Nifty 50 earnings grew 17% YoY in Q3, but analysts’ tone cautious; here’s why
quarter for India Inc as most companies reported better-than-expected numbers for the three months ended December, triggering further upgrades in earnings.
Earnings of companies that are part of the Nifty 50 grew by 17% year-on-year (YoY), against expectations of an 11% growth, according to Motilal Oswal Financial Services.
However, the overall growth was slower in the December quarter, compared with the September quarter.
Five Nifty companies – Tata Motors, HDFC Bank, Tata Steel, ICICI Bank, and JSW Steel – constituted 56% of the incremental accretion in earnings, the brokerage firm said.
Domestic cyclicals such as automobiles and financials continued to propel the overall earnings growth, while they were also joined by global cyclicals such as oil and gas and metals. The only heavyweight sector to disappoint was information technology, with the overall earnings seeing a decline for the first time in 26 quarters.
Banking, financial services, and insurance, or BFSI reported a healthy 22% YoY growth in earnings, while the automobile sector registered a 60% growth. For companies in the metal sector, profits rose sharply on the back of easing cost pressures and a low base of last year.
Meanwhile, oil marketing companies’ profitability surged 4.6 times YoY in the last quarter due to strong marketing margins. So, the aggregate operating profit or EBITDA increased by 10% YoY in the last quarter.
Despite the good show by companies, Motilal Oswal pointed out that the earnings upgrade-to-downgrade ratio turned weaker
