India Strategy Weekly IdeaMetrics Idea of the Month – Corporate meeting takeaways By Emkay Global Financial Services Ltd
Over the last ten days, I met with nine corporates across consumption and BFSI. There is widespread optimism about a 2H recovery with focus on the economy segments, for which GST impact on affordability is more pronounced. This reinforces our consumption-driven OW call on the broader market, and we maintain our Nifty target at 28,000 for Sep-26E.
Companies expect 8-10% delta in sales volume Companies expect 8-10% delta in sales volume, with a bigger impact on the economy segments. The affordability impact is much higher for lower-income segments. The regulatory changes (in cars and two-wheelers) resulted in aggressive price hikes in entrylevel segments – this cut brings prices closer to long-term trend levels. Feedback from the ground (sales channels, distributors) reinforces this view – this is not just a theoretical construct from the head-office staff.
GST cuts – Not the only driver
The GST cuts are one of the many drivers of the expected consumption recovery. They ride on previous government actions like the ~Rs1trn tax cuts in the FY26 Union Budget and the RBI's monetary easing. This is mainly seen as a structural change in demand and growth. Most corporates see it as a permanent expansion of the TAM because they estimate that the affordability gap contracts by >50%. A small minority is more cautious and wants evidence for confirming that the trend lasts beyond the H2FY26 pop.
Lenders are also optimistic
Lenders are preparing for a sharp increase in disbursements across PVs, 2Ws, and CDs, with some spillover expected into personal loans. Most minor asset-quality issues that appeared in FY25 have largely eased, and improved system liquidity gives lenders the confidence to pursue growth. There are a few small pockets of stress, such as micro-LAP and smaller SME borrowers, albeit these are not systemic. NBFCs are not overly concerned about the short-term bond market tightness – they see no pressure on either borrowing costs or liquidity.
Short-term disruption
The over 5-week gap between the GST announcement and its implementation might create short-term disruption in postponed sales and inventory valuations, though it is not seen as a major issue. The implementation date of 22-Sep allows inventory clearance before the end of Q2FY26, and the lost sales will recover over the two quarters. Sales in the Sep-Nov 2025 period could grow at over 10% vs the same period in 2024.
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