Tata Motors, Bajaj Auto, Coal India: Nifty cos that led FY24 earnings upgrades post Q3 results

A total of 35 Nifty companies have declared results so far, delivering 18 per cent profit growth compared with Motilal Oswal's estimates of 15 per cent growth, thanks to strong results by financials. Tata Motors (up 19.3 per cent), followed by Bajaj Auto (5.9 per cent), Dr Reddy’s Labs (5.3 per cent), and Coal India (4.2 per cent) have seen the highest upgrades to FY24 earnings estimates post December quarter results, said the domestic brokerage.  

JSW Steel (down 7.7 per cent), followed by Cipla (5.7 per cent), UltraTech Cement (5.2 per cent) and Reliance Industries (down 3.9 per cent), led the downgrades among Nifty constituents, the brokerage said in a strategy note.

Excluding financials, said Motilal Oswal Securities, profit for Nifty would have grown 12 per cent YoY against estimates of 9 per cent YoY. The Nifty’s profit, in fact, would have increased 28 per cent, if one excludes earnings of metals and oil & gas constituents.

Motilal Oswal said an overall 12 companies in Nifty reported profits below its expectations while 10 others recorded a beat on estimates. The brokerage said Nifty EPS remains almost unchanged for FY23 and FY24 at Rs 822 (from Rs 820) and Rs 990 (from 990 earlier), as downgrades in metals and oil & gas sectors have been offset by upgrades in automobiles and private banks.

Motilal Oswal said the December quarter corporate earnings have so far been in line with its expectations, with performance of heavyweights, such as Tata Motors, Coal India, Axis Bank, ICICI Bank, HDFC Bank, Maruti Suzuki, and TCS, driving the aggregate.

Given the continuity of policy focus and pronouncements, it felt that the market will discount the Union Budget 2023 and shift focus to an overall growth-inflation paradigm in a challenging global backdrop and corporate earnings growth trajectory, which has remained resilient so far in 1HFY23.

"The forthcoming RBI policy meet will be an important policy event to gauge any pause in the near-term monetary tightening measures. After the recent correction, valuations are in the fair value zone with Nifty trading at 17.5-18 times FY24E EPS band and thus offering room for upside if the corporate earnings delivery continues,” it said.

The brokerage prefers BFSI (banking, financial services and insurance), IT, industrials, auto and cement sectors. It is underweight on energy sector in its model portfolio.

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