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Motilal Oswal Report
The Q3 FY24 corporate earnings ended on a strong note, with widespread outperformance across aggregates driven by continued margin tailwinds. Domestic cyclicals such as autos and financials, along with global cyclicals (i.e., metals and oil and gas) drove the beat. Technology posted a marginal decline in earnings, its first in 26 quarters.
The aggregate earnings of our universe companies exceeded our expectations and rose 29% YoY (versus our estimate of +19%). Earnings for the Nifty-50 jumped 17% YoY (versus our estimate of +11%).
The earnings growth for our universe was fueled by domestic cyclicals (such as banking, financial services and insurance and autos), as well as healthy gains from global cyclicals (i.e., metals and O&G). BFSI clocked a 22% YoY growth (versus estimate of +17%), while autos registered a significant growth of 60% YoY (versus estimate of +34%).
Metals earnings jumped 74% YoY (versus estimate of +25%) over a weak base of Q3 FY23, led by Tata Steel Ltd., JSW Steel Ltd., and Coal India Ltd.
Oil marketing companies' profitability surged 4.6 times to Rs 120 billion in Q3 FY24 from Rs 26 billion in Q3 FY23, due to strong marketing margins.
The top earnings upgrades in FY25E: Tata Motors (+26%), Coal India (+10%), Hero MotoCorp (+10%), Cipla (+8%), and Bharti Airtel (+7%).
The top earnings downgrades in FY25E: UPL (-23%), LTIMindtree (-8%), ITC (- 6%), Divis Labs (-5%), and HUL (-5%).
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