Day: June 14, 2025

India’s largest lender, State Bank of India (SBI), has moved swiftly to pass on the Reserve Bank of India’s latest repo rate cut to borrowers. On Friday, SBI announced a 50 basis points reduction in its External Benchmark Lending Rate (EBLR) and home loan interest rates, effective June 15, 2025.

This move comes in response to the RBI’s decision to cut the policy repo rate by 50 bps, as the central bank looks to stimulate economic growth amid a declining interest rate environment.

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📉 What’s Changing?

• EBLR (External Benchmark Lending Rate):
  • Old Rate: 8.65%
  • New Rate: 8.15%
• Home Loan Rates (linked to EBLR):
  • Revised Range: 7.5% – 8.45%
  • Varies based on borrower’s credit score

According to SBI’s updated website, borrowers with stronger credit profiles will benefit from lower interest rates.

“We have passed the entire repo rate cut to our borrowers,” a senior SBI executive confirmed.

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💰 What About Deposit Rates?

While borrowers cheer the rate cut, depositors may face disappointment:

• Special Deposit Scheme – ‘Amrit Vrishti’ (444 days):
  • Interest rate reduced by 25 bps
  • New Rate: 6.60% (down from 6.85%)
  • Effective June 15, 2025

Other domestic retail term deposit rates (below ₹3 crore) remain unchanged for now. However, SBI had already trimmed term deposit rates across maturities by 20 bps last month, and a further review is underway.

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🏦 Why It Matters: The EBLR Explained

SBI’s lending rates are linked to the EBLR, which is pegged to the RBI’s repo rate. This ensures quicker transmission of monetary policy changes to end borrowers. The EBLR also includes:

• Credit Risk Premium – based on the borrower’s credit profile
• Business Strategy Premium – based on SBI’s internal pricing strategy

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📊 What Does This Mean for the Banking Sector?

According to a report from CareEdge Ratings:

• Deposit growth remains competitive, especially for low-cost Current and Savings Accounts (CASA)
• Banks lowering deposit rates may see a lagged impact on deposit costs over the next 2–3 quarters
• This could squeeze Net Interest Margins (NIMs) in FY26

CareEdge estimates NIMs may decline by 20–25 basis points in FY26 compared to FY25, as falling yields on loans could outpace the decline in deposit costs.

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🧾 Takeaway for Borrowers and Depositors

• Home loan borrowers: This is a good time to review your current rates and consider refinancing if you’re paying more than the revised range.
• Depositors: Interest rates are under pressure, especially for medium-term deposits. Consider shorter tenures or alternatives like debt mutual funds if you’re seeking better yields.
• Investors in bank stocks: Keep an eye on NIM pressures in FY26 as rate transmission accelerates.

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Final Word: SBI’s move is a clear signal that the Indian banking system is responding quickly to the RBI’s monetary easing. While borrowers benefit immediately, depositors and bank margins could feel the heat in the coming quarters.

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U.S. stock markets closed deep in the red on Friday, as escalating tensions in the Middle East sparked a sharp sell-off, particularly in financial and tech stocks. Iran’s missile counterstrikes on Israel—following Israeli attacks on strategic military and nuclear sites—sent shockwaves through global markets, triggering a flight to safety.

Major Indices Tumble

• Dow Jones Industrial Average: Dropped 1.79% to 42,197.79
• S&P 500: Declined 1.13%, closing at 5,976.97
• Nasdaq Composite: Slipped 1.30% to 19,406.83

All three major indices posted weekly losses:

• Dow: -1.3%
• S&P 500: -0.4%
• Nasdaq: -0.6%

Broad-Based Selloff Led by Financials and Tech

The downturn was widespread, with 10 of 11 S&P 500 sectors closing in the red. The hardest hit:

• Financials: -2.06%
• Information Technology: -1.5%

On the S&P 500, declining stocks outnumbered advancers by more than 6-to-1, underscoring the bearish sentiment.

Geopolitical Fears Trigger Flight to Safety

Investor nerves were rattled after reports of multiple explosions over Tel Aviv and Jerusalem, following a barrage of missiles launched by Iran. This retaliation marks a major escalation in regional conflict, fueling concerns of broader geopolitical instability.

The U.S. Dollar Index rose 0.5% to 98.16, while the yield on the 10-year Treasury climbed 5.6 basis points to 4.413%, reflecting a shift toward safer assets amid rising uncertainty.

Oil Prices Surge Amid Supply Concerns

Crude oil prices spiked nearly 7% on fears of a potential disruption in Middle East oil supplies—a key concern given the region’s importance to global energy markets.

This led to a rally in energy stocks:

• ExxonMobil: +2.2%
• Diamondback Energy: +3.7%

Stock Movers: Winners and Losers

🔻 Big Tech & Financials Fall

• Nvidia: -2.1%
• Apple: -1.4%
• Visa & Mastercard: Both down over 4%
• Adobe: -5.3%
• Oracle: Bucked the trend, jumping 7.7% to a record high

✈️ Airlines Under Pressure

Rising oil prices spooked airline investors, dragging stocks lower:

• Delta Air Lines: -3.8%
• United Airlines: -4.4%
• American Airlines: -4.9%

🛡️ Defense Stocks Rally

Amid rising conflict, defense contractors saw strong gains:

• Lockheed Martin, RTX Corp, and Northrop Grumman: All up 3%+

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Looking Ahead: Volatility on the Radar

With geopolitical risks rising and oil prices spiking, markets may remain volatile in the near term. Investors will be closely watching for diplomatic developments, central bank reactions, and economic data releases in the coming days.

