Kotak Institutional Equities hosted managements of 63 companies including One 97 Communications Ltd (Paytm), Tata Power Company Ltd, Premier Energies Ltd and RBL Bank Ltd on Day 2 of its Chasing Growth 2025 conference. The Day saw about 800 representatives from 222 funds connect with executives from these corporates in 275 one-on-one and 118 group meetings. Here are the key takeaways from a couple of companies that participated in the event:
Paytm The key takeaways for Paytm was that the primary focus of the business is on payments and upselling financial services to payment customers. The company processes a GMP of Rs 5 lakh crore from consumers to merchants every quarter through UPI and cards. Of this, 80 per cent is processed through UPI, which has significantly cannibalized debit card usage, while the remaining 20 per cent is processed through credit cards.
Paytm said the market share of payment devices in the offline segment is at a 90 per cent sound box and 10 per cent card machines. On the Rs 5 lakh crore of GMP, net of payment to the bank by Paytm, 5-6 bps of the transaction is received as revenue. A dollar a month is the revenue accrued from each merchant for the soundbox. The government incentive is the only income for UPI.
A total of 80-85 per cent of the revenue comes from loan distribution, with a lending partner. Each lender individually underwrites each loan request, which is received on the Paytm platform, while Paytm has a whitelist of its consumers eligible for lending. Out of this, merchant lending comes in at 70 per cent, the rest is personal loans. Paytm said it had cut the loan book significantly by July 2023. From Rs 1,100 crore a couple of years ago, the current run rate is at Rs 600 crore.
"In the equity broking business: CAC is much lower for Paytm Equity Broking, with Paytm customers being converted into the Paytm Equity Broking business. Management views it as a very high gross margin business. Most importantly, huge cost advantages using AI by optimizing operation costs," it said.
The insurance broking business, is currently at a very minor portion of revenues. Paytm also has credit card distribution with SBI, Kotak, IIB and others as partners and has co-branded cards with lenders. Rs 100 crore revenue a year comes from this line of business.
Tata Power The Tata Power management highlighted that Tata Power saw 8 per cent YoY growth in PAT Q3, aided by a regulatory boost at Mundra UMPP and a lower effective tax rate of 21 per cent. While margins to 14 per cent for the quarter, the management highlighted that the margins will normalise to 7-9 per cent in the upcoming quarters.
Tata Power expects earnings from the renewable segment (asset ownership + project execution) will drive growth and will be aided by the commissioning of 5 GW of new renewable capacities, an order book of Rs 13,500 crore with Tata Power Solar and a ramp-up of 4 GW cell and module capacity.
The management expects renewable energy to contribute more than 50 per cent of Ebitda by 2030, with almost 30 per cent coming from the transmission and distribution (T&D) business and less than 20 per cent from traditional power sources, as opposed to the current 30 per cent, 30 per cent and 40 per cent Ebitda contributions, respectively.
The management highlighted that the announced budget and policies will be favorable for Tata Power. Under PM Surya Ghar, the government is targeting 10 million solar rooftop installations by 2027. As the largest solar rooftop developer in India with a 13 per cent market share, Tata power aims to capture 3 million households in the next three years, raising its market share to 30 per cent. The Tata Power management highlighted that Tata Power will stay consistent with its strategy of venturing into FDRE and hybrid projects in renewable energy, instead of going for vanilla solar or wind projects to earn higher Ebitda margins and using 70 per cent debt combined with 30 per cent equity for funding these projects.
Premier Energies The Premier Energy management said it remains unclear as to what the new US administration will do with the IRA. While the IRA has been paused at the moment, management remains unsure of which incentives within the IRA are impacted. However, despite all this uncertainty, US demand will remain strong, since solar energy is the cheapest form of energy, it suggested.
The management believes that solar manufacturing is scaling up very well, with module manufacturing crossing 100 GW and solar cell capacity at 20 GW. Additionally, it is expected that 30-35GW of solar cell capacity will be added in the next 2.5-3 years, leading to potential supply-demand parity by 2030. The company attributed the heavy expansion to government support, non-tariff barriers and a strong demand environment.
The company shared that solar module demand, which was 32 GWdc in 2024, is likely to increase to 40-45 GWdc in the next couple of years, led by 20-25 GW demand from IPPs, 10 GW from rooftop and 7-8 GW from KUSUM and CPSU.
"Premier’s order book stands at Rs69.5 bn as of Dec 2024, implying a robust order inflow over 9MFY25. Solar cell has been the key driver of increase in orders with the order book contribution increasing to 36 per cent in 3QFY25. The whole orderbook is executable in next 12-18 months, implying a strong near-term revenue visibility and robust domestic demand for solar cells, which would enable the company to generate elevated margin," Kotak noted.
RBL Bank The RBL Bank management indicated that overall loan growth is likely to be 10-15 per cent YoY in 2026E. Key drivers will be the segments of housing finance, business loans, tractors and gold loans. Gold loan origination will be a largely branch-led customer cross-sell model. Tractors will have low disbursements until June and will pick up thereafter. The tractor business has broken even, it suggested.
The rest of the retail businesses are likely to break even on aggregate in 2026E. Wholesale are seen growing well, led by commercial banking. Business banking has broken even as well. The bank is not chasing volume growth through new card issuances. The bank is not chasing smaller value cards and the RBL Bank management is looking at cross-selling savings to this customer base.
In the case of microfinance, the industry has shrunk. The management believes it is difficult to predict how the industry will grow after the cycle turns. The management indicated that this loan book might end up staying flat YoY in 2026E, looking at the situation on the ground. It indicated that ex-bucket collection efficiency in MFI had improved marginally in January over December. However, the bank has seen a sequential drop, given the situation in Karnataka in February.
"The management has accelerated provisioning for the microfinance business recently. As a consequence, the bank currently carries a PCR of 85 per cent on GNPA, as of December 2024. The management indicated that it will consider keeping the coverage level at a similar or higher level during 4QFY25 as well," Kotak cited the RBL management as saying.