'This Quarter May Be The Worst' For India Inc Earnings: Emmer Capital CEO

India Inc. could be in the middle of its worst quarter in terms of earnings, said Manishi Raychaudhuri, chief executive officer of Emmer Capital, as muted early results continue to trickle in for the March quarter.

"This quarter may be the worst in the cycle," Raychaudhuri told NDTV Profit. "From the first quarter of financial year 2026, we expect things to improve as government infrastructure spending and rural cash transfers begin to flow in."

The March-quarter earnings season has so far seen cautious commentary from bellwether companies across technology, consumer, and industrial sectors. Analysts have flagged risks of margin pressure, subdued consumption, and delayed investment decisions due to the ongoing political and fiscal cycles.

Raychaudhuri also noted that consumer discretionary recovery may take about two quarters as the impact of tax benefits and infrastructure spending starts to materialise.

Despite the current softness, India's long-term fundamentals remain intact, attributing the slowdown to short-term factors tied to the geopolitical and fiscal calendar rather than any deep structural issues, Raychaudhuri emphasised.

On the topic of valuations, Raychaudhuri highlighted that while Indian valuations were "reasonably attractive" in early March—relative to their Asian peers—they have since rebounded.

Indian stocks are currently trading at a 55-60% premium to MSCI Asia ex-Japan, which is well above the long-term average premium of 40-42%. He expects this premium to moderate further, which could present a more attractive entry point for investors.

Raychaudhuri stressed that a slight pullback of 8-10% in Indian markets, or a scenario where other markets in Asia, particularly North Asia, see a significant rebound, could help narrow this valuation gap.

Raychaudhuri singled out three sectors for medium-term investment opportunities. Financials, especially private sector banks, remain a strong focus, alongside industrials, which could benefit from the continuation of infrastructure spending and rising defence budgets globally, he said.

This could also be an opportunity for India, given the increasing geopolitical tensions, he added.

The third sector he highlighted was consumer discretionary. "There’s additional money being thrown at the consumers," Raychaudhuri noted, citing tax rebates that make up to Rs 12 lakh of income tax-free in India. He expects this to improve consumer sentiment, particularly for discretionary products, even as the demand for staples remains subdued.

There is potential for better sentiment in sectors like consumer discretionary goods, due to this fiscal support, according to him. However, global demand, particularly for materials, would need to be monitored, especially with ongoing bilateral trade negotiations and broader global market conditions, he added.