Of course, nobody expected this quarter of blockbuster results. Even on that muted background, the reported figures are largely disappointed. Given the election -related disruptions in the Basic Quarter last year, many had expected a natural tail wind of the low basic effect to support growth this quarter.
Instead, we see various companies struggling to post even modest growth. This means that the current softness may not be one -off. If it is not just a passing blip, do we stare at a deeper growth challenge for the economy in the medium term?
To better understand the underlying trends, it is useful to look at important collection restaurants of the management comments from some prominent companies that have reported income so far.
Let’s start banking
The surprise here is not a muted credit growth – which is now modest for a few quarters. There was also no postponement of that trend this quarter, despite a recovery in the general sentiment. Credit growth has fallen further in the last three months.
From the floating from around the middle of the midteen levels in Q4 FY24, credit growth fell sharply to a few figures in this quarter, after he had stayed in the low teenagers in the last three -quarters. The greater negative surprise, however, came from commentary on the uncovered segment – in particular from the management of leading NBFCs and banks. They point to livered customers (loans from multiple banks), who can affect credit quality and seriously influence growth in the coming months. This means that the growing stress in the MSME segment, which could considerably limit growth if the pressure continues. Determable activa quality and rising slipping in MSME retailings between banks support this concern. Combined with constant stress in the microfinance segment and a general credit delay, the prospects of a sharp economic rebound dim appear.
For banks, the pressure on the net interest rate margins (nims) could not have come in a worse time. With successive tariff reductions, the credit rates have fallen, while the deposition rates are left behind – pressing NIMs in the short term.
This pressure is just when growing is scarce and credit costs are rising (due to higher provisions), which seriously affects profitability for many banks. Not to mention, bank shares were the consensus purchases at the start of the quarter – seen as undervalued plays in the midst of the sharp recovery of the market of lows. Unfortunately, the income told a different story. Waiting for a long -awaited repetition in bank shares only becomes longer.
Circling back to activity quality in the retail trade, further proof of stress is visible in the credit card segment. Although the delay in new credit card additives is known, the growing delinquencies have not received much attention. Based on the portfolio at risk (par) Metriek, long -term arrears (par more than 90 days) have risen to 15%, indicating the rising repayment pressure in arrears.
To do it – another sector with equally disappointing income.
Bellwether companies reported consecutive falls in both income and profitability. With Gedempte Guidelines from major players, we look at another year with low sales growth with one digit. But that is only part of the story.
While income can rise, the real pain loss pain caused by productivity gain of the AI -Push lies. If the recent dismissal announcement of TCS is followed by others in industry, the second-order effects on broader economic activity can be ominous. Comes at a time when MSMEs are already under stress-as repeated in the comments of banks-the growth costs looks increasingly vulnerable in the medium term.
That said, the economy has a number of clear places.
There are no complaints about the growth prospects of the agricultural sector, given the robust monsoon views this year. Although this alone cannot compensate for the potential delay in consumption, the only relief can offer – especially if it is supported by persistent government capital expenditures (Capex), which remains critical in view of the weakness in the private Capex.
Government Capex had been a strong engine to FY24, but last year her limitations exposed. Capacity restrictions in traditional infrastructure segments such as roads, railways and general infrastructure have started execution. In response, the government is investigating new areas – such as urban water infrastructure (including waste water treatment) and shipbuilding – to speed up the Capex. If successful, these efforts can significantly improve the economic outlook.
For investors, these are not easy times to navigate
Although benign macro conditions help prevent sharp market corrections, the weakening of micro -fundamentals can keep markets under control and slow the outbreak that many hope for.
In such an environment, investors must use a stock-specific approach-on search for bottom-up opportunities. The era of easy money seems to be behind us. In the future, spotting the following winners will depend more on skill than happiness.
(The author, Arunagiri N is the founder CEO & Fund manager at Trustline Holdings)
(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)
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