RBI

Monetary Policy
Committee Meeting
February
2025
Report by Trade Brains

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Key Highlights of RBI MPC
February 2025 Meeting:
Repo Rate cut by 0.25% or 25 bps from 6.5% to 6.25%
Standing Deposit Facility reduced from 6.25% to 6%

Marginal Standing Facility & Bank Rate cut to 6.5%

from 6.75%
The MPC maintains a “Neutral Stance”
GDP growth projection for FY25 retained at 6.4%.
Real GDP Growth forecasted for FY26 is 6.7%.
For Q1- 6.7% , Q2- 7%, Q3- 6.5% and Q4- 6.5%.
CPI projected 4.8% for FY25 & for Q4FY25 is 4.4%.
CPI projected 4.2% for FY26. For Q1 - 4.5%, Q2 - 4%,
Q3 - 3.8% & Q4 - 4.2%
Foreign exchange reserves: $630Bn (as on Jan 31, 2025)
To launch Bank.in domain for Indian banks & Fin.in
domain for Financial sector by Apr ‘25.
India received $129.1Bn in remittances in 2024, the
largest recipient globally.

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 Banking &

Year 2025
Real Estate
Financial
Services

RBI MPC Report Gold

Infrastructure

Automobiles

Banking & Financial

FMCG &
Consumer NBFC
durables

Services

Market Cap ₹13,25,588 ₹6,79,030 ₹8,95,801 ₹3,13,995 ₹3,79,175

CMP ₹1,733 ₹761 ₹1,269 ₹1,014 ₹1,907

P/E 19.1 9.0 18.2 11.2 19.3

NPA(Net) 0.46% 0.53% 0.42% 0.35% 0.41%

NIM 3.40% 3.10% 4.25% 3.93% 4.93%

CASA Ratio 34.00% 39.20% 40.50% 39.00% 42.30%

Capital
Adequacy 20.00% 13.03% 16.60% 17.01% 23.40%
Ratios
*Ratios(%) and figs (in ₹ Cr) are as of Q3FY25.

A reduction in interest rates is likely to stimulate the Banking And Financial Services
sector significantly. Lower borrowing costs can lead to increased demand for loans,
which would enhance banks' profitability through higher lending volumes.

Additionally, a rate cut may improve the asset quality of these banks as borrowers find
it easier to service their debts, reducing the likelihood of defaults. This positive
sentiment can also lead to higher valuations in the banking sector as investors
anticipate improved earnings.

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Year 2025
Banking &
Real Estate
Financial
Services

RBI MPC Report Infrastructure

Automobiles
Gold

FMCG &

Real Estate
Consumer NBFC
durables

Market Cap ₹1,90,339 ₹28,085 ₹65,830 ₹59,068 ₹68,639

CMP ₹769 ₹1,150 ₹1,810 ₹1,371 ₹2,270

P/E 50.7 44.0 25.5 101.0 46.1

ROE 8.96% 12.87% 13.91% 12.17% 7.25%

ROCE 5.96% 11.97% 16.41% 17.69% 8.64%

Debt to
Equity 0.1 1.52 0.18 1.02 1.07
Interest
Coverage 7.03 2.77 12.51 3.32 7.68
Ratio
*Ratios(%) and figs (in ₹ Cr) are as of FY24.

The Real Estate sector is poised for a substantial uplift if interest rates are cut. Lower
interest rates make mortgages more affordable, encouraging homebuyers to enter the
market. This can lead to increased sales volumes and higher property prices, fostering
a more robust real estate market. Additionally, developers may find it easier to finance
new projects, leading to an increase in construction activities and overall economic
growth.

These leading real estate players are expected to benefit from a rate cut, with increased
residential sales likely as buyers take advantage of lower mortgage rates, driving
revenue growth. Developers with a balanced focus on residential and commercial
segments expect to see strong project demand across categories.

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Year 2025
Banking &
Real Estate
Financial
Services

RBI MPC Report Infrastructure

Automobiles
Gold

FMCG &

Infrastructure
Consumer NBFC
durables

Market Cap ₹4,61,659 ₹84,224 ₹1,17,205 ₹32,629 ₹21,570

CMP ₹3,357 ₹404 ₹367 ₹54 ₹810

P/E 33.2 65.8 30.2 43.7 47.5

ROE 17.72% 15.33% 11.12% 4.42% 8.34%

ROCE 14.45% 16.45% 10.25% 6.78% 12.61%

Debt to
Equity 1.35 0.62 1.73 1.35 0.85
Interest
Coverage 3.16 4.61 2.24 1.51 1.54
Ratio
*Ratios(%) and figs (in ₹ Cr) are as of FY24.

