Zerodha founder Nithin Kamath recently raised alarm bells regarding the slowdown in corporate growth, highlighting the stagnation being witnessed across various sectors in both public and private markets. He pointed out how valuations in the private markets, especially in the case of startups, have surged well above their fundamental value or expected growth, resulting in a scarcity of funding for later-stage ventures.
Amidst a challenging year for India's markets, characterized by heightened retail investor activity and a pullback from foreign investors, Kamath noted the flashing warning signs in growth indicators. Data reflects a pattern of fluctuating and declining profit growth, despite some resilience in revenue figures. For example, profits showed a decline from a high of 44% in June 2023 to turning negative at -3.4% in September 2024, marking a significant shift downwards.
Kamath's concerns are part of a broader narrative encompassing geopolitical tensions, elevated valuations, and market corrections, all of which are influencing investor sentiment. This sentiment is mirrored in the financial data that indicates both declining revenue growth and profits for Indian corporates, prompting analysts to revise their growth forecasts for the upcoming quarters. Sectors like finance and healthcare are exceptions, showing projected earnings growth of 11% and 15% respectively, driven by factors like credit demand and global market expansion. In contrast, sectors like metals, oil and gas, and cement are projected to face challenges and potential declines due to various market conditions and challenges.