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For the JM Financial coverage universe we forecast a PAT decline of 5% YoY in 4QFY25. Through 9MFY25, Nifty EPS registered 8% YoY growth in EPS, resulting in a 4Q asking rate of 3%. However, we now expect Nifty 4Q PAT to decline 2% YoY, primarily led by a weak performance in BFSI. Our proprietary analysis also suggests that 35% of companies under our coverage are likely to see cuts to the FY26E EPS during the 4Q result season. Sectors where highest percentage of companies could see EPS cuts in FY26E are IT, Auto and Auto Ancillaries, Building Material, Media, Chemicals and Industrials.

* Nifty50 down 15% from its recent peak: The market correction since Sep’24 was driven by the confluence of three factors: (1) weak Indian economic data in 2QFY25, (2) weak corporate earnings in 2Q and 3QFY25, and (3) FIIs finding more palatable valuations in China and attractive opportunities in the US. This drove FII outflows to the tune of USD 25.6bn over Oct’24 to Feb’25. DII inflows of USD 39.5bn counterbalanced these outflows, in the absence of which the market correction could have been sharper. In Mar’25, FIIs were marginal net buyers to the tune of USD 975mn, driving a rally in the Indian markets. However, this rally has been cut short by US President Donald Trump’s announcements on tariffs, leading to an uncertain global environment.

* JM Financial universe 4QFY25 PAT expected to decline 5% YoY: For the JM Financial universe, we forecast a PAT decline of 5% YoY in 4Q. Sectors driving this decline: (1) BFSI (32% weight in earnings) expected to decline 8% YoY, (2) oil and gas (16% weight in earnings) expected to decline 12% YoY, and (3) utilities (8% weight in earnings), expected to decline 7% YoY. Ex-BFSI, the JM Financial universe is expected to register a 6% YoY decline in 4Q PAT. Ex BFSI and Oil & Gas, this should decline 4% YoY. Sectors with lesser earnings weight but those with the highest 4Q PAT growth: Healthcare (+69%), Media (+59%), EMS (+55% YoY), Hotels (+35% YoY), Real Estate (+29% YoY).

* 4QFY25 Nifty50 PAT set to decline 2% YoY: Through 9MFY25, Nifty registered 8% YoY growth in EPS, resulting in a 4Q asking rate of 3%. However, we now expect Nifty 4Q PAT to decline 2% YoY, led by weak performance in BFSI (YoY EPS decline of 4% YoY and 44% weight in Nifty earnings). This weak BFSI performance is likely to be driven by falling loan growth, NIM compression driven by weak CASA growth and recent rate cut, weak trading gains and elevated credit cost. Ex BFSI, 4Q Nifty PAT is yet expected to decline lower at 1%. Besides BFSI, key contributors to this decline are (1) IT, where PAT should decline 7% YoY and has 11% weight in Nifty earnings, and (2) Oil & Gas, where PAT is expected to decline 5% YoY and has 11% weight. Sectors that should show decent growth include: (1) Infrastructure (+14% YoY, 4% Nifty weight), (2) Automobiles (+10% YoY, 9% Nifty weight), (3) Metals & Mining (+11% YoY, 2.5% Nifty weight).

* 35% of JMFL coverage could see FY26E EPS cuts in 4Q result season: Our proprietary analysis suggests that 35% of companies under our coverage are likely to see cuts to the FY26E EPS during the 4Q result season. Sectors where the highest percentage of companies could see EPS cuts in FY26E are IT, Auto and Auto Ancillaries, Building Material, Media, Chemicals and Industrials.

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