Speaking to ET Now, Pankaj Tibrewal from IKIGAI Asset said the investment environment has steadily improved over the past few months as several earlier headwinds have started turning into positives.
“We have been constructive since March. Crude prices have returned to pre-war levels, and the AI-led markets have seen a significant shakeout. The next big trigger for markets will be the first-quarter earnings,” he said.
Revenue Growth May Beat Expectations
While the Street remains cautious about margins because of elevated raw material costs, Tibrewal believes analysts are underestimating the potential for stronger revenue growth across Corporate India.
“The biggest disconnect is top-line growth. Many companies have already taken price hikes, and revenues could surprise positively, even if margins remain under pressure,” he said.
He expects operating leverage to cushion part of the margin impact and support earnings in several sectors.
Home Improvement Sector in Focus
Tibrewal identified the home improvement segment as one of the strongest opportunities, citing favourable industry dynamics in tiles and wood panels.
“Branded tile players are gaining market share as Morbi manufacturers struggle with higher gas costs. Dealer feedback points to a significant pickup in volumes,” he said.
He also expects strong performance from wood panel companies and sectors benefiting from import substitution.
“Chinese imports have reduced sharply in segments like MDF, while chemicals, textiles, engineering and auto ancillaries are also seeing improving momentum,” he said.
A Stock Picker’s Market
Rather than expecting gains across the board, Tibrewal believes investors should focus on businesses with strong earnings visibility. “This is a stock picker’s market. The opportunity lies in identifying sectors and companies where growth is clearly visible,” he said.
Nifty Earnings Growth Seen at 10–13%
Despite near-term cost pressures, Tibrewal expects double-digit earnings growth for the benchmark index this year, supported by banks and cyclical sectors.
“I do not think 10% to 13% Nifty earnings growth will be a challenge. Banking, metals and cement should all contribute meaningfully,” he said.
He also expects nominal GDP growth to drive stronger corporate revenues.
“Corporate India’s top-line growth should improve as nominal GDP remains healthy, and operating leverage will support earnings,” he said.
Demand Remains Healthy
According to Tibrewal, companies are no longer worried about weak demand despite higher prices. “Companies are not talking about demand destruction. The key challenges are supply chains and raw material costs, while demand remains reasonably good,” he said.
He remains particularly optimistic about the broader market.
“Many companies can compound earnings at 20% to 25% annually. That is where the best bottom-up opportunities lie,” he said.
Private Banks Offer a Contrarian Bet
Although foreign investor selling has weighed on banking stocks, Tibrewal believes the sector’s fundamentals remain among the strongest in years.
“Private banks are very attractively valued. The challenge is technical because FIIs have been persistent sellers,” he said.
He expects sentiment to improve once foreign selling subsides.
“Bank balance sheets are in the best shape they have been in for years. Once FII selling stops, banking stocks could quickly return to favour,” he said.
FII Flows Could Return
Tibrewal believes India could benefit if global investors rotate away from overheated AI-driven markets.
“I am hopeful FIIs will return in the second half of the fiscal year. India looks attractive in dollar terms, while the AI trade globally appears to be entering a mature stage,” he said.
With earnings season approaching, investors will closely watch whether stronger revenue growth and resilient demand can offset cost pressures and provide the next leg of the market’s rally.
