Nifty Earnings to See Modest Growth in FY25, Surge to Mid-Teens in FY26: ASK’s Sandip Bansal
Nifty Earnings : After a subdued earnings performance over the last few quarters, the Nifty 50 is expected to witness a modest growth of around 5% in FY25 before accelerating to mid-teen levels in FY26, according to Sandip Bansal, Deputy CIO at ASK Investment Managers. In a recent interview, Bansal outlined key macroeconomic factors that could drive earnings growth, potential investment opportunities, and the impact of global trade policies on Indian markets.
Earnings Outlook: A Slow FY25, A Strong FY26
The Indian stock market has faced multiple headwinds, including weaker-than-expected earnings growth in the last few quarters. However, FY26 is expected to mark a turnaround. Bansal attributes the expected earnings boost to:
- Increased government spending on infrastructure and capital-intensive sectors
- RBI’s easing of liquidity conditions, improving credit availability
- The Union Budget’s push for consumption-led growth
- Lower inflation and potential rate cuts, which could boost consumer demand
- A low base effect from FY25, setting the stage for stronger numbers in FY26
These factors combined could push Nifty earnings growth into the mid-teens, making it a crucial year for investors looking for long-term wealth creation.
How Will Donald Trump’s Tariff Plan Impact Indian Pharma?
Recently, former U.S. President Donald Trump suggested imposing a 25% tariff on pharmaceutical imports, raising concerns about its impact on India’s $50 billion pharma industry. However, Bansal remains optimistic, noting that:
- India supplies nearly half of the U.S.’s generic drug requirements, making it an indispensable part of the global pharma supply chain.
- Alternative suppliers may have higher costs, reducing the likelihood of significant disruptions for Indian players.
- The Indian government is in discussions with U.S. officials to mitigate trade tensions, which could lead to exemptions for essential drugs.
While short-term volatility is possible, the sector’s long-term fundamentals remain strong.
PSUs: An Undervalued Opportunity?
Public Sector Undertakings (PSUs) have underperformed in recent times, leading many investors to question their potential. However, Bansal believes that PSUs present a compelling investment opportunity due to:
- Attractive valuations, given their recent underperformance
- Strong earnings growth in key sectors like defence and power
- Government backing and policy support for strategic industries
- High dividend yields, offering a steady income stream for investors
With the ordering and execution cycle picking up, PSUs could be a lucrative option for value investors with a long-term perspective.
Will FIIs Return in 2025?
Foreign Institutional Investors (FIIs) have been net sellers in Indian equities over the past few months. However, Bansal expects them to return in the second half of 2025 as:
- The rupee stabilizes, reducing currency risks
- Corporate earnings improve, making India a more attractive investment destination
- Valuations in many sectors become reasonable, offering better entry points
Given India’s long-term growth potential, FIIs are expected to increase their exposure as macroeconomic conditions improve.
SIP Revolution: Can Rs 250 SIPs Change the Market?
The recent introduction of Rs 250 SIPs (Systematic Investment Plans) could be a game-changer for retail investors. This initiative:
- Encourages first-time investors to enter the equity market
- Helps individuals with lower income levels invest in mutual funds
- Broadens the investor base, leading to increased liquidity and stability in the markets
Over time, these small-ticket investments could significantly boost participation in equity markets, supporting long-term wealth creation.
Is This the Right Time to Invest? Top Sectors to Watch
Despite short-term volatility, Bansal believes the current market environment presents good long-term investment opportunities. Based on Nifty’s FY26 EPS estimate of ₹1,200, the index is trading at 19x one-year forward earnings, which is lower than the 10-year average of 20.5x.
While short-term volatility remains a concern, investors can take a staggered investment approach to build their portfolio over time.
Sectors with Strong Growth Potential:
- Manufacturing & Infrastructure – Supported by government policies and rising domestic demand
- Defence – Key beneficiary of geopolitical shifts and India’s self-reliance push
- Consumption & Discretionary Spending – Driven by rising incomes and aspirations
- Healthcare & Pharma – Strong global demand and India’s competitive advantage
- Financial Services – Poised to benefit from improved credit growth and a stable economy
Pharma: A Strong Sector Despite Tariff Uncertainty
Despite concerns over potential U.S. trade tariffs, Indian pharma companies remain well-positioned for growth. Bansal highlights several possible outcomes:
- Companies may pass on higher costs to insurers or consumers, limiting the impact
- Essential drugs could be exempted from tariff hikes
- India’s negotiations with the U.S. may lead to trade concessions
Given India’s dominance in the global generic drug market, the sector is likely to weather near-term uncertainties and remain a high-growth industry over the long run.
Key Financial Ratios & Market Outlook
| Metric | Value |
|---|---|
| Nifty FY25 EPS Growth | ~5% |
| Nifty FY26 EPS Growth | Mid-Teens |
| Estimated Nifty FY26 EPS | ₹1,200 |
| One-Year Forward P/E | ~19x |
| 10-Year Average P/E | ~20.5x |
| Current PSU Dividend Yields | High |
| SIP Starting Amount | ₹250 |
| FIIs Expected to Return | H2 2025 |
Conclusion: A Market Poised for Growth
While FY25 earnings growth remains subdued, FY26 offers significant upside potential, making it a pivotal year for equity markets. Investors looking for long-term wealth creation should consider sectors with strong fundamentals and adopt a staggered approach to investing.
With government support, improving macroeconomic factors, and attractive valuations, India remains one of the most promising markets for investors worldwide.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.