In its latest earnings review, Motilal Oswal Financial Services (MOSL) observed that earnings performance for the MOFSL Universe was in line with expectations, showing a 1 per cent year-on-year (YoY) decline. Despite the subdued overall growth, the Nifty 50 index managed a 4 per cent YoY increase, surpassing MOSL’s estimate of 3 per cent. The weaker aggregate performance was primarily driven by global commodities, with sectors like Metals and Oil & Gas dampening results.
MOSL highlighted a notable trend in the earnings upgrade-to-downgrade ratio for FY25E, which has taken a negative turn. In the recent quarter, 43 companies received earnings upgrades of more than 3 per cent, while 121 companies saw downgrades exceeding 3 per cent. This downgrade ratio of 0.4x is the weakest seen since the first quarter of FY21, indicating a challenging earnings environment for many firms. Additionally, MOSL noted a contraction in the EBITDA margin for the MOFSL Universe (excluding financials), with a 180 basis points YoY decline to 16.2 per cent, largely impacted by oil marketing companies (OMCs).
Standout Performers
Amid this challenging backdrop, several standout performances highlighted resilience and strategic growth across specific sectors.
Hindalco: Aditya Birla Group’s Hindalco Industries Ltd reported an impressive 123.3 per cent YoY increase in net profit, reaching ₹1,891 crore for Q2 FY25, driven by robust operational performance in its Indian business and effective cost management. Revenue from operations rose 7.7 per cent YoY to ₹22,262 crore, while EBITDA grew by 56.5 per cent to ₹2,749 crore. Hindalco’s EBITDA margin surged to 12.4 per cent in the second quarter, significantly up from 8.5 per cent YoY, reflecting favourable macroeconomic factors and efficient management strategies.
Apollo Hospital: Apollo Hospitals also recorded strong growth, with net profit climbing by 63 per cent YoY to ₹379 crore for the quarter ending September 30, 2024. Revenue from operations rose 15 per cent YoY to ₹5,589 crore, while EBITDA saw a 30 per cent YoY increase, reaching ₹816 crore. Prathap C. Reddy, founder and chairman of Apollo Hospitals Group, emphasized the company’s continued commitment to expanding healthcare access nationwide, pushing the boundaries of medical service delivery across India.
Trent: Tata Group’s Trent Ltd, a retail powerhouse, delivered a 46.9 per cent YoY growth in consolidated net profit, amounting to ₹355.06 crore for Q2 FY25. The company’s revenue from operations surged by 39.3 per cent YoY to ₹4,156.67 crore. Trent’s retail footprint continued to expand, with the company adding seven Westside and 34 Zudio stores, including one in Dubai. This expansion aligns with Trent’s goal of broadening its market presence through its popular lifestyle brands Westside and Zudio.
MOSL’s recent analysis highlighted a challenging earnings environment, particularly within global commodity sectors, while emphasising the robust growth seen in sectors like healthcare, retail, and select metals. As FY25 progresses, companies across the MOFSL Universe may need to adapt to fluctuating global conditions, though notable resilience remains within high-performing firms like Hindalco, Apollo Hospitals, and Trent. The broader market outlook may be shaped by these sectoral variances, with companies and investors remaining cautious yet hopeful for sustained growth in sectors poised for expansion.
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