Rs

India Strategy

India Strategy | Earnings drought ending, finally!

January 2025

A PAUSE for THOUGHT!

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:

A PAUSE for THOUGHT!

01

Page #3-7

Summary

02

Page #8-9

Corporate earnings at a glance:

BFSI and Defensives to propel

earnings growth

03

Page #11-13

Markets: Resilient performance

during uncertain times

04

Page #15-27

3QFY25 Preview: Earnings to

improve; commodities to drag

05

Page #28-44

MOFSL Universe: 3QFY25 Highlights

& Ready Reckoner

06

Page #45-298

Sector & Companies Preview

AUTOMOBILES

–

Pg45

Festive season fails to

revive demand

CAPITAL GOODS

–

Pg63

Eyes on execution growth

and margins

CEMENT

–

Pg74

Weak print, yet gradual

recovery aligns with

expectations

CHEMICALS

–

Pg85

Not out of the woods yet

CONSUMER

–

Pg97

Mixed trends; jewelry

and liquor to outperform

CON. DURABLE

–

Pg124

Resilient growth in cables

and large appliances;

wires soft

EMS

–

Pg130

Bright outlook led by

strong revenue growth

and margin expansion

FIN. BANKS

–

Pg136

Muted quarter;

unsecured asset quality

remains under watch

NBFC

–

Pg155

Demand and asset

quality trends remain

rather weak

NON LENDING

–

Pg171

Regulations and weak

markets to impact

performance

HEALTHCARE

–

Pg186

Robust earnings growth

momentum to sustain in

3QYF25

INFRA

–

Pg204

Order inflows subdued;

tender pipeline robust in

3QFY25

LOGISTICS

–

Pg208

Activity remains muted in

3QFY25 amid

consumption slowdown

METALS

–

Pg214

Lower metal prices to

keep EBITDA under

pressure; muted

coal costs to offer some

cushion

OIL & GAS

–

Pg225

OMCs likely to post

robust results; CGD

margins to contract

UTILITIES - Pg279

Strong growth in RE capacity,

stable power demand to

drive 3Q earnings

REAL ESTATE

–

Pg241

Strong sales backed by

sustenance demand

RETAIL

–

Pg250

No festive cheers for

retailers

TECHNOLOGY - Pg260

Setting the stage for a

CY25 revival

TELECOM - Pg271

Residual benefits of tariff

hikes to boost 3Q

earnings

Others - Pg286

India Strategy

BSE Sensex: 78,199

Nifty 50: 23,703

India Strategy | 3QFY25 Preview

A PAUSE for THOUGHT!

Mastering the game!

A PAUSE for THOUGHT!

Déjà vu for earnings in 3Q!

Market correction

–

a sign of things to come?

Even as the calendar flips from 2024

to 2025, the underlying backdrop for Indian equities remains broadly unchanged.

Following a blazing rally in CY23 and 9MCY24, the Indian markets are currently

navigating an interim phase of course correction, with the Nifty-50 retreating 10%

from its peak. This market correction has coincided with a slowdown in earnings

growth, as the Nifty-50 has managed only a modest 4% PAT growth in 9MFY25E

(following a 20%+ CAGR during FY20-24). This deceleration can be attributed to a

broad-based slowdown in consumption (esp. urban), a cutback in government capex,

and banks taking a more cautious approach to the heady unsecured personal loans,

with credit growth easing from a robust 16-17% to a more tempered 11-12% at

present. Additionally, urban consumers are feeling the pinch from rising prices,

although rural consumption is showing signs of recovery thanks to a bountiful

monsoon, which has exceeded the long-period average by 8%.

Divergence in institutional flows signifies a shift in market dynamics:

As we dive into

2HCY24, the Indian markets have been navigating through a sea of uncertainty, stirred

by a cocktail of multiple domestic developments and pivotal global events that

unfolded in late 2024. The triumph of Donald Trump in the US elections, coupled with

Mid and Small-caps outperform

Nifty-50

handsomely (as of Dec’24)

the Federal Reserve (Fed)’s cycle of rate cuts and sporadic stimulus measures from

China (albeit with less impact), has left global markets in a state of suspense, amplifying

Nifty50

volatility. Accordingly, this has prompted a sharp reaction from foreign investors, who

Nifty Midcap 100

pulled out ~USD12b in 3QFY25. In contrast, domestic investors have remained

Nifty Smallcap 100

27

26

steadfast and continued to display unstinted support. The SIPs continued to scale

24

24

record highs, averaging ~INR250b/month during the quarter, enabling overall DII

inflows of ~USD22b in 3QFY25. Interestingly, this divergence in institutional flows also

14

manifested in a rare phenomenon where small- and mid-cap stocks posted a sharper

recovery than their large-cap counterparts, despite the latter's seemingly favorable

9

valuations. We believe this intriguing trend highlights the market's potential for

structural diversification. Currently, the Nifty-50 is trading at ~20x one-year forward

earnings, while the mid- and small-caps are trading at 56% and 17% premiums,

YoY

5yr CAGR

respectively.

Early signs of a growth pickup beginning to manifest

In the realm of domestic politics, the third quarter has been somewhat favorable for

the markets. The NDA government has managed to regain some of its lost momentum

following a lukewarm Lok Sabha election verdict.

