- 2 years ago
- The #MPC is likely to vote to maintain the status quo
- Reviewing #UnoMinda's Q3 results
Samina Nalwala and Niraj Shah discuss the repo rate and speak with Uno Minda's Sunil Bohra on 'India Market Open'. #NDTVprofitLive
Guest List:
Indranil Sengupta, Economist, and Head of Research, CLSA India
Jayesh Mehta, DSP Finance
Sunil Bohra, Executive Director- Group CFO, Uno Minda
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- Reviewing #UnoMinda's Q3 results
Samina Nalwala and Niraj Shah discuss the repo rate and speak with Uno Minda's Sunil Bohra on 'India Market Open'. #NDTVprofitLive
Guest List:
Indranil Sengupta, Economist, and Head of Research, CLSA India
Jayesh Mehta, DSP Finance
Sunil Bohra, Executive Director- Group CFO, Uno Minda
______________________________________________________
For more videos subscribe to our channel: https://www.youtube.com/@NDTVProfitIndia
Visit NDTV Profit for more news: https://www.ndtvprofit.com/
Don't enter the stock market unaware. Read all Research Reports here: https://www.ndtvprofit.com/research-reports
Follow NDTV Profit here
Twitter: https://twitter.com/NDTVProfitIndia , https://twitter.com/NDTVProfit
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03:22 Welcome back.
03:23 You're watching India Market Open.
03:24 We're all gearing up to hear what the RBI governor has
03:27 to say at this very important meet.
03:30 Well, we have with us Indranil Sengupta,
03:32 economist and head of research, CLSA India,
03:34 and Jayesh Mehta of DSP Finance.
03:37 Mr. Gupta, I'm going to come to you first.
03:39 It's an important meeting of sorts.
03:41 We've heard about fiscal consolidation,
03:43 lowered market borrowing.
03:44 Growth seems to be holding up.
03:46 Core inflation has declined to sub 4%.
03:49 And the US Fed has ruled out any rate cuts,
03:51 at least in the foreseeable future.
03:53 What are you expecting from this much anticipated RBI meet?
03:58 So we think that the environment is
04:04 turning towards RBI easing.
04:08 As you yourself said, that the fiscal consolidation process
04:13 has begun.
04:15 The Fed is looking to cut 75 basis points this year.
04:19 And we are also seeing inflation come down maybe to 5.3%
04:26 this month in January.
04:27 And of course, core inflation is actually in the threes.
04:31 So against this backdrop, we think
04:33 that the RBI cuts CRR by 0.5% of GDP
04:37 this time to take care of the liquidity pressures
04:41 and begins to cut rates from April.
04:44 And overall, we are looking at a 100 basis point
04:48 rate cut by June 2025.
04:52 Jish, good morning.
04:53 I'm going to quickly talk to you about the liquidity piece
04:57 because we like a bird's eye view on what's actually
05:00 happening in those markets.
05:02 From September, liquidity has been tight in the system.
05:06 What we did see very recently is call rates actually easing.
05:10 Now, we also know that in the month of July and August,
05:14 inflation also was much higher than the RBI's comfort zone.
05:17 That is also now beginning to come off.
05:20 A lot of people have been maintaining
05:22 that commentary on liquidity is going to be very critical.
05:25 And that could be the next driver for the bond markets.
05:27 Is that the opinion you have too?
05:31 There are two parts to it.
05:33 Of course, as you said rightly, last from November,
05:37 the liquidity has been tight.
05:39 And some people interpret this as like a pseudo rate hike when
05:44 the US was touching 5% and the situation didn't look that great.
05:49 So kind of look like pseudo rate hike.
05:51 Of course, the official reasoning was government spending
05:55 and the time taken mismatch kind of situation.
05:59 I think now it is back to hugging more actually went below
06:04 the repo rate and now they are trying to maintain it
06:07 around repo rate.
06:08 And that's what the stance would be because the situation
06:11 looks more benign.
06:13 And that's what I believe they will kind of try to now target more.
06:18 Because if you really look at October, November, December,
06:22 the situation globally didn't look that great.
06:25 So I would say, though, of course,
06:27 there's no official communication to that effect.
06:30 I would say it was more like, you know,
06:33 wait and watch what's happening globally.
