certificate will now suffice — a relief for manufacturers who argued the extra paperwork added months of compliance burden.
   Source: Business Standard
   

2. India has added silver grains, powder, and other 99.9% purity forms to the restricted imports list, requiring prior authorisation from the DGFT. The move comes after silver imports hit a record $12 billion in FY26 — up from $4.8 billion the year before.
   Source: Economic Times
   

3. President Trump signed an executive order creating a voluntary framework for the US government to review national security risks of advanced AI systems for up to 30 days before public release. Trump had delayed signing a similar order in May over concerns it could hamper America’s AI lead — the final version keeps participation optional and limits the review window, with the NSA director deciding which models qualify for scrutiny.

   Source: Business Standard

- This edition of the newsletter was written by Manie and Kashish.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #14

Hi folks, hope you’ve had a great week…

Read more

11 days ago · 7 likes · 1 comment · Zerodha

Rosa & Tamoghna on India’s Youth Employment Crisis

In India, the more educated you are, the more likely you are to be unemployed. Graduate unemployment among the youth sits at 40%. For those with no education, it’s 3%. We recently spoke to Rosa Abraham and Dr. Tamoghna Halder, two of the authors behind the Azim Premji University’s State of Working India 2026 report, to understand why. Our conversation goes into what’s really driving this paradox — the role of caste and social signalling in education choices, whether waiting for a good job is rational, why the “missing middle” of Indian firms matters, and what the demographic dividend window really means for policy. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. Are ATMs in India dead?

Are ATMs in India dead?

When was the last time you took cash out of an ATM? The existence of UPI has at least minimized, if not outright removed, the use of ATMs for many people in Indian cities.

But believe it or not, India is sitting on more physical cash today than it has at any point in its history.

According to the RBI’s currency-in-circulation data, the total value of banknotes in circulation in India was 41 lakh crore. That’s actually more than double the level just before demonetisation in November 2016, when banknotes in circulation stood at ~₹18 lakh crore. The currency that demonetisation was supposed to remove has more than come back.

UPI didn’t kill cash. It took over the small, fast, daily transactions: the local tea/coffee shop, the auto, the kirana shop, and so on. But large parts of the country still run on cash for reasons that have little to do with UPI’s technical capabilities.

In much of rural India, where the only bank branch is hours away, cash is just what works. Many of the people transacting in cash, like agricultural labourers, daily-wage construction workers, and small traders in rural and semi-urban India, don’t even have working bank accounts, or have lost trust in them. A lot of transactions in real estate and the unorganized economy are settled in cash precisely to stay outside the formal banking trail.

Then, there’s the question of what kind of cash this is. Of the ₹41 lakh crore in banknotes, roughly ₹35.2 lakh crore is in ₹500 notes alone. The ₹500 isn’t the note you use for everyday spending, though. It sits in wallets, drawers, and almirahs. In a 2023 research paper, the RBI concluded that digital payments are now substituting cash for everyday transactions, but the store-of-value motive for holding cash remains intact. Cash in India has grown not because people are transacting in it more, but because they’re holding more of it.

The demand for physical cash is very much alive. What UPI has changed is how people get hold of it, and because of it, the economics of running ATMs. After all, several ATM operators — including one of the two largest companies that ran the country’s ATM network — have collapsed in the last few years.

But the chain of events isn’t as straightforward as you’d think. And that’s what we’ll be getting into in this story.

Money maker

Let’s start with the fundamentals of how ATM operators make money.

Say you have an HDFC Bank account. You walk up to an SBI ATM and withdraw ₹10,000. Behind the scenes, HDFC Bank (which is your bank) pays SBI a small fee for letting you use their machine. This fee is called the interchange fee.

The interchange fee is the source of margins for an off-site ATM (which is an ATM not attached to a bank branch). An ATM exists because somebody runs them and earns ₹19 every time you use one. Sometimes the owner is a bank itself, paying a third party to manage the machine on a per-transaction basis. Sometimes, the owner is a separate non-bank company called a “white label“ operator (like Indicash or Hitachi Money Spot), whose whole living comes from interchange fees. The model works as long as enough people use each machine repeatedly.

But the fee has barely moved. It was ₹15 from 2012, raised to ₹17 in August 2021, and then to ₹19 in May 2025. Two hikes in 13 years.

Since UPI took over small, daily transactions, an ATM that used to do 200 transactions a day now does a fraction of that. At the same time, the costs of running an ATM machine — from the rent on the ATM cubicle to the diesel for the cash van that comes to refill the machine — have all gone up.

Perhaps the biggest cost increase lies in wages. The new Labour Codes, which standardise minimum wages and benefits across India, are pushing up the cost of the ground-level workforce that runs this industry — like drivers, security guards, and cash custodians.

The Currency Cycle Association, which is the industry body for cash operators, told Business Standard in May 2026 that the industry is now in a “force majeure situation“. That’s a term for when a business can no longer operate as designed because of forces it can no longer control.

Ka-ching no more?

The first major domino that fell victim to a force majeure situation was AGS Transact Technologies.

AGS was the second-largest ATM managed services provider in India. At its August 2021 peak, it had installed, maintained or managed around 72,000 ATMs and cash recyclers across the country. It went public in January 2022 at ₹175 a share.

But by mid-2025, the company found itself in freefall. In early 2025, nearly 38,000 ATMs serviced by AGS went dark — including 14,000 SBI ATMs, India Post ATMs, and Yes Bank ATMs. On August 25, 2025, the National Company Law Tribunal in Mumbai admitted AGS to corporate insolvency, and by February 2026 admitted creditor claims against the company had reached ₹13,171 crore. The stock was at ₹5, down 97% from its IPO price.

AGS was the most dramatic failure, but not the only one. White label operators have been hit just as hard. Since they only earn from interchange and run no other line of business, a ₹19 fee that no longer covers cost is an existential problem rather than a margin question. Tata Communications, for instance, divested its white label network Indicash to Findi India in March 2026, exiting the business it had pioneered in 2013.

What’s being built instead

So, what does that mean for the ATM?

Well, the machine itself is changing. The old ATM was a cash dispenser. The new machine is a cash recycler, which still dispenses cash but also accepts deposits, so small business owners can deposit their daily takings without queuing at a branch. The same machine can also do video KYC for a new account, issue a fresh debit card, run a cross-sell on a personal loan, or update a passbook.

In effect, the new ATM sounds a lot like a partial bank branch with no teller.

That’s not coincidental, either. Banks now often use the ATM as a way to offload work from their branches. Anything you used to do at the teller’s counter, except wealth management and lending, you can now do at an ATM.

On the latest earnings call of CMS Info Systems, the largest cash management company in India, Chief Business Officer Anush Raghavan explained what this looks like in practice for one of its clients, ICICI Bank:

“Two years back, they [ICICI Bank] had, I think, about 20% cash recyclers and 80% cash dispensers. Two years since now, since we have been working with them, it has gone the other way. We are 80% cash recyclers and 20% dispensers.”

The contracts under which ATMs are being built are changing too.

In the old model, the operator was paid a fee per transaction. So when transactions dropped, operator revenue dropped. The new model is a fixed monthly fee per machine. That inherently means that the bank takes some of the risk of transaction volumes being low. The operator gets paid more predictably.

In fact, CMS CEO Rajiv Kaul said on the same earnings call that “for all practical purposes, the transaction fee model is dead in the ATM business.” CMS itself walked away from a ₹700 crore contract at ₹19 per transaction — equivalent to ₹75 crore of annual revenue — because the unit economics over the seven-year contract life didn’t work.

In FY26, CMS signed long-term fixed-fee contracts with SBI, ICICI Bank and HDFC Bank that together secured 85% of its FY27 revenue target. With AGS gone and smaller white label operators struggling, CMS now holds a whopping 46% market share in India’s ATM cash management.

Cash rules everything around me

So, with recyclers taking over dispensers, and fixed fees replacing per-transaction fees, what does the broader picture look like?

See, a cash recycler costs roughly ₹6 lakh to install, versus ₹3.5 lakh for a pure dispenser. The economics of these expensive multi-function machines only work if enough people use them for enough things, which means installing them where banks already have customers and where the recycler can act as a branch substitute. In practice, this means the new ATMs are going into urban and tier-1 to tier-3 locations.

Now consider the machines that are being shut down. As per the RBI’s Report on Trend and Progress of Banking in India, between FY24 and FY25, on-site ATMs grew by roughly 5,000, while off-site ATMs declined by nearly 8,000. Off-site is where you find ATMs not attached to a bank branch, like a petrol pump or a small-town market street. These are also the ATMs that white label operators, who run most of their machines in semi-urban and rural areas, have always depended on.

According to an ICRIER consultation report, just 21.6% of India’s ATMs are in rural areas, and India has 21.4 ATMs per 1 lakh adults compared to a global average of ~39.5. Most of the rural cash-access machines that do exist depend on the old, outdated interchange fee model.

Banks haven’t abandoned rural cash access, though. They’re just far less reliant on ATMs.

For one, there are 22,000+ regional rural bank branches (RRBs) across 730 districts. Secondly, business correspondents, who are individuals authorised by banks to provide basic banking services through their own shops, now operate the majority of India’s banking outlets in branchless mode. And then there are micro-ATMs, which are handheld biometric or card-based devices through which a kirana shopkeeper can dispense small amounts of cash from their own till. These grew to nearly 1.5 million units as of 2024.

These substitutes work, but they are different products. A micro-ATM caps your withdrawal at around ₹10,000 and depends on the shopkeeper having that much cash on hand, which they often don’t. A business correspondent operates during their own business hours and is dependent on one person’s reliability and connectivity. An RRB branch has fixed hours and queues. None of them is the equivalent of a 24/7 ATM.

The new infrastructure looks more suited to the areas they’re in. It’ll be a long while before we get to know whether the substitutes are as good as the off-site ATMs being lost. But what is clearer than ever is that the Indian ATM is no longer the humble, lumpy cash machine we have known it to be for so long.

Tidbits

1. JSW Group has finalized plans to set up a 30 GWh lithium-ion cell manufacturing facility with a joint venture partner, investing over $1.3 billion across two phases. The company is evaluating Southeast Asian countries for the plant to leverage India’s free trade agreements, and will import cells from China in the interim as it aims to deliver its first new energy vehicles by late 2026 or early January 2027.
   Source: Business Standard

2. On June 5, Maruti Suzuki will launch India’s first E100 vehicle — a car that runs on nearly pure ethanol, marking a step beyond the country’s existing E20 blending programme. While industry executives estimate E100 could cut per-kilometre fuel costs by 25–35%, the bigger challenges remain: limited refuelling infrastructure, lower energy density than petrol, and consumer unfamiliarity with flex-fuel technology.
   Source: Business Standard

3. Realty firm Anant Raj has signed an MoU with the Haryana government to invest ₹20,000 crore in large-scale data centre infrastructure across the state, expected to create around 6,000 jobs. This is over and above its existing 307 MW expansion pipeline across Manesar, Panchkula and Rai, and follows a ₹4,500 crore commitment in Andhra Pradesh eight months ago.
   Source: Business Standard

- This edition of the newsletter was written by Krishna.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #14

Hi folks, hope you’ve had a great week…

Read more

11 days ago · 7 likes · 1 comment · Zerodha

Rosa & Tamoghna on India’s Youth Employment Crisis

In India, the more educated you are, the more likely you are to be unemployed. Graduate unemployment among the youth sits at 40%. For those with no education, it’s 3%. We recently spoke to Rosa Abraham and Dr. Tamoghna Halder, two of the authors behind the Azim Premji University’s State of Working India 2026 report, to understand why. Our conversation goes into what’s really driving this paradox — the role of caste and social signalling in education choices, whether waiting for a good job is rational, why the “missing middle” of Indian firms matters, and what the demographic dividend window really means for policy. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. How Suzlon survived by selling to itself

2. The cost of defending the rupee

How Suzlon survived by selling to itself

In March 2014, Suzlon Energy sold one of its businesses for ₹2,000 crore — about 26 times what that business was worth on its own accounts.

It would have been a remarkable sale, but for the fact that the buyer wasn’t some outside investor. It was a subsidiary it had set up itself. In a year when its group was bleeding money, the company booked a profit of nearly ₹1,923 crore. In an order dated 29 May 2026, SEBI looked at that sale, and a handful of similar deals, calling them what they were: a way for a company on the edge of collapse to look healthier than it actually was.

You probably know Suzlon as one of the Indian market’s great turnaround stories: a wind-energy company that fell to a penny stock, before clawing its way to becoming a near-₹80,000 crore giant. This is the story of how it bought the time to do just that.

A fight to stay alive

To understand why it would bother dressing its books, you need to understand how close Suzlon came to going under.

Suzlon was founded in 1995 by Tulsi Tanti, a textile businessman who got into wind energy to solve his own factory’s power problems. From there, it spent the 2000s becoming one of the world’s largest wind-turbine makers. It did this the risky way: borrowing heavily to buy companies abroad, including a German turbine maker called Senvion.

Then, the 2008 financial crisis hit. The company’s overseas markets froze. Orders dried up. Nobody wanted turbines when the world was melting down. Only, their debt didn’t go anywhere. By the early 2010s, Suzlon owed banks well over ₹13,000 crore.

Things were desperate. And so, in 2013, its lenders stepped in with what’s called “corporate debt restructuring”, or CDR. They effectively gave it more time and gentler terms, rather than force it into bankruptcy. In March 2013, a consortium of 19 banks led by State Bank of India restructured roughly ₹9,500 crore of Suzlon’s debt.

But that rescue came with conditions. Suzlon had to sell assets, raise fresh money, and crucially, keep its balance sheet from looking too broken. Their net worth — or the amount of money they would be left with if they sold everything and paid off all their debts — could not drop below zero. If that happened, the conditions of the restructuring would be breached, and the arrangement would come crashing down.

This has become an existential matter for Suzlon. No matter how the broader business fared, it needed its accounts to look good, and for its net worth to stay positive.

Selling a business to yourself

And so, in 2014, Suzlon sold its operations-and-maintenance arm — the unit that services wind turbines after they’re installed. The business was worth about ₹77 crore on Suzlon’s own books.

But then, Suzlon sold it, in one lump, to Suzlon Global Services — a wholly-owned subsidiary — for ₹2,000 crore. Somehow, in shifting the company from one arm to another, it had recorded a profit of ₹1,923 crore.

There was no way Suzlon Global Services could actually pay any of that. It was barely more than a name on a piece of paper. Its assets at the time amounted to just ₹4 lakh. Over the next many years, it would somehow manage to push ₹700 crore into Suzlon’s bank accounts.

That still left ₹1,300 crore in unpaid dues. And so, the company constructed a ruse, effectively making it seem like the money had all been paid. Over the period of a few days in March 2017, Suzlon and its subsidiary moved money back and forth between their accounts. The same funds would go out and then come straight back, again and again. Each loop would be recorded as a ‘payment’.

Imagine I give you a ₹100 note, and then ask you to return it immediately, over and over again. Each time you give me the note, I write down “paid ₹100” before sliding it right back. If we do this long enough, on paper, I can make you “pay” me any amount of money — whether or not I’m any richer by the end. That’s what Suzlon did.

Of course, this didn’t increase Suzlon’s bank balance. But that was never the point; the point was to get rid of an awkward line in their accounts. For all those years, according to Suzlon’s books, its subsidiary “owed” it ₹1,300 crore. This circular exercise let Suzlon erase that line. On paper, the old sale was closed, Suzlon just happened to give it another ₹1,300 crores in routine loans that year, and bought convertible bonds from it.

Bygones were now bygones, Suzlon had successfully booked a ₹1,923 crore paper profit, and the new loans were something to be dealt with later.

Why go to all this trouble? To keep their net worth from hitting zero. The very next year, Suzlon recorded a loss of ₹6,000 crore in assets it had finally admitted were impaired. Had it not inflated its net worth just in time, that impairment would have pushed its net worth below zero. The conditions of its debt restructuring would have been breached, all its loans would instantly come due, and everything would fall apart.

The number juggler

It would be one thing if Suzlon did this once.

To SEBI, though, the larger problem was that this quickly became a pattern.

In 2015-16, for instance, it sold its shares in Suzlon Global Services — the buyer in its last deal — to yet another subsidiary: Suzlon Structures. This brought in an extra paper profit of about ₹830 crore.

Then, it got even more creative.

The company had a Dutch subsidiary, for instance, that was in need of a loan. To guarantee that loan, Suzlon asked the State Bank of India to issue a ₹4,050 crore “letter of credit”. If there were ever a default, the lenders would go to SBI for money, who would in turn recover it from Suzlon. In 2016-17, Suzlon showed this in its books honestly, as a contingent liability: money it may have to cough up in case things went wrong.

But then, it slowly began to disappear from its books. The next year, it became an “insurance contract” instead, and was quietly dropped from its contingent liabilities. But the bill would come due in October 2019, when the subsidiary would default on the loan.

The same sort of thing would happen again and again.

For instance, the value of one of their subsidiaries, SE Forge, kept fluctuating in its books. One year, it wrote down its investment in it, essentially declaring it worthless. The very next year, while scrambling to raise money, it declared that the business had recovered and added the value back again. Later on, it wrote the investment down yet again.

Suzlon had given loans to SE Forge as well. But with some accounting alchemy, those loans would turn into “investments”.

Or take Suzlon Gujarat Wind Park. Suzlon claimed to “invest” ₹1,200 crore of fresh capital in the company. But all that money circled right back. Meanwhile, just ten days later, that ₹1,200 crore “investment” was sold to another subsidiary for ₹192 crore.

As these allegations piled up, Suzlon tried taking cover under technicalities. In each case, they had appointed reputable valuers, and had the “deals” approved by their board, and by shareholders. Everything was disclosed to stock exchanges. Independent auditors had given their seal of approval. Everything was thoroughly stamped and signed.

SEBI, however, brushed that aside. If you were trying to dress up your books, it didn’t matter if you followed all the procedures carefully. It didn’t matter if the company eventually emerged as a profit making entity, and no investor was harmed. You can’t mislead people with your accounts, no matter how impressive your paperwork is.

What does it all cost?

Suzlon almost got away with all this scott-free.

SEBI had looked at this matter before. In 2019, It began an investigation, asked for a forensic audit, and asked Suzlon’s executives for an explanation. Last year, however, SEBI’s adjudicating officer cleared all of them. They found no violation, and no penalty. The matter seemed dead.

It wasn’t.

SEBI has the power — although used rarely — to reopen and revise its own officers’ decisions if it finds them wrong and damaging to the market. The clean chit didn’t make sense. SEBI took it down, and looked at the matter more strictly.

That said, for all that drama, the final bill is small.

SEBI fined the five parties a total of about ₹28.95 crore. There’s no market ban, and no demand to redo the old accounts.

Suzlon is now a company worth close to ₹80,000 crore, earning over ₹2,000 crore a year. The fine, to them, is a rounding error. That’s probably why the stock barely budged when order came out.

For less than ₹30 crore — a pittance — Suzlon managed to keep itself alive for long enough to crawl out of destitution, and survive until the renewables industry finally took off. In 2022 and 2023, it raised actual equity of ₹1,200 crore through rights issue where shareholders put in real cash. It used that money to clear its debt for good. Finally, the company genuinely had a positive net worth.

In 2020, when the company was gasping for air, the stock was worth just ₹1.58. Any investor that bought in, then, multiplied their money many times over, as the stock reached high fifties.

Regardless, the company will appeal SEBI’s order to the Securities Appellate Tribunal. That shall be the next chapter in a fascinating saga.

The cost of defending the rupee

On May 26, the Reserve Bank of India conducted a $5 billion USD/INR buy-sell swap auction with a three-year tenor. 254 bids came in from banks, totalling $9.8 billion — nearly twice the amount on offer. The RBI accepted 141 of those bids at a weighted average premium of ₹9.20 per dollar.

If you understood none of these words, don’t worry, we also struggled a little when we started looking into the swap. In simple terms, what it means is that the RBI wants to sell rupees and buy dollars from Indian banks, and do the reverse transaction three years later at an agreed upon rate.

So if the banks sell $1 to the RBI for the current exchange rate — say, ₹95 — they’ll buy back the same dollar amount at a premium of ₹9.20 over the current exchange rate. That premium is the price banks were willing to pay the RBI to borrow rupees for three years, using their dollars as collateral. And, given that it was nearly doubly oversubscribed, clearly, the banks wanted rupees a lot more than dollars.

But why would the RBI conduct such an operation? How does it affect the various objectives that the RBI sets for itself in a given timespan?

Well, because much of this swap has something to do with the RBI’s defense of the rupee since 2024.

Let’s zoom out a little bit. As we covered before, since 2024, well before the Strait of Hormuz crisis, India’s rupee has been under pressure due to a worsening import bill, plus the persistent selling of Indian equities by foreign investors. Repeated tariff announcements from the US didn’t help. And then, a historic oil shock has only accelerated the decline.

The RBI defends the rupee by selling dollar reserves for rupees. In FY26 alone, RBI net-sold a record $53.13 billion in the spot market. But every dollar it sells sucks rupees out of the banking system. Defending the rupee, in other words, comes at a cost. And that cost is a domestic liquidity crunch.

The swap auction is how the RBI tries to fix that crunch. But understanding why it needs to fix it — and why the fix might be creating its own problems — requires understanding what the RBI is actually juggling.

Swiss Army knife

The RBI, at any given time, has many different objectives to reach. However, the achievement of one of them usually pulls back the other. The central bank, then, manages multiple jobs that often pull in divergent directions.

For instance, on one hand, the RBI is the custodian of the rupee. It manages the exchange rate and protects the rupee from sharp appreciations or depreciations against the dollar, the global reserve currency. On the other hand, it also manages rupee liquidity, making sure that domestic banks have enough rupees to lend and create credit.

The problem here is that the main tool for the first job often creates a setback in the second.

Here’s what happens. When the RBI sells dollars to prop up the rupee, it receives rupees in return. Those rupees exit the banking system. If the RBI is selling billions of dollars every week, the cumulative drain is enormous. Banks find themselves short of rupees, and interbank lending rates spike.

The RBI usually tries to keep the call rate — the rate at which banks lend to each other for very short time periods — close to the policy corridor surrounding the repo rate, which is usually 25 basis points above or below the repo rate. Currently, that band is 5-5.5%. The call rate had spiked to 6.9% towards the end of March 2026, reflecting a deep liquidity crunch.

So the RBI needs a way to put the rupees back in. But it also needs to keep defending the rupee. And it needs to do both without looking like it’s running out of ammunition.

That’s where reserves come in. India holds roughly $690 billion in foreign exchange reserves — among the largest stockpiles in the world. In theory, the RBI can sell dollars when the rupee is weak and buy them when it’s strong.

But here’s the catch: our dollar reserves have become what Indian economist Rajeswari Sengupta calls a “barometer of macroeconomic health”. When the headline number falls too fast, markets get more concerned. Foreign investors may also read it as yet another distress signal and pull money out faster, which weakens the rupee further. In a weird doom loop, the intervention creates the very conditions that undo itself.

Now, instead of selling dollars today and watching the reserves fall, the RBI can promise to deliver dollars sometime in the future — say, 6 months from now. This is a forward sale. No reserves leave the vault today, and the headline reserves number stays intact for now.

But a forward sale only defers the need to deplete reserves. It doesn’t make the problem disappear completely. When the contract matures 6 months later, the RBI has three choices. One, it can deliver the dollars, which means reserves finally fall. Two, it can buy dollars in the spot market to fund the delivery — but that means buying dollars, which pushes the rupee down, the opposite of what it wants. Or, lastly, it can roll the same contract into a new forward, only kicking the obligation further into the future.

Over the past two years, the RBI has leaned heavily on the third option. Its net short forward position — the total value of dollars it has committed to deliver in the future — has swelled from roughly $10 billion in early 2024 to an estimated $103 billion by end-March 2026. That’s $103 billion worth of dollars the RBI has promised to deliver but hasn’t yet.

This is the hidden cost of defending the rupee. The headline reserves say $690 billion, but $103 billion of that is already spoken for. And another $115 billion is in gold, which is valuable on paper, but isn’t liquid enough to be sold quickly.

The side door

So, how does the RBI’s swap auction come in here?

Here’s what actually happened on May 26. Banks sold $5 billion of their dollar holdings to the RBI at the prevailing spot rate (~₹95.44 per dollar). The RBI credited around ₹47,700 crore to their accounts. The banks agreed to buy those dollars back three years later at the spot rate plus a premium of ₹9.20 per dollar.

For the RBI, this accomplishes several things at once. It puts a huge amount of rupees back into the banking system, addressing the liquidity hole that its forex intervention created. And now that the RBI has bought dollars, it also temporarily adds $5 billion to the headline reserves. Such a move might also let the RBI manage its forward book by converting shorter-dated bilateral forward obligations into a clean three-year commitment.

There is usually another secondary, but important reason as to why RBI may conduct a swap: to help temper future expectations about the availability of the dollar.