NDA’s recent triumphs in Haryana, a

sweeping victory in the crucial state of Maharashtra, and success in the bye-elections in

Uttar Pradesh

–

the largest and politically pivotal state

–

have set the stage for

renewed focus on development initiatives. This renewed vigor could lead to an

increase in capital expenditures, which had been stagnant in 1HFY25, dipping 12.7%

YoY due to a flurry of key elections, extreme weather conditions, and the

government’s

preoccupation with coalition building following the

Jun’24 Lok

Sabha verdict.

However, the landscape isn't without its challenges. Several key High Frequency

Indicators (HFIs) are showing some signs of fatigue, hinting at an overall interim

slowdown, with 2QFY25 GDP hitting a seven-quarter low of 5.4%. Yet, as we stepped

3

Gautam Duggad

Gautam.Duggad@MotilalOswal.com

Deven Mistry

Deven@MotilalOswal.com

Aanshul Agarawal

Aanshul.Agarawal@MotilalOswal.com

January 2025

A PAUSE for THOUGHT!

Mastering the game!

into Dec’24, the HFIs painted a mixed picture of economic activity. Auto sales have

remained subdued (vehicle registration for 2Ws/3Ws/PVs/CVs declined

18%/5%/2%/5% YoY in Dec’24), reflecting a slowdown in consumption. However,

growth in real rural wages improved to 1.3% YoY, which typically augurs well for rural

consumption of staples. On the flip side, toll collection growth decelerated, and while

power generation saw some improvement, it still lagged behind expectations.

Union Budget & policies of the new US administration to keep markets jittery

As we gaze into the future, the Union Budget is poised to be a pivotal moment,

capturing our attention for hints of a revival in government capex and quick fixes to

boost consumption. Moreover, the

RBI monetary policy in Feb’25 will also be critical

in

shaping interest rate trends. We believe that the RBI will initiate a modest rate-cut

cycle to ease concerns about an economic slowdown. Moreover, rural income and

consumption are expected to improve, thanks to a bountiful monsoon, a successful

Kharif harvest, and promising Rabi sowing, along with the anticipated positive ripple

effects of increased government spending.

On the global stage, the most notable factor keeping markets on edge will be the

follow-through on the protectionist promises from the incoming Trump

administration. Markets will remain volatile as they navigate the tug-of-war between

government rhetoric and the challenging reality of implementing radical "Make

America Great Again" initiatives.

Amid the challenges, the medium-term opportunities remain intact

Notwithstanding the near-term challenges on both the macro and micro fronts, we

remain optimistic about India's growth story in the medium to long run. As the

aftereffects of the slowdown in government spending and monetary tightening

recede, we expect the corporate earnings growth for FY26E to look healthy (at 16%

earnings growth for FY26E for the Nifty-50). The domestic flows in equities remain

resilient. However, the supply of paper has also risen considerably. CY24 has been a

blockbuster year for the Indian primary market, with INR1.9t raised through IPOs

–

an all-time high. Capital raised through QIPs also reached a record high of INR1.3t

(2.5x of CY23). With a lean domestic political calendar in CY25, the resumption of

capital spending, and recovery in corporate earnings, we expect the backdrop for

Indian equities to turn better progressively in CY25 even as we expect a range-

bound market in 1HCY25 until earnings catch up with the rich broader market

valuations.

MOFSL Universe to clock ~6%

earnings growth in 3QFY25E

PAT growth YoY (%)

10.8

Earnings trajectory similar to 2Q; Nifty EPS cut 0.6%/1.7% for FY25E/26E

We estimate the MOFSL Universe and Nifty-50 earnings to grow 6% YoY each in

3QFY25. Ex-Metals and O&G, we project the MOFSL Universe and Nifty earnings to

grow 10% and 8% YoY, respectively, vs. 11% and 10% in 2QFY25, respectively. The

EBITDA margin (ex-Financials) is likely to remain flat YoY for the MOFSL Universe,

reaching 17.1%, mainly aided by Healthcare and Telecom but dragged down by

Commodities and Cement sectors. Meanwhile, the margin is projected to expand

30bp for the Nifty-50 at 20.2%. The overall modest earnings growth is broadly

anticipated to be driven by BFSI (+8% YoY), along with Capital Goods (+26% YoY),

Technology (+9% YoY), Healthcare (19% YoY), and Real Estate (+58% YoY) sectors.

Conversely, earnings growth is likely to be weakened by global cyclicals, such as

Metals (- 8% YoY), O&G (-4% YoY), and Cement (-45% YoY). Meanwhile, Consumer

Durables (+31% YoY) and Retail (+30%) are projected to deliver strong growth, while

4

6.4

1.9

-1.0

January 2025

A PAUSE for THOUGHT!

Mastering the game!

Auto (+3% YoY) and Consumers (+1% YoY) are anticipated to post flattish

performance. We have cut our FY25E and FY26E Nifty EPS by 0.6% and 1.7% to

INR1,050 and INR1,220, respectively. O&G has driven ~80% of the 0.6% cut in our

FY25E earnings. We estimate the Nifty EPS to grow 4%/16% in FY25/FY26.

