Union AMC sees India Inc earnings growth rising to mid-teens; sees opportunities in consumption space

Union MF is also planning to expand into GIFT city with an inbound investors, under an upcoming FME retail licence.

India Inc’s earnings growth could accelerate sharply over the next two years, with mid-teen expansion likely between FY26 and FY28, Union AMC Chief Investment Officer Harshad Patwardhan said on the sidelines of the fund house’s forthcoming consumption fund launch.

“We expect earnings to grow to the mid-teens over the next two years. That is a significant improvement compared to what we have seen over the last two years.”

He noted that recent concerns that most of the growth was from certain sectors is a part of the way market works and that the broader earnings trajectory is turning favourable. “You have to look at the aggregate earnings growth. Some sectors lead, some lag and that is normal,” he said.

With fundamentals improving, he added, equity markets which were stagnant for the last few months should “start to look up.”

Future-focused consumption fund built on ‘RISE’ strategy

Patwardhan said the AMC’s upcoming consumption fund will be constructed using its RISE framework—Reach, Intermediates, Spend-up, Experience—to capture new-age consumption behaviour across 19 AMFI-classified sectors. The New Fund Offer (NFO) opens on December 1, 2025, and closes on December 15, 2025.

He highlighted premiumisation as the most powerful trend. “Whether it’s real estate, cars or FMCG, the top end is growing faster. Premium soaps and premium toothpaste are selling faster. People everywhere are aspirational,” he said.

Penetration-led growth remains strong, particularly in consumer durables. “Air conditioners were once a metro product. Now they are an urban product. And with power availability improving in the hinterland, companies are expanding distribution,” he said.

The portfolio will be “decisively forward-looking,” Patwardhan added. “The benchmark for this fund is very backward looking. Our portfolio will be focused on emerging consumer trends, not how things were 10 or 20 years ago.”

The scheme will be tilted toward mid- and small-caps and will exclude B2B sectors like defence, IT services and infrastructure-focused lenders.

Consumption index has outperformed the broader market 13 times over the last 19 years. Between 2019 and 2024, the Nifty India Consumption TRI delivered an average return on equity of 14.7%, higher than the 12.5% average of the broader Nifty 500 Index, Patwardhan added.

CEO Madhu Nair explained that India’s demographic and income shift is fundamentally expanding consumption power. The country’s 32 crore households are expected to rise to 40 crore over the next 4–5 years.

“The shape of the income pyramid is changing and bulging toward the middle and upper-middle levels,” he said. Households earning Rs 44 lakh and above, classified as upper-middle and high-income are expected to double from 60 lakh to 1.2 crore in the coming years.

“That is a significant growth of more than 60 lakh more people entering that bracket,” Nair added. The middle-income segment (Rs 8–44 lakh) is likely to grow from 11 crore to 17 crore, while the lowest-income cohort will shrink. “Earlier population was seen as a curse; now it is turning into a blessing,” he said.

SIF equity launch set for February; eyeing Gift City expansion

Nair said Union MF’s Specialised Investment Fund (SIF) is “well on plan,” with the first equity long-short product expected to launch in February, subject to regulatory approval by end-January. Distributor preparation is underway, with 3,000 already trained and 6,000 expected by February.

Union MF is also planning to expand into GIFT city with a fund for inbound investors.

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