Outlook Business Desk
A JM Financial report highlights that EPS estimates for Nifty 50 companies in FY25E and FY26E have been reduced by 5.8% over the past year. The downward trend continued in February 2025, with EPS estimates for FY25E-27E declining by 0.5% to 0.9%, following a sharper 1.4% to 2.8% cut in January 2025.
In February 2025, the consumer sector saw the most EPS downgrades (88%), followed by banking and automobiles (83%), oil & gas (67%), and metals & mining (60%). Meanwhile, telecom (+5.7%), industrials (+0.9%), metals & mining (+0.2%), and insurance (+0.1%) experienced EPS upgrades. IT services, pharma, NBFCs, and infrastructure had minimal cuts.
Analysis reveals that 60% of Nifty 50 companies saw EPS downgrades in February 2025, an improvement from 72% in January. Notable sectors with EPS cuts exceeding 1% included Banks (-1.5%), Cement (-1.6%), Oil & Gas (-1.5%), and Consumer (-3.3%).
Bharti Airtel recorded the highest EPS upgrade with a 5.7% increase, followed by Hindalco Industries at 2.1%. Other notable gains included Coal India (+1.3%), Bharat Electronics (+0.9%), Bharat Petroleum Corporation Ltd (BPCL) (+0.7%), and NTPC (+0.6%).
Kotak Mahindra Bank experienced the sharpest EPS decline at -11.1%, followed by Trent Ltd (-8.2%) and IndusInd Bank (-7.8%). Other major companies facing significant EPS reductions included Asian Paints (-6.0%), ONGC (-5.1%), and ITC (-4.0%).
The Nifty ended its 10-day losing streak on Wednesday, with the Sensex rising 700 points and adding Rs 8 lakh crore to BSE-listed companies' market value. Despite lower earnings estimates, the Nifty 50 is trading at a price-to-earnings ratio of 21.5x for FY25E, with an expected EPS of Rs 1,027.