Indian Stocks Struggle in 2025, Valuations Under Scrutiny
High-flying Indian stocks that soared in 2024 are facing a challenging start to 2025, as investors question whether lofty valuations are justified by earnings.
Technology favorite Zomato Ltd., which doubled its value last year, has plummeted 22% since January, driven by disappointing results. Real estate giant Oberoi Realty Ltd. has lost 24% after missing profit targets.
These declines mirror a broader selloff in Indian stocks, with the NSE Nifty 50 Index down 12% from its September peak. Despite the correction, Indian stocks remain relatively expensive compared to other emerging Asian markets.
"The main concern is valuations and whether they reflect fundamentals," said Arvind Subramanian of Morningstar Inc.
Small-cap stocks, which outperformed large-caps in 2024, have been especially hard hit. Power equipment maker GE Vernova T&D India Ltd. has fallen 16% this year ahead of its earnings report.
Bullish Indian investors argue that the long-term growth story remains intact. Valuations have moderated slightly, with the Nifty 50 now trading just below its five-year average earnings multiple.
However, "initial results for the December quarter are not very encouraging," said Kunal Vora of BNP Paribas SA. "Earnings estimates for the next two years appear optimistic and hinge on an improved economic outlook."