India's Earnings Growth Can Be Better Than Expected In 2023, Says Goldman Sachs' Sunil Koul

India's corporate earnings are expected to rise at least 17% in the current year with a likelihood of even better growth, according to Sunil Koul at Goldman Sachs.

"The tracking of the first-quarter (January-March) numbers, as a proportion to the full year, has been a little bit higher than the historical average," Koul, the Asia Pacific strategist at Goldman Sachs told BQ Prime's Niraj Shah.

While the consensus estimate is at 18%, Koul said that the financial services firm is already "fairly conservative" on the top line numbers in reaching the 17% estimated growth.

According to Koul, the outlook for the full year suggests the possibility of an upward push to earnings.

Koul said that banks are a "large part of the earning recovery thesis", as they continue to gain market share from non-banking financial institutions and increasing credit growth.

In addition to the banking sector, Koul also said he remains optimistic regarding the manufacturing sector, which benefits from infrastructure growth initiatives such as ‘Make in India’, along with Performance-linked incentive schemes.

Consumer staple companies are experiencing volume growth, he said. "Rural FMCG has turned positive after multiple quarters of decline."

However, IT and metals have been a drag on the earnings so far, Koul said.

In terms of allocation, Goldman Sachs maintains an “underweight” stance on IT and pharma sectors due to their “softer” performance, including in the current quarter.