Speaking to ET Now, Saigal said that while the broader markets have endured substantial pain, the silver lining is that valuations have cooled meaningfully. He noted that the earnings slowdown seen over the previous three to four quarters appears to be reversing, with the last two quarters showing improvement and current-quarter results coming in largely in line with expectations.
“Valuations are down and earnings are kind of trending up. That, on a micro basis, on a bottom-up basis, looks like a positive sort of setup,” Saigal said. He added that while macro headwinds—especially tariffs—have weighed on sentiment over the past few quarters, much of that pressure may now be behind the market. In his assessment, what was earlier a headwind could turn into a tailwind in the coming period, making India a more attractive investment destination than it was 16–18 months ago.
Saigal said his firm remains bullish on the broader markets, especially where secular growth visibility is strong.
Cyclicals Less Attractive Despite Near-Term Earnings Upside
Commenting on oil marketing companies, including HPCL, Saigal cautioned against drawing long-term conclusions from quarterly earnings swings that are heavily influenced by macro variables such as crude prices and government compensation mechanisms.“Earnings are dependent on too many macro factors for one to take a secular bottom-up call on that sector,” he said, even as he acknowledged that the recent quarter had been reasonable for some companies. Saigal stressed that this is not the time to chase cyclical names but to focus instead on businesses with strong cash flow and revenue growth visibility.He pointed out that several high-quality secular growth companies are now trading 30–50% below their one-year highs. “If one was to go back one year and look at these companies and talk about them, one would say that I wish these companies were down 30–40% so that I could buy them for the long term,” he said.Caution Warranted in Wires and Cables Amid Input Cost RisksOn the wires and cables segment, Saigal acknowledged that recent results and management commentary have been positive, but flagged copper prices as a key risk factor. With copper—one of the largest inputs—trading at elevated levels and demand remaining strong, margin pressures could emerge.
“The leading player disappointed on margins in the cables and wire space,” he noted, adding that at current valuations, any sustained margin contraction could weigh on stock performance. Given the increasing competition following new entrants into the segment, Saigal advised a cautious approach to the space over the medium term.
PSU Banks Positioned Well on Growth and ValuationsSaigal struck a more constructive note on PSU banks, highlighting robust earnings, stable credit costs, and positive growth commentary. He said that performance has been encouraging, particularly when viewed against market expectations and prevailing conditions.
“All of this, for the valuations that these banks trade at, does bode well for the space,” he said, adding that stock performance has also held up reasonably well.
Pharma: CDMO Space Offers Structural OpportunityWhile not particularly bullish on US-focused pharma exporters in the near term due to tariff-related uncertainty, Saigal expressed optimism on the Contract Development and Manufacturing Organisation (CDMO) segment.
He said that while exporters to the US may continue to face uncertainty until tariff clarity emerges, the CDMO opportunity is structurally strong over the next three to five years. “India is actually a small player in that opportunity,” he noted, suggesting significant headroom for growth in revenues and profitability for the right companies within the sub-sector.
Metals Outlook Improves as Valuations Turn AttractiveOn metals, Saigal believes the sector is entering a favourable phase, with demand momentum building in industrial metals following strength in precious metals. Currency depreciation and improving demand dynamics are expected to support the sector.
“Our analysis suggests that valuations are really one standard deviation lower than average levels over the last five years, and that bodes very well for metals in general,” he said. Non-ferrous metal stocks, in particular, appear attractively valued, supported by strong recent performance and positive forward commentary, while ferrous metals could follow suit over time.
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