Introducing: The Chatter

Apr 29, 2025

Welcome to the inaugural edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy.

This is a new experiment from us — and we’d love to hear what you think. Your feedback will really help shape how The Chatter evolves.

MACRO

Where HDFC thinks we are in the credit cycle

HDFC believes India’s credit cycle bottomed out 9–12 months ago, and might be picking up again. Expect NPAs and credit costs to rise modestly, though they should stay well below past peaks.

“If you listen to our Chief Credit Officer, he has done various analyses to say that the credit cycle bottomed out maybe even three quarters ago, four quarters ago and … at the industry level, the nonperforming loans going up and the credit cost beginning to go up. The offset has always been some of the legacy loans 5 years, 10 years, whatever legacy loans some recoveries and repayments have happened against those.
So you don't necessarily see the full effect of that through the P&L at the industry level. You don't see that. So whether the credit NPAs and credit costs will normalize over the next 1 year, 3 years, it should, but that should be at a lower level than what historically we have seen is the assessment of our credit officers.”

— Srinivasan Vaidyanathan (CFO, HDFC Bank)

Axis doesn’t think the tariffs will hit us badly

Tariffs are the flavour of the season. Axis, however, has taken the stance (albeit with some qualification) that at least the companies it is exposed to won’t be hit too badly by the tariffs.

“We’ve done a fairly elaborate bottom-up work on impact on tariffs across industry and within those industries, companies where we have exposures. At this point in time, on everything that we know around tariffs, the impact on the portfolio is negligible. But there are so many moving parts, both positive and negative. We continue to watch the space and evaluate the impact on the portfolio.”

— Rajiv Anand (Deputy Managing Director, Axis Bank)

Entry-level car growth stagnates

Maruti points to how the demand for entry-level cars in India is simply not growing. Most of the country simply doesn’t have a car.

“One phenomenon that we have to be conscious of — the demand overall is not growing, and a large part of it is... 88% of the country is not participating in the car growth story. That's because entry-level cars are just not growing. Sometime, India will have to take a call how to address this, if manufacturing has to grow. Auto is a large part of the manufacturing sector.”

— Rahul Bharti, Chief Investor Relations Officer, Maruti Suzuki

Cement Demand Outlook

Cement demand grew 6.5–7% in Q4, is expected to rise 8% in FY26, driven by housing, rural demand, and government spending.

"As cement consumption grew almost 6.5 to 7% in Q4 and we are expecting that it will have a continued improvement and reach say 8% overall demand growth for FY26. This is supported with improved construction activities, rural demand, the overall housing and increased government spending. Cumulative growth for FY25 we believe is for the industry between 4 to 5%."

—Ajay Kapur – CEO of Ambuja

Despite macroeconomic concerns, luxury real estate demand remains resilient with no signs of slowdown, suggesting this segment operates independently of broader economic cycles.

Luxury Housing Boom

Luxury housing demand remains strong, with buyers increasingly opting for larger spaces and showing little sensitivity to economic ups and downs.

"I don't see any slowdown at all I mean at least we don't even feel that in the luxury segment... having said that you would have seen our results last quarter we've sold apartments for 200 plus crores in 360 West so again luxury is agnostic to the economy I feel people who have the money have the money and who want to live a particular lifestyle don't care for a single quarter going up or down as such."
"As far as demand for luxury there is super appetite suddenly people are consuming more square feet per person than what people did earlier. I mean it's heartening to see very large bathrooms wardrobe spaces bedrooms so you know per person consumption per square foot has gone up like big time."

— Vikas Oberoi – Chairman & Managing Director of Oberoi Realty

RETAIL

On how Reliance Retail is thinking about streamlining its physical presence:

Reliance Retail is optimizing its store network. It’s shutting underperforming or poorly located stores. At the same time, it’s also opening new ones, resulting in a net addition of about 500 stores.

“We have seen store closures but it is also because of a variety of reasons. It could be just about some stores maybe have shifted because of maybe the trade areas or the consumer preferences moving. Some stores not performing well because maybe the mall itself is not performing up to the mark and so it is a function of variety of reasons for both fashion largely and also for grocery business so it is both from small town to largely mall based stores and in large cities. So we have seen maybe just optimization in large pockets. But we have also replaced all of those stores with new stores, so you actually see for the year, there is a net addition of about 500 stores.”

— Gaurav Jain (Head, Strategy and Business Development, Reliance Retail)

On Reliance’s quick commerce advantage

Unlike the rest of the industry, which works on dark stores, Reliance is trying to piggyback on existing stores, turning incremental deliveries into pure upside without needing separate infrastructure.

“The big advantage that we have in this segment is compared to other people who have to set up dedicated store infrastructure. For us, we are only leveraging the infrastructure that we already have. My fixed cost is already being taken care of by my store sales. This is all incremental sales and it is only incremental cost that I have to incur to deliver these orders. So we are doing this model in a profitable manner with a very strong unit economics.“

— Dinesh Taluja (CFO & Corporate Development, Reliance Retail)

BANKING AND FINANCE

How HDFC is bringing its loan-deposit ratio under control

HDFC Bank is trying to get its loan-deposit ratio to where it was before its merger. It deliberately slowed loan growth in FY25 to prioritize deposit build-up. It expects its loan-deposit ratio to normalize below 90% only by FY27.

