Despite some challenges, core sectors such as BFSI, technology, real estate, utilities, telecom, and healthcare have shown healthy performance, supporting overall earnings stability.
Earnings for Nifty companies were flat on a year-over-year basis, largely due to the commodity sector’s drag, especially in metals and oil & gas (O&G).
However, when excluding these global cyclical sectors, Nifty’s earnings saw a moderate growth rate, underscoring the strength in India’s domestic demand drivers.
Within BFSI, private and public sector banks played a vital role, even though some margin compression was observed. The broader financial sector continues to see solid contributions, as public banks report a strong earnings trajectory.
Technology companies exceeded expectations, delivering healthy growth in revenue while maintaining cautious optimism for the upcoming quarters.The healthcare sector performed particularly well, with steady growth in domestic formulations. The consumer sector displayed mixed results, with urban markets facing softer demand while rural areas showed promising resilience.
In oil & gas, OMCs reported a weaker performance due to lower refining margins, and Reliance Industries saw softening in both its O2C and telecom segments. This sector’s performance led to a modest contraction in overall EBITDA margins for the quarter, highlighting challenges in some cyclical industries.
Despite this, earnings estimates remain intact for several sectors, with Nifty’s EPS expectations undergoing only minor revisions, driven by a handful of stocks in commodity-linked segments.
This earnings season has reinforced the importance of selectively positioning within growth-oriented sectors. Focus remains strong in technology, healthcare, BFSI, and consumer discretionary, which benefit from structural growth drivers, resilient demand, and improving fundamentals.
Underweight positions in metals, energy, and automobiles reflect caution in segments with cyclical exposure.
Overall, the outlook for earnings remains optimistic for well-positioned sectors, backed by stable domestic demand and selective global tailwinds.
This positioning favours long-term growth themes, with a distinct tilt towards large-cap stability and sectors expected to sustain momentum through FY25.
LT: Buy| Target Rs 4300| LTP Rs 3657| Upside 17%
L&T posted a 21% YoY growth in revenue, 13% YoY growth in EBITDA, and 5% YoY growth in PAT for 2QFY25, exceeding estimates. Improved execution & reduced working capital, supported better margins & RoE.
Execution is expected to remain strong, further improving performance in coming quarters. The company’s focus on both traditional and new sectors supports long-term growth.
ICICI Bank: Buy| LTP Rs 1259| Target Rs 1500| Upside 19%
ICICI Bank has consistently outperformed market expectations, showcasing resilient growth across various metrics, including profitability, asset quality, & business expansion.
In 2QFY25, PAT rose 14% YoY to Rs 11,750 crore, beating estimates by 8%, supported by robust other income and controlled provisions.
Credit growth remained healthy at 15% YoY, primarily driven by strong SME, retail, and corporate lending, while deposit growth was robust at 15.7% YoY, enabling a healthier CD ratio. We estimate a ~12% CAGR in PAT over FY24-26 with RoA/RoE of 2.19%/17.4% for FY26.
(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)