Key Points
- Nifty-50 delivers 5% year-on-year profit growth in Q3FY25
BFSI sector continues to drive earnings performance
Corporate earnings show signs of deceleration
EPS estimates for FY26 and FY27 reduced
The report highlighted that for the quarter ended December 2024 (Q3FY25), Nifty delivered a modest 5 per cent YoY PAT growth, in line with market expectations. This marks the third successive quarter of muted earnings expansion since the pandemic-induced slowdown in June 2020.
It said, "A third consecutive quarter of low single-digit earnings growth.....This market correction has coincided with a slowdown in earnings growth, as the Nifty-50 has managed only 4 per cent PAT growth in 9MFY25".
As per the report the recent market correction has been accompanied by a deceleration in corporate earnings growth. Nifty-50 has managed only a 4 per cent PAT growth in the first nine months of FY25 (9MFY25), a sharp contrast to the robust 20 per cent plus compound annual growth rate (CAGR) seen during FY20-24.
The overall earnings scorecard for Q3FY25 remained modest, with the banking, financial services, and insurance (BFSI) sector continuing to drive growth. Additionally, the Technology, Telecom, Healthcare, Capital Goods, and Real Estate sectors made positive contributions to the index's earnings performance.
However, the overall trend signals a slowdown in profit growth momentum, raising concerns over corporate earnings sustainability in the near term.
The report also noted that the Nifty EPS (earnings per share) estimate for FY26 was cut by 1.4 per cent to Rs 1,203 and FY27E EPS was also reduced by 1.8 per cent to Rs 1,373 (from Rs 1,398) due to downgrades in some companies.
The Nifty-50's single-digit earnings growth reflects broader economic headwinds and sectoral challenges, impacting corporate profitability.
Analysts believe that sustaining earnings growth amid global economic uncertainties and domestic market volatility will be crucial for Nifty-50 companies in the upcoming quarters.
As investors assess the implications of this earnings slowdown, market sentiment is expected to be influenced by upcoming macroeconomic data, monetary policy decisions, and corporate guidance for the final quarter of FY25.
