HDFC Bank, JSW Steel, RIL, BPCL, ICICI Bank: 5 Nifty cos account for 73% incremental rise in Q2 earnings
With more than two-third of Nifty companies out with their quarterly results so far, only five companies within Nifty reported profits below expectations, 12 recorded an earnings beat while 19 registered in-line results so far, Motilal Oswal Securities said in an earnings update note.
Out of 36 Nifty companies that have declared results so far saw a 35 per cent YoY against Motilal Oswal’s estimate of 31 per cent YoY. BPCL, HDFC Bank Ltd, JSW Steel Ltd , Reliance Industries Ltd (RIL) and ICICI Bank Ltd are five Nifty constituents that have contributed 73 per cent to the incremental YoY accretion in earnings. On the flip side, companies such as Tata Steel Ltd, Tech Mahindra Ltd and UPL Ltd contributed adversely to Nifty earnings.
The brokerage said Nifty EPS has so far been stable, with estimates for FY24 and FY25 have witnessed a marginal rise so far at Rs 993 and Rs 1,139, respectively. This is against Rs 986 for FY24 and Rs 1,132 for FY25 earlier. Downgrades in technology companies have been offset by upgrades in BFSI and automobile companies, the brokerage said.
“The 2QFY24 corporate earnings scorecard so far has been in line, with BFSI and automobiles driving the aggregate. The spread of earnings has been decent, with 74 per cent of our coverage universe either meeting or exceeding profit expectations. The margin tailwind will moderate in 2HFY24 with base effect coming into play and pick-up in some commodity prices,” Motilal Oswal Securities said.
At present, Nifty is trading at a 12-month forward P/E of 17.4 times, a 13 per cent discount to its own long-period average. Motilal Oswal has largely retain its sectoral allocations and weights and continue to rely on “the sector winners with growth visibility driving our stock selection
framework.” It has been overweight on financials, consumption, industrials, automobiles and Healthcare sectors. Metals, energy, IT and utilities are a few sectors it is underweight on. The domestic brokerage firm is neutral on telecom sector its model portfolio.
Meanwhile, in another note, taking into account 79 earnings from NSE200 index, ICICI Securities said the results have so far been robust with growth at 31 per cent (excluding HDFC Bank). “It dovetails with our expectations of a rising PAT/GDP upcycle. Also, earnings beat are exceeding misses (Beats – 29 , Neutral – 21, Miss – 26),” it said.
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