CA Varun Agarwal (SEBI RA Regn.No. INH000014474)

Laser Power & Infra IPO: My view on the IPO is to skip it for now but keep the company on the radar after listing. Laser Power & Infra operates in an attractive power transmission and distribution sector, has an integrated manufacturing and EPC business model, benefits from strong industry tailwinds, has improved EBITDA margins and profitability, and is being offered at a seemingly reasonable valuation of around 20x FY26 earnings. However, the key concern is that its manufacturing revenue declined sharply in FY26 despite robust demand for cables and conductors across the sector, while peers continued to grow. The company’s explanation of raw-material shortages and customer order postponements is not fully convincing, especially given its low export exposure. The sharp rise in working-capital days and debt also raises questions about cash-flow quality, and the sustainability of the FY26 margin expansion remains untested. Therefore, it would be prudent to wait for the company to list, study its FY27 performance and management commentary in detail, understand whether the revenue decline was temporary or company-specific, and consider investing only after there is clear evidence of growth revival, better working-capital control and stable margins.

TCS CEO K Krithivasan has said that artificial intelligence will not lead to an overall reduction in the company's workforce, as AI is expected to transform jobs rather than eliminate them. While AI will automate certain tasks and improve productivity, TCS will continue hiring employees with new AI-native skills to support evolving client requirements. His comments come at a time when concerns about AI-driven job losses are increasing across the IT industry. Supporting this view, TCS added 9,279 employees on a net basis during Q1 FY27—the company's largest quarterly headcount addition in four years—taking its total workforce to nearly 5.94 lakh employees. The company also onboarded about 14,000 fresh graduates during the quarter, indicating that despite rapid AI adoption, TCS continues to see strong demand for talent, albeit with a greater focus on AI-related skills and reskilling.

You can think of nibbling some allocation in the IT sector also in your portfolio where you see companies giving double digit growth guidance for FY27 & FY28.

TCS delivered a better-than-expected Q1 FY27 performance in what was anticipated to be a weak quarter for the IT sector. Revenue grew 13.9% year-on-year to ₹72,275 crore, ahead of analyst estimates, while net profit increased 4.6% to ₹13,349 crore. A key highlight was the rapid growth of its AI business, with annualised AI revenue reaching $2.6 billion, up 13.6% sequentially and now contributing about 9% of total revenue. The company also secured strong deal wins, including an $800 million AI-led contract with SKF, helping total contract value (TCV) reach $9.5 billion during the quarter. While profit growth was relatively modest and deal wins were lower than the exceptionally strong Q4 FY26 level, management indicated that demand conditions are expected to improve during Q2. Overall, the results suggest that AI is becoming a meaningful growth driver for TCS and is helping offset the broader slowdown in traditional IT spending.

Indian markets witnessed a good recovery session yesterday. While the broader markets showed healthy participation and strength, the benchmark indices cooled off from the intraday highs and eventually closed near the lower end of the day's range, with the Nifty ending at 23,962. With positive global cues and a likely strong opening today, we expect the recovery momentum to continue. Encouragingly, market breadth has improved and broader markets are once again participating in the rally, which is generally a positive sign for overall sentiment. Over the last few weeks, we have consistently highlighted the 23,800–23,900 zone as a strong support area for the Nifty. The index has respected this support zone, held firm, and recovered from those levels. As long as this support remains intact, we continue to maintain a bullish view on Indian markets from a short-term perspective. On the earnings front, TCS has reported results largely in line with market expectations. While it may not have delivered any major positive surprise, the absence of negative surprises is equally important in the current environment. If the upcoming earnings season continues along similar lines, it should provide stability to market sentiment and reduce the risk of any significant downside reaction from corporate results.

U.S. markets had a strong session yesterday. The Dow Jones closed 0.27% higher, the Nasdaq gained 1.30%, and the S&P 500 ended 0.81% in the green. U.S. futures are trading mildly lower this morning, but the overall setup remains constructive. The U.S. 10-year bond yield is steady at 4.5%. Brent crude oil has cooled off to around $76 per barrel, which is a positive development for India. The Dollar Index remains stable near 100. Gold has moved higher to around $4,121, while silver is trading near $60. Asian markets are also trading in the green, supported by the positive overnight performance in the U.S. and some cooling in crude oil prices. Overall, global cues can be considered positive for today. Indian markets are likely to open on a strong note, although domestic earnings announcements and geopolitical developments may continue to influence market direction during the session.

Good Morning Friends ☕

The government has formally launched the bidding process for its ₹37,500 crore coal gasification incentive scheme, with the first project agreements scheduled to be signed by January 4, 2027. The scheme aims to accelerate investments in coal and lignite gasification projects, reduce India's dependence on imported chemicals and petrochemicals, promote value-added use of domestic coal and support the national target of gasifying 100 million tonnes of coal by 2030. Under the announced timeline, applications will close in September 2026, selected bidders will be announced in October, letters of award will be issued in November, and project agreements will be signed in January 2027. Companies will be evaluated based on factors such as financial incentive sought, plant capacity, project cost, technology partnerships and financial strength. The development is positive for coal gasification, chemicals and engineering sectors, and could benefit companies such as Coal India, BHEL, Engineers India and other firms involved in coal-to-chemicals, syngas and downstream petrochemical projects.

