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* In this report, we present our interim review of the 3QFY24 earnings season.

* As of 1 st Feb’24, 147/33 companies within the MOFSL Universe/Nifty announced their 3QFY24 results. These companies constitute: a) 73% and 74% of the estimated PAT for the MOFSL and Nifty Universe, respectively; b) 48% of India's market capitalization; and c) 77% weightage in the Nifty.

* The 3QFY24 aggregate earnings of the aforementioned 147 MOFSL Universe companies were in line with our estimates and grew 34% YoY (vs. our est. of +28% YoY). The earnings growth was fueled by the domestic cyclicals, such as BFSI and Auto. BFSI clocked a 26% YoY growth, while Auto registered a growth of 40% YoY (in line with our est. of +40%), driven by Maruti Suzuki and Bajaj Auto.

* OMC’s profitability surged to INR120b in 3QFY24 from INR26b in 3QFY23, owing to strong marketing margins. Ex-OMCs, MOFSL/Nifty’s earnings grew 28%/20% YoY. ? The Metals sector reported a healthy growth of 234% YoY (vs. est. of 133% YoY), primarily fired by Tata Steel, which clocked a profit of INR8.5b in 3QFY24 (vs. a loss of INR23.8b in 3QFY23). Excluding Tata Steel, the MOFSL Metals Universe grew 62% YoY during the quarter.

* Until now, 28/48 companies within the MOFSL Coverage Universe have reported an upgrade/downgrade of more than 3% each, leading to an adverse upgrade-todowngrade ratio for FY25E. However, the EBITDA margin of the MOFSL Universe (excluding Financials) has expanded 250bp YoY to 14.9% during the quarter so far.

* Earnings of the 33 Nifty companies that have declared results so far jumped 21% YoY (vs. est. of +20% YoY), propelled by HDFC Bank, Tata Steel, ICICI Bank, JSW Steel, and Reliance Industries. These five companies contributed 57% to the incremental YoY accretion in earnings. Conversely, Tech Mahindra, Infosys, and Wipro contributed adversely to Nifty earnings. Only eight companies within Nifty reported profits below our expectations, while nine recorded a beat, and 16 registered in-line results so far.

* Nifty EPS stable: Our EPS estimates for FY24/FY25 have witnessed a marginal decline so far at INR972/INR1,131 (vs. INR976/INR1,142).

* Summary of the 3QFY24 performance thus far:

1) Technology: The IT Services companies (within MOFSL Universe) reported relatively healthy performance (beating our estimates) despite having seasonality and furlough impact in 3QFY24, with a median revenue growth of 1.0% QoQ CC.

2) Banks: Earnings growth for private banks was largely in line, while most of the PSU banks posted a slight earnings beat despite a higher opex due to wage provisions. NIMs of PSU banks stood resilient, with several of them reporting a sequential expansion in margins, while private banks continue to see NIM pressure emanating from the persistent rise in funding costs.

3) NBFCs – Lending: Demand momentum in the vehicle segment remained robust in CV and 2W but was showing signs of moderation in tractors and PV.

4) Automobiles:

3QFY24 results thus far have been in line; the growth has largely been driven by:

1) healthy volume growth, 2) better product mix,

3) lower commodity costs, and

4) operating leverage. The commodity price trend is largely expected to remain stable in the coming quarters.

5) Consumer: On a broader canvas, the pulse of consumption has been weak; only some pockets have fared relatively better on volume trajectory, such as Paints, and Jewelry. The Staple universe sustained a largely similar demand trend as witnessed in 2QFY24. Volume improved marginally on a sequential basis, but the overall revenue growth was muted due to price cuts.

6) Oil & Gas: The sector so far has reported mixed results. RIL missed our estimates due to lower gas price realizations and a lower downstream margin. OMCs witnessed an earnings decline sequentially amid contraction in GRM and marketing margins. However, the actual performance (vs. estimates) was a mixed bag. Gas companies broadly outperformed our expectations aided by reasonably stable gas prices. Refer to page 8 for the detailed 3QFY24 sectoral trends.

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