Rs

India Strategy

India Strategy | Earnings drought ending, finally!

July 2024

The Retail Rhapsody!

Gautam Duggad

-

Research Analyst

(Gautam.Duggad@MotilalOswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.

1

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

April 2021

Content:

The Retail Rhapsody!

01

Page #3-7

Summary

02

Page #8-9

Corporate earnings at a glance:

BFSI and Auto to drive earnings

growth again

03

Page #10-11

Indian markets continue to head

north backed by strong domestic

flows and retail participation!

04

Page #12-25

Auto and BFSI lead the charge,

OMCs drag down earnings

05

Page #26-39

MOFSL Universe: 1QFY25 Highlights

& Ready Reckoner

06

Page #40-256

Sector & Companies Preview

AUTOMOBILES

–

Pg41

1QFY25 to be a healthy

quarter; input cost

pressures surface

CAPITAL GOODS - Pg59

Election impact to weigh

on 1QFY25

CEMENT

–

Pg69

Demand softens; cement

prices remain muted

CHEM. SPECIALTY

–

Pg79

Green shoots visible;

meaningful recovery still

away

CONSUMER

–

Pg89

Steady demand; gradual

volume improvement

CON. DURABLE

–

Pg108

RAC strong; cables &

wires growth to

moderate on a high base

EMS

–

Pg113

Revenue uptrend set to

continue

FIN. BANKS

–

Pg118

Earnings growth to

moderate; margins bias

slightly negative

NBFC

–

Pg137

Seasonally weak quarter;

loan growth still

reasonably healthy

NON LENDING

–

Pg151

Capital markets-linked

companies to deliver

decent performance

HEALTHCARE

–

Pg161

Earnings on healthy

growth path in 1QFY25 as

well

INFRA - Pg177

Order inflows hit amid

elections; tender pipeline

robust

LOGISTICS

–

Pg181

Logistics activity remains

muted in 1QFY25 amid

elections

METALS - Pg187

Steel prices range-bound;

lower coal costs to

support earnings

performance

OIL & GAS - Pg198

1QFY25 likely to be soft

quarter amid margin

weakness

REAL ESTATE

–

Pg212

Strong demand traction

likely to continue

RETAIL

–

Pg222

Value retailers may

outperform premium

retailers

TECHNOLOGY - Pg233

Wishing for a turnaround

TELECOM - Pg244

Moderate growth to

continue; tariff benefits

in 2Q

OTHERS - Pg251

India Strategy

BSE Sensex: 79,997

Nifty 50: 24,324

India Strategy |

Retail Rhapsody!

The

1QFY25 Preview

Mastering the game!

The Retail Rhapsody!

FY25 to be the year of healthy but normalized earnings growth!

India:

The Retail Savings Pool

theme finally coming of age!

The Indian Cricket team recently emerged victorious in the ICC Men's T20 World Cup,

marking its first World Cup triumph since 2011! The 13-year gap between triumphs

was notably long, yet the subsequent celebrations underscore the era we are living in.

Similarly, the Indian capital markets have displayed a resilient and consistently upward

trend over the past three years. While numerous factors contribute to this stellar

performance, we posit that the surge in Retail Investors’ savings pool, particularly in

Equities, stands out as a prominent driver. The influx of retail investments into

equities following the pandemic has significantly altered ownership dynamics. As a

proportion of the free-float of the Indian market, DII + Retail ownership increased to

62.9% in Mar’24 from 55.1% in Mar’14 and 58.7% in Mar’19. Non-institutions

accounted for more than half of the cash volumes in FY24 (at 52%), up from 38% in

FY14 and 49% in FY19.

India’s weight in

the MSCI Index has gone up to ~19% now

from ~7% in FY14 and ~9% in FY19. The total DII inflows in 1HCY24, at USD28.5b,

exceed the full-year CY23 inflows of USD22.5b. Cumulatively, over CY22-1HCY24, the

total FII flows have reached ~USD4.8b vs. USD83b of DII flows.

The narrative of India’s

retail investors

‘typically

buying at the top and selling at the bottom’ has been

reversed. At least, in this regard,

this

time “it indeed is different”.

Even on the

election results counting day (4

th

Jun’24), retail investors used the correction to

allocate more and were the net buyers of equities. Total demat accounts have surged

to 160m

in Jun’24 from 36m in Mar’20.

India’s

Mutual Fund Equity AUM has

jumped

to INR6.1t

in Mar’20

from INR1.9t

in Mar’14,

and stands at INR27.7t as of May’24. All

of this, coupled with solid underlying earnings performance of India Inc. (Nifty-50

profits have compounded at 23% over FY20-24, while MOFSL Universe profits have

delivered 27% CAGR over the same period)

has propelled India’s market

capitalization

beyond USD5t.

Best is ahead; albeit with intermittent hiccups: As outlined in our

4QFY24 Strategy

Preview report,

India now boasts a unique combination of

‘size

and growth’.

With

elections behind us and the return of the same Modi-led NDA dispensation and

virtually the same cabinet to power, we anticipate policy continuity to drive the

overall economic momentum further. There will be a sustained focus on

infrastructure, capex, and manufacturing, which will occupy center stage, in our view.

The forthcoming Union Budget of the new government will outline the priorities for

the next five years. The much-publicized 100-day agenda will also provide a good idea

about the government’s policy framework in its third term. We also expect the

government to strategically utilize the extra windfall from the RBI dividend to provide

relief to the poorer and middle-classes and to encourage consumption ahead of the

key state elections slated in Oct-Nov’24. Against this optimistic backdrop, we discuss

the earnings for 1QFY25 ahead.

July 2024

3

The Retail Rhapsody!

Mastering the game!

MOFSL Universe to report flat earnings growth, dragged down by OMCs

We estimate the MOFSL Universe earnings to remain flat and Nifty earnings to grow

4% YoY in 1QFY25. However, excluding OMCs, the MOFSL Universe and Nifty

earnings are expected to grow by 11% YoY and 8% YoY, respectively. Margin

tailwinds are likely to ebb due to a high base. The EBITDA margin (ex-Financials) is

likely to contract 170bp YoY for the MOFSL Universe, reaching 15.8%, mainly

dragged down by OMCs. Meanwhile, the margin is projected to contract 80bp for

the Nifty-50 at 20.1%. The EBITDA margin (ex-Financials and O&G) is likely to remain

flat/decline 30bp YoY to 19.1%/20.4% for MOFSL/Nifty. The overall earnings growth

is anticipated to be driven, once again, by domestic cyclicals such as Auto (+18%

YoY) and BFSI (+15% YoY), with improved contributions from Healthcare (+21% YoY)

and Metals (+12% YoY). Conversely, earnings growth is likely to be weighed down by

global cyclicals, such as O&G (led by OMCs), which are anticipated to decline 36%

YoY, along with Cement (-15% YoY) and Spec. Chemicals (-20% YoY). The Real Estate

(+37% YoY) and Retail (+14% YoY) sectors would report strong growth, while

Consumers (+10% YoY), and Technology (+6% YoY) are anticipated to post moderate

growth YoY. Our FY25E and FY26E Nifty EPS remain stable at INR1,134 and INR1,330,

respectively. We estimate the Nifty EPS to grow 13%/17% in FY25/FY26.

Annual earnings trend: FY25 to normalize as earnings converge with

revenue growth

FY23 and FY24 experienced an interesting interplay of revenue and earnings growth,

driven by global macros. In FY23, the MOFSL Universe witnessed a sharp drag on

margins as commodity prices surged during the Russia-Ukraine war. This resulted in

just 11% earnings growth for MOFSL Universe, despite 24% revenue growth. FY24

saw a reversal of this trend, as commodity prices moderated and margins sharply

rebounded. Thus, the MOFSL Universe posted 31% earnings growth despite just 4%

revenue growth. Now for FY25, we expect earnings to normalize and track the

revenue trend. For FY25, we expect the MOFSL Universe to deliver 10% revenue

growth and 11%/13% EBITDA/PAT growth, YoY. The Nifty-50 is expected to deliver

12% earnings growth in FY25 over a high base of FY24 (+26% YoY).