Annual earnings trend: FY25 to normalize as earnings converge with revenue

growth

The past two financial years experienced an interesting interplay of revenue and

earnings growth, driven by global macros. In FY23, the MOFSL Universe experienced

a sharp drag on margins as commodity prices surged during the Russia-Ukraine

conflict. This resulted in just 11% earnings growth for the MOFSL Universe, despite

24% revenue growth. FY24 witnessed a reversal of this trend, as commodity prices

moderated and margins sharply rebounded. Thus, the MOFSL Universe delivered

30% earnings growth despite just 4% revenue growth. For FY25, we expect earnings

to normalize and track the revenue trend. For FY25, we anticipate the MOFSL

Universe to deliver 6% revenue growth and EBITDA/PAT to grow 5%/4% YoY. The

Nifty-50 is also likely to deliver 4% earnings growth in FY25 over a high base of FY24

(+26% YoY).

Sectoral PAT growth for the

quarter-ended

Dec’24

(YoY %)

EMS

Real Estate

Staffing

NBFC - Non Lending

Cons. Durables

Retail

Cap. Goods

Insurance

Healthcare

Earnings highlights

–

3QFY25E | BFSI to drive modest earnings growth aided

by Capital Goods, Technology, and Healthcare; Commodities continue to drag



Media

Banks-PSU

Logistics

Technology

Infra

NBFC - Lending

Utilities

MOFSL Univ.

Chemicals

Auto

Banks-PVT

Consumer

Oil & Gas

115

58

55

39

31

30

26

23

19

18

13

12

9

9

8

8





6

4

3

2

1















-4

Metals

-8

Cement

-45

Telecom

Loss

We expect the

MOFSL earnings to grow 6% YoY, while those of Nifty would also

grow 6% YoY in 3QFY25.

Excluding global commodities (i.e., Metals and O&G),

the MOFSL Universe and Nifty are likely to report 10% and 8% YoY earnings

growth, respectively, for the quarter.

Sales and EBITDA of the MOFSL Universe are likely to grow 8% and 9% YoY,

while for the Nifty, we expect sales and EBITDA to improve 5% and 9% YoY,

respectively. Ex-Commodities, EBITDA of the MOFSL Universe/Nifty is likely to

grow 13%/12% YoY.

The modest earnings growth is likely to be driven once again by BFSI, with

positive contributions from Technology, Capital Goods, Healthcare, and Real

Estate. The earnings growth of PSU Banks, NBFC-Lending, and Private Banks is

expected to be 13%, 8%, and 2% YoY, respectively. The 2%/13% earnings growth

in Private/PSU Banks is the lowest in 13/10 quarters. Also, NBFC Non-lending

(Capital market players’) earnings

are likely to rise 39% YoY, primarily led by

exchanges and brokers.

The

Auto

sector’s earnings are likely to rise

3% YoY, the lowest in 11 quarters.

The

Capital Goods

sector is projected to report an earnings growth of 26% YoY for

the quarter, the seventh consecutive quarter of 20%+ earnings growth.

The

Healthcare

universe is likely to report strong 19% YoY earnings growth; its

seventh consecutive quarter of robust earnings growth.

The

Real Estate

universe is likely to deliver another quarter of strong earnings

growth of 58% YoY.

The

Technology

sector is likely to deliver earnings growth of 9% YoY in 3QFY25.

The

Metals

universe is projected to report an 8% YoY earnings decline on a high

3QFY24 base.

The

O&G

Universe is expected to report a 4% YoY earnings decline, dragged

down by IOCL and others but partially offset by BPCL and HPCL.

5

January 2025

A PAUSE for THOUGHT!

Mastering the game!

















The

Cement

universe is expected to report a 45% YoY earnings decline. The

sector is likely to clock the third consecutive quarter of sharp earnings decline

driven by low pricing and a high base of margins YoY.

The

Telecom

universe is likely to post the lowest loss figure of INR3.3b since

Jun’18, mainly led by improved margins in Bharti Airtel.

The

Chemicals

sector is likely to report a 4% YoY earnings growth; the first

quarter of earnings growth after declining for six consecutive quarters.

We expect EBITDA margin (ex-Financials) to remain flat YoY for the MOFSL

Universe at 17.1%. Conversely, for Nifty-50, excluding Financials, margin is likely

to expand 30bp YoY to 20.2% during the quarter.

In 3QFY25, the MOFSL Large-cap/Mid-cap Universe is likely to register a PAT

growth of 5%/17%, while the Small-cap Universe is projected to report a 3% YoY

PAT decline during the quarter. Moreover, sales for large-/mid-/small-caps are

likely to grow 8%/4%/9% YoY, and their EBITDA to clock 8%/13%/10% YoY growth.

Sales/EBITDA/PAT of the MOFSL Universe

are expected to report a two-year

CAGR of 7%/12%/17% over Dec’22-Dec’24.

FY25E earnings highlights:

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

PAT growth of 6%/5%/4% YoY. Financials, Metals, Technology, Automobile, Capital

Goods, and Healthcare, are likely to be the key earning drivers with 13%, 13%, 9%,

8%, 25%, 21% YoY growth, respectively. These six sectors are projected to

contribute 223% of the incremental earnings for the MOFSL Universe in FY25.

