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Indian banks are expected to have steady growth in earnings and returns over the next 3–4 years, according to a recent report by Jefferies. It expects a 13% compound annual growth rate (CAGR) in loan growth for banks between FY24 and FY27, helmed by a supportive environment and expected adjustments in interest rates. "We expect steady growth in earnings and stable returns, Over FY24-27, the banks we cover should see 13% CAGRin loans We factor 25-50 bps cut in rates, &amp; depending on timing, NIMs will move," the report said. Depending on the timing, these rate cuts could impact banks' <keyword id="20076541" type="General" weightage="20" keywordseo="net-interest-margins" source="keywords">net interest margins</keyword> (NIMs), which measure the difference between interest income generated and interest paid to depositors. The report also notes that banks' net interest income (NII), a critical metric that is reflective of how much a bank earns from its lending, could grow at a steady 12% CAGR, which would support overall earnings growth. <h2>Rate cuts probable next year</h2>Per SBI Mutual Fund's monthly outlook for November 2024, while markets were initially speculating possible rate reductions in December this year or February next year these chances now stand dampened due to two reasons. First, elevated CPI numbers in September, which stood at a nine-month high, underlined the stickiness of food inflation. Secondly, RBI governor Das recently highlighted his hawkish stance at a conference, stating that "rate cuts at this stage would be premature and risky’. The report further adds that February 2025, or even April, would be a better time to discuss repo rate cuts in India. Even <keyword id="19985925" type="General" weightage="20" keywordseo="bank-credit-growth" source="keywords">bank credit growth</keyword> has continued to outpace deposit growth for two years now. However, they seem to be inching closer in the recent past. For instance, in October 2024, while bank credit growth remained at 12.7%, the deposit growth rate followed closely at 11.8%. This also means that banks are witnessing an elevated bank credit-to-deposit ratio, standing at 77% in October. <h2>Risks in unsecured lending </h2>However, Jefferies noted some areas of caution that could influence growth in other revenue streams, particularly fees. Growth in fees may be at risk due to expected declines in the disbursal of unsecured loans, which generally carry higher interest rates and generate higher fees for banks. October saw stress and defaults rising in the unsecured lending space, prompting the RBI to intervene. As a result, unsecured loans by banks have only grown by 12.1%, the lowest since the pandemic. Despite these risks, the report expects banks' return on assets (ROA) and return on equity (ROE) to remain healthy, underscoring the sector's stable profitability potential. The report also highlights that while the Nifty Banks index has risen by 19% over the past year, it has still underperformed the broader Nifty index, which delivered 27% returns in the same period. BSE Bankex has been along similar lines, generating returns worth 19% over one year. While the Nifty banks' index has a YTD (yield to date) of 7.63%, it continues to trail Nifty's YTD of 11.30%

Indian banks to have steady growth in earning over next 3-4 years, fees from unsecured lending may dip, notes Jefferies report