Earnings highlights

–

1QFY25E | BFSI and Auto would continue to lead,

while contributions from Healthcare and Metals to improve

We predict

MOFSL earnings to remain flat, while those of Nifty

to grow 4% YoY

in 1QFY25. Excluding global commodities (i.e., Metals and O&G), the MOFSL

Universe and Nifty are likely to report 12% YoY and 10% YoY earnings growth,

respectively, for the quarter.



Overall, earnings growth is likely to be driven once again by domestic Cyclicals,

such as

BFSI

and

Auto,

while contributions from Metals and Healthcare would

rise.

Banks and NBFC Lending

would mainly lead BFSI’s earnings,

with 14% and

17% YoY growth, respectively. The earnings growth of Private and PSU Banks, at

16% and 11% YoY, while healthy, is the lowest over ten and eight quarters,

respectively. The

Auto

sector’s

earnings are likely to rise 18% YoY, the lowest in

nine quarters; however, the sector is among the best performers within the

MOFSL Coverage sectors once again.



Sales and EBITDA of the MOFSL Universe are likely to grow 9% and 2%; while for

Nifty, we expect sales and EBITDA to improve 6% and 4% YoY, respectively. Ex-

OMC’s,

EBITDA of the MOFSL Universe/Nifty is likely to grow 11%/8% YoY.



Mid- and small-cap outperform

Nifty-50 by a wide margin

Nifty50

Nifty Midcap 100

Nifty Smallcap 100

69

56

4

25

15

YoY

26 24

5yr CAGR

July 2024

The Retail Rhapsody!

Mastering the game!

The

Healthcare

universe is likely to report strong 21% YoY earnings growth.



The

Metals

universe is projected to report 12% YoY earnings growth on a weak

1QFY24 base.



The

Capital Goods

sector is projected to report strong earnings growth at 24%

YoY for the quarter (however, the lowest in five quarters), dragged down by L&T.

Ex-L&T, the MOFSL Capital Goods Universe is likely to post 44% YoY growth.



The

Cement

universe is expected to report a 15% YoY earnings decline. The

sector is likely to clock the first quarter of earnings decline following a strong

performance in the past three quarters (primarily due to a weak base).



The

Specialty Chemicals

sector is likely to report a sharp earnings decline of 20%

YoY for the fifth straight quarter.



EBITDA margin is projected to contract 170bp YoY for the MOFSL Universe (ex-

Financials) to 15.8%. Conversely, the EBITDA margin for the Nifty-50, excluding

Financials, is likely to contract 80bp YoY to 20.1% during the quarter.



The MOFSL Midcap Universe is estimated to report a 7% and 2% YoY growth in

sales and EBITDA, respectively, and a 4% YoY decline in PAT. Conversely, the

MOFSL Smallcap Universe is estimated to clock a growth of 9%/9%/5% YoY in

Sales/EBITDA/PAT for 1QFY25. The MOFSL Largecap Universe is likely to register

a sales/EBITDA/PAT growth of 10%/1%/1% YoY during the quarter.



Sales/EBITDA/PAT of the MOFSL Universe

are expected to report a two-year

CAGR of 7%/ 14%/23% over

Jun’22-Jun’24.



FY25E earnings highlights:

The MOFSL Universe is likely to deliver a sales/EBITDA/

PAT growth of 10%/11%/13% YoY. Banks and Metals are likely to be the key

earning drivers, with 35% and 17% YoY growth, respectively. These two sectors

are anticipated to contribute 57% of incremental earnings for FY25.



Nifty EPS remains unchanged:

Our FY25/FY26E Nifty EPS remains stable at

INR1,134/INR1,330. We expect the Nifty EPS to grow 13% and 17% in FY25 and

FY26, respectively.

MOFSL Top Ideas: Largecaps

–

ICICI Bank, SBI, L&T, M&M, HCL Tech, Coal India,

Titan, Mankind Pharma, CIFC and Hindalco; Midcaps and Smallcaps

–

Indian

Hotels, Ashok Leyland, Godrej Properties, KEI Industries, PNB Housing, Cello

World, Kalyan Jewelers, Persistent Systems, Angel One, Metro Brands.



Model portfolio: Key changes

Constructing a model portfolio against the backdrop of a stellar performance of

the markets and the underlying expensive valuations presents a unique challenge

of participating in the growth without overpaying for it. Our portfolio

construction, as always, is driven by earnings growth visibility. While we continue

to remain bullish on Domestic Cyclicals, we are incrementally turning more

constructive on Technology.

Sectorally, we remain OW on PSU Banks, Consumption,

Industrials, and Real Estate. We raise IT to marginal OW from UW and cut Auto from

OW to UW. We also lift Healthcare to marginal OW from Neutral, while maintaining

UW on Private Banks and Energy. Industrials and Capex, Consumer Discretionary,

Real Estate, and PSU Banks are our key preferred investment themes. We have also

made several additions from a bottom-up viewpoint across sectors.



FINANCIALS:

We have done marginal tinkering in weights in

NBFCs

even as we

stick to our significant OW stance on PSU Banks

(SBI, BoB),

where we find

valuations still attractive. We maintain our UW stance on Private Banks, where

our preferred picks are

ICICI Bank and HDFC Bank.

July 2024

5

The Retail Rhapsody!

Mastering the game!

TECHNOLOGY:

We raise Technology

to

marginal

OW

from

UW.

Reasonable

valuations, a low base of growth (MOFSL IT Universe earnings posted 5% CAGR

over FY22-24), and under-ownership drive our preference. We continue to hold

Infosys and HCL Tech

and now add

Persistent and LTTS

to the portfolio. We

expect Persistent to be the fastest-growing company within our coverage

universe over the next 2-3 years. It is also well-positioned to capitalize on

predictive GenAI spending, particularly, in data engineering. We expect LTTS to

register consistent revenue growth over the next three years, led by diversified

vertical exposure and best-in-class execution. LTTS is in the pole position to

benefit from increased outsourcing activity in ER&D space over the medium to

long term.



CONSUMPTION:

We continue to remain

OW

on Consumption, with a significant

bias towards discretionary consumption names.

In Staples, we are adding HUL

and GCPL to the portfolio.

Reasonable valuations, bottoming out of volume

growth, and a gradual pick-up in monsoon provide decent catalysts from a

tactical perspective. Any potential relief measures in the Union Budget for

middle-class/rural segments ahead of the state elections can drive a moderate

re-rating in the sector. We are adding

KEI Industries and Kalyan Jewelers

to the

model portfolio given the solid underlying earnings growth and consistent

execution. We continue to maintain our allocations in

Avenue Supermart, Titan,

Indian Hotels, Zomato, Cello, and Metro Brands.



AUTOMOBILES:

We are cutting weights in

Automobiles

and downgrade it to

UW

following the recent sharp run-up in our model portfolio stocks (SAMIL,

which we added in 4QFY24 has rallied 71% in the last three months, while

Craftsman Automation

has been up 30%). Within the sector, we continue to

maintain our preference towards

M&M

(which has also rallied 44% in the last

three months between our two preview reports) and

Ashok Leyland.



INDUSTRIALS & REAL ESTATE:

Industrials remain our favorite theme. However,

valuations have run up and offer little respite from the near-term risk-reward

perspective. While we remain OW and maintain our allocations in

L&T and ABB,

we now replace

KOEL with Bharat Electronics.

KOEL, since our initiation in

Dec’23,

has been up 135%.

BEL

will continue to benefit from its dominant

position in defense electronics , and we expect a 16% revenue CAGR and 17%

EBITDA CAGR over the next three years. We continue to remain very bullish on

Real Estate

and retain our significant

OW

stance without any change in our

picks and weights (Godrej

Properties, Sobha Ltd., and Sunteck Realty).



HEALTHCARE:

We are raising Healthcare

to OW

from

Netural.

We are replacing

Cipla

with

Mankind Pharma

in the portfolio.

Mankind Pharma

is not only

enhancing the niche portfolio, but also improving its chronic share, thereby

driving a 15% earnings CAGR over FY24-26. Surplus cash provides increased

scope for growth through inorganic opportunities. We remain constructive on

the Hospitals sector and now switch from

Global Health to Max Healtchare.

After delivering 33% EBITDA CAGR over FY20-24, Max Healthcare is well-placed

to deliver 19% EBITDA CAGR over FY24-26 backed by the scale-up of the

recently acquired Sahara Hospital (Lucknow), Alexis Hospital (Nagpur), and the

addition of beds at its existing sites.