The Infrastructure Sector would likely experience a positive impact from reduced
interest rates as financing costs for large projects decrease. This can accelerate project
approvals and implementation timelines, fostering an environment conducive to
growth. Lower rates can also enhance government spending on infrastructure projects
as budget constraints ease, leading to increased investments in public works.

These players in the infrastructure sector are likely to benefit from a rate cut through
reduced financing costs, enhancing margins on new contracts. This financial flexibility
could strengthen their operational efficiency and contribute to steady growth in their
revenue streams.

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Year 2025
Banking &
Real Estate
Financial
Services

RBI MPC Report Infrastructure

Automobiles
Gold

FMCG &

Automobiles
Consumer NBFC
durables

Market Cap ₹2,63,016 ₹1,47,681 ₹61,447 ₹4,11,152 ₹1,48,829

CMP ₹714 ₹5,387 ₹209 ₹13,077 ₹1,832

P/E 8.3 34.6 23.8 28.3 25.0

ROE 32.99% 22.49% 25.49% 15.73% 44.12%

ROCE 18.02% 27.72% 14.21% 21.01% 52.17%

Debt to
Equity 1.05 0.02 4.3 0.01 0.08
Interest
Coverage 3.8 103.24 2.38 91 53.12
Ratio
*Ratios(%) and figs (in ₹ Cr) are as of FY24.

The Automobile Sector typically experiences a boost from lower interest rates due to
enhanced affordability of vehicle financing options for consumers. This leads to increased
sales volumes as consumers are more inclined to make purchases when loan terms
become more favorable. Increased accessibility to financing could lead to higher vehicle
sales, with passenger vehicle sales seeing growth due to improved consumer confidence.

The commercial vehicle segment could experience increased demand from logistics and
construction sectors, while demand for heavy-duty trucks may rise as economic activity
picks up. Lower financing costs also offer manufacturers the opportunity to introduce new
models or upgrade existing ones, expanding product offerings and increasing
manufacturing capacity.

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Year 2025
Banking &
Real Estate
Financial
Services

RBI MPC Report Infrastructure

Automobiles
Gold

FMCG &

NBFC
Consumer NBFC
durables

Market Cap ₹1,34,562 ₹1,14,374 ₹5,26,756 ₹1,16,604 ₹1,07,355

CMP ₹408 ₹434 ₹8,480 ₹1,381 ₹561

P/E 6.5 7.8 32.9 28.7 13.2

ROE 19.53% 20.56% 18.84% 17.45% 15.04%

ROCE 67.44% 68.62% 14.65% 27.76% 17.47%

Net Profit
Margin 29.04% 29.77% 26.28% 18% 20.31%
Return On
Assets (ROA) 1.90% 2.58% 3.85% 2.18% 2.96%
*Ratios(%) and figs (in ₹ Cr) are as of FY24.

A rate cut can positively influence the NBFC stocks involved in funding capital-intensive
projects by both the government and private sectors. Lower interest rates typically
encourage infrastructure spending as financing options become cheaper. The likely
increase in the loan demand will improve their profit margins and enable them to offer
more competitive loan products to clients. This can increase their market share and
revenue potential.

As economic growth accelerates, the demand for energy and infrastructure projects
tends to rise, driving higher loan disbursements for these companies. Furthermore, with
their strong capital ratios, these companies are well-positioned to navigate any
short-term volatility while capitalizing on long-term growth opportunities.

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Year 2025
Banking &
Real Estate
Financial
Services

RBI MPC Report Infrastructure

Automobiles
Gold

FMCG & Consumer FMCG &

Consumer
durables
NBFC

Durables

Market Cap ₹5,56,865 ₹2,15,971 ₹1,18,989 ₹88,491 ₹27,617 ₹23,407

CMP ₹2,370 ₹2,240 ₹4,940 ₹14,731 ₹4,314 ₹364

P/E 53.8 68.8 55.4 144.0 109.0 47.1

ROE 20.22% 108.5% 66.40% 24.77% 9.13% 16.21%

ROCE 24.61% 82.68% 49.81% 27.20% 11.66% 19.96%

Net Profit
Margin 16.18% 16.12% 12.44% 2.12% 10.16% 6.04%

Return On
Assets (ROA) 13.09% 37.37% 23.58% 5.26% 5.61% 7.23%

*Ratios(%) and figs (in ₹ Cr) are as of FY24.

