SBI, Bharti Airtel, NTPC, TCS to drive Q2 Nifty earnings; RIL, ONGC, Tata Steel to drag numbers

A total of eight Nifty constituents are likely to report a profit growth above 20 per cent YoY in the September quarter, while 13 others are expected to report a YoY decline in bottom line. State Bank of India (SBI), Bharti Airtel Ltd , NTPC Ltd, Tata Consultancy Services Ltd (TCS), and Hindalco Industries Ltd are likely to drive Nifty earnings, while BPCL, JSW Steel Ltd, Reliance Industries, ONGC, and Tata Steel Ltd are expected to drag the same, analysts said.

To be sure, the earnings revisions have turned adverse with downgrades of 6 per cent in the Nifty EPS since July. Analysts are largely expecting Nifty earnings to remain flat in Q2, at a multi-quarter low. 

"We have cut our FY25E and FY26E Nifty EPS by 4 per cent and 3.6 per cent to Rs 1,072 and Rs 1,269, respectively. Metals and O&G have driven 80 per cent of the 4 per cent cut in FY25 earnings. We estimate the Nifty EPS to grow 7 per cent/18 per cent in FY25/FY26," MOFSL said in a note.

For the September quarter, MOFSL said earnings for Nifty would grow 2 per cent YoY. Excluding global commodities Nifty earnings is likely to grow at 10 per cent YoY.  For Nifty, excluding financials, margin is likely to contract 40 bps YoY to 20 per cent during the quarter.

Nuvama Institutional Equities said Nifty earnings may grow 2 per cent YoY in Q2FY25. If the estimates are met, H1FY25E EPS growth for Nifty would work out to just 3 per cent. 

"This run rate is markedly slower than the 13 per cent growth projected for full year FY25 and would, hence, likely prompt earnings cuts. What’s more worrisome is the earnings slowdown is now being led by demand—and not external/liquidity shock. Reversing demand would thus need a notable policy response, which is not in the offing for now," it said.

Nuvama said the combination of slowing earnings and record-high valuations on aggregate (market cap-to-GDP of 150 per cent) and breadth (median trailing PE: 45 times) warrants caution. The brokerage said it has a defensive bias in its portfolio with private banks being the only cyclical overweight.

"We expect 2QFY25 net profits of the BSE-30 Index to increase 5.3 per cent YoY and 2.7 per cent QoQ, and of the Nifty-50 Index to grow 3.7 per cent YoY and 2.5 per cent QoQ. We estimate EPS of the BSE- 30 Index at Rs 3,448 for FY2025 and Rs 4,039 for FY2026 and of the Nifty," Kotak Institutional Equities said.

Elara Securities said its analysis of 235 stocks, consisting of large-cap firms of 65, mid-cap firms of 68, and small-cap companies of 102,  reveals large-cap firms are likely to show better resilience in terms of  bottom-line performance.

"While we expect earnings contraction across  all three, large-cap earnings are set to decline by 2.5 per cent compared to sharp decline of 18 per cent YoY and 7 per cent YoY for mid-cap and small-cap firms," Elara Securities said.