Global Infratech & Finance Ltd Management Discussions

ANNUAL OVERVIEW AND OUTLOOK

After a better-than-expected 7.6% this fiscal, Indias real GDP growth will likely moderate to 6.8% in fiscal 2025. The transmission of the rate hikes effected by the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) between May 2022 and February 2023 still continues and is likely to weigh on demand next fiscal. On the other hand, regulatory actions to tame unsecured lending will have a bearing on credit growth. A lower fiscal deficit will mean the fiscal impulse to growth will be curtailed. But the nature of spending will provide some support to the investment cycle and rural incomes. We also expect a normalisation of the net tax impact on GDP witnessed this fiscal. Uneven economic growth for key trade partners and an escalation of the ongoing Red Sea crisis can be a drag on exports. Some factors will continue to underpin growth next fiscal. Continued disinflation will support the purchasing power of consumers. This assumes a spell of normal monsoon in calendar 2024, which can lift agricultural growth on a low base. And a gradual pick-up in private sector capex will make investment growth more broad-based. Net-net, amid the interplay of these factors, India will retain its position as the fastest growing large economy. Interestingly, the next seven fiscals (2025-2031) will see the Indian economy crossing the $5 trillion mark and inching closer to $7trillion. A projected average expansion of 6.7% in this period will make India the third-largest economy in the world and lift per capita income to the upper middle-income category by 2031.

INDUSTRY OVERVIEW

The market focus on stocks should not preclude interest in other asset classes in 2025. Corporate bonds in the U.S., Asia and Europe, for example, are likely to remain interesting for investors for several reasons. These include institutional demand, still high yields and the return of the (term) premium. Supply and demand will remain fundamental to commodities such as oil and industrial metals but we also see other factors maintaining a relatively high price for gold in 2025. In alternative assets, we focus in this outlook on infrastructure central to investing in future growth and what we call the public and private mixology of investing in this area. FX considerations will, as always, be a central consideration for investors and here 2025 will clearly be a case of strong economy, strong currency for the U.S. dollar. The euro will look weak in comparison, but rate rises and growth could support the Japanese yen. 2025 will not always be an easy year for investors as markets navigate through geopolitical or other risks (including the “three Rs” of recession, rates and rotations). But we believe that these risks are manageable. With markets already anticipating the impact of future economic growth and development, this means that being and staying invested will be essential for portfolio success both in the short and long term. I hope you find the analysis in this annual outlook useful and we are, of course, always here to guide you through 2025 and beyond.

OPPORTUNITIES & THREATS Opportunities

Indias Stocks Market in 2025 The stock market in India Investors are able to examine opportunities for long-term growth during the current decline in 2025. The Indian stock market is already starting to experience price changes impacted by volatility after hitting all-time highs. Even though indexes have seen drops, this stage is crucial for market stabilization & long-term financial expansion.

A Reversal in the Market

Beginning as profit booking in FY24, the most recent correction has expanded into more comprehensive market correction. In recent months, there has been 13% and 12% adjustment in the Nifty 50 and Sensex, respectively. The Adjustments have also been made to the mid-cap & small-cap indices. The Nifty Midcap100 is down 20% & the Nifty Smallcap100 is down 23%. Indias correction is producing a more balanced investment climate, even as global markets are displaying flexibility. Long-term investors now have the chance to collect high-quality companies at appealing prices thanks to a robust economy & solid fundamentals.

Corporate Earnings & Economic Growth Factors

A natural correction has been taking place in corporate results, bringing valuations into line with reasonable growth prediction. With the GDP growth predicted to be 6.6% in 2025 & 6.7% in 2026, the Indian economy is still on solid ground while this represent as the slowdown from few last years. The Indian economy is still among the fastest-growing in the world.

The Strategic Approach of the Government

The Strengthening consumer demand & upholding budget disciplines were the key goal of the FY26 Union Budget. The Long-term spending increases & improved disposable income are the goals of policies like raising the income tax exemption level to Rs12 lakh, even while capital expenditures stayed constant at Rs11.2 lakh Crore.

RBIs Preventive Actions

For the first time in over five years, the Reserve Bank of India (RBI) has lowered the repo rate to 6.25% in an efforts to stimulate economic growth. Even though growth projections for the near future have been lowered, this monetary easing creates the circumstances for increased economic activity, better liquidity & more favorable borrowing terms for both consumers and enterprises.

