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Building Businesses In The Digital Age
Good morning. In today’s edition — how is raising capital for businesses different now than 25 years ago?; how the budget can boost consumption; and the Indian rupee may continue to slide.
CORE CONVERSATIONS
JM Financial’s Vishal Kampani On Redefining Wealth Management For India’s Digital Generation
Conversations around raising capital for a business have dramatically changed in the past 25 years. While earlier, it was primarily about getting access to the capital market, now, the founders or promoters of a company have diverse ways of acquiring funds to get a project going.
“Do you want to raise private equity? If not private equity, do you want to do pre-IPO funding? Do you want to do an IPO directly? Do you want to do a combination of it?I think there is a very different corporate finance discussion that we have with every promoter, every company, on how they can meet their financial needs,” Vishal Kampani of JM Financial Ltd told The Core Report: Weekend Edition.
The 50-year-old JM Financial Ltd is working in a fragmented market at a time when technology is changing India's financial landscape.
“We're seeing a lot more large private equity funds who are focused on buyouts and not necessarily focused on growth. So very keen to work with promoters and tell them, listen, if you have a succession planning issue, or if you feel that you want to hang up your boots and be involved in charitable activities, or whatever you want to do, or you believe that you can't add more value to the business today, we are happy to take a controlling stake. You go into the minority,” Kampani said.
Wealth management for India’s digital generation has been redefined even in the past decade. The digital revolution, accelerated by the pandemic in 2020, has reshaped consumer expectations in India, making companies like JM Financial rethink their strategies. Despite the high costs involved, the firm is investing heavily in long-term digital platforms to stay ahead.
"I think the graduation of customers from the age bracket of 20-30, 30-40 may actually be more digital. And therefore we are building the platform from an extremely long-term perspective. So it's costing us, there is a burn involved, but we're taking a very long-term view to building it out," Kampani added.
Firms like JM want to address the individual wealthy and the retail, combined of course with investment banking, a far more rarified zone where it is all about trust, relationships and innovation.
And 2024 was a blowout year for investment banking. Will that continue?
PODCAST
On Episode 488 of The Core Report, financial journalist Govindraj Ethiraj talks to Ambareesh Baliga, veteran market analyst as well as Pushan Sharma, Director at CRISIL Ltd.
Markets recover from Trump and earnings battering.
What are the underlying trends in the markets right now?
The Rupee is holding relatively strong.
Oil prices yet to respond to Trump’s national energy emergency.
India’s whiskey & steel export strategy to the US.
Decoding India’s earnings growth slowdown for Q3.
MESSAGE FROM INDIA ENERGY WEEK 2025
India Energy Week 2025 will bring together global energy leaders to explore pressing challenges, showcase India's energy transition, and highlight innovative solutions.
The conference is scheduled from February 11-14, 2025, in New Delhi.
THE BUDGET WISHLIST
📈 FMCG Industry Looks For Growth And Innovation
As the Union Budget 2025 approaches, the FMCG industry is optimistic about policies that could drive growth, spark innovation and boost consumer demand. As a cornerstone of India’s economy, the industry seeks measures to address inflation’s impact on urban consumption while promoting rural development.
“This upcoming Union Budget could also introduce initiatives that encourage private-sector investments in infrastructure, which will drive job creation, productivity, and economic growth. We also believe that an expanded Production-Linked Incentive (PLI) scheme will enhance India's domestic manufacturing capabilities, decrease reliance on imports, and help bridge the demand-supply gaps for consumer goods,” said Saugata Gupta, managing director and CEO of Marico Limited.
Key Budget Expectations:
Boosting Rural Growth: Investments in rural infrastructure and employment generation to fuel both agricultural and non-farm economies.
Encouraging Private Investment: Policies to promote private-sector involvement in infrastructure, fostering job creation and economic growth.
Supporting MSMEs: Easing credit access, operational challenges, and offering incentives for innovation and growth to empower small businesses.
Accelerating Digitalisation: Backing technology adoption and supply chain modernisation to improve efficiency and competitiveness.
Providing Tax Relief: Measures for middle-class tax relief to boost disposable income and consumer spending.
📦 Driving Competitiveness Through Simplified Logistics
Simplifying logistics regulations and easing compliance are vital to enhancing India’s global competitiveness. R.S Subramanian, SVP of South Asia, DHL Express said that streamlined processes can significantly lower logistics costs, making India a more attractive hub for trade and investment.
