As a result, consensus earnings estimate for India’s top 50 companies have been revised downward, with projected growth now seen below 10%—a sharp drop from the 16% anticipated a year ago. According to Bloomberg data, the 12-month forward earnings estimate for the Nifty 50 currently stands at ₹1,185, reflecting a 2% decline over the past two months. Estimates for the following fiscal year have also been trimmed by 3% during the same period.
The Nifty 50 is currently trading at 19 times its one-year forward earnings—a level that many market participants view as reasonable, especially given the relatively low cost of capital available to Indian companies. A recent selloff in US bonds, combined with softening yields in India, has significantly narrowed the yield spread between the two. On Thursday (April 17), the gap further shrank to just 206 basis points (bps), marking a near historic low compared to nearly 700 bps seen back in November 2011.
With limited room left for margin expansion, corporate profits are unlikely to outpace nominal GDP growth, said Prashant Jain, Founder and Chief Investment Officer at 3P Investments Private Limited, in an interaction with CNBC-TV18. “Investors should align their return expectations with earnings growth—roughly around 12% CAGR over the next three years,” he added.
Furthermore, the March quarter results for Tata Consultancy Services (TCS) and Wipro fell short of Street expectations, capping off FY25 on a subdued note. Persisting pressure on discretionary IT spending, coupled with delays in client decision-making, continued to strain margins and stalled any scope for expansion.
While pharmaceutical and IT companies derive a significant portion of their revenues from international markets, other sectors with notable overseas exposure include commodities and automobiles. However, domestically driven sectors such as banks, infrastructure, and telecom are expected to outperform amid the current macroeconomic uncertainty.
(Edited by : Poonam Behura)
