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Bloomberg Quint
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Improving Macros Seen Supporting Corporate Profit In FY26 Despite Weak FY25
- Improving domestic macroeconomic indicators are expected to support corporate earnings in the financial year ending March 2026, despite muted growth in the previous year.
- Corporate earnings in the preceding year showed single-digit growth, with certain sectors like metals and technology performing well in the January-March quarter.
- Consolidated net profit for Nifty 50 companies is projected to grow by around 5% in FY26, a decline from the double-digit growth post-pandemic until FY25.
- The CEO of Systematix Group mentioned that earnings growth is likely to range between 5-6% in the ongoing fiscal year, compared to the previous year's range of 4.5-5%.
- Expectations of a good monsoon season and lower retail inflation could contribute to a rural economic comeback, offsetting urban slowdown in the market.
- Optimism remains high among companies, driven by stable commodity prices, low inflation, favorable monsoons, government capex, and tax incentives.
- A gradual impact of easing inflation on corporate earnings is anticipated, with potential benefits from lower oil prices and increased revenues.
- Challenges persist with low nominal wage growth, suggesting structural economic issues, despite potential margin benefits from lower oil prices.
- India may witness a supply chain shift, potentially boosting exports in mid-value categories like textiles, while being cautious about high-value segments.
- The overall outlook for corporate earnings in FY26 points towards a gradual recovery and potential double-digit growth, with various factors influencing the market dynamics.
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