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Business Standard
5 days ago
- Business
- Business Standard
India's services sector 'epochal opportunity' for investors: Report
India's services sector contributed 55 per cent to the country's gross domestic product in FY25, up from 40 per cent in the early 1990s and providing 'wealth-creation opportunities', said a report on Monday. The sector is the cornerstone of India's ambition to be a $5 trillion economy and an 'epochal opportunity' for investors, said Axis Mutual Fund's report named Scaling New Hights-India's Service Sector Report The sector grew at an average of 8.3 per cent annually in the post-pandemic period (FY23-FY25). Sub-sectors such as IT, financial services, healthcare, telecom and e-commerce are seeing 'unprecedented momentum' due to digitalisation, rising incomes and urbanisation, it said. For investors, this structural growth translates into potential wealth creation opportunities over the long term. IT services are projected to grow 4-6 per cent in FY26 as companies tap into generative artificial intelligence and Cloud technologies. Financial services continue their digital transformation, with mutual fund assets under management growing at over 20 per cent compound annual growth rate over the past decade. Health care reported a 62 per cent year-on-year expansion in March 2025, driven by tech adoption and rising demand. Indian ecommerce's size will triple from $103 billion in 2024 to $325 billion by 2030, making it one of Asia-Pacific's fastest-growing markets, said the report. Investment opportunity The sector has consistently attracted the highest share of foreign investments, accounting for 19 per cent of all such inflows in FY25. Investors looking to benefit from this trend may consider: Sector-focused mutual funds and exchange-traded funds, including those benchmarked to the Nifty Services Sector index, which posted a 10-year CAGR of 13 per cent. Stocks in key sub-sectors like IT, BFSI, telecom, and healthcare that stand to gain from these structural shifts. Emerging themes such as fintech, medtech and premium consumer services. The report said that while the long-term story remains strong, investors should be mindful of short-term volatility, especially during global downturns. A diversified portfolio and long investment horizon are recommended.
Hans India
6 days ago
- Business
- Hans India
Services sector propelling economy towards $5-trn goal
New Delhi: India's service sector is demonstrating a significant role in the country's journey towards becoming a $5 trillion economy, a report said on Monday. For decades, the sector has not only been contributing massively to India's gross domestic product (GDP), but has also become the key driving force to the nation's economy, rising from 40 per cent contribution in GDP in the 1990s to accounting for 55 per cent gross value added (GVA) in FY25, according to the Axis Mutual Fund's 'Service Sector Report'. 'From contributing approximately 40 per cent of India's GDP in the early 1990s, the service sector surged to account for 50.6 per cent of India's gross value added (GVA) in FY14. This dominance has only amplified, reaching an estimated 55 per cent in FY25,' the report stated. All verticals of the service sectors, including information technology (IT) services, finance and banking, healthcare, telecommunications, and e-commerce, have shown immense growth in the last two decades.
Hans India
6 days ago
- Business
- Hans India
India's service sector scales new heights towards $5 trillion economy
New Delhi: India's service sector is demonstrating a significant role in the country's journey towards becoming a $5 trillion economy, a report said on Monday. For decades, the sector has not only been contributing massively to India's gross domestic product (GDP) but has also become the key driving force to the nation's economy, rising from 40 per cent contribution in GDP in the 1990s to accounting for 55 per cent gross value added (GVA) in FY25, according to the Axis Mutual Fund's 'Service Sector Report'. 'From contributing approximately 40 per cent of India's GDP in the early 1990s, the service sector surged to account for 50.6 per cent of India's gross value added (GVA) in FY14. This dominance has only amplified, reaching an estimated 55 per cent in FY25," the report stated. All verticals of the service sectors, including information technology (IT) services, finance and banking, healthcare, telecommunications, and e-commerce, have shown immense growth in the last two decades. IT services grew from $8 billion in 2000 to $245 billion in FY24, with further expansion to $300 billion expected by FY26. The digital revolution gave a magic shift to the Banking Financial Services and Insurance (BFSI) sector, with mutual fund AUM growing at over 20 per cent CAGR over the past decade to reach Rs 72.19 lakh crore in May 2025, the Axis Mutual Fund report said. The healthcare market size is projected to reach $370 billion by 2027, with 62 per cent year-on-year growth reported in March 2025 alone. The telecom sector has seen data consumption per user soar 450 times since 2014, reaching 28 GB per month in 2025, and the e-commerce market is expected to triple from $103 billion in 2024 to $325 billion by 2030, it added. India's nominal GDP doubled in in last decade (2015-2025). In FY25, it reached to nearly $3.97 trillion and is estimated to surge to around $4.19 trillion by the end of the calendar year, providing a formidable foundation for the service sector's expansion. Rapid digitisation under the 'Digital India' initiative, proactive government policies including ease of doing business policies, liberalisation in foreign Direct Investment (FDI) norms, and sector-specific incentives have been creating a fertile ground for the upscale of the service sector, the report said.
