RIL, IndusInd Bank, Bajaj Finance, Maruti Suzuki India, BPCL shares lead Nifty downgrades post Q2 results #IndiaFinance

The corporate earnings scorecard for the September has been weak but, excluding commodities, it is broadly in-line, MOFSL said in its interim earnings review note. The domestic brokerage said that the NSE Nifty has seen an earnings per share (EPS) downgrade of 1.2 per cent for FY25 and 1 per cent for FY26 so far, with the FY25 EPS estimate now falling to Rs 1,059, largely owing to less-than-expected numbers from BPCL, Reliance Industries Ltd and Coal India Ltd. Over the past six months, Nifty earnings estimates have taken a hit to the tune of 7 per cent, with FY25 earnings growth for the index now projected at a mere 5 per cent, the lowest since FY20, it noted.

BPCL saw a 34.3 per cent downgrade in its FY25 EPS projections, followed by IndusInd Bank (16.7 per cent), UltraTech Cement (15.5 per cent), NTPC (8.3 per cent), Coal India (7.3 per cent), Maruti Suzuki (6.4 per cent), Nestle India (6.1 per cent) and Reliance Industries (5.6 per cent).

The domestic brokerage said the FY26 Nifty EPS estimate has been reduced to Rs 1,256 from Rs 1,269, led by downgrades in BPCL, Reliance Industries, Maruti Suzuki India Ltd, Bajaj Finance Ltd and IndusInd Bank Ltd.

Among the Nifty constituents, ICICI Bank Ltd, Wipro Ltd, HCL Technologies Ltd, Bharat Electronics Ltd, Tech Mahindra Ltd, Maruti Suzuki India Ltd, L&T, Cipla Ltd, Tata Consumer Products Ltd and JSW Steel Ltd exceeded profit estimates, MOFSL said. Conversely, BPCL, Coal India, IndusInd Bank, Ultratech Cement, Nestle India, Kotak Mahindra Bank, NTPC and Bharti Airtel missed profit estimates for Q2FY25, it noted.

As of October 31, 34 Nifty stocks reported a sales growth of 5 per cent, Ebitda growth of 1 per cent and nil growth in PAT growth. Of these, 10, surpassed and nine companies missed PAT estimates, MOFSL said. On the Ebitda front, eight companies exceeded while seven missed MOFSL’s estimates for the quarter.

“The earnings spread has deteriorated, with only 62 per cent of MOFSL coverage universe either meeting or exceeding profit expectations. Consumption has emerged as a weak spot while select segments of BFSI are seeing asset-quality stress. Nifty FY25 EPS has seen another 1 per cent cut after a 4 per cent cut in preview. Overall Nifty EPS has seen 7 per cent downward revision in last six months, reducing the expected FY25 earnings growth to just 5 per cent, weakest since FY20.

“The Nifty is trading at a 12-month forward P/E of 20.7 times, in-line with its long-period average (LPA) of 20.5 times. Despite the recent 7-8 per cent correction from the highs, the broader markets are still trading at expensive valuations (NSE Midcap 100 at ~30x forward P/E). We had made several important changes in our model portfolio in Q2FY25 preview where we raised the weights in BFSI, Technology, Healthcare with a distinct bias towards large-caps,” it said.

“Our model portfolio reflects our conviction in domestic structural as well as cyclical themes. We are OW on IT, Healthcare, BFSI, Consumer Discretionary, Industrials and Real Estate. In contrast, we are UW on metals, energy, and automobiles,” the brokerage added.