Dear readers, As we approach yet another weekend, here are some key developments across various sectors. Nvidia has surpassed Apple to become the world’s largest company, driven by the AI boom. Meanwhile, the US Federal Reserve cut interest rates, by 25 basis points to 4.75%, the second such reduction in 2024. In the workplace, Gen Z’s approach to mental health got attention, with one employee taking a week off after a breakup. Additionally, Indian banks are expecting steady growth, despite challenges in unsecured lending. Read on for all the details! <h2>Top stories from the week </h2> Indian banks to have steady growth in earnings over next 3-4 years, fees from unsecured lending may dip, notes Jefferies report Jefferies forecasts steady earnings growth for Indian banks over the next 3–4 years, with a 13% annual loan growth rate. However, a decline in unsecured lending could reduce fee income. While net interest income is expected to grow at 12%, challenges such as rising defaults and a potential dip in rate cuts could affect profitability. Despite this, banks’ return on equity and assets remain promising. <a href="https://www.businessinsider.in/finance/news/indian-banks-to-have-steady-growth-in-earning-over-next-3-4-years-fees-from-unsecured-lending-may-dip-notes-jefferies-report/articleshow/115048179.cms" data-type="tilCustomLink" target="_blank">Read more</a> Nvidia becomes world’s largest company amid AI boom, surpasses Apple in the race Nvidia has surpassed Apple to become the world’s largest company by market capitalization, driven by the AI boom. The company’s strong performance is fueled by surging demand for its chips used in AI technologies. With a market cap hitting $3.43 trillion, Nvidia continues to dominate the AI hardware sector, powering data centres and AI research. The company’s revenue growth of 122% YoY further cements its leadership in the AI space. <a href="https://www.businessinsider.in/business/news/nvidia-becomes-worlds-largest-company-amid-ai-boom-surpasses-apple-in-the-race/articleshow/115003223.cms" data-type="tilCustomLink" target="_blank">Read more</a> ‘He had a breakup and took a one-week leave’: Manager shares about his Gen-Z employee, internet reacts A manager’s tweet about granting a Gen Z employee a week off for a breakup sparked widespread debate. While the manager expressed frustration over project delays, internet users defended the employee’s mental health needs, criticizing the manager’s lack of empathy. Some supported the manager’s view, pointing out generational differences in work culture. The incident went viral, furthering discussions about Gen Z’s unique workplace expectations. <a href="https://www.businessinsider.in/careers/news/he-had-a-breakup-and-took-a-one-week-leave-manager-shares-about-his-gen-z-employee-internet-reacts/articleshow/115041747.cms" data-type="tilCustomLink" target="_blank">Read more</a> US Fed cuts interest rates by 25 bps, Powell notes Trump’s victory to have no impact on policy decisions The US Federal Reserve has cut interest rates by 25 basis points to 4.75%, the second such reduction in 2024. Fed Chairman Jerome Powell emphasized the Fed’s independence despite Trump’s criticism and suggested that the economic outlook remains uncertain, though the Fed is focused on inflation targets. Trump’s policies may lead to higher inflation, adding complexity to the Fed’s efforts to stabilize prices. Experts anticipate that bond yields will stabilize, benefiting emerging markets like India. <a href="https://www.businessinsider.in/finance/news/us-fed-cuts-interest-rates-by-25-bps-powell-notes-trumps-victory-to-have-no-impact-on-policy-decisions/articleshow/115070690.cms" data-type="tilCustomLink" target="_blank">Read more</a> Big Tech’s winners and losers from Donald Trump’s win, according to the market After Donald Trump’s election victory, tech stocks surged, with companies like Tesla seeing significant gains. Tesla’s rise was fueled by Trump’s public support for CEO Elon Musk. Conversely, companies like Apple faced challenges due to fears over potential tariffs on China. While some, like Google, might benefit from lighter regulations, others like Meta could face political challenges. Overall, the election results reshaped market expectations for Big Tech’s future. <a href="https://www.businessinsider.in/tech/news/here-are-big-techs-winners-and-losers-from-donald-trumps-win-according-to-the-market/articleshow/115067798.cms" data-type="tilCustomLink" target="_blank">Read more</a> <h2>Top web stories</h2> <a href="https://www.businessinsider.in/entertainment/webstories/donald-trump-on-screen-a-look-at-his-iconic-cameos/slidelist/115045250.cms" data-type="tilCustomLink" target="_blank">Donald Trump on screen: A look at his iconic cameos</a> <a href="https://www.businessinsider.in/india/webstories/8-lifestyle-mistakes-contributing-to-health-problems-in-india/slidelist/115051791.cms" data-type="tilCustomLink" target="_blank">8 lifestyle mistakes contributing to health problems in India</a> <a href="https://www.businessinsider.in/travel/india/webstories/10-magical-indian-experiences-every-traveller-should-try/slidelist/115052527.cms" data-type="tilCustomLink" target="_blank">10 magical Indian experiences every traveller should try</a>