For instance, with the Strait of Hormuz crisis, naturally, everyone’s worried about the future. It could be a prolonged crisis, it could be a war, who knows? Those worries manifest themselves in the forward exchange rate — in fact, the one-year forward USD-INR rate briefly touched ₹100 per dollar just last week. So, to help bring down the forward rate, the RBI might conduct a swap. In fact, even after this auction, the three-year forward premium fell from ₹9.25 to ₹9.

What’s the banks’ end in this trade? They may have dollar deposits and export receivables that they don’t need immediately, compared to rupees. More importantly, the counterparty in this swap isn’t just another bank — it’s India’s central bank. That makes the credit risk essentially zero.

Usually, such a swap can take place without an auction. Bilateral swaps still happen a lot more often than swap auctions — they’re business-as-usual liquidity operations for the RBI. But an auction is usually done when the scale of the swap is huge, and when the RBI wants to know a market-clearing price.

See, this auction had a cut-off of ₹9.10, meaning every bid below that was rejected; 113 banks didn’t get in. The fact that the weighted average premium of ₹9.20 was higher than the cut-off tells you most successful bidders were willing to pay even more. This is a market showing its hand.

From novelty to necessity

The buy-sell swap auction is not a very new instrument, but its current frequency is unprecedented.

The RBI started the format in March 2019 under then-Governor Shaktikanta Das. The context was a routine liquidity deficit — banks needed rupees, and the RBI had exhausted its bond-buying capacity. The first $5 billion auction was oversubscribed 3.3x. A second followed in April 2019.

Then, the RBI used it again in March 2020, just as COVID began, but in the opposite direction. In this case, the RBI actually sold dollars to banks during the pandemic, when the global market was desperately short of dollar funding.

The current cycle is different in both scale and urgency. Since January 2025, the RBI has conducted seven buy-sell swap auctions — totalling at least $55 billion. The January 2025 auction alone was oversubscribed five-fold, with $25.6 billion in bids against $5 billion on offer.

Interestingly, over time, the premium bid by banks has risen. The weighted average premium banks paid has climbed steadily across these auctions: ₹6.73 in February 2025, to ₹7.51 in February 2026, to ₹9.20 now. Each auction is more expensive than the last.

The escalation tells you something about the scale of the problem. The RBI keeps needing to come back to the auction window because the underlying cycle hasn’t broken: it sells dollars to defend the rupee, which drains rupee liquidity, which forces it to inject liquidity via swaps. But that, in turn, builds up its forward book, which erodes future reserves. Each round trip leaves the balance sheet a little more encumbered than the last.

Looking ahead

The swap auction is sophisticated plumbing. It puts rupees where they’re needed, it avoids the visible stigma of reserve depletion, and it buys the RBI time until the external pressure on the rupee reduces. But it doesn’t fix the underlying problem.

The rupee’s weakness reflects both structural and cyclical pressures. India’s dependence on imported energy is one such structural vulnerability, while recent foreign portfolio outflows have added to the pressure. No amount of swap auctions changes that equation.

The RBI can keep doing this for a long enough while. It has the reserves to withstand that kind of pressure. But what complicates the equation is the market’s expectations of where those reserves should be.

The cost of that then becomes deferred to a bill that only comes in the future. The question that remains is how large that bill might get before the market starts paying more attention to it than to the headline reserves number.

Tidbits

1. Myanmar’s President Min Aung Hlaing is visiting New Delhi, and the government is looking at this as a significant opportunity for India as we aim to secure rare earth minerals from the neighboring country, a resource currently dominated by China.
   Source: Economic Times
   
   2. Factory output grew at 4.9 per cent in April as against 5.7 per cent during the corresponding month of last fiscal, the Statistics Ministry reported on Monday. This is the first print under the new base year of 2022-23.
   Source: Hindu BusinessLine
   
   3. The Russian government has imposed a ban on aviation fuel exports until November 30 2026. The decision has been take to to ensure stability in the domestic fuel market, the government said.
   Source: Business Standard

- This edition of the newsletter was written by Kashish and Manie.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #14

Hi folks, hope you’ve had a great week…

Read more

11 days ago · 7 likes · 1 comment · Zerodha

Rosa & Tamoghna on India’s Youth Employment Crisis

In India, the more educated you are, the more likely you are to be unemployed. Graduate unemployment among the youth sits at 40%. For those with no education, it’s 3%. We recently spoke to Rosa Abraham and Dr. Tamoghna Halder, two of the authors behind the Azim Premji University’s State of Working India 2026 report, to understand why. Our conversation goes into what’s really driving this paradox — the role of caste and social signalling in education choices, whether waiting for a good job is rational, why the “missing middle” of Indian firms matters, and what the demographic dividend window really means for policy. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. Energy security is no longer a fuel problem

2. India's Missing Poor

Energy security is no longer a fuel problem

India is doing two seemingly contradictory things at once.

On one side, we’re shifting to clean power as fast as any large economy on earth. Five years ago, for every rupee we put into fossil-fuelled electricity, we spent roughly a rupee and a half on renewables and nuclear power. Today, that has climbed to thrice as much. Solar and wind now make up more than half of our installed power capacity, with solar investment alone climbing about 25% a year.

At the same time, however, we’re building oil refineries at the fastest pace in years. Our refining investments have grown at around 23% a year over the past five years, and we’re on track to add roughly 15% more by 2030. Almost all the crude we process is imported. And so, the more we expand our refining capacity, the deeper our reliance on imported oil grows.

Why are we simultaneously trying to insulate ourselves from fuel imports, while also placing a bigger bet on the most import-dependent part of its energy system? Well, the energy world is in a weird inflection point, at the moment, all we can do is hedge.

It isn’t just us, though. As a new report from the International Energy Agency (IEA) notes, what the world considers “energy security” is changing rapidly.

To fuel, or not to fuel

For most of the last half-century, “energy security” meant you needed to keep fuel flowing. Fifty years ago, when the world had been hit by the oil shock of 1973, it responded by finding more oil in safer places — like the North Sea. It also moved to use each drop of fuel it had more carefully, with fuel-economy rules and efficiency standards.

We now find ourselves in such a moment again, this year.

This time around, the IEA describes a very different instinct taking hold. The most reliable defence against being held hostage for oil, countries are quickly discovering, is to not need any. If you can get energy in a form that you don’t have to import or burn though, you are immune to being embargoed, blockaded or priced out from another corner of the world.

That logic is pointing the world to one direction: electricity. An electrified economy doesn’t perennially wait for fuel to reach its borders. It is already saving the world hundreds of billions in import costs. Which is why close to 60% of all energy investment in the world now goes into electricity in some form — generating it, moving it, storing it, or running things on it.

The recent Hormuz crisis has given this trend wings. As oil prices jumped this year, interest in electric vehicles climbed across the world — from the European Union to Vietnam. Countries like Japan and Korea, which import nearly all their fuel, are now putting public money into electrifying buildings and heating. They’re selling this to voters as national security, not climate policy.

As the IEA warns, however, electrification doesn’t end a country’s dependence on the outside world. It only changes how that dependence looks.

Electric dependencies

An economy that runs on oil has to keep buying oil, often from far away.

An electrified one, meanwhile, has to get two different things right: it needs to spend a large amount of money upfront, and it needs to source a steady supply of manufactured hardware — solar panels, batteries, transformers, and other equipment that makes up a grid. If those are built and paid for, running costs drop and the fuel risk mostly goes away.

That comes with its own hurdles, however.

The first is manufacturing. As we harp about endlessly on The Daily Brief, most of the world’s electrification hardware is overwhelmingly made in China. The country accounts for ~85% of the world’s solar manufacturing capacity, ~80% of its lithium-ion battery production, and ~95% of the capacity to make the wafers that go inside solar panels. It also controls more than 70% of the market for 19 out of the 20 minerals the IEA considers strategic.

No single oil producer in the world enjoys anywhere near this level of dominance.

The second hurdle is money. Clean power is capital-heavy and front-loaded. Almost all of your investment is compressed at the very beginning, while the savings only trickle in over decades. This makes electrification unusually sensitive to the cost of borrowing. If money is hard to raise at the time infrastructure is being set up, the future earnings it could bring matter for little.

As our technology improves, the burden drops. Over the past decade, the cost of solar panels, batteries and electric vehicles fell by roughly 80%. Without these advancements, our current pace of electrification would cost twice as much.

And yet, it is still not in everyone’s reach. Even if the equipment is cheap, if the loans needed to install it cost 12% a year, many are still unlikely to invest.

That’s the deep irony of our moment. Electrification was supposed to be a great leveller: the sun and the wind fall on everyone, unlike oil, which sits under a lucky few countries. But the things that turn sun and wind into electricity — capital and factories — are even more concentrated than oil ever was.

Who can actually afford it

This has done something odd: there are few countries that can actually afford to make this switch, and they’re those that need it the least.

A solar project in a rich country can be financed at a single-digit rate, often in the mid-single digits. The same project in India, Brazil, Indonesia or South Africa carries a cost of capital closer to 9 to 13%. In much of Africa, it runs above 20%. These higher interest rates add a recurring cost to the entire lifetime of a project, even though most investments are made upfront.

As a result, places that have the most to gain from cheap, home-grown power are exactly the ones for whom it’s the most expensive to build.

Funding constraints

That gap is getting harder to cross. For one, the world is becoming reluctant to give these projects patient capital, instead tilting towards debt. While energy-related borrowing rose about 10% last year, projects funded out of equity, grants or subsidies edged down. The world is also doing away with the “green” premium it would once give electrification projects, shaving off some of their cost. The market for sustainable-labelled debt actually shrank about 14% last year, as lenders went back to judging projects on their economics rather than branding. And the philanthropic money that once backstopped risky projects in the poorest markets has thinned to a trickle.

Instead, the capital for green infrastructure increasingly sits with a handful of very large institutions — pension funds, insurers, and asset managers. These now hold close to 30% of the biggest listed state energy companies and more than 85% of the largest private ones. These institutions chase low-risk returns, and are unlikely to fund moonshot projects somewhere in the developing world.

The result: China, the United States and the European Union account for about two-thirds of the world’s clean-energy investment. The rest of the world gets under 30% of its energy investment.

That has interesting knock-on effects. In a situation like the Hormuz crisis, countries that could already raise the money for green projects were the most capable of displacing its effects. Meanwhile, those most exposed to swings in fuel prices have the least capital to climb out of that exposure.

How much does a percent cost?

How does the developing world break out of this grid-lock?

IEA points to one idea: capital recycling. If developers can sell or refinance their finished, working projects, that could free up money for new ones. The same equity, then, can build several things over time instead of just one.

This is already happening in the richer world. There, the market for buying and selling operating projects grew from around $220 billion in 2013 to roughly $960 billion a decade later. But once again, in the developing world — which needs this kind of secondary market the most — it barely exists. And without buyers for finished assets, money stuck in one project never reaches the second.

This might sound dry, but consider this: if the cost of capital in developing economies comes down by a single percent, their yearly cost of financing their clean power and electrification falls by about $30 billion by 2035.

A return to fossils?

Paradoxically, meanwhile, a moment like this pushes them further into coal and gas.

Take coal. As recently as the beginning of this year, it seemed like coal would soon cease to be the world’s energy backbone. But the world has suddenly learnt just how unstable its oil supplies were, while green energy projects are unaffordable. At the moment, therefore, coal is being recast across much of Asia as a security asset. It is easy to find, plentiful, and relatively immune to the wrath of Hormuz-like chokepoints. The world’s coal supply investment is now at its highest in more than a decade, at around $180 billion.

Meanwhile, investment in natural gas supply is at a ten-year high as well, but for very different reasons. This isn’t just an outcome of capital starvation — the United States, the world’s richest country, is ordering gas-fired power plants at the fastest rate in 25 years. Much of it is meant to feed the surging electricity demands of AI data centres. In just the last year, the country has placed ~$24 billion worth of gas-related orders for data centre projects alone. If American data centres were a country, they would be the world’s second largest destination for gas turbines. The timeline for AI demand is simply too short for grids and clean plants to catch up.

And so, in a moment that’s pushing the world towards electrification, paradoxically, fossil fuels have suddenly had a second wind.

India, with both hands

India sits in an awkward spot through all this.

We’re too big, and growing too fast, to stay still. Our appetite for energy is growing faster than almost anywhere on earth — with our total energy spending rising about 11% a year. We’re too short of cheap capital to outspend the problem. We can’t lean fully into clean energy, because that requires money we can’t afford, and hardware imports from China, who we don’t fully trust. And yet, we can’t afford to stand still either. Structurally, we need much more energy than we currently make.

And so, we do both.

As we recently covered, we’ve built out so much green energy infrastructure recently that our raw capacity for generating energy isn’t our biggest problem any more. Our bigger bottleneck, now, is finding a way to absorb all that energy. Some of our biggest investments are in things like the grid and batteries. Off late, even tenders for solar and wind energy are paired with storage — so that our energy can be made reliable around the clock.

But we’re hedging this with a massive build-out of refineries. We’re increasingly a maker and exporter of finished fuels, capturing value and supply that would otherwise sit abroad. This naturally deepens our need for imported crude. But when the alternative is expensive finance and a dependence on China, oil can actually become insurance.

We have to fend off two risks at once: the risk of being shut out of the clean future, and the risk of being caught short in the fossil-based present.

India’s Missing Poor

Between 2004 and 2011, India pulled off something rarely seen in the world. Our poverty rate fell from 37% to 22%. Every single year, we would drop more than two percentage points. That is, every year, one in fifty Indians — tens of millions of people — would break out of poverty.

And then, for about a decade, we struggled to even count how many poor people we had.

Our economy kept growing through this period. Our GDP per capita rose by over 4% a year for the entire decade. By any normal logic, poverty should have kept falling, maybe even at a faster rate.

But, did it? That’s a hard question to answer — because we simply stopped counting.

But there’s some indication to be found in a 2025 Tinbergen Institute discussion paper, authored jointly by researchers at JNU, and the Vrije Universiteit in Amsterdam. The three of them set out to reconstruct what happened to Indian poverty after 2011, a period when the data had a hole in the middle.

How do you count poverty

India counts its poor the simplest way imaginable: surveyors knock on doors and ask what a household spent last month. They then add up the answers, draw a line, and count who falls below it.

One of these surveys was due around 2017. Although the survey itself happened, the government refused to release the results, citing concerns about data quality. And so, for roughly a decade, India had no official, trustworthy consumption numbers at all.

There were some leaked tabulations, though. According to the economist S. Subramanian, they pointed to something unfortunate: poverty, it appeared, may have ticked up slightly between 2011 and 2017.

A new survey finally arrived in 2022 and 2023. On the surface, it suggested a dream headline: India’s poverty had fallen 29.6% to 7.2%. That is, in a decade, poverty had fallen from nearly one in three Indians to barely one in fourteen.

This didn’t settle things, however, because the survey changed how it measured people’s consumption. The new survey used a different recall method from the one in 2011, with different time windows for different goods. Surveyors now visited each household several times instead of once. They bundled the items differently, added new ones, and began putting a value on goods people received for free.

This wasn’t a conspiracy; in fact, many of these were genuine upgrades. But when you overhaul a survey like this, ordinarily, you run a small bridge survey alongside it, done the old way, just once, so the new numbers can be lined up against the past. That step was skipped, and with that, we lost the ability to compare ourselves against older figures.

Even though we had new numbers now, these changes made them incomparable with older surveys. You could tell how people responded to the new survey, but you couldn’t tell if there was real change in people’s lives, or if the new methods simply gave different answers.

There was also a third problem: nobody agrees on the poverty line.

You can think of a poverty line as a cutoff. Spend less than Rs. X in a month and you’re counted as poor. Spend more and you’re not. India has two of them, drawn by two different government committees. The lower of these, and therefore the one that’s harder to be considered “poor” under, was the “Tendulkar line”. By that line, 22% of Indians were poor in 2011. The Rangarajan line sat higher, considering more people as “poor”.

Effectively, even if we had spending data from every single person in India, we wouldn’t know exactly how poor people were.

With these problems in the data, all one could tell was that our level of poverty had moved. Only, it was much harder to estimate exactly how much it moved by. For that, we would need something more creative.

Filling in the blanks

To get around our many data challenges, the researchers attempted something called “survey-to-survey imputation” — a method that one of the same researchers had discovered previously.

Instead of comparing spending, which the two surveys measured differently, they only looked for those things both surveys measured the same way. Both had household sizes, years of schooling, what kind of work people do, what they own — a fridge, a two-wheeler, a phone — and so on. That gave you a pattern: a household that looked a certain way tended to spend a certain amount. If you applied the pattern to the new survey, you could make an educated guess on what those households would have spent, counted by the old method.

The authors then ran the model a thousand times over, giving them a proper range, instead of one fragile guess.

In a richer version of the same exercise, they also tracked patterns alongside results from labour force surveys we carry out every year, getting a richer year-by-year picture rather than one frozen frame.

Now, this method isn’t magic, as the authors themselves admit. There’s no guarantee that a statistical relationship from 2011 has any meaning today. They did test it backwards — between 2004 and 2011, for when we had good data. There, it tracked reality quite closely. But anything could have broken that correlation in the following years.

This is a reconstruction. It is imperfect. But it does offer some sort of bridge between two data series with a massive gap in between, where none existed previously.

The answer

This exercise gave the researchers a range.

The quick method, that simply compared the two surveys, showed a drop in poverty from 22% to around 11-14%. In the richer method, which also used jobs data, the decline was less steep still — dropping to ~18% by 2017, and then hovering at 17-18% through to 2022.

This is all, incidentally, under the Tendulkar line. The stricter Rangarajan line gives a poverty rate somewhere in the low twenties.

A common finding that runs across is that our rate of poverty decline has slowed down. Against our old pace, where poverty came down by 2% every year, the pace fell to less than 1%, if not lower. In fact, chances are, we saw a quick enough decline until around 2017, but it stalled there — and some of our gains were wiped away in the COVID years of 2020 and 2021.

An uneven map

This, however, is a national average. Underneath, they found a wildly uneven map, with different parts of India seeing completely different fates.

Uttar Pradesh, India’s largest state, stands out with a clear and real fall in poverty across both villages and cities. In its immediate neighbourhood, though, the picture was very different. Bihar barely budged. Jharkhand and Madhya Pradesh weren’t much better off either. Whatever worked in UP wasn’t happening around it. That gap wasn’t some quirk of measurement; it was clearly a matter of policy.

Poverty reduction in Maharashtra and Andhra Pradesh, too, flatlined. In fact, in some states that already had low urban poverty, urban poverty actually crept up.

Villages and cities, too, saw very different fates. Rural India saw the bigger drop from 2011. At the same time, it also took the post-COVID hit. The bounce-back in poverty rates after 2020 is mostly a village story.

Meanwhile, cities improved less, and more unevenly. But they also held onto their gains through the pandemic.

One of the challenges with India’s poverty reduction is simply our size. Our population went from about 1.26 billion in 2011 to 1.43 billion in 2022 — with hundreds of millions of new people. Even when the poverty rate fell, the number of poor Indians barely saw a dent, dropping from ~270 million to maybe 250 million.

Why did we falter?

The paper doesn’t attempt to tell one what happened. After all, it’s a measurement paper. It’s trying to get the number right, not to explain it.

Here is our speculation, though: detached from the paper’s findings.

The last decade has shored up serious headwinds that were beyond anyone’s control. COVID was a real external shock. In the years since, the world has been through a wider slowdown that no single country fully controls. None of this is good for an economy.

But there are clearly choices involved.

Consider the state gap. Why does UP pull ahead when Bihar — a culturally similar state that sits just next to it — cannot? Things like this signal that governance and state-level policy matter.

As we recently covered, some of this ties back to India’s broken labour markets, where real wages for unskilled workers have gone nowhere for years, while people are sliding back into low-paid farm work because the factories never showed up.

Many Indian economists — like Mody, or Ghatak and Kumar — have been making a similar point: that our headline GDP growth may overstate how good things really are on the ground. This new paper certainly gives them some firepower.

Good statistics are infrastructure

There are other choices worth thinking about, though.

Holding back the results of a survey is a choice. As was the lack of a bridge between our older consumption figures and the newest set.

That, more than any single figure, is the real story. You might have whatever beliefs you do politically. You might completely disagree with their reading on India’s poverty rate. But it is unfortunate that a country of India’s stature doesn’t have detailed numbers on its own consumption, or that researchers have to reverse-engineer it with clever statistics out of a university in Amsterdam. That is a failure of our statistical plumbing.

Good official statistics are infrastructure, as basic as roads or electricity. When they break down, everyone argues past each other with their own favourite numbers, while the truth dies a lonely death in between.

Tidbits

[1] Govt to unveil coal-based urea policy within a month

The government is finalising a new policy to promote coal gasification-based urea production, aiming to reduce dependence on imported natural gas and improve fertiliser self-sufficiency. The move has gained urgency amid global energy supply concerns and growing industry interest in coal-based urea projects.
Source: BusinessLine

[2] IBC has helped creditors recover over ₹4 lakh crore

Creditors have realised more than ₹4 lakh crore through resolutions under the Insolvency and Bankruptcy Code (IBC), while over 30,000 cases involving ₹14 lakh crore were settled even before formal admission. The government says the IBC has significantly improved creditor-debtor discipline and accelerated resolution of stressed assets.
Source: BusinessLine

[3] West Asia conflict could slow growth and lift inflation: SBI Chairman

SBI Chairman C.S. Setty warned that the ongoing West Asia conflict could weaken global growth, raise energy prices, and push up inflation. While India remains relatively resilient due to strong domestic demand and public investment, prolonged disruptions could weigh on FY27 growth and inflation.
Source: Economic Times

- This edition of the newsletter was written by Pranav and Bhuvan.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #14

Hi folks, hope you’ve had a great week…

Read more

11 days ago · 7 likes · 1 comment · Zerodha

Rosa & Tamoghna on India’s Youth Employment Crisis

In India, the more educated you are, the more likely you are to be unemployed. Graduate unemployment among the youth sits at 40%. For those with no education, it’s 3%. We recently spoke to Rosa Abraham and Dr. Tamoghna Halder, two of the authors behind the Azim Premji University’s State of Working India 2026 report, to understand why. Our conversation goes into what’s really driving this paradox — the role of caste and social signalling in education choices, whether waiting for a good job is rational, why the “missing middle” of Indian firms matters, and what the demographic dividend window really means for policy. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Hi folks, welcome to another episode of Who Said What? I’m your host Kashish and if you’re new here, here’s the quick context.

The idea is simple: we pick the most interesting comments from business leaders and break down what’s really going on behind them.

This builds on a newsletter we run called The Chatter by Zerodha, where we track what company managements say in their earnings calls or TV interviews. But instead of looking at those comments in isolation, this format zooms out. We track one theme across companies and over time to see how the story evolves. The goal is to connect the dots and understand the deeper shifts shaping an industry.

For today’s episode, we we wanted to know how are Indian pharma companies planning to make money off of the GLP-1 trend?

On the evening of 20 March 2026, hours before Novo Nordisk’s Indian patent on semaglutide formally expired, Natco Pharma announced that its generic vial would sell for ₹1,290 a month. The original drug, at innovator pricing, had been going for roughly ₹16,000. By the next morning, six more domestic firms had piled in. By the end of the week, thirteen companies had launched twenty-six brands. Within a month, more than fifty were on the market or in the queue.

The interesting question isn’t who launched — almost everyone did. The interesting question is what each company is actually doing: whether they’re making the drug, selling it, both, or simply renting out their distribution to someone who has already done the harder work. The same molecule, the same patent cliff, the same 250-million-strong pool of potential patients — and six very different ways to make money off all of it.

Over the last four quarters, we read through earnings calls from 27 listed Indian pharma companies — more than 140 calls in total — to map what each one is actually up to. Here’s what we found.

A note on the prize before we get there. India’s GLP-1 market — semaglutide plus Eli Lilly’s tirzepatide — was worth about ₹571 crore in 2024. By February 2026, on a rolling twelve-month basis, it had jumped to ₹1,446 crore, with the anti-obesity slice alone more than doubling. But that figure is the market the innovators built: until 21 March, semaglutide was still on patent, so almost all of it was Novo’s and Lilly’s branded money.

Three estimates of where it goes from here: Systematix sees a ₹5,000-crore incremental opportunity across India, Brazil and Canada combined over the next 12-15 months; CareEdge expects India alone to reach ₹5,000 crore by 2030; and Jefferies, more bullish, sees a market north of $1 billion in India.

Set against those projections, what the new entrants have actually booked is almost nil. Cipla’s Yurpeak — itself an innovator launch, Lilly’s tirzepatide sold under a Cipla brand — did ₹14 crore in its first month. Eris’s liraglutide, an older off-patent GLP-1, does about ₹1 crore a month. Every generic semaglutide launched only in the last week of March, so a full quarter of post-launch sales simply doesn’t exist yet. What follows is a description of strategy, not of a profit pool that has already formed.

A primer — what it is, who makes it, how it’s sold

Start with what the drug actually does, because that’s what explains the gold rush.

