Saurabh Mukherjea, Founder of Marcellus Investment Managers, has flagged concerns over the near-term earnings outlook for India Inc., pointing to weak demand, slow capex, and high household debt.Speaking to CNBC-TV18, Mukherjea said that the first quarter of financial year 2026 is likely to be sluggish, and there are no clear triggers for a strong recovery yet.
“The first quarter will be muted, it will be another 4 or 5% EPS growth quarter,” he said. He remains uncertain about what could drive a meaningful pickup in earnings. “It’s not as yet clear to me, what exactly will drive an EPS pick-up in India.”
According to Mukherjea, both private and public capital expenditure remain subdued. Despite some noise around investments, actual signs of revival are lacking. “If you look at budgeted government capex or the private capex noise, it’s not evident there is going to be a big take-off in either of them,” he explained.Mukherjea is not optimistic about a sharp revival in consumption either. High levels of household debt and sluggish job growth are holding back demand. He pointed out that aside from home loans, household debt as a percentage of GDP has reached a record 33–34%, one of the highest in the world.Read Here | IT Sector Q1 Preview: Stable quarter likely but seasonal strength missing
However, Mukherjea sees a potential silver lining. Real estate sales have dipped over the last three quarters, which, in his view, could free up household budgets and lead to higher spending on other items.“When you buy a flat, it sucks up so much of your income that everything else then is put on the back burner. If real estate demand is conking off… that ironically could presage a broader recovery in demand for cars and consumer durables.”“When you buy a flat, it sucks up so much of your income that everything else then is put on the back burner. If real estate demand is conking off… that ironically could presage a broader recovery in demand for cars and consumer durables.”Mukherjea sees HDFC Bank and ICICI Bank as top performers in a challenging environment, thanks to their strong ability to gather low-cost deposits. He also backs ICICI Lombard for its consistent underwriting track record and steady demand in the insurance sector.He is bullish on private hospitals, citing rising demand and limited supply of quality beds in cities like Mumbai and Bengaluru. With public investment in healthcare slowing and insurance schemes like Ayushman Bharat gaining ground, he believes the private sector is well-positioned to benefit.Mukherjea also sees opportunity in corporate hotels, especially in business hubs across southern India, where supply shortages persist amid growing demand from global executives.For full interview, watch accompanying videoFollow our live blog for more stock market updates
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