Motilal Oswal raises Nifty50 EPS outlook by 2.5% on robust corporate earnings

Motilal Oswal increased its FY24 earnings forecast for Nifty 50 shares by 2.5% to Rs 988 on the basis of strong business results that look strong enough to support India’s growing economic outlook. .
Smart companies reported 32% growth in profits in the June quarter. The earnings distribution was particularly positive, with 62% of total earnings analyzed meeting or exceeding earnings forecasts. Nifty beat expectations with a year-over-year EBITDA growth of 22%, beating forecasts of 18%.
“We are increasing FY24 EPS Nifty by 2.5% to Rs 988 (previously Rs 964) as profits from Tata Motors, JSW Steel, Bharti Airtel, SBI and Kotak Mahindra Bank increase significantly. We now expect Nifty’s EPS to grow 22%/16% y/y in FY24/25,” Motilal said in a note. In the Motilal universe, BFSI companies recorded a 60% increase in profits year-on-year, while the automotive sector recorded a profit of Rs 17,900 crore from Rs 1,300 a year ago. growth in the first quarter of fiscal year 24, outpacing expectations for a 59% increase OMC has seen the company go from a loss of Rs 18.5 trillion to a profit of Rs 30,500 billion over the past year thanks to continued profits strong market. However, the metal dented the company’s overall results with profits plummeting 40%, mainly due to the poor performance of Tata Steel (strong change -92%), Vedanta (-81%) and Hindalco ( -40%) compared to the same period last year. next year.
IT services also performed poorly, characterized by relatively steady average revenue growth during the constant currency (CC) quarter. This is notable in a period typically known for strong seasonal performance. The performance of the MOFSL universe reflects a mixed scenario of success and failure, with 36% of companies beating our forecast and 38% below the forecast at the PAT level. Looking ahead to MOFSL’s overall earnings trend for FY24, the ratio of upgrades to downgrades has skewed slightly to the downside. Some 66 companies reported a profit increase of more than 3%, while a fall in profits of more than 3% affected 76 companies. In addition, the EBITDA margin of the entire MOFSL, excluding financial services, recorded a significant increase year-on-year, increasing by 330 basis points to 17.6%.
Motilal Oswal believes the strong earnings momentum will continue with earnings growth estimated at more than 20% for Nifty in fiscal year 2023-24. The MOFSL universe’s projected earnings pool is expected to post 33% year-on-year growth in FY24, breaking the milestone of Rs 10 lakh.

Nifty is trading at a forward price-to-earnings (P/E) ratio of 18.5x, representing an 8% discount to its own long-term average (LPA). Motilal Oswal maintains an “overweight” position in the financial, consumer goods and automotive sectors. The brokerage remains “underweight” on metals, energy and utilities, and adopts a “neutral” stance on IT, healthcare and telecommunications in its model portfolio. me.