homemarket NewsIndia a long term growth story, expect 12 18% earnings expansion annually, says Kotak Mahindra AMC
India a long-term growth story, expect 12-18% earnings expansion annually, says Kotak Mahindra AMC
Nilesh Shah, MD, Kotak Mahindra AMC said, "RBI has done a fantastic job with managing conflicting objectives from growth, inflation, rupee, government’s borrowing programme in financial sector stability in control and no wonder RBI governor got the recognition as the best central banker of the world.”
Now that the Reserve Bank of India (RBI) policy has been addressed, attention is shifting back to corporate earnings as companies prepare to release their financial results for the September quarter, beginning this Monday. Tata Consultancy Services (TCS) will kick off the earnings season for the Nifty 50 stocks on Wednesday.
Nilesh Shah, MD, Kotak Mahindra AMC said, “Earnings are also growing at 1-1.25% a month. So there could be a combination of both, time and price correction, than just price correction.”
“India is a longer-term growth story and our earnings at least for the foreseeable future are expected to grow anywhere between 1% a month to 1.5% a month. That is a growth rate of anywhere between 12% and 18% depending on what kind of portfolio you have picked up,” he added.
According to him, as long as this earnings growth trajectory continues to remain, every correction is an opportunity to buy.
Many of the smaller companies are trading at a higher valuation than larger companies which is unlikely to sustain for long, he said.
The RBI Monetary Policy Committee (MPC) has kept its growth projection for India's GDP at 6.5% for the 2023-24 fiscal, Governor Shaktikanta Das announced on October 6.
While sharing his views, he said, “RBI has done a fantastic job with managing conflicting objectives from growth, inflation, rupee, government’s borrowing programme in financial sector stability in control and no wonder RBI governor got the recognition as the best central banker of the world.”
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According to him, in terms of results, there will be case-specific stories but overall general disappointment.
“Market has discounted that the September quarterly results will not be as attractive,” he said.
Meanwhile, Pankaj Chhaochharia of Antique picked industrial, real estate, cement, and PSU Banks as preferred investment choices.
Chhaochharia said global bond yields and crude oil prices pose potential short-term risks. He anticipates positive earnings surprises from companies such as SBI, ITC, Lupin, NCC, and others, while they foresee negative surprises from stocks like Tech Mahindra, Asian Paints, Dr. Reddy's, and Indian Hotels.
Varun Lohchab from HDFC Securities, however, expects the upcoming earnings season to be reasonable. The key issue this time lies in the timing of festive demand, as a significant portion is likely to occur in Q3 due to Diwali falling slightly later compared to the base year when some of it was in Q2, he noted.
As a result, certain sectors like consumer durables or auto companies may not appear as strong in terms of their numbers when viewed optically. However, if one considers the expectations for the festive season as a whole, they appear to be reasonably positive.
For more details, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Oct 9, 2023 4:57 PM IST
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