Government capex would align with nominal GDP growth in times to come while private capex is expected to gather pace over the next three to five years, driven by higher capacity utilisation and an uptick in investments in emerging sectors such as renewables and electric vehicles, according to Hari Shyamsunder of Franklin Templeton.
Shyamsunder, vice president & senior institutional portfolio manager-emerging markets equity-India at the company, said the slowdown in corporate earnings in the second quarter ended September was temporary. A recovery is likely in the second half of FY25, aided by an increase in government spending to meet the budgeted target for the fiscal and improvement in rural demand, benefiting companies linked to this theme.
Edited excerpts:
What do you make of the slowdown (Q2FY25) in corporate earnings amid the relatively high valuations, especially in mid-and small-caps?
The Q2FY25 earnings season has been weak, with revenue and earnings growth under pressure across most sectors. This aligns with the GDP growth of 5.4%, the slowest in seven quarters. Slowing consumption, reduced capital expenditure, and declining exports have broadly impacted corporate performance.
Government-dependent companies have also struggled. Central government capex declined during this period, a sharp contrast to the 43% growth seen in H1FY24. This slowdown appears temporary, influenced by elections and government formation in the fiscal year's first four months. A rebound is expected in H2FY25 as the government ramps up spending to try and meet budgeted targets.
この記事は Mint New Delhi の December 23, 2024 版に掲載されています。
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