GLP-1 — glucagon-like peptide-1 — is a hormone your gut releases after you eat. It nudges the pancreas to put out insulin, tells the brain that you’re full, and slows down how quickly the stomach empties. Drugs like semaglutide are engineered copies of that hormone, tuned to last a week in the body instead of a few minutes. Take one injection a week and your appetite quietly shrinks, your blood sugar steadies, and the weight comes off — often 15% of body weight or more.

Now, the cast.

The two innovators. Two foreign drugmakers built the entire global GLP-1 market between them.

Novo Nordisk, a Danish company, makes semaglutide — the molecule everyone is now copying. Novo sells it under three brand names: Ozempic (an injection, for type 2 diabetes), Wegovy (the same molecule at higher doses, for obesity), and Rybelsus (an oral tablet). When people say “Ozempic” colloquially, they usually mean semaglutide in general.

Eli Lilly, an American company, makes tirzepatide — a different molecule that works on the same biological pathway but has shown stronger weight-loss results in trials. Lilly sells it under one global brand, Mounjaro. In India, Lilly has partnered with Cipla to market it under a separate brand, Yurpeak.

What “going off patent” actually means. A patent gives the original drugmaker an exclusive selling window. When it expires — the industry calls this the “loss of exclusivity”, or LOE — other companies can legally make and sell copies, called generics. Semaglutide’s Indian patent expired on 21 March 2026. Tirzepatide’s runs until at least 2030. So semaglutide is now fair game. Tirzepatide is still legally Lilly’s alone.

Pens vs vials — why the device matters. Semaglutide is an injection a patient takes once a week, for years on end. How it’s packaged changes the economics entirely.

A vial is a glass bottle of the liquid drug. To inject, the patient — or a clinic nurse — has to draw the right dose into a separate syringe. Vials are cheap to manufacture but fiddly to use: dosing errors are common, and most patients won’t self-inject from one.

A pen is a pre-loaded injector with a dial. The patient turns the dial to the prescribed dose, presses the pen against the skin, and pushes a button. It costs three to six times more to make than a vial. But it’s dramatically easier to use — and adherence, patients sticking with the therapy long enough for it to actually work, depends almost entirely on the device.

Hold that distinction in your head. It does most of the work in Bets 1 and 6.

Bet 1 — Be there on day one with a generic pen

The default play: show up on 21 March with a branded generic, fight for share through the sales force, and ride the volume.

Almost every Indian pharma company took some version of this bet — Sun, Dr Reddy’s, Lupin, Zydus, Alkem, Natco, Cipla, Glenmark, Torrent, Mankind, Eris. The interesting thing is that nobody priced the same way. Within ten days of launch, the Indian generic semaglutide market had split into three distinct price tiers — and the tier a company chose determined who its patient was.

The cheapest tier was vials. Natco opened at ₹1,290 a month for a vial; Glenmark’s GLIPIQ launched even lower, at ₹325 a week. These prices are roughly a tenth of Novo’s. The trade-off: patients can’t easily self-inject from a vial, so this tier really only works in clinics where staff can manage the dosing — or with the small fraction of patients comfortable handling a syringe.

The middle tier was affordable pens — Alkem, Zydus, Natco’s own pen device — in the ₹1,800-4,500-a-month range. Same molecule as the vial, but in the easy-to-use injector. This is where the mass-market volume will likely settle once price competition has done its work.

The premium tier was high-end pens with patient support wrapped around them — Dr Reddy’s at ₹4,200, Sun at ₹2,960-7,400 depending on dose. These companies are betting that better device design, a branded experience and patient education can justify a premium even after generics have flooded the market.

Same drug, ₹325 a week to ₹7,400 a month. Different patients, different doctors, different settings.

“Sun Pharma plans to be in market on day-one of a generic launch. We have already received the regulators’ approval for both the indication of chronic weight management as well as treatment of type 2 diabetes under the brand name Noveltreat and Sematrinity respectively.”

— Kirti Ganorkar, Managing Director, Sun Pharma | Q3 FY26

The honest part of this bet is that everyone running it knows exactly what it looks like. Crowded. Loud. Margin-thin within a few quarters.

“There’s a mad rush in the market. Every company is launching. And if at this particular time, you launch, you will be lost somewhere.”

— Rajeev Juneja, Vice Chairman & MD, Mankind Pharma | Q4 FY26

“I am not going to tell you that we are going to make a lot of money in India, I will never say that, I actually agree with you, it will be very competitive.”

— Rajeev Nannapaneni, Vice Chairman & CEO, Natco Pharma | Q2 FY26

So why run it anyway? Two reasons. The market is so big that even a thin slice is real money. And being absent on day one means being absent forever — Indian doctors tend to stick with whichever brand they wrote first. That’s why Lupin, Dr Reddy’s and Sun all set internal targets to rank top-three among generics from week one.

“Our goal is very clear to be at Top 3 player in this as generic Semaglutide and I think we’re well on track.”

— Nilesh Gupta, Managing Director, Lupin | Q4 FY26

The early post-launch read suggests Torrent has surprised everyone. The single decision that won it that share was launching the oral version alongside the injectable — something no other generic did at scale.

“Torrent held 38% share among generic players as per the Pharmatrac April data set, with 28% share in the injectable format and 100% share in the oral format.”

— Aman Mehta, Management, Torrent Pharmaceuticals | Q4 FY26

In rupee terms, even Torrent’s standout is small — about ₹17 crore of monthly sales against a quarterly revenue base of roughly ₹3,000 crore. For now, the point of Bet 1 is defensive: don’t let the competitor own the diabetes prescription pad. The money comes later.

Bet 2 — Don’t fight the generics, sell the original

Here’s the counter-bet. If the generic market is going to be a knife fight at ₹1,290 a month, why be in it at all? Instead, partner with the original drugmaker, sell their actual product at a premium, and lean on their global data and their device.

Emcure took this bet hardest. In late 2025, it signed an exclusive deal with Novo Nordisk to launch Poviztra in India. Poviztra is the same drug as Wegovy — Novo’s semaglutide for obesity — just sold under a different brand name in India by Emcure. The molecule is identical. The device is identical (Novo’s own pen). And the data behind it is the same global trial evidence Novo has been collecting for years.

“It was after a fierce competition there were at least 8 or 9 companies who were interested in partnering with Novo Nordisk and they selected Emcure. And we became the only company to launch the innovator drug in the game-changing semaglutide category.”

— Satish Mehta, MD & CEO, Emcure Pharmaceuticals | Q3 FY26

The logic is straightforward. Post-LOE, you have 17 generic semaglutide brands fighting for shelf space, and none of them have Novo’s vast trial record — the evidence on how the drug behaves in patients who also carry other conditions, what the industry calls comorbidities. So Emcure’s pitch to doctors is simple: this is the actual Wegovy, just at a more accessible price than the imported original.

“If you look at the construct of this deal, obviously, post-LOE, we anticipate a very crowded market in India. And so the ability to partner with Novo and launch this brand ahead of the competition and allowing ourselves to shape the market and have brand recall versus being lost in the crowd probably 4, 5 months down the line is something that we feel strongly will allow us to succeed.”

— Vikas Thapar, President, Corporate Development, Emcure | Q2 FY26

Cipla ran a different version of the same bet — and arguably the cleaner one. Rather than partnering with Novo on semaglutide, which is now copyable, Cipla partnered with Eli Lilly on tirzepatide, launching Yurpeak in India in late 2025. Yurpeak is Lilly’s Mounjaro, marketed in India by Cipla under a different name.

The crucial difference is the patent. Tirzepatide’s Indian patent runs until at least 2030, so Cipla isn’t fighting any generic competition at all. It’s selling a still-patented innovator drug, at innovator-adjacent prices, into a country where Mounjaro became the second-largest pharmaceutical retail product within a year of launch. It helps that tirzepatide mimics two gut hormones rather than one — GIP as well as GLP-1 — which is why its trials show even bigger weight loss.

“Tirzepatide is the first and only dual agonist of GIP and GLP-1, which makes it a very unique proposition. And while both products have been launched by the respective innovators, you can see from the uptake that Tirzepatide uptake is far ahead.”

— Achin Gupta, Global COO, Cipla | Q2 FY26

“As you see from IQVIA data, last month the molecule was clocking upwards of Rs. 130 crores a month. So, our efforts are primarily focused on that.”

— Achin Gupta, MD & Global CEO Designate, Cipla | Q3 FY26

Yurpeak’s ₹14 crore in its first month annualises to about ₹168 crore at the launch run-rate. Small against Cipla’s quarterly revenue — but it’s a healthy margin on a molecule that is still on patent, while the rest of the industry slugs it out at near-cost prices.

Both Emcure and Cipla are making the same wager: don’t try to be the cheapest. Try to be the only one allowed to sell the real thing.

Bet 3 — Differentiate the device

A third group accepted that they’d be launching a generic, but decided to win share through a better pen rather than a lower price.

Zydus went furthest here. The standard semaglutide regimen forces patients to switch devices as the dose climbs — one pen for the first four weeks at the starter dose, another at the next level, another for maintenance. Three different disposable pens over the first few months. Zydus built a single reusable pen with a 15 mg / 3 ml cartridge that handles every dose.

“We have a new formulation where it’s a very significant ease to the patient in terms of use. Also, there is a very meaningful benefit in terms of cost because today, we have in, typically for weight loss, you have to shift from the first four weeks to the next four weeks with a different dose and that means a different pen device. For us, we have a…. and we don’t need to make any changes from the initial dosing to the higher dosing.”

— Dr. Sharvil Patel, Managing Director, Zydus Lifesciences | Q3 FY26

The clever part is what Zydus did next. Instead of trying to take share alone, it licensed the same pen to Lupin and Torrent under semi-exclusive co-marketing deals. Three of the strongest sales forces in India, all pushing the same differentiated device.

“This being a highly competitive product with the multiple launches, we believe that the best strategy would be to launch with more players to create more share of voice and more impact for the new formulation with the customers.”

— Dr. Sharvil Patel, Managing Director, Zydus Lifesciences | Q4 FY26

The arithmetic is striking. Lupin’s, Torrent’s and Zydus’s generic injectable market in April 2026 — 57% of all generic semaglutide sales in India — all flow back to Zydus’s Ahmedabad production lines. The device was the moat and partnerships with others was the distribution.

“The product from Zydus is a unique pen and I think that’s differentiation in the market as well. Our patient support program is pretty solid as well. So, a so good start. I think we’re the number two company as a generic one, the number three as a product itself.”

— Nilesh Gupta, Managing Director, Lupin | Q4 FY26

Sun Pharma’s differentiation was an auto-injector — a pen designed so the needle stays hidden and the injection happens automatically when the patient holds it against the skin. Same molecule, same dose; what changes is the patient’s experience.

“The product has been received very well by the doctor community and one of the differentiating points is our auto-injector as well as the pen system which was appreciated by the doctors and patients equally well.”

— Kirti Ganorkar, Managing Director, Sun Pharma | Q4 FY26

Bet 4 — Sit out the rush

Mankind Pharma did something none of its peers did. It launched a pen, then deliberately refused to compete on price, refused to launch the cheaper vial, and started pointing its energy elsewhere.

“In this competitive market, we have launched our GLP Pen. And we are not in a hurry to launch vials. We are not in a hurry to cut down the prices.”

— Rajeev Juneja, Vice Chairman & MD, Mankind Pharma | Q4 FY26

This is the contrarian bet. The logic: when 50 companies are fighting over the same molecule at falling prices, the better business isn’t winning that fight. It’s selling all the other things patients on GLP-1 also need.

“We are focusing on GLP-1. It’s a long term and a large opportunity for any Indian company to ignore that. But we are also focusing on adjacent and supportive therapies like vitamins and minerals and protein, which is going to grow better in the time to come.”

— Sheetal Arora, CEO, Mankind Pharma | Q4 FY26

The numbers suggest the basket strategy is already working. Mankind’s anti-diabetes portfolio grew 14.4% in Q3 FY26 — about 1.9 times the market, excluding new GLP-1 launches. Chronic-care now contributes 39.3% of its domestic business. The semaglutide pen launched into an existing chronic-care engine, not into a vacuum.

“What we’re doing, we are basically working on the adjacent therapies like vitamins, minerals, protein side because ultimately, a company which would be selling the complete portfolio will be having a better advantage. So our approach is a bit different than the rest of the people actually.”

— Rajeev Juneja, Vice Chairman & MD, Mankind Pharma | Q4 FY26

There’s a longer game behind it, too. Mankind has a novel molecule, MKP10241 — a small-molecule oral obesity drug — in Phase II trials in Australia. Nothing for FY27 or FY28. But it’s the kind of asset that can turn a defensive GLP-1 launch into an offensive franchise if it works.

Bet 5 — Export the molecule

For companies with international footprints, the Indian market is the appetiser. The main course is everywhere else the innovator is still supply-constrained — Brazil, Canada, the Middle East, parts of Europe.

Dr Reddy’s is the most aggressive here, with 26 GLP-1 products in the pipeline and a plan to launch across 87 countries.

“First of all, I see that as many, many years of opportunity. Actually, we are entering a decade of GLP-1 products. Obviously, it’s going to change and evolve. The full portfolio of GLP-1 for the company is 26 products.”

— Erez Israeli, CEO, Dr. Reddy’s Laboratories | Q1 FY26

Different companies are betting on different geographies. Torrent’s whole international strategy hinges on Brazil — a market whose regulator, ANVISA, is so strict about semaglutide that pharmacies have to keep physical copies of every prescription.

“Each prescription for Semaglutide has to be issued in two copies. And with the indication on the prescription and the pharmacy is required to maintain extensive records, including a copy of each prescription.”

— Sanjay Gupta, Executive Director, International Business, Torrent | Q1 FY26

“Roughly the market is $1 billion for Semaglutide. You can divide it into the injectable at 75% and oral at roughly 25%. Currently, the Ozempic market is declining very fast and Wegovy is growing very fast. There are no generic launches in Brazil as of today.”

— Management, Torrent Pharmaceuticals | Q4 FY26

Biocon is going direct in Europe — selling its own generic liraglutide, an older GLP-1 drug, in the Netherlands rather than through a partner — and out-licensing semaglutide to Ajanta Pharma for 26 countries across Africa, the Middle East and Central Asia.

“We launched generic Liraglutide for diabetes and obesity in the Netherlands as our first ‘direct-to-market’ GLP-1 in the EU. We also signed an out-licensing agreement with Ajanta Pharma to market our vertically integrated drug product, Semaglutide, in 26 countries across Africa, Middle East and Central Asia.”

— Kiran Mazumdar Shaw, Executive Chairperson, Biocon Group | Q3 FY26

Biocon’s cost edge here is structural. The company spent years building fermentation-based capacity to make its peptides — growing them in living cells — rather than taking the more common route of stitching them together through synthetic chemistry. At scale, fermentation brings the cost of the active ingredient down from roughly $200 a gram to between $20 and $50 — a 4-10x advantage rivals can’t easily replicate. In a generic market that will eventually be priced like a commodity, that’s the difference between making money and not. In the September 2025 quarter, Biocon’s generics business grew 24% year-on-year to ₹774 crore, with margins on its biosimilars — near-copies of complex biological drugs — expanding to 28% at the operating-profit (EBITDA) level.

Lupin is leaning on South Africa and Brazil. Emcure picked up Quebec through a Dr Reddy’s partnership. Zydus is taking its differentiated pen to 20-plus markets.

The wrinkle is that this bet has been slower than anyone expected. Canada — meant to be the first big market after the patent expired — stalled for most of the year, with Health Canada clearing no generic GLP-1 at all. Dr Reddy’s, after a Notice of Non-Compliance in October 2025, finally won approval — the first one through. For most of the year, the picture looked like this:

“Of course, the review cycle is long drawn, especially in markets such as Canada, where we have not seen a single generic GLP being approved, including liraglutide, which has not been approved by Health Canada.”

— Siddharth Mittal, CEO & MD, Biocon | Q3 FY26

The export bet has a cleaner economic logic than the domestic one. Innovator pricing abroad is still high, generic competition is thin, and the ₹5,000-crore incremental opportunity Systematix talks about is, in the analysts’ own framing, largely an export number — concentrated in far fewer hands than the domestic chaos suggests.

Bet 6 — Sell the shovels

In any gold rush, some people decide not to dig. They sell the shovels.

In Indian GLP-1, the shovel-sellers split into two distinct camps. One is making the pens for everyone else launching this year. The other is making the chemical raw materials for the next generation of drugs, the ones nobody has launched yet. Both businesses are quietly more profitable than selling the generic itself.

Sub-part A — Make the pens for everyone else

Semaglutide is a hard drug to manufacture. It’s a 31-amino-acid lipidated peptide — a chemically intricate chain that most Indian small-molecule drugmakers can’t produce consistently at industrial scale. And even the companies that can make the active ingredient often can’t fill it into pens themselves, because cartridge fill-finish — the sterile step of loading the drug into the device — needs specialised, isolator-based sterile lines. There are perhaps three or four such facilities in the whole country.

So a separate set of companies decided not to launch generics at all. They decided to make the pens for everyone who is.

OneSource Specialty Pharma is the dominant player. It’s what the industry calls a CDMO — a contract development and manufacturing organisation, a company that builds a drug end-to-end for others to sell under their own labels. And the pitch is exactly that end-to-end-ness: develop the formulation, fill the cartridge, assemble the pen, serialise the box.

“Our biggest value proposition to our customers is end-to-end we supply. Not only we do development for them, we will do commercial manufacturing for fill finish for cartridge, pack it, put it in the box, serialize it. So the box which a patient opens at home is the box coming out of one source site.”

— Neeraj Sharma, CEO & MD, OneSource Specialty Pharma | Q2 FY26

The scale is real. OneSource has signed up more than twenty customers — and has stopped taking new ones. Capacity is being scaled from 40 million units in FY26 to 220 million in FY27. Its customer base holds roughly two-thirds of the Indian generic semaglutide market by value. Several customers have paid capacity-reservation fees up front; others are on take-or-pay contracts, which means they owe OneSource for the reserved capacity whether or not they actually take the product.

“And today as we speak, our customer base total as on end of April holds almost two-thirds of the Indian market share by value of the generic market… We are the first and the only CDMO partner for the first three generic Semaglutide approvals in all the highly regulated markets, US and Canada.”

— Neeraj Sharma, CEO & MD, OneSource Specialty Pharma | Q4 FY26

Gland Pharma is running the same play with cartridges — capacity expanded from 40 million to 140 million units a year, eight GLP-1 contracts signed, six or seven more in the pipeline.

“In the GLP-1 space, we have made significant progress with eight contracts already signed and an additional 6-7 expected to be signed soon. Our current cartridge capacity now stands at 140 million units. Our approach remains disciplined and value-focused, positioning this as a strong mid-to-long-term opportunity with meaningful upside.”

— Srinivas Sadu, Executive Chairman, Gland Pharma | Q4 FY26

The neat thing about this bet is that these companies don’t care who wins the Indian launch war. Whoever ends up selling the pen — they made it.

Sub-part B — Make the building blocks for the next wave

Go one layer deeper. The fill-finish CDMOs need cartridges, the cartridges need an active ingredient, and that active ingredient is a peptide that has to be synthesised from raw chemical pieces. That’s where the second group of shovel-sellers sits.

A quick definition. A peptide is a chain of amino acids — essentially a small protein. Semaglutide itself is a 31-amino-acid peptide. To make a peptide drug, you take individual amino acids, chemically “protect” them so they don’t react in the wrong places, link them together in the right order, and then strip the protections off at the right time. The whole thing get assembled like Lego into the final drug.

Divi’s Laboratories made the most interesting choice here. It flatly refused to make generic GLP-1s. Instead, it sells the Lego pieces — fragments and amino acids — to the original innovators like Novo Nordisk and Eli Lilly, who use them to build their own peptide drugs.

“Divi has strategically decided that we will not look at generic part of peptide synthesis. We are right now fully occupied with the amount of CS projects we have. So, we do not want to venture into that mode.”

— Dr. Kiran S. Divi, Whole-Time Director & CEO, Divi’s Laboratories | Q2 FY26

The economics are very different from Sub-part A. Divi’s makes its own protected amino acids in-house — dull to describe, but it gives the company a grip on cost and on impurity that pure peptide assemblers don’t have. It has earmarked roughly ₹700-800 crore per project for three new dedicated peptide units. Custom synthesis — what it calls its innovator-facing business — already accounts for 56% of Divi’s revenue, and that segment grew 23% year-on-year in Q2 FY26.

“The one unique thing about Divi’s is, we manufacture our own protected amino acids, which gives us both in natural and unnatural, which gives us an edge over everyone, because we control our quantities, we control our cost, we control our impurity profile.”

— Dr. Kiran S. Divi, Whole-Time Director & CEO, Divi’s Laboratories | Q2 FY26

The trade-off is clean. The branded generics are scrapping over a fragmented Indian retail market. Divi’s is selling shovels to the prospectors who still own the gold mine.

Neuland is running a similar bet, but framing it bigger. The global peptide CDMO market, in its telling, has gone from a $1-1.5 billion category to $5-6 billion in just a few years — and most of that explosion is downstream of GLP-1’s success, which has made innovators want to develop the next generation of peptide drugs.

“What used to be a $1 or $1.5 billion market space is now a $5 or $6 billion market space and it is growing very rapidly because more and more drugs are coming out into the market, which are peptides.”

— Saharsh Davuluri, Vice-Chairman & MD, Neuland Laboratories | Q1 FY26

“It’s not just about the weight loss drugs that have been commercialized, but it’s also about the next gens, not just from the large companies, but other companies as well. So there is a plethora of development candidates, which are peptides.”

— Saharsh Davuluri, MD & CEO, Neuland Laboratories | Q4 FY26

Laurus Labs, Syngene, Piramal Pharma and Shilpa Medicare are all running variations of this bet. Different scales, different positioning, but the same thesis: don’t bet on which generic semaglutide wins in India — bet on the entire peptide modality, globally, over the next decade.

A coda — the diagnostics tag-along

There’s one more bet, and it isn’t pharma at all. If millions of new patients go on a powerful weekly injection, somebody has to test their bloodwork. Diagnostic labs see the GLP-1 boom as a downstream opportunity.

Metropolis Healthcare is the most explicit about it:

“On the GLP-1 front, the receptor agonist market in India is currently valued at USD 110 million in 2024 and is projected to grow to USD 500 million by 2030. This shift is likely to drive higher demand for regular monitoring of glucose, lipids, liver, kidney, and cardiac parameters.”

— Ameera Shah, Chairperson, Metropolis Healthcare | Q1 FY26

Dr Lal PathLabs is less convinced — at least so far:

“Patient volume growth is partly a factor of the improved collection and lab network we have put in place. It is definitely not driven by GLP-1.”

— Shankha Banerjee, CEO, Dr Lal PathLabs | Q4 FY26

A bet that’s real but small. The kind of thing that shows up in the numbers two or three years from now, not next quarter.

A footnote on what’s not a bet — the next-generation Indian molecules

Beneath the semaglutide land grab, three Indian companies are quietly building their own proprietary metabolic drugs — ones that could end up mattering more than any generic launch.

Sun Pharma has GL0034 (also called Utreglutide), an in-house GLP-1 molecule now in global Phase II trials for both Type 2 diabetes and MASH, a form of fatty liver disease. Mankind has MKP10241, a small-molecule oral obesity drug, in Phase II in Australia. Lupin is developing its own oral semaglutide in-house and has partnered with China’s Gan & Lee on Bofanglutide, a novel fortnightly GLP-1 agonist.

None of these reach the market for two to four years. None move FY27 earnings. But they’re the only assets in the listed Indian pharma universe that could turn GLP-1 from a defensive franchise into an offensive one.

TL;DR

Semaglutide came off patent in India on 21 March 2026, and within a week thirteen companies had launched twenty-six generic brands. But the synchronised launch hides six different answers to the same question — how do you actually make money off this molecule? Most went for the generic pen and split into price tiers; Eris reframed it as a metabolic drug for “thin-fat” India; Emcure and Cipla skipped the generic fight and sold the innovators’ own products; Zydus won by licensing a better pen to its rivals; Mankind sat out the price war; Dr Reddy’s, Torrent and Biocon chased exports; and OneSource, Gland, Divi’s and Neuland sold the shovels. The point isn’t that everyone launched — it’s that almost no one chose to compete head-on with the company next door. Combined listed-player revenue is still just ₹100-130 crore a month. The real money is two years out, and most of it will be made outside India.

That’s it for this edition. Thank you for reading. Do let us know your feedback in the comments.

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

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In today’s edition of The Daily Brief:

1. Three tales of real estate: Q4 at India’s residential developers

2. Jio and Vodafone don’t like Airtel’s new postpaid plan

Three tales of real estate: Q4 at India’s residential developers

On April 27, Abhishek Lodha, the MD and CEO of Lodha Developers, told investors to stop looking at his company’s pre-sales numbers. That was odd. “Pre-sales” — the value of homes a developer agrees to sell in a period — is a number real estate companies live and die by. Lodha had just reported its strongest-ever quarter on this front, having sold ₹5,890 crore worth of homes between January and March. And yet, Abhishek wanted investors to focus on his company’s actual profit instead. Pre-sales, he said, isn’t a great measure of the underlying health of a real estate business.

