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The Weekly Wrap | Take that to the Bank

Divya Biswal
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Last week, India’s two largest private-sector banks cut the interest rate they offer on savings accounts—the easiest and the cheapest source for them to raise money from depositors. This week, their stock prices soared to record highs.

 

Now, we aren’t saying that shares of HDFC Bank and ICICI Bank touched all-time highs just because they reduced the interest rate from 3.00% to 2.75% on savings account balances of up to Rs 50 lakh. But that surely helped. After all, this was the first reduction in nearly three years and help them expand their margins in coming quarters.

 

There were, of course, other factors, too. Both banks exceeded analysts’ forecasts for fourth-quarter earnings.

 

HDFC Bank, the country’s biggest private-sector lender, posted a 6.7% year-on-year growth in standalone net profit to Rs 17,616 crore for the January-March period. Net interest income climbed 4.6% to Rs 32,070 crore while core net interest margin increased to 3.54% from 3.43% on total assets. Its deposits increased 5.9% while gross loans rose almost 4%.

 

ICICI Bank, which trails HDFC as India’s second-largest private-sector lender but is closing the gap, reported an 18% jump in standalone net profit to Rs 12,630 crore in Q4. Its total loans and deposits grew by almost 14% each. Its net interest income increased by 11% to Rs 21,193 crore while net interest margin widened to 4.41% from 4.25% in Q3. 

 

There was more good news. Both banks reported an improvement in asset quality. HDFC’s gross bad loans fell to 1.33% as of March 31 from 1.42% at the end of December while ICICI’s gross NPAs declined to 1.67% from 1.96%.

 

The surprisingly strong results boosted investor sentiment. Shares of HDFC touched an all-time high of Rs 1,977.95 while the ICICI climbed a peak of Rs 1,437.00 apiece on Monday. In fact, both stocks helped power the Sensex and Nifty to their highest levels in 2025. But they weren’t alone.

 

Axis Bank also topped Q4 profit forecasts. Its standalone net profit was flat at Rs 7,118 crore but its net interest income rose 6% to Rs 13,811 crore and its gross NPAs dropped to 1.28% at March-end from 1.46% in the earlier quarter. Axis Bank’s shares have also risen in recent days though they remain below the all-time highs touched last year.

 

All in all, it was a good week for India’s top banks. And the coming quarters look promising, too. With interest rates on a downward trajectory, loan demand is likely to pick up. That should boost their earnings and stocks. You can bank on that!

 

 

Slow Moving Consumer Goods

 

While India’s top banks are putting up a good show, the country’s largest consumer goods companies are struggling to do so. Hindustan Unilever Ltd and Nestle India Ltd this week reported weaker Q4 profits and shrinking margins as demand for urban consumers falls at a time the overall economy is also slowing.

 

HUL’s consolidated net profit at Rs 2,475 crore was down 3.3% from a year earlier and fell 17% from Q3. Revenue from product sales grew just 2.7% year-on-year to Rs 15,416 crore in the January-March quarter

 

The local arm of Unilever Plc said its underlying volume growth was only 2% in Q4. Moreover, its EBITDA margin fell 30 basis points to 23.1% while gross margin shrank 160 basis points to 49.8%. HUL also cut its margin forecast. It said it will post core margins in a range of 22-23% in the near- to mid-term, down from the previous projection of 23-24%.

 

Nestle India’s quarterly profit slipped 5.2% to Rs 885 crore as the company was hit by higher prices of coffee, cocoa and other major commodities. Its revenue rose 4% to Rs 5,504 crore, with growth slowing from 9% a year earlier.

 

The weak financial performance also reflects in the stock prices of the two companies. Nestle India’s shares are down almost 14% since September last year while HUL’s stock has slumped nearly 24%.

 

Meanwhile, in contrast to HUL and Nestle, Tata Consumer Products Ltd exceeded quarterly revenue estimates thanks to higher sales volume and as it hiked prices of food and beverage products.

 

The Tata Group company’s Q4 revenue jumped 17% to Rs 4,608 crore but its profit before tax and exceptional items fell 5% year-on-year to Rs 484 crore because of higher tea prices and expenses related to certain acquisitions.

 

The price hikes, however, weren’t enough to shield the company as its core profit margin shrank by 250 basis points.

 

Clearly, weak consumer demand is hurting FMCG companies. And with consumer demand expected to remain weak in an overall tepid economic environment, it may take some time for these companies to find their mojo.

 

It’s Always about the Economy

 

Talking about the economic environment, the World Bank as well as the International Monetary Fund lowered India’s GDP forecast for the current financial year due to increased global uncertainty and trade tensions. 

