Pricing power, inventory gains to boost Q4 earnings: JM Financial

Consensus earnings estimates for the fourth quarter of FY26 point to double digit growth, albeit at a lower level than the previous quarter due to the impact of the West Asia war and a high base effect, says Satish Ramanathan, chief investment officer-equity at JM Financial Asset Management Company in an interview.

- Ram Sahgal [e-mail]

Leading companies may emerge better given superior pricing power.

Asked whether it is time for foreign portfolio investors to return to Indian equity markets, Ramanathan reply was: ‘...we believe Indian equity markets are now reasonable as regards valuations and are poised to benefit from a diversified economy and domestic market. We expect foreign investor sentiment to improve once oil prices settle down.” He manages some Rs 9,800 crore equity assets under management at JM Financial AMC.

Edited excerpts from the interview:

Do you think our markets have seen the worst from the impact of the Iran war?

In March, Indian equity markets declined nearly 11% on fears of the fallout from the Iran war. Concerns about oil and gas availability were elevated and prices spiked, leading to a weakness in the currency. The subsequent news flow has been encouraging as tensions between US and Iran seem to have declined. However, we will need to assess markets and the impact on the economy on a periodic basis.

India remains particularly vulnerable, as dollar remittances and energy dependency on the Middle East is high. So far, India seems to have coped with the crisis relatively well with minor dislocations, but higher prices of crude may trickle into the economy and cause inflationary pressures.

The estimate of crude prices by the RBI at $85 /bbl is higher than the prewar estimate of $65 for 2026. Its impact?

Oil prices may not move back to prewar levels quickly, but in the early stage of the conflict, availability and price were issues; we seem to have addressed the availability aspect. However, the second order impact needs to be seen... many chemical industries have been impacted and fertiliser prices have increased. The impact on fiscal and current account balance needs continuous monitoring.