Weekend wrap: Nvidia’s AI-driven surge, Indian banks’ steady growth and more

The <keyword id="22902068" type="General" weightage="100" keywordseo="health-insurance-sector" source="keywords">health insurance sector</keyword> may face challenges in the coming months, due to <keyword id="20617555" type="General" weightage="20" keywordseo="rising-claims" source="keywords">rising claims</keyword> and increased competition, particularly in the retail sector, highlighted a report by <keyword id="19905137" type="General" weightage="20" keywordseo="Jefferies" source="keywords" meta.keywordsubtype="org" meta.entityname="Jefferies" meta.hostid="153" meta.entityid="Jefferies">Jefferies</keyword>. "Health (approx. 35% of mix) can see pressure in its retail segment from rising claims frequency and elevated competition" the report stated. The report indicated that <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>'s <keyword id="22461357" type="General" weightage="20" keywordseo="non-life-insurance" source="keywords">non-life insurance</keyword> sector is experiencing significant shifts, the health insurance segment may face challenges as healthcare costs continue to rise and more consumers claim their insurance, and insurers are grappling with increased payouts. This trend could squeeze margins and put pressure on insurers to find ways to manage costs while remaining competitive in the market. However, for the <keyword id="20224622" type="General" weightage="20" keywordseo="motor-insurance" source="keywords">motor insurance</keyword> segment, the report draws a promising picture and added that it is entering a promising multi-year upcycle. This positive momentum is expected to benefit large private insurers of the motor segment, who are well-positioned to capitalize on these trends. "Initiate on Non-Life Insurers Large private insurers are set to gain from multi-year upcycle in motor (approx. 35% of premium mix) led by <keyword id="21232881" type="General" weightage="20" keywordseo="premiumization" source="keywords">premiumization</keyword> of underlying auto mix and moderating competitive intensity" the report mentioned. The report also added that the motor insurance segment in India is estimated to grow at a compound annual growth rate (CAGR) of 14% over the financial years 2024 to 2027. The key driver behind this growth is the ongoing shift in the automobile market towards higher-value vehicles. Over the past three years, the average selling price (ASP) of passenger vehicles (PVs) has increased by 41%, reflecting a move towards premium segments. This trend is expected to continue, benefiting motor insurance renewals, which account for 60-70% of the motor insurance premium mix. "Motor segment amidst a multi-year upcycle (est. 14% CAGR over FY24-27E) as renewals (60-70% of premium mix) will continue to benefit from the underlying change in auto mix towards premium high-value segments" the report added. Despite these challenges, the report mentioned that the broader non-life insurance market in India remains significantly underpenetrated, with insurance premiums representing only about 1% of the country's <keyword id="19904293" type="General" weightage="20" keywordseo="GDP" source="keywords">GDP</keyword>. This is relatively low compared to global peers, where non-life insurance to GDP ratios range between 2% and 4%. However, the Indian non-life insurance market has shown steady growth, with gross premiums expanding at a CAGR of 12% over the past five years, reaching Rs 2.8 trillion (approximately $35 billion). Notably, the private sector has outpaced the overall market. "India remains an under-penetrated market with non-life insurance to GDP at approx. 1% (vs 2-4% for global peers). Gross premiums have expanded at 12% CAGR over the last 5 years to Rs 2.8tn (approx. $35bn) with the private sector growing faster at 15% CAGR and improving its market share to 68%(from 57%)" said Jefferies in the report. Despite these challenges, the overall insurance market in India remains underpenetrated, offering significant long-term growth potential for insurers who can navigate these dynamics effectively.

Rising claims pose challenge for health insurance sector in India, says Jefferies