India.com
6 days ago
- Business
- India.com
Indias Service Sector Scales New Heights Towards $5 Trillion Economy
New Delhi: India's service sector is demonstrating a significant role in the country's journey towards becoming a $5 trillion economy, a report said on Monday. For decades, the sector has not only been contributing massively to India's gross domestic product (GDP) but has also become the key driving force to the nation's economy, rising from 40 per cent contribution in GDP in the 1990s to accounting for 55 per cent gross value added (GVA) in FY25, according to the Axis Mutual Fund's 'Service Sector Report'. 'From contributing approximately 40 per cent of India's GDP in the early 1990s, the service sector surged to account for 50.6 per cent of India's gross value added (GVA) in FY14. This dominance has only amplified, reaching an estimated 55 per cent in FY25," the report stated. All verticals of the service sectors, including information technology (IT) services, finance and banking, healthcare, telecommunications, and e-commerce, have shown immense growth in the last two decades. IT services grew from $8 billion in 2000 to $245 billion in FY24, with further expansion to $300 billion expected by FY26. The digital revolution gave a magic shift to the Banking Financial Services and Insurance (BFSI) sector, with mutual fund AUM growing at over 20 per cent CAGR over the past decade to reach Rs 72.19 lakh crore in May 2025, the Axis Mutual Fund report said. The healthcare market size is projected to reach $370 billion by 2027, with 62 per cent year-on-year growth reported in March 2025 alone. The telecom sector has seen data consumption per user soar 450 times since 2014, reaching 28 GB per month in 2025, and the e-commerce market is expected to triple from $103 billion in 2024 to $325 billion by 2030, it added. India's nominal GDP doubled in in last decade (2015-2025). In FY25, it reached to nearly $3.97 trillion and is estimated to surge to around $4.19 trillion by the end of the calendar year, providing a formidable foundation for the service sector's expansion. Rapid digitisation under the 'Digital India' initiative, proactive government policies including ease of doing business policies, liberalisation in foreign Direct Investment (FDI) norms, and sector-specific incentives have been creating a fertile ground for the upscale of the service sector, the report said.
Time of India
02-06-2025
- Business
- Time of India
Valuations higher than what growth warrants; pick stocks carefully in this market: Shreyash Devalkar
Shreyash Devalkar , Fund Manager, Axis Mutual Fund , recent GDP growth numbers for FY25 and Q4 met expectations. US flows are aiding the market. Despite lower volume growth, valuations are high. The IT sector's growth and PE ratio trends are an example. Globally, IT service valuations have shifted due to higher cash flows. Current valuations exceed what growth justifies. Careful stock picking is essential in this market. Indian markets have had a strong. Will this party continue and if yes, why and if no, why not? Shreyash Devalkar: You have been highlighting one point which is true as far as overall markets are concerned – good macro, in which there is low interest rate, low commodity prices, and fiscal deficit in control. The recent GDP growth numbers released for FY25 and Q4, have not shown much deviations from the expectations though the numbers are not what the market expected a year ago. But as of now, there is no deviation. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Una inversión en Amazon podría darte un salario extra. Undo So, broadly, combining all these factors we see definitely the flows from the US are there and that is definitely helping the market. And despite relatively lower growth on the volume front especially, the valuations are definitely high. I always give an example of the IT sector. In the first decade of this century, the IT sector used to grow at 15% with around 20-25 PE. In the second decade, it grew at around 10% with 15-20 PE, and now it is growing at around 5% with around 20 PE. So, the growth is low and the valuations are definitely higher than expected. Some of these valuations are not only in India and if you see IT services globally and take similar companies like Accenture in the US, there also they have seen some changes in valuation, the most appropriate reason is actually over the last three decades, the higher cash flows and higher payouts which this sector has witnessed. But broadly for various reasons, we can try to attribute one thing or other for every sector per se. Valuations are now higher than what the growth would warrant. So, one needs to be very careful in terms of stock picking in this kind of market. Is it okay to say that the macros are looking much better