Corporate Earnings Picture Unlikely To Improve This Fiscal: Kenneth Andrade

Corporate India may not see a significant earnings jump in the third or fourth quarter this fiscal, but investors can expect a more meaningful earnings recovery after, according to Kenneth Andrade, founder and chief investment officer of Old Bridge Capital Management.

Andrade projected high single-digit to low double-digit earnings growth in fiscal 2026. "Corporate leverage won't make a big comeback for another year or two," Andrade told NDTV Profit. While corporate capex growth is a long-term expectation, it's not happening at a pace that should alarm investors or companies in the near term, he said.

Despite the tempered outlook, IT companies and global-facing sectors continue to offer strong cash flows and profitability. "India remains a very strong place for cash flows, but if we want substantial growth, we need to look beyond domestic markets," Andrade said, adding that Indian businesses are increasingly focused on exports to fuel growth.

For IT companies, which traditionally see mid-single-digit growth, Andrade estimated that they may trade between 17 to 23 times earnings.

For investors navigating the current environment, the focus should be on "growth at reasonable prices," according to Andrade. Although markets are no longer cheap, he advises looking at valuations carefully to ensure long-term gains.

The IT sector, with its "stupendous cash flows," remains a strong play, especially as global demand for tech services stabilises. Andrade is also bullish on select sectors like steel and energy, which continue to show potential.

Andrade's view emphasises the importance of disciplined investing, as he noted, "nothing is cheap in the markets."