India’s corporate income has been contracted since Q1. Adj. The Pat growth of the Nifty5o index was 6.7% in Q1 and 6.5% in FY24 to 6.5% in Q2. Q3 has some traction in revenue and profitability, as expected. Data of India’s broad index, Nifty500 index, shows that India’s total sales have increased by 5%, Ebitda (operating profit) 14%and PAT by 10%.
Encouraged, economic data and management insights show that Q4 is expected to show improvement on both QOQ and Yoy basis. While the final figures still prevailing by 31 March, the initial estimates indicate an increase in the 10–12%range. The scene has been created on the assurance that government expenditure is quadruple, high-existing monthly data indicates that the demand for quantity in urban and rural markets has improved and inflation is decreasing, resulting in a decrease in corporate costs. Is.
Despite a 16% decline in the comprehensive Indian stock market, the valuation remains more, with a one-year forward P/e, over the average 7-8% EPS increase in the last nine months. While the earnings of Q3 have shown some speed, the total results are slightly lower than expectations, largely due to 55% downgrade in earnings between Nifty 50 companies.
Nevertheless, if the traction in increase in corporate income increases to 15%in FY 26, which is India’s historic long -term growth number, we can expect traction in the domestic stock market from April to September. 12-13%. This speed is primarily inspired by the base effects less than the FY25, which is combined with strengthening the domestic demand supported by improving both urban and rural consumption. The available data indicates that corporate income increase is on a recovery trajectory.
Trade deal
Another notable development for India was the initial agreement with the United States to expand the total trade from $ 200 BN by 2030. By 2030, the pact will be finalized within the next two to three quarters, aimed at increasing bilateral trade through a new structures tariff framework. India has already reduced tariffs on American imports in categories like auto, auto parts, aircraft, energy, precious metals, EV batteries and others. Additionally, India planned to increase crude oil and defense imports from the US as part of its strategy to reduce trade surplus deficit.
Tariffs declared by US President Donald Trump are expected to be imposed in March-April, but they are not expected to impress India significantly. 25% of tariffs are likely to have mixed effects on metals, especially if China redends its exports to India due to a decline in demand from the US. The proposed tariffs on pharmaceuticals are also not expected to affect India, which supplies 50% of generic products sold to consumers in the US. These products are essential, of low value, and in high demand, limit the impact on both suppliers and consumers. However, companies that may need to move their products to the US may withstand a decrease in margin.
The idea is that if we have a good business treaty with the US, the threat of tariff war cannot hurt India. Currently, the world is concerned about the risk of mutual tariffs from the US, against the WTO criteria. This is expected to slow down world trade due to vengeance from other countries. At least, India is capable of developing an edge in the proposed tariff war.
(The author is the head of research, Jiojit Financial Services)
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