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4QFY25 review: Nifty EPS a beat; but FY26/27 estimates cut

Nifty50 EPS grew by 4.9% in 4QFY25, ahead of expectations of a 2.2% YoY decline. Factoring in the 4QFY25 results, our Nifty50 EPS for FY26E and FY27E have been cut by 5.3% and 5.9% respectively. Consequently, our Nifty50 EPS growth now stands at 12.0% (vs. 16.4% earlier) for FY26E and 14.3% (vs. 15.1% earlier) for FY27E. Of these, the largest EPS cuts for FY26E are in Automobiles, Cement, Oil & Gas, and NBFCs. For FY26E, we expect Telecom, Metals & Mining, Consumer, Oil & Gas and Banks to do the heavy lifting. Out of the 50 companies in the Nifty, 18% missed estimates in 4Q while 48% beat our estimates and the rest reported an in-line quarter. Further, if we split 4QFY25 performance in terms of market capitalisation, we see that the proportion of misses in small caps was the largest, followed by mid-caps and then large caps; 31% of small-cap companies missed expectations, while the misses were lower in midcaps and large caps at 28% and 17% respectively.

* 4QFY25 Nifty50 EPS growth ahead of expectations - In 4QFY25, Nifty50 EPS grew 4.9% YoY (vs. expectation of 2.2% decline YoY). Ex-financials, EPS grew 10.5% YoY (vs. expectation of -0.8% YoY). On a YoY basis, amongst key sectors, (1) Financials declined 1.8% YoY, (2) Oil & Gas declined 6.6% YoY, (3) IT declined 3% YoY, and (4) consumer declined 9.3% YoY. Further, on a YoY basis, sectors that saw the highest YoY EPS growth were: (1) Metals & Mining (+33.2% YoY), (2) Ports and Logistics (+23.3% YoY), (3) Industrials (+18% YoY), and (4) Infrastructure (+16.7% YoY).

* EPS estimates cut for FY26E and FY27E - Through 4QFY25 results, our Nifty50 EPS for FY26E and FY27E have been cut by 5.3% and 5.9% respectively. Consequently, our Nifty50 EPS growth now stands at 12.0% (vs. 16.4% earlier) for FY26E and 14.3% (15.1% earlier) for FY27E. Of these, the largest EPS cuts for FY26E are in Automobiles, Cement, Oil & Gas, and NBFCs.

* Which sectors have to do the heavy lifting in FY26E? - We forecast 12.0% YoY growth in FY26E Nifty50 EPS. Sectors that are expected to do the heavy lifting are: Consumer (+14% YoY and 5.6% weight in Nifty50 PAT), Telecom (+73% YoY growth and 2.5% weight in Nifty50 PAT), Metals and Mining (+23% YoY growth and 7.2% weight in Nifty50 PAT), Oil & Gas (+23% YoY growth, and 11.0% weight in Nifty50 PAT) and Banks (+7% YoY growth and 37.7% weight in Nifty50 PAT).

* JMFL coverage universe EPS grows 9.5% YoY in 4QFY25 - The JM Financial coverage universe 4QFY25 EPS grew 9.5% YoY. Sectors that saw the highest YoY EPS growth were: (1) EMS (+113% YoY), (2) Aviation (+62% YoY), and (3) Healthcare (+44% YoY). Sectors that saw the weakest YoY EPS performance included: (1) Building Materials (- 28% YoY), (2) Depositories (-22% YoY), and (3) Auto Ancillaries (-17% YoY). Compared to estimates, the largest beats were seen in Internet, followed by EMS and Utilities. Among the misses, Healthcare and Real Estate led the pack.

* Small caps had higher share of misses - Out of the 50 companies in the Nifty, 18% missed estimates in 4Q while 48% beat our estimates and the rest reported an in-line quarter. Further, if we split 4QFY25 performance in terms of market capitalisation, we see that the proportion of misses in small caps was the largest, followed by mid-caps and then large caps; 31% of small-cap companies missed expectations, while the misses were lower in midcaps and large caps at 28% and 17% respectively.

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