Q4FY25 earnings better-than-expected; BEL, Bharti Airtel, Adani Ports, M&M among top upgrades, says Motilal Oswal

Q4FY24 results review: While the March quarter (Q4FY25) earnings season did not deliver a strong positive surprise, it did not disappoint either. The majority of experts found the results healthy, broadly in line with expectations, and in some sectors, even better than estimated.

According to one of the top domestic brokerage firms, Motilal Oswal Financial Services, the Q4FY25 corporate earnings concluded on a strong note, exhibiting widespread outperformance across aggregates.

Motilal observed the healthy performance was led by metals, OMCs (oil marketing companies), PSU banks, automobiles, healthcare, technology, and capital goods. On the otehr hand, oil and gas (excluding OMCs) and private banks dragged the overall profitability.

“Sales, EBITDA, PBT, PAT growth for Nifty constituents were in line at 7 per cent, 7 per cent, 9 per cent, 3 per cent YoY, respectively, in Q4FY25. Among Nifty constituents, 30 per cent exceeded our PAT estimates, while 26 per cent missed our estimates,” said Motilal.

Motilal highlighted that the Nifty reported a single-digit profit growth for the fourth successive quarter since the pandemic (June 2020).

The brokerage firm said Hindalco, ICICI Bank, Tata Motors, Coal India, Larsen & Toubro, Wipro, Tata Steel, Reliance Industries, Dr. Reddy’s Lab, Bharat Electronics, Eicher Motors, Tech Mahindra, Trent, Maruti Suzuki, and Apollo Hospitals delivered higher-than-estimated earnings.

On the other hand, IndusInd Bank, ONGC, Kotak Mahindra Bank, Grasim Industries, Asian Paints, Eternal, SBI Life Insurance, NTPC, HDFC Life Insurance, Titan, JSW Steel, and Bharti Airtel missed Motilal Oswal's profit estimates.

"Five Nifty companies – Bharti Airtel, Hindalco, ICICI Bank, Tata Motors, and HDFC Bank – contributed 137 per cent of the incremental YoY accretion in earnings. Conversely, IndusInd Bank, ONGC, SBI, Kotak Mahindra Bank, and Grasim contributed adversely to the earnings," said Motilal Oswal Financial Services.

"Nifty's earnings per share (EPS) for FY25 ended at ₹1,013 (+1 per cent YoY) over a high base of FY24 (+24 per cent YoY) as the earnings normalised and tracked the revenue trend," said the brokerage firm.

Motilal underscored that the Nifty EPS estimate for FY26 was trimmed by 1.9 per cent to ₹1,135, largely owing to SBI, ONGC, IndusInd Bank, Tata Motors, and TCS. FY27E EPS was also reduced by 1.1 per cent to ₹1,314 (from ₹1,328) due to downgrades in SBI, ONGC, IndusInd Bank, TCS, and Reliance Industries.

The mid-cap segment showed remarkable resilience. Motilal highlighted that while overall earnings have been ahead of estimates, the mid-cap segment has been an unexpected standout surprise.

On the other hand, the brokerage firm underscored that the small-cap segment has been a laggard, recording not only weaker-than-expected numbers but also a notable aggregate PAT decline of 16 per cent YoY.

Top earnings upgrades in FY26E

According to Motilal, Bharat Electronics (BEL) (7.1 per cent), Bharti Airtel (6.6 per cent), Hindalco (5.8 per cent), Adani Ports (4.6 per cent), and M&M (4.4 per cent) are the top earnings upgrades.

Eight Nifty companies witnessed earnings upgrades of over 3 per cent in their FY26 EPS estimates, while 16 companies witnessed downgrades of over 3 per cent, Motilal said.

Top earnings downgrades in FY26E

Eternal (-53.9 per cent), IndusInd Bank (-45.6 per cent), ONGC (-13.4 per cent), Tata Motors (-11.6 per cent), and JSW Steel (-8.5 per cent) are the top downgrades, said Motilal.

"The Q4FY25 earnings fared better than expectations. However, forward earnings revisions continue to exhibit weakness, with downgrades surpassing upgrades," Motilal said.

Q4FY25 earnings: Sectoral snapshot

Banks

According to Motilal, the banking sector witnessed a mixed quarter. There was a divergence in margin outcome between the private and public banks.

"Most of the large private banks had seen a sequential improvement in net interest margins (NIMs) amid lower-day adjustments in Q4, while public banks continue to see a moderation in NIMs, although calibrated at low single digits," said Motilal.

ICICI Bank, HDFC Bank and AU Small Finance Bank were the outperformers in Q4FY25, while Bank of Baroda, IndusInd Bank and Bandhan Bank missed the estimates of the brokerage firm.

IT

Motilal believes the backdrop for the IT sector remains challenging, as macro uncertainty continues to weigh on demand, marking a softer exit to FY25.

"FY26 setups diverge across tier-1 companies: TCS and Wipro guided for weak Q1; Infosys strikes a cautiously optimistic tone with the upper end of its guidance (3 per cent YoY organic constant currency growth) assuming a stable to marginally improving environment. HCL Tech leads with the most constructive guidance of 2-5 per cent YoY in constant currency," said Moilal.

Autos

While auto original equipment manufacturers (OEMs) posted a 5 per cent YoY growth, the auto ancillary universe posted a higher growth of 8 per cent YoY, said Motilal.

Key surprises from the sector were TVS Motor Company, Mahindra & Mahindra (M&M), Hyundai, CEAT, MRF, Endurance Technologies, Craftsman Automation, Motherson Sumi Wiring India and Bosch. However, Maruti Suzuki, Amara Raja Energy & Mobility and Samvardhana Motherson International were among the key misses from the sector, Motilal said.

Consumer

Volume growth across most companies was limited to low-to-mid-single digits.

Page Industries, United Breweries, United Spirits and Indigo Paints were the outperformers from the sector, while Asian Paints, Colgate-Palmolive India and Procter & Gamble Hygiene & Health Care were the underperformers.

Oil & Gas

According to Motilal, the sector's revenue came in 7 per cent above our estimate (flat YoY). Excluding OMCs, revenue was 8 per cent above our estimate (up 7 per cent YoY). EBITDA was 16 per cent above estimates (flat YoY), with OMCs, GAIL, and IGL beating our estimates. Excluding OMCs, EBITDA was in line with estimates (flat YoY). Adjusted PAT was 27 per cent above estimates (down 5 per cent YoY). Adjusted PAT, excluding OMCs, was in line (down 12 per cent YoY).

Metals

Ferrous companies reported robust growth as imports softened. The Ferrous companies within our coverage clocked a sales volume growth of 9 per cent YoY and 12 per cent QoQ. This growth was primarily led by the resumption of construction activity and softening imports, coupled with a low base effect, Motilal said.

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