Note: Exhibit data is sourced from Bloomberg, Companies, and MOFSL research database

July 2024

6

Corporate earnings at a glance: BFSI and Auto to drive earnings growth

Rhapsody!

The Retail

again

Mastering the game!

BFSI and Auto would lead the quarter;

Healthcare and Metal’s contribution to improve; excluding

OMCs, profits would

grow 11% and 8% YoY for the MOFSL Universe and Nifty, respectively.

BFSI and Auto would continue to lead, while contributions from Healthcare and Cement to improve

PAT expected to remain flat YoY for

PAT likely to decline 7% YoY for the

PAT to jump 12% YoY for the MOFSL

the MOFSL Universe

MOFSL Universe, excluding Financials

Universe, sans Metals and O&G

MOFSL Universe

145

233

MOFSL Ex Financials

77

55

43

51 46

23

18 14

-3

16

29

10

50

47 53

17

8 3

-19-12

6

33

4

18

13

39 33 29 34

23

31

23

18

MOFSL Ex Metals and O&G

2

0

-7

12

PAT growth for the Nifty Universe

likely to be at 4% YoY

106

Nifty Universe

PAT to remain flat YoY for the Nifty

Universe, sans Financials

Nifty Ex Financials

147

PAT to jump 10% YoY for the

Nifty Universe, sans Metals and O&G

55

Nifty Ex Metals and O&G

50

34

31

39

26

22 23 10 10 17

40

33 28

19

12

29

22

16 20

-2 0

8

23 29 20

7

4

0

14

19

11

23

24

16

16

10

Performance of the MOFSL Universe to be driven by Banks, Auto, Metals, and Healthcare in 1QFY25E

57 35

20 16 14

32 24 21

11

8

6

6

5

4

3

2

1

0

0

1

4

6

23

226

July 2024

7

Corporate earnings at a glance: BFSI and

O&G’s

contribution likely to improve

The Retail Rhapsody!

Mastering the game!

Financials’

contribution

to witness gains and would account for over one-third of the overall profit pool

BFSI PAT (INRb)

BFSI contribution to MOFSL universe PAT (%)

36

30

36

32

32

33

34

36

23

19

23

26

26

O&G’s PAT contribution to the MOFSL Universe

would decline to a seven-quarter low in 1QFY25

O&G PAT (INRb)

O&G contribution to MOFSL universe PAT (%)

24.7

24.2

20.4

21.2

21.5

20.8

15.6

17.0

21.3

18.2

18.0

15.8

14.5

MOFSL (ex-OMC)’s PAT share (%): Domestic cyclicals to drive earnings

while defensives’ contribution to improve;

Global

cyclicals to drag!

28

26

29

28

28

26

DEFENSIVES

30

36

53

25

25

-1

48

45

26

32

22

26

24

23

21

21

37

25

24

23

24

21

27

22

21

25

20

27

20 22

25

24

40

GLOBAL CYCLICALS

37

36

38

39

DOMESTIC CYCLICALS

42

42

39

35

25

46 43

47

39

42

38

42

51

53

52

53

54

53

55

54

July 2024

8

The Retail Rhapsody!

Mastering the game!

MOFSL: MODEL PORTFOLIO

SECTOR WEIGHT /

PORTFOLIO PICKS

Financials

Private Banks

ICICI Bank

HDFC Bank

Axis Bank

AU Small Finance

PSU Bank

SBI

Bank of Baroda

Diversified Financials

Angel One

Chola. Inv & Fin.

PNB Hsg Fin

Consumption / Retail

Avenue Supermarts

Titan Company

HUL

GCPL

Zomato

Indian Hotels

Energy/Telecom

Reliance Industries

Bharti Airtel

HPCL

Technology

Infosys

HCL Technologies

Persistent Systems

L&T Technology

Cap Goods, Infra & Cement

Larsen & Toubro

ABB India

Bharat Electronics

Godrej Properties

Auto

Mahindra & Mahindra

Ashok Leyland

Healthcare

Mankind Pharma

Max Healthcare

Metals / Utilities

Hindalco

Coal India

Others

Kalyan Jewellers

Metro Brands

KEI Industries

Sobha

Restaurant Brands

Cello World

Sunteck Realty

TOTAL

LP: Loss to Profit

BSE

100

31.7

22.3

6.4

9.2

2.7

0.3

3.4

2.5

0.4

6.0

0.0

0.4

0.0

12.2

0.5

1.0

1.7

0.4

1.0

0.4

13.0

8.0

2.8

0.0

10.6

4.4

1.2

0.4

0.0

9.7

3.1

0.0

0.9

0.0

7.7

1.9

0.2

4.2

0.0

0.5

6.9

0.8

0.8

4.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

100

MOST

WEIGHT

32.0

20.0

8.0

7.0

3.0

2.0

6.0

4.0

2.0

6.0

2.0

2.0

2.0

14.0

3.0

3.0

2.0

2.0

2.0

2.0

12.0

6.0

4.0

2.0

11.0

4.0

3.0

2.0

2.0

10.0

4.0

2.0

2.0

2.0

5.0

3.0

2.0

5.0

3.0

2.0

4.0

2.0

2.0

7.0

1.0

1.0

1.0

1.0

1.0

1.0

1.0

100

WEIGHT

EFFECTIVE

RELATIVE

SECTOR STANCE

TO BSE100

0.3

-2.3

1.6

-2.2

0.3

1.7

2.6

1.5

1.6

0.0

2.0

1.6

2.0

1.8

2.5

2.0

0.3

1.6

1.0

1.6

-1.0

-2.0

1.2

2.0

0.4

-0.4

1.8

1.6

2.0

0.3

0.9

2.0

1.1

2.0

-2.7

1.1

1.8

0.8

3.0

1.5

-2.9

1.2

1.2

2.9

1.0

1.0

1.0

1.0

1.0

1.0

1.0

Neutral

Underweight

Buy

Buy

Neutral

Buy

Overweight

Buy

Buy

Neutral

Buy

Buy

Buy

Overweight

Buy

Buy

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Neutral

Buy

Buy

Neutral

Buy

Neutral

Buy

Buy

Buy

Buy

Underweight

Buy

Buy

Neutral

Buy

Buy

Underweight

Buy

Buy

Overweight

Buy

Buy

Buy

Buy

Buy

Buy

Buy

PAT YoY / CAGR (%)

FY24

FY25E

FY26E FY24-FY26

28

38

13

7

21

26

26

28

44

7

7

1

13

LP

26

4

39

LP

1

6

19

11

25

82

34

20

35

102

38

19

1

18

30

-5

22

-53

Loss

24

4700

25

13

15

13

43

18

11

33

30

23

34

20

8

16

189

19

16

80

-45

8

8

30

10

12

54

21

27

21

28

13

18

34

-8

47

20

24

591

Loss

22

235

14

14

17

18

33

18

15

17

35

23

32

23

11

19

176

23

21

49

10

16

9

22

16

29

24

23

11

19

20

15

23

4

18

36

24

24

110

LP

26

43

19

13

16

15

38

18

13

25

32

23

33

21

9

17

182

21

19

64

-22

12

9

26

13

20

38

22

19

20

24

14

20

18

4

41

22

24

281

LP

24

119

16

July 2024

9

The Retail Rhapsody!

Mastering the game!

MARKETS

Indian markets continue to head north…

…backed

by strong domestic flows and retail participation!













Clocking new highs since Mar’23:

The Nifty-50 surpassed the milestone of 24k,

and BSE Sensex exceeded the 80k mark and hit an all-time high. Despite the

heightened volatility during the Lok Sabha election period, markets remained

strong and continued their uptrend. The Nifty-50 surged

25% YoY as of Jun’24

(up

10% in CY24YTD). The Nifty-50 continued its upward march since the last five

consecutive quarters (rising 38% since Mar’23). The market cap of the Indian

listed universe surpassed USD5t, accounting for 4.2% of the global market cap.

Showcasing strong resilience:

The Indian markets continued to showcase their

resilience and outperformed other emerging markets handsomely amid weak

global macros, high interest rates, and geopolitical uncertainties that kept global

markets volatile and jittery. MSCI India outperformed global markets by a wide

margin in the past 12 months.

