BFSI firms lead as India Inc earnings growth slows for third consecutive quarter in Q3 – ETCFO-OxBig News Network

The ongoing market correction aligns with a slowdown in corporate earnings growth. The Nifty-50 reported just 4% PAT growth in 9MFY25, a sharp contrast to the over 20% CAGR seen during FY20-24. The 3QFY25 earnings remained modest, driven largely by BFSI, alongside positive contributions from Technology, Telecom, Healthcare, Capital Goods, and Real Estate, according to a report by Motilal Oswal Financial Services (MOFSL).

For the third straight quarter, Nifty-50 posted single-digit PAT growth at 5% YoY. Five companies—Bharti Airtel, SBI, ICICI Bank, Hindalco, and Reliance Industries—accounted for 111% of the YoY earnings increase, while Coal India, ONGC, Tata Motors, JSW Steel, and IndusInd Bank contributed negatively.

Aggregate earnings for the MOFSL Universe companies increased 6% YoY, aligning closely with expectations of 7% growth. Nifty-50 earnings rose 5% YoY, as projected. Performance was weighed down by global commodities, particularly Metals and Oil & Gas (O&G). Excluding these sectors, earnings growth stood at 10% and 7% for the MOFSL Universe and Nifty, respectively. BFSI posted an 11% YoY earnings increase, with PSU Banks surging 24% YoY, far exceeding the estimated 13%. Other key growth drivers included Technology (+9% YoY), Telecom (profit of Rs 9 billion vs. loss of Rs 35 billion), Healthcare (+25% YoY), Capital Goods (+20% YoY), and Real Estate (+60% YoY). Meanwhile, declines in O&G (-11% YoY), Cement (-55% YoY), Chemicals (-12% YoY), and Consumer (-5% YoY) hindered overall growth.

Mid-caps outperformLarge-cap companies (84 under MOFSL coverage) reported an in-line earnings growth of 5% YoY, while mid-caps (87 companies) delivered an impressive 26% YoY growth, exceeding the 17% estimate, driven by PSU Banks, NBFCs, Commodities, and Retail. Small-caps (121 companies) struggled, with earnings declining 24% YoY against an estimated 5% drop, with 56% missing estimates. Across large and mid-cap segments, 29% and 43% of companies, respectively, underperformed projections.

The earnings beat-miss ratio for MOFSL Universe skewed negative, with 44% of companies missing estimates and only 28% exceeding them. The earnings upgrade-to-downgrade ratio for FY26E stood at 0.3x—the weakest since 1QFY21—as 37 companies received upward revisions exceeding 3%, while 137 companies saw downgrades beyond 3%. The EBITDA margin (ex-Financials) marginally expanded by 40bps YoY to 17.4%, aided by Healthcare, Telecom, and Infrastructure but pressured by Cement, Consumer, Automobiles, and Chemicals.

For FY26E, earnings are expected to grow at 19% YoY, with Financials (+13%), Oil & Gas (+24%), and Metals (+37%) leading. However, downside risks persist. Earnings estimates were cut by 1.8% and 2.3% for FY26E and FY27E, respectively. Small and mid-caps suffered sharper cuts of 5.9% and 3.4%, while large-caps saw a 1.2% reduction.
Nifty EPS estimates for FY26E were trimmed by 1.4% to Rs 1,203, mainly due to downgrades in ONGC, HDFC Bank, JSW Steel, Axis Bank, and SBI. FY27E EPS was lowered by 1.8% to Rs 1,373.

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