Corporates Expected to Report 15% EPS Growth in FY25; Banks and IT Stocks Offer Attractive Valuations, Steel Sector Poised for Success

Indian corporates are expected to report 15 per cent earnings-per-share (EPS) growth in FY2025, driven by strong domestic consumption, policy reforms, and healthy corporate balance sheets. According to domestic wealth manager Client Associates, this growth is a result of the continuation of strong momentum from delivering a double-digit EPS growth in the current fiscal year. Sensing companies are also witnessing a moderate earnings upgrade due to a fall in commodity prices, better-than-expected domestic economic activities, government’s focus on capex expenditure, and steady credit growth.

The Indian economy is projected to grow at about 6.5 per cent in FY25, mainly due to strong domestic demand and calibrated policies. India remains the only large economy that will see a gross domestic product (GDP) growth higher than its long-term averages and an inflation rate lower than its long-term averages in CY2024 and FY2025.

In terms of sectoral earnings, corporate and private banks are poised to report healthy earnings growth on the backdrop of better-than-expected credit growth and declining non-performing assets (NPAs). The information technology (IT) sector, though, has witnessed consecutive downgrades due to a high base from the previous year, elevated manpower costs, and a decline in global IT spend. The fast-moving consumer goods (FMCG) sector reported mild earnings upgrades, while the auto sector is set to report an upbeat earnings growth, and infrastructure companies due to all-time high order book and stable volumes, are set to deliver a better-than-average earnings growth during the year.

In specific sectors, FMCG and power companies expect steady profit growth, while the steel sector anticipates abnormally high growth in FY2025. Cement, despite facing challenges, is supported by stable volume growth. Telecom and engineering companies like Bharti Airtel and Larsen & Toubro also showcase positive earnings outlooks, driven by tariff hikes and order book strength.

Overall, the Indian corporate sector presents a positive outlook, with expected growth in various key sectors and robust financial performance.