“Reducing logistics costs by simplifying regulations and making compliances easier, remains a key lever for India to become even more competitive globally. The push for infrastructure development across modes is also critical for the economy as well as to support growth expectations,” Subramaniam said.
Key Budget Expectations:
Infrastructure Development: Expanding multi-modal infrastructure to support economic growth and meet rising expectations across industries.
E-Commerce Export Hubs: Encouraging the setup of dedicated export hubs to empower MSMEs and drive India’s export potential.
Simplified Tax and Customs Procedures: Collaboration with the government to create streamlined tax structures and easier customs processes, easing the path for exporters.
Sustainability in Trade: Acknowledging the growing focus on sustainability in global business, there is immense potential for collaborative efforts to adopt greener practices in international trade.
CO:RELATION
Advantage Polycab
Investors in Indian equities are toning down their expectations. There is a convergence on a broad thought that India's growth is slowing, and the future earnings growth is likely to remain in single digits. Shares of companies that were darlings of the stock market not long ago have tumbled sharply compared to the broader market. Polycab has been an outperformer over the past year, but if you look at last month's performance, the share price has taken a hit. It recovered marginally after the company's management assured investors that the growth and profit story was intact. With nearly 90% of revenue from wires and cables, Polycab could be your proxy for India's fast-moving electrical goods (FMEG) market.
Cables and wires are likely to see an intense focus as the demand for expanding installed power capacity, power transmission lines, office spaces, data centres, and new residential homes remains persistently high. The government's focus on manufacturing in India allows a focused FMEG player like Polycab to take advantage of benefits. There is also a rapid shift to the organised sector in the cables and wires sector, and companies like Polycab are taking advantage of this by expanding their market share.
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🔢 CORE NUMBER
Rs 51,748 crore
This is how much money foreign portfolio investors (FPI) have taken out of the Indian markets so far in January. This has affected India’s both the Nifty 50 and the Sensex. This is a continuation of the sell off that began in late 2024. One of the highest FPI outflows was seen in October with an offloading of Rs 94,017 crore of domestic stocks. Several factors such as a slowdown in India’s economic growth and lower Q3 earnings have impacted foreign investor sentiments. And it is unlikely to get better with the new Doland Trump government at the helm of America and a weakening rupee.
FROM THE PERIPHERY
—🔽 India is now among the least-favoured Asian stock markets, with 10% of fund managers underweight on Indian equities for 2025, according to BofA Securities. The survey, covering $513 billion in assets, attributed this sentiment to high food inflation, rising US bond yields, and a strong dollar. In contrast, Japan remains the top pick in Asia, with 53% of fund managers overweight, followed by Taiwan (20%). Analysts, including BNP Paribas, expect single-digit returns for Indian equities as broader APAC markets face muted economic sentiment.
—🥲 Trump, at the moment, seems to be going ahead with the action he had promised when he came to power. Some of the harsh measures will also be directed to India. While Tuesday’s reports said that India was willing to work with the Trump administration over the illegal immigrants issue, now it seems that New Delhi is mulling over lowering tariffs and the import of more goods from the US to keep Trump happy. Bloomberg reported sources as saying that India was planning to buy more bourbon whiskey, pecan nuts and even steel and oil. These conversations are however not yet public.
—₹ The Indian rupee has consistently slid against the US dollar for the past few months, and this slide will likely continue. Former Reserve Bank of India (RBI) governor and economist Raghuram Rajan said that the rupee still has room for depreciation. "The dollar is at 85.6 and everyone is asking why is the rupee depreciating. And you say in real and nominal effective terms it is not. But everybody wants to know the relationship versus the dollar. And that pushes a lot of central banks to intervene when they shouldn't be trying to maintain the value,” Rajan was quoted by The Economic Times as saying.
—✈️ Lenders to the defunct Go First airline expect recoveries by H1FY26, following the National Company Law Tribunal's (NCLT) January 21, 2025, liquidation order, ending its 20-month insolvency saga. According to Business Standard, the defunct carrier owes Rs 6,200 crore, with secured creditors like Central Bank of India and Bank of Baroda claiming Rs 1,934 crore and Rs 1,744 crore, respectively. Due diligence on collateral, including a 94-acre Thane land parcel, is ongoing. Recovery may cover principal amounts, with legal and financial processes extending into the next fiscal year.
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