<ul><li>Stocks of top developers ran up by over 40%, and a few even doubled in the last three months.</li><li>At these prices, most of the real estate sector’s upcycle has been priced in, say experts.</li><li>With good land banks, and new launches most large players are expanding business, but investors are advised to wait for better entry points. </li></ul>Indians love buying property and this has fuelled a real estate upcycle since <keyword id="19896627" type="General" weightage="20" keywordseo="covid" source="keywords">Covid</keyword> struck. But investors looking to take fresh bets on real estate stocks must be cautious due to the sharp run seen in most of the stocks in the last three months. Stocks of top developers ran up by over 40%, with a few outliers like <keyword id="20074586" type="General" weightage="20" keywordseo="sobha" source="keywords">Sobha</keyword> that doubled in the last three months. At these highs, the sector’s valuations are stretched, say a few analysts. “Developer stocks doubled in 2023 taking the sector to peak multiples. Expectations are high and easy scaleup is now behind,” said a report by <keyword id="19905137" type="General" weightage="20" keywordseo="jefferies" source="keywords">Jefferies</keyword>, downgrading <keyword id="20188869" type="General" weightage="20" keywordseo="prestige" source="keywords">Prestige</keyword> to ‘underperform’, Sobha to ‘hold’. CLSA also downgraded top stocks like DLF, Prestige and Sobha as it believes the upcycle has priced in after the recent run-up. “Property stocks have gone up sharply over the past three months and our reverse DCF valuation implies very high growth built into current prices, which we believe will be difficult to achieve considering cyclicality,” it said in its recent report. There could be another trigger ahead with a possible affordable housing push announced in the upcoming Union Budget, as well as news of new launches by developers. “We believe the resultant growth from such events is already built into our estimates. We thus expect stocks to consolidate in 2024,” CLSA said. Real estate sector returns <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3-month returns </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1 year returns </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">DLF </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">45% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">112% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Sobha </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">105% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">149% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Prestige Estates </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">73.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">196% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Godrej Properties </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">41.7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">89.7% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Macrotech (Lodha) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">44.9% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">109% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Sunteck Realty </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.9% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">19.8% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Oberoi Realty </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">38.7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">81.9% </td></tr></tbody></table>Source: BSE Double-digit demand but will cool off 2023’s highs The Indian residential market is in the middle of an upcycle. In the last three years, home sale volumes have doubled. In 2023, volumes surged around 25%. Consumer demand is expected to be robust in 2024, and companies are poised for growth with. But the sector might not be able to replicate the growth rate seen in the last two years. “A seven-year long weak phase for the residential market implies significant headroom for vols to rise in the medium term. As the housing upturn enters its fourth year in 2024, vols growth should cool down but still post around 10% year-on-year growth,” says Jefferies. CLSA also pegs housing demand to grow at 12% in 2024. It also believes that the large players will be able to post post industry-beating growth rates of 15-20%. That’s because the top-end of the residential real estate market, in particular, has been racing ahead. Recently, DLF was able to offload 1,137 apartments in its Gurgaon project within three days. They carried a price tag of ₹7 apiece. In line with the demand growth, most developers had accelerated their inventory addition. Godrej added ₹32,000 crore worth of gross development value (GDV) in FY23 against the guidance of ₹15,000 crore. <keyword id="20070786" type="General" weightage="20" keywordseo="macrotech" source="keywords">Macrotech</keyword> also surpassed its business development guidance of ₹15,000 crore by adding ₹19,800 crore worth of GDV in FY23. As of FY24, most of these players are also expected to add to their land banks. “With robust balance sheets, low cost of capital and strong brands, organized players are at an advantage in adding new business development and are positioned for further market share gains,” said HDFC Securities Institutional Research. But this growth also brings up the pace of unsold inventory worries that had dogged the players for a long time before the upcycle set in. “While sales growth was strong, the volume of launches exceeded that of sales causing unsold inventory levels to rise by 5% YoY. And as overall market traction has shifted toward the mid and premium segments, so has that of the unsold inventory,” said CLSA. With more sales on the horizon and sharp uptick in construction activities, the sector is all set to see good cash flow gains through 2024. The fundamentals are all in place, but investors have to wait for better entry points into these stocks, advise analysts.

Realty stocks trading at peak valuations, analysts recommend entry after correction