06:35 And that's the reason maybe kind of without hiking rate,
06:39 you manage it through liquidity by, you know,
06:42 making the repo rate go higher to almost like 675.
06:46 So that's what I would put it around because if they want,
06:50 they can keep it, always keep it at six half, which is quite possible.
06:55 So that's one part of it.
06:58 And in terms of bond market, I don't think quarter percent repo rate
07:05 plus minus really matters except for the short end.
07:09 Right now it's all rising in for the rate card, not immediately,
07:14 maybe June, but definitely no rate hike for the rate card.
07:19 And of course, we have a huge flow coming in from the FBI inclusion.
07:24 There's also very buoyant demand by FBI because not only for inclusion,
07:30 but also because of you and Rupee is quite bullish.
07:34 Buying bond is the best way to go along the iron.
07:37 So that's where we see very robust demand right now coming in from foreigners.
07:42 Jayesh, good morning. Since we are on the topic with the government having done
07:47 what it has done in the budget and the guidance given,
07:50 if the RBI does not do an action but sounds dovish,
07:55 let's say hypothetically sounds dovish, maybe a change of stance, what have you.
08:00 Do you think that spurs movement in the bond markets?
08:06 Yes. You see, if you really look at it after the budget,
08:10 it moved to a new range, six or seven or six and like seven, eleven, seven, twelve,
08:15 looks dovish, right? We are moving towards six eighty.
08:20 Now it doesn't go in straight line, right? It may go to seven, eleven, again, seven, twelve,
08:25 again, seven or eight again, but definitely the directionally is at six eighty.
08:30 So both the things have happened. There is no reason for RBI also to be not optimistic about it.
08:39 Only thing is, we may see that they may not really, really cut the rates immediately.
08:45 Maybe they may want to see what's happening in the US.
08:48 So maybe that's what the general consensus is only after the US data was June.
08:54 But I would still give 50, 40 basis points, 40% chances for April rate cut.
09:01 Okay. Okay. Indranil, I've heard you say in your opening answer,
09:05 good morning, Neeraj here, that you expect 100 basis points by June 2025.
09:09 Do you concur with Jayesh that even if the Fed were not to make a move,
09:13 and I think Jayesh mentioned that they will wait for the move to happen,
09:16 but even if let's assume they don't make a move, the Fed that is, can the RBI still do it?
09:21 Because in some sense, the view post-budget was that the government has done what it has done.
09:25 We need, we're not satisfied with the growth rates that we may necessarily have,
09:29 even if they're highest in the larger economies.
09:31 And if you want more, it's also imperative upon the Reserve Bank of India to be a bit more benign.
09:38 So we have a 15 basis point rate cut in April. Okay.
09:42 My view is that once the dollar is baked in, rate cut by the Fed, and it is baking that in,
09:50 then there is no need to wait for the Fed.
09:53 On the other hand, if you see, you know, you are sitting at 6.5, core inflation is 3.3,
09:59 which means your real policy rate is 3.2%, whereas the benchmark is about 1%.
10:06 Even if you look at the overall inflation, which is 5.3, including the spike in actuation,
10:15 you are beyond 1%. If you look at the RBI's own forecast of 4.9% inflation,
10:21 six months, nine months down the line, you are at a 1.9% real rate.
10:27 So that's number one. And secondly, I think if you cut rates, given that, you know,
10:34 equity flows are almost 20 times of debt flows in India, money will come in because,
10:40 you know, equity markets chase growth. And once, as Jayesh also said,
10:46 once you have the rupee appreciating and rates coming down, debt FBIs will also come
10:53 because then you are senting, you know, both capital and FX gains.
11:01 Oh, yeah. I mean, this nuance missed me. We've two men who were earlier with the same company
11:08 on together on the show today. I just kind of missed that. OK. Inderneel, just wondering,
11:14 you, in some sense, do you anticipate growth numbers to be strong second half calendar year 24
11:30 with the kind of numbers that have been put up in the interim budget?
11:36 The government is not pegged back on CapEx, just the pace of growth.
11:40 But you could I mean, some people argue that if you look at Achar Sahita and therefore 11 effective
11:45 months of operations, then the per month CapEx number is not that bad either per se.