Mixed performance by global economies in CY24YTD:

India remains the third

best performer (+10%) after Taiwan (+21%) and the US S&P500 (+14%),

outperforming China (+10%) and other EM (+6%) along with other key global

economies in CY24YTD in USD terms. Further, MSCI India (+16%) outperformed

MSCI EM (+6%) by a wide margin in CY24YTD.

India’s outperformance

vs. the global market continues:

As the global markets

recover from their lows in CY23,

India’s outperformance

slips from the highs, in

CY24. However, despite relative moderation, India remains the top performer in

local currency terms and the second-best performer in USD terms (only after the

US) in the last 10 years. The Nifty-50 posted a CAGR of 15%/15%/12% (in local

currency terms) and a CAGR of 11%/11%/9% (in USD terms) during the three-

year/five-year/ten-year periods ended Jun-24.

DII flows exhibit power, FII flows remain flat:

Backed by strong retail

participation and SIP flows of +USD2b (scaling a new high), DII inflows continue

to remain strong. DII inflows over the past six months at USD28.5b have

exceeded that of the entire CY23 (USD22.3b). FII flows continued to remain

volatile in CY24. With concerns over election uncertainty behind, FIIs turned

positive

in Jun’24 infusing about USD0.3b in CY24YTD.

Broad-based outperformance trend continues!

Following a year of broad-based

growth in FY24, with all the indices and sectors delivering positive returns, the

outperformance trend has continued in 1QFY25 (Apr-24 to Jun-24) as well. Both

the Nifty Midcap 100 (+16% YoY) and the Nifty Smallcap 100 (+20% YoY)

outperformed the Nifty-50 by a wide margin of 8% and 12%, respectively. The

continued rally of the laggards from the past decade, such as Real Estate, Capital

Goods, PSUs, Industrials, Defense, etc. (despite not being a major contributor to

the large-cap indices), led to the continued rally in the broader markets. This

continued to drive a rally in the mid- and small-cap indices to new highs.

July 2024

10

The Retail Rhapsody!

Mastering the game!

Exhibit 1:

World equity indices in USD terms (%)

21

14

CY24YTD Chg (%) - In USD

Exhibit 2:

World equity indices in local currency terms (%)

CY24YTD Chg (%) - In local currency

28

18

10

6

5

4

-2

-2

-3

14

10

6

6

5

0

-9

-19

-3

-5

-8

Exhibit 3:

FII flows remained volatile but positive…

Net FII (USD b)

14.2

7.7

3.8

23.4

Exhibit 4:

…while

DII inflows continued to remain strong

Net DII (USD b)

32.2

22.3

0.3

14.0

15.9

6.0

28.5

21.4

12.1

-4.6

-17.0

-5.0

Exhibit 5:

FIIs net buyers, and inflows jumped in Jun’24

Net FII (USD b)

Exhibit 6:

DII flows have been robust since the last 11 months

Net DII (USD b)

Exhibit 7:

Nifty Midcap and Nifty Smallcap indices have outperformed Nifty-50 in past one year (indices rebased to Nifty-50)

35,000

30,000

25,000

20,000

15,000

Nifty50

Nifty Midcap 100

Nifty Smallcap 100

(rebased to Nifty50)

Jun'23-Jun'24 growth (%)

Nifty-50 25%,

Midcap up 56%,

Small

cap index up 69%

32,435

29,914

24,011

19,189

July 2024

11

The Retail Rhapsody!

Mastering the game!

1QFY25 PREVIEW

Auto and BFSI lead the charge, OMCs drag down earnings

MOFSL ex-OMCs is expected to grow by a healthy 11%



Expect BFSI and

Auto to lead the

incremental profit

growth

in 1QFY25

Of the 17 major

sectors under

MOFSL Coverage,

11 sectors to

witness an

expansion in

EBITDA margin

YoY





Sectoral PAT growth for the quarter-

ended

Jun’24

(YoY %)

NBFC - Non Lending

Real Estate

Staffing

Insurance

EMS

Cap. Goods

60

37

36

32

29

24

21

21

18

17

17

16

14

12

11

10

6





Cons. Durables

Healthcare

Auto

Logistics

NBFC - Lending

Banks-PVT

Retail

Metals

Banks-PSU

Consumer

Technology

MOFSL Univ.

Infra

Media

Cement

Chemicals-Spec

Oil & Gas

0

-7

-11

-15

-20

-36



Telecom

Loss

Auto

sector’s earnings are

likely to surge 18% YoY during the quarter. EBITDA

margin for our Auto OEM universe (excluding JLR) is expected to improve 170bp

YoY at 13.1%, fueled by moderate commodity costs on a YoY basis, a favorable

product mix, and operating leverage. However, we expect the EBITDA margin to

remain stable QoQ. For auto ancillaries, the EBITDA margin may largely remain

stable YoY, while it is expected to decline 70bp QoQ. We noted a rise in key

commodity prices in 1QFY25 QoQ, such as aluminum (+15%), copper (+16%), lead

(+5%), rubber (+5%) and platinum (9%). While the impact of rising input costs is

likely to be visible for OEMs from 2Q onwards, tyre companies are expected to

face this adverse impact in 1Q itself, with the major impact likely in 2Q.

BFSI’s

earnings are expected to moderate with a slightly negative margin bias.

For BFSI, we expect a 15% YoY earnings growth, which is driven by Private Banks

(up 16%), Insurance (up 32%), and NBFC-Lending (up 17%), while PSBs are

expected to post an earnings growth of 11% YoY. We estimate systemic loans to

clock a 14% growth over FY25-26. The home, vehicle, real estate, and small

business segments continued to do well, while CV demand remained healthy.

Credit quality for most banks had been robust, leading to controlled

provisioning expenses. However, the recent developments related to farm loan

waivers could potentially upset the credit culture and result in an uptick in credit

costs, particularly in the agri and unsecured segments (like MFI).

The Capital Goods sector’s

earnings are projected to rise 24% YoY during the

quarter. Some moderation in order inflow is expected in 1QFY25, following a

strong FY24. The companies continue to benefit from a strong enquiry pipeline,

especially in transmission, data centers, EVs, railways, semiconductors,

electronics, and hydrogen. We expect 12% YoY growth in execution in 1QFY25.

Higher commodity prices and labor shortages can hurt margins. However, we

expect margins to get support from improved pricing, cost-saving measures, and

an improved product mix. As a result, we expect an ~80bp YoY expansion in

EBITDA margin for our coverage universe.

For the MOFSL

Consumer

coverage universe, revenue/EBITDA/PAT are expected

to clock 8%/9%/10% YoY growth in 1QFY25. The demand trend was steady in

1QFY25, and the summer portfolio is expected to outperform. Most of the

management teams remain positive on volume recovery in FY25. With steady

macro, along with price cuts/consumer offers by companies, we expect that our

FMCG universe is likely to clock mid-to-high-single-digit volume growth in FY25.

The

Healthcare

companies under our coverage are expected to report a healthy

YoY earnings growth of 21% in 1QFY25. We expect aggregate sales to grow by

11% YoY to INR763b, aided by strong traction in Domestic formulation (DF) sales

and a healthy performance in the US segment. EBITDA is likely to exhibit a 15%

YoY growth to INR179b, led by a higher share of niche launches in the US

generics. PAT is expected to grow by 21% YoY to INR111b. For hospitals, we

expect profitability to improve due to the addition of beds, an increase in

occupancy, and the optimization of case mix/payor mix.

Companies within our

Metals

coverage universe are expected to post a revenue,

EBITDA, and APAT growth 3%, 11%, and 12% YoY, respectively, in 1QFY25. On a

sequential basis, we expect revenue to be flat and EBITDA and APAT to grow 3%

and 6%, respectively. The QoQ performance can be attributed to marginal

12

July 2024

The Retail Rhapsody!

Mastering the game!

Sectoral Sales growth for the quarter-

ended

Jun’24

(YoY %)

NBFC - Non Lending

EMS

Real Estate

NBFC - Lending

Insurance

Banks-PVT

Retail

Cons. Durables

Logistics

Staffing

Cap. Goods

Healthcare

Oil & Gas

MOFSL Univ.

