17 Feb , 2025 By : Debdeep Gupta
The earnings season for the October-December period marked the third consecutive quarter of low single-digit earnings growth, leaving analysts and investors wanting more. Domestic brokerage Motilal Oswal noted that the slowdown in earnings growth has coincided with the ongoing market correction, as the Nifty 50 has recorded a 4 percent PAT growth in 9MFY25.
For the quarter gone by, Bharti Airtel, SBI, ICICI Bank, Hindalco, and Reliance Industries contributed to the most of Nifty 50's earnings growth on a YoY basis. Conversely, Coal India, ONGC, Tata Motors, JSW Steel, and IndusInd Bank contributed adversely to the earnings.
"The Q3FY25 corporate earnings scorecard was modest, driven once again by BFSI, with positive contributions from Technology, Telecom, Healthcare, Capital Goods, and Real Estate," added the brokerage. Of the 292 companies under Motilal Oswal's coverage, 81 exceeded the profit estimates, while 129 posted a miss, and 82 were in line.
Large-cap companies posted an in-line earnings growth of 5 percent on-year, while mid-caps stood out to deliver 26 percent earnings growth. Small-cap companies experienced a broad-based miss as earnings dipped 24 percent YoY.
The beat-miss ratio for the MOFSL Universe was unfavorable, with 44 percent of the companies missing its estimates, while 28 percent reported a beat at the PAT level. "For the MOFSL Universe, the earnings upgrade-to-downgrade ratio has turned weaker for FY26E as 37 companies’ earnings have been upgraded by >3 percent, while 137 companies’ earnings have been downgraded by >3 percent," added the brokerage.
Motilal Oswal added that the 3QFY25 earnings were in line with modest expectations; however,
forward earnings revisions are the weakest in recent times, with downgrades far outpacing upgrades, especially in the non-Nifty 50 universe.
"The expectations for FY26 corporate earnings are still somewhat elevated, in our opinion, given the underlying macro-micro backdrop and are thus ripe for further downgrades. The recent correction in broader markets factors into some of the potential disappointments in earnings ahead. That said, the valuations for mid and small-caps are still expensive vis-à-vis their history as well as vs. Nifty-50," concluded MOFSL.
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