Worst Over For India Inc. Earnings? Here's What Jefferies Says
In addition, the pace of earnings downgrades is expected to slow down significantly, which in turn, could reduce volatility and support investor confidence.
After a long period of slowdown and muted growth, the worst could be over for India Inc's earnings, according to Jefferies' most recent note on the Indian market.
In its latest India Strategy note, Jefferies anticipates an upturn in Indian market in the second half of the financial year ending March 2026 - a run that may continue through FY27.
The brokerage firm adds that the overall earnings per share trend will also accelerate, much thanks to the combination of low base effects and ongoing policy support from the government.
In addition, the pace of earnings downgrades is expected to slow down significantly, which in turn, could reduce volatility and support investor confidence.
Jefferies is confident of India Inc. achieving a 13-15% growth in FY27 EPS, which could be critical in attractive capital and sustaining the market momentum.
This will ultimately bode well for Indian market, particularly when it comes to justifying the high valuation that has so far kept global investors cautious for a long period of time.
Sectors Jefferies Is Bullish On
According to Jefferies, perhaps the greatest potential for large positive earnings swings is concentrated in cyclically sensitive sectors.
These include autos, banks, power, and consumer segments. On the flip side, though, Jefferies notes that the cement and telecom sectors are expected to offer the strongest, most stable EPS growth over the forecast period.
This forecast is backed by policy measures that are designed to boost domestic demand, including the recent GST rationalisation that should greatly improve domestic consumption, as well as income tax adjustments.
Simply put, Jefferies expects good times ahead as investors - both domestic and international - gear up for a potentially better third quarter earnings ahead.