Nifty EPS cut for FY25E/26E:

We reduce our FY25E and FY26E Nifty EPS

estimates by 0.6%/1.7% to INR1,050 and INR1,220, respectively. O&G has led to

80% of the 0.6% cut in FY25E Nifty earnings. We estimate the Nifty EPS to grow

4.5%/16.1% in FY25/FY26.

MOFSL TOP IDEAS: Largecaps

–

ICICI Bank, SBI, L&T, HCL Tech, M&M, Trent, Bharti

Airtel, Titan Company, Sun Pharma, and Dixon Tech.

Midcaps and Smallcaps

–

Indian Hotels, Cummins India, BSE, Godrej Properties,

Coforge, Metro Brands, IPCA Labs, Angel One, Anant Raj and JSW Infrastructure.

Model portfolio: Key changes

Constructing a model portfolio in the current volatile backdrop of moderating

earnings and expensive broader market valuations presents a unique challenge. As

always, we have made several adjustments to our model portfolio and sectoral

stance. Overall, with broader markets trading at significant premiums vs. their

own LPA and Nifty, we remain biased towards large-caps with a 76% allocation,

while mid-caps and small-caps occupy the rest. We discuss the key changes in the

model portfolio below:



We are OW on BFSI, IT, Industrials, Healthcare, and Real Estate, while we are

UW on Oil & Gas, Cement, Automobiles, and Metals. We have also made several

additions from a bottom-up viewpoint across sectors.



FINANCIALS:

We are trimming HDFC Bank and adding weights in Non-Lending

NBFCs. We are adding BSE to the model portfolio while keeping our weights

intact in Angel and HDFC Life. In the first leg of F&O regulations, BSE premium

turnover has remained flat despite the decline in notional turnover. This will

lead to better profitability as revenue is linked to premium turnover, while costs

are linked to notional turnover. Further, we expect the market share to improve

as Sensex expiry is shifted to Tuesday. In Lending-NBFCs, we are adding Shriram

January 2025

6

A PAUSE for THOUGHT!

Mastering the game!

Finance to the model portfolio. SHFL has positioned itself to capitalize on its

diversified AUM mix, improved access to liabilities, and enhanced cross-selling

opportunities. Valuations, at 1.8x FY26 P/B, look attractive for 17% RoE and an

expected 20% earnings CAGR over FY25-27E.



TECHNOLOGY:

We reiterate our OW stance on IT and maintain our weights.

However, following the sharp outperformance by Persistent, we are now

replacing it with LTI Mindtree. LTIMindtree's presence in the BFSI and Hi-tech

verticals, which are projected to rebound in the near term, underpins its ability

to seize the demand in these market segments supported by its expertise in

data, ERP, and application modernization. Despite current uncertainties

regarding management succession and margin pressures (reflected in its current

valuations), a significant recovery in margins is anticipated by FY27. Together

these factors present an asymmetric risk-reward scenario, and this makes a

strong case to include the stock in our model portfolio.



CONSUMPTION:

We continue to stay OW in Discretionary and UW in Staples.

Within Discretionary, we are adding Trent as we expect Trent to continue its

significant outperformance (vs. retail peers), driven by robust store additions in

Zudio, backed by its superior store economics. We are also introducing Page

Industries to our model portfolio. With volume growth pressure bottoming out

and benign input costs likely to lead to a better margin print, we expect the

earnings cycle to pick up from hereon.



AUTOMOBILES:

We maintain our UW stance on Automobiles and continue to

reiterate M&M and TVS Motors as our preferred ideas.



INDUSTRIALS:

This sector remains our favorite theme, and we maintain our OW

stance and weights in the sector with allocation towards L&T, ABB, and Dixon

Technologies.



HEALTHCARE:

We maintain our OW stance on Healthcare and raise weights

further. We are reintroducing Sun Pharma in the model portfolio and also

adding IPCA. SUNP has multiple sustainable growth levers, such as: 1) adding

products/improving prescriptions for the specialty portfolio, 2) clinical

development of differentiated products, and 3) volumes/new introductions in

the branded generics market. We expect 14%/17% EBITDA/PAT CAGR over

FY25-27. Following a muted performance in the US over the past eight years due

to compliance issues, IPCA is well-poised to revive its US business through new

product launches, relaunches, stable pricing in its base business, and the

integration of the Unichem business over the next 12-24M. We expect 30%

earnings CAGR and an improvement in the RoEs to ~16% over FY25-27E.



UTILITY:

We are adding JSW Energy to our model portfolio. We expect a spike in

installed capacity to over 14GW by FY27 from 7.7GW in 1HFY25. This is

accompanied by solid execution with a proportion of the renewable pipeline

backed by PPA significantly higher than peers. We forecast EBITDA to nearly

double to INR11.1b by the end of FY27E from INR5.3b at the end of FY24.



REAL ESTATE:

We continue to remain OW in Real Estate and add Anant Raj in

the model portfolio.

