Motilal Oswal reports Nifty 50 exceeding Q3 estimates: top upgrades and downgrades in earnings listed

The Nifty 50 index delivered a strong beat with a 17 per cent year-on-year (YoY) PAT growth, as per a report by Motilal Oswal Financial Services. The brokerage firm observed that domestic cyclical sectors such as autos and financials, along with global cyclical sectors such as metals and Oil & Gas, were the primary drivers of this exceptional performance. Technology, however, posted a marginal decline in earnings, marking its first decline in 26 quarters.

The report highlighted that five Nifty companies – Tata Motors, HDFC Bank, Tata Steel, ICICI Bank, and JSW Steel – contributed 56 per cent of the incremental YoY accretion in earnings. This finding led Motilal Oswal to forecast a growth of 5 per cent YoY in Nifty earnings for Q4FY24.

In terms of sectoral highlights, the report noted that the IT services companies exhibited a median revenue growth of 1 per cent QoQ in constant currency. The banking sector showed a mixed performance with healthy business growth, controlled provisions, persistent NIM pressure, and high operational expenditure. The autos sector, excluding tractors, experienced a 16 per cent YoY growth in volumes, driven by a healthy recovery in two-wheelers and stable growth across other segments. The consumption trend and management commentary about rural recovery in the consumer sector remained unchanged in Q3.

Looking forward, the brokerage firm maintained its Nifty EPS estimates for FY24 and FY25 at ₹975 and ₹1,142, respectively. They now expect the Nifty EPS to grow about 21 per cent and 17 per cent YoY in FY24 and FY25, respectively.

The report also detailed the top earnings upgrades and downgrades in FY25E. Earnings upgrades were seen in companies such as Tata Motors, Coal India, and Hero MotoCorp, while earnings downgrades were observed in UPL, LTI Mindtree, and ITC.

It is important to note that the views and recommendations mentioned are those of the broking firm and not of Mint. Prior to making any investment decisions, investors are advised to check with certified experts for further guidance.