India's Q1 2025 GDP and May 29 Earnings: A Goldmine for Undervalued Sectors

The Indian economy's Q1 2025 GDP growth of 3.2%—driven by multinational sectors—paints a backdrop of macroeconomic stability. Yet, the true opportunity lies in undervalued sectors like autos, infrastructure, and consumer goods, where upcoming earnings releases on May 29 could unlock hidden growth. With global tariff uncertainties and domestic policy tailwinds, investors have a rare chance to capitalize on stocks trading below their intrinsic value.

The GDP Context: Stability Amid Transition

The Central Statistics Office's preliminary GDP data highlights a 3.2% quarter-on-quarter growth, fueled by sectors like IT, telecom, and manufacturing. While domestic sectors lagged, this signals a shift toward export-driven industries. However, the GDP estimates are preliminary and subject to revision in June—making May 29's earnings calls a critical test of corporate fundamentals.

Auto Sector: Riding the DTC Surge

The auto sector faces headwinds from fluctuating raw material costs, but Bajaj Auto (NSE: BAJAJ-AUTO) stands out. Its Q3FY25 net profit rose 8% YoY to ₹2,195.65 crore, driven by robust demand for bikes and three-wheelers. With a 593% jump in DTC revenue (to ₹2.9M in Q1 2025), Bajaj is repositioning for e-commerce dominance.

Why Invest?
- Valuation Edge: Bajaj's P/E of 24.5 is below its 5-year average of 28.
- Growth Catalyst: The May 29 earnings could confirm sustained DTC momentum, with plans to expand into 25,000 retail locations by 2025.

Infrastructure: Building on Momentum

Larsen & Toubro (NSE: LT) reported a 15% revenue jump to ₹2.60T in FY25, fueled by infrastructure projects. Despite margin pressures (5.6% profit margin), L&T's 13% annual revenue growth forecast aligns with India's 7.0% GDP growth target.

Undervalued Gem:
- PGHH (NSE: PGHH) saw EBITDA margins double to 25.5% in Q4FY24, yet trades at a P/B of 1.8—below peers. Its highway projects and cost efficiency make it a buy at current levels.

Consumer Goods: Resilience in a Volatile Market

While the sector faces margin pressures, Marico (NSE: MARICO) shines with double-digit revenue growth (13.9% YoY) in Q4FY24, driven by its foods division. Meanwhile, Jubilant Agri & Consumer Products (NSE: JACPL) leverages rural demand, with agri-input sales up 16.7%.

The Play:
- Alkem Laboratories (NSE: ALKEM) trades at a P/E of 41 but enjoys 39.3% net profit growth in Q4FY25. Its pharma-CBD crossover products position it for long-term growth.

Global Tariffs vs. Domestic Tailwinds

U.S.-India trade tensions loom, but domestic policies—like the Production-Linked Incentive (PLI) schemes—provide a shield. The improved monsoon forecast (8% above average rainfall) will boost rural demand, benefiting agri-linked consumer stocks like NMDC and Jubilant Agri.

Risks to Monitor

• Margin Pressures: L&T's 80% operational costs in G&A expenses highlight execution risks.
• Policy Uncertainty: Modi's push for “Make in India” could cut both ways—subsidies for some, taxes for others.

Conclusion: Act Now Before the Rally

May 29's earnings are a litmus test for India's undervalued sectors. With Bajaj Auto's DTC pivot, L&T's infrastructure dominance, and Marico's resilience, these stocks offer asymmetric upside. Buy now—before revised GDP data in June validates their growth trajectories.

The time to act is here: the economy is stable, valuations are attractive, and earnings could surprise to the upside. Investors who move quickly will capture the next wave of Indian growth.