India’s DC market is on the brink of a growth phase, fueled

by the country’s rapid digital transformation and increasing demand for data

storage. With competitive lease rates of INR9m per MW per month and lower

construction costs, ARCP’s DCs are set to deliver

healthy profits. Strong pre-

sales, collections, and operational cash flows underpin ARCP’s growth.

January

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

Note:

2025

7

Corporate earnings at a glance: BFSI and Defensives to propel earnings

THOUGHT!

A PAUSE for

growth

Mastering the game!

Banks, Telecom, Technology, and Healthcare would lead the charge; excluding Metals and O&G, profits would grow 10%

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 grow 6% YoY for

PAT likely to rise 5% YoY for the

PAT to grow 10% YoY for the MOFSL

the MOFSL Universe

MOFSL Universe, excluding Financials

Universe, sans Metals and O&G

MOFSL Universe

50

45

29

23

19

14

17

11

2

-1

-6

MOFSL Ex Financials

51

46

33

10

5

-10

-22

6

5

-5 -9

MOFSL Ex Metals and O&G

51

35

31

21

27

30

23

16

3

5

13

24

6

19

14

11

10

PAT growth for the Nifty Universe

likely to be only 6% YoY

Nifty Universe

35

26

21

29

24

17

10

11

19

12

3

PAT to grow 5%YoY for the Nifty

Universe, barring Financials

Nifty Ex Financials

30

26

22

15

21

21

PAT to grow 8% YoY for the

Nifty Universe, sans Metals and O&G

Nifty Ex Metals and O&G

51

35

24

32 30

24

16 17

12

10

8

9

6

-2

0

8

5

-1

-1

11

18

3

Performance of the MOFSL Universe to be driven by Capital Goods, Healthcare, BFSI & Technology in 3QFY25E

40 31

13

25

20 19 16 15

10

9

9

8

7

4

4

3

3 2

1

1

1

0

19 20 22

2,777

2,954

January 2025

8

Corporate earnings at a glance: BFSI’s contribution likely to contract

for THOUGHT!

A PAUSE

Mastering the game!

Financials’ contribution likely to contract sequentially while still account for over one-third

of the overall profit pool

BFSI PAT (INRb)

37

30

27

36

33

BFSI contribution to MOFSL universe PAT (%)

36

37

39

35

32

34

34

26

O&G’s PAT contribution to the MOFSL Universe shows some signs of sequential

recovery in 3QFY25

O&G PAT (INRb)

O&G contribution to MOFSL universe PAT (%)

23.0

22.4

16.8

20.0

19.2

13.3

14.3

15.7

19.8

16.7

13.2

13.4

15.1

MOFSL (ex-OMC)’s

PAT share (%): Domestic cyclicals to continue drive the modest 3QFY25 earnings

30 40

24

33

54

23

-1

46

44

28

24

29

25

25

33

25

34

24

35

27

22

25

DEFENSIVES

22

23

25

23

24

23

23

23

25

22

23

23

23

24

24

22

46

29

37

35

33

21 22

GLOBAL CYCLICALS

42

42

42

38

43

39

36

42

51

53

52

52

54

53

55

54

55

54

DOMESTIC CYCLICALS

January 2025

9

A PAUSE for THOUGHT!

Mastering the game!

MOFSL: MODEL PORTFOLIO

SECTOR WEIGHT /

PORTFOLIO PICKS

Financials

Private Banks

ICICI Bank

HDFC Bank

Kotak Mahindra Bank

PSU Bank

SBI

Diversified Financials

Angel One

Shriram Finance

BSE

PNB Hsg Fin

Technology

Infosys

HCL Technologies

LTIMindtree

Coforge

Consumption / Retail

Titan Company

HUL

Trent

Indian Hotels

Metro Brands

Page Industries

Energy/Telecom

Reliance Industries

Bharti Airtel

Cap Goods, Infra & Cement

Larsen & Toubro

ABB India

Dixon Tech.

Healthcare

Sun Pharma

Ipca Labs

Global Health

Auto

Mahindra & Mahindra

TVS Motor

Metals / Utilities

Power Grid Corp.

