More Stories

Informist, Wednesday, Jan. 8, 2025

 

MUMBAI – Motilal Oswal Financial Services Ltd. expects the net profit of Nifty 50 companies and the 294 companies covered by it for the December quarter to rise 6% on year. Excluding metal and oil and gas companies, the brokerage expects Nifty 50 companies to post 8% on-year growth and the 294 companies covered by it to report a growth of 10%.

 

Bharti Airtel Ltd., State Bank of India, Hindalco Industries Ltd., Bharat Petroleum Corp. Ltd., ICICI Bank Ltd., and Tata Consultancy Services Ltd. are likely to drive the earnings of the Nifty 50 companies during the quarter, Motilal Oswal said. However, Coal India Ltd., JSW Steel Ltd., IndusInd Bank, Tata Steel Ltd., and Tata Motors Ltd. are projected to drag the earnings down. 

 

For the latest quarter, the brokerage expects a 5% growth in sales for Nifty 50 companies and a 9% growth in their earnings before interest, tax, depreciation, and amortisation. It expects the 294 companies covered by it to report an 8% growth in sales and a 9% growth in EBITDA for Oct-Dec. Excluding commodities companies, the brokerage expects the EBITDA of Nifty 50 to grow 12% on year and that of the 294 companies tracked by it to grow 13% on year.

 

Excluding financial companies, the EBITDA margin of the 294 companies covered by the brokerage is expected to remain flat at 17.1% during the latest quarter, aided by healthcare and telecommunication sectors but weighed down by the commodities and cement sectors. The Nifty 50 companies are expected to post an EBITDA margin of 20.2%, up 30 basis points.

 

The brokerage expects earnings growth to be driven by an 8% growth in banking, financial services, and insurance, a 26% growth in capital goods, a 9% growth in technology, a 19% growth in healthcare, and a 58% growth in real estate sectors. Meanwhile, an 8?cline in the growth of metals, a 4?ll in oil and gas, and a 45?ll in the growth of cement sectors are expected to drag the growth during the latest quarter. While consumer durables are expected to grow 31% on year and retail is expected to grow 30%, the automobile sector is expected to post a growth of 3% and the consumer sector is expected to grow a mere 1%, Motilal Oswal said. 

 

The brokerage firm said it has cut the earnings-per-share estimate for Nifty 50 companies by 0.6% to INR 1,050 for 2024-25 (Apr-Mar) and by 1.7% to INR 1,220 for FY26. The cut in the EPS estimate was largely driven by the oil and gas sector, the brokerage said.

 

The automobile original equipment manufacturers are expected to report only a 6% on-year growth in volumes in the December quarter, despite the festival season, the brokerage said. It expects the sales and EBITDA of the automobile companies covered by it, excluding Jaguar Land Rover, to grow 9% on year during the latest quarter. The profit after tax of these companies will grow 6% on year. Motilal Oswal expects the original equipment manufacturers covered by it to post steady margins given sequentially stable input costs. The brokerage expects automobile ancillaries covered by it to post an 11% growth in sales, a 3% growth in EBITDA, and a 10% growth in profit.

 

The brokerage expects Oct-Dec growth in earnings for the banking, financial services, and insurance companies covered by it to be driven by a 23% growth for insurance companies. It expects a 13% growth for public sector banks due to lower other income and soft margins, a 39% growth for the non-lending non-banking finance companies, an 8% growth for non-banking finance companies, and a 2% growth for private banks. The brokerage expects the earnings of its banking universe to grow 7% on year in the latest quarter. 

 

Motilal Oswal expects the aggregate revenue of the information technology services companies covered by it to grow 5.8% during the quarter. It expects the sector's EBIT to grow 6.1% and its profit after tax to grow 8.9% on year. "The most important catalyst for the sector now would emerge after 3Q (Oct-Dec), when client budgets for CY25 would be finalised and the magnitude of changes in client behaviour would become clearer," the brokerage said. 

