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Nifty-500: 4Q review – Broad-based earnings growth

Metals and PSBs drive earnings; Automobile and O&G lag

* The Nifty-500 companies delivered a healthy performance in 4QFY25, driven by strong macroeconomic fundamentals despite geopolitical uncertainties, weak consumption trends, and a high base in 4QFY24.

* The aggregate sales/EBITDA/adj. PAT of Nifty-500 companies grew 6%/11%/9% YoY to INR36.4t/INR7.5t/INR4.3t in 4QFY25.

* Earnings for the quarter were primarily driven by broad-based growth, with key sectors such as Metals (+47% YoY), PSBs (+13% YoY), Healthcare (+46% YoY) and Telecom (loss-to-profit), contributing positively. In contrast, Automobiles (-22% YoY), O&G (-4% YoY), and Pvt. Banks (-3% YoY) dragged overall earnings.

* Chemicals and Media recorded strong YoY growth of 67% and 51%, respectively, on a weak base, while Consumer Durables delivered a robust 41% YoY growth despite a high base. Meanwhile, Consumer (+4% YoY), Real Estate (+4% YoY), and Technology (+3% YoY) exhibited muted earnings growth in 4QFY25.

* The Nifty-500, ex-BFSI, reported an aggregate earnings growth of 10% YoY, whereas aggregate earnings grew 9% YoY (ex-global commodities).

* The EBITDA margin of Nifty-500 (ex-BFSI) came in at 16.8%, up 80bp YoY (+30bp QoQ). EBITDA margin, ex-commodities (i.e., Metals and O&G), came in at 19.9% (up 80bp YoY/30bp QoQ).

* FY25: Sales/EBITDA/adj. PAT grew 5%/8%/6% to ~INR136t/INR28t/INR15t led by PSBs, Healthcare, and Telecom, while O&G, Auto, and Cement weighed on the year’s earnings. Ex-BFSI, the FY25 aggregate sales/EBITDA/PAT rose 6%/4%/1% YoY. Further, ex-Metals and O&G, sales/EBITDA/PAT grew 7%/14%/13% YoY during the fiscal. EBITDA margin, ex-BFSI, contracted 30bp YoY to 16.4%; however, ex-Metals and O&G, operating margin expanded 50bp YoY to 19.5%.

* Mid- and small-caps drive earnings: The earnings performance of Nifty-500 companies was led by Midcaps in both 4QFY25 and FY25. The aggregate earnings of Nifty-100/Nifty Midcap-150/Nifty Smallcap-250 grew 5%/29%/8% YoY in 4QFY25. Whereas the aggregate PAT grew 3%/22%/7% YoY in FY25.

* Sectors and companies: Of the 21 key sectors, 16 reported profit growth in 4QFY25, while 17 reported profit growth in FY25. In 4QFY25, 234 companies reported earnings growth of over 15% YoY, while 179 companies saw a decline in earnings. For the full FY25, approximately 237 companies recorded earnings growth above 15% YoY, whereas 151 companies reported a decline.

* Heavyweights dominate: FY25 earnings were skewed towards Banks, Telecom, and Metals companies. The top 10 companies by incremental profit growth contributed approximately 97% to the incremental YoY earnings in FY25, compared to 50% in FY24.

Key sectoral highlights for 4QFY25

* Metals contributed significantly to the quarter’s earnings, driven by a weak 4QFY24 base and strong performance from non-ferrous companies. Aggregate revenue for non-ferrous players was supported by favorable pricing, while healthy volumes in ferrous companies were offset by muted NSR during the quarter.

* Within BFSI, PSBs led the aggregate earnings while Pvt. Banks dragged. Most of the large private banks had seen a sequential improvement in NIMs amid lowerday adjustments in 4Q, while PSBs continue to see a moderation in NIMs. NII growth stood at ~7% YoY for Pvt. Banks and 3% YoY for PSBs.

* Healthcare sector delivered a strong quarter with 46% YoY earnings growth, driven by increased momentum in chronic therapies within the DF segment and favorable currency movements in regulated markets.

* Telecom sector reported a profit of INR 61b in 4QFY25, compared to a loss of INR 15b in 4QFY24, primarily driven by Bharti Airtel. However, other peers posted muted to negative earnings for the quarter.

* Technology companies reported a muted 4QFY25 performance, with PAT growth of just 3% YoY. Tier-1 companies remained weak due to lower-than-expected growth and subdued demand. The backdrop remains challenging, as macroeconomic uncertainty continues to weigh on IT spending.

* The Automobile sector reported a weak quarter, impacted by modest domestic volume growth of 2% YoY and a high earnings base in 4QFY24. Nifty-500 companies in the sector recorded sales and EBITDA growth of 6% and 2% YoY, respectively, while PAT declined 22% YoY.

* Consumer demand remained subdued during the quarter, with volume growth across most companies limited to the low- to mid-single digits. While rural demand showed gradual improvement, urban demand remained weak. Nifty500 companies reported sales/EBITDA/PAT growth of 8%/17%/4% YoY.

* The Oil & Gas sector weighed on 4QFY25 performance, with sales and EBITDA growing marginally by 1% and 2% YoY, respectively, while adjusted PAT declined 4% YoY. Excluding OMCs, the performance was weaker, with sales growing 5% YoY, while EBITDA and PAT declined 1% and 13% YoY, respectively.

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