India Inc. has seen a significant return to growth after a four to five-quarter period of subdued performance, according to Jitendra Sriram, Senior Fund Manager – Equity at Baroda BNP Paribas Mutual Fund. In an exclusive interview, Sriram highlighted that the breadth of earnings has notably improved across market capitalizations.
Robust Growth Across Market Caps
The first quarter saw largecap companies deliver nearly 20 percent year-on-year growth. Midcap segments followed closely, posting growth in the mid-twenties, while smallcap companies, as measured by the Nifty Smallcap 250 index, achieved an impressive approximately 30 percent growth.
However, Sriram offered a note of caution, suggesting that this growth trajectory might temper in the second half of the year. This potential slowdown is attributed to a higher base effect from the previous year, specifically a GST cut announced by Prime Minister Modi which became operational in late September 2025. This, combined with strong demand for white goods and vehicles during the festive season of the prior year, sets a challenging comparison for the upcoming second half.
Strategic Investment Themes
Sriram detailed several investment themes that have yielded positive results for his funds. Early identification and sustained investment in the power equipment sector proved highly beneficial, particularly driven by renewed interest in thermal power amidst global energy pressures, such as those in the Straits of Hormuz.
Another successful area has been mid-tier banks. While large banks have generally acted as market performers, mid-tier banks, which have undergone substantial recapitalization, have delivered strong performance. Certain elements within the chemicals sector have also contributed positively to their portfolio returns.
Bullish Outlook on NBFCs
Expressing a bullish stance on Non-Banking Financial Company (NBFC) shares, Sriram noted a significant reduction in concerns regarding the Reserve Bank of India's (RBI) monetary policy. Earlier expectations of a hardening stance from an easing perspective have diminished materially. Sovereign yields, which had previously risen above 7 percent, have since retraced to around 6.80 percent.
Sriram believes that while bond yields have softened and capital availability is adequate, the RBI is unlikely to breach its outer boundary of 6 percent for yields. This environment, coupled with operating leverage gained from economies of scale, is creating opportunities for NIM (Net Interest Margin) and yield improvements within the NBFC space.
Baroda BNP Paribas Mutual Fund manages 49 funds, with Sriram and his team overseeing substantial assets. Their Balanced Advantage Fund manages Rs 12,000 crore, the multi-cap fund Rs 3,400 crore, and the large-cap fund Rs 2,600 crore. The midcap fund, a stellar outperformer over the last three years with 19 percent compounded annual growth, manages Rs 2,584 crore.