Speaking on the sidelines of the 22nd Motilal Oswal Annual Global Investor Conference, Agrawal said, “My sense is this is the start of an earnings acceleration. And this is the first quarter.”
Agrawal expects Nifty earnings per share to climb from roughly ₹1,250 this year to between ₹1,425 and ₹1,450 next year. He projected 12-14% annual earnings growth for the Nifty over the next four to five years, even as he cautioned that the current pace of over 20% growth across listed companies will not hold indefinitely.
He pointed to two policy changes behind the growth: a cut in the Goods and Services Tax (GST) — a tax charged on the sale of goods and services — from 28% to 18%, and a jump in credit flow from 9-10% to 17-18%. Corporate tax collections are up 22-23% through mid-August, and GST collections are growing at about 15%, he said.
He believes geopolitical tension, not weak earnings, is the main factor holding back Foreign Institutional Investors (FIIs) from Indian equities. He noted that FII selling has already slowed and said prices will catch up once earnings growth is confirmed over further quarters.
Agrawal named autos, data centers, power, and transformers as sectors already performing well and said consumption-linked companies, including quick service restaurants (QSRs), are also picking up.
He said the quick commerce sector will keep growing at more than 40-50% a year for the next four to five years, well above the 14-15% growth rate for overall consumption.
He said general trade — traditional corner stores — could shrink to half of total distribution over the next decade, with quick commerce taking up at least a third of the fast-moving consumer goods (FMCG) distribution market. He added that listed players such as Blinkit and Eternal, along with Flipkart and Amazon, are expanding in the space, and that profitability for the category is still two to three years away+.
He said return on equity (RoE) for these companies could eventually exceed 100% once losses stop, given their low capital base, which could support price-to-earnings multiples above 100.
Agrawal said the private banking sector remains one of the largest contributors to Nifty profits and has been among the best-performing parts of Indian markets since 1995, led by HDFC Bank. He said a leadership transition across the sector over the past two to three years has weighed on performance, but revenue growth has already returned in the latest quarter, with profit growth expected to follow.
Agrawal said mutual fund industry assets under management (AUM) have grown at about 30% a year over the past decade and currently stand at about ₹80 lakh crore. He said even at 20% annual growth, AUM could reach ₹400-500 lakh crore over the next decade.
Agrawal pointed to Reliance Industries‘ tie-up with Rolls-Royce to build jet engines, announced on Monday (August 17), as a sign of the sector’s expansion. He said companies balancing domestic consumption with exports will fare better than pure exporters, given the risk of tariffs and trade restrictions.
He also pointed to global companies shifting manufacturing to India for cost and technology reasons, comparing the trend to the earlier growth of Infosys and Tata Consultancy Services (TCS) in services.
For the full interview, watch the accompanying video
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