With India Inc.'s earnings season for the quarter and full year ended March 31, 2025 done and dusted, brokerages have a mixed outlook on the results on the cards.
While Motilal Oswal believes that the fourth quarter's earnings show was a broad-based beat, with thirteen sector posting results above expectations, Emkay Global noted that showing was broadly in-line with projections.
According to Motilal Oswal, the sectors that recorded a healthy outperformance were: metals, OMCs, PSU banks, automobiles, healthcare, technology, and capital goods. On the flip side, oil & gas (ex-OMCs) along with private banks dragged the quarter's overall profitability.
On a sequential basis, Emkay Global noted that the healthcare, materials, and industrials sectors showed improvement, while the consumer discretionary and IT sectors reported a muted QoQ performance.
Nomura Holdings added, "The aggregate PAT growth for this universe was at 10 percent YoY, with aggregate earnings coming in 6 percent higher than consensus estimates. There were more beats than misses, but in aggregate, earnings continue to be revised lower."
The constituents of the Nifty 50 index delivered a three percent YoY PAT growth, compared to Motilal Oswal's estimate of two percent. Nifty 50 reported a single-digit profit growth for the fourth successive quarter since the pandemic.
"Five Nifty companies – Bharti Airtel, Hindalco, ICICI Bank, Tata Motors, and HDFC Bank – contributed 137 percent of the incremental YoY accretion in earnings. Conversely, IndusInd Bank, ONGC, SBI, Kotak Mahindra Bank, and Grasim contributed adversely to the earnings," said Motilal Oswal.
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Within the MOFSL coverage universe, large-caps (86 companies) reported 10 percent YoY earnings growth. Mid-caps (89 companies) outperformed with 19 percent growth (vs. 10 percent estimate), driven by financials (PSU Banks and NBFCs), metals, healthcare, and retail.
In contrast, small-caps (122 companies) saw a broad-based miss, mainly due to Financials, with earnings down 16 percent YoY (vs. -11 percent estimate) and 39 percent missing estimates. Among large- and mid-caps, 21 percent and 25 percent of companies missed estimates, respectively.
The Nifty EPS for FY25 ended at Rs 1,013 (higher by one percent YoY) over a high base of FY24 (+24 percent YoY) as the earnings normalized and tracked the revenue trend. "The past two financial years experienced an interesting interplay of revenue and earnings growth, driven by global macros," added the brokerage.
Going ahead, Emkay Global believes that the markets could consolidate for the short term as the proportion of stocks in BSE200 trading above +1sd above LTA has risen, from 10.6 percent to 30.3 percent.
"We see downgrades over and pick up in earning in H2FY26; short-term global and geopolitical effects are done, and a constructive trade deal with the US would follow. Our March 31, 2026 target for the Nifty is unchanged at 26,000," said Emkay Global.
Further, the broking house remains constructive on broader markets. "Worries around reciprocal tariffs have largely receded, and we see the focus shifting to bilateral trade treaties. We expect the Nifty FY26 EPS growth at ~12–13 percent, and signs of a recovery in discretionary consumption demand should start becoming visible as effects of the monetary easing start to take hold"
The report added that the markets saw a V-shaped rally following the tariff pause, with the brokerage expecting the beta rally to continue, therefore any dip should be viewed as an entry point.
Nomura raised its FY26 target for Nifty 50 to 26,140, from 24,970 earlier, suggesting a potential upside of 6 percent from current levels. "The Indian equity markets have been resilient in the recent past despite corporate earnings estimate cuts and global uncertainties. We think positive domestic macros, as reflected in the significant fall in yields and the relatively lower beta of Indian equities underpinned by consistent domestic flows, are supporting market valuation."
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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