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EMS, Telecom, Industrials & Retail Set for Strong Earnings Surge: Report

A report by Antique identifies EMS, telecom, industrials, and retail as sectors poised for stronger earnings growth over the next two years, supported by stabilizing macroeconomic indicators. It projects Nifty 50 earnings to grow at about 16% CAGR from FY26-28, a significant rise from the previous period. In contrast, sectors like oil & gas, IT services, and FMCG are expected to be laggards due to sector-specific challenges. The analysis links improved corporate profitability to the expected normalization of Wholesale Price Index and nominal GDP growth by FY27.

Key Points: Top Sectors for Strong Earnings Growth Next 2 Years

  • EMS sector leads growth
  • Telecom and retail to benefit
  • Industrials gain from macro stability
  • Oil & gas and IT may lag
2 min read

EMS, Telecom, Industrial and Retail sectors to deliver strong earnings growth over next 2 years: Report

Antique report forecasts robust earnings for EMS, telecom, industrials, and retail, with Nifty 50 earnings growth projected at 16% CAGR from FY26-28.

"Sectors likely to deliver stronger earnings growth are EMS, telecom, industrial, and retail - Antique Report"

New Delhi, January 5

Sectors such as EMS, telecom, industrials and retail are expected to deliver stronger earnings growth over the next two years, supported by improving macroeconomic conditions, according to a report by Antique.

The report stated this by highlighting a point that corporate earnings are positively correlated with the Wholesale Price Index (WPI) and nominal GDP growth. Both these key macro parameters are expected to normalize in FY27, which is likely to create a more supportive environment for corporate profitability.

It stated, "Sectors likely to deliver stronger earnings growth are EMS, telecom, industrial, and retail; while the laggard are likely to be oil & gas, IT services, power utilities, FMCG, and auto."

On the back of these macro tailwinds, the report also projects Nifty 50 earnings growth of around 16 per cent CAGR over FY26-28. This is a significant improvement compared to the muted 7 per cent CAGR recorded over FY24-26.

According to the report, sectors that are closely aligned with domestic demand and structural growth themes are likely to benefit the most in the coming years.

EMS, telecom, industrials and retail are expected to emerge as the strongest performers in terms of earnings growth over the next two years, aided by better demand conditions and operating leverage as macro indicators stabilize.

On the other hand, the report noted that some sectors are likely to lag in earnings growth during this period. These include oil and gas, IT services, power utilities, FMCG and the automobile sector.

The report suggests that these segments may continue to face sector-specific challenges, which could limit their earnings growth compared to the broader market.

The report also pointed to another encouraging trend for the market. The pace of earnings downgrades across large-cap, mid-cap and small-cap companies has slowed over the past four quarters.

This moderation in downgrades is seen as a positive sign, indicating improved earnings visibility and greater stability in corporate performance.

Overall, the report suggests that with WPI and nominal GDP growth expected to normalize in FY27, the corporate earnings outlook is set to improve meaningfully.

The projected acceleration in Nifty 50 earnings growth over FY26-28 reflects this improving macro backdrop, even as sectoral performance is expected to remain mixed.

- ANI

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Reader Comments

P
Priya S
Telecom showing strong growth is no surprise with 5G rollout and increased data consumption. But I'm a bit skeptical about retail. With inflation still a concern for middle-class families, will discretionary spending really pick up that much? Hope the report factors that in.
V
Vikram M
Finally some good news for the manufacturing and industrial sector! 🇮🇳 The 'Make in India' push and PLI schemes seem to be paying off for EMS. This is crucial for job creation. The lag in IT services is worrying though, hope it's a temporary phase.
S
Sarah B
As an investor, this report provides much-needed clarity. The shift from a broad-based slowdown to sector-specific opportunities is key. Will be rebalancing my portfolio towards industrials. The slowdown in earnings downgrades is the most positive signal here.
R
Rohit P
While the overall projection is positive, I respectfully disagree with the auto sector being a laggard. With the EV transition and strong domestic demand for both two-wheelers and cars, I feel this sector might surprise on the upside. The report might be underestimating it.
K
Kavya N
Good analysis. The correlation with WPI and nominal GDP makes sense. When input costs stabilize, corporate margins improve. Hope this growth translates into better salaries and more jobs for the youth. That's the real test of any economic recovery.

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