Emkay Global Financial Services has reported that Nifty profit after tax growth was 16% year on year, significantly below that of the BSE 500, reinforcing their positive view on small and mid caps. The report also mentions the convergence in revenue growth between the two indices and its potential impact on profit growth.
The Q3FY24 earnings were strong and largely in line with estimates, with weak topline growth and stable margins benefiting from a weak base last year. Consensus Nifty earnings estimates remained resilient and unchanged throughout the earnings season. The report highlights the performance of different sectors, with industrials standing out on topline and margins, while consumer discretionary was aided by operating leverage.
On the other hand, the BSE-500 aggregate earnings were strong and resilient, with non-financials seeing sequential acceleration in topline growth. However, EBITDA margins were down by 50bps QoQ to 18.2% and overall PAT growth was strong at 26% but sequentially down from the previous quarter. The report also emphasizes the performance of different sectors within the BSE-500, such as industrials, consumer discretionary, and materials.
In conclusion, the report remains constructive on the markets and expects most of the CY24 returns to be bunched in the April-September period. It also notes the weakening PAT growth trajectory in financials due to the base effect and the upward normalisation of credit costs.
In summary, the report by Emkay Global Financial Services highlights the performance of Nifty and BSE 500, emphasizing the potential impact of revenue growth convergence on profit growth. The report also provides insights into the Q3FY24 earnings, the resilience of consensus Nifty earnings estimates, and the performance of different sectors within the BSE-500. Finally, it emphasizes the constructive outlook on the markets and the potential trajectory of CY24 returns.
