Daily Voice: 'Pillars falling into place' - Earnings poised for double-digit growth, says Jitendra Sriram

Jitendra Sriram is the Senior Fund Manager at Baroda BNP Paribas Mutual Fund

• Time and price correction in markets made valuations more comforting and in range with our long-term levels
• Expect nominal GDP momentum to also pick up into the year
• See earnings growth already improving into the double digit zone

Did our AI summary help?

Jitendra Sriram, Senior Fund Manager at Baroda BNP Paribas Mutual Fund, said corporate earnings are beginning to move toward a double-digit growth trajectory.

In an interview with Moneycontrol, he noted that key macro and market fundamentals are aligning, creating the conditions for Indian equities to gain momentum in the latter part of the year.

On the growth front, he noted that weaker inflation in FY26 has made nominal GDP slightly softer. However, with base effects wearing off and global hard commodity prices firming up, he expects nominal GDP momentum to pick up as the year progresses.

Do you expect India to outperform other emerging markets later this year, now that the worst-case scenarios appear to be behind us?

It is no doubt, true that a lot of concerns gripping our markets have abated in the current quarter. Trade deals with the US & the EU should help reduce any competitive disadvantages for our exporters. The time and price correction in markets visible since September 2024 has made valuations more comforting and in range with our long-term levels.

The main stumbling point in FY26 was the trajectory of corporate earnings growth which was muted to begin with. However, a combination of tax cuts (Union Budget of February 2025), good monsoons (May-September 2025), GST cuts (w.e.f September 2025) and successive rate cuts from the RBI (most recently in December 2025) has improved GDP growth and if we look at the evolving earnings growth, it is showing signs of pick up into the double-digit zone. One could argue that the fundamental pillars are falling into place for Indian market to start performing later into the year.

Do you believe the earnings recovery will be strong from here on?

Adjusted for one-off effects (new labour code etc), we see the earnings growth already improving into the double digit zone. Lag effects of softer monetary policy, the stimulus of GST rationalisation and the better prospects of manufactured exports post ratification of trade deals is expected to improve this earnings growth momentum further into the mid teens later into the year.

Will earnings growth be led by banks and NBFCs?

Multiple sectors are expected to benefit because of various stimuli. Consumer discretionary on GST rationalisation, metals on global price improvements, utilities from rising energy demand (data centre investments etc), certain exporters (textiles, marine products etc) because of trade deals etc. Banks & NBFC’s as lenders to all these will be indirect beneficiaries.

Do you see strong investment opportunities ahead in the pharma and hospital segments?

Pharma was never directly impacted because of tariffs. However, the industry is evolving itself into CDMO, CRO and also making entries into higher margin areas such as peptide fragments which could expand the market for these players.

Hospitals have a different structure that is evolving. Internally for most of the listed universe we are seeing free cash starting to rise after years of investment. We are also seeing a lot of single hospitals folding into chains consolidating the industry both trends being positive for the industry.

Do you believe the GDP outlook has improved now that concerns around higher tariffs are behind us? Does this mean that 7 percent growth from next year onward cannot be ruled out?

In FY26 itself, the RBI has raised its GDP forecast by a cumulative 80bps from its forecast at the start of the year. This makes the 7% mark an achievable and sustainable target. Weaker inflation into FY26 had made the nominal GDP a little softer but with base effects wearing off, global hard commodity prices firming we expect nominal GDP momentum to also pick up into the year.

Is the US deal constructive for the rupee?

Markets are a function of not only the underlying earnings but also of sentiment. A high tariff (25% baseline and Russia specific 25%) could have made Indian exports uncompetitive, long run, fuelling negative sentiment. To that extent, the agreements on trade deals with 2 large trading blocs – the US and the EU will definitely alleviate concerns and lift sentiments that India would no longer be relatively disadvantaged versus its peers across major export items hence the momentum on exports can be back on rails.

The fact that each side is actively engaging for a resolution to these prickly issues is again sentimentally positive for currency markets and the Rupee.