36% companies in Nifty 50 miss estimates in Sep quarter, shows data

Profits remain flat; modest earnings growth is driven by BFSI cos, says Motilal report

Almost 18 companies among the Nifty 50 entities have missed estimates for the quarter ended September this year while 15 have beaten them, according to the Bloomberg data.

 

Based on the September-quarter results, analysts have upgraded 19 companies and downgraded 14, the statistics show.

 

As there is no coverage on the revenue and profit parameters for Bajaj Finserv, it is not included in the chart. The results of the rest of the Nifty 50 have not been announced so far.

 

The earnings of the 34 Nifty 50 companies that have reported results till October have remained flat year-on-year compared to an estimated positive growth rate of 2 per cent last year, according to a post-results analysis by brokerage firm, Motilal Oswal Financial Services.

 

 

Stagnation was driven primarily by ICICI Bank, Axis Bank, Bharti Airtel, NTPC, and HDFC Bank. 

 

Bharat Petroleum Corporation Ltd (BPCL), JSW Steel, Coal India, IndusInd Bank, Reliance Industries, and Ultratech Cement negatively impacted Nifty earnings. Of the companies, nine have reported profits below expectations, 10 have exceeded forecasts, and for 15 the results were in line with estimates, the report said.

 

The report said the 34 Nifty stocks reported a year-on-year sales growth rate of 5 per cent and an Ebitda (earnings before interest, tax, depreciation, and amortisation) growth rate of 1 per cent, while profit before tax (PBT) and profit after tax (PAT) growth remained zero. This compares to estimated 5 per cent sales growth, 4 per cent Ebitda growth, and 2 per cent growth in PBT and PAT last year.

 

Of these companies, 10 exceeded Motilal Oswal analysts’ PAT estimates, while nine fell short.

 

On Ebitda, eight surpassed estimates while seven did not meet them during the quarter.

 

Among the Nifty constituents, ICICI Bank, Wipro, HCL Technologies, Bharat Electronics, Tech Mahindra, Maruti Suzuki, L&T, Cipla, Tata Consumer, and JSW Steel exceeded the profit estimates. But BPCL, Coal India, IndusInd Bank, Ultratech Cement, Nestle, Kotak Mahindra Bank, NTPC, and Bharti Airtel missed them. 

 

Apart from the 34 companies, as of the end of October, 166 companies under Motilal Oswal coverage have reported their results for the September quarter. Together, these companies account for 73 per cent of the estimated PAT for the study and 74 per cent of the Nifty 50 companies. These companies also represent 50 per cent of India’s market capitalisation and hold an 81 per cent weighting in the Nifty.

 

According to a Motilal Oswal study for a wider group, the corporate earnings scorecard for the end of the September quarter has shown weakness though the results outside the commodities sector are generally in line with expectations. The earnings spread has deteriorated, with only 62 per cent of the coverage universe meeting or surpassing profit forecasts. Consumption has been identified as a weak area while certain segments of the banking, financial services and insurance sector are experiencing asset-quality challenges.

 

The report noted the Nifty FY25 EPS (earnings per share) had been reduced by another 1 per cent following a previous 4 per cent cut in the Motilal Oswal preview. Over the past six months, the overall Nifty EPS has been reduced 7 per cent, lowering the expected earnings growth for FY25 to just 5 per cent, the weakest performance since FY20.

 

Currently, the Nifty is trading at a 12-month forward price-earning (P/E) of 20.7x, which aligns with its long-term average of 20.5x.

 

The P/E is used to evaluate the relative value of a company’s shares. It is calculated by dividing the current market price per share by the earnings per share (EPS). The ratio helps investors assess whether a stock is overvalued, undervalued, or fairly priced relative to its earnings.

 

Despite a recent 7-8 per cent correction from their highs, the broader markets remain at elevated valuations, with the NSE Midcap 100 trading at a forward P/E of 30x.