Tata Steel

JSW Energy

Real Estate

Godrej Properties

Anant Raj

Others

TOTAL

LP: Loss to Profit

BSE 100

32.0

21.9

6.6

9.7

2.0

3.1

2.2

6.9

0.0

0.6

0.0

0.0

12.6

5.2

1.5

0.4

0.0

14.0

1.1

1.6

1.2

0.6

0.0

0.0

11.3

6.2

3.2

9.3

3.1

0.0

0.0

4.9

1.5

0.0

0.0

7.4

2.1

0.4

6.6

1.1

0.8

0.0

0.0

0.0

0.0

1.9

100

MOST

WEIGHT

33.0

20.0

9.0

7.0

4.0

4.0

4.0

9.0

3.0

2.0

2.0

2.0

14.0

6.0

3.0

3.0

2.0

14.0

3.0

3.0

2.0

2.0

2.0

2.0

10.0

6.0

4.0

9.0

5.0

2.0

2.0

7.0

3.0

2.0

2.0

5.0

3.0

2.0

5.0

2.0

2.0

1.0

3.0

2.0

1.0

0.0

100

WEIGHT

RELATIVE TO

BSE100

1.0

-1.9

2.4

-2.7

2.0

0.9

1.8

2.1

3.0

1.4

2.0

2.0

1.4

0.8

1.5

2.6

2.0

0.0

1.9

1.4

0.8

1.4

2.0

2.0

-1.3

-0.2

0.8

-0.3

1.9

2.0

2.0

2.1

1.5

2.0

2.0

-2.4

0.9

1.6

-1.6

0.9

1.2

1.0

3.0

2.0

1.0

-1.9

EFFECTIVE

SECTOR STANCE

Overweight

Underweight

Buy

Buy

Neutral

Overweight

Buy

Overweight

Buy

Buy

Buy

Buy

Overweight

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Buy

Underweight

Buy

Buy

Neutral

Buy

Buy

Buy

Overweight

Buy

Buy

Buy

Underweight

Buy

Neutral

Underweight

Buy

Neutral

Buy

Overweight

Buy

Buy

Underweight

PAT YoY / CAGR (%)

FY24 FY25E FY26E FY27E

FY24-

FY26

28

38

22

21

26

20

275

44

1

6

2

2

7

1

163

26

-5

0

4

39

25

82

44

16

0

47

34

44

1

-61

24

20

76

16

13

10

2

18

17

18

74

25

8

10

5

17

8

3

61

35

9

18

-4

77

18

51

132

19

59

7

14

22

10

65

47

91

124

13

10

12

13

11

6

18

30

23

13

13

17

59

25

14

38

26

27

19

24

24

23

16

28

20

34

26

19

24

3

183

27

-38

26

17

14

14

19

17

45

21

23

21

12

10

21

23

19

10

39

18

25

20

13

39

17

16

29

14

25

26

17

19

5

47

6

-16

13

17

12

11

8

15

12

18

50

24

10

12

11

36

17

8

49

30

17

19

9

48

20

32

72

20

46

16

17

23

7

116

36

9

68

15

January 2025

10

A PAUSE for THOUGHT!

Mastering the game!

MARKETS

Nifty-50: Nine successive years

of positive returns

YoY returns (%)

29

24

20

Resilient performance during uncertain times…

…fueled

by record DII inflows, offset by volatile FII flows with the onset of

Fed rate cuts and the new US administration!



15

12

4

9

3

3











The relentless run-up:

Indian markets celebrated another year of gains, marking a

historic milestone with nine consecutive years of positive returns. Both the global

and Indian markets faced significant challenges in CY24, including geopolitical

headwinds, regulatory tightening, a minor setback for the NDA in the Lok Sabha

elections, mixed state election outcomes, increased capital gains taxes, a

strengthening USD, persistent inflation, high interest rates, a consumption

slowdown, earnings moderation, valuation concerns in mid/small caps, and

volatile FII flows, leading to heightened market volatilities. After scaling a new

peak, the Indian market corrected 10%

from its Sep’24

highs amidst earnings

slowdown concerns, moderating macros, and sharp FII selling. Nevertheless, the

Nifty-50 declined 8% QoQ; however, it ended CY24 with 9% gains.

Mid-and small-caps remain the winners for the second consecutive year:

Both

Nifty Midcap 100 and Nifty Smallcap 100 grew 24% YoY each, outperforming

Nifty-50 (+9%) by 15pp each in CY24. Notably, mid- and small-cap indices

clocked a CAGR of 27% and 26% between

Dec’19 and Dec’24,

outperforming the

Nifty-50 (+14%) by 13pp and 12pp, respectively. However, the mid- and small-

cap indices reported a CAGR 6%

and 2% between Dec’14 and Dec’19,

underperforming Nifty-50 (+8%) by 2% and 6%, respectively.

The outperformance

was fueled by the business momentum in sectors such as

Real Estate, Capital Goods, Automobiles, Infrastructure, Industrials, Utilities,

Hotels, and PSUs (mainly falling under the mid- and small-cap categories), which

is driving stock prices as well. Conversely, sharp FII outflows from large-cap

stocks (Nifty-50) have led to their underperformance this year again. Despite

~30% correction in a few stock

prices from their Sep’24 highs, the mid-

and

small-cap indices handsomely outperformed the large-cap index.

Global markets clock healthy gains in CY24:

Key global market indices such as

US S&P500 (23%), Taiwan (+20%), Germany (+12%), China (+10%), Japan (+7%),

India (+6%),

MSCI EM (+5%), and the UK (+4%) gained, while France (-8%), South

Korea (-21%), Russia (-26%), and Brazil (-30%) declined in CY24 in USD terms.

Though MSCI India (+11%) outperformed MSCI EM (+5%), its performance

remained in line with MSCI World (+17%) in CY24.

India’s outperformance

vs. the global market:

As the global markets recover

from their lows in CY23,

India’s outperformance

slid from the highs in CY24.

However, despite relative moderation, India outperformed most global markets

in local currency terms (barring China) and in USD terms (only after the US and

Taiwan) over the last 10 years. The Nifty-50 posted a CAGR of 11%/14%/11% (in

local currency terms) and a CAGR of 6%/10%/8% (in USD terms) during the

three-year/five-year/ten-year periods ended Dec’24.

