Q1 Earnings Preview: Flat to 4% growth in net profit expected from Nifty pack; auto, financials, health to outperform
Motilal Oswal and Kotak Mahindra differ in their Q2 earnings projections for the Nifty universe. While Kotak forecasts a nearly flat growth of 0.6%, Motilal Oswal projects a 4% increase in net profits. Both firms predict stronger growth when excluding global commodities. Motilal Oswal anticipates a 10% YoY increase for the Nifty excluding oil & gas and metals, while Kotak forecasts a 9.3% rise excluding oil marketing companies.
Nifty earnings are expected to remain flat to up to 4% rise on a year-on-year basis for the quarter ended June 30, 2024, according to estimates by brokerages and (MOFSL).While Kotak sees Nifty universe to report flat (0.6%) earnings on a YoY basis, MOFSL estimates a 4% uptick in the net profit for the reporting quarter.
Excluding global commodities, i.e. oil & gas and metals, the Nifty universe is expected to report a 10% YoY jump, Motial Oswal said in a preview note. Meanwhile, Kotak pegs net income YoY growth at 9.3%, excluding the OMCs.
BFSI and auto companies are expected to continue their dominance while contributions from healthcare and metals could improve in 1QFY25, MOFSL said. Banks and NBFC lending would mainly lead BFSI’s earnings, with 14% and 17% YoY growth, respectively, it said.
Within banks, the earnings growth of private and PSU banks is estimated at 16% and 11% YoY, respectively, though it will be the lowest in over 10 quarters for private banks and over eight quarters for PSU banks, the report said.
Meanwhile, the auto sector’s earnings are likely to rise 18% YoY, which will also be the lowest in nine quarters. Notwithstanding this, the auto sector will be among the best performers within the MOFSL coverage sectors once again.
Sales and EBITDA for Nifty are likely to improve 6% and 4% YoY, respectively, while excluding OMC’s, EBITDA of the Nifty is likely to grow 8% YoY.
Conversely, the EBITDA margin for the Nifty-50, excluding financials, is likely to contract 80bp YoY to 20.1% during the quarter.
Kotak report estimates Q1FY2025 sales growth at 7.3% YoY. The sales and net profit are likely to decline 1.9% and 10.7%, respectively, quarter-on-quarter. EBITDA margin is expected to decline both on YoY basis and sequentially to 19.2% versus 20.4% in Q1FY24 and 19.6% in Q4FY24.
Sectorally automobiles (14%), banks (13%), diversified financials (26%), healthcare services (16%), insurance (20%), pharmaceuticals(10%) and transportation(12%) are expected to report double-digit sales growth.
Auto (20%), capital goods (17%), diversified financials (19%), electric utilities (18%), healthcare (64%), insurance (16%), metals & mining (14%), telecommunication (36%) and transport (20%) are expected to report double-digit PAT growth. Meanwhile, most sectors in the Nifty universe are expected to witness decline in PAT growth on a QoQ basis.
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Source: Stocks-Markets-Economic Times
