One needs to be cautious with mid and smallcaps

As the March 2025 quarter (Q4FY25) earnings season gets busier, KARTHIKRAJ LAKSHMANAN, senior vice-president and fund manager for equity at UTI AMC, tells Puneet Wadhwa in an email interview that considering the near-term uncertainties, there is a possibility of a few percentage points of cut in earnings growth for 2025-26 (FY26) versus the current expectations. Edited excerpts:

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What's your interpretation of March 2025 quarter earnings of India Inc?

This quarter being the year-end numbers, the result announcements are spread over a longer period and only few companies have reported so far. While some large IT companies' results have been weaker, mid-sized ones have fared better. Financials have been broadly in-line while staples have been weaker on growth.

Overall, the expectations are for single digit topline and earnings before interest, taxes, depreciation, and amortisation (Ebitda) growth in this quarter. Profit margins have been moving up in the last few years, which may be at risk of decline in some sectors. Considering the near-term uncertainties, there is a possibility of a few percentage points of cut in earnings growth for FY26 versus the current expectations. That said, as long as the growth is in double digits, markets should take it positively.