Making Growth & Stability Investments

As the market fluctuates, investors are adding more solid assets to their portfolios, including gold, which has seen a rise in demand. Also, technical developments, government-led reforms, and robust domestic demand all contribute to Indias continued long-term growth story. The emphasis on technology and digital transformation, spearheaded by the governments initiatives, continues to open new avenues for investments in sectors like e-commerce, fintech, and renewable energy. Moreover, with the ongoing push towards infrastructure development and urbanization, real estate and construction sectors are also seeing renewed interest, promising robust returns on investment. As the Indian market transitions through this corrective phase, it presents a unique opportunity for both domestic and international investors to engage with a rapidly evolving economy poised for significant advancements. The emphasis on technology and digital transformation, spearheaded by the governments initiatives, continues to open new avenues for investments in sectors like e-commerce, fintech, and renewable energy. Moreover, with the ongoing push towards infrastructure development and urbanization, real estate and construction sectors are also seeing renewed interest, promising robust returns on investment.

Looking Ahead

Even though the current market phase represents temporary changes, the Indian economy is still expected to grow in the long run. India is desirable place to invest due to their robust business sector, aggressive policies & expanding consumer base. It is likely that investors who remain committed to long-term wealth creation, disciplined investing and solid fundamentals will profit from the possibilities that lie ahead. Future development and prosperity are anticipated when confidence returns and the market stabilizes. The outlook for the India Stock Market 2025 remains positive, with the economy showing resilience and adaptability in the face of global and domestic challenges. This period could very well be looked back upon as a pivotal moment for entering the vibrant Indian market.

Threats

The impact of geo-political tensions is becoming increasingly evident in the global markets. In 2024, the Ukraine-Russia war and ongoing tensions between Israel and Iran caused significant losses for investors. Additionally, the trajectory of the US markets and political developments impacted the Indian market. Following the election of Donald Trump as the new US President, the Indian stock market witnessed a sharp decline, and the rupees value fell against the dollar in the exchange market. Biggest Challenges for Indian Stock Markets In 2025

Trumps rise in US

The biggest factor that would play an important role in shaping of global economy in 2025 would be President-elect Donald Trump. Global economic experts are of the opinion that Trump might take some harsh decisions, which may fuel global protectionism and further slump in the global markets. "Trump has threatened to impose a 60% tariff on imports from China. Chinese-made products are widely used in the US, and even a 30% tariff would significantly increase their prices. This would add to the challenges faced by the Federal Reserve, which has been striving to curb inflation in the US economy. Halting the interest rate cut cycle, which the Fed successfully initiated, would hurt the global economy in general and the US economy in particular."

US Dollar Strengthens Post-Election

The US dollar has gained strength following the American elections, with predictions of further strengthening if corporate tax rates are reduced to 15%. This move is expected to boost corporate earnings, leading to higher investments in the US markets. However, a stronger dollar in 2025 could pose challenges for emerging markets. Despite this, experts believe the dollar may not stay strong for long as former US President Donald Trump has expressed a preference for a weaker dollar to promote exports.

Indias Slowing Growth Rate

Indias economic growth slowdown remains a major concern, with GDP growth recorded at 5.4% in the second quarter of the current fiscal year. Analysts are now debating whether this slowdown is temporary or structural. If it is structural, it could negatively impact stock markets. However, fiscal and monetary stimuli are expected to revive economic growth in the third and fourth quarters. In the long term, Indias GDP growth trajectory looks promising. Indias stable political system, demographic dividend, entrepreneurial society, leadership in the digital sector, and rapidly growing startup ecosystem are expected to fuel sustained economic growth for years to come. This resilience is likely to bolster Indias economy and markets in the face of global challenges.

RISKS AND CONCERNS

Global Infratech & Finance Ltd. (GIFL) has exposures in various line of business. GIFL are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

MARKET RISK

The Company has quoted investments which are exposed to fluctuations in stock prices. GIFL continuously monitors market exposure in equity and, in appropriate cases, also uses various derivative instruments as a hedging mechanism to limit volatility.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2024-25, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis. However due to internal issues, the Company could not comply with the provisions of LODR Regulations, 2015 and hence the Company is liable to pay penalties for such non-compliances. However the Company is not aware of quantum of such Penalties.