Manufacturing Bharat

We Can Cover You

We Can Cover You

Written by 2:46 pm Economy

Client associates cautiously optimistic on Indian equities in 2025

Client Associates (CA), the country’s largest multi-family office provider, has projected a robust recovery in Corporate earnings in 2025-26 with growth estimated at 11.7 per cent, signalling optimism for the medium-term future.

This forecast is substantially higher than the 8 per cent earning growth projected for the current fiscal by the firm, which is now managing over $ 6.1 billion in assets. It is however much lower than the 20.1 percent earnings growth recorded by the broader market in 2023-24.

Maintaining a “neutral” stance on equities, Client Associates stated in its Equity Assessment 2025 Report that “amid higher valuations and global uncertainties, we anticipate moderate returns in the high single digits from markets in calendar year 2025, accompanied by high volatility”

The firm’s report also highlighted that it was “underweight” on small and mid caps.

“We are expecting Indian corporates to report subdued earnings growth at 8 per cent in the current fiscal. This is due to slower economic growth, lower private consumption and higher inflation seen in the last quarter or two”, Rohit Sarin, Co-Founder of Client Associates said.

“However corporate earnings growth next fiscal are expected to grow to 11-12 per cent on the back of an expected increase in government capex. This will be higher than our long-term growth averages. We are expecting government capex to come back”.

Also, Client Associates expects investment-led demand along with rural demand (accounting for 60 per cent of consumption) to make a big improvement in 2025-26.

Sharing the strategic outlook for the equity markets in 2025, Sarin said “2024 was a year marked by strong sectoral rallies, but 2025 presents a shift in the landscape. While the market’s performance in 2024 was underpinned by cyclical growth, 2025 will be a year of navigating a more cautious environment with heightened volatility. Despite the challenges posed by a cyclical slowdown, sectors like healthcare, IT, and financial services remain pivotal in driving long-term growth”.

Large-cap stocks, in particular, represent strong value opportunities as one moved into a year of strategic optimism, he added.

Large-Cap Stocks

A key takeaway from the Client Associates Equity Assessment 2025 report is the undervaluation of large-cap stocks. While mid and small-cap stocks are trading at elevated PE ratios of 34.1 and 30 respectively—well above their 5-year averages—large-cap stocks are available at a PE ratio of 22, significantly below the historical average of 24.2. This suggests that large-cap stocks represent an attractive value opportunity, especially as investors navigate a more volatile market environment in 2025, he said.



Source link

Visited 1 times, 1 visit(s) today
[mc4wp_form id="5878"]