<ul class="summary-list"><li>Virgin Galactic shares could rise 33% over the next year, Jefferies said on Tuesday. </li><li>Virgin Galactic could see revenue climbing to $1.7 billion by 2030 as demand for space flights grows.</li><li>Jefferies initiated coverage on billionaire Richard Branson's company with a buy rating. </li></ul><a href="https://markets.businessinsider.com/stocks/spce-stock">Virgin Galactic</a> shares could climb by more than 30% over the next 12 months, said Jefferies, which sees the company ramping up in value as demand swells in the space tourism market. Virgin Galactic is selling tickets <a href="https://www.businessinsider.com/virgin-galactic-space-flight-ticket-cost-450000-richard-branson-2021-8ic-rocket-plane-flies-richard-branson-crew-to-space-2021-7">starting at $450,000</a> for a seat on future rides to space after <a href="https://www.businessinsider.com/virgin-galactic-rocket-plane-flies-richard-branson-crew-to-space-2021-7">July's first flight with a full crew</a>, including founder <a href="https://www.businessinsider.com/richard-branson-virgin-galactic-with-blue-origins-jeff-bezos-2021-7">Richard Branson</a>, to the <a href="https://www.businessinsider.com/blue-origin-jeff-bezos-astronaut-edge-of-space-2021-6">edge of space</a>. <a href="https://www.businessinsider.com/elon-musk-virgin-galactic-ticket-richard-branson-space-deposit-price-2021-7">Tesla CEO Elon Musk</a> reportedly is among the 600 people who have made a reservation by putting down a $10,000 deposit. "We believe Virgin Galactic has strong long-term prospects supported by a growing backlog and early mover advantage coupled with a unique experiential offering," said Jefferies equity analyst Greg Konrad in a Tuesday note initiating coverage with a buy rating. Jefferies put a 12-month price target of $33 on the stock, which represents 33% upside from Monday's closing price of $24.88. Shares during Tuesday's session rose as much as 9.4% then trimmed the advance to 8%. It said Virgin Galactic's attractive outlook is boosted as it stands to offer 660 flights a year by 2030, up from current capacity of about 36. "This supports the ability to meet demand, which is underscored by a desire to explore space coupled with an addressable market that could approach $120 billion of potential future demand and supports a rise to $1.7 billion of revenues by 2030," said Konrad. "Near-term the biggest headwind is supply, which should expand over the next three to four years capturing the financial benefits within backlog," he said. The firm estimated Virgin Galactic to have four spaceships in its fleet by 2025 then increasing to 14 spaceships and $1.7 billion of revenue in 2030 based on 3,360 passengers. Virgin Galactic shares have been whipped around during 2021, surging to as much as $62.80 in mid-February then later pushed into negative territory before recovering for a 5% gain for the year through Monday's session.

Virgin Galactic could climb 33% as demand for commercial space travel accelerates, says Jefferies

Online food delivery platform <keyword id="6358977" type="General" weightage="100" keywordseo="swiggy" source="Orion">Swiggy</keyword>'s losses doubled to ₹3,629 crore in FY22 compared to ₹1,617 crore in the last fiscal year. Total expenses went up 131% to ₹9,574.5 crore in FY22. According to its annual financial statement with the Registrar of Companies (RoC), during the last quarter of FY22, Swiggy turned "decacorn" (with a valuation of $10 billion and above) after raising a $700 million round led by Invesco. Meanwhile, Swiggy's revenue grew 2.2 times to ₹5,705 crore during FY22 as opposed to ₹2,547 crore in FY21. According to Entrackr, outsourcing support costs accounted for 24.5% of the total expenses of the company. This particular cost increased 2.3 times to ₹2,350 crore in FY22 from ₹1,031 crore in FY21. Its advertising and promotional expenses surged 4 times to reach ₹1,848.7 crore during FY22, according to the report. Reports surfaced last month that Swiggy may lay off more than 250 employees or up to 5% of its workforce starting January. "There have been no layoffs at Swiggy. We concluded our performance cycle in October and have announced ratings and promotions at all levels. As with every cycle, we expect exits based on performance," a Swiggy spokesperson had said in a statement. The upcoming layoffs are likely to impact Swiggy's quick commerce delivery service <keyword id="9728281" type="General" weightage="50" keywordseo="instamart" source="Orion">Instamart</keyword> to reduce cash burn. In November, global brokerage firm <keyword id="151304" type="General" weightage="50" keywordseo="jefferies" source="Orion">Jefferies</keyword> said that Swiggy was fast losing market share to its rival <keyword id="11830133" type="DOMAIN" weightage="20" keywordseo="zomato" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="zomato" meta.entityname="Zomato Ltd." meta.entityid="57948" meta.seoname="zomato-ltd">Zomato</keyword> despite offering heavy discounts. Citing Swiggy investor Prosus' financial report, Jefferies said that the gross value of Swiggy's food delivery business was $1.3 billion in the January-June period this year. Zomato in the same period logged a gross order volume of $1.6 billion. In May last year, Swiggy acquired Dineout, a dining-out and restaurant tech platform, for an undisclosed sum. According to sources, the acquisition size was around $200 million. Earlier this year, the food delivery platform raised $700 million led by Invesco at a $10.7 billion valuation. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tvs-motor-sales-slip-3-58-to-242012-units-in-dec/articleshow/96681654.cms">TVS Motor sales slip 3.58% to 2,42,012 units in Dec</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/indias-manufacturing-pmi-hits-13-month-high-in-dec-on-rise-in-new-orders-strong-demand/articleshow/96678340.cms">India's manufacturing PMI hits 13-month high in Dec on rise in new orders, strong demand</a>