A week later, though, on Godrej Properties’ investor call, chairman Pirojsha Godrej invited investors to focus on… well, pre-sales. Godrej had just announced the largest annual booking value ever published by a listed Indian developer, having sold ₹34,171 crore worth of homes through the year.

Then, a few weeks hence, Prestige Estates’ Irfan Razack told investors to look at something else entirely: revenue. The company’s revenue had grown 71% over the previous year, while profits had more than doubled. Almost as an aside, Razack pointed to an additional ₹65,935 crore of sales that hadn’t shown up as revenue yet.

Three of India’s largest residential developers, in the same quarter, were looking at different metrics. Little of that was management spin. In the business of residential real estate, “pre-sales”, “revenue”, and “profit” mean three very different things. The number a developer chooses to emphasise tells you something about what their business focuses on.

Results, in three shapes

Godrej Properties

Godrej Properties is the largest company we’re looking at today.

For the third year running, it was India’s biggest residential developer by booking value. The roughly ₹34,000 crore worth of homes it sold, last year, was well above its own guidance. Almost a third of that came from the March quarter alone — one of the best the company has ever reported.

But those were bookings. The cash actually coming in from those buyers was a slightly different story. The year’s collections fell just short of ₹20,000 crore — 17% higher than last year, but still short of the ₹21,000 crore management had promised. It’s a minor miss, but it points to something: Godrej’s bookings are running faster than the cash arriving from buyers.

This is the sort of thing that happens when a developer pushes new launches over older projects further along in construction. And Godrej was doing just that: for instance, it ran a pan-India “1% campaign” during the quarter, where buyers put down 20-30% upfront, and then pay just 1% of the price every month until they take possession — a softer payment plan than the industry standard.

The company is loading its pipeline further still. Across FY26, it added ₹42,100 crore worth of future sales potential — enough to keep its pipeline overflowing for years. But for now, that future pipeline probably looks like hard cash and capital commitments in buying land.

Prestige Estates

Prestige, meanwhile, is the fastest growing company in the set.

Its pre-sales through FY 2026, at ₹30,025 crore, were up 76% from the previous year. The Bengaluru-based company has been rushing to capture new markets, and the plan seems to work. The company’s first major foray into the NCR market — Prestige City Indirapuram — booked nearly ₹9,500 crore in sales by itself: a number that major players struggle to meet across an entire portfolio.

More interestingly, its revenue grew by a staggering 71% year-on-year, while profits more than doubled.

And yet, the company’s margins had fallen to 27% — well below the 30% often quoted as an industry baseline. As its management noted, the company’s overhead costs — salaries, advertising, marketing — had ballooned to about ₹1,000 crore. That’s a pittance compared to its ₹30,000 crore pre-sales. But compared to the revenue actually showing up in its books, of roughly ₹10,000 crore, it looked much bigger.

In other words, Prestige’s expenses are growing today, at the pace of its sales, but the revenue will only show up after years of construction. Until then, its reported margins will remain compressed.

In the interim, the company is buying land aggressively, often on debt — with net debt rising 41% through the year, to almost ₹11,000 crore. To its management, all that debt will, over time, pay for itself. For now, though, that’s only an assumption.

Lodha Developers

Finally, there’s Lodha: the smallest of the three, by pre-sales. It has carved out a corner for itself, though, with a portfolio concentrated almost entirely in Mumbai.

Lodha’s pre-sales, at just under ₹20,500 crore, were well below its peers — even if they were up 16% from last year. This was a little short of what the company itself expected. That, to the management, was partly because of all the volatility the Iran war had created.

By other metrics, though, the company looked rather clean. It had the lowest debt-to-equity figures of the three, at just 0.23x. Its net profit grew 24% over the year, well ahead of its peers — with EBITDA margins of 33%.

Perhaps this is why the company was asking investors to look at profits rather than pre-sales. Profits, it maintained, was the end goal. Pre-sales were simply a means to an end.

The three timelines of a developer

Why is it that three companies in the same industry, for the same time period, are pointing investors to different metrics as measures of their performance?

The answer lies in the sheer weirdness of the real estate industry.

In real estate, a single purchase can play out over the course of years. When you buy a home from a major developer, chances are, you aren’t buying a finished home. You’re just buying a promise. That promise will only come through over 2-4 years of construction.

Of course, you don’t pay the entire amount for your house either, at first. You pay a small fraction when you book a house — 10-20%, perhaps — and then pay the rest in installments as the building goes up, milestone by milestone. In other words, from the point a sale is first booked, it is years before all that money actually shows up in the developer’s accounts.

As money trickles in, though, it creates another mismatch. Until a building finally comes up, a customer has paid the developer a lot of cash for what is, to that point, a paper agreement. They don’t yet have an actual house to their name. The sale has begun, but it isn’t yet complete. The developer hasn’t yet earned that cash. If, for whatever reason, a property can’t come through, they would rightfully have to return it.

Think of what that means. For years at an end, a developer has a large amount of cash in its coffers, which it is still in the process of earning. That is money, yes, but it isn’t revenue. When the company prepares its books, it has to account for that money without claiming it’s theirs.

Developers get around this weirdness with a clever bit of accounting. The actual cash in their account sits on their balance sheet as an asset. They pair it with a liability, however: accounting for it as an advance that might have to be repaid.

It is only once a project is complete and ready to be handed over (or sometimes earlier, when specific accounting milestones are met) that it turns into revenue. This moment is, in some senses, also a verdict. It is when you get a sense of how profitable a project was — how disciplined the developer ultimately was on pricing, project selection and costs.

A real estate developer, therefore, runs on three timelines at once.

First, there’s a sales timeline. This is the value of all homes a developer has promised to sell — which it shows as its “pre-sales” or “bookings” number. This measures all the demand the developer has locked in for its upcoming projects.

Then, there’s a cash timeline. Every pre-sale sets up a trickle of cash which arrives, in parts, over years. The amount of cash the company has received makes for its “collections”. That’s the actual money the company is generating today.

Finally, there’s an accounting timeline. This counts how much revenue a developer can finally book as its own. This is also when you learn how much profit all those years of development have actually yielded.

If real estate was a stable, slow-growing business, these three timelines would march together. As companies closed old projects, they would begin new ones, with a steady pipeline that turned sales into cash, and then into revenue. But Indian real estate isn’t a stable, slow-growing business. Companies have been launching, selling, and building at a pace far ahead of what revenues they recognise.

This opens the door to very different strategies.

One, a developer can chase scale. They can launch as much as possible: buying a large amount of land, turning it into a stream of new projects, and accepting that cash and revenue will follow years later. Two, it can chase profitability — building a small number of higher-margin projects, where each home brings in more profit per square foot, and discipline matters more than volume. Finally, it can chase completion — focusing on finishing what it has already sold, so that revenue and profit quickly follow bookings.

Or, more simply, it can chase pre-sales, profit margins, or revenue. Each creates a completely different financial profile. We saw a demonstration of just that in this quarter’s results.

The market gets harder

Meanwhile, the wider market is becoming harder to operate in.

A year ago, India’s residential market was a relatively easy space to operate in. Interest rates were down. Inflation was benign. Premium and luxury buyers were lining up behind new properties. It was the ideal market for a large, branded developer.

But the picture has changed since.

According to Knight Frank, home sales across India’s top eight cities, last quarter, fell about 4% from last year. Launches, meanwhile, were still climbing, outpacing sales for the fourteenth quarter in a row. In the March quarter, they outstripped sales by over 10,000 units. Increasingly, developers are sitting on ever-larger amounts of unsold inventory.

For now, prices have held up across major cities. Developers sustaining this, to some extent, through schemes and incentive programs. Perhaps that is where Godrej’s 1% campaign comes from.

At the other end, meanwhile, funding is becoming more expensive to arrange. Bond yields are rising, with the 10-year government yield crossing 7%, to the highest it has been in twenty months. The Iran war has made commodities more expensive. That, in turn, has made it more expensive to build a house, with costs rising by around 5%.

These developers may have sold thousands of crores’ worth of houses last quarter, but those houses will be built over years. The costs involved — of raising money, buying material, and more — aren’t yet clear. We’re years away from finding out how profitable they’ll be.

What does that mean for these companies? Can Godrej convert its enormous pipeline into hard assets for cheap enough? Will Prestige be able to fund its massive expansion, as margins fritter and debts rise? Will Lodha struggle to draw new buyers, in a market where sentiment might be turning?

None of these answers will be clear for a while. That’s simply the nature of the real estate cycle. But we’ll stay tuned in.

Jio and Vodafone don’t like Airtel’s new postpaid plan

On May 19, Bharti Airtel launched something it called Priority Postpaid. The pitch was that, compared to others, postpaid customers would get a faster, more stable connection especially in crowded places like concerts, markets, and at peak hours.

Three days later, Jio and Vodafone Idea told a parliamentary committee the service should be paused. Their complaint, in essence, was that this might violate India’s net neutrality rules. We’ll explain what this means eventually.

The reaction was instant. The government’s communications committee opened a probe, The Department of Telecom (DoT) is reviewing and TRAI also started asking questions.

This isn’t the first time this is happening though. In 2020, Vi launched a plan called RedX — premium speeds for premium customers, while Airtel launched Platinum. Both promised faster 4G to anyone paying above a threshold. Three days after Airtel’s launch, Jio complained to TRAI, who, within a week, froze new sign-ups. Both plans were dead in months.

Six years later, the same three companies are in a similar fight, but with different context.

Same tower, different lane

Let’s start with how a plan like Priority Postpaid works.

Priority Postpaid is structured across five plans with OTT bundles stacked on top. Existing postpaid users get the upgrade automatically. Prepaid users have to migrate to postpaid to access it.

The technology underneath is called network slicing. Every signal between your phone and the nearest cell tower travels on a chunk of “radio spectrum” that telcos bid for in government auctions. Until 5G, that spectrum was one shared pool; every user drew from the same well of their telco provider. What slicing does is partition that pool into separate, reserved lanes, each with its own guaranteed bandwidth, latency, and reliability.

For instance, say one slice is for a hospital that needs ultra-low latency. Another for a stadium where 80,000 phones are uploading at once. Another for connected cars. Another, in Airtel’s case, is for postpaid retail users.

In 4G, lanes were shared. Prioritising one class of customers meant directly slowing down everyone else. That’s what made RedX and Platinum offerings in 2020 impossible to defend. In 5G, though, the network can hold a fixed share of capacity aside for the postpaid slice even when the prepaid lane fills up. A traffic jam in one lane doesn’t slow the other down.

Slicing only works on 5G standalone — meaning the full 5G stack, built end-to-end on a brand-new 5G infra. The alternative, non-standalone, is just 5G radios bolted onto the old 4G infra. Which is also why Airtel can do this right now..

Jio has run standalone since launch in late 2022, but hasn’t ventured into consumer slicing. Airtel only finished its standalone transition in early 2026, and Priority Postpaid is its first commercial use. Vi runs mostly non-standalone, with limited standalone rollout.

Who’s saying what?

Now.Jio, the company that complained in 2020, is currently the most measured. It feels network slicing is a legitimate use of 5G capabilities, but says that retail products of this kind should be launched only after regulatory approvals, with authorities examining the technical parameters carefully. If we were to read between the lines, they don’t want to kill this idea, because they’d also want to eventually do this.

Vi, the company that violated in 2020, is now the loudest critique. Its submission calls Airtel’s plan “discriminatory” and asks for it to be put on hold pending regulatory clarity.

Airtel, the company whose Platinum plan got killed in 2020, is back doing essentially the same thing in a more sophisticated form.

It’s also worth considering where in the market each of them stands right now. Jio has the standalone infrastructure ready and wants to monetise it eventually, so it can’t condemn slicing outright. Vi can’t match Airtel’s investment and is bleeding postpaid subscribers: this move from Airtel may well take away high-value customers away from them. Airtel has the infrastructure ready and the highest-paying postpaid base in the industry; it has the most to gain from going first.

But where is this contention even coming from? It’s all about net neutrality: the principle that Internet Service Providers (ISPs) must treat all internet communications equally.

It’s a simple idea, but open to interpretations, hence the confusion.

What do the rules say?

India’s net neutrality framework came in stages. The first part came in 2016, when TRAI banned discriminatory pricing — the rule that killed Facebook’s Free Basics and Airtel Zero. Both schemes had let some apps run free for users while every other app ate into their data plan. But with the 2016 rule, telcos could no longer charge different rates for different content.

The bigger rule came next. In 2017, TRAI issued formal recommendations on net neutrality, which the DoT accepted in July 2018. The government wrote the rule into every telecom licence in the country. The rule itself was simple: internet providers couldn’t discriminate against content — no blocking, no slowing things down, no giving certain types of traffic preferential speeds.

But there were two exceptions where the rule didn’t apply. One was “reasonable traffic management“, which included handling congestion, security, and emergencies. The other was “specialised services“ — like remote surgery, critical IoT, and autonomous vehicles — which were things that genuinely couldn’t run on the regular network.

That being said, a specialised service couldn’t be a substitute for ordinary internet, and rolling one out couldn’t make ordinary internet any worse for everyone else. The exceptions, then, were just exceptions.

But in 2020, a hole opened up. That year, TRAI submitted detailed recommendations on what “traffic management” looked like and what was allowed. The DoT never adopted them. So today, India has a 2018 framework with no clarity on what counts as “reasonable traffic management” now that 5G technology actually lets a telco set aside whole network slices for paying customers.

This is the gap Airtel is operating in. Its argument is simple: net neutrality is about content, not customers. Priority Postpaid doesn’t favour Netflix over YouTube. It favours a postpaid user over a prepaid one — but once that postpaid user is on the network, every app they open is treated the same.

The strongest counter-argument is one made in the US. It says that telcos are stretching the specialised services exception into a loophole it was never designed for. The exception was meant for things that physically couldn’t work on the regular internet at scale, and not ordinary services that ran faster for high-paying customers.

In the US, the 2024 net neutrality order was clear: consumer slicing wasn’t what the exception was meant to cover. T-Mobile took the hint and kept its slicing limited to enterprise and emergency services. Singapore, meanwhile, went the other way — Singtel openly sells 5G+ Priority Passes to consumers for a few dollars at a time, no regulator pushing back.

The postpaid premium has disappeared

The technical fight is interesting, but it’s downstream of something more basic. Indian telecom has a revenue problem.

Airtel’s ARPU — the average monthly revenue per user — was ₹257 in the quarter ending March 2026, the highest in India. That’s only around $3 a month. For comparison: China’s ARPU is around ₹600; Europe’s is over ₹1,000; the US is over ₹4,300 — all many multiples of our benchmark. And our industry has spent tens of billions of dollars combined on 5G spectrum and capex since 2022, without getting adequate returns to match.

So far, ARPU has grown only by raising prepaid prices. The 2024 round of hikes pushed prepaid tariffs up by 17–20%. The problem is that this growth has run into a wall, which shows up in one number.

According to TRAI data, in 2020 the average monthly spend on prepaid was ₹84 and on postpaid was ₹244. A gap of ₹160. By 2025, prepaid averaged ₹194 and postpaid ₹199. A gap of ₹5. The premium that postpaid users used to pay over prepaid users has, for all practical purposes, vanished — a 97% collapse in five years.

This is weird because, well, postpaid is supposed to be the high-margin segment. At Airtel, 7-8% of customers are on postpaid but they generate 12-13% of mobility revenue. It has lower churn and longer commitments with predictable bills. Every telco wants postpaid users. But why would any prepaid user migrate today?

That’s the engine driving Priority Postpaid. Slicing may not entirely be about better network experience for the sake of it. It certainly also provides another reason for the postpaid premium to exist again by giving the postpaid user something a prepaid user will find it hard to have, no matter how much they recharge for. Then, you sell migration from prepaid to postpaid.

The numbers work out the way Airtel needs them to. The cheapest Priority Postpaid plan is ₹449 a month. A prepaid user spending around ₹300 a month who migrates pays roughly 50% more. Multiply that across the conversions Airtel projects, and you have the next leg of ARPU growth without needing another politically painful prepaid hike.

What makes this an irresistible move commercially is that the 5G standalone network is already built. The slicing capability is just software running on top of it. Moving a user from the regular slice to the priority slice is essentially going to cost zero. Almost the entire monthly uplift from a prepaid-to-postpaid conversion flows straight through to operating profit.

Questions without answers

Airtel’s strongest defence is also its weakest. Its submission tells the parliamentary committee that the 5G network is currently running at only 38% of its capacity. Postpaid users account for just 4% of that load. Even after Priority Postpaid pushes postpaid up to maybe 6%, there’s still around 60% spare capacity for everyone else. So no one is being slowed down.

That’s true today, but will it be true at scale? We can’t say for sure. The 2020 TRAI objection to RedX and Platinum was never about immediate slowdowns. It was about what happens when the network loads up. As more Indians shift to 5G and data usage keeps climbing, that 60% spare capacity shrinks.

At some point, keeping a guaranteed lane for postpaid has to come from somewhere. It’ll show up as everyone else’s spectrum being taken away for priority customers.

Another claim from Airtel is that since prepaid customers earn them most of their revenue, they have no incentive to harm those customers. The intent of Priority Postpaid isn’t to make prepaid worse, but to make postpaid visibly better, so that high-value prepaid users migrate. If migration works as designed, average prepaid quality doesn’t have to fall for the strategy to pay off.

The DoT now has two decisions to make. Is customer-tier prioritisation, like what Airtel is doing, a net neutrality issue at all, or not?

Does retail consumer slicing qualify as a “specialised service” which is technically allowed under the law, or is that stretching the legal limits of the definition?

How DoT lands on these decides more than whether Airtel keeps Priority Postpaid. It decides what kind of internet 95% of Indians get to use for the next decade, and more importantly, will telco operators able to increase their ARPU, or will have to get more creative in trying to achieve that.

Tidbits

[1] Byju’s founder sentenced to six months in Singapore jail

A Singapore court has sentenced Byju’s founder Byju Raveendran to six months in jail for contempt of court, saying he failed to comply with multiple orders related to his assets. The ruling adds to mounting legal pressure as global investors and lenders pursue recovery claims linked to the edtech firm’s collapse.
Source: Economic Times

[2] Extreme weather devastates India’s Alphonso mango crop

Maharashtra’s prized Alphonso mango crop has suffered losses of 85–90% in key growing regions due to extreme heat and El Niño-linked weather disruptions. Export demand has also weakened amid the Iran conflict, hurting farmers, traders, and businesses linked to the mango supply chain.
Source: Reuters

[3] SEBI plans pilot for tokenised corporate bond trading

SEBI will launch a pilot project to test tokenisation of corporate bonds using distributed ledger technology (DLT), with rollout expected in 6–9 months. The regulator believes tokenisation could improve liquidity and enable faster, more automated settlements in India’s corporate bond market.
Source: The Hindu

- This edition of the newsletter was written by Pranav and Kashish.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #13

Hi folks, Pranav (Manie) here. Just wanted to drop a quick note today instead of our usual intro…

Read more

20 days ago · 8 likes · 1 comment · Zerodha

Rosa & Tamoghna on India’s Youth Employment Crisis

In India, the more educated you are, the more likely you are to be unemployed. Graduate unemployment among the youth sits at 40%. For those with no education, it’s 3%. We recently spoke to Rosa Abraham and Dr. Tamoghna Halder, two of the authors behind the Azim Premji University’s State of Working India 2026 report, to understand why. Our conversation goes into what’s really driving this paradox — the role of caste and social signalling in education choices, whether waiting for a good job is rational, why the “missing middle” of Indian firms matters, and what the demographic dividend window really means for policy. Do give it a listen!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. Indian pharma has lofty aims in the midst of chaos

2. India’s credit card industry is splitting in two

Indian pharma has lofty aims in the midst of chaos

Indian pharma is going through a period of rapid change.

Yes, US tariffs and geopolitical uncertainty are forcing companies to rethink their geographical mix. But relievingly, the Indian market itself has become the fastest-growing engine for most players. Indian firms are also ferociously working on expanding to other developing markets,

Meanwhile, Indian pharma is in the midst of a generational shift toward chronic therapies — like cardiac, respiratory, diabetes and oncology. One chronic solution in particular, GLP-1, promises to be a gold rush. And two of the biggest acquisitions in the sector’s history landed within six weeks of each other.

Clearly, there’s a lot to unpack this quarter.

We looked at the Q4 FY26 earnings calls of four of India’s largest pharma companies — Sun Pharma, Torrent Pharmaceuticals, Zydus Lifesciences, and Cipla. All of these companies have points of agreements and divergence on what they think Indian pharma will look like over the next decade.

The numbers matter, of course. Sun Pharma reported ₹14,560 crore in Q4 revenue, up about 14%. Torrent’s Q4 revenue hit ₹4,197 crore, up 42% — though that’s inflated by its JB Pharma acquisition; the base business grew 16%. Zydus came in at nearly ₹7,600 crore, up 16%. And then there’s Cipla, the only one with negative y-o-y revenue growth in Q4.

But, of course, the numbers are secondary to the structural forces driving them. Let’s get into them.

Repeat business

For decades, Indian pharma companies made money selling acute medicines, like cough-and-cold medicines, antibiotics, and painkillers. These are the kinds of drugs you take for a week and stop. These are high-volume, low-stickiness products where brand loyalty is weak and price competition is fierce.

For the last few years, the entire sector has been undertaking a hard pivot towards chronic therapies. That refers to medicines for conditions like diabetes, heart disease, depression, and cancer that patients recurringly, even for years.

That also makes their economics very different. Chronic patients are repeat customers. Doctors prescribe these meds based on long-term efficacy and not just price. And once a patient stabilises on a particular medication, switching is rare.

And that shows up in the numbers. Zydus, for instance, has pushed its chronic mix from 38% to 46% in just three years. For both Sun Pharma and Torrent, meanwhile, chronic medicines make up over 70% of their portfolios.

How have all four companies anchored themselves to the chronic shift? There are some commonalities in their strategies, cardiac and diabetes being key among them.

For instance, Torrent has built a fortress in cardiac and gastroenterology. Before their recent acquisition of JB Pharma, those two segments alone made up half its India revenue. Similarly, Sun Pharma consistently ranks #1 in prescription share among Indian cardiologists. Cipla has a cardiac brand called Dytor, which is one of its fastest-growing products at 25% y-o-y.

Similarly, given India’s tryst with diabetes, all major pharma firms have a strong diabetes portfolio. Cardio-Diabeto is Zydus’ largest combined therapy segment, making up 19% of their India business. Cipla’s anti-diabetes segment has seen a 16% annual growth rate over the last few years, and also launched India’s first inhaled rapid-acting insulin product last quarter. For both Torrent and Sun, anti-diabetes products make up around 8% of their India business.

But beyond these similarities, the bets mostly diverge.

For instance, Zydus is the largest oncology player in India. In a previous Daily Brief story, we covered the push from Indian pharma to treat cancer, and Zydus was a key anchor of this story. Earlier this year, it announced India’s first biosimilar of the breast cancer drug Trastuzumab Emtansine.

Sun Pharma, meanwhile, also has a broad portfolio of medicines dedicated to skin cancer, like Unloxcyt, Odomzo and Nidlegy. Sun Pharma is also the market leader of neuro-psychiatry medicines in India — none of its three peers have significant presence here. Neuro-psychiatry usually includes medicines targeted at depressions, strokes, and nervous disorders like dementia and Alzheimer’s.

Elsewhere, Cipla is a leader in respiratory products. Its flagship inhaler Foracort crossed ₹1,000 crore in annual sales this quarter.

The GLP-1 race

One very new chronic solution that has grabbed everyone’s attention is GLP-1.

Not too long ago, the dam of Novo Nordisk’s patent on semaglutide, one of the key molecules that trigger the GLP-1 receptor, broke through. This has launched a brutal competition among India’s pharma firms to build the next big weight-loss drug.

Torrent moved first and fastest. It launched two generic semaglutide brands — Semalix and Sembolix — in both injectable and oral formats, priced at roughly ₹4,000 a month. Within six weeks, it had captured 38% market share among generic players, ranking first in the category. Torrent’s management credited early product availability in both formats and aggressive pricing as the key advantages. Semaglutide will play a significant role in their chronic mix for years to come.

Zydus wasn’t far behind, being only second in market share. It launched three semaglutide brands with a twist: each uses a reusable, multi-dose pen device that lets patients scale up their dosage without switching devices. Zydus also took a different commercial approach by actually licensing its product to both Lupin and Torrent for co-marketing. Interestingly, unlike many of its peers, Zydus has also chosen to make the semaglutide API in-house.