 

The World Bank cut its forecast for India to 6.3% from its previous forecast of 6.7% in October. It also cut its growth predictions for other South Asian nations, saying they had “limited buffers to withstand global challenges”.

 

“Benefits to private investment from monetary easing and regulatory streamlining are expected to be offset by global economic weakness and policy uncertainty,” the World Bank said in a report.

 

The IMF trimmed its forecast for India’s GDP growth in FY26 to 6.2% from the 6.5% it had predicted in January.

 

The revised forecasts by the two multinational agencies are now below the Reserve Bank of India’s estimate. The RBI earlier this month reduced its GDP forecast to 6.5% from 6.7%.

 

India, of course, isn’t the only country battling an economic slowdown. 

 

The IMF expects global growth in 2025 will be 2.8%, down from 3.3% in 2024. This will be the slowest pace since 2020-21 when COVID-19 pandemic wreaked havoc. It also slashed US GDP forecast to 1.8% in 2025 from 2.8% last year and cut its outlook for China to 4.0% from 4.6%.

 

What’s the main reason for this slowdown? Well, if you didn’t already know, it’s because of the uncertainties created by US President Donald Trump’s decisions and the tariffs he has imposed, postponed, and threatened to re-impose on almost all of America’s trading partners since he took office in January. 

 

Those tariffs have started to pinch American companies and consumers. Their global effects will become clearer in coming months. And we will be here as usual to explain all that!

 

IPO Watch

 

Moving on to stock-related news, primary market activity in India has been rather muted for the past couple of months after a brisk start to the year. Only 10 companies have floated initial public offerings on the main board so far this year, as stock markets turned choppy. The 11th will test the markets next week.

 

Ather Energy Ltd will launch its Rs 2,980-crore IPO on Monday, pricing its shares in a band of Rs 304-321 apiece. The IPO comprises a fresh issue of Rs 2,626 crore and an offer for sale of Rs 354.70 crore by its promoters and some investors.

 

This will be the first significant IPO since IT company Hexaware went public with a Rs 8,750-crore issue in mid-February.

 

Now, one would think Ather is confident enough of its IPO sailing through since stock markets have rebounded from their lows last month. But that confidence hides a little nervousness. That’s because Ather has reduced the size of the fresh issue from Rs 3,100 crore previously and cut the offer-for-sale portion by almost half. 

 

Still, the IPO is an important milestone. Not just for Ather itself but also for India’s nascent electric vehicle industry. Ather will be the second electric scooter maker after Ola Electric to go public. 

 

Ather is currently the fourth-largest electric scooter company in India by market share, after Bajaj Auto, TVS Motor and Ola Electric. Interestingly, at No.5 is Hero MotoCorp, which is India’s biggest two-wheeler maker and also the biggest shareholder of Ather with a 38% stake. Hero isn’t selling any shares in the IPO.

 

While Ather is going ahead with its IPO, albeit after cutting its size, many other companies that already have SEBI approval are going slow. One of those is the India unit of South Korean giant LG Electronics. The company had filed its draft documents for the IPO in December and got SEBI approval last month. The estimated Rs 15,000-crore IPO will involve only an offer for sale by the Korean parent, as and when it does go to the market.

 

Overall, so far it doesn’t look like 2025 will manage to match 2024 numbers. Last year, nearly 90 companies floated IPOs on the main boards of BSE and NSE. While nearly 50 companies already have SEBI approval to launch their IPOs, almost 70 more have filed draft documents. How many will eventually dare to take the plunge is anybody’s guess at this time.

 

 

Market Wrap

 

Both the Nifty 50 and the BSE Sensex rose this week but their gains were capped as markets fell on Friday on investor concerns over tensions after a deadly terrorist attack in Kashmir’s Pahalgam.

 

For the week, the two benchmarks climbed almost 0.8% each. However, the small-caps and mid-caps lost about 2.5% each as investors turned cautious.

 

The IT index surged 6.6% to post its best week since June last year thanks to better-than-expected earnings outlook by software services companies. Tech Mahindra and HCL Tech were the top gainers this week. TCS and Infosys were also among the biggest gainers.

 

Automakers Mahindra & Mahindra and Tata Motors, SBI Life Insurance, IndusInd Bank, Hero MotoCorp, and Tata Consumer Products were the other stocks firmly in the green.

 

At the other end of the spectrum, Shriram Finance was the top loser. Adani Ports and Adani Enterprises as well as Bharti Airtel, HDFC Life Insurance, NTPC and Axis Bank were among the other stocks in the red.

 

Other Headlines

 

 

That’s all for this week. Until next week, happy investing.

 

Interested in how we think about the markets?

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