Q4FY24 results review: While the March quarter (Q4FY25) earnings season did not deliver a strong positive surprise, it did not disappoint either. The majority of experts found the results healthy, broadly in line with expectations, and in some sectors, even better than estimated.
According to one of the top domestic brokerage firms, Motilal Oswal Financial Services, the Q4FY25 corporate earnings concluded on a strong note, exhibiting widespread outperformance across aggregates.
Motilal observed the healthy performance was led by metals, OMCs (oil marketing companies), PSU banks, automobiles, healthcare, technology, and capital goods. On the otehr hand, oil and gas (excluding OMCs) and private banks dragged the overall profitability.
The Nifty’s profit after tax (PAT) grew by a 3 per cent year-on-year (YoY) versus Motilal’s estimates of +2 per cent.
Motilal highlighted that the Nifty reported a single-digit profit growth for the fourth successive quarter since the pandemic (June 2020).
“Five Nifty companies – Bharti Airtel, Hindalco, ICICI Bank, Tata Motors, and HDFC Bank – contributed 137 per cent 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 Financial Services.
“Nifty’s earnings per share (EPS) for FY25 ended at ₹1,013 (+1 per cent YoY) over a high base of FY24 (+24 per cent YoY) as the earnings normalised and tracked the revenue trend,” said the brokerage firm.
Motilal underscored that the Nifty EPS estimate for FY26 was trimmed by 1.9 per cent to ₹1,135, largely owing to SBI, ONGC, IndusInd Bank, Tata Motors, and TCS. FY27E EPS was also reduced by 1.1 per cent to ₹1,314 (from ₹1,328) due to downgrades in SBI, ONGC, IndusInd Bank, TCS, and Reliance Industries.
Top earnings upgrades in FY26E
According to Motilal, Bharat Electronics (BEL) (7.1 per cent), Bharti Airtel (6.6 per cent), Hindalco (5.8 per cent), Adani Ports (4.6 per cent), and M&M (4.4 per cent) are the top earnings upgrades.
Top earnings downgrades in FY26E
Eternal (-53.9 per cent), IndusInd Bank (-45.6 per cent), ONGC (-13.4 per cent), Tata Motors (-11.6 per cent), and JSW Steel (-8.5 per cent) are the top downgrades, said Motilal.
“The Q4FY25 earnings fared better than expectations. However, forward earnings revisions continue to exhibit weakness, with downgrades surpassing upgrades,” Motilal said.
Q4FY25 earnings: Sectoral snapshot
Banks
According to Motilal, the banking sector witnessed a mixed quarter. There was a divergence in margin outcome between the private and public banks.
“Most of the large private banks had seen a sequential improvement in net interest margins (NIMs) amid lower-day adjustments in Q4, while public banks continue to see a moderation in NIMs, although calibrated at low single digits,” said Motilal.
IT
Motilal believes the backdrop for the IT sector remains challenging, as macro uncertainty continues to weigh on demand, marking a softer exit to FY25.
“FY26 setups diverge across tier-1 companies: TCS and Wipro guided for weak Q1; Infosys strikes a cautiously optimistic tone with the upper end of its guidance (3 per cent YoY organic constant currency growth) assuming a stable to marginally improving environment. HCL Tech leads with the most constructive guidance of 2-5 per cent YoY in constant currency,” said Moilal.
Autos
While auto original equipment manufacturers (OEMs) posted a 5 per cent YoY growth, the auto ancillary universe posted a higher growth of 8 per cent YoY, said Motilal.
Key surprises from the sector were TVS Motor Company, Mahindra & Mahindra (M&M), Hyundai, CEAT, MRF, Endurance Technologies, Craftsman Automation, Motherson Sumi Wiring India and Bosch. However, Maruti Suzuki, Amara Raja Energy & Mobility and Samvardhana Motherson International were among the key misses from the sector, Motilal said.
Consumer
Volume growth across most companies was limited to low-to-mid-single digits.
Page Industries, United Breweries, United Spirits and Indigo Paints were the outperformers from the sector, while Asian Paints, Colgate-Palmolive India and Procter & Gamble Hygiene & Health Care were the underperformers.
According to Motilal, the sector’s revenue came in 7 per cent above our estimate (flat YoY). Excluding OMCs, revenue was 8 per cent above our estimate (up 7 per cent YoY). EBITDA was 16 per cent above estimates (flat YoY), with OMCs, GAIL, and IGL beating our estimates. Excluding OMCs, EBITDA was in line with estimates (flat YoY). Adjusted PAT was 27 per cent above estimates (down 5 per cent YoY). Adjusted PAT, excluding OMCs, was in line (down 12 per cent YoY).
Metals
Ferrous companies reported robust growth as imports softened. The Ferrous companies within our coverage clocked a sales volume growth of 9 per cent YoY and 12 per cent QoQ. This growth was primarily led by the resumption of construction activity and softening imports, coupled with a low base effect, Motilal said.
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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
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