65

44

28

22

20

17

17

16

13

13

12





12

11

9

9

9

8

4

3

3

1

1

1

0





Banks-PSU

Auto

Consumer

Telecom

Technology

Metals

Cement

Chemicals-Spec

Media

Infra











improvement in realizations and lower coal costs offset by softer volumes and

high iron ore costs. We expect the ferrous and non-ferrous sectors to deliver

earnings improvement QoQ during 1QFY25. The mining companies are expected

to report subdued growth due to weak volumes.

The Cement sector’s

earnings are projected to decline 15% YoY as the cement

price remained muted during the quarter. The all-India average cement price

was down ~4% YoY/1% QoQ in 1QFY25. We estimate the average EBITDA/t to

decline ~1% YoY (down 11% QoQ) to INR895, as weak cement prices offset the

benefit of lower variable costs. The aggregate EBITDA of our coverage universe

is estimated to increase by a mere 3% YoY, while OPM is likely to improve

marginally by 50bp YoY to 16.7%.

The O&G sector’s

earnings are expected to decline 36% YoY, driven by lower SG

GRM (down 52% QoQ) and marginally lower marketing margins (down 29%/10%

for MS/HSD). The EBITDA/scm margins for MAHGL and GUJGA are down 4%/

11% QoQ (up 2% QoQ for IGl) amid a continued shortfall in APM gas and 18%

higher QoQ spot LNG prices in 1QFY25. We have reduced our Brent price

assumption by 7%/12% for FY25/26, to USD78.8/bbl and USD75/bbl for

FY25/26, respectively. This has been led by a gradual unwinding of OPEC+

voluntary cuts from Oct’24,

as the IEA expects a rise in global oil supply from

non-OPEC+ by 1.4mb/d in CY24 and 1.8mb/d in CY25.

Specialty Chemicals

is projected to report an earnings decline (down 20% YoY)

for the fifth consecutive quarter. We expect positive earnings from 2QFY25

onwards.

The Technology

sector’s (IT services companies) revenue is expected to recover

following a tepid 4QFY24 for the industry. We expect aggregate revenue/EBIT/

PAT to grow 3.2%/5.2%/6.1% YoY (all in INR terms) for our coverage universe.

We would be looking for signs of recovery in discretionary spending in the form

of deal activities, which have been heavily skewed towards cost-takeout

projects. However, any disappointment in 1QFY25 could again put pressure on

2Q. We believe mid-tier companies could continue to perform well, especially

those with strong offerings in “pre-GenAI” spending, such as data engineering.

1QFY25 snapshot:

We expect EBITDA/PBT/PAT to be +2%/flat/flat YoY in

1QFY25 for the MOFSL Universe. Excluding Metals and O&G, EBITDA/PBT/PAT

for the MOFSL Universe would grow 10%/11%/12% YoY. Sales for the MOFSL

Universe are forecasted to grow 9% YoY. Excluding Metals and O&G, sales are

also likely to rise 9% YoY during the quarter.

EBITDA margins for Real Estate, Metals, Healthcare, Capital Goods, Consumer

Durables, Automobiles, Technology, Consumer, and Logistics should expand,

while margins for O&G, Specialty Chemicals, Media, EMS, and Retail are likely to

contract on a YoY basis.

Nifty earnings to grow 4% YoY in 1QFY25:

Ex-OMCs, the Nifty earnings are

anticipated to rise ~8% YoY. HDFC Bank, Hindalco, TCS, ICICI Bank, and Maruti

Suzuki, are likely to drive Nifty earnings, while BPCL, JSW Steel, Coal India,

Grasim Industries and ONGC are projected to drag the same.

Nifty earnings, ex Metals/O&G, are likely to increase 10% YoY in 1QFY25.

FY25E snapshot:

The MOFSL Universe and Nifty are likely to record 13% YoY and

12% YoY earnings growth, respectively, in FY25E. Excluding Metals and O&G, the

MOFSL Universe/Nifty should post 18%/12% YoY earnings growth.

13

July 2024

The Retail Rhapsody!

Mastering the game!

Key sectoral trends and highlights

















The Private banks

(ex-HDFCB) sector is expected to report a PPoP growth of

10% YoY/flat QoQ, and a PAT growth of 9% YoY/a decline of 2.1% QoQ. We also

estimate earnings to record a 16% CAGR over FY24-26. We estimate 1QFY25 NII

growth of 16.6% YoY (+13.0% YoY ex-HDFCB). Slippages broadly remain under

control, which should drive stability/further improvement in asset quality ratios.

The PSU banks

are likely to report moderate earnings growth of 11.5% YoY in

1QFY25. NII growth is also likely to moderate to 8.8% YoY as margins maintain a

downward bias. Accordingly, we estimate PSBs’ earnings to clock a 17% CAGR

over FY24-26. Asset quality is anticipated to remain stable due to an improving

borrower profile and a low SMA pool, keeping slippages under control.

However, with the ongoing developments about farm loan waivers, the outlook

for asset quality will be closely monitored over the coming quarters.

The MOFSL

NBFC-Lending

Coverage Universe is likely to report a sales/PAT growth

of 22%/17% YoY. For our coverage universe, we estimate loan growth of ~20%

YoY/~4% QoQ in 1QFY25. While loan growth was broad-based, a) gold financers

are expected to report strong gold loan growth, b) micro-financiers are expected to

report muted loan growth, and c) select HFCs (impacted by RBI guidelines on

interest income recognition only on cheque encashment) might report weaker

disbursement momentum. Structurally, we believe that fixed-rate lenders such as

vehicle financiers and micro-LAP lenders will benefit from any interest rate cuts

whenever they occur.

Auto

OEMs reported ~10% YoY volume growth in 1QFY25, with broad-based

growth in almost all the segments. 2Ws outperformed with ~11% YoY growth,

followed by PVs with 6% YoY growth. CVs and tractors grew 4% each. However,

passenger car volumes continued to underperform UVs as demand remained

weak for the entry-level category. Revenue/EBITDA/PAT for our coverage

universe is likely to grow ~9%/14%/18% YoY during the quarter. EBITDA margin

for our Auto OEM universe (ex-JLR) is likely to improve 170bp YoY at 13.1%.

For the MOFSL

Consumer

universe, we expect marginal improvement in volume

growth QoQ in 1QFY25. Considering a steady macro, price cuts, and consumer

offers by companies, we expect that our FMCG universe is likely to post a mid-

to-high-single-digit volume growth in FY25. Gross margin is likely to see some

improvement, albeit at a slower pace than witnessed over the last 3-4 quarters.

For the MOFSL

Capital Goods

universe, we expect healthy growth of 12%/21%/

24% YoY in sales/ EBITDA/PAT in 1QFY25. Due to elections in Apr-May’24,

the

government’s ordering activity slowed down. During the quarter, LT announced

orders worth ~INR183b, BHE won ~INR43b, KECI secured ~INR49b, and KPIL

acquired ~INR23b. With strong existing order books, we estimate 12% YoY

growth in execution for our coverage universe in 1QFY25.

The

MOFSL Cement

Universe should report an EBITDA/PBT growth of 2%/2%

and a PAT decline of 15% YoY for the quarter. Following a strong growth (in the

range of ~8-19% YoY) over eight consecutive quarters (1QFY23-4QFY24), growth

in cement volume is estimated to moderate to ~5% YoY in 1QFY25 amid general

elections during the quarter. We estimate an average capacity utilization of

~85% in 1QFY25 vs. ~88%/95% in 1QFY24/4QFY24.

The

Healthcare

Universe is likely to report sales/EBITDA/PAT growth of 12%/

17%/ 21% YoY in 1QFY25. We expect aggregate DF segment sales to grow 10%

YoY to INR194b In 1QFY25 for the companies under our coverage. This will be

14

July 2024

The Retail Rhapsody!

Mastering the game!





propelled by healthy growth in Cardiac, Gastro, and Derma therapies that have

grown more than IPM for the quarter.

The

Metals

Universe is expected to post an earnings growth of 12% YoY. In

1QFY25, average domestic HRC prices remained flat QoQ /7% lower YoY to

INR53,630/t. Premium HCC price declined ~USD70/t (down 21% QoQ) to

USD260/t. As Tier-I mills carry nearly two months of coal inventory, they are

likely to experience the positive impact of lower coking coal prices in 1QFY25.

HRC and rebar prices are expected to improve, driven by the resumption in

exports and an expected uptick in domestic demand post-elections.