“See, what we had described, Kunal, last quarter or even about a year ago is that the LDR will come down to the premerger level … that will come into that range in FY '27.
So that is why we saw that the loan growth in this year that went by, FY '25, will be lower than the prior year for the industry and we took that opportunity, both industry loan growth going down and pricing being not to our liking, we accelerated to say, let's take this opportunity to slow down even further. So we grew at 7.7%, the assets under management in this recent time period.
We have also indicated that in FY '26, we are subject to appropriate pricing, quality is always given, appropriate pricing that we will be growing at the market rate of growth…
… So we do expect that FY '27 is when it will come below that 90 mark.”

— Srinivasan Vaidyanathan (CFO, HDFC Bank)

ICICI on what rate cuts mean for bank margins

Even though banks generally pass on the effect of interest rate changes to their customers, ICICI expects the recent rate cuts to put pressure on margins. Why? Loan rates reset immediately while deposit rates adjust with a lag. Managing this gap is a key challenge for a bank.

“So, whether the rate-cut was relatively less or more, there would be some impact on margins because the deposit rates would, the deposit repricing would occur with a lag while the loan repricing would be immediate. Indeed, the expectations of the rate cut have gone up compared to where they were, say, a couple of months ago and a higher level of rate-cut is now expected. At the same time, as we spoke earlier, the deposit rates have also started falling. So, we will have to see as we go along how we manage through this. But there would be an impact on margins definitely.”

— Anindya Banerjee (Group CFO, ICICI Bank)

Axis is entering aircraft financing

In an industry-first, Axis executed an aircraft financing deal out of GIFT city. We’ve talked about the evolving dynamics of Indian aircraft leasing on The Daily Brief before.

“During the quarter, Axis Bank became the first Indian bank to execute an aircraft financing deal. It involved a long-term US dollar loan for the purchase of 34 training aircraft. The spiring aircraft financing deal structure end to end by our GIFT city team is a strategic step toward creating a robust aviation finance ecosystem within India.”
— Amitabh Chaudhry (MD & CEO, Axis Bank)

AUTOMOBILES

Realistic view on EV profitability

Maruti thinks electric vehicles will be less profitable by design — something the industry will simply have to live with.

“We have to be conscious that by design EVs will have much lower profitability and that's true for the entire industry. We can't expect EVs to have the same level of profitability as IC engines.”

— Rahul Bharti, Chief Investor Relations Officer, Maruti Suzuki

EV Impact on Lubricants

Castrol thinks that EVs will cut two-wheeler lubricant demand by about 10% over the next 5–8 years.

"By 2030 my expectation is if government supports it and the EV charging infrastructure at home also grows and they become more safe to ride on you should see about 30% as you rightly said of the numbers getting sold becoming EV which means of the park that number will still be less than 10%. So 5 to 8 years hence the total market for two-wheeler lubricant which would have grown by then will see a 10% correction in total volume requirement.”

— Mr. Kedar Lele, Managing Director (Castrol)

Rural premium product adoption: Contra conventional wisdom

Castrol believes that rural India doesn’t buy cheap, low-quality products, as conventional wisdom states — but instead looks for value-for-money.

"Many people believe that rural India buys only low-quality, low-price products. That's not true. Rural India actually buys high-performance, good products which offer good value. In our rural India expansion, we've been able to prove and see that both high-end Activ, Power One, as well as Essential have started growing. What Essential has essentially done for us is to make Castrol more relevant for a wider range of people who aspired to buy Castrol but couldn't afford it earlier."

— Mr. Kedar Lele, Managing Director (Castrol)

RENEWABLE ENERGY

Renewables and Coal Strategy

Ambuja is setting up 1,000 MW of renewable energy by 2026, has 300 MW already operational, and is also bidding for coal mines to boost captive consumption.

"We have already earlier announced our investments of 1,000 megawatt of renewable energy which is expected to commission by 26. 300 megawatt is already up and running which I already shared with you. As previously explained to meet our requirements we aim to maximize captive coal consumption. As a result we are bidding for coal mines in the auctions being conducted by the government of India."

— Ajay Kapur – CEO of Ambuja

MISCELLANEOUS

Data centers are a new source of coolant demand

Data centers are shifting from air to liquid cooling, with processors fully dipped in coolants.

"We've been working already with bunch of data centers across the world where the coolants for immersive cooling as well as direct to chip cooling technology has been adopted, developed and now being prospected with large data centers who are moving from ambient cooling to coolant based cooling of their CPUs and processors... In the future when you walk into data centers you'll see large containers and tubs filled with coolants in which the processors will be fully dipped.”

— Mr. Kedar Lele, Managing Director (Castrol)