Episode Details

It's Thursday, February 20th, 2025. This is Nelson John, let's get started.

In January 2025, Foreign Portfolio Investors (FPIs) withdrew over ₹780 billion from Indian equities, marking a significant sell-off. This trend persisted into February, with outflows reaching ₹73.4 billion by the 10th, as per National Securities Depository Ltd (NSDL) data. Despite this broad retreat, FPIs increased their stakes in select companies during the December 2024 quarter. Notably, FPIs raised their holdings in Greaves Cotton, a diversified engineering company, from 1% to 2.4%. This surge coincided with the company’s announcement of an IPO for its electric mobility subsidiary, Greaves Electric Mobility. Similarly, Shaily Engineering, specializing in high-performance plastic components, saw FPI ownership rise from 3.1% to 5.4%. The company’s focus on proprietary drug delivery devices has positioned it favorably in the healthc are sector. Borosil Renewables, India’s sole solar glass manufacturer, experienced an increase in FPI stake from 4.2% to 5.4%. This uptick followed the imposition of anti-dumping duties on solar glass imports, benefiting domestic producers. Infrastructure firms like Kalpataru Projects International and KEC International also attracted higher FPI interest, with stakes rising to 12.4% and 15.2%, respectively, driven by substantial order wins in the transmission and distribution sectors. In the chemicals sector, Atul Ltd saw FPI holdings increase to 11.2%, bolstered by strong quarterly performance. Meanwhile, Action Construction Equipment, a leading crane manufacturer, witnessed FPI stakes climb to 11.9%, reflecting confidence in its growth trajectory. These targeted investments suggest that, despite overall market exits, FPIs are selectively increasing exposure to companies with robust growth prospects and strategic initiatives.

In the December quarter, Bharti Airtel reported an average revenue per user (ARPU) of ₹245, surpassing Reliance Jio’s ₹203. This ₹42 gap, up from ₹38 in the previous quarter, is attributed to Airtel’s higher proportion of postpaid users and the migration of 2G users to 4G services. Despite Airtel’s ARPU lead, Jio’s larger subscriber base of approximately 460 million, compared to Airtel’s 360 million, positions it to gain more in absolute revenue from future tariff hikes. With India’s mobile connections nearing saturation at 1.15 billion, ARPU growth remains crucial for revenue expansion. However, challenges such as increased home broadband penetration and regulatory directives for voice-and-SMS-only plans may impact ARPU growth. While Airtel’s shares have risen nearly 50% over the past year, the recent 0.8% stake sale by the Mittal family, the company’s promoters, could influence short-term investor sentiment. 

AkzoNobel N.V., Europe’s leading paint manufacturer, is considering selling its consumer paints division in India, potentially valuing the sale between $1.5 billion and $1.7 billion. This move comes as part of a strategic review initiated last year. The company plans to retain its industrial coatings segment due to its complex partnerships and advanced technological requirements. Three major contenders—Pidilite Industries, JSW Paints, and Indigo Paints—have advanced to the second round of bidding for the consumer paints business. Pidilite is reportedly preparing a solo bid, while JSW Paints and Indigo Paints are exploring collaborations with private equity firms such as Blackstone, TPG, Advent International, and Warburg Pincus. If AkzoNobel opts to sell both its consumer and industrial coatings divisions, the total valuation could reach up to $2.2 billion. The industrial coatings sector involves intricate intellectual property rights and long-term contracts, making it less straightforward to divest. The final decision on the sale’s structure and the assets included is still under deliberation. This potential sale could