For the

Technology

Universe, we expect aggregate revenue/EBITDA/PAT to

grow 3.3%/5.1%/6.1% YoY (all in INR terms) for our coverage universe. We

expect revenue growth of Tier-I companies to be in the range of -0.5% to +2.0%

QoQ in CC. Revenue of Tier-II players is expected to grow by -1.5% to +5.0% QoQ

in CC terms. We expect ~5-7% YoY revenue growth in constant currency (cc)

terms for HCL and TCS (lower for INFY largely due to a poor exit to FY24) for

FY25. This will be

contingent on a recovery in the flow business and clients’

willingness to resume discretionary spending.

July 2024

15

The Retail Rhapsody!

Mastering the game!

Exhibit 8:

MOFSL and Nifty Universe to post flat and 4% YoY earnings growth, respectively, in 1QFY25 (INR b)

Sector

PAT growth sectors

NBFC - Non Lending (5)

Real Estate (11)

Staffing (4)

Insurance (6)

EMS (5)

Capital Goods (11)

Consumer Durables (5)

Healthcare (24)

Med/Low growth sectors

Automobiles (25)

Logistics (8)

NBFC - Lending (20)

Banks-Private (13)

Retail (20)

Metals (10)

Banks-PSU (6)

Consumer (19)

Technology (12)

PAT de-growth sectors

Infrastructure (3)

Media (3)

Cement (11)

Chemicals-Specialty (12)

Oil & Gas (15)

Others (13)

Telecom (4)

MOFSL Universe (265)

Nifty (49)

Sensex (30)

Sales

Jun-24

2,663

26

124

116

531

21

824

180

840

11,291

2,859

153

322

912

533

2,858

899

882

1,872

10,180

47

46

539

160

8,267

495

625

24,133

13,979

10,354

Gr. (%)

YoY

QoQ

15

-16

65

5

28

-22

13

5

20

-33

44

-18

12

-21

16

-7

12

4

8

0

9

-5

13

0

22

4

17

3

17

9

3

-2

9

1

8

9

3

1

9

3

0

-13

1

7

1

-8

1

2

11

5

4

-8

4

2

9

-1

6

-4

8

-3

EBITDA

Jun-24

382

11

35

4

25

2

94

18

193

3,171

391

57

241

671

59

507

599

226

421

1,377

13

10

84

30

875

70

295

4,930

3,439

2,786

Gr. (%)

YoY

QoQ

23

-13

71

7

50

-26

17

16

28

-37

35

-40

21

-28

25

-9

17

5

10

-2

14

-8

14

3

20

5

15

-8

14

10

11

3

3

-3

9

14

5

-2

-17

-7

0

-9

-4

36

2

-17

-10

9

-24

-10

-18

-14

4

2

2

-4

4

-5

8

-5

PAT

Jun-24

248

9

24

2

24

1

56

12

119

1,848

212

32

137

426

25

225

342

161

287

463

4

5

35

16

405

21

-25

2,559

1,857

1,463

Gr. (%)

YoY

QoQ

26

-14

60

6

37

-35

36

79

32

17

29

-46

24

-36

21

-9

21

2

13

-3

18

-13

17

1

17

3

16

-4

14

20

12

6

11

-10

10

12

6

-1

-35

-20

-7

-23

-11

26

-15

-31

-20

9

-36

-19

-52

-35

Loss

Loss

0

-8

4

-9

9

-9

PAT Delta PAT

INR b Share (%)

50

10

4

0

6

1

1

0

6

1

0

0

11

2

2

0

21

5

207

72

32

8

5

1

20

5

57

17

3

1

24

9

35

13

14

6

16

11

-253

18

0

0

-1

0

-6

1

-4

1

-226

16

-23

1

8

-1

4

100

65

120

July 2024

16

The Retail Rhapsody!

Mastering the game!

Exhibit 9:

Expect a two-year PBT/PAT CAGR of 20%/23% for the MOFSL Universe (INR b)

PBT (INR b)

Sector

Automobiles (25)

Capital Goods (11)

Cement (11)

Chemicals-Specialty (12)

Consumer (19)

Consumer Durables (5)

EMS (5)

Financials (50)

Banks-Private (13)

Banks-PSU (6)

Insurance (6)

NBFC - Lending (20)

NBFC - Non Lending (5)

Healthcare (24)

Infrastructure (3)

Logistics (8)

Media (3)

Metals (10)

Oil & Gas (15)

Oil Ex OMCs (12)

Real Estate (11)

Retail (20)

Staffing (4)

Technology (12)

Telecom (4)

Others (13)

MOFSL Universe (265)

MOFSL Ex Metals and O&G (240)

MOFSL Ex OMCs (262)

Nifty (49)

Sensex (30)

Jun-22 Jun-23 Mar-24 Jun-24

52

49

60

33

165

10

1

674

361

182

15

110

6

101

11

33

10

494

371

608

18

34

2

326

-24

6

2,428

1,563

2,666

1,931

1,469

236

70

54

27

199

14

1

1,106

492

431

19

156

7

129

7

34

8

293

871

466

20

29

2

366

-3

45

3,510

2,345

3,105

2,487

1,889

312

122

70

20

189

19

3

1,257

523

520

24

178

12

157

9

38

6

316

681

510

44

28

2

392

3

32

3,697

2,700

3,526

2,680

2,125

278

83

50

22

217

17

2

1,257

568

469

25

183

12

155

7

40

8

321

581

489

28

33

3

384

1

25

3,510

2,608

3,418

2,554

2,033

Growth (%)

Two-year

YoY

QoQ

CAGR

18

130

-11

18

31

-32

-8

-9

-28

-18

-19

8

9

15

15

20

31

-10

29

43

-46

14

37

0

15

25

9

9

60

-10

30

27

3

17

29

3

63

37

4

20

24

-1

-6

-23

-26

19

10

5

-9

-15

37

9

-19

1

-33

25

-15

5

-10

-4

39

23

-36

13

-1

20

38

14

48

5

8

-2

LP

LP

-72

-43

102

-21

0

20

-5

11

29

-3

10

13

-3

3

15

-5

8

18

-4

PAT (INR b)

Jun-22 Jun-23 Mar-24 Jun-24

13

31

44

25

123

7

1

507

272

133

14

82

5

78

8

29

8

333

244

429

15

25

2

242

-48

2

1,689

1,111

1,873

1,347

1,011

180

45

41

20

147

10

1

817

369

307

18

118

6

98

5

27

6

201

632

327

18

22

2

271

-32

44

2,555

1,722

2,250

1,793

1,342

244

88

51

15

144

13

2

984

443

379

20

134

9

117

5

32

4

212

498

366

37

21

1

291

-25

32

2,767

2,057

2,634

2,030

1,606

212

56

35

16

161

12

1

939

426

342

24

137

9

119

4

32

5

225

405

336

24

25

2

287

-25

21

2,559

1,929

2,490

1,857

1,463

Growth (%)

Two-year

YoY

QoQ

CAGR

18

309

-13

24

34

-36

-15

-11

-31

-20

-20

9

10

15

12

21

33

-9

29

46

-46

15

36

-5

16

25

-4

11

60

-10

32

28

17

17

29

3

60

38

6

21

24

2

-7

-27

-23

17

5

1

-11

-16

26

12

-18

6

-36

29

-19

3

-11

-8

37

27

-35

14

-1

20

36

13

79

6

9

-1

Loss Loss Loss

-52

236

-35

0

23

-8

12

32

-6

11

15

-5

4

17

-9

9

20

-9

Sales/PAT for the MOFSL Universe to grow 9%/remain flat YoY in 1QFY25

Exhibit 10:

Expect sales for the MOFSL Universe to grow 9%

YoY in 1QFY25

53

32 29

7

-2 -1 -5

-30

-5

18

2

26

Exhibit 11: Expect MOFSL Universe earnings to remain flat

YoY in

1QFY25

145

108

43

29

17 13

4 3 6 6

9

4

3 4

-24

-44

19

36

43

23 18 14

-3

2 16

51 46

29

10

0

3

July 2024

17

The Retail Rhapsody!

Mastering the game!

