With the fiscal fourth quarter earnings season all set to kickstart this week, Nuvama Institutional Equities said that earnings weakness persisting during 9MFY25 is likely to streak through Q4FY25 as well. Summarising the key highlights, the brokerage elaborated, “i) Top-line growth for coverage (ex-OMCs) is likely to be subdued (~6 per cent YoY) for a straight 8th quarter. ii) Weak top line is now weighing on margins, dragging profit growth to just 1 per cent (9MFY25: 6 per cent). iii) Profits to be weak in cement, FMCG, energy and autos; metals, chemicals, pharma and telecom to post strong growth.
This week, IT services major Tata Consultancy Services (TCS) will release its Q4 earnings report on 10th April. The coming week will see others like Wipro announcing Q4 results on 16th April and Infosys on 17th April and banking majors ICICI Bank and HDFC Bank on 19th April.
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Nuvama said, “Overall, profit recovery remains elusive, disappointing consensus. Nifty 50 EPS is likely to edge up 2 per cent (6 per cent in FY25 based on preview)— implying cuts to FY25 EPS itself. A weak FY25 exit amid rising global uncertainties poses risks to 13 per cent FY26E Nifty EPS growth expectation. This along with elevated valuations warrants a defensive bias.”
Top-line growth to remain subdued
According to Nuvama, Q4 top-line growth is forecasted at 6 per cent YoY for its coverage universe (excluding OMCs), versus 8 per cent in Q3FY25. “This is likely to be the 8th straight quarter of sub10 per cent top-line growth. While the top line has been subdued in both FY24 and FY25, the mix is different. In FY24, exports and low-end consumption weakened, whereas in FY25, BFSI, discretionary consumption and capex slowed,” the brokerage firm said. In terms of sectors, it added, top line is likely to be a) good (15 per cent YoY) in EMS, internet, NBFCs, QSR, consumer services; ii) moderate (10–15 per cent YoY) in durables, FMCG, pharma, retail, industrials, non-lending financials; and iii) weak (< 10 per cent YoY) in IT, banks, metals, energy, paints, cement.
EBITDA margins for the coverage (ex-commodities and BFSI) are likely to be stable YoY (versus large expansion in FY24).
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