Sun Pharma’s brands Noveltreat and Sematrinity hit the market right at patent expiry. But despite being India’s largest pharma company by revenue, Sun didn’t feature in the early market share data the way Torrent and Zydus did. The Q4 earnings call was dominated by their acquisition of Organon, not GLP-1 execution.

However, unlike its peers, Sun is also investing in its own proprietary GLP-1 drug, GL0034, as well as another GLP-1 molecule called utreglutide. With this move, Sun wants to move to an original formulation rather than rely on generics only to capture more of the value.

Cipla, meanwhile, treats GLP-1 as a whole therapeutic category, of which semaglutide is just one part. On that note, it partnered with Eli Lilly to distribute Yurpeak — which is based on the tirzepatide molecule that Eli Lilly still has a patent on. Cipla’s margins on the product depend entirely on the terms Eli Lilly sets.

Dealmaking and war chests

If FY26 had a defining theme beyond chronic and GLP-1, it was acquisitions. Two transformative deals landed within three months of each other, and they tell you everything about where the sector thinks growth will come from.

First, you have Sun Pharma’s ~$12 billion acquisition of Organon in April 2026 — is the biggest deal in Indian pharma history. As mentioned earlier, their entire Q4 earnings call addressed little besides what this acquisition means for them. And it means a lot.

Organon ranks top 3 globally when it comes to contraceptives and fertility solutions for women. It gives Sun a massive leg up in women’s health, where they’ve historically had little presence before. Organon also has a strong biosimilar business, which has grown very fast over the last 5 years.

But these synergies are still unproven. The risk of the acquisition potentially not working out is just as real. Sun has a net cash position of $3.1 billion (~₹29,000 crore at current rates) — an already massive war chest. But the debt required to finance this deal will be a significant cash drain. And worryingly, Organon itself has been growing at just 1-2% per year.

Secondly, there is Torrent’s acquisition of JB Pharma, a ₹12,500 crore deal that closed in January 2026. It also poses similar risks as the Sun-Organon deal. The first quarter of consolidation already showed up in the numbers as a 42% y-o-y jump in the Q4 revenue. But Torrent’s leverage has spiked to 2.3x net debt-to-EBITDA. Undoubtedly, cash flow management will be of the utmost importance when it comes to paying off the debt raised for this acquisition.

Then there’s Cipla, sitting on the other side of the table. It ended FY26 with nearly ₹11,000 crore in net cash, yet no transformative deal to show for it. Cipla did make some small deals, like acquiring Inzpera Healthcare for paediatrics, or licensing established Pfizer brands like Corex and Dolonex. But these are bolt-ons rather than game-changers.

When pressed by an analyst about what this cash pile will be used for, management was incredibly conservative, saying that they’re choosing to be selective about which opportunities to pick. As peers consolidate and deploy capital, Cipla’s cash increasingly looks like an option premium it’s choosing not to exercise.

Zydus has shown similar levels of caution. Earlier in the year, they explicitly said that ideally, they would not want their net-debt-to-EBITDA ratio to cross 2x with an acquisition. Between Q3 and Q4, due to some acquisitions and a share buyback, their net debt went up from 3,000 crore to 7,000 crore. But this still kept their ratio under 1x.

The geography shift

There’s an old mental model of Indian pharma: develop drugs cheaply at home, export them to the US and Europe, earn in dollars. That model isn’t wrong, but it’s becoming incomplete.

The domestic Indian market is now, for most of these companies, the fastest-growing segment. India isn’t just a manufacturing base anymore. With 100 million diabetics, an ageing population, and rising chronic disease prevalence, it’s becoming the demand story too. Sun Pharma’s India business grew 14% in FY26, Zydus has consistently delivered double-digit India growth, and Cipla managed between 7-10% across the year.

That’s not to say exports don’t matter. They do, but the global footprint isn’t just limited to the US and Europe anymore.

For instance, Torrent is growing remarkably fast in Brazil, where its revenues showed healthy double-digit growth on the back of new launches in cardiac and CNS therapies. Brazil’s branded generics market operates on similar dynamics to India’s — physician-driven prescriptions, brand loyalty, chronic therapy dominance — and Torrent’s playbook translates naturally.

Sun’s Organon acquisition also opens a door none of these companies have ever walked through: China. Organon has an existing commercial presence in the Chinese market, selling established brands that still command 20-30% market share despite dozens of generic alternatives. Sun’s management sees this as a massive platform.

But the US, historically the crown jewel of Indian pharma exports, is a more complicated picture.

Sun’s US generics business declined 1% in FY26. Cipla’s US revenue was dragged down by the expiry of its lucrative generic Revlimid and a supply crisis with Lanreotide, one of its top three US products. Zydus grew a modest 6% in the US, also due to the expiry of its own Revlimid product.

The sector isn’t abandoning the US, but tariff uncertainty and regulatory headaches only reinforce the shift toward India, Brazil, and other emerging markets.

What’s ahead

So, what do we look forward to in FY27?

Sun needs to prove that Organon — a company growing at barely 1-2% — can be revitalised under Indian management. Torrent needs to show that JB Pharma’s integration delivers the synergies that justify its premium valuation, while managing elevated leverage.

Cipla faces the highest-stakes year of the four: its margin recovery depends on US respiratory launches — generic Ventolin, generic Advair, generic Symbicort — landing on time, and its FY27 EBITDA margin guidance of 18.5-20% has already been cut three times in two years. Zydus needs its multi-engine model — pharma plus consumer plus medical devices plus contract manufacturing — to deliver without becoming too complex to manage.

For all four, the GLP-1 share war in India is just getting started: sustaining early market share as more competitors arrive will be the real test. The next set of earnings calls, in July and August, will give us the first real read on which of these diverging bets is paying off.

India’s credit card industry is splitting in two

You can understand most lending products by looking at their loan book: how big is it, how fast does it grow, what’s the bad-loan ratio, where are margins, and so on.

Credit cards don’t work that way. Most of what makes the business worthwhile — interchange fees from every swipe, annual fees, EMI conversion charges, foreign exchange markups, and so on — is tied to how much customers spend, not to how much they borrow. There’s an element of lending to the business, but that isn’t the heart of it.

Keep that in mind as you think about what comes next.

In FY26, total system spends came in at about ₹23.6 lakh crore, which was up 12% year-on-year. That sounds healthy, until you account for how sharply it has decelerated. That growth figure, in FY25, had been 21%. In FY23, it was 47%.

What’s more: per-card, spending barely budged in FY26. The base of cardholders kept expanding, but the average user wasn’t spending more.

What does this tell us? Is the industry just maturing? Or is it a bad time for the business?

Read the FY26 earnings calls of banks and you see more nuance underneath the slowdown, which touches different credit card issuers in different ways. Large issuers, that are part of massive banks, can manage such a slowdown. But smaller specialty issuers, the ones who bet big on credit cards as their only growth play, are hurting.

The big three are managing through

Let’s start with the three issuers that dominate the system.

HDFC Bank — by far the largest issuer — treats its card business as a cross-selling hook rather than a growth engine in its own right. The product sits inside what management calls its “cross-sell thaali“. If a customer opts for any one of these, they become potential customers for the rest of the thaali.

Here, the card isn’t really a simple profit engine. Its value lies in the relationships it builds, the data it generates, and most importantly, the deposits that come with it.

You see, most credit card customers at a large private bank are also account holders, fixed-deposit holders, or mutual fund SIP investors, all through the bank’s platform. Those customers’ account balances are part of what makes the relationship economically viable. For such a bank, the cheapest funding they have on their balance sheet partly comes from those who first walked in for a credit card. That’s a structural advantage that won’t show up in the numbers alone.

Contrast this perspective to that of SBI Cards, which had the standout year of FY26. There, spends grew 29% to ₹4.3 lakh crore, which allowed the company to move its share of system spends from 15.7% to 18.1%. The company actually culled the number of accounts it was adding — with new account additions deliberately falling 12%. And yet, its profits grew by 13%.

Some of this incredible performance probably came from RuPay credit cards, which link to UPI, taking off in smaller towns.

While SBI slowed down their account growth, ICICI Bank did something different — it actually let its card book shrink. Its credit card portfolio contracted 5.6% year-on-year in the March quarter, marking a striking reversal for a bank that, as recently as FY24, had grown the same segment by more than 30%.

This was more than just a seasonal dip. There is industry-wide softness in revolve rates.

That sounds cryptic, we know, and we’ll explain that eventually. But here’s the bottomline: ICICI looked at the economics of its credit card business, and decided not to defend the book, instead letting it contract.

These, however, are big banks. They share the luxury of choosing a posture. A slowdown could touch them, but they can shrug it off.

The bill is coming due

Lets drop below the top three on the issuer table, though. Here, the picture changes sharply.

Take RBL Bank, for instance. Its card book was historically sourced heavily through a co-brand partnership with Bajaj Finance: the latter would source customers, while RBL would hold the credit risk. This was the sort of arrangement that worked beautifully at a time of growth, but can be expensive and slow to unwind when the cycle turns.

But then the arrangement ended abruptly as the RBI tightened the rules around co-branded credit cards.

In March 2024, the RBI clarified that the co-branding partner cannot access transaction data, cannot market the card as its own product, and cannot be involved in any process after the initial issuance. The incentive to enter such arrangements suddenly died. Federal Bank and South Indian Bank were ordered to stop adding new co-brand customers that same month. Then, in December 2025, the RBI reportedly told all partner banks to pause new OneCard issuances pending clarification on data-sharing concerns.

In essence, the RBI mandated that co-branded cards would be a bank product, run on the bank’s terms. The partner no longer had a role.

RBL spent FY26 living through both of these at once. Cards-in-force drifted down from a March 2025 peak of about 48 lakh to around 46 lakh by Q4 FY26. Not just that, the bad loans in the credit card portfolio was a dominating reason for the bank’s higher provisioning cost. In fact, of the ₹684 crore in net provisions on advances during Q4 alone, credit cards accounted for ₹489 crore. A wind down of the credit card business hit hard.

AU Small Finance Bank has been in even more deliberate retreat. The bank scaled up its credit card business aggressively after launching in January 2021, hit 5 lakh live cards by March 2023, and was clocking monthly spends of ₹1,000 crore at the peak. Then the underwriting cycle turned. The card book shrank 19% in FY25, and Q2 FY26 commentary confirmed the calibration was still in progress as unsecured advances (microfinance plus credit card) were down 23% year-on-year.

Now, AU is building its card book off its deposit customer base going forward, not the open market. The bank that issued 50 lakh cards through open-market sourcing has decided that that was the wrong unit of growth to chase.

BOBCARD, the credit card subsidiary of Bank of Baroda, tells a third version of the same story. The company ran a premium co-brand strategy on the RuPay network, and scaled past 10 lakh active users during FY25. But the cost of that scale showed up in the books. Net NPAs jumped more than fourfold from ₹33 crore in FY24 to ₹137 crore in FY25, and return on assets fell sharply.

The pattern across the three is the same. Each built their card business as a standalone growth bet — RBL through a partnership, AU through open-market sourcing, BOBCARD through premium co-brands. Each grew fast in FY22 and FY23. Each is now spending FY26 and likely a chunk of FY27 working off the cohorts they originated during the boom.

The revolver squeeze hits everyone, just differently

Underneath the bifurcation, there’s a problem affecting both the banks and the specialty issuers: the economics of the product itself are getting worse.

The metric to watch is the revolver mix — it’s the share of card receivables on which the issuer earns the high revolving interest rate. Revolvers are the customers who don’t pay their full bill each month and roll the balance over. They are, by a wide margin, the most profitable customers a card issuer has. The split between revolvers and transactors (who pay in full each month) is the single biggest determinant of credit card profitability.

At SBI Card, the revolver mix has been stuck between 22% and 24% for two straight years, and management now expects a “slight downward bias” in FY27. ICICI’s admission that revolve rate softness is industry-wide, not portfolio-specific, confirms what SBI Card’s numbers suggest.

See, when issuers tightened underwriting in 2024 and 2025, they got rid of the highest-risk borrowers — the ones who couldn’t make ends meet on monthly income and used revolving credit as a bridge. The customers who survived the pruning are wealthier, more credit-tested, and far more disciplined. They use the card for the rewards and the 45-day grace period, then pay in full. Asset quality improves, but the interest income falls.

As one analyst put it on SBI Card’s call, a single percentage point fall in revolver mix translates to roughly 25-27 basis points off the margins. The compensating lever, which is converting outstanding amounts into EMI at lower yields, only partly fills the hole.

This also explains why we have been seeing rewards across the biggest credit card companies going down over the past many quarters.

When the revolver pool is shrinking, there is less money with credit card companies of which rewards are to be given away. It only makes sense to cut them back too.

For the big issuers, the squeeze is manageable — SBI Card is targeting a return on assets of 4-4.5% over the medium term, well above its FY26 print but below the 5%+ the business once posted. For the smaller players, the squeeze is the difference between a viable standalone card business and one that needs a strategic rethink.

What comes next

The pattern across both halves of the industry is the same in one important respect. Everyone is shifting toward existing-to-bank and pre-approved sourcing. HDFC’s cross-sell thali, SBI Card’s banca channel, AU’s pivot to deposit customers — these are variations of the same logic.

Open-market acquisition turned out to be the most expensive way to give out credit cards when the cycle turned, and nobody wants to be exposed to it the same way next time. The fixed-deposit-backed credit cards appearing at the edges of the industry, and the growing role of RuPay credit cards riding the UPI rails for small-ticket spends, are both symptoms of this broader shift in how issuers are willing to onboard customers at all.

The bigger question for FY27 is whether the bifurcation widens or closes. If RBL manages to take care of bad loans of its credit card business by next half of the year as guided, and AU’s turnaround completes in roughly that window, the smaller players might reach the other side. If turmoil sustains, if unsecured stress flares again, if revolve rates keep softening, the gap between the issuers who can absorb a credit cycle and the ones who cannot will keep widening.

Tidbits

1. The four rounds of petrol and diesel price hike, totalling about Rs 7.5 per litre, have trimmed the losses state-owned oil firms were incurring from selling fuel below cost to close to Rs 600 crore per day, the Joint Secretary in the Ministry of Petroleum and Natural Gas said.
   Source: Economic Times

2. SEBI is reviewing whether listed debt should have disclosure ​norms similar ‌to listed equity to enhance transparency and investor protection in debt markets, chairman Tuhin Kanta ‌Pandey said.
   Source: Hindu BusinessLine

3. India’s position as the fifth-largest global market by capitalisation is under threat as Taiwan closes in on the South Asian nation’s spot, powered largely by the rapid rise ​of TSMC.
   Source: Reuters

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   - This edition of the newsletter was written by Manie and Kashish.

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   What we’re reading

   Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

   So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

   Subtext by Zerodha

   What We're Reading #13

   Hi folks, Pranav (Manie) here. Just wanted to drop a quick note today instead of our usual intro…

   Read more

   18 days ago · 8 likes · 1 comment · Zerodha

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   Rosa & Tamoghna on India’s Youth Employment Crisis

   In India, the more educated you are, the more likely you are to be unemployed. Graduate unemployment among the youth sits at 40%. For those with no education, it’s 3%. We recently spoke to Rosa Abraham and Dr. Tamoghna Halder, two of the authors behind the Azim Premji University’s State of Working India 2026 report, to understand why. Our conversation goes into what’s really driving this paradox — the role of caste and social signalling in education choices, whether waiting for a good job is rational, why the “missing middle” of Indian firms matters, and what the demographic dividend window really means for policy. Do give it a listen!

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   Thank you for reading. Do share this with your friends and make them as smart as you are 😉

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Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. How high can SpaceX fly?

2. How did Indian carmakers perform this quarter?

How high can SpaceX fly?

It’s hard to know what one should make of SpaceX’s IPO filings. It is, above all, a picture of extremes.

Here’s a sample: this January, the SpaceX board granted founder Elon Musk a billion shares of Class B stock, which would vest in fifteen tranches as the company’s market capitalisation would rise. That isn’t unusual in itself; Musk would get similar performance grants at Tesla as well. What’s new, however, was a condition: for any of those tranches to vest, he would have to ensure a permanent human colony on Mars with at least a million inhabitants

A different grant from this March could give him another three hundred million shares. Those would partly vest, however, once he managed to fly a data centre with a hundred terawatts of compute a year to space. That’s roughly a hundred thousand times what SpaceX has installed today.

Last year, the same company burned through fourteen billion dollars of cash last year. Its debt alone comes to thirty billion dollars. Its capex bill, last year, was thrice as large as its actual earnings

This isn’t a normal company. It is one built on both ambition and hubris, both of stratospheric proportions. And now, they’re aiming at the world’s largest ever IPO as well. Their recent IPO document gives a rare glimpse into the business beneath the madness. We aren’t sure if we comprehend SpaceX any better because of it, or if our confusion just runs deeper now.

Either way, here’s what we saw.

What’s inside

SpaceX, despite its name, isn’t merely a space business. It’s a hazy amalgamation of many futuristic enterprises.

Its original heart was launch: the business of sending things up to space. SpaceX is the world’s biggest space-faring entity: more prolific than all the world’s sovereign space programs taken together. In 2025, four out of every five kilograms humans sent to space went there on a SpaceX rocket.

The workhorse of its launch program is one of the greatest engineering marvels of the modern world: the Falcon 9. The rocket has flown over six hundred and twenty orbital missions, with a mission success rate of over 99% — the highest of any launch vehicle in the world. The rocket, and its reusable boosters, fundamentally changed space travel. Before it, sending a single kilogram of payload into orbit cost $18,500. Once the Falcon 9 was pressed into regular service, that fell to just $2,700. There’s simply nothing else like it.

SpaceX counts everyone from young start-ups like India’s own Galaxeye to NASA among its customers. But as the company matures, its biggest customer is turning out to be… SpaceX itself.

In 2023, about two-thirds of all Falcon launches catered to SpaceX. By 2025, SpaceX’s payloads occupied almost three-fourths of the Falcon’s launches. Why does SpaceX’s internal demand ring this strong? Why does the world’s most powerful launch platform increasingly cater to itself?

Well, increasingly, the heart of SpaceX isn’t space launches: it’s the internet.

Starlink

Over the last few years, SpaceX has created a constellation of thousands of tiny satellites that beam the internet across remote parts of the world, in a service called ‘Starlink’. By the March quarter this year, the service had 10.5 million subscribers, across 164 countries around the world. It was used by both sides in the Russia-Ukraine war; and when Russians were cut off from the service, it changed the tide of that war. It’s currently being smuggled into Iran to get around the country’s internet blackout.

A service like this is only possible because of Starlink’s 9.5 thousand satellites, or about three-quarters of every active satellite in space.

This is increasingly the main cash cow of SpaceX. Starlink revenues netted the company $11.5 billion dollars in 2025, or nearly three-fifths of the company’s overall income. This is the only part of the SpaceX business that generates any meaningful profit, with last year’s EBITDA coming to $7.2 billion.

How many customers will pay for satellite internet, however? The company is currently fanning out across the developing world, looking for customers everywhere from Kenya to Indonesia to add to their service. This has, however, materially decreased their per-customer earnings. Their average revenue per user (or ARPU) used to be $91 a month, back in 2024. By the March quarter this year, it had fallen to $66. The company assumes that it’ll keep falling, until it settles at $31. Can the company’s economies of scale handle such a fall?

The company needs something to sustain its cash flows. Because a new addition to the SpaceX family is burning up all the money it can make.

Artificial intelligence

This February, SpaceX absorbed xAI into its business — a short while after xAI had, in turn, absorbed X (formerly Twitter). Both businesses now sit on the space-faring entity’s books.

The merger was an odd moment for the company. On one hand, it had acquired another major futuristic business. At the same time, though, the company inherited a tangle of related-party arrangements, and a lot of the madness Elon Musk was associated with: from political controversies, to allegations of creating non-consensual sexual imagery.

The new business came with $3.2bn of revenue from 2025. Twitter advertisements alone brought in $1.8 billion in 2025. Then, there were subscriptions, data licensing, and developer access to Grok’s models — which collectively brought in $1.4 billion last year, and are growing twice as fast.

For every dollar it was bringing in, though, it was losing two. The company ran at an operating loss of $6.4bn. On top of that, it spent $12.7 billion in capital expenses — roughly four times revenue — in building out data centres and acquiring GPU clusters at industrial scale. Its margins have been falling, while depreciation alone has overtaken the segment’s earnings.

The company, however, thinks of itself as essentially building for a distant future.

There are signs that this calculation isn’t entirely far-fetched. Just a few months ago, xAI was in a ugly, public feud with Anthropic. It was only this January when Anthropic had banned xAI engineers from using Claude, supposedly because they were using it to build their own models. In February, Elon Musk called Anthropic “misanthropic and evil”.

Just three months hence, though, the companies are now partnering. Anthropic recently announced it would lease the entirety of xAI’s first Memphis data centre, called “Colossus”. It agreed to pay xAI a staggering $1.25bn a month through May 2029 — roughly $40bn over the life of the contract. In other words, a direct AI competitor, with whom xAI had a publicly strained relationship, just decided to rely on it as an infrastructure provider. And for that, it agreed to pay it an amount higher than most public companies’ revenues every single month.

The AI business is currently in an economic wild west; one where all bets are off. xAI might not lead this race, but it’s very much in the arena.

How the money actually moves

Together, this gives us three very different businesses, all of which move at very different speeds.

Collectively, their revenues have been growing rather quickly: from about $10bn in 2023 to nearly $19bn in 2025 — most of which was driven by Starlink. In 2025, they threw off nearly $7 billion in cash. For all the hype, there’s a genuine business here.

But it’s a business that’s investing ungodly sums of money in the future. In 2025, its total capital expenditure was thrice the cash it actually made, at $20.5 billion. Nearly $13 billion of that went into AI data centres alone. And then, in just this March quarter, it spent another $10 billion, a lot of which was again in AI.

That effectively gives the company deeply negative cash flows. The business burnt $14 billion in cash last year, and has already burnt another $9 billion this year.

Where did that money come from? It was raised externally. Last year, SpaceX raised about $26 billion of financing in 2025, most of it debt for AI infrastructure. Another $7 billion came in this March quarter. This is adding up to a serious amount of debt on the company’s books, more than $20 billion of which matures next year alone. The company will also have to pay out an extra $20 billion next year in contractual commitments.

Under the terms of one of the major bridge loans SpaceX took out this year, the net proceeds of the company’s IPO would first go into paying that loan. Contractually, this is what the IPO must do before all else: reduce the company’s debt burden. Any new growth comes after that.

The dream

This is the company that could launch the largest IPO in the world: an audacious but cash-hungry mix of businesses straight out of Star Wars. The IPO could bring in over $70 billion, valuing the company at over $2 trillion. That’s roughly the amount of economic activity the entirety of Australia sees in a year.

What could ever make a business worth this much?

The promise of SpaceX, by and large, lies in the future. The company’s filings claim that it has identified the “largest actionable total addressable market in human history”. In all, the company frames itself as chasing a $28.5 trillion opportunity. Most of that — $26.5 trillion — comes from AI alone. In comparison, space exploration — which gives the company its name — is a relatively small $370 billion market.

Is there a world where the company could get to even a fraction of that?

It spins together a captivating dream. In the vision it sells, its newest rocket, Starship — which is almost twice as tall as Falcon 9, and can carry five times as much — will run at the same frequency as Falcon 9 currently does. This will enable a whole new paradigm: one where it shall run entire data centres in space, manufacture new satellites on the moon, and establish a permanent presence on Mars.

If that vision sounds fanciful, it is.

It depends on a lot of things going exactly right. Starship, which is yet to deliver its first payload to orbit, will have to replicate the Falcon 9’s incredible economics. It’ll have to get around regulatory tussles, while dodging political controversy and sovereign preferences. Meanwhile, its other businesses will have to fall into shape. Starlink will have to expand faster than its ARPU drops, while its AI arm will need to see more cash flow in.

And its erratic, mercurial founder — who is also building cars at Tesla, brain-chips at Neuralink, and tunnels at Boring Company — will have to keep his head in the game through all of it.

This is a tall order. It isn’t a dream most people would agree to underwrite.

Then again, this is a company that makes its CEO compensation contingent on a million humans migrating to another planet. It has both, the ambition to pull off a species-defining achievement, and the hubris to fall flat on its face.

Which side shall prevail? We certainly don’t have a clue.

How did Indian carmakers perform this quarter?

A decade ago, buying a car was a much simpler decision.

You picked petrol or diesel, chose a hatchback or a sedan, and negotiated the best price with your dealer. Today, you are choosing between petrol, CNG, hybrid, and electric.

Your neighbour might talk highly about CNG for the lower running cost. Your colleague just bought an EV and will not stop talking about it. Few might think anything without a diesel engine is a waste of money. And somewhere in all of this, you are trying to figure out what actually makes sense for your life, your commute, and your budget.

That fragmented demand is visible in the Q4 FY26 results of India’s three largest passenger vehicle companies — Maruti Suzuki, Hyundai India, and Tata Motors. Everyone sold more cars. But who is buying them, what they are buying, and what it costs to make those cars, that is where the real story is.