Exhibit 12: Expect EBITDA margin to remain flat YoY at

19.1% in

1QFY25

Average: 19.4%

Exhibit 13: Expect PAT margin to also remain flat YoY at

9.2%

Average: 9.0%

Source: MOFSL, excluding Financials and OMCs

Source: MOFSL, excluding Financials and OMCs

Exhibit 14:

Banks, Auto, Metals and Healthcare to lead; while O&G, Cement, and Spec Chem. to drag earnings in 1QFY25

57 35

32

24

14

21 20 16

11

8

6

6

5

4

3

2

1

0

0

1

4

6

23 226

2,555

2,559

Exhibit 15:

Sectoral quarterly PAT trend (INR b)

–

MOFSL Universe to report a flat YoY growth in PAT in 1QFY25

Sector

June-21 Sep-21 Dec-21 Mar-22 June-22 Sep-22 Dec-22 Mar-23 June-23

Automobiles

8

31

59

86

13

97

142

186

180

Banks-Private

174

190

262

295

272

306

343

375

369

Banks-PSU

123

148

150

152

133

226

252

300

307

Insurance

4

13

8

16

14

15

16

20

18

NBFC - Lending

29

71

81

91

82

90

101

111

118

NBFC - Non Lending

4

4

5

5

5

6

5

6

6

Capital Goods

18

34

38

63

31

41

46

69

45

Cement

51

45

32

42

44

21

23

36

41

Chemicals-Specialty

18

16

18

22

25

24

22

25

20

Consumer

90

109

118

115

123

126

131

133

147

Consumer Durables

5

7

7

10

7

7

9

11

10

EMS

0

0

0

1

1

1

1

2

1

Healthcare

89

94

87

79

78

97

88

81

98

Infrastructure

3

3

3

6

8

4

4

5

5

Logistics

21

20

23

22

29

26

23

29

27

Media

5

5

8

7

8

5

6

3

6

Metals

373

416

353

414

333

139

133

242

201

Oil & Gas

301

385

418

449

244

276

337

536

632

Real Estate

7

15

20

25

15

15

19

31

18

Retail

-5

18

31

25

25

24

28

19

22

Staffing

1

2

2

2

2

2

2

2

2

Technology

239

247

256

263

242

264

284

286

271

Telecom

-55

-46

-45

-25

-48

-42

-59

-21

-32

Others

-25

-8

10

-1

2

-1

34

32

44

MOFSL Universe

1,476

1,820 1,945 2,162

1,689

1,767 1,988 2,517

2,555

July 2024

Sep-23 Dec-23 Mar-24 June-24E

205

227

244

212

415

420

443

426

294

306

379

342

19

18

20

24

120

128

134

137

7

6

9

9

58

57

88

56

41

46

51

35

18

15

15

16

143

147

144

161

9

9

13

12

1

1

2

1

110

105

117

119

3

4

5

4

30

32

32

32

8

6

4

5

179

241

212

225

624

467

498

405

19

21

37

24

23

30

21

25

2

2

1

2

277

284

291

287

-43

-35

-25

-25

16

36

32

21

2,579 2,573

2,767

2,559

18

The Retail Rhapsody!

Mastering the game!

Expect profits of Nifty constituents to rise 4% YoY in 1QFY25







We expect sales/EBITDA/PBT/PAT for Nifty constituents to improve

6%/4%/3%/4% YoY propelled by BFSI and Auto. Excluding Metals and O&G,

Sales/EBITDA/ PBT/PAT is likely to grow 8%/9%/9%/10% YoY for the quarter.

HDFC Bank, Hindalco, TCS, ICICI Bank and Maruti Suzuki, are likely to drive Nifty

earnings, while BPCL, JSW Steel, Coal India, Grasim Industries and ONGC are

projected to drag the same.

Eleven Nifty companies are likely to report a PAT growth of above 20% YoY.

Whereas, ten Nifty companies are expected to report a YoY decline in PAT.

Exhibit 16:

Sector-wise PAT breakdown for the Nifty constituents in 1QFY25E (YoY %)

26

17

17

16

15

14

14

Telecom, Autos,

Private Banks, and

NBFCs are likely to

lead Nifty earnings

in 1QFY25

11

8

6

4

4

3

0

0

-19

-19

Exhibit 17:

Expect Nifty’s revenue to

grow 6% YoY in 1QFY25

47

17

8

0

0

-5

2

28 26

23

35 27

18

Exhibit 18:

Expect Nifty’s EBITDA to grow 4% YoY in 1QFY25

42

28

13

7 7 6 7

6

15

6 4 8

-2

-11

6

22

17 16

21 21

15 9

13 12

9

11

4

-26

-4

Exhibit 19:

Expect Nifty’s PAT to rise 4% YoY in 1QFY25

106

85

39

12

5

8

-23

-32

10

20

28

26

22

23

10

10

17

33

19

12

4

July 2024

19

The Retail Rhapsody!

Mastering the game!

Exhibit 20:

Nifty’s earnings snapshot for

1QFY25 (INR b)

Sales

Gr. (%)

EBIDTA

Gr. (%)

PBT

Gr. (%)

PAT

Gr. (%)

Company

Sector

Jun-24 YoY

QoQ Jun-24

YoY

QoQ Jun-24 YoY

QoQ Jun-24 YoY

QoQ

Bajaj Auto

Automobiles

117

13.2

1.6

23

19.3

1.1

26

18.4

2.7

20

19.0

2.3

Eicher Motors

Automobiles

43

6.6

-0.1

11

9.5

-0.9

12

11.7

-0.9

10

9.9

-5.7

Hero MotoCorp

Automobiles

106

20.9

11.4

16

32.4

17.5

16

31.1

21.8

12

31.6

22.5

Mahindra & MahindraAutomobiles

281

16.6

11.7

39

19.5

19.4

37

12.1

41.5

30

7.5

46.2

Maruti Suzuki

Automobiles

350

8.3

-8.4

42

41.4

-10.0

44

38.6

-11.5

34

37.9

-11.6

Tata Motors

Automobiles

1,034

1.1

-13.9

138

1.5

-19.0

55

2.5

-40.7

41

8.5

-46.8

Axis Bank

Banks-Private

133

11.4

1.8

98

11.0

-7.1

86

10.2

-8.4

64

10.6

-10.1

HDFC Bank

Banks-Private

293

24.3

0.9

235

25.2

-19.7

206

29.5

30.8

155

29.3

-6.4

ICICI Bank

Banks-Private

195

7.1

2.3

153

8.3

1.8

141

9.9

-1.4

106

10.2

-0.7

IndusInd Bank

Banks-Private

56

14.7

3.8

42

9.4

2.7

31

10.1

-0.2

23

10.1

-0.5

Kotak Mahindra Bank Banks-Private

71

14.3

3.1

52

5.9

-4.0

48

3.8

-8.4

36

4.0

-13.2

State Bank

Banks-PSU

427

9.8

2.6

258

2.0

-10.3

227

-0.3

-16.3

169

0

-18.6

HDFC Life Insur.

