Because such fast paced agri credit growth (in FY08-09 and in FY15-16) was followed by stress in agri credit with a lag of 12-24 months.
Bear Case: Growth was subdued in India due to discontinuation of in-licensed brands.
Price cuts and expectations of a limited market share improvement (30-35 percent) in FY25-26E.
Recent acquisitions give entry in new markets and scope for market share and capacity expansion.
Penna acquisition not going through can be big risk for the company's earnings growth and market share expansion.
The Budget will give the first indications of whether or not coalition politics is a factor in policymaking.
Sticking to fiscal prudence while also appeasing the lower-and middle-class, pushing capex while also pleasing farmers, boosting welfare spending without making it too obvious, the street is eagerly awaiting what Finance Minister Nirmala Sitharaman has to offer in Budget 2024-25.
Investors are a bit edgy this time because unlike in the past, the government may also need to consider the pulls and pressures of coalition partners, who have so far been quite well-behaved.
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Equity benchmarks sank over eight percent on June 4, on fears that NDA 3.0 would have to relinquish their iron control over policymaking. But Initial concerns that the government may lean towards welfarism after the sub-par electoral verdict, were quickly brushed aside.
The Budget will give the first indications of whether or not coalition politics is a factor in policymaking.
So far, this market has climbed every single wall of worry, thanks to unabated domestic liquidity flow. So even if the Budget were to disappoint, most likely bulls may find a new narrative to keep the party going. At the same time, investors should also bear in mind that pricey valuations have considerably reduced the margin of safety.
Agri credit
Agri credit is growing at 20 percent plus in recent months, outpacing bank credit growth by 400 bps and constituting more than 13 percent of bank credit, write Citi analysts . Kunal Shah, Dipanjan Ghosh and Yash Gujarathi. This may not necessarily be a good thing, the trio warn.
Because such fast paced agri credit growth (in FY08-09 and in FY15-16) was followed by stress in agri credit with a lag of 12-24 months.
They ask: Does rising dominance of agri gold loans suggest that farmers are borrowing agri loans for non-agri purposes? Is it leading to rising indebtedness and could it translate into stress in unsecured credit, namely Kisan Credit Card/micro finance?
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Commodities
Funds and speculators have reduced their bullish positions on LME base metals as fundamental factors do not support a significant price increase, writes Yes Securities Hitesh Jain in his report. Despite ongoing mine supply constraints for several metals, spot premiums are low, and exchange inventories are rising amid weak demand conditions in China, Jain says.
On the other hand, speculators are bullish precious metals, buoyed by signs of a slowing US economy even as the Fed is to signal the timing of its rate cut.
Tata Elxsi (Rs 6,960, -2.2%)
Shares slipped as analysts turned bearish following a 3 percent decline in net profit for the first quarter.
Bear Case: Changing dynamics in the automotive sector, increasing competition, and moderating demand are leading to a focus on profitability and reduced spending. The healthcare segment of the company witnessed a decline due to a delay in the renewal of some projects at one of the large customers.
Bull Case: A healthy deal pipeline, continued growth in the transportation sector, new customer wins, and business expansion with strategic customers across various sectors could boost growth in Q2 FY25.
Lupin (Rs 1,819, -0.4%)
Stock snapped a 5-day gaining streak.
Bull Case: US sales grew 34 percent on year in FY24 due to regulatory improvements and inhalation portfolio traction. US sales expected to grow at 9.7 percent CAGR over FY24-26E, reaching $981 million. gSpiriva launch and export incentives boosted margins to 19 percent in FY24.
Bear Case: Growth was subdued in India due to discontinuation of in-licensed brands. Price cuts and expectations of a limited market share improvement (30-35 percent) in FY25-26E. Albuterol competition may impact US sales for a few quarters. Valuations pricey
Ambuja Cements (Rs 678, +1.95%)
Double upgrade from Nomura to 'buy'
Bull case: Scope for more inorganic growth, industry-leading volume growth and aggressive capex major growth drivers, says Nomura. Recent acquisitions give entry in new markets and scope for market share and capacity expansion.
Bear case: Extended monsoon, especially in South India where the company is the third largest player. Penna acquisition not going through can be big risk for the company's earnings growth and market share expansion.
(With inputs from Veer, Neeshita, and Vaibhavi.)
