Earnings Growth and Market Multiples
“Very difficult to take a call on the longevity of this uncertainty. The Iran situation may settle in 15–20 days, but a quarter of impact will already be reflected in earnings,” Kant said in an interview to ET Now. He noted that earlier expectations of 12–13% earnings growth for FY27 have now been revised down to 9–10%, reflecting the market’s adjustment to global events.
Despite this, Kant believes the Nifty index, currently trading around a 19x FY27 multiple, presents a “comfortable zone to start investing.” He emphasized a staggered buying strategy, suggesting investors allocate no more than 20–25% of their cash into carefully chosen sectors.
Selective Stock Picks
Kant highlighted several sectors and companies that appear attractive in the current environment. “Defence stocks have corrected, so HAL and BEL remain top picks,” he said. Midcap companies are also drawing attention, with Power Mech Projects Limited now available at around 12x one-year forward earnings, supported by a strong order book exceeding ₹39,000 crore.
Other picks include Welspun Corporation, operating in pipes both in India and the U.S., which has corrected to 11–12x one-year forward earnings. In the automobile space, Mahindra & Mahindra has fallen below 20x one-year forward PE, despite growth above 20%, making it a potential bargain.
Kant summarized, “This year will be a stock-picker’s market, focused on defence, metals, and automobiles. Banking and NBFCs, however, remain areas of caution due to potential asset quality stress and rising cost of funds.”
Strategy for Investors
Experts recommend maintaining a well-researched shopping list and adopting a staggered investment approach. “Even if the market moves over the next three to six months, selective investing is key,” Kant advised. With multiple triggers—including elections, monsoon uncertainty, and geopolitical developments—investors are encouraged to focus on quality stocks rather than sectoral trends alone.
While valuations have corrected, caution remains paramount. A selective, patient, and bottom-up strategy may help investors navigate the volatility while identifying long-term opportunities.