Insights from MOSL on Nifty 50 Earnings Forecast
According to the latest analysis by domestic brokerage Motilal Oswal Financial Services (MOSL), the Nifty 50 is anticipated to experience a modest year-on-year (YoY) earnings growth of just 2% in the September quarter (Q2FY25), marking the lowest growth in 17 quarters. This subdued performance highlights the challenges facing various sectors.
Sector-Wise Earnings Performance
Excluding the earnings from oil marketing companies (OMCs), MOSL predicts a slightly stronger 7% YoY growth in earnings for its overall coverage universe, with a 5% rise for the Nifty. Despite these expectations, this still reflects the weakest performance recorded in recent quarters. Analysts at MOSL indicate that the margin support experienced in previous quarters is likely to disappear, predicting a contraction of approximately 40 basis points, bringing the Nifty 50 margins down to 20%.
The anticipated earnings growth is primarily expected to be buoyed by sectors such as Banking, Financial Services, and Insurance (BFSI), along with a better performance from the telecom sector. Conversely, global cyclical sectors like Oil & Gas, metals, cement, and automobiles are projected to hinder overall earnings growth.
Identifying Profit Churners
Even with the general expectation of moderate growth, MOSL has pinpointed six companies likely to exhibit significant profit increases, each expected to report over a 35% surge in net profit for Q2FY25.
SBI Life Insurance
MOSL forecasts that SBI Life Insurance will show a remarkable 35% YoY increase in its net profit, projected to reach around ₹510 crore, up from ₹380 crore in the same quarter last year. Gross premium income is expected to surge by 10% to ₹22,150 crore compared to ₹20,180 crore in the prior year. This growth will likely be supported by consistent cost management and stable new business premiums.
Apollo Hospitals
For Apollo Hospitals, the brokerage estimates a significant 56% YoY jump in net profit to around ₹361.6 crore for Q2FY25. Additionally, gross sales are likely to rise by 11.3% YoY, expected to reach ₹5,395 crore. Factors contributing to this growth include increases in specialty segment volumes, reduced operating expenses, and growth in primary care services.
Hindalco
MOSL projects Hindalco‘s net profit to increase by 45.5% YoY to ₹3,100 crore. Net sales for the quarter are expected to rise 5.1% to ₹56,900 crore. The firm’s EBITDA is also anticipated to grow, driven by stable volumes and planned capital projects. However, potential weaknesses in Novelis’ performance due to one-off events are noted as potential pitfalls for the company’s full profit sustainability.
Trent
The retail company Trent is earmarked for a net profit increase of 37.3% YoY, projected at ₹398 crore, alongside a compelling revenue rise of 48% to ₹4,278 crore. Strong same-store sales growth and operational efficiencies are identified as key drivers of this anticipated surge.
Bharti Airtel
In the telecom arena, Bharti Airtel is predicted to post a 50.7% increase in net profit to approximately ₹4,500 crore. Corresponding net sales are expected to rise by 10.8% to ₹41,000 crore, bolstered by robust performance in the wireless segment and an expected increase in average revenue per user (ARPU).
NTPC
Finally, NTPC is projected to witness a 41.5% growth in net profit to roughly ₹4,613 crore. The company’s net sales are expected to experience a modest 2% YoY rise. This growth trajectory follows the recovery from one-off adjustments affecting the previous year’s sales impact on profit figures.
Conclusion
The forthcoming quarter’s expectations reflect a broader trend toward cautious optimism among select firms given the current economic climate. Investors are advised to stay vigilant and consider these analyses while making informed decisions in the stock market.
Disclaimer: The analysis and projections provided here are those of individual analysts or financial services companies and do not represent the views of the publication. Investors should consult with certified financial experts before making any investment decisions.
