MSCI India earnings to grow 10-12% in dollar terms over next two years, says UBS

What happened

UBS expects MSCI India company earnings to grow at a compounded annual growth rate of 10-12% in dollar terms over the next two years, 2027 and 2028. UBS strategist Sunil Tirumalai said Nifty 50 earnings growth is unlikely to differ much and could be a couple of percentage points higher.

Confirmed

Global impact / market context

Earnings growth is the profit companies generate. A 10-12% yearly rise in dollar terms means US-dollar investors could see underlying profits increase, even if share prices lag. That profit growth is what ultimately supports stock valuations and long-term returns.

Analyst inference

Indian equities have become cheaper relative to other emerging markets, with the valuation premium falling to about 65% from 110% in September 2024. UBS attributes part of this to stronger earnings upgrades in South Korea and Taiwan, which makes those markets more competitive for investor money.

Analyst inference

What to watch

1. UBS strategist Sunil Tirumalai identified banking as one sector currently offering attractive valuations in India. Confirmed
2. Watch whether MSCI India earnings actually grow near 10-12% in dollar terms through 2027 and 2028, because slower growth would undercut the case for current valuations. Analyst inference
3. Track whether India's valuation premium keeps shrinking if South Korea and Taiwan continue their earnings upgrade cycle, which could pull global investor money toward those markets instead. Analyst inference

Evidence

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