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The Government of India has extended customs duty concessions and exemptions on several key machinery items, components and raw materials used in electronics manufacturing and lithium-ion battery production until March 2029. The move is aimed at reducing input costs, improving competitiveness of domestic manufacturers, encouraging fresh investments, boosting exports and strengthening India's electronics manufacturing ecosystem under the Make in India initiative. Companies involved in electronics manufacturing services (EMS), mobile phones, consumer electronics and battery manufacturing are expected to benefit through lower production costs and potentially better margins, which is why stocks such as Dixon Technologies, Syrma SGS and Amber Enterprises reacted positively to the announcement.

Hope you are felling better today😃

Kusumgar IPO: Only aggressive investors should apply: Kusumgar operates in the niche and high-entry-barrier technical textiles segment, supplying specialized fabrics and solutions to aerospace, defence, industrial, automotive, and outdoor applications. The company has vertically integrated operations, strong engineering capabilities, healthy EBITDA margins of around 27%, and exposure to long-term growth themes such as defence indigenization and advanced materials. It is also gradually moving up the value chain from fabric manufacturing to higher-margin defence and aerospace solutions. However, investors should note that revenue and profits declined in FY26, indicating that growth can be volatile and dependent on order flows. The business has customer concentration risk, some governance yellow flags such as past auditor observations, related-party transactions and missing historical corporate records, and the IPO is a 100% Offer For Sale with no fresh capital being infused into the company. At around 45x FY26 earnings and nearly 25x EV/EBITDA, the valuation is expensive, leaving limited room for execution disappointments. Overall, it is a good-quality niche manufacturing business with attractive long-term opportunities, but the premium valuation and recent slowdown mean investors should temper expectations and be prepared for some volatility.

The tensions between the U.S. and Iran have escalated once again. Reports suggest that the ceasefire has been violated, with the U.S. continuing military strikes and Iran retaliating by targeting U.S.-linked assets and locations in neighbouring countries. Naturally, such developments have increased uncertainty across global financial markets. However, instead of reacting to every headline, I will continue to monitor crude oil prices as the most important indicator to assess the seriousness and potential economic impact of the conflict. Historically, oil has been one of the best real-time indicators of whether a geopolitical event is likely to remain localized or evolve into a larger crisis. We did witness a sharp spike in Brent crude oil prices yesterday, with prices briefly moving close to the $80 per barrel mark. However, the rally cooled off later and oil prices retreated from the highs. This suggests that, at least for now, the market is not pricing in a major disruption to global energy supplies.

Indian markets witnessed a weak session yesterday. As visible from the chart, the Nifty formed a large red candle, and almost the entire gains accumulated over the last one week were wiped out in a single trading session. Over the last couple of weeks, we have been repeatedly highlighting the 23,800–23,900 zone as an important support area for the Nifty. Yesterday, the index closed at 23,882, which is exactly around this support zone. Therefore, today’s session becomes very important. If the Nifty decisively breaks below 23,800, we will have to revisit our short-term bullish view on the markets. However, since the index is still trading around the support zone and has not yet broken it decisively, we would prefer to wait for one more trading session before changing our stance. The result season also begins today and will play an important role in deciding the next market direction. For now, the short-term setup has weakened, but the key support zone is still intact. We will closely watch today’s price action before taking a fresh view on the market.

U.S. markets witnessed a mixed session yesterday. The Dow Jones declined 1.09%, while the S&P 500 closed 0.28% lower. The Nasdaq, however, managed to buck the trend and ended 0.20% higher, supported by selective buying in technology stocks. U.S. futures are trading largely flat with a slight positive bias this morning, indicating the absence of any strong directional cues. The U.S. 10-year bond yield has edged higher to 4.5%, which continues to remain a factor that equity markets are closely monitoring. Brent crude oil has cooled off marginally and is currently trading around $78 per barrel. While crude prices remain elevated compared to recent levels, the pullback from the highs provides some relief to global markets. The Dollar Index remains stable around the 100 mark. Precious metals have also cooled off slightly. Gold is trading near $4,078, while silver has softened to around $58. The correction in precious metals suggests that some of the recent safe-haven demand is easing. Asian markets are showing a mixed trend today, reflecting the lack of a clear direction from global markets. Some markets are witnessing profit booking, while others are relatively stable. Overall, global cues can be considered neutral for today. Mixed performance across major global markets, stable currency movements, and slightly softer commodity prices point towards a balanced setup. Indian markets are therefore expected to witness a flattish start to the trading session, with domestic factors and earnings-related developments likely to dictate market direction through the day.

Good Morning Friends ☕

Finance Minister Nirmala Sitharaman has urged India's toy industry to target a much larger share of the global toy market, calling on manufacturers to aim for 25% of the projected $179 billion global market by 2032 rather than being satisfied with India's current target of a $5 billion domestic toy market by 2034. The government believes India has a significant opportunity to emerge as a global toy manufacturing hub, supported by quality-control measures, higher import duties, trade agreements and the recently announced National Action Plan for Toys. These initiatives have already led to a sharp reduction in toy imports, which have fallen 71% since 2019, while exports have grown steadily. The broader objective is to move beyond import substitution and build a globally competitive toy manufacturing ecosystem that can capitalize on the global supply chain diversification away from China.

Nifty closed exactly at the 23900 zone today. We will see the market tomorrow and decide our view.