Insurance

137

17.6

-34.4

7

17.4

-42.0

5

26.5

17.4

5

25.3

26.6

SBI Life Insurance

Insurance

156

14.8

-38.3

10

14.2

-34.2

4

3.1

-51.9

4

4.5

-50.9

Bajaj Finance

NBFC - Lending 84

25.7

5.4

68

21.8

5.3

53

17.1

4.4

39

14.9

3.2

Bajaj Finserv

NBFC - Lending 234

21.5

-13.0

68

10.6

-0.6

57

11.0

2.9

22

14.2

4.7

Shriram Finance

NBFC - Lending 52

24.8

3.0

40

29.1

3.3

27

20.9

2.8

20

20.0

3.3

Larsen & Toubro

Capital Goods

535

11.7

-20.3

54

10.6

-25.6

44

2.3

-29.9

27

8.4

-37.5

Grasim Industries

Cement

69

10.7

2.0

6

-14.9

8.8

1

-68.3 -61.6

1

-71.4 -55.7

Ultratech Cement

Cement

181

2.1

-11.3

32

6.5

-21.1

23

2.9

-26.6

16

-7.9

-32.7

Asian Paints

Consumer

92

0.0

5.2

20

-6.1

17.8

19

-8.9

18.3

14

-9.0

12.4

Britannia

Consumer

42

5.4

3.9

8

13.9

-0.3

7

17.5

-1.5

5

16.5

-1.1

Hind. Unilever

Consumer

156

0.4

2.3

37

1.3

5.0

35

0.7

5.8

26

2.4

5.7

ITC

Consumer

184

7.0

2.5

71

5.9

6.6

74

6.0

7.6

54

6.3

5.9

Nestle

Consumer

51

8.6

-3.9

12

13.2

-10.1

11

14.9

-11.6

8

13.8

-12.6

Tata Consumer

Consumer

44

18.5

12.9

7

24.3

7.6

6

13.2

9.9

4

20.3

1.8

Apollo Hospitals

Healthcare

50

13.5

1.4

7

33.0

5.7

4

60.2

17.6

3

79.0

17.5

Cipla

Healthcare

68

6.8

9.6

17

16.2

32.0

16

14.7

32.5

11

13.9

30.6

Divis Labs

Healthcare

22

23.7

-4.5

7

35.3

-6.7

7

35.3

-6.4

5

43.7

-4.4

Dr Reddy’ s Labs

Healthcare

74

9.8

4.4

20

-3.4

11.8

17

-6.4

13.2

13

-5.8

6.2

Sun Pharma

Healthcare

132

11.9

11.6

33

3.0

11.9

31

9.9

3.5

26

16.0

-5.6

Adani Ports

Logistics

72

14.6

3.9

42

12.0

4.0

29

17.4

8.3

23

13.8

1.7

Coal India

Metals

364

1.0

-2.8

98

-12.4

-0.7

97

-9.9

-14.9

74

-7.6

-15.2

Hindalco

Metals

583

10.1

4.2

70

23.0

5.2

46

39.5

12.2

35

42.4

10.7

JSW Steel

Metals

422

-0.1

-8.9

63

-10.2

3.3

20

-43.6

-6.1

14

-38.3

11.0

Tata Steel

Metals

580

-2.5

-1.1

60

15.1

-9.7

21

-0.5

-11.1

11

79.4

-7.7

BPCL

Oil & Gas

1,015 -10.1 -12.9

60

-62.3

-35.7

44

-68.6 -40.8

33

-68.8 -40.8

ONGC

Oil & Gas

372

10.0

7.4

187

-4.1

7.2

131

-1.7

2.1

98

-1.9

-0.4

Reliance Inds.

Oil & Gas

2,337 12.6

-1.2

410

7.6

-3.6

261

7.3

-6.0

167

4.0

-12.1

Titan Company

Retail

130

9.7

4.4

12

5.3

-0.5

10

4.1

5.3

8

3.5

1.5

HCL Technologies

Technology

279

6.2

-2.0

58

5.5

-5.6

50

5.7

-5.8

38

6.3

-5.7

Infosys

Technology

388

2.3

2.3

99

0.8

3.6

86

2.7

3.3

63

6.1

3.9

LTIMindtree

Technology

90

3.2

1.0

16

-2.8

3.5

15

-0.6

5.4

12

0.7

5.4

TCS

Technology

622

4.8

1.6

165

10.3

-3.8

163

8.8

-3.3

121

9.2

-2.9

Tech Mahindra

Technology

130

-1.5

0.7

14

-10.9

1.3

11

-13.3 -15.7

8

-14.4 -15.7

Wipro

Technology

222

-2.9

-0.2

44

3.9

-0.7

38

0.1

-1.6

29

0.1

1.4

Bharti Airtel

Telecom

387

3.3

2.8

203

3.6

4.9

56

6.2

6.9

37

26.2

24.1

NTPC

Utilities

412

5.3

-3.1

115

1.5

1.8

61

6.4

-10.9

45

17.5

-12.4

Power Grid Corp.

Utilities

107

7.9

-1.7

94

8.3

4.6

44

8.3

-13.1

36

3.7

-12.4

Nifty Universe

13,979 6.2

-4.2

3,439

3.6

-4.5

2,554

2.7

-4.7

1,857

3.6

-8.5

Note: For Banks: Sales = Net Interest Income, EBITDA = Operating Profits; For Life Insurance: Sales = Net Premium, EBITDA = VNB.

July 2024

20

The Retail Rhapsody!

Mastering the game!

Exhibit 21:

Expect 16% PAT CAGR for the MOFSL Universe over FY24-26

Sales

EBIDTA

EBIDTA

PAT

PAT Delta

PAT Grw / CAGR (%)

CAGR (%) CAGR (%)

Margin (%)

(INR b)

Share (%)

Sector

(FY24-26) (FY24-26) FY24 FY25E FY26E FY24 FY25E FY26E FY24 FY25E FY26E (FY24-26) (FY24-26)

High PAT CAGR (>25%)

13

20

18.5 19.9 21.2 1,363 1,944 2,607 15

43

34

38

32

Telecom (4)

12

16

47.2 48.7 50.6

-134

-30

103 Loss Loss

LP

LP

6

EMS (5)

40

50

11.2 12.0 12.9

6

9

14

33

59

54

56

0

Staffing (4)

15

27

3.4

3.9

4.1

7

12

15

1

64

29

45

0

Retail (20)

20

24

11.4 11.8 12.2

93

129

171

-1

38

33

35

2

Real Estate (11)

21

29

28.6 30.1 32.4

94

123

160

17

31

30

30

2

Metals (10)

10

21

16.9 19.1 20.7

871

1,176 1,459

0

35

24

29

15

Others (13)

11

21

15.3 16.5 18.2

126

150

208

98

20

38

28

2

Consumer Durables (5)

15

25

9.6 10.4 11.3

42

54

69

23

30

27

28

1

Infrastructure (3)

11

13

26.5 27.6 27.6

17

22

28

-12

25

29

27

0

Capital Goods (11)

16

22

11.5 12.1 12.7

241

298

379

32

23

27

25

4

Medium PAT CAGR (15-25%)

12

17

27.4 28.4 29.6 5,741 6,707 7,934 28

17

18

18

57

Logistics (8)

16

18

37.0 37.8 38.3

121

147

182

12

21

24

23

2

Healthcare (24)

12

17

22.3 23.5 24.2

430

517

616

25

20

19

20

5

Media (3)

10

17

22.3 23.0 25.2

24

27

34

17

13

25

19

0

Chemicals-Specialty (12)

12

17

19.1 19.5 20.7

68

76

96

-29

12

26

19

1

Financials (54)

13

17

40.1 41.4 43.2 4,016 4,708 5,551 22

17

18

18

40

Banks-PVT (13)

17

17

76.6 75.8 77.1 1,689 1,944 2,281 26

15

17

16

15

Banks-PSU (6)

10

16

63.6 68.2 69.8 1,294 1,543 1,813 34

19

17

18

13

Insurance (7)

11

13

6.4

6.3

6.8

485

533

587

13

10

10

10

3

NBFC - Lending (23)

22

23

74.2 74.4 75.3

517

641

814

-3

24

27

25

8

NBFC - Non Lending (5)

31

44

40.8 48.1 49.2

31

46

56

43

47

21

33

1

Auto (25)

11

13

13.7 14.0 14.3

855

980

1,153 95

15

18

16

8

Cement (11)

11

18

16.5 17.5 18.6

226

252

301

29

11

20

15

2

Low PAT CAGR (<15%)

6

5

15.4 14.1 14.9 4,129 4,003 4,544 41

-3

14

5

11

Technology (12)

7

10

22.5 22.9 23.6 1,117 1,230 1,381

4

10

12

11

7

Consumer (19)

9

10

24.7 25.1 25.2

587

640

713

16

9

11

10

3

Oil & Gas (15)

6

2

13.0 11.3 12.1 2,425 2,133 2,451 80

-12

15

1

1

Ex OMCs (12)

7

11

16.7 17.1 18.2 1,589 1,736 2,012 21

9

16

13

11

MOFSL (269)

10

13

20.0 20.2 21.4 11,234 12,654 15,085 31

13

19

16

100

MOFSL Ex OMCs (266)

10

16

22.2 23.1 24.3 10,397 12,256 14,647 22

18

20

19

NA

Nifty (50)

9

13

23.2 24.0 25.1 7,929 8,900 10,409 26

12

17

15

NA

Sensex (30)

10

15

27.1 28.2 29.3 5,926 6,879 8,135 22

16

18

17

NA

Note: For Banks, sales represent net interest income, and EBITDA represents operating profit; Sensex and Nifty Numbers are free float

July 2024

21