The scorecards

Maruti Suzuki posted net sales of ₹50,079 crore on 6.7 lakh units sold, up 11.8% in volume. EBIT came in at ₹4,409 crore, up 30.4% year-on-year, its strongest operating quarter ever. But net profit fell 6.9% to ₹3,591 crore, but that wasn’t because of the car business. Maruti incurred a paper loss of ~₹750 crore on its non-operational financial investments.

Hyundai Motor India reported revenue of ₹18,916 crore on 2.08 lakh units, up 8.7% in volume. But EBITDA margin dropped from 14.1% a year ago to 10.4%. We will come back to why that happened.

Tata’s India passenger vehicle business crossed 2 lakh units in a single quarter for the first time. Its Q4 revenue was up 49% y-o-y to ₹18,742 crore, while EBITDA margins were at 9.4%. But its volume surge also came off a weak first half of FY26 (or H1 FY26), when the GST cut had not yet landed and Tata was still rebuilding momentum.

At the Tata Motors Passenger Vehicles consolidated level, net profit fell 32%, mainly because of the cyber-attack on Jaguar Land Rover and US tariffs.

Where did the money go?

In our last results story, we covered the GST cut, which propped up demand meaningfully enough to offset rising costs elsewhere. But this quarter, the cost side only worsened, and the West Asia conflict added another layer of pressure.

For Tata, the cost of raw materials (steel and aluminium) had gone up by more than 5% of revenue over the past year. Put differently, for every ₹100 worth of cars Tata sold, more than ₹5 extra went to raw materials than the year before. About 2-2.5% had already hit in FY26, and a steep additional 3.5 to 4% increase was coming through this quarter.

What’s more, Tata didn’t pass any of the rising costs to consumers through all of FY26.

The logic behind it was this: demand was fragile in H1, and in the second half the company did not want to undercut the consumer benefit of the GST cut. So it absorbed the entire hit internally through cost reduction of ~2% of revenue.

But that still left a gap. Going forward, they might end up passing some costs. But if that happens, it will have to be done carefully without disturbing customer value. This is as delicate as a balancing act can get.

Meanwhile, Hyundai’s response to rising costs was somewhat opposed to Tata.

Commodity inflation ate about 1.2 percentage points off margins in a single quarter. Hyundai actually passed on costs multiple times through the year, with one more flagged for May. It also tightened the discounts that dealers could offer buyers. When demand is weak, carmakers allow larger discounts to sell more. But after the GST cut, Hyundai pulled those back.

Despite all of that, Hyundai’s EBITDA margins fell by 4 percentage points year-on-year. But that’s also because, on top of rising input costs, their new Pune plant was adding fixed costs before being fully operational. Additionally and a one-off labour code provision pushed up employee costs by nearly ₹100 crore in the quarter.

Maruti looked the least squeezed operationally. It actually made more money per car than it did the previous quarter — partly because it gave smaller discounts, and partly because of favorable currency movements on exports. They had deliberately not raised prices, though, because they didn’t want their sales momentum to slow down. A successful balancing act in terms of pricing.

Interestingly, Maruti’s belief is that the West Asia crisis is temporary, and once it is over, many of these cost pressures will lapse. They are taking it “as part of regular business“ — a riskier approach compared to other companies.

Who is buying these cars?

So costs went up, and pricing alone could not fully cover the gap. But margins did not entirely collapse either, and that’s because carmakers sold more premium, higher-margin models.

For Maruti, the share of first-time buyers jumped from about 42% in the first half of 2025 to 51% in Q4. Many were two-wheeler owners upgrading to their first car after the GST cut made entry-level models more affordable.

But these new buyers did not behave the way first-time buyers used to. A decade ago, the first would probably be an Alto. In 2026, the best-selling car is the Dzire, a sedan. The Victoris, a mid-SUV, reached 50,000 sales faster than any Maruti model before. Most importantly, a ~₹9 lakh Dzire earns the company more per unit than a ~₹4 lakh Alto would.

Hyundai’s growth came from rural India and CNG car models, and there are reasons for both.

Firstly, rural incomes have held up through good monsoons and government transfers, and Hyundai is deliberately putting 7 out of every 10 new outlets in rural areas. Rural penetration notched up from 22.6% in Q1 to 24.7% in Q4.

But the CNG push is not just about offering another fuel option. In many tier-2 and tier-3 towns, CNG refuelling infrastructure has expanded, making it more practical for buyers. CNG’s share in Hyundai’s sales went from 13% to 18% year-on-year. And this isn’t just in rural areas; urban demand also turned positive at 7% growth this quarter, after being negative in H1 2026.

In Tata’s case, its compact SUVs Nexon and Punch were the top sellers. CNG and EVs together now account for over 40% of Tata’s portfolio.

Across the board, the picture of the premium mix driving growth is largely similar. But the sceptical question is whether this mix shift is durable. If the GST-led first-time buyer wave fades, the mix could shift back towards lower-margin models. Even if the premium mix stays, how long does it cushion against elevated commodity costs?

That is where the supply side becomes important. Last quarter, we talked about order books swelling, but factory capacity falling painfully short of fulfilling them. That constraint now has a concrete response.

Maruti, for instance, is commissioning two plants simultaneously, adding 500,000 units of capacity in a single year, which management called “virtually unheard of“. Meanwhile, Hyundai’s Pune plant is running at 1.3-1.4 lakh units in two shifts, with expansions taking it to 3.2 lakh units by 2030.

Tata’s problem is different, though. It is not short on factory space. But the Tata Sierra, which has seen strong bookings, is stuck because its casting suppliers for the new engine cannot ramp fast enough. Tata is bringing in additional suppliers to plug the gap.

Every company is placing a different bet

Beyond the quarterly numbers, there is a longer-term question that all three dealt with. What kind of cars should companies be building for the next 5-10 years?

Of course, in business, this question is inescapable. But one reason it has become harder to ignore now is the recently-finalized CAFE 3 norms, which cap the carbon dioxide emissions a carmaker’s entire fleet can emit on average. If you sell mostly petrol cars, the average of your fleet gets too high compared to what the norms allow. You need more CNG, hybrid, or electric cars to bring it down.

The CAFE 3 norms are stricter than their predecessor rule set. If companies do not bring their averages down in time, they face three choices. They either face penalties, or they have to restrict how many petrol cars they sell, or they cross-subsidise green vehicles by charging more for petrol models.

In that context, each company is playing a different long-term game.

Tata, of course, is the largest four-wheeler EV player in India, with over 40% market share and 92,000 units sold in FY26. They expect the cost of making petrol and diesel cars to only go up because of tighter norms, while EV costs will keep falling as batteries get cheaper and production scales.

In fact, CEO Shailesh Chandra went as far as saying EVs will not just reach price parity with petrol-based cars, but also become more profitable eventually.

Tata’s EV bookings actually jumped 25-30% after the West Asia conflict began, as fuel uncertainty pushed more buyers to consider charging at home. What remains to be seen is how much of a structural force this is. There’s the possibility that if petrol stabilises, some of that demand could fade.

Hyundai is also confident about meeting the CAFE 3 threshold as well. But it isn’t going all-in on EVs the way Tata is. This year, Hyundai is launching its first localised electric compact SUV space alongside a new petrol-based mid-SUV. But it also leans heavily on CNG, which already accounts for 18% of its sales and helps bring the fleet average down anyway. For Hyundai, EVs are just one among many green options.

Maruti’s first fully electric car, the e-VITARA, has begun production in Gujarat. It is also building a charging network targeting over 1 lakh points by 2030 to support the model. But Maruti also noted that the final CAFE 3 draft is not yet notified, and that it encourages all green technologies, not just EVs.

That is why, much like Hyundai, EVs are only one part of Maruti’s roster which also includes biofuels, flex-fuel readiness, CNG, and strong hybrids. It is making sure it has an answer no matter which way the market goes.

And there’s no answer to that yet because the nature of growth of each green technology is quite different.

For instance, we know that rural India and CNG are among the fastest growth drivers right now. But at the same time, public charging infrastructure in tier-2 and tier-3 towns barely exists. The household buying a CNG car in a small town, and the household considering EV in a metro are two very different buyers. Building for both at the same time is particularly expensive.

What to watch in FY27

So, what do we watch in the coming year?

First, pricing power. Hyundai raised prices in May, Tata took its first increase in April, and Maruti has announced hikes from June. The GST benefit is still fresh in buyers’ minds. Q1 of FY27 itself could tell us how much of this demand recovery can survive a cost pass-through.

Second, plant utilisation. New plants carry fixed costs whether they run at 50% or 90%. If demand holds, these investments pay for themselves through scale. Otherwise, they become a drag on margins.

Third, EV traction beyond early adopters. Tata is furthest on this curve. In contrast, both Hyundai and Maruti have more calculated bets. We are still in the midst of finding out how different green technologies in India will progress.

Tidbits

[1] Tata Electronics to begin chip packaging at Assam plant

Tata Electronics plans to start semiconductor chip packaging at its upcoming OSAT facility in Assam, initially serving automotive and industrial clients. The company is fast-tracking operations to prove manufacturing capability early, with the plant expected to scale up sharply by year-end.
Source: Economic Times

[2] India may extend and expand e-two wheeler subsidies

The government is considering extending the PM E-Drive scheme with fresh funding to continue supporting electric two-wheelers. Officials are looking at higher subsidies as India pushes electric mobility to cut dependence on imported oil and accelerate EV adoption.
Source: Mint

[3] West Asia tensions may push subsidy bill 50% above target

The government’s subsidy expenditure could overshoot budget estimates by nearly 50%, mainly due to rising fuel and fertiliser costs linked to the Strait of Hormuz crisis. Higher LPG and fertiliser subsidies may significantly increase fiscal pressure if energy prices stay elevated.
Source: Financial Express

- This edition of the newsletter was written by Pranav and Vignesh.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #13

Hi folks, Pranav (Manie) here. Just wanted to drop a quick note today instead of our usual intro…

Read more

19 days ago · 8 likes · 1 comment · Zerodha

If you’re a woman who feels intimidated by the world of money, In Her Interest is meant for *you*.

Most women share a complicated relationship with money.

On one hand, women are expected to be exceptionally good with it. They manage household budgets, track expenses, stretch money, save for emergencies, and make a hundred tiny financial decisions every month.

When money conversations turn more formal, though; when they shift to investments, insurance, taxes, or business finances, they suddenly defer to someone else — a father, husband, brother, the family CA, or “the finance person” in the family.

To us, this weird duality seems to creep in because most women have never had a friendly, low-pressure place to learn their way around it.

That’s what In Her Interest, a Zerodha initiative, is trying to create. In Her Interest hosts small, in-person sessions where women can ask normal money questions without being judged, sold to, or drowned in jargon. The next few sessions cover finance for entrepreneurs in Gurugram, smart money management in Mumbai, investing basics in Pune, and the basics of mutual funds in Hyderabad. If you’re a woman who has been meaning to get a little more comfortable with money — or know someone who might — this is a fantastic place to start!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. Gold, securitised

2. Indian alcobev keeps the spirits alive

Gold, securitised

In December 2025, SEBI Chairman Tuhin Kanta Pandey publicly said that the framework for Electronic Gold Receipts, or ‘EGRs’, needed a review.

EGRs are SEBI-regulated securities that have been trading on BSE since October 2022. Only, the SEBI Chairman wasn’t content with how the product was faring. Its adoption hadn’t met expectations; it hadn’t become the gold price discovery benchmark it was designed to be. Some GST-related issues kept creating friction in how they worked.

Five months later, though, on May 4, 2026, NSE launched its own EGR segment anyway.

This adds yet another item to India’s confusing menu of gold products. Indians can buy physical gold — which is pure and battle-tested, but comes with problems ranging from storage to liquidity. There are a host of fintech apps that let you buy ”digital gold”, but that sits outside SEBI’s rulebook, as we covered in November. There are Sovereign Gold Bonds — a promising offering that was shelved in February 2024 because they became too expensive for the government to keep issuing. And finally, there are Gold ETFs that give you price exposure but no physical gold, something that’s emotionally important for us Indians.

The EGR was supposed to solve all those problems. These were regulated, liquid, tradable products that give you both price exposure and physical ownership, should you want it. This was supposed to be India’s most ambitious gold-related experiment since SGBs were introduced a decade ago.

But do they actually fulfil that promise? And why doesn’t the very regulator who created them think they’re working yet?

What an EGR actually is

It all started when, in December 2021, the Ministry of Finance notified Electronic Gold Receipts as being “securities” under the Securities Contracts (Regulation) Act, 1956.

That single technical change gave birth to a whole system.

The notification put EGRs in the same legal category as listed shares. It signalled that EGRs weren’t a commodity like physical gold, nor were they a contract for gold, like MCX futures. They were actual securities. To give you a sense of how big a deal that is, the crypto industry has been pushing for cryptocurrencies to be recognised as securities for years, hoping for the legitimacy it brings. That was a status EGRs were given on a platter.

A week after that notification, SEBI came out with the Vault Managers Regulations, 2021, creating the new class of intermediaries. The next month, SEBI issued the ‘Gold Exchange Framework’, which defined how the product would actually trade.

It was putting together a system that connected five parties. SEBI-registered ‘vault managers’ — body corporates with a net worth of at least ₹50 crore, with SEBI-approved storage infrastructure — would hold physical gold. As of today, there are three: Sequel Logistics, Malca-Amit JK Logistics, and Brinks India.

These vault managers would provide a foundation on which standard capital markets institutions would operate. The EGRs built atop those deposits would sit in your demat account, in the depository system. Exchanges would provide a trading screen that you would access through a broker. Clearing corporations would guarantee and settle trades. It was an architecture that deliberately mirrors equity markets, bolted on to gold rather than shares.

EGRs have a lifecycle that SEBI divides into three “tranches”.

Tranche 1: Creation

EGRs are created when physical gold enters the system. A depositor — anyone from a jeweller, to a refiner, to a bank, to even a retail investor with a gold bar — would bring physical gold to a vault manager. Not any gold, though: it has to be freshly imported, or refined by an exchange-approved domestic refinery. It must meet either the international benchmark — LBMA Good Delivery Standard — or India’s own India Good Delivery Standard.

The vault manager weighs and assays the gold. They certify its purity, check its documentation for traceability, and then log everything into a system depositories have built, so that all parties can see and reconcile everything. Once gold is locked in, the vault manager creates an EGR in the depositor’s name, which the depository credits to their demat account.

The single most important rule of the whole framework was that a vault manager cannot create an EGR without physical gold being present in its vault. To enforce this, the vault manager and the depository reconcile records continuously, and the depository periodically inspects vaulted gold physically. Unlike “digital gold”, this guarantees that investors are safe from counterparty risk, because of the certainty that every EGR was backed by gold.

Tranche 2: Trading

From this point, EGR behaves like a share that you can trade on the exchange. There are two things that make this system work: fungibility and interoperability.

EGRs are fungible; i.e. they aren’t tied to a specific bar’s serial number. If you deposit gold and an EGR is created, that goes into the system, where all bars of a type are considered identical. If you withdraw later, you’ll get gold of the same purity and weight, but it probably won’t be your specific bar. That lets them become interoperable. Gold deposited at one vault location could be withdrawn from a different location, or even from a different vault manager.

In other words, India’s securitised gold effectively becomes a single national pool. That’s what makes it tradable. In a sense, the identity of any one bar of gold is dissolved. It just becomes an ISIN with some broad details.

There are two ‘series’ of EGRs, based on their purity — 999, which is 99.9% pure, and 995, which is 99.5% pure. These can be traded in denominations running from 100 milligrams to 1 kilogram. Those denominations need not be what the depositor actually puts in. If a jeweller deposits a 1kg pure gold bar with the vault manager, that can trade as 100 units of 10 grams, without any change to the gold itself.

Keeping gold in a vault isn’t free, though, and vault managers aren’t doing charity. So, vault managers levy a storage per-gram, per-day fee on every EGR holder. This is built into the system itself. SEBI requires every vault manager to publish its rates on its website, which are baked into the EGR record at creation itself. Brokers collect these charges from an investor’s account and pass them to the depository, which then remits it to the vault manager. This is the same pipeline through which corporate actions on shares flow.

This system ensures that, unlike with digital gold, you know exactly what you’re paying.

EGRs can also be moved off-market. They can also be pledged as collateral against a loan. Some day, this might help create a system of instant digital gold loans. India already has a massive gold loan market built almost entirely on jewellery valuation by branch staff. EGR loans could become a more sophisticated, standardised version of that. But that’s still in the future.

Tranche 3: Conversion

EGRs expose you to the price of gold, much like a Gold ETF. But crucially, they also let you take the gold home if you’d like.

A holder can place a withdrawal request with their depository. The depository then checks that storage charges have been paid, before forwarding the request to the vault manager. The vault manager arranges delivery of physical gold, while the depository simultaneously extinguishes the EGR from the investor’s demat account.

But there’s friction here. A 3% GST is levied at this point, because as soon as gold is physically delivered, the system legally treats it as a “sale of goods”. On the flip side, though, if you send someone an EGR itself, that isn’t taxed like a gold transaction. There’s no GST.

With income tax, it’s the opposite. According to rules of the Income Tax Act, converting physical gold into an EGR — or vice versa — is not a “transfer”. A conversion doesn’t create capital gains. On the other hand, if you transact in EGRs, that is taxed like any listed security. So, long-term capital gains kick in after 12 months at 12.5%, compared to 24 months for physical gold.

Why it hasn’t worked yet

BSE launched its EGR segment during muhurat trading in October 2022. Three and a half years later, though, trading volumes are so thin that researchers genuinely struggle to compare them meaningfully against Gold ETFs.

What went wrong?

The most obvious is awareness and enablement. Unlike ETFs, which have seen marketing campaigns and YouTube explainers, EGRs simply weren’t publicised enough. Meanwhile, most brokers that handle the vast majority of India’s retail demat accounts had not enabled the EGR segment. Without that, retail can’t actually buy what NSE is selling.

But there’s a deeper problem: vault infrastructure. India has just three approved vault managers, who run out of a handful of locations, mostly in metros — Mumbai, Delhi, Ahmedabad, Chennai. EGRs are premised on uniform pricing across India: one national gold price, discovered through exchange trading, that replaces the patchwork of city-level jeweller quotes. But that promise has to rest on something physical. To create an EGR, you have to bring gold to a vault. To take delivery against one, you have to collect gold from a vault. Someone in Coimbatore or Lucknow can buy and sell EGRs on the exchange, but the moment they want to deal in physical gold, they have to find a way of transporting it safely to a metro or back.

For “one national price” to mean something across the country, EGRs need a vault network that reaches deep into Tier-2 and Tier-3 cities. Until that happens, every withdrawal or deposit from outside major metros carries a massive logistics tax.

Then, there’s GST.

When physical gold first enters India or moves between commercial players (refiners, importers, traders), it attracts GST. They would normally claim input tax credit on this — that is, they would recover the GST they paid by setting it off against the GST they collect on their own sales. But that doesn’t work with EGRs. Once gold gets converted into an EGR — a security — it stops being a “good” for GST purposes.

And then, when it’s eventually converted back to physical gold and withdrawn, GST applies again at 3%. The transitions in and out of the security wrapper create complications that nobody has solved.

The result is that institutions — the very people who should be creating EGRs in bulk and providing liquidity — find the process more painful than it needs to be. And when institutions don’t show up at scale, trading volumes stay thin. The market becomes illiquid, with wide bid-ask spreads. And that makes the entire product unattractive.

What this is, and isn’t

What India has built, on paper, is impressive. In practice, though, it comes with last mile problems and regulatory issues that threatens its survival. And not enough people are interested, yet, for things to be fixed.

Investors that simply want a play on gold prices can simply go for Gold ETFs. Indeed, that’s a more liquid market with better price discovery. Meanwhile, the product is riddled with too many issues for those who want regulated gold exposure with the option of physical delivery at the end.

Can NSE’s new issue change that, though? Can it get enough people interested that the other problems are ironed out? We’ll be watching earnestly.

Indian alcobev keeps the spirits alive

We’ve been tracking India’s alcobev industry for a while now. We broke down the complicated liquor game earlier this year, looking at how state-level policies can make or break an entire market overnight. Then we covered the Q2 FY26 results, where premiumisation and backward integration were the stories that mattered.

In the last quarter of the year, the same structural themes are still at play: premiumisation is accelerating, state-level regulations remain a wildcard, and companies are diverging sharply in how they’re handling it all. But a new variable has entered the equation. The war in the Middle East, the closure of the Strait of Hormuz, and surging aluminium prices have introduced a cost shock that is hitting one corner of this industry far harder than the rest.

We’re looking at two spirits and a brewer — Radico Khaitan, United Spirits (USL), and United Breweries (UBL) — to explain what’s going on.

The numbers

Let’s start with the numbers.

Radico Khaitan continues its streak of being the fastest-growing of the three. Its Q4 revenue came in at ₹1,504 crore, up 15% year-on-year. Its net profit nearly doubled from Q4 FY25 to ₹175 crore, and its EBITDA margins expanded from ~13% to 19% — its highest-ever quarterly EBITDA margin. For the full year, Radico’s revenue rose by 25% y-o-y to cross the ₹6,000 crore milestone for the first time, and its net profit grew by a whopping 75% to over ₹600 crore.

Meanwhile, United Spirits had a more muted (but resilient) quarter. Operating revenue grew by 4% to ₹6,838 crore, and EBITDA rose 17% to ₹591 crore. The reported net profit of ₹571 crore was up 27%, but that’s flattered by a one-time ₹219 crore tax refund benefit. Strip that out, and you’re looking at a more modest quarter.

For the full-year, operating revenue went up 4% to nearly ₹27,800 crore, while PAT margins were at 6.4% — higher than 5.7% in FY25.

United Breweries’ Q4 revenue fell 3% to ₹2,250 crore despite volume growing 4%. Operating margins compressed to about 6%, down from 8% a year ago. Net profit was ₹102 crore, barely up 4%. For the full year, PAT came in at ₹413 crore, down from ₹442 crore in FY25. However, considering that two quarters ago, their volumes fell in regions with a rain shock, this was a noteworthy comeback for them.

Premiumisation: three Indias, one direction

The premiumisation trend in Indian alcobev is not new — we’ve covered it in every edition. But Q4 FY26 adds a useful framework for thinking about it.

United Spirits, in its earnings call, laid out what it calls the “Three Indias”. In their view, India 1 is about 49% of the population — aspirational but income-constrained. India 2 is the core middle class, about 28%, constantly upgrading what they drink. India 3 is the affluent 8% — spending big on single malts, tequilas, and craft spirits. USL has chosen to exit the bottom 20% of the market entirely to focus on these three rising tiers.

This is also the operating principle behind what all three companies are doing.

Radico’s “Prestige & Above“ (P&A) segment, for instance, grew volumes by 28% this year, and now accounts for almost 70% of sales by value. Its luxury portfolio — which includes Rampur single malt, Jaisalmer gin, and so on — delivered ₹475 crore in Q4 revenue, up 40% from last year. Management is targeting 25% growth in this portfolio next year.

United Spirits is executing a similar playbook from a more mature base. Its P&A segment now makes up more than 90% of net sales. Smirnoff crossed 1 million cases for the year, with Q4 alone contributing more than 400,000 cases. Don Julio tequila became the fastest brand in USL’s portfolio to cross ₹100 crore in net sales, and has already captured a third of the Indian tequila market. India is now the third-largest global market for Johnnie Walker by volume.

Even United Breweries, which had the weakest overall quarter, saw its premium segment grow 16%. Heineken Silver, a 100% malt beer, is UBL’s big bet, and the company is localising production across eight breweries to protect margins on it. But premium still makes up less than 10% of UBL’s total portfolio. It’s far behind the spirits players in that regard.

What’s clear is that Indian consumers — especially Gen Z — may be choosing to drink less but drink better. Pocket-sized 180ml and 200ml formats are making premium brands affordable for first-time trials, creating an entry ramp into premium brands without the full-bottle commitment. This is structural, not cyclical. And each company has plans to further increase the number of brands under their P&A umbrella.

The state-level maze

But if premiumisation is the structural tailwind, state-level excise policies have been, for all of last year, the obstacle course.

For instance, Maharashtra’s “Maharashtra Made Liquor” (MML) policy has been the biggest disruptor. The capped excise duty hike pushed regular spirit prices up by as much as 80%, while premium labels saw only a 10% increase. As a result, industry volumes in the state have dropped by roughly 20%.

Each company has responded differently.

United Spirits, which has no MML play, took the hit directly. Its mid-range brands like McDowell’s and Royal Challenge saw prices jump roughly 35% two quarters ago. But management says the worst of the shock was fully absorbed this quarter.

Radico, by contrast, entered MML through a joint venture last quarter, and is actually targeting a 10% market share in the category.

Now, beer was exempt from the tax hikes entirely, which, for UBL’s beer-heavy portfolio, meant incredibly good fortunes. It reported more than 20% growth in the state as consumers switched from newly expensive spirits to beer.