DIIs clock record inflows, while FIIs post outflows in CY24:

DII inflows continue

to remain healthy, backed by sustained strength in retail participation and

monthly SIP flows of ~USD3b. DII inflows over the past 12 months (at ~USD63b)

have also exceeded the combined DII inflows of CY22 and CY23. Global

uncertainties, cautious commentary from the US Fed on interest rate cuts, Mr.

Trump winning the presidential election, and recovery in the US markets led to

significant volatility and FII outflows in the past three months. The global

interest rates are further expected to cool down (albeit lower than earlier

11

January 2025

A PAUSE for THOUGHT!

Mastering the game!

expectations), and retail participation as well as institutional flows will continue

to remain strong going forward. However, the extent of interest rate cuts,

geopolitical uncertainties, and recovery in domestic earnings would be the key

monitorables that would drive FII flows into the Indian markets.

Exhibit 1:

World equity indices in USD terms (%)

23

20

12

10

7

CY24 change (%)

(USD)

28

24

20

Exhibit 2:

World equity indices in local currency terms (%)

CY24 change (%)

(in local currency)

6

5

4

-8

-21

-26

19

19

9

9

5

-2

-30

-8

-10

-10

Exhibit 3:

Over the last 12 months,

India’s market cap has surged 23.6% to reach USD5.2t,

while the global market cap has

increased ~11% (by USD12.2t)

5.2

62.0

23

2.5

20

10.0

6.4

0.6

24

0.8

3.1

1.5

0.6

Mkt cap chg 12M (%)

5

3

2

-1

Curr Mcap (USD Tr)

-1

-21

-32

India

US

Taiwan

China

Japan

Russia

Indonesia

UK

Korea

Brazil

Exhibit 4:

Trend in India’s contribution to the

global market cap (%)

–

at an all-time high

5.1

4.2

India's Contribution to World Mcap (%)

4.2

3.3

3.3

2.4

1.5

Average: 2.7%

1.6

January 2025

12

A PAUSE for THOUGHT!

Mastering the game!

Exhibit 5:

FIIs report outflows during the year…

FII (USD b)

14.2

7.7

3.8

-0.8

14.0

15.9

6.0

-5.0

12.1

23.4

21.4

32.2

22.3

Exhibit 6:

…while

DII inflows broke earlier records

DII (USD b)

62.9

-4.6

-17.0

Exhibit 7:

FII flows remained volatile in CY24

FII(USD b)

6.7

5.0

4.1

1.81.9

1.7

7.0

2.3

4.0

0.5

5.9

3.1

3.3

1.4

1.3

Exhibit 8:

DII flows have been robust since the last 17 months

DII (USD b)

12.8

-0.2 -0.6

-3.7

-2.32.7

-

-3.1

-1.1

-3.0

-2.2

4.1 3.7

2.9

2.3

0.3 0.5

6.8

6.7

5.8

5.3

5.3

4.0

3.8

3.42.8

3.23.1

3.02.43.4

1.71.6

-10.9

-0.4 -0.3

Exhibit 9:

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

Nifty-50

28,800

26,600

24,400

22,200

20,000

21,731

23,645

Nifty Midcap 100

Nifty Smallcap 100

(rebased to Nifty50)

26,934

26,916

12 month performance

Nifty-50 up 9%,

Midcap up 24%,

Small

cap index up 24%

Valuations above the LPA for Nifty-50, while

they’re

rich for broader markets





Nifty is trading at a 12-month forward P/E of 19.9x, 3% below its own LPA.

Notably, Nifty-50’s

EPS CAGR of

17% (to INR1,050 in FY25E) has converged with

the index CAGR of ~14% during the last five years (ended

Dec’24).

We expect

FY25/FY26 EPS to grow 5%/16% to INR1,050/INR1,221.

India’s market capitalization-to-GDP

ratio has been volatile, plummeting to 57%

(of FY20 GDP) in Mar’20 from 80% in FY19 and then sharply reviving to 112%

in

FY22; the ratio moderated to 96% in FY23, though. The ratio is now at 138% (of

FY25E GDP), above its long-term average of 85%. We expect the nominal GDP to

increase 9.2% YoY in FY25.

January 2025

13

A PAUSE for THOUGHT!

Mastering the game!

Exhibit 10:

Nifty-50

down 10% from Sep’24 highs and valuations marginally

below the LPA

28,000

Dec'14-24:

Nifty CAGR: 11% |

Avg P/E: 20.5x

Nifty50 Index

Nifty P/E (x)

27.0

23,645

24.0

21.0

22,000

16,000

20.6

10,000

8,283

4,000

19.9

18.0

15.0

Exhibit 11: 12-month forward Nifty P/B (x)

3.9

3.4

2.9

2.4

Exhibit 12: 12-month forward Nifty RoE (%)

17.3

16.0

10 Year Avg: 2.8x

15.6

3.2

13.9

12.2

10.5

10 Year Avg: 13.8%

1.9

Exhibit 13:

Broader markets trade at a significant premium to large-caps

38

32

26

20

14

8

Nov'14-Nov'24 P/E(x)

Nifty50 avg : 20.5x

Midcap avg : 22.2x

Smallcap avg : 16.0x

Nifty-50(x)

Midcap100 P/E(x)

Smallcap100 PE (x)

31.1

Nifty50 trade at a premium

23.2

19.9

Mid-caps trade at a significant premium to large-caps; small-cap

valuation also outpaced that of large-caps in the past one year

Exhibit 14:

Trend in India’s market-cap-to-GDP

ratio (%)

GFC: Peak of 149% in Dec’07

Nominal GDP growth in FY24/FY25E:

9.6%/9.2%

Lowest since the

GFC

105

84

84

56

97

Average of 85% for the period

90

71

64

66

82

69

79

84

80

57

132

103

138

113

96

January 2025

14

A PAUSE for THOUGHT!

