Weekly Newsletter 2

Weekly Market Newsletter – June 15-20, 2025

Macro Summary

Global geopolitical tensions escalated significantly with direct military exchanges between Israel and Iran, driving volatility in oil markets and prompting concerns over the closure of the Strait of Hormuz. While initial de-escalation efforts saw some oil price retreats, rhetoric from both sides and the US (including reports of potential US strikes on Iran) kept risk sentiment elevated. On the trade front, India is actively pursuing Free Trade Agreements with the EU and an interim deal with the US, alongside exploring alternative rare earth sources. Domestically, India's Wholesale Price Index (WPI) inflation cooled more than expected, offering some relief, but the unemployment rate saw an uptick in May. The US Federal Reserve kept interest rates unchanged, anticipating two rate cuts later in 2025, mirroring actions by the BOE. OPEC's latest report maintained its oil demand growth forecasts, projecting a sound second half for the global economy.

Highlights of the Week

• Ramakrishna Forging revealed a Rs. 220.52 Cr inventory overstatement for FY24-25, reducing net worth by 6.73%.

• HBL Engineering secured multiple large Kavach system installation orders from South Central Railway totaling over Rs. 290 Cr.

• Wipro's key client Marelli (a $100M deal client) filed for bankruptcy, potentially impacting the deal.

• DLF's 'Privana North' premium project in Gurugram sold out completely within a week, generating Rs. 11,000-12,000 Cr in sales.

• Dixon Technologies MD projected export revenues to rise sharply from Rs. 1,800 Cr last year to Rs. 8,000 Cr in FY26.

• Sun Pharma's Halol facility received a Form-483 with 8 observations from a USFDA inspection.

• Bajaj Finance announced a 4:1 bonus share issue.

• Tanla Platforms approved a share buyback offer at Rs. 875 per share.

• The US Federal Reserve kept interest rates unchanged, signaling two potential rate cuts later in 2025.

• Israel-Iran conflict intensified with direct attacks and the US moving military assets to the Middle East.

Sector Heat-Map

Sector	Key Prints	Momentum
Defense & Railways	Significant contract wins (HBL Eng., Railtel), capacity expansion plans (GRSE), strong order book expectations (BEML).	Bullish
Real Estate	Premium projects selling out quickly (DLF), aggressive land acquisitions (Godrej Prop.), new township investments (Omaxe).	Bullish
Pharmaceuticals	Positive USFDA outcomes (Syngene, Alembic), strong export growth (Laurus Labs); countered by 483 observations at other plants (Sun Pharma, Natco, Zydus).	Mixed
Aviation	Ongoing safety checks (Air India, DGCA review), flight cancellations, restructuring efforts (SpiceJet).	Neutral to Bearish
Manufacturing/EMS	Strong export projections (Dixon Tech.), strategic partnerships (Optiemus, Samvardhana Motherson), new plant investments (Uno Minda).	Bullish
IT Services	New deal wins (TCS, HCL Tech, Mastek, Intellect); however, a key client bankruptcy impacts a large deal (Wipro).	Mixed

Key Sector Narratives

Defense & Infrastructure Push: The government's continued focus on strengthening domestic defense capabilities and modernizing infrastructure, particularly railways, has led to a surge in order inflows for companies like HBL Engineering, BEML, and GRSE. This trend is expected to sustain, driven by strategic national projects and an emphasis on 'Make in India' initiatives, promising robust revenue and margin visibility for players in these sectors.

Robust Real Estate Demand: The premium and luxury segments of the real estate market are demonstrating exceptional resilience and demand, as evidenced by DLF's rapid sell-out of its new project. Developers are actively acquiring large land parcels in strategic locations for future residential and commercial developments, signaling a buoyant outlook for the sector despite broader economic uncertainties.

Aviation Sector Headwinds: The Indian aviation sector faced operational challenges this week, including flight cancellations and enhanced safety inspections mandated by the DGCA on specific aircraft fleets. While the regulator affirmed compliance post-reviews, these events highlight the ongoing need for stringent operational oversight. Geopolitical tensions are also adding pressure, leading to potential route adjustments for international carriers.

Bullish Set-ups (↑)

Stock	Catalyst	Comment
HBL Engineering	Multiple new Kavach system orders.	Secured significant contracts from South Central Railway totaling over ₹290 Cr, indicating strong order book visibility.
Godrej Properties	Acquisition of large land parcels.	Acquired land in Bengaluru (₹1,500 Cr revenue potential) and Pune (₹3,100 Cr revenue potential), signaling aggressive growth.
DLF	'Privana North' project completely sold out.	Generated ₹11,000-12,000 Cr in sales within a week, underscoring robust demand for luxury housing.
Dixon Technologies	Sharp rise in export projections.	MD expects exports to grow from ₹1,800 Cr to ₹8,000 Cr by FY26, highlighting significant manufacturing potential.
Laurus Labs	May 2025 exports jumped 104% YoY.	Strong export growth indicates robust demand for its products and potential for positive earnings momentum.
United Drilling Tools	Wins ₹108 Cr order.	Significant order win relative to its ₹420 Cr market cap, improving order book and revenue visibility.
Tanla Platforms	Board approves buyback offer.	Approved buyback at ₹875/share, signaling management confidence in valuation and commitment to shareholder returns.
United Spirits	Acquisition of majority stake in NAO Spirits.	Expands its premium Indian craft gin portfolio and market presence with ₹1.1B acquisition.
Samvardhana Motherson	Joint venture with Egtronics Co.	Strategic JV for manufacturing operations in India, enhancing its global sales and EV components business.

