Ahmedabad Times

With geopolitical tensions easing and crude oil costs retreating to pre-war ranges, buyers are shifting their consideration to the upcoming earnings season for the subsequent market set off. The June quarter outcomes are anticipated to supply readability on whether or not Indian firms can navigate enter price pressures whereas sustaining progress.

Chatting with ET Now, Pankaj Tibrewal from IKIGAI Asset mentioned the funding surroundings has steadily improved over the previous few months as a number of earlier headwinds have began turning into positives.

“Now we have been constructive since March. Crude costs have returned to pre-war ranges, and the AI-led markets have seen a big shakeout. The subsequent huge set off for markets would be the first-quarter earnings,” he mentioned.

Income Progress Might Beat Expectations

Whereas the Avenue stays cautious about margins due to elevated uncooked materials prices, Tibrewal believes analysts are underestimating the potential for stronger income progress throughout Company India.

“The most important disconnect is top-line progress. Many firms have already taken value hikes, and revenues might shock positively, even when margins stay underneath stress,” he mentioned.
He expects working leverage to cushion a part of the margin impression and assist earnings in a number of sectors.
House Enchancment Sector in Focus
Tibrewal recognized the house enchancment section as one of many strongest alternatives, citing beneficial trade dynamics in tiles and wooden panels.

“Branded tile gamers are gaining market share as Morbi producers battle with greater fuel prices. Vendor suggestions factors to a big pickup in volumes,” he mentioned.

He additionally expects sturdy efficiency from wooden panel firms and sectors benefiting from import substitution.

“Chinese language imports have diminished sharply in segments like MDF, whereas chemical compounds, textiles, engineering and auto ancillaries are additionally seeing enhancing momentum,” he mentioned.

A Inventory Picker’s Market
Reasonably than anticipating features throughout the board, Tibrewal believes buyers ought to deal with companies with sturdy earnings visibility. “This can be a inventory picker’s market. The chance lies in figuring out sectors and firms the place progress is clearly seen,” he mentioned.

Nifty Earnings Progress Seen at 10–13%
Regardless of near-term price pressures, Tibrewal expects double-digit earnings progress for the benchmark index this 12 months, supported by banks and cyclical sectors.

“I don’t assume 10% to 13% Nifty earnings progress shall be a problem. Banking, metals and cement ought to all contribute meaningfully,” he mentioned.

He additionally expects nominal GDP progress to drive stronger company revenues.

“Company India’s top-line progress ought to enhance as nominal GDP stays wholesome, and working leverage will assist earnings,” he mentioned.

Demand Stays Wholesome
In accordance with Tibrewal, firms are not anxious about weak demand regardless of greater costs. “Corporations should not speaking about demand destruction. The important thing challenges are provide chains and uncooked materials prices, whereas demand stays fairly good,” he mentioned.

He stays significantly optimistic concerning the broader market.

“Many firms can compound earnings at 20% to 25% yearly. That’s the place one of the best bottom-up alternatives lie,” he mentioned.

Non-public Banks Supply a Contrarian Guess
Though overseas investor promoting has weighed on banking shares, Tibrewal believes the sector’s fundamentals stay among the many strongest in years.

“Non-public banks are very attractively valued. The problem is technical as a result of FIIs have been persistent sellers,” he mentioned.

He expects sentiment to enhance as soon as overseas promoting subsides.

“Financial institution stability sheets are in one of the best form they’ve been in for years. As soon as FII promoting stops, banking shares might rapidly return to favour,” he mentioned.

FII Flows Might Return
Tibrewal believes India may benefit if international buyers rotate away from overheated AI-driven markets.

“I’m hopeful FIIs will return within the second half of the fiscal 12 months. India seems enticing in greenback phrases, whereas the AI commerce globally seems to be getting into a mature stage,” he mentioned.

With earnings season approaching, buyers will carefully watch whether or not stronger income progress and resilient demand can offset price pressures and supply the subsequent leg of the market’s rally.