Mastering the game!

3QFY25 PREVIEW

Earnings to improve; commodities to drag

MOFSL (ex-Commodities) earnings likely to grow 10% YoY



Expect BFSI

to lead the

incremental profit

growth

in 3QFY25







Of the 18 major

sectors under

MOFSL Coverage,

only 7 sectors are

likely to witness

an expansion in

EBITDA margin

YoY





The

Auto

sector’s earnings are likely to rise 3% YoY during the quarter.

The Auto

OEMs are expected to deliver just ~6% YoY volume growth in 3QFY25, despite

the festive season. Revenue/EBITDA/PAT for our coverage companies (ex-JLR)

are anticipated to grow ~9%/9%/6% YoY in 3Q. Given sequentially stable input

costs, we expect OEMs within our coverage universe to post steady margins. For

Auto Ancillaries under our coverage, we expect ~11%/3%/10% YoY growth in

revenue/EBITDA/PAT during the quarter.

BFSI:

We expect an 8% YoY adj. earnings growth for our BFSI universe, which will

be driven by Insurance (+23%), PSBs (+13%), NBFC Non-lending (+39%), NBFC-

Lending (+8%), and Private Banks (+2%). We estimate the NII for our banking

coverage universe to grow 7.3% YoY in 3QFY25.

For the private banks under our

coverage,

we estimate PPoP growth of 10.4% YoY and PAT growth of 2.3% YoY in

3QFY25.

PSBs to report earnings growth of 13% YoY

due to lower other income

and soft margins. NII is likely to inch up 5.4% YoY as the margin bias remains

negative. We estimate earnings of the MOFSL Banking Universe to grow 7% YoY

in 3QFY25, while the sector earnings would clock a 12.6% CAGR over FY25-27E.

NBFCs:

We estimate ~15%/15%/8% YoY growth in NII/PPoP/PAT in 3QFY25 for

our NBFC coverage universe.

NBFC Non-lending:

The

Capital market

players’

earnings are likely to rise 39% YoY, primarily led by exchanges and brokers,

while the

Insurance

players are likely to post 23% YoY earnings growth in 3Q.

The

Technology

sector’s (IT services companies) 3QFY25 revenue growth is

likely to be 6% YoY. The most important catalyst for the sector now would

emerge after 3Q, when client budgets for CY25 would be finalized and the

magnitude of changes in client behavior would become clearer. We expect

aggregate revenue/EBIT/PAT to grow 5.8%/6.1%/8.9% YoY (all in INR terms) for

our coverage universe.

The

Capital Goods

sector’s

earnings are projected to rise 26% YoY during the

quarter. With FY25 being an election year, order inflows were expected to be

weak, but orders are anticipated to ramp up from 4QFY25. However, ordering

activity has remained strong across thermal power, renewables, T&D, data

centers, buildings, and factories, while it has been weak in water and railways.

The defense sector’s ordering activity is also likely to ramp up based on the

recent approvals. Overall, we believe that despite selective order inflow

improvement, the strong existing order books provide healthy revenue visibility

for companies within the sector. We expect a 19% YoY growth in execution for

3QFY25. We expect margins to remain largely stable QoQ, given the benign

commodity prices. As a result, we expect a ~20bp YoY expansion in EBITDA

margin for our coverage universe.

For the MOFSL

Consumer

coverage universe (ex-QSR and Jewelry), revenue/

EBITDA/PAT are expected to clock 7%/2%/1% YoY growth in 3QFY25. Within our

coverage universe, all segments (barring paints) are anticipated to deliver

revenue/EBITDA growth YoY in 3QFY25

–

staples +5%/+4%, liquor +12%/+19%,

innerwear +10%/+16%, QSR +18%/+14%, and jewelry +31%/+21%. The paints

segment is expected to post a decline of 1%/12% in revenue/EBITDA in 3Q.

The

Healthcare

companies under our coverage are expected to report a healthy

YoY earnings growth of 19% in 3QFY25. We expect aggregate sales to increase

10.4% YoY, aided by strong traction in domestic formulation (DF) sales and

15

January 2025

A PAUSE for THOUGHT!

Mastering the game!

Sectoral sales growth for the quarter-

ended

Dec’24

(YoY %)

partially aided by the US segment. EBITDA is likely to exhibit 16.8 % YoY growth,

fueled by a higher share of niche launches in the US generics. PAT is likely to

grow 19.4% YoY. For hospitals, we expect profitability to improve due to the

EMS

85

addition of beