Namaste! Aaj ka news roundup, Newswala style!

MARKETS

Markets: Sensex and Nifty rose for the second straight session on Tuesday, driven by late buying in banking stocks and a positive global trend. Sensex closed up 363.99 points at 80,369.03, while Nifty gained 127.70 points to end at 24,466.85.

TOP STORIES

Small Borrowers Are Tripping Up Top Banks

What Happened

India’s leading banks, including HDFC and Kotak Mahindra, are facing a significant rise in loan defaults, particularly among small borrowers. This is alarming for the personal loans and micro-credit segments, which have seen a sudden spike in non-performing assets. 

While bad loans had dropped to a historic low of 2.8% of total assets by March 2024, the trend has reversed sharply. In the latest quarter, five out of the eight largest private banks reported an increase in bad loans. 

Why It Matters

This uptick in defaults marks a crucial turning point in the credit cycle for Indian banks. Analysts predict that stress levels will remain elevated for the next three to four quarters. Even as India’s economy is projected to grow by 7.2% this fiscal year, lending has been growing at an astonishing pace, particularly in personal loans and credit cards, which have surged over 25%. 

The Reserve Bank of India (RBI) is now stepping in to regulate this lending frenzy, citing concerns about unsustainable growth and rising indebtedness among borrowers. 

What does it mean?

While the immediate impact of rising bad loans may not spell disaster for well-capitalized banks, this ongoing trend could threaten their profitability and growth in the longer term. As regulators increase scrutiny over lending practices, banks may face a slowdown in consumer lending, prompting them to rethink their strategies.

PAISON KA KHEL

Apple’s iPhone exports from India reach $6 billion

Apple Inc. is making a big splash in India, with iPhone exports jumping by a third to nearly $6 billion in just six months. This increase shows Apple’s efforts to rely less on China and focus on India’s growing market and skilled workforce. The company is on track to exceed $10 billion in exports this fiscal year.

Major suppliers like Foxconn and Tata Electronics are ramping up production, with Tata exporting about $1.7 billion worth of iPhones from its Karnataka factory.

O2 Power sets sight on $350M funding 

O2 Power, aiming to expand its renewable energy capacity, is looking to raise $300-350 million in equity. With backers EQT and Temasek preparing to sell, investors like Macquarie and Stonepeak are eyeing the opportunity. Already managing a robust 5.6 GW portfolio, O2 aims to increase its annual capacity from 1.5 GW to 2.5-3 GW.

With EQT and Temasek seeking around $1 billion for their combined $415 million investment, fresh investors may soon take the reins to fuel O2’s expansion.

TOP STORIES

Udaan Lands ₹300 Crore to Power B2B Growth

What Happened?

Bengaluru's B2B e-commerce leader, Udaan, has raised ₹300 crore in a recent debt financing round led by investors like Lighthouse Canton, Stride Ventures, InnoVen Capital, and Trifecta Capital. 

With this funding, Udaan aims to expand its innovative "micro-market strategy," focusing on small, dense clusters of around 3 km, each serving 40,000-50,000 residents. Launched in 2016 by former Flipkart executives Sujeet Kumar, Amod Malviya, and Vaibhav Gupta, Udaan also counts Microsoft and Tencent among its investors.

Why it matters

Udaan's growth has been impressive, with a remarkable 60% increase in revenue and over 50% more daily active buyers this year. They plan to channel the new funds into expanding their supply chain, opening micro-fulfilment centres, and boosting service quality. This drive toward profitability is evident by improved gross margins (+200 basis points) and a 30% cut in EBITDA burn, making Udaan's growth story one to watch.

Zoom out

With its latest investment, Udaan is on a mission to solidify its dominance in the B2B e-commerce space, where it commands a whopping 70% market share across key sectors, including FMCG and pharma. The company is eyeing a public listing by mid-2025. This latest round follows their $340-million Series E raise in 2023, and if it maintains its current momentum, Udaan could very well transform into one of India’s top eB2B players. 

GLOBAL NAZARA

China's bold $1.4 trillion plan to revive its economy

China is set to propose a massive fiscal plan, considering over 10 trillion yuan (about $1.4 trillion) in new debt to stimulate its struggling economy. This plan includes 6 trillion yuan raised through special sovereign bonds over the next three years and an additional 4 trillion yuan for property and land purchases.

The timing is strategic, coinciding with the upcoming U.S. presidential election. If Donald Trump wins, China might further expand this fiscal package to tackle potential economic challenges. 

JSW Steel joins forces with POSCO for big plans

JSW Steel and South Korea’s POSCO are teaming up to launch a 5 million tonne-per-year steel plant, with plans for expansion. This partnership also aims to boost electric vehicle (EV) battery production and renewable energy in India. 

Already invested in MG Motor India, JSW is no stranger to the EV space and renewable energy through JSW Energy. With steel prices set to bounce back, JSW is optimistic about a strong second half of the year.

TOP STORIES

Razorpay's Comeback with ₹2,068 Crore Revenue

What Happened

Razorpay, the Bengaluru-based fintech, has reported a remarkable 24% increase in revenue, reaching ₹2,068 crore for the fiscal year ending March 2024. This growth comes despite facing a nine-month hiatus imposed by the Reserve Bank of India (RBI) on onboarding new merchants. 

•  Total income stood at ₹2,501 crore and expenses at ₹2,454 crore

Why It Matters

Razorpay's impressive performance is largely attributed to its payment gateway segment, which accounts for 75% of the company’s total revenue. The lifting of the RBI's ban on new merchant onboarding last December enabled Razorpay to clear its backlog efficiently. 

• The company successfully onboarded 150,000 new merchants from a pool of 500,000 interested applicants.

Their smart acquisition strategy and omnichannel approach have been key in mitigating risks associated with regulatory disruptions. This proactive stance helped the total payment volume to a remarkable $180 billion in FY24. 

Also, Recent acquisitions, such as the purchase of BillMe, have further strengthened offline operations.

Final words

Razorpay stands out in the competitive fintech market, thanks to strong support from investors like Tiger Global and Salesforce Ventures. With total funding of $741.5 million, the company has built a solid base for future growth. Plus, they are planning to relocate their domicile back to India by FY25, which can further enhance the market reputation. 

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