11:50 Do you expect growth numbers to be strong or would we kind of pretty much do what we would do?
11:59 And would that influence the RBI decision as well?
12:02 I think growth could come down to about 6 percent in the calendar year, number one.
12:08 And number two, there is a joker in the pack, which is the US slowdown.
12:12 Is it a is it is it no landing? Is it soft landing? Is it a hard landing?
12:19 We do not know yet. So the base case is that growth will settle around 6 percent.
12:27 On the one hand, you have El Nino fading away, which means that there should be a good harvest,
12:33 a Kharif harvest in October. On the other hand, the Fed is up in the air.
12:38 The US's growth numbers are up in the air.
12:42 OK, fair point. Final point. And Jayesh, this question is to you.
12:47 What about the rupee? Again, I'm maybe not as much from the Reserve Bank of India perspective,
12:52 but in the next 12 to 24 months, there's a lot of talk around how the 4 percent annual depreciation piece
12:57 may not be a thing of the future. One, is that a fact? Is that something that you believe in?
13:03 And to any of the RBI actions now or April, if they do 15 business points or later on,
13:08 even if they go ahead, if the Fed doesn't, does it have an impact on what the currency does meaningfully?
13:15 I think, you know, PLI plus the flow and all that, which will kind of pan out in next two, three years.
13:23 So that's very positive. And his general view is the rupee appreciation.
13:30 I also am a big follower of rupee appreciation. But having said that, a couple of concern,
13:38 you know, while gold always has been there, fuel oil is fine.
13:43 I think it's still manageable as long as below 80. One of the new thing which is picking up is education.
13:51 Right. That's become becoming bigger than gold import. So I think that's something we need to really,
13:57 really look at while PLI would bring in additional, you know, dollar inflow or make in India would bring in dollar inflow.
14:07 But this kind of outflows needs to be really looked at. And that's that's a little bit worrisome.
14:14 But having said that, very optimistically, very bullish on rupee.
14:19 You're right. We are not looking at the traditional average three and a half, 4 percent depreciation.
14:26 So from that perspective, we should be looking at a different regime going forward.
14:33 Chairman, both of you, thank you so much for taking the time out and giving us a quick heads up into what to expect,
14:38 maybe to expect in the next 17 minutes. We'll let you go on that note.
14:44 Thank you. Well, that's the view from our guest, the head of the MPC announcements in about 16 minutes.
14:50 We'll take a quick break before the MPC announcement comes in.
14:53 We'll talk about earnings. The management of Uno Minda joins in to decode the Q3 numbers.
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24:25 but we are very, very confident in medium to long-term growth of the industry.
24:29 Got it! So, Niranjit you are just minutes away from policy so a quick answer. Four wheelers you expect over the next five to seven years about 3 to 4x growth because penetration can be deepened.
24:39 Overall, what's the CAGR outlook for the group, for the company at large? Could it be similar to the four-wheeler growth?
24:46 As I said, Niranjit, we don't comment on revenue or CAGR. Our endeavor is to outperform the industry. So, I'm sorry I'm not able to give you any number or a CAGR for future.
25:00 Okay, but you believe that you could still maintain the growth rates that you say for example, said for the four-wheeler space while maintaining the margin set about 11% because you've done that now for a number of years. You think that can continue?
25:13 So, that is our endeavor, Niranjit. That's our target that how do we make sure that the growth trajectory we have built, we sort of work on that aggressively and we deliver in terms of the year-on-year growth and the outperformance which we have delivered.
25:28 So, we are working on all fronts and hopefully we should be able to replicate, continue to deliver what we have been able to do in past.
25:34 Viewers, new greenfield capacity in four-wheeler alloy wheels in addition to Bawal and Pune two-wheeler alloy wheel and four-wheeler Lightning in Vietnam and Pune.
25:43 So, lots happening in Uno Minda. They are guiding to 11% margins and one and a half times industry growth. Sunil Bhora, thank you so much for taking the time out and speaking to us today.
25:53 Thank you, Jay.
25:53 Well, that's Uno Minda. We need to slip into a quick break. We'll be back with the RBI Governor and the MPC policy.