Swiggy's losses jump 2X to ₹3,629 crore in FY22, layoffs coming

<ul><li><keyword id="6367820" type="General" weightage="20" keywordseo="adani-group" source="Orion">Adani group</keyword> has a consolidated gross debt of ₹2.3 trillion and net debt of ₹2 trillion. </li><li>Net debt / EBIDTA has come down from 7.6x in 2013, to 4.0x in 2016, and 3.2x in September 2022 says the equity research report. </li></ul>Adani group's details on debt and repayment schedule point that consolidated net debt is at ₹2 trillion, with relatively low refinancing needs in the near term, according to an equity research report by Jefferies, a New-York-based investment bank and financial services company. While acquisition of cement business raises debt, it generates cash as well. “Indian banks' exposure is limited to 0.5% of loans (private banks lower at 0.3% and PSUs at 0.7%) and quality is better, as mostly to cash-making assets; tighter RBI rules also helped. So we see low risk to asset quality, but some delay in capex cycle,” the report says. According to the report, Adani group has a consolidated gross debt of ₹2.3 trillion (+20% vs. Mar-22) and net debt of ₹2 trillion (+22% vs. Mar-22), spread across group companies as of September 2022. Excluding that of acquisition of cement business gross debt was flat versus March 2022 while net debt rose 5% during the same period. However, the cement entity also generates reasonable cashflow. The top companies by net debt levels are Adani Green Energy (AGEL), Adani Ports and SEZ (APSEZ), Adani Power (APL) and Adani Transmission (ATL) with ₹300-400 billion in net debt each. However, the leverage is higher for AGEL &amp; ATL. Over FY16 to September 2022, we estimate that net debt levels rose from ₹ 0.7 trillion to ₹2 trillion reflecting capex in group companies. Details on the debt repayment schedule reflects manageable refinancing needs. “Cashflows of the group have been improving at a faster pace that has helped to bring down net debt / EBIDTA (on run rate basis) from 7.6x in 2013, to 4x in 2016, and 3.2x in Sep-22,” says the report. Net debt / EBIDTA ratio is higher for Adani Green Energy (AGEL) and Adani Transmission (ATL) but lower than portfolio level for other entities. As per management, EBITDA includes other income. “Our recent conversation with industry participants also indicated that cashflows and repayment timelines of debt have been conservatively planned. Debt Service Coverage Ratio (DSCR) for most portfolio companies is in the range of 1.7-2.0x for FY23E, ex of ATGL,” the report adds. A lower net debt / EBIDTA ratio is considered good as the lower the ratio, the higher the chances of paying off debt. A higher net debt / EBIDTA ratio means that the company may face financial problems going ahead. Indian banks are better placed “While we watch for developments here, we don't see material risk arising to the Indian banking sector as debt to this group forms 0.5% of total loans — 0.7% for PSU banks and 0.3% for private banks. Moreover, the quality of their exposure is better, with high exposure to cash-generating / operating asset,” the report says. In fact, Indian banks haven't participated in loans on pledge of shares as well as acquisition financing, partly thanks to restrictions imposed by RBI on banks. In that segment, foreign banks could have 80-90% of the market share. However, a realignment of the capex commitments from the group could affect the pipeline of the capex cycle as well as loan growth for banks, the report says.

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