February 2026: Indian corporate growth picking up

In this newsletter we look at the results of the BSE500 ex-financials for the quarter ended 31-Dec-25. Below we present the year on year (yoy) growth for the BSE-500 constituents for the last 12 quarters. Of the 428 non-financials in the BSE500, our sample set consists of 388 companies for whom comparable numbers are available for 16 quarters. These 388 companies constitute 96% of the market cap of the BSE-500 non-financials. Since energy is a volatile sector, we have excluded that in a second metric and we have also excluded Tata Motors Passenger Vehicles (TMPV) in a third metric because Tata Motors reported a large loss this quarter, largely due to its international operations.

It is this third metric, which excludes the energy sector and TMPV that we should pay attention to because it is the best approximation of what is happening in the Indian corporate sector over the last 12 quarters. We can see that there is a definite pick up in both aggregate revenue growth as well as EBIT growth in the last two quarters. This is a welcome sign and perhaps the effect of all the stimulus the central bank and the government have introduced over the last 12 to 15 months.

Meanwhile, as we wrote in our January newsletter, there has been a severe correction in stock prices in the broad market over the last few months though this is not visible in the prices of the market indices. The broad market continued to drift downwards in February as well. When we look at the tables above, it is interesting that when the broad market was close to its peak in Sep 2024, the corporate performance, both in terms of revenue and EBIT, was close to its weakest over the last 12 quarters. And now as the market is correcting significantly, corporate growth is beginning to pick up. Valuations of many stocks are getting crunched and interesting opportunities are emerging. You would have noticed that cash levels in the portfolio are down significantly – this is a sharp contrast from September 2024 when we had about 25-30% cash in the portfolio. All in all, opportunities are increasing and this is a good time to invest in the Indian equity market for the long term.