Budget boost will take time to reflect in corporate earnings, says Axis MF’s Ashish Gupta

Ashish Gupta, CIO, Axis Mutual Fund

Ashish Gupta, CIO of Axis Mutual Fund, praised the finance minister for striking a balance in the 2025 budget but noted that its boost to India Inc will take time to translate into earnings growth.

To balance various priorities, the budget focused on two key areas that demanded urgent attention--demand and regulations. "The first issue, on the demand side was addressed by significant cuts in personal taxes while the second issue was the regulatory cholesterol affecting growth, which led to the formation of high-powered committees to review non-financial sector regulations and financial sector regulations in the context of sector development," Gupta explained.

Given that these were major obstacles to growth acceleration, Gupta commended the finance ministers efforts to address these issues. At the same time, he noted that the budget also maintained fiscal consolidation, with a five-year target under the FRB (Fiscal Responsibility and Budgeting) as a percentage of GDP, which provides comfort to foreign investors. "It is important, because we need really the monetary policy to start supporting efforts for growth. And I think that is where this budget delivers, that it gives some degree of fiscal boost, but also creates an enabling environment for monetary policy to be supportive of growth," Gupta said.

Despite the budget's boost to spur demand, Gupta doesn't expect earnings trend to change so quick as he believes these policy adjustments take time to impact the economy. He further noted the existence of other macro challenges that may hinder earnings growth for India Inc, particularly those surrounding the currency's freefall.

To provide comfort on that front, Gupta believes the Reserve Bank of India's monetary policy needs to result in better availability and reduced cost of capital.

Also Read | Growth recovery crucial for banking stocks to rebound, says Axis MF's Ashish Gupta

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