 

The brokerage expects the order inflow for the capital goods sector to rise from Jan-Mar, after the slowdown due to the elections. The brokerage expects order execution during the quarter to be 19%. "Overall, we believe that despite selective order inflow improvement, the strong existing order books provide healthy revenue visibility for companies within the sector," Motilal Oswal said. The brokerage expects the EBITDA margin for these companies under its coverage to grow 20 basis points on year, given benign commodity prices.

 

The brokerage expects the consumer companies covered by it, excluding the quick-service restaurants and jewellery companies, to report a 7% growth in sales during the December quarter. The brokerage expects the EBITDA of these companies to grow 2% on year. All consumer segments such as staples, liquor, innerwear, quick-service restaurants, and jewellery, barring paints, will post a growth in sales and EBITDA during the quarter, Motilal Oswal said. 

 

The aggregate sales of the healthcare companies covered by it are expected to grow 10.4% on year due to strong traction in domestic formulation sales and the US segment, Motilal said. The brokerage expects the EBITDA of these companies to grow 16.8% on year due to a higher share of niche launches in the US generics market. The brokerage expects the profitability of hospitals to improve due to the addition of beds, higher volumes, and optimisation of the case mix or the payer mix.   

 

The brokerage expects the revenue of the metal companies covered by it to grow 5% during the quarter and their EBITDA to decline 2% on year. Motilal Oswal expects the margins for companies dealing in ferrous metals to remain under pressure due to weak metal prices but added it will be partly offset by moderate coking coal prices. The brokerage expects companies dealing in non-ferrous metals to perform better than their counterparts who deal in ferrous metals.

 

The volumes of the cement companies covered by the brokerage are expected to rise 8% on year during the December quarter. It expects the average EBITDA per tonne for the cement companies under its coverage to fall 28% to INR 842 and their average operating expenses per tonne to fall 4%, led by positive operating leverage and favourable fuel prices. The brokerage expects the growth in sales and EBITDA for the oil and gas sector, excluding oil marketing companies, to be flat for the latest quarter. The profitability of oil marketing companies is expected to remain strong, the brokerage said.

 

The brokerage expects the revenue of the power utility companies under its coverage to rise 14% during the quarter and their EBITDA to rise 17%. A healthy growth in power demand and renewable energy generation should drive the sector's profitability in the December quarter, Motilal Oswal said. The real estate companies under its coverage will report a 10% growth in pre-sales, a 47% growth in cumulative collections, and a 44% growth in EBITDA. The brokerage expects the chemicals sector to post an earnings growth of 4% on year during the quarter after six consecutive quarters of decline. 

 

 

Among large-caps, the brokerage said it prefers ICICI Bank, State Bank of India, Larsen & Toubro, HCL Technologies, Mahindra & Mahindra, Trent, Bharti Airtel, Titan Co., Sun Pharmaceutical Industries, and Dixon Technologies (India). Among mid-caps and small-caps, it prefers The Indian Hotels Co., Cummins India, BSE, Godrej Properties, Coforge, Metro Brands, IPCA Laboratories, Angel One, Anant Raj, and JSW Infrastructure. 

 

For 2024-25 (Apr-Mar), the brokerage expects the net profit of Nifty 50 companies and the 294 companies covered by it to grow 4% on year. Excluding metals and oil and gas companies, the earnings of Nifty 50 companies will likely rise 11%, while those of the 294 companies covered by the brokerage are expected to rise 12% on year. For FY25, the brokerage expects the revenue of the companies covered by it to grow 6% on year and their EBITDA to rise 5% on year. Sectors such as financial services, metals, IT, automobile, capital goods, and healthcare will be the key drivers of earnings for FY25, Motilal Oswal said. 

 

Motilal Oswal expects earnings of Nifty 50 companies to grow 16% in FY26 as the after-effects of the slowdown in government spending and monetary tightening recede. The Nifty 50 constituents have managed to achieve only a 4% growth in their net profit for Apr-Dec, Motilal Oswal said. The brokerage attributed the deceleration in earnings so far to a slowdown in consumption, especially in urban areas, low government spending, easing credit growth, and banks taking a more cautious approach towards unsecured personal loans.  End

 

Reported by Steffy Maria Paul

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.