India Inc. has started the financial year 2023-2024 on a strong note, reporting robust results for the April-June 2023 quarter. Here are the key highlights of corporate earnings for the quarter:
Earnings Growth: Nifty companies delivered impressive earnings growth of 32% in Q1 FY24.
Earnings Upgrades: Motilal Oswal Financial Services raised its FY24 earnings estimates for Nifty50 stocks by 2.5% to ₹988, citing notable earnings upgrades in Tata Motors, JSW Steel, Bharti Airtel, SBI, and Kotak Mahindra Bank.
Nifty EPS Growth: The Nifty EPS is expected to grow by approximately 22% and 16% YoY in FY24 and FY25, respectively.
Earnings Spread: The earnings growth in Q1 FY24 saw 62% of the Universe either meeting or exceeding profit expectations.
Sector Performance:
- BFSI: The BFSI (Banking, Financial Services, and Insurance) sector recorded a robust 60% YoY profit growth.
- Auto: The Auto sector posted significant profits of ₹17,900 crore in Q1FY24, with an 83% earnings growth (excluding Tata Motors).
- Healthcare: Healthcare made a strong comeback with 24% earnings growth after six consecutive quarters of flattish earnings.
- Metals: Metals continued to drag down the aggregates with a 40% YoY decline in earnings, led by Tata Steel (-92% YoY), Vedanta (-81% YoY), and Hindalco (-40%).
- IT Services: IT services companies reported weak performance in Q1 2023, with flat median revenue growth QoQ in constant currency. Key verticals like BFSI and Retail reported a median USD revenue decline of 1.2% and 0.4% QoQ, respectively.
Earnings Upgrades and Downgrades: As many as 66 companies reported earnings upgrades of more than 3%, while 76 companies saw earnings downgrades by over 3%. EBITDA margin for the MOFSL Universe, excluding Financials, rose 330 basis points YoY to 17.6%.
Future Outlook: Motilal Oswal expects earnings to remain healthy, estimating over 20% earnings growth for Nifty in FY24. The profit pool of MOFSL Universe is projected to grow at 33% YoY in FY24, surpassing the ₹10 lakh crore mark.
Valuation: Nifty is trading at a 12-month forward P/E of 18.5x, at an 8% discount to its long-term average (LPA).
Brokerage Recommendations: Motilal Oswal remains Overweight on Financials, Consumption, and Automobiles. It is Underweight on Metals, Energy, and Utilities and Neutral on IT, Healthcare, and Telecom within its model portfolio.
Overall, the Q1 FY24 earnings report indicates a strong start to the financial year for India Inc., with several sectors showing robust growth, particularly BFSI and Auto, while Metals and IT Services faced challenges.
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