Bearish Set-ups (↓)

Stock	Catalyst	Comment
Ramakrishna Forging	Inventory overstatement.	Revealed ₹220.52 Cr inventory overstatement for FY24-25, reducing net worth by 6.73%, raising governance concerns.
Wipro	Key client files for bankruptcy.	Marelli, a client for a $100M deal, filed for bankruptcy, potentially impacting Wipro's revenue.
Sun Pharma	US FDA Form-483 with 8 observations.	Halol facility received significant observations during inspection, raising concerns about compliance and future approvals.
Blue Star	Downward revision in growth expectations.	Revised expected growth to 10-15% from 20%, signaling a cautious demand outlook for HVAC products.
Marico	Surging global coconut oil prices.	Faces intensifying cost pressures and margin risks for its flagship brands heavily dependent on coconut oil.
Voltas	Weak Q1 demand and margin commentary.	Indicated 20-25% decline in April/May for Room ACs and impact on Commercial Refrigeration, with continued MEP provisioning.

Earnings / Corporate Actions Calendar

• Results: Asian Paints (Q1 on July 29).

• Dividends: IndiMart Intermesh (Final ₹30 + Special ₹20), Vedanta (₹7/share), HAL (Board to consider Final Dividend on June 27).

• Bonus Issues: Bajaj Finance (4:1), ABATE AS Industries (1:1), Investment & Precision Castings (1:1), Nestle (Board meeting on June 26 to consider).

• Buybacks: Tanla Platforms (₹875/share via tender offer).

• Fundraising/QIP/NCDs: NTPC (Board to consider bonds/NCDs up to ₹180B on June 21), Biocon (QIP closed at ₹340.2/share), Kaynes Technology (QIP opened at ₹5,625.75/share), ZEEL (Warrants up to ₹22.37B), Infibeam Avenues (Rights issue worth ₹7B), Thirumalai Chemicals (Preferential issue of ₹4.51B), Sudarshan Pharma (Fundraising up to ₹15B), Astec Lifescience (Board meeting on June 24 for fundraising), Valiant Organics (Board to consider fundraising on June 25), Can Fin Homes (Board to consider equity/debentures fundraising).

• Other: Macrotech Developers (Name change to Lodha Developers approved).

The Editor’s Note

Geopolitical tensions remain a dominant factor, with the Israel-Iran conflict leading to significant market volatility. While there have been attempts at de-escalation, the risk of wider regional instability and its impact on energy prices persists. Investors should closely monitor diplomatic developments and their implications for global supply chains and commodity markets.

Domestically, macroeconomic indicators present a mixed picture, with cooling wholesale inflation but a rise in unemployment. Despite these nuances, sectors benefiting from government impetus in defense, infrastructure, and indigenous manufacturing continue to show strong order book momentum and growth prospects.

The market sentiment is expected to remain cautious, driven by external uncertainties. A tactical stance favoring quality businesses with strong order backlogs, robust balance sheets, and exposure to resilient domestic demand themes is advisable. Selective opportunities may emerge in sectors poised for structural growth.

Final Watch-list

• Long Bias (↑):

  • HBL Engineering: Strong government orders for Kavach systems and railway modernization.

  • DLF: Excellent sales performance in the luxury real estate segment, indicating sustained demand.

  • Dixon Technologies: High growth potential from rising electronics exports and 'Make in India' push.

  • BEML: Increasing defense and railway modernization orders, along with healthy margin expectations.

  • Godrej Properties: Aggressive expansion with significant land acquisitions and strong project pipeline.

  • United Spirits: Strategic acquisitions expanding its premium portfolio and potential excise duty relief.

  • Tata Elxsi: Partnership with Infineon for EV solutions, tapping into a high-growth market segment.

  • Samvardhana Motherson: Strategic JVs and acquisitions to strengthen its automotive components and EV presence.

  • ITD Cementation: Multiple large infrastructure and construction project wins providing order book visibility.

• Short Bias (↓):

  • Ramakrishna Forging: Significant accounting discrepancies and net worth reduction raise serious governance concerns.

  • Wipro: Major client bankruptcy directly impacts a large deal, posing revenue and operational risks.

  • Sun Pharma: USFDA observations at a key facility indicate potential compliance issues and regulatory scrutiny.

  • Blue Star: Downward revision in growth outlook signals weakening demand in its core HVAC business.

  • Voltas: Anticipated weak Q1 performance and continued provisioning in key business segments due to demand challenges.

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