than the micros. Will that be a fair statement? The rupee has stopped falling. Inflation is coming under control as are bond yields. There has been an early onset of monsoon. Are we in for macro dominated rather than micro dominated trade now? Live Events You Might Also Like: Can India become the services factory of the world? Gautam Trivedi explains Shreyash Devalkar: Yes, this has been the case probably for one year to one-and-a-half years. Just one year ago, this trade had started because over last year we saw earnings cut and since September of 2024, the market started reacting to the micro numbers. If you remove even Trump trade related fall, before that also, there was a substantial fall and that was micro related. So, let us not totally ignore the micro and earnings growth. This phase has been a reminder of that and that is where on a one-year basis and so on, the returns as such are not as lucrative as one would like to have. So, definitely macro is good and it provides some downside protection to the market, but micro would be important to make money in individual stocks. We just concluded the Q4 earning season. Help us understand what were your key takeaways from the earning season? Other than that, which sectors do you believe offer an opportunity for long-term investors? Have you spotted any standout sector? Shreyash Devalkar: As far as the season is concerned, it was good versus expectations. What is happening currently is that since the last two-three quarters, the earnings are getting cut ahead of the earning season and expectations are getting revised downward prior to the earning season. So, generally, the earning season is not seeing as much cut as far as the period of approaching the earning season and that is why you have seen that not much reaction to the earning disappointment during the earning season per se. The stocks actually fell, as I said, from September onwards itself. If you take the largecaps represented by Nifty 50, then the growth has been less than 5% overall, while the broader market growth has been around 8%. Good growth in the context of valuation, has been in financial services in the last quarter in terms of NIMs versus expectation. Growth as well as asset quality have been good in some of the oil marketing companies, and the frontline capital goods companies as well. Only a part of the margin is where the focus is on the market especially when it comes to the capital goods and auto kind of cyclical sectors. Otherwise, the earnings are broadly in line with expectations. Since earnings are getting cut for the last three-four quarters ahead of the earning season, I see that FY26 earnings may not see further cuts beyond a point because the market has tried to factor in the recent trends in the earnings in FY26 as well. FY27 is where the entire bulge is when it comes to the earning growth expectation. As far as near-term earning cuts are concerned, we are broadly there. You Might Also Like: Top Nifty50 stocks analysts suggest buying in this volatile week What in this market is cheap but not good and what is good and yet cheap? Shreyash Devalkar: That part has been the case again for the last eight months or one year or so. So, the largecap of India mostly if you take bank, FMCG, IT, largest companies some of them, point is that since they are so large their growth is very much dependent on GDP growth and at 6-7% GDP growth whatever are the numbers for that and if there is expectation of the GDP growth further improving from here, with that expectation definitely the largecaps are reasonably valued compared to their growth expectation. If GDP growth accelerates, then largecaps can give better risk-adjusted returns. When it comes to mid and smallcaps, this conundrum has been there for the last three years now. It is not today's conundrum that largecap lacks growth while valuations are reasonable and midcap, smallcap the growths are better than the largecap but valuations have got elevated quarter after quarter. A 20 PE mid, small great growth story, became 30, 40 after every quarterly result season. Even in this quarter, the same thing would have happened and initially largecaps outperformed. But post the result season, many of the mid and smallcaps because of the good earning growth delivery have caught up. As an investor, if I am running a diversified portfolio, we are looking at a mix of both. So, just for the sake of reasonable valuations, one need not be entirely in the low growth segment. At the same time, one should not totally ignore some of the companies where the valuations are high, but the growth stories are intact. So, reasonable valuation is what we are looking forward to in our diversified funds. You Might Also Like: Stocks to buy today: Paytm, Swiggy among top 5 trading ideas for 2 June 2025
