Anand Shah, Director and Chief Investment Officer, BNP Paribas Mutual Fund, sees earnings growth picking up by more than 15 percent in FY18 after two weak years.
BNP Paribas Mutual Fund is expecting growth on earnings per share (EPS) to return to 19-21 percent in the next financial year, according to Director and Chief Investment Officer Anand Shah.
Speaking at the launch event of BNP Paribas Balanced Fund, Shah said: “We expect EPS which was at 8.6 percent in FY17 to increase to above 19.6 percent in FY18.”
India’s 12-month Forward Price to Earnings Ratio as of February 2017 is 16.4 times, close to its historical average.
The fund house expects earnings growth to pick up by more than 15 percent in FY18 after two weak years.
Shah also said that considering the low interest rates, valuations of companies are attractive. He added that India’s structural story is intact and looking "brighter".
Corporate M&A is likely to tick higher given the strong free cash flows and higher nominal growth, he said.
On individual sectors, Shah was overweight on B2C sectors such as private banks, entertainment, airlines and non-banking financial companies (NBFCs). Sectors that will benefit from rising income of Indian middle class must be looked at, he added.He was also underweight on the IT sector and will maintain that stance till the mutual fund sees a revival in either the global IT tax spending or any other triggers for margins to expand.