Nifty Firms' Earnings Set For 20% Growth In FY24: Motilal Oswal's Gautam Duggad

Corporate earnings of NSE Nifty in the third quarter were resilient and are on track to deliver 20% growth in the current fiscal, according to Gautam Duggad of Motilal Oswal Financial Services Ltd.

The markets have had a fabulous run, and, therefore, earnings have become an important driver and indicator to track markets, the head of research told NDTV Profit in an interview. "Corporate earnings are quite resilient, and they complete the very strong macro- and micro-picture."

The top-down view for the 250 companies that Motilal Oswal covers predicted earnings growth of 19% but got a decent beat of 29%. The Nifty companies delivered a 10% earnings growth against the expected 10%, according to Duggad.

"More importantly, a lot of sectors have contributed to this run," he said. "Auto and public sector banks have beaten expectations, while private banks met expectations... metals and oil have been a big driver."

The only weak point in the third quarter was the consumer sector, especially on the staple side and low-ticket consumption items. The information-technology sector's commentary still does not point towards any big revival, Duggad said.

"We had started with an earnings per share of (Rs) 975 for the quarter and ended the quarter with (Rs) 976 EPS. That basically means (a) 20% earnings growth for FY24, and we are expecting about (Rs) 1,140 EPS for FY25 Nifty, which converts into 15–16% earnings growth."

"We have already seen (a) 22% earnings compounding for (the) Nifty in the last four years, and the next two years are also looking decent with 15–16% growth," he said.

This is the first quarter where PSU banks have outperformed private banks. A large part of the incremental push on earnings has come from PSU banks, Duggad said.

They were making losses in fiscal 2018, and now that they are at such a scale, they are doing phenomenal profit numbers with a 20% return on equity, he said. "Even after such a significant run-up, PSU banks are still trading at 0.1 to 1.2 price to book when their ROE is doing well about 17–18% consistently and will sustain for the next two years."

The PSU Index has done phenomenally well with corporate earnings, and publicity momentum will continue to remain intact, he said. 

Watch The Interview Here