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29:21 Hello and welcome to this special coverage of the RBI policy. We are less than two minutes away from RBI Governor Shaktikanta Ghas telling us about what the decision has been.
29:33 The decision will be flashed on the screen. Our ticketing will be giving out to you as soon as we get to know about it. But as Samina has been saying, it's probably not as much about the decision, Samina, as it is about the commentary, about the stance on liquidity and about Paytm.
29:49 Indeed. I think Paytm is going to be the bigger question that reporters are going to be asking the Governor. But let's not forget that apart from the rate cut, which I don't think anybody is expecting.
30:00 Change of stance?
30:01 Change of stance may be a withdrawal from a comedy, from restrictive to more of a neutral stance is what the street is slightly divided on. But yeah, the bigger story is going to be liquidity. Let's not forget, we had a very critical budget in terms of the macros of the country.
30:17 Keeping in mind the path of fiscal consolidation, the fact that market borrowing is lower, US Fed is not going to move on this rate cut, on their rate cut anytime soon. And the fact that liquidity will also ease in the system because of our inclusion in the JPM index. A couple of factors will play out.
30:34 But I think if we were to put our bets on this, Neeraj, no rate cut, no change in stance, literally just move. I don't think there could be much coming in, even though I know the house is divided and that is a little bit of an expectation out there.
30:45 But unlikely, right? I just can't see why we need a change in stance at this stage. We've seen earnings. I understand there is a little bit of pressure. But you've anyway got the RBI controlling the super rate.
30:56 But you changed the stance so that you set the stage for being able to take an action as and when you want to.
31:01 You know Neeraj is an equity man, right? He's literally hoping that there's a change in tone because a change in tone will fuel the market rally.
31:08 Take a look. Let's quickly take a look at what Bank Nifty is doing, what some of your PSU banks are doing. I wouldn't imagine too much activity on any of those parameters.
31:17 Oh, and Bank Nifty is not doing too badly. Maybe they think like Neeraj this morning.
31:21 That's how this started. But yeah, bond yields have moved to a different range post-budget. So it'll be interesting to see what happens to yields today.
31:29 And as Samina mentioned, maybe, who knows, maybe the currency too. It's kind of steady.
31:34 It's the fighter.
31:35 It's the fighter, yes. So yeah, all of those things in focus. Okay, I think it's 10. So we should be getting those flashes up on the screen any moment.
31:44 Should be coming any moment. But I think this is something where we keep a keen eye out for. And as soon as Governor Das starts speaking, I think we cut to him and try and hear out what he has to say.
31:54 Also on liquidity, I think it would be interesting to see how comfortable the RBI is with keeping call rates at 6.5%.
32:02 Remember, the call rate is higher. Banks will have to raise money from depositors. So the whole equation really starts moving back to the other avenues of the market.
32:11 They've maintained their liquidity stand. We've seen various measures taken by the Reserve Bank of India in the form of VRR.
32:18 In fact, that's going to be important to see if they talk about those measures. Could be FX swaps, could be VRR.
32:23 But from the look of it, that is going to be the biggest talking point. At least it has been the biggest talking point amongst economists in the last couple of weeks.
32:32 Core inflation is up 4% at 3.8%. That is comfortable for the Reserve Bank of India. It will be interesting to see what they are charting out for inflation.
32:41 What sort of growth targets do they have in mind as well? While the NSO has predicted or estimated growth of 7.3% this year and 7% next year.
32:51 This is the first monetary policy statement of 2024. A momentous year for the Reserve Bank of India which enters its 90th year of existence and operations on 1st April this year.
33:09 Over the years, the Reserve Bank has established itself as a credible institution which stands for stability, trust and economic progress.
33:21 In recent years, it has become a pioneer in fostering innovation and technology in the financial system.
33:30 Customer centricity and financial inclusion have always been its priorities. The Reserve Bank's tireless efforts towards maintaining a fine balance among price stability, financial stability and external sector stability have paid rich dividends as the country embarks on a higher growth trajectory in the years to come.
33:57 As India gains a pole position in the new global order, the contribution of the Reserve Bank is getting widely recognized both within and outside the country.
34:10 The global economy continues to present a mixed picture. On the one hand, the odds of soft landing have increased with inflation moving closer to the target and growth holding up better than expected in major advance.
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