Karnataka, meanwhile, moved in the opposite direction. Progressive reforms reduced excise slabs from 16 to 8, effectively dropping premium spirit prices by 15-35% while raising the floor on cheap liquor. Both USL and Radico see this as a major tailwind for premiumisation.

Andhra Pradesh, meanwhile, is settling into its new normal after last year’s dramatic reopening to private retail. Radico went from 10% to 30% market share in one year, but both Radico and USL are now dealing with the base effect — year-on-year comparisons look soft because last year’s numbers were inflated by that initial rush.

The takeaway is the same as always: in Indian alcobev, the national story is the sum of 28 different state stories. And you can’t evaluate any company without understanding the policy hand it’s been dealt.

The geopolitical squeeze

No results story this quarter would be full without a mention of the crisis at the Strait of Hormuz. It has introduced a cost shock that is hitting the Indian alcobev industry — and one company in particular. And that difference is simply explained by why the crisis matters more to beer than spirits.

See, beer cans are made from aluminium, and aluminium prices were already climbing before the war, driven by rising demand from electric vehicles, solar panels, and data centres. Pre-war, global prices hovered around $3,200 per tonne and the market was already facing a modest supply deficit.

When the Strait of Hormuz closed, Middle Eastern aluminium output — about 9% of the global total — was suddenly cut off from European and American ports. Aluminium Bahrain, which operates the world’s largest smelter, cut production, and prices surged to a four-year high of $3,500 per tonne.

Naturally, that means UBL was hurt the most out of all three. Management has explicitly flagged a potential ₹400-500 crore cost impact over the next two to three quarters — driven by aluminium, energy costs, and shipping disruptions. The company has already stopped selling cans in Telangana because the margins no longer make sense, and its market share in the cans segment there has dropped to less than 2%.

That being said, UBL doesn’t face a shortage of cans. The only reason they may cut back on beer cans is because there are no incentives for them to sell those cans.

United Spirits faces a more manageable squeeze. Packaging makes up about a third of its costs, and the company expects a hit of 1.25-1.5% to gross margins. Their plan is to offset part of it through price hikes (especially in newly-liberalised states like Karnataka), and half through productivity improvements.

Radico, meanwhile, is the most insulated of the three. Around 90% of its power and fuel comes from captive biofuel, so it’s fairly independent of global energy price swings. It has seen a 15% spike in glass bottle costs, but is absorbing this by using smaller packs which use less glass. It is still guiding for an impressive 125 basis points of EBITDA margin expansion next year.

There’s a potential tailwind on the horizon too: the India-UK Free Trade Agreement, which is expected to slash import duties on Scotch whisky from 150% to 75%. USL is the most obvious beneficiary, since it would make its Scotch portfolio (which relies on imports from Scotland) significantly more competitive.

What’s next

The Indian alcobev story is playing out at two speeds. There’s a massive structural tailwind from premiumisation, and some state-level policies are actively encouraging it. But co-existing with it are prohibitive regulations in other states, plus the headwinds from geopolitical supply chain shocks.

Among the three, Radico has the most momentum, with a high premium mix, margin expansion, and a near-debt-free balance sheet. USL is the resilient franchise, also holding their own in the premiumization wave. UBL is the one under pressure — premium growth is real but it’s too small a slice, and the Middle East cost wall is enormous relative to its profitability.

Tidbits

1. The Central Board of the Reserve Bank of India approved a record surplus transfer of ₹2.87 lakh crore to the central government for 2025-26, aided by a sharp rise in income and a larger balance sheet.
   Source: Hindu BusinessLine

2. State-run Steel Authority of India Limited (SAIL) is working on an ambitious capital expenditure plan of more than ₹35,000 crore over the next two financial years, driven largely by capacity expansion projects at its IISCO, Bokaro and Bhilai steel plants.
   Source: Business Standard

3. The Government of India announced an 8% stake sale in the PSU lender Central Bank of India via an offer for sale (OFS). The government may additionally exercise an oversubscription option to sell more shares depending on investor demand.
   Source: LiveMint

   ---

   - This edition of the newsletter was written by Kashish and Manie.

   ---

   What we’re reading

   Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

   So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

   Subtext by Zerodha

   What We're Reading #13

   Hi folks, Pranav (Manie) here. Just wanted to drop a quick note today instead of our usual intro…

   Read more

   19 days ago · 8 likes · 1 comment · Zerodha

   ---

   If you’re a woman who feels intimidated by the world of money, In Her Interest is meant for *you*.

   Most women share a complicated relationship with money.

   On one hand, women are expected to be exceptionally good with it. They manage household budgets, track expenses, stretch money, save for emergencies, and make a hundred tiny financial decisions every month.

   When money conversations turn more formal, though; when they shift to investments, insurance, taxes, or business finances, they suddenly defer to someone else — a father, husband, brother, the family CA, or “the finance person” in the family.

   To us, this weird duality seems to creep in because most women have never had a friendly, low-pressure place to learn their way around it.

   That’s what In Her Interest, a Zerodha initiative, is trying to create. In Her Interest hosts small, in-person sessions where women can ask normal money questions without being judged, sold to, or drowned in jargon. The next few sessions cover finance for entrepreneurs in Gurugram, smart money management in Mumbai, investing basics in Pune, and the basics of mutual funds in Hyderabad. If you’re a woman who has been meaning to get a little more comfortable with money — or know someone who might — this is a fantastic place to start!

   

   ---

   Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. The boom before the storm: Q4 at the oil marketing business

2. Cracks in the half-full glass of Indian dairy

The boom before the storm: Q4 at the oil marketing business

On May 13, HPCL reported its March quarter results. It was a record: the highest quarterly profit in the company’s history. IOCL reported its results five days later, on May 18, celebrating its strongest year ever: with record throughput, record sales, and profits nearly thrice as high as the year before. The very next day, on May 19, BPCL released their own results: these weren’t spectacular, but they were way better than expected, given a massive impairment charge the company had to book.

None of them sounded happy on their investor calls, though.

As they spoke about their March quarter results, the context for the following quarter had already been set. The Hormuz crisis and soaring oil prices were already wrecking their economics. Together, they were bleeding roughly ₹1,000 crores a day. The government hiked prices for the first time in four years, only to hike them again within the same week. But the losses wouldn’t stop.

These companies’ latest numbers, in other words, tell you very little about how they’re currently faring. But they do tell us where they were before, and how well they were placed when the shocks arrived.

The boom: An exceptional quarter

The three companies we’re covering — IOCL, HPCL and BPCL — all saw their revenues grow in the mid-single digits. They had steady throughputs and steady volumes. And yet, their margins had soared, bringing in historic profits.

The largest of the three, IOCL, saw its quarterly standalone revenues grow 7% from a year earlier, to cross ₹2,33,000 crore. It ran over full capacity — at nearly 114% — processing 19.7 MMT of crude. Its sales were up modestly for the quarter too, at 27.3 MMT. None of this pointed to its wild surge in profits, though. At nearly ₹11,400 crore standalone, they had grown by 57% over the same quarter last year.

Something similar happened at HPCL, the smallest of the three. Its standalone revenues were up about 4.5%, to around ₹1,23,000 crore. Its refineries pushed through 6.4 MMT of crude, roughly the same as last year. Its sales edged up just 2%, to 13 MMT. And yet, its standalone profit — at about ₹4,900 crore, was up 46% over the same quarter one year ago. This was, in fact, the highest the company has ever posted in a single quarter.

BPCL, the markets knew, was supposed to have a bad quarter. The company was taking a large accounting hit — it had to write-down almost ₹4,350 crore on an overseas oil exploration bet, after a deepwater project in Brazil was delayed by almost two years. That was always going to kill its profits.

Without that, though, its story too was typical for the industry. Its standalone revenues were up about 6%, to roughly ₹1,35,000 crore. Its refineries were pushing through 10.4 MMT of crude, while its sales grew about 4%, to 14.2 MMT. Yet its pre-exceptional profit — before considering its huge investment write-down — was up about 43% over the same quarter a year ago. BPCL also ended the quarter with the strongest balance sheet of the three: with its standalone more than halving in a year, to below ₹10,500 crore, against investments worth over ₹18,000 crore.

These were spectacular results for a mature sector. But something was beginning to crack.

There were a few hints of that in the quarter results alone. For one, IOCL — the largest — chose not to report a number that analysts tracking these companies always looked for: its gross refining margin. As its management explained, it simply didn’t make sense in an environment like this. Their refining margins could look extraordinarily high, even if the company was losing money.

There was another hint, though: those massive profits, themselves, were ominous.

Why Q4 was the last good quarter

Two-thirds of the way into the March quarter, the Middle East erupted in conflict. Crude prices surged. As IOCL’s management said, the Indian crude basket rose from about $64 per barrel to $83 over the quarter — a 30% jump in less than three months.

But oil companies don’t buy crude and refine it the same day. They procure crude weeks-to-months in advance, store it, and run it through their refineries over many weeks.

In the March quarter, most of the petroleum products that IOC, BPCL and HPCL sold were made from crude they purchased before the crisis. That was a very different time, with very different economics. All three refiners’ margins had risen all through FY 2026. By the time the March quarter rolled around, all three were structurally in a better place than they had been in the same quarter a year before.

Once the war broke out, for a few brief weeks, these companies enjoyed “inventory effects.” They priced their raw crude at the pre-crisis rates they bought it for. But once it came out of their refineries, their inventories of finished products — of the refined petrol, diesel and other fuels they planned to sell — were all valued at post-crisis international benchmarks. Notionally, this looked like a huge profit for their refining arm.

Their cheap crude inventories would empty out over the course of the quarter, of course. But the quarters’ numbers by themselves were insulated from the war.

But that would only last for so long. As the war dragged on, the cushion would deflate, the inventory gains would vanish, their costs would climb, and those profits would come tumbling down.

But there’s another side to this coin: these companies’ refining arms might have made paper profits, but to the books of their marketing arm — which are separate — those over-priced finished product inventories become the input cost. Their revenues, meanwhile, are bound to the government’s price ceiling. Right now, that ceiling is well below what their inventories are priced at. Their “inventory effects” will soon bite the other way. Today’s paper profits are losses for tomorrow.

That, however, is a story for another quarter.

The first cracks

Where will the crisis show up, when it does?

The first big crack will come through cooking gas.

OMCs usually make a small loss on every gas cylinder they sell. Through the March quarter, for instance, IOCL lost ₹100 on every cylinder they sold. That loss would soon start climbing, however. By April, it was losing ₹171 per cylinder. By May, it was losing ₹617. The others, too, saw a similar escalation. In two months, these companies’ per-cylinder losses will go up six- to eight-fold.

This was only to be expected. After all, the entire gas supply chain had blown up.

OMCs used to secure their LPG based on long-term contracts from the Persian Gulf, on prices linked to Saudi rates. That LPG would reach India after going through the Strait of Hormuz. Once that route was choked, though, they had to rush to find alternatives. They were now scrambling to find gas in spot markets from across the world — the United States, Indonesia, Nigeria, Angola — where prices had already been bid up by $200-300.

Worse still, they were getting this gas from further away, often spending more on transport. As BPCL’s management noted, for instance, their freight costs jumped roughly twelve-fold.

Ideally, the government compensates these companies for the massive losses they had taken. Well before the war broke out, it had already announced a sector-wide compensation scheme earlier in the year, paying OMCs thousands of crores in monthly installments to make up for their LPG losses. That scheme, however, was designed for a world where they lost ₹100 per cylinder. But things were growing far worse.

OMCs usually carry their per-cylinder losses on their books as a “negative buffer,” expecting that the government will eventually make them whole. In effect, those buffers tell you what the government owes. Those buffers were large before the war. They started climbing faster in the March quarter. By the end of March, for instance, IOCL was already carrying ₹23,102 crore in accumulated LPG losses.

As the crisis gets worse, those buffers are likely to skyrocket before the government can pay them down.

The coming storm

At least LPG comes with a hope of compensation, however. Petrol and diesel, on the other hand, have no compensation scheme at all.

In theory, the Indian government doesn’t regulate the price of fuel. Companies are free to set the pump price as they like. They can pass elevated prices through to the public and protect their books. In practice, though, the government is a majority shareholder in all three companies. Any price hike needs political sanction.

Since 2022, the government had kept retail petrol and diesel prices frozen, even as global crude prices were swinging wildly. Once the crisis hit, however, that was no longer feasible. The losses were soaring too quickly.

At first, the government tried absorbing the hit itself, giving OMCs some breathing room. In the last week of the March quarter, it cut excise duty on petrol by ₹10 per litre, bringing it from ₹13 to ₹3, and cut diesel excise to zero. This would give OMCs a higher share of what consumers paid at the pump. At the same time, however, it started adding windfall taxes to fuel exports, capping any upside these companies would see in higher international prices. The crude oil coming into India, it signalled, was meant for Indians.

But OMC losses kept mounting. On May 15, for the first time in four years, OMCs finally raised the prices of petrol and diesel by ₹3 a litre. The hike didn’t go far enough, however. Four days later, they added a second, smaller hike of about 90 paise.

These hikes lower the pain, but only marginally. According to CRISIL, even after these hikes, OMCs are losing roughly ₹10 per litre on petrol and ₹13 on diesel. These hikes, if anything, are just the beginning. To some analysts, if the stand-off continues and oil prices stay above $100, you should expect hikes as high as ₹20 per litre if these companies are to stop losing money.

For now, the crisis has no end in sight.

What comes next

That’s the ugly aftermath of a quarter that, on paper, looked incredible. These companies may have made record profits, but as Petroleum Minister Hardeep Puri said, the losses these companies could see in a single quarter might wipe out the profit they made over an entire year.

The path ahead, all three companies have signalled, will be painful.

In retrospect, this March quarter may look like a peak. After posting record years, three months from now, these companies may well report some of their worst quarters in a decade.

Cracks in the half-full glass of Indian dairy

We’ve covered the Indian dairy business a few times now. We broke down how the industry works when Milky Mist filed for its IPO. Then we looked at the Q2 FY26 results of the industry, where a weak monsoon season contributed to rising milk costs, while a structural shift to value-added dairy products was also underway.

With the last quarter of the year, the picture has become more tainted.

Revenue grew almost everywhere, but profitability collapsed for some, while barely holding up for others. A brutal milk shortage, a geopolitical crisis halfway across the world, and the relentless push into higher-value products, all collided in the same quarter.

We’re looking at four companies this time — Hatsun Agro, Heritage Foods, Dodla Dairy, and Parag Milk Foods — to see where the Indian dairy business is heading.

The numbers

Hatsun Agro, India’s largest publicly-listed dairy company, continues to be the most consistent performer. The total Q4 revenue came in at ₹2,580 crore, up about 15% from a year ago, with net profit rising 18% to ₹51 crore. For the full year, FY26 revenue grew by ~14% to ₹9,973 crore, with net profit jumping 28% to ₹356 crore.

Meanwhile, Dodla Dairy posted its highest-ever quarterly revenue at ₹1,074 crore, an 18% jump — also the fastest top-line growth in this group. The headline PAT is nearly ₹70 crore — hardly 3% higher than the same time last year, while also including a one-time tax credit of about ₹29 crore. For the full year, revenue grew 11% to ₹4,125 crore, but net profit barely budged at ₹267 crore.

Heritage Foods grew revenue 10% to ~₹1,158 crore, but everything below the top line fell apart. EBITDA dropped 35% to ₹52 crore, with the margin compressing from 7.6% to 4.5%. Net profit crashed 37% to ₹24 crore. For the full year, revenue rose 9% to ₹4,526 crore, but PAT fell 20% to ₹150 crore.

For Parag Milk Foods, revenue grew just 3% y-o-y to ₹945 crore — the slowest in the group — but net profit surged 23% to ₹32 crore, while EBITDA margins have largely remained stable around 8.3% compared to Q4 FY25. For the full year, revenue grew by 11% year-on-year to ₹3,818 crore, with net profit rising 14% to ₹135 crore. By revenue, this was their best year ever.

The pattern is mostly clear: everyone grew revenue, but operational profit margins either fell, or just remained stagnant. There was little question of margin expansion in relative terms, even if the absolute numbers grew.

The milk shortage

The biggest reason for this pattern is one that has haunted most of FY26: a shortage of raw milk.

See, India’s dairy industry has a natural rhythm. Every year, the cooler months, which are roughly October through February, bring what’s called the “flush season.” Cattle produce more milk when temperatures drop and green fodder is abundant. Dairy companies use this window to build up inventory, stockpile butter, and lock in lower procurement prices. The flush is the foundation on which the rest of the year is built.

But this year, there was virtually no flush. Dodla’s management even said so last quarter.

Erratic and excessive rainfall across several key states, particularly Andhra Pradesh and Telangana, stressed cattle so badly that milk yields dropped. Last quarter, Heritage even quantified this: between Q2 and Q3 of an average year, a normal flush previously brought an incremental 2 lakh litres per day in procurement. But this year, that same increase was a mere 60,000 litres.

The shortage created a vicious cycle, one we highlighted in our story on the Q2 results. Earlier in the year, companies exported domestic milk fat to capture high global prices, thereby depleting butter reserves. To compensate, companies had to buy even more liquid milk just to extract cream, further squeezing an already tight market, and leading to a surge in the average milk procurement prices for everyone.

For instance, Parag’s costs rose up by 15% year-on-year to ₹42 per litre, while their volume growth remained weak — even declining in core categories. Meanwhile, Dodla’s prices rose up by ~10% to ₹41 per litre, and Heritage paid 8% more, moving up to ~₹47 per litre.

This is also the biggest driver behind the recent price hikes undertaken by Amul and Mother Dairy. That’s never an easy move in a country where milk prices are politically explosive. Private companies face the same pressure: they can’t pass on the full cost to consumers without risking a volume hit.

So, how did each company navigate this?

Well, some things were common across the board. There was unwillingness to have consumers bear the full brunt of a price hike, for fear of losing market share. Everyone also increased their marketing investments. Most importantly, they doubled down on their ongoing shift towards selling more value-added products (VAP), which we will get into in detail soon.

Yet, there were certain divergences in strategies, which also led to some variation in outcomes.

For one, somehow, Dodla posted its highest-ever quarterly milk sales volume in the midst of this. How does one achieve that during a milk shortage?

Two major factors made this possible. For one, over the year, they built up buffer inventory when supplies were better. Secondly, they diversified themselves across India, including Tamil Nadu, Karnataka, and Maharashtra. On that note, they also acquired OSAM Dairy, which plugged them into Eastern India’s procurement network. And they didn’t just remain within India’s borders: their Africa business grew by 48% year-on-year.

However, Dodla’s operating margins didn’t escape this crisis, falling steeply from 9.2% in Q4 FY25 to 5% this quarter.

Heritage absorbed the pain more directly. Their milk procurement volumes fell 7% to 16.38 lakh litres per day. To protect farmer loyalty during the crunch, Heritage kept procurement prices high, while passing only a partial increase to consumers. The average selling price rose just 4%, nowhere near enough to offset the 8% jump in procurement costs. Of course, that led to a similar margin collapse.

The companies expect some relief in the near future, though. Heritage pointed to the start of a potential “cow flush“ already underway in some places. With milk prices this high, farming is profitable enough to incentivise higher production, which should gradually ease procurement costs. Dodla observed something similar as well.

But two massive risks loom. To begin with, as we’ve covered in one of our recent stories, the world is expecting a Super El Niño, which could suggest an intense summer that could dry up fodder and water that cows need. On top of that, there’s the situation at the Strait of Hormuz, which we’ll eventually get into as well.

Value addition

Part of the answer to the milk shortage problem lies in the long-term industry shift away from simple, liquid milk to value-added products (VAP). Selling curd, paneer, ice cream, or whey protein offers higher margins and more pricing flexibility.

Hatsun leads here by a wide margin. Nearly half its revenue comes from VAP, anchored by the Arun Ice Creams brand, which is why it earns EBITDA margins roughly double what Heritage or Dodla manage.

For Heritage and Dodla, the mainstay is curd, accounting for about 70% of each company’s value-added revenue. Heritage pushed its overall VAP contribution to 41.9% of quarterly revenue (including consumer fats), up from 36.8% a year ago, driven primarily by growth in paneer and ice cream. Heritage is betting big on ice cream in particular with a new plant at Hyderabad.

But the most interesting VAP move came from Parag, and it’s about whey protein.

You see, Parag runs Avvatar, a whey protein brand. Since whey is a byproduct of cheese production — and Parag holds a 35% market share in cheese — they have a built-in raw material pipeline that competitors can’t easily replicate. The “New Age” segment, which includes Avvatar and their premium milk brand, grew more than 100% year-on-year this quarter, and now makes up over 10% of total turnover.

In fact, this is also why Parag was the only company to expand profitability this quarter despite modest revenue and volume growth.

Its competitors, meanwhile, seem to be playing catch-up. Heritage launched a whey-based drink called GlucoShakti in Q1 of FY26, but haven’t yet disclosed a full portfolio strategy like Parag. As of last quarter, Dodla is yet to have enough paneer production at scale which can help generate sufficient whey.

Within VAP, the other big shift is the retreat from B2B bulk commodity sales. Selling butter or skimmed milk powder in bulk to institutional buyers is low-margin work that doesn’t build a brand. And every company unilaterally followed this strategy, instead shifting resources to selling VAP directly to customers.

Dodla, for instance, took this to its logical extreme: its bulk sales went from ₹38.4 crore in Q4 FY25 to literally zero this quarter. They’d rather use the butter internally for their own consumer products than sell it at commodity prices. Heritage saw a 70% decline in bulk fat revenue for the year. Hatsun heavily credits its lack of dependence on middlemen, wholesalers and institutions like hotels and restaurants as to why it makes better margins on its ice-cream:

The Strait of Hormuz effect

At last, we have the crisis at the Strait of Hormuz.

The most direct hit of the crisis is on packaging. Every litre of milk comes in a plastic pouch, and plastic is a petroleum derivative. Dodla, for instance, reported a 30% surge in packaging costs. Parag flagged the same, and raised the prices of their milk pouches accordingly.

Hatsun faces an additional problem. Ice-cream cones require gas to manufacture, and gas supply has, of course, become erratic due to the crisis. But what helps Hatsun is that it also manufactures some of its own polythene films in-house, which partially insulates it.

Then, there’s the livestock feed angle. Dodla and Heritage both operate subsidiaries that manufacture cattle feed that dairy farmers buy to feed to their cows. These serve as loyalty loops, keeping farmers tied to their procurement networks. But cattle feed production depends on the fertilizer urea, which is made primarily from natural gas. And now, gas has become harder to come by.

This doesn’t just raise feed costs, though. It also threatens crop yields, which rely on fertilizers. That, in turn, further affects fodder supply for cattle. Dodla’s management specifically cited the uncertain “impact on agriculture from urea production” as a reason for cautious margin guidance.

In Dodla’s earnings call, an analyst also pointed out a small irony: if crop failure pushes farmers away from agriculture, they often shift resources toward livestock, potentially improving dairy procurement. Management agreed with the theory but wasn’t willing to bet on it.

The crisis has also stalled international expansion. Parag, for instance, had plans to build a depot in the Middle East, but now those plans are on hold indefinitely. Dodla’s Africa business faces higher freight costs that make planning difficult.

Conclusion

The next few quarters will mostly be shaped by forces that are hard to predict and impossible to control.

El Niño threatens to undo early signs of a supply recovery. The Strait of Hormuz crisis is keeping packaging, feed, and freight costs elevated. And every company is simultaneously pouring money into brand-building, all while margins are under pressure.

The most controllable variable is the shift toward value-added products. The hope is that the bet will, over time, create enough margin cushion to weather cycles like this one. Of course, within VAP, certain products (like protein) are growing much, much faster than others. So the specific VAP strategies also matter significantly in determining who can escape relatively unscathed when the next shock hits.

Tidbits

[1] Govt clears ₹5,500 crore floating solar + battery storage scheme
The Finance Ministry has approved a ₹5,500 crore scheme to support floating solar projects integrated with battery storage systems. The plan aims to help states expand renewable capacity while improving grid reliability through storage-backed clean energy. The proposal now awaits final Cabinet approval.
Source: PowerLine

[2] PFC’s 30-year NPCIL loan may reshape nuclear financing
A ₹26,000 crore, 30-year loan from PFC to NPCIL is emerging as a benchmark for financing nuclear power projects in India. Policymakers and industry stakeholders say long-tenure loans are essential because nuclear plants involve very high costs and long construction timelines.
Source: BusinessLine

[3] NCDEX launches India’s first weather futures contract
NCDEX will launch RAINMUMBAI, India’s first SEBI-approved weather derivatives contract, on May 29. The product will help sectors like farming, construction and power utilities hedge against unpredictable rainfall and monsoon risks using Mumbai rainfall data.
Source:The Hindu

- This edition of the newsletter was written by Pranav and Manie.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #12

Hi folks, hope you’ve had a great week…

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a month ago · 18 likes · 1 comment · Zerodha

If you’re a woman who feels intimidated by the world of money, In Her Interest is meant for *you*.

