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Corporate earnings downgrade cycle nearing end: Kotak’s Prasad
Mint New Delhi
|October 20, 2025
Heraisedared flagwhen domestic retail investors, oblivious to the valuation-earnings disconnect, jumped into givean exit to foreign portfolio investors (FPI) who've sold a record %2 trillion in the cash market so far this calendar year.

But, after a year of negative stock price returns amid a slew of earnings downgrades, Sanjeev Prasad, the managing director and co-head of Kotak Institutional Equities, expects a broad-based earnings growth pick up from the next fiscal year, partly because of a low base in certainsectorsanda turnaround in others, complemented by the government’s and central bank’srecentfiscal and monetary measuresto boost demand and growth. Prasad warns that India’s much-enjoyed valuation premium could beatrisk.
Edited excerpts:
You’ve been concerned about earnings lagging valuations by a wide margin for some time. Where do you stand now?
It’sjust the start of the quarterly season, but so far the trends have been okay, I would say. We haven’t seen any major disappointment, which was the case earlier. We hada situation where we had earnings downgrades after every quarterly season, based on either a company missing numbers or guiding down numbers. This time around, that’s not the case. If you look at the IT companies, in most cases, it wasa slight beat versus expectations, which is a positive. Also, the commentary seems tobe okay.
Axis Bank reported very decent numbers. Concerns abounded over a steep compression in NIMs (net interest margins) in Q2 because of the recent rate cuts during the course of the year, and some challenges surrounding NPLs (nonperforming loans) or some new stressed assets materialising, whichis not the case. So, it looks like earnings expectations have already been brought down to levels which look difficult to miss, which is a good sign, I would say.
In your recent notes, you sounded more upbeat on earnings growth, going into the next fiscal year. Why's that?
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