A rate cut can stimulate the FMCG & Consumer durables sectors by increasing
disposable income and reducing borrowing costs for consumers and businesses.
Enhanced consumer spending on everyday goods and premium products in FMCG,
coupled with increased demand for electrical appliances in FMEG, can drive sales
growth.

Additionally, lower interest rates help companies reduce operational costs, invest in
expansion, and stimulate innovation. The resulting positive market sentiment may
further support stock performance and investment opportunities in these sectors.

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Year 2025
Banking &
Real Estate
Financial
Services

RBI MPC Report Infrastructure

Automobiles
Gold

FMCG &

Gold
Consumer NBFC
durables

An RBI rate cut could lead to higher gold prices because lower interest rates make gold
a more attractive investment, as returns on interest-bearing investments like savings
accounts decrease. With reduced borrowing costs, consumer spending and investment
may also rise, further driving demand for gold as a store of value.

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Glossary of key terms
Bank Rate:
The interest rate at which RBI provides loans to banks without requiring collateral, serving
as a benchmark for other interest rates.
Marginal Standing Facility Rate (MSFR):
The rate for emergency overnight borrowing from RBI, set above the repo rate to discourage
frequent use.
Repo Rate:
The interest rate at which RBI lends money to banks against government securities to
manage liquidity and inflation.

Standing Deposit Facility Rate (SDFR):

The interest rate at which banks deposit excess funds with RBI without collateral to manage
liquidity.
Consumer Price Index (CPI):
Measures the average price change of a fixed basket of consumer goods and services,
indicating inflation.
GDP (Gross Domestic Product):
The total monetary value of all goods and services produced within a country in a specific
period.
Foreign Exchange Reserves:
The total holdings of Foreign Currencies, Gold, SDRs, and other assets by the central bank
to stabilize the economy.
Remittance:
A cross-border transfer of money, typically sent by migrant workers to their home country,
contributing to foreign exchange reserves and economic stability.

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DISCLOSURES

1. Research entity or Research analyst or his associates or his relatives have no financial interest in the subject company/companies.
2. Research analyst or research entity or its associates or relatives, have no actual/beneficial ownership of one per cent or more
securities of the subject company/companies., at the end of the month immediately preceding the date of publication of the research
report or date of the public appearance or research recommendation.
3. Research entity or Research analyst or its associate or relatives has no connection or association of any sort with any issuer of
products/ securities recommended herein.
4. Research analyst or his associate or his relative has no actual or potential conflicts of interest arising from any connection to or
association with any issuer of products/ securities, including any material information or facts that might compromise its objectivity or
independence in the carrying on of research and recommendations services.
5. Research entity or Research analyst or its associates has not received any kind of remuneration or consideration form the products/
securities recommended herein.
6. Research entity or Research analyst or its associates have not received any compensation from the subject company/companies
in past 12 months.
7. Research entity or Research analyst or its associates have not managed or co-managed the public offering of Subject
company/companies in past 12 months.
8. Research entity or Research analyst or its associates have not received any compensation for investment banking or merchant
banking or brokerage services from the subject company/companies in past 12 months.
9. Research entity or Research analyst or its associates have not received any compensation for products or services other than
investment banking or merchant banking or brokerage services from the subject company/companies in the past twelve months.
10. Research entity or Research analyst or its associates have not received any compensation or other benefits from the subject
company/companies or third party in connection with the research report or research recommendations.
11. Research entity or Research analyst or its associates have not received any compensation for products or services from the subject
company/companies in past 12 months.
12. The subject company/companies is or was not a client of Research entity or Research analyst or its associates during twelve
months preceding the date of distribution of the research report and recommendation services provided.
13. Research Analysts or its associates has not served as an officer, director or employee of the subject company/companies.
14. Research Analysts has not been engaged in market making activity of the subject company/companies.
15. Research Analyst involved in making the reports are Anoushka Roy, Omkar S Chitnis, and Shashi Kumar K N.

ANOUSH Digitally signed by

ANOUSHKA ROY OMKAR S Digitally signed by
OMKAR S CHITNIS SHASHI
Digitally signed by
SHASHI KUMAR K N
KA ROY Date: 2025.02.07
12:14:59 +05'30' CHITNIS Date: 2025.02.07
12:15:40 +05'30'
KUMAR K N Date: 2025.02.07
12:16:15 +05'30'

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