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As of May 5, 2025, earnings for 27 Nifty companies show a mixed but generally better-than-expected performance for Q4FY25, with year-on-year (YoY) growth of 9% in sales, 6% in EBITDA, 10% in PBT, and 4% in PAT. These figures exceeded consensus estimates, particularly for PAT and EBITDA. Of these, six companies beat and five missed PAT expectations, while six exceeded and four fell short of EBITDA estimates.

In the broader MOFSL Universe, comprising 109 companies, sales/EBITDA/PBT/PAT grew 7%/7%/8%/6% YoY, outperforming expectations of 4%/1%/2%/-2%. Excluding the Metals and Oil & Gas sectors, the remaining companies delivered stronger results, with 9% sales growth and 4% PAT growth, aligned or slightly above estimates.

Despite this relatively strong Q4 showing, forward earnings revisions have been negative, with more downgrades than upgrades. FY25E Nifty-50 EPS growth is expected to be muted at around 2%, following a robust 20%+ CAGR from FY20–24. However, market sentiment has improved, with the Nifty up 3.5% YTD in CY25, fully recovering earlier losses. The Nifty now trades at 21x FY26E earnings, slightly above its long-period average of 20.6x.

Looking ahead, while near-term volatility is expected due to global macro risks, trade tensions, and weak Q4 performance in some sectors, the medium- to long-term growth story for India remains strong. MOFSL maintains a cautious but optimistic portfolio stance, favoring large caps and domestic-oriented sectors. They are overweight (OW) on BFSI, Consumer Discretionary, Industrials, Healthcare, IT, and Telecom, and underweight (UW) on Oil & Gas, Cement, Automobiles, Real Estate, and Metals.

Sector Spotlight: What moved, what stayed, and what slowed!

 Key Sectoral Trends – 4QFY25 Highlights

* Auto: Auto sector performance was mixed. Sectoral revenue and PAT grew at ~13% and 5.5% YoY, respectively driven by M&M and TVS. Correspondingly, input costs also remained manageable. However, FY26 growth guidance is muted for PVs and cautious for exports.

* Cement: Volume growth in the cement sector, at ~11% YoY, lagged expectations, but realizations and EBITDA outperformed with a price rise in April 2025. Short-term demand may dip due to heat waves, but FY26 growth of 7–8% is guided.

* Consumer Durables: HAVL and RRKABEL beat estimates on strong volume/margin performance. However, it is important to note that Management highlighted that the delayed summer has adversely impacted secondary demand for cooling products, and the growth trajectory needs to be monitored for the rest of the season. Near term outlook is cautious.

* Consumer Staples: Weak urban demand and food inflation led to a muted quarter. MRCO outperformed (+20% sales YoY), but margins were under pressure. Rural revival and macro tailwinds could aid recovery.

* Financials – Banks/NBFCs: Private banks showed mixed results; large ones held up better. Most banks expect earnings growth to bottom out in the 1HFY26, with credit costs likely to improve as stress in unsecured lending subsides. We remain cautious on NIMs given the deeper than-expected rate cycle shift.

* NBFCs saw tight asset quality and weak CV demand. Housing finance companies delivered steady growth with margins varying across companies. More importantly, personal loan focus is shifting toward prime borrowers.

* Capital Markets: Activity picked up in March, but weak sentiment weighed on F&O volumes and demat additions. AMCs saw flat SIPs due to market volatility with yields declining slightly due to a marginal dip in equity contribution to the AUM.

* Insurance: The general insurance industry’s growth rate in 4QFY25 remained slow due to 1) weak infrastructure investments, 2) slow credit growth, 3) the impact of 1/n regulations, and 3) weak trends in motor sales growth. Life insurers saw ULIP drag but improved margins via a shift to non-linked products.

* Metals: The sector reported decent performance - JSP led on volumes with margins flat. VEDL/HZ benefited from pricing and cost controls. The mounting volatility in non-ferrous prices due to global trade tension would be the key monitorable for non-ferrous business performance going forward.

* IT: Tier-1s posted muted results amid macro headwinds; HCLT stood out with strong guidance. Tier-2s showed stronger growth. Demand uncertainty lingers.

* Oil & Gas: OMCs beat on GRMs. While RIL’s EBITDA was flat QoQ, MRPL and IGL outperformed. However, in the case of Castrol, margins fell.

* Retail: Subdued demand, especially for premium segments. DMart/Trent expanded stores. Grocery margins squeezed.

* Real Estate: Sectoral results were strong on both operational and financial parameters. The revenue for our coverage universe was up 19% while EBITDA was in line. Strong pre-sales (+14%) and execution led to solid financials. With stables margins, our outlook on the sector remains robust.

* Telecom & Utilities: Telecom saw muted QoQ growth with RJio, Tata Telecommunications, and Indus Towers’ disappointing on multiple fronts. On the utilities front, IEX posted strong volume gains despite lower fees.

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