Key takeaway: The Middle East conflict is no longer a background concern—it’s now a central risk factor that markets can’t ignore.

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Every investor dreams of that one multibagger stock — the kind that quietly turns ₹1 lakh into ₹50 lakh. For some, this dream has already come true. A few under-the-radar small caps have transformed into serious wealth creators over the past few years.

These companies didn’t rise on hype. Their core businesses evolved, earnings took off, and investors who stayed the course — without trying to time the market — saw phenomenal gains. But now that these stocks have already delivered 50x returns, a key question arises: Is there any upside left? Or is the best behind us?

Let’s dive into three such standout names.

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#1 Bombay Stock Exchange (BSE): A Classic With a New Growth Engine

Asia’s oldest stock exchange, operating since 1875, BSE is also the world’s fastest, clocking trades at 6 microseconds. It provides trading services across equities, debt, currencies, derivatives, and mutual funds.

One of its standout platforms, BSE StAR MF, is now India’s largest online mutual fund distribution platform. It processes 2.7 million transactions per month and adds nearly 200,000 new SIPs monthly.

Explosive FY25 Performance

BSE’s performance in FY25 was driven by strong operating leverage:

• Revenue doubled to ₹32 billion (vs ₹15.9 billion in FY24)
• Net profit surged 71% to ₹13.2 billion
• Operating margins expanded from 28% to 51%

Derivatives Boom: A Game-Changer

Derivatives now make up 44% of BSE’s total revenue — ₹14.2 billion, up from just ₹1.8 billion a year ago. A spike in average daily premium turnover (₹71.6 billion → ₹118 billion) offset a decline in notional turnover, thanks to favorable regulatory shifts.

Equity transaction charges also contributed ₹3 billion, while total transaction charges nearly tripled to ₹20.3 billion.

Other Growth Drivers

• Mutual fund segment revenue: ↑80% to ₹2.3 billion
• Corporate services (listing & compliance fees): ↑40% to ₹4.9 billion
• Plans to launch 40 new indices in FY26 to capitalize on passive investing
• Improved infrastructure: 100 new server racks for increased trading activity

Valuation Watch

BSE currently trades at 89x P/E, far above its 10-year average of 29x. While structural tailwinds (derivatives growth, increased participation) remain, the valuation suggests a lot of optimism is already priced in.

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#2 Elecon Engineering: Quietly Gearing Up for Global Growth

Elecon Engineering, one of Asia’s largest industrial gear makers, holds a commanding 38–40% share of India’s gear market. It also has a strong presence in material handling equipment (MHE) and is known for its high-tech engineering — supplying marine gears to the Indian Navy is a case in point.

Strong FY25 Financials

• Revenue: ₹22.3 billion, up 15%
• EBITDA: ₹5.4 billion; margins at 24.4%
• Net profit: ₹4.2 billion, up 17%
• Gear division: 79% of revenue
• MHE division: 21%, with a sharp 73% YoY growth

Global Playbook and Sectoral Tailwinds

• Domestic revenue: 77%; International: 23%
• Target: Increase international share to 50% by FY30
• Strong demand across sectors like steel, cement, and power
• Open order book stands at ₹9.5 billion (+20% YoY)
• Order intake grew 19% to ₹24 billion in FY25

Valuation Perspective

At 37x P/E, Elecon trades above its 10-year average of 21x. The stock is expensive, but structural growth — especially from global markets and infrastructure investments — provides a compelling long-term story.

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#3 BLS International: Riding the Travel and Digital Boom

Founded in 1983, BLS International is a leading provider of visa, passport, and consular services, operating in over 70 countries. It manages non-judicial tasks for visa processing — from submission to approval.

FY25 Snapshot

• Revenue: ₹21.9 billion, up 31%
• EBITDA: ₹6.3 billion, up 82%; margin expanded to 20.6%
• Net profit: ₹5.4 billion, up 66%
• Net cash position: ₹9.3 billion

Business Breakdown

• Visa and consular services: 75% of revenue
  • Applications rose 31% to 3.7 million
  • Revenue per application increased 35% to ₹2,903
  • EBITDA margin: 34.5%
• Digital services: 25% of revenue
  • Revenue up 71%
  • Margin pressure due to higher operational costs

What’s Ahead?

• Active acquisition strategy (₹10 billion deployed in FY25)
• Strong revenue visibility from upcoming $1–2 billion government contracts
• Proxy play on rising global travel demand, higher disposable incomes, and easing visa regulations (e.g., ASEAN visa reforms)

Valuation Check

BLS trades at 30x P/E, broadly in line with its historical average of 32x. Compared to BSE and Elecon, BLS offers relatively reasonable valuation with solid growth visibility.

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Final Thoughts: Should You Buy Now?

Over the past five years, BSE, Elecon, and BLS International have delivered massive shareholder returns. Each benefited from structural tailwinds:

• BSE rode the derivatives boom and platform scale
• Elecon capitalized on infrastructure momentum and global demand
• BLS gained from rising visa volumes and digital transformation

However, valuations now matter more than ever:

• BSE is richly valued — pricing in a lot of its future growth
• Elecon looks expensive, but global expansion offers upside
• BLS appears fairly priced, with consistent earnings momentum and a strong balance sheet

If you’re looking for long-term compounders, understanding the growth runway versus current valuations is key. The dream of 50x returns may be behind us for now, but solid businesses still have the potential to deliver strong, sustainable gains — if you enter at the right price.

Eqwires Research Analyst

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info@eqwires.com

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