TCS kicked off earnings season with a bullish tone — and now the pressure is on India Inc. to deliver.
The nation’s largest IT exporter rose nearly 6% after its boss saw business picking up into the new financial year starting April.
It shows wobbly earnings growth is already fading into history, investors are eagerly scanning for signs of a turnaround, and the chatter is all about what’s coming next — not what’s already happened.
Exporters are sitting pretty, buoyed by a stronger dollar that’s handing them a sweet forex tailwind. While the domestic economy may be catching its breath, businesses with their sights set overseas are strutting confidently.
All eyes are now on Infosys and Wipro, both set to report next week, to see if they’ll bring the heat too. These companies, drawing the bulk of their revenues from the US, could also get a lift from renewed whispers of Trump tax cuts.
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Beyond IT
It’s not just about software though. Electronics manufacturers like Cyient and Kaynes Technology are gearing up for what analysts at Prabhudas Lilladher expect to be a blockbuster season, with revenue growth predicted to clock in at a sizzling 50%.
The broader picture isn’t as rosy. For the Nifty 50, third-quarter earnings are expected to grow at just over half the speed of last year’s 15%-ish pace, but the smart money knows the real story is in the outlook.
While exporters are enjoying their moment, it’s a mixed bag elsewhere.
Automakers, for instance, are revving their engines on international two-wheeler sales to offset a sluggish domestic performance. Bajaj Auto could be a standout here, according to analysts, but the same can’t be said for sectors more tethered to India’s domestic story.
Banks and lenders are grappling with a double whammy of slowing loan growth and sticky funding costs, with the central bank offering no rate cuts to ease their pain.
Public-sector banks like SBI, with their corporate-heavy loan books, may fare a little better, but retail-focused players are bracing for a rough ride as borrowers at the bottom of the income pyramid struggle to keep up.
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Not defensive enough
Consumer companies, once a safe haven, are also under pressure, with Nitin Gupta, analyst at Emkay Global Financial Services, questioning just how “defensive” they really are. Inflation and a demand slump are squeezing margins, and dwindling earnings growth is turning up the heat.
He says Marico and Emami might be the rare bright spots, but for many in this sector, it’s looking like a quarter to forget.
The big wildcard, of course, comes on 1 February, when the first full budget after last June’s elections hits the stage.
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With hopes pinned on measures to revive the consumption cycle, the government might just have a starring role in this season’s earnings drama.
Until then, the spotlight remains firmly on those globally-oriented heroes keeping investors entertained — and maybe, just maybe, optimistic.
Edited by Thyagu Adinarayan and Tim Hume. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
