New Delhi, Jan 15 (Blitz India Business) India’s macros (like fiscal consolidation, strong balance sheets and recovery in consumption) remain robust amid slowing global growth and the country’s long-term growth prospects remain steady, projected at 6.5 per cent real GDP growth and 10-11 per cent nominal GDP growth, according to a report on Wednesday.
The strength of banks (NPAs below 1 per cent) and corporate balance sheets is notable. India Inc.’s profits are growing strong, but they are also generating large amounts of free cashflows in sharp contrast to 2003-2008, where free cashflows were in deficit, according to the monthly insight report from global financial services company Mirae Asset.
Household debt levels are also reasonable compared to global standards. India’s aggregate debt to GDP is lower than in 2010, while it has risen globally, the findings showed.
“The Nifty 50 Index’s valuation at 19 times FY26E and 17 times FY27E P/E is reasonable given the consensus earnings growth of mid-teens CAGR over FY23-FY27. Earnings growth is broad-based, providing better certainty,” the report mentioned.
“Some sectors, particularly among industrials, continue to trade at a premium. Mean reversion is expected in these richly valued sectors,” the report noted.
Meanwhile, agriculture is likely to see a further revival as the kharif crop and price outlook are favourable. The upcoming rabi crop is also likely to be positive.
The total farm area sown in the country under various rabi crops in the ongoing season so far has increased to 632.3 lakh hectares, up from 631.4 lakh hectares in the same period of the previous year, according to the latest government data.
Government capex is likely to pick up in H2 FY25. Rural consumption could offset the softness in urban consumption, and this too presents a positive picture with the ongoing harvest and commencement of the next season, according to the report.
“We also expect the state government’s welfare spends will support consumption recovery. Monetary policy stimulus could also help in reviving growth in the near-medium term,” it added.
Overall, while near-term concerns have risen and could weigh on investor sentiments, the medium to long-term India story remains intact, the report noted.