Most women share a complicated relationship with money.

On one hand, women are expected to be exceptionally good with it. They manage household budgets, track expenses, stretch money, save for emergencies, and make a hundred tiny financial decisions every month.

When money conversations turn more formal, though; when they shift to investments, insurance, taxes, or business finances, they suddenly defer to someone else — a father, husband, brother, the family CA, or “the finance person” in the family.

To us, this weird duality seems to creep in because most women have never had a friendly, low-pressure place to learn their way around it.

That’s what In Her Interest, a Zerodha initiative, is trying to create. In Her Interest hosts small, in-person sessions where women can ask normal money questions without being judged, sold to, or drowned in jargon. The next few sessions cover finance for entrepreneurs in Gurugram, smart money management in Mumbai, investing basics in Pune, and the basics of mutual funds in Hyderabad. If you’re a woman who has been meaning to get a little more comfortable with money — or know someone who might — this is a fantastic place to start!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. India’s two-wheelers drift through a collision of forces

2. India’s biogas problem

India’s two-wheelers drift through a collision of forces

If you filled up your petrol-fueled two-wheeler recently, your pocket probably felt a painful sting. And with petrol prices having been hiked twice in less than a week, that only seems to be getting worse.

If you’re like most of us, who ride a petrol-powered two wheeler to work every day, there’s a thought that has probably crossed your mind at least once this month. Maybe it’s time to go electric. No more waking up to news of another fuel hike. Just plug in at night, ride in the morning.

But then you think about it a little more. What’s the range of an EV? Where’s the nearest charging station? The fact that the Hero Splendor — arguably the bike most symbolic of India — starts with a kick and a grunt and doesn’t need a software update is comforting. The total cost of ownership of an EV is still not convincingly low enough for people to make a complete switch away from petrol bikes, yet.

So, we looked at the Q4 FY2026 results of Bajaj Auto, Hero MotoCorp, TVS Motor and Ather Energy to see how the two-wheeler segment is navigating all of this.

The numbers

Bajaj Auto posted ₹16,006 crore of revenue, a 20.8% EBITDA margin, and total two-wheeler volumes of 11.67 lakh units, up 24% year on year. Interestingly, it was the premium end of the portfolio, not the mass market, is what powered the quarter. Its premium brands, KTM and Triumph, delivered a record domestic quarter of nearly 43,000 units, up 43%.

Meanwhile, Hero MotoCorp hit ₹12,797 crore of revenue, up 29% year on year, with an EBITDA of ₹1,856 crore and PAT of ₹1,401 crore. Hero’s growth was broad-based across scooters, EVs, and premium bikes.

TVS Motor reported its highest-ever quarterly revenue of ₹12,808 crore, a 13.1% EBITDA margin, and total sales of 15.60 lakh units, up 28%. Motorcycles, scooters, EVs, exports and three-wheelers all contributed. However, TVS is also very apprehensive of the future, telling analysts that its April dispatches were hit by workforce shortages, raw material delays, and limited container availability, even though retail demand stayed strong.

Ather Energy is the purest EV play of all of them. Q4 volumes hit 83,418 units — up 76% year on year — with total income of ₹1,214 crore and an EBITDA margin of -2.5%, a 21 percentage point improvement from a year ago. The loss is narrowing fast, but Ather remains more exposed to battery costs, rare-earth prices and subsidy policy than the legacy players.

The squeeze

The Strait of Hormuz disruption has undoubtedly been on everyone’s mind this quarter. It has tightened energy and shipping flows, feeding into higher fuel prices, container shortages and costlier energy-linked inputs.

Earlier, we had spoken about how rising raw material costs were eating into the industry’s margins. This quarter, it quite naturally got worse. When energy gets expensive, so does everything that needs energy to produce. That includes the steel, copper and aluminium that two-wheelers are made of.

Bajaj’s CFO walked through just how bad it got in quantified terms. Steel costs were up 15%, copper 20%, and aluminium and certain metals had moved sharply. All told, Bajaj is looking at an extra 3.5–4% of revenue being eaten up by raw material costs alone.

Bajaj also said it had covered just ~40% of this through a price hike from 1 April. But hiking the price more would risk pushing away the price-sensitive buyers who make up the bulk of the market.

Hero also faced a similar squeeze. Its CFO, Vivek Anand said the cost of raw materials went up by about ₹2,100 for every vehicle it made in Q4. Hero raised prices by ~₹2,000 per vehicle to compensate, which sounds like it nearly covered the gap. But any which way, the margin still shrinks in percentage terms.

For TVS, commodity costs ate up 3–5% of its revenue, the worst they’ve seen. So far, TVS has only been able to offset about a third of this through price hikes. For the rest, it would rely on cost reduction, better product mix, scale benefits and selective price increases on the right models. They said they’ve handled similar situations before, but this one is worse.

For Ather, the challenge is even more severe. Prices of rare earth magnets, memory chips and lithium-ion batteries — all the key components of an EV — spiked during FY26. Only a small part of the inflation had actually been passed on so far. Ather is sitting on unrecognised cost pressure that will either show up in future margins or price hikes on products that are already more expensive than their petrol or diesel equivalents.

The Hormuz disruption also directly affected exports. For Indian two-wheeler companies that ship to the Middle East, Africa and beyond, it has meant fewer containers and longer waits. TVS told analysts that shipping times had stretched by about 15%, adding 8–10 extra days per shipment.

Bajaj said it lost 5,000–6,000 units of monthly sales in the Gulf region, though it managed to reroute shipments to non-Gulf markets well enough that the damage was contained.

The pressure has also rattled the humdrum of two-wheeler factories. Bajaj estimated that it lost 10–15% of potential demand in April because LPG shortages shut down vendor factories, workers migrated back to their hometowns, and containers simply weren’t available. TVS flagged the same issues. Hero said it kept all its plants running without disruption, but acknowledged the commodity and labour cost picture was “changing every day“.

These headwinds didn’t crush Q4, as revenue grew strongly across the board. But by April, the commodity costs, shipping delays and vendor shutdowns had started catching up.

How they’re protecting margins

So, in the face of these challenges, without relying heavily on price hikes, how did the legacy players protect profitability?

The most important lever that two-wheelers pulled on that front is actually product mix. The logic is simple: a company makes more money on a higher-priced vehicle than on a basic commuter bike. Every company cited “product mix“ as a tailwind on their earnings call.

Consider what’s happening at Bajaj. The company launched 10 new Pulsar variants between October and March, and those models already account for half its domestic motorcycle sales. Its KTM and Triumph business hit 43,000 units in Q4, up 43% year on year. The sportier 150cc-plus bikes are selling at twice the rate of the broader market.

But, at the same time, the cheapest motorcycles — the 100cc commuters that millions of Indians depend on, are barely growing anymore.

Meanwhile, Hero, which built its entire identity around the commuter bike, is now leaning on its Harley-Davidson range (up 26%) and scooters (up 48%) for growth. TVS’s Ronin, its premium motorcycle, went from 2,000 units a month to over 8,000. Still small in absolute terms, but the direction is unmistakable.

In essence, while the shift towards premiumization was a deliberate top-down choice, it seems to also be driven by the shifting preferences of the consumer market. After all, the growth of commuter bikes is also simultaneously slowing down. This is a structural change in the broad two-wheeler market.

But part of it is certainly also that the entry-level buyer, the one most sensitive to price hikes and fuel costs, is simply not showing up the way they used to. That’s good for margins today, but if the bottom of the market keeps hollowing out, premium demand alone may not sustain the kind of volume growth these companies need.

On the EV side, though, something different is playing out. Ironically, the same Hormuz crisis squeezing ICE margins may also be strengthening the consumer case for EVs.

Never let a crisis go to waste?

If you’ve been tuning into the podcasts our team has been putting out lately, you may have come across our conversation with Kyle Chan, an expert on Chinese industrial policy. Perhaps, the most provocative quote from the episode was this:

“Every day that the Strait of Hormuz is closed and every day that the Iran war continues is a month’s worth of free marketing for Chinese EVs and batteries and solar and clean tech.”

Well, something similar is playing out in India.

Even before petrol prices were actually hiked, the LPG shortages and fuel uncertainty had already started changing how people think about what powers their vehicle. When your cooking gas disappears and petrol feels like it could jump any day, electricity starts to look like the one thing that won’t let you down.

Tarun Mehta, Ather’s CEO, said the consumer mindset is flipping. A year ago, families would say “buy what you want, but make sure at least one vehicle runs on petrol.“ Now it’s becoming “buy what you want, but keep at least one EV in the house, just in case.“

Now, it’s still too early to see this show up cleanly in the two-wheeler EV numbers. Scooter buyers and three-wheeler operators respond to different triggers. But there is an observable shift in sentiment, and with petrol prices now hiked twice in a week, more buyers are seriously considering going electric.

What’s more interesting is that these companies are also starting to make money on EVs. As we covered in our earlier EV story, profitability was the missing piece of the puzzle. This quarter changed that.

Bajaj’s Chetak scooter, for instance, is no longer losing money on each unit it sells. This was nearly unthinkable two years ago.

On the other hand, Ather is still loss-making, but its operating losses shrank significantly. The company also brought down the cost of making each scooter by 9% over the year, partly through design tweaks and partly by switching to cheaper battery chemistry. Most of Ather’s overhead costs are fixed, so the more scooters it sells, the cheaper each one becomes to produce. These are all powerful tailwinds if volumes keep growing. But if they slow down for any reason, those same fixed costs pile back up fast.

Ather also makes money beyond just selling scooters. It offers a paid subscription called Pro-Pack that bundles software, connected services and extended warranties. 93% of buyers opted for it in Q4, the highest ever.

What’s ahead

So, what do we watch out for in the first quarter of FY27?

Well, for one, the commodity costs, particularly that of copper. They were rising anyway, but the Strait of Hormuz crisis has only made things worse. Its impact on two-wheeler sales only began showing up in April, so we have to wait for Q1 FY27 to see how the crisis unfolds.

Secondly, how much of the premiumization trend is sustainable? How much of it is driven because the Indian consumer wants more, and how much of it reflects the disappearance of the Indian middle class that buys commuter bikes? And how much does the answer to that change how long this trend can prop up margins?

Additionally, the PM E-DRIVE incentive window for registered electric two-wheelers ends on 31 July 2026, unless it is extended again. The next quarter might be able to decisively tell us how these companies plan to keep growing through all of that.

India’s biogas problem

In October 2018, India launched a programme called SATAT, or ‘Sustainable Alternative Towards Affordable Transportation’. The plan was to build 5,000 biogas plants across the country, to turn organic waste like cow dung, paddy straw, or kitchen scraps into a clean fuel, biogas, that could piggy-back on natural gas pipelines and pumps. This was to be finished by 2025.

Eight years on, we’re running somewhere between 130 and 170 plants.

According to the International Energy Agency’s 2025 Outlook for Biogas and Biomethane, India’s sustainable biogas potential, alone, is larger than our entire natural gas consumption. We could potentially meet all our natural gas needs by just tapping our biogas potential. But we’re stuck utilising less than 5% of it. By volume, India sits on the largest organic waste base of any country in the world. Almost none of it is converted into anything useful.

By all accounts, biogas should work. Then why, after a decade of policy effort, have we barely moved the needle? And can we change that?

What biogas actually is

A biogas plant is, functionally, an industrial-scale stomach.

Organic waste goes inside a sealed tank called a “digester”, where it’s broken down by bacteria that thrive without oxygen, much like bacteria in a cow’s gut break down grass. As they work, they release a mixture of gases. That mixture is biogas: roughly 55-65% methane and 35-44% carbon dioxide, with traces of other gases.

You can feed a biogas plant almost any organic matter. In India, they typically run on five feedstocks: cattle dung, agricultural residue, the pressmud left over from sugarcane crushing, municipal solid waste, and sewage. The bacteria don’t particularly care where their carbon comes from. What they care about is that the supply is consistent, the moisture is right, and the input isn’t contaminated.

You can use raw biogas straight out of the digester. You can pipe it into a village kitchen to replace firewood, or burn it locally to generate electricity. But those uses are limited. To plug into the modern gas economy — with CNG vehicles, household PNG connections, or industrial gas lines — you have to clean it further. You have to strip out the CO₂, other gases, and moisture, leaving behind a stream that is 95-98% pure methane.

That cleaned-up gas is called ‘biomethane’. If biomethane is compressed for transport and storage, it gets a different name: Compressed Biogas, or CBG.

Chemically, this biomethane is the same methane we get in conventional natural gas. It’s the same molecule — same calorific value, same combustion profile, same physical properties. And so, every piece of infrastructure that India’s building to move natural gas — City Gas Distribution pipelines, CNG pumps, household PNG connections — can carry biomethane without modification.

If we build more biogas capacity, a lot of the infrastructure we need thereafter will already be in place.

When the digestion process is done extracting gas, it leaves behind a physical residue: a wet, nutrient-rich sludge called fermented organic manure. That residue is, in principle, high-quality organic fertilizer.

Why biogas matters more than it sounds like it should

Think about this for a moment: we have a fuel that takes waste, runs on the infrastructure we are already building, and produces fertilizer as a byproduct. The case for scale looks self-evident.

And then, it comes with second order benefits.

The first is that it slashes down our import bills. India imports roughly half its natural gas as LNG, and those imports are only slated to increase; as the government plans to raise the share of gas in our primary energy mix from around 6% today to 15% by 2030. That’s a lot of money flowing outside. According to the Institute for Energy Economics and Financial Analysis, if India can scale biogas to displace just one-fifth of our natural gas by 2030, we will save around $29 billion on LNG imports by FY 2030.

This has clearly caught the government’s interest. In November 2023, the National Biofuels Coordination Committee mandated phased CBG blending into both transport CNG and household PNG — much like blending ethanol into petrol. We were targeting 1% blending in FY 2025-26, which would scale up slowly to 5% from FY 2029. This ‘Compressed Biogas Blending Obligation’, or CBO, plugged a massive hole in our biogas program: one of the reasons SATAT couldn’t garner any interest was that no one would buy what these plants produced. The CBO closes that gap. Even a 1% mandate is a massive guaranteed offtake, which could seed a new sector.

Second, biogas could also become central to our push for clean cooking. India has been trying to move its households to gas-based cooking, instead of primitive sources like firewood or cow dung. Through the Pradhan Mantri Ujjwala Yojana, we expanded active LPG connections to roughly 318 million households. But that creates a terrible dependency: India imports about two-thirds of its LPG. This puts us at the mercy of global markets. A crisis like the one we’re seeing in the Middle East can send prices skyrocketing. In times like this, our poorest households quietly fall back to wood and dung.

One way out of this bind is to set up village-level biogas plants, which run on the same cattle dung and crop residue that the village already produces. This could completely insulate these villages from global volatility.

Third, there’s fertiliser. India spent around ₹1.88 lakh crore on chemical fertilisers in FY24, importing massive quantities of urea and DAP in the process. The slurry that comes out of a CBG plant is, in principle, a direct substitute for synthetic fertilizer. The Department of Fertilisers now pays ₹1,500 per tonne as Market Development Assistance for fermented organic manure sold from CBG plants. If that market actually develops, every tonne sold does two things: trimming India’s fertiliser bills, while improving CBG plant economics.

Finally, think of what this could do to our stubble problem. Every winter, paddy stubble burnt in Punjab and Haryana drags Delhi-NCR into a crisis of breathing air. The same paddy straw could become a valuable feedstock for biogas plants, which a farmer can be paid to sell rather than burn. This is one of those rare interventions that doesn’t depend on coercing farmers, but instead gives them a better alternative.

In short, biogas solves many of our problems at once. Few policy levers have this much potential. But then, what went wrong?

Why did it fail?

India generates roughly 62 million tonnes of usable organic waste every year. According to the IEA, we could potentially make around 87 billion cubic metres of biogas in a year.

But there’s a big barrier to getting there: logistics.

One of the most important numbers in biogas math is 50 kilometres. See, the inputs for a biogas plant, unlike crude oil or coal, aren’t concentrated in small regions. They’re spread thinly across millions of smallholder farms. Before processing, this is all waste — bulky, rotting mass with low calorific value. There’s only so far you can take it before transportation costs are too high. According to both CEEW and the IEA, transporting baled biomass beyond about 50 kilometres from the plant gate destroys project economics.

In practice, that’s the physical limit for how far a biogas plant could draw supplies from. India can’t scale this sector the way it scaled, say, oil refining. You can’t concentrate capacity in a small number of massive plants. One has to build hundreds of decentralised plants, each with its own 50-kilometre catchment area.

Within that circle, feedstock arrives in seasons. Most agri-residues peak post-harvest and soon disappear. Paddy straw shows up for a few weeks in October and November. Pressmud comes only when sugarcane is crushed. But a CBG plant needs to run 365 days a year to recover its capex. And so, it must collect waste during the harvest window, and then store it through an entire year.

The moment a plant starts operating, it’s hit by local supply economics. There are no government-defined benchmarks for the price of waste. Prices vary wildly from region to region: paddy straw that costs roughly ₹2,800 a tonne in Punjab can cost ₹3,600 a tonne in Chhattisgarh. And these prices change by hundreds of rupees over the course of a single season.

As a result, Indian biogas plants run at an average capacity utilisation of around 35%, with some running as low as 20%. According to the IEA, if we could only lift average utilisation from 35% to 44%, we would easily meet our 2030 blending targets without commissioning a single new plant.

And then, once a plant does produce gas, it runs into another logistics problem. Only ~15% of operational CBG plants are connected to the City Gas Distribution pipeline network. The other 85% have to truck their output in pressurised cylinders to depots hundreds of kilometres away. A plant in rural Madhya Pradesh selling to an HPCL outlet in Bhopal, in effect, has to run a trucking company alongside its gas business.

This is one place our subsidies have failed. India rewards building plants, but not running them. It makes more sense for an operator to commission a facility, bank the subsidy, and sit on a half-running asset, than spending on logistics. Generation-linked tariffs — paying per kilogram of gas actually delivered — would fix this.

Finally, our plants have too much slurry, with no buyers for that residue. The slurry can pile up, ferment, and then poison the bacterial culture in the plant.

The three layers

All of this means we can’t build a biogas network indiscriminately. The ideal biogas ecosystem would have three layers stacked on top of each other.

At the base would be small-scale, decentralised biogas plants — village digesters, farm-level units, wet-waste plants serving hotels, airports, and apartment complexes. With good planning, these can bypass the 50-kilometre problem, because the feedstock and the burner are in the same village — or even the same building. Our colleagues at Rainmatter have been quietly backing this for some time, with investments in companies running farm-level digesters, agri-waste-to-energy startups, and integrated waste management platforms at bulk waste generators.

In the middle comes industrial-scale CBG — 5-50 tonne-per-day facilities, which feed into the networks of oil marketing companies. This is where the 50-kilometre problem is most acute, and where the CBO mandate will be tested first. Private capital has begun showing up here: Reliance Industries has committed roughly ₹65,000 crore to setting up 500 CBG plants in Andhra Pradesh, as part of a national target of 2,000 plants. The first of these broke ground at Kanigiri in April 2025.

Finally, there’s the City Gas Distribution network — with long-distance pipelines, household PNG connections, and CNG outlets. This is the long-term structural answer that could make larger plants work. Without it, every plant would have to maintain its own distribution network. We’re lacking here; India has around 1.61 crore active PNG households today, against a long-term target of 12.64 crore by 2034. A better grid could ensure that the entire biogas economy eventually operates at scale.

The CBO mandates 3% blending from the current financial year. This requires thrice as much physical CBG supply as we currently have, by March next year. That’s a big gap, and we don’t expect the number of biogas plants in India to multiply. But what could change is their average utilisation rate.

That’s the number we’ll keep looking at.

Tidbits

1. Adani, Vedanta, Hindalco and Hindustan Copper are opposing a move to bring fire-refined high conductivity (FRHC) copper rods made by secondary refiners under the same Bureau of Indian Standards specifications as their own output, arguing scrap-based players lack the technology to consistently hit the 99.99% purity needed for electrical applications. The standoff has left roughly 400,000 tons of copper wire rod trading outside the quality control regime.
   Source: Reuters

2. Google unveiled a redesigned search box meant to handle longer, chatbot-style queries, a new Gemini 3.5 Flash model pitched as its best yet for coding, and Gemini Omni, which can generate video from a mix of text, image and audio prompts. The company also launched a $100/month developer subscription tier.
   Source: Business Standard

3. The National Solar Energy Federation of India has petitioned the Central Electricity Regulatory Commission to raise the ₹10/unit ceiling on power exchanges, saying it leaves generators and energy storage firms unable to recover losses incurred during weak-demand periods and is choking investment in storage. The plea comes as peak power demand hit a record 260.45 GW on Tuesday amid a heatwave.
   Source: Reuters

- This edition of the newsletter was written by Vignesh and Kashish.

What we’re reading

Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

Subtext by Zerodha

What We're Reading #12

Hi folks, hope you’ve had a great week…

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a month ago · 18 likes · 1 comment · Zerodha

If you’re a woman who feels intimidated by the world of money, In Her Interest is meant for *you*.

Most women share a complicated relationship with money.

On one hand, women are expected to be exceptionally good with it. They manage household budgets, track expenses, stretch money, save for emergencies, and make a hundred tiny financial decisions every month.

When money conversations turn more formal, though; when they shift to investments, insurance, taxes, or business finances, they suddenly defer to someone else — a father, husband, brother, the family CA, or “the finance person” in the family.

To us, this weird duality seems to creep in because most women have never had a friendly, low-pressure place to learn their way around it.

That’s what In Her Interest, a Zerodha initiative, is trying to create. In Her Interest hosts small, in-person sessions where women can ask normal money questions without being judged, sold to, or drowned in jargon. The next few sessions cover finance for entrepreneurs in Gurugram, smart money management in Mumbai, investing basics in Pune, and the basics of mutual funds in Hyderabad. If you’re a woman who has been meaning to get a little more comfortable with money — or know someone who might — this is a fantastic place to start!

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi.

In today’s edition of The Daily Brief:

1. India’s EMS companies are building their way out of thin margins

2. How the Hormuz crisis changed oil markets

India’s EMS companies are building their way out of thin margins

A few months ago, we published a primer on how India’s electronics manufacturing services (EMS) business works.

The takeaway was that EMS is a notoriously unforgiving business — razor-thin margins, heavy dependence on government subsidies, and working capital cycles that can make or break a company. But we also noted that it’s a business that extends far beyond smartphones: home appliances, medical devices, railway signalling systems, EV components, and more.

The latest quarterly results for three of the biggest Indian EMS firms — Dixon, Kaynes, and Syrma SGS — are out. These aren’t competitors in the traditional sense. Dixon, the largest of them all, is the high-volume consumer electronics giant; Kaynes focuses on complex industrial, automotive, and aerospace systems; Syrma straddles both worlds with a growing tilt towards defence, railways, and healthcare.

But they all operate under similar constraints that define all EMS companies. How do you build a durable, profitable business when your core job is assembling someone else’s product?

Their answers, this quarter, are converging in interesting ways.

The numbers

As per its adjusted numbers, Dixon posted Q4 revenues of ₹10,520 crore, with an adjusted EBITDA of ₹418 crore and a PAT of ₹192 crore. Dixon’s EBITDA margin sits around 4%, with PAT margins closer to 2%.

FY26 consolidated revenue hit ₹48,893 crore, up 26% from last year, actual adjusted EBITDA surging 23% to ₹1,887 crore and PAT rising 20% to ₹845 crore. While that’s healthy absolute growth in profits, the margin share of revenue shows the brutality of being in the business. That’s the reality of being India’s largest mobile phone assembler.

Kaynes reported Q4 revenues of ₹1,243 crore, up 26% year-on-year, with an EBITDA margin of 15.6% and a PAT margin of 7.3%. For the full year, Kaynes delivered an EBITDA margin of 15.8% and a PAT margin of 10% — comfortably the highest among the three.

But the quarter didn’t fully meet market expectations. Management pointed to the West Asian conflict — supply chain delays, project timing shifts, and last-minute customer deferrals disrupted the cadence of revenue recognition even as the order book remained strong. Kaynes didn’t offer specific revenue guidance for the year ahead, but was unambiguous about intent, saying:

“We will outgrow the market, penetrate every segment, and double the market’s growth rate. That is our commitment.”

For Syrma, Q4 revenue came in at ₹1,477 crore, a 56% jump from the same quarter last year. Operating EBITDA hit ₹174 crore at an 11.9% margin, and PAT surged 67% year-on-year to ₹119 crore. IT and railways, in particular, went on a tear — up 182% year-on-year.

The margin gap between these three tells you everything about what kind of electronics you assemble. Dixon’s 4% EBITDA margin reflects the highly-commoditised nature of the mobile phone business. Kaynes’ 15.6% reflects the premium of serving complex, high-reliability sectors like aerospace and industrial electronics. Syrma sits in between.

But, of course, none of them are content with where they stand today.