CLSA says Q3 earnings stronger-than-expected, despite consensus doubts

CLSA upgraded stocks like DLF and Muthoot Finance while downgrading Zomato and PVR Inox.

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26 Aug, 2025 12:21

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The earnings show for the three months ended December 2024 was better than expected, noted Hong Kong-based brokerage CLSA, sharing a divergent view to the consensus opinion.

Around 30 percent of the companies under CLSA's coverage beat the brokerage's estimates, while 46 percent underperformed, missing estimates.

After nine quarters of contraction, the profit-before-tax growth for urban plays turned positive and outperformed rural players, added the brokerage.

In spite of Nifty 50's decent results, Nifty 50's FY26/27 consensus EPS was cut by around three percent, while CLSA cut its EPS estimates by roughly two percent.

CLSA analysts upgraded 18 percent of stocks for FY26, and on the flip side, 63 percent were downgraded. The top upgrades for FY26 were DLF, Muthoot Finance, and ONGC. The top downgrades were Zomato, PVR Inox, and Bandhan Bank.

CLSA also changed the rating for a series of stocks.

The key upgrades:

Underperform to Hold:

• Voltas
• Tata Steel
• Indian Oil
• BPCL
• Oil India

• Escorts Kubota
• Dalmia Bharat
• ACC
• Astral
• Kaynes Technology
• Cholamandalam Investment and Finance Company
• Muthoot Finance
• Aurobindo Pharma
• Dr. Lal Pathlabs
• Godrej Properties
• TCS
• Wipro

• Bajaj Auto

• Gujarat Petronet
• Dr. Reddy's Laboratories

On the flip side, domestic brokerage Motilal Oswal said that the earnings season for the October-December period marked the third consecutive quarter of low single-digit earnings growth, leaving analysts and investors wanting for more.

The brokerage noted that the slowdown in earnings growth has coincided with the ongoing market correction, as the Nifty 50 has recorded a 4 percent PAT growth in 9MFY25.

For the quarter gone by, Bharti Airtel, SBI, ICICI Bank, Hindalco, and Reliance Industries contributed to the most of Nifty 50's earnings growth on a YoY basis. Conversely, Coal India, ONGC, Tata Motors, JSW Steel, and IndusInd Bank contributed adversely to the earnings.

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