Earnings cut cycle to resume post Q4 results, warns Aditya Khemka of InCred Asset Management 

Aditya Khemka, CIO at InCred Asset Management, on Friday said 2025 has been a year of disappointment and that he finds the stock market a bit expensive. In an interview to Business Today, he said Nifty constituents posted earnings growth of only six per cent in the first half of FY26, excluding oil marketing companies (OMCs) and commodity companies, compared with the 10–12 per cent growth the Street had anticipated at the start of the year. 

Like the Street, Khemka too had not hoped for a 6 per cent earning growth in H1FY26. Yet, he said, the market has refused to correct despite this underperformance in earnings growth. 

"We believe that the market is getting a little more expensive with each passing day as earnings continue to disappoint, but the market does not correct. So, the PEG multiple and the PE multiple keeps going up,"  he said. 

Khemka said if one looks at the current estimates for FY26, most analysts are expecting anywhere around 12-15 per cent bottom line growth for Nifty. That is a steep ask, Khemka said.

He said the GST cut, the income tax rationalisation for up to 12 lakh income and the global tailwinds are all positives, but he sees enough headwinds also in terms of consumption trends wavering.

"I see people trying to save more, deleveraging their balance sheets rather than leveraging further and these things are sort of going against the consumption. So what we have to realise, is that almost 60-70 per cent of Nifty index weights are in stocks that at end of the day are driven by consumption. If consumption does not pick up, Nifty as an index may not perform. I don't see consumption picking up sustainably," Khemka said.

He said consumption did pick up in the September quarter and it should show a minor uptick in the December quarter as well, largely an outcome of GST cuts.

"But I think Q4 will be a telling quarter and my expectation as of today is that 4Q will show relatively flat earning growth, a single digit earning growth and that is where, I think, the market will get a little disappointed and we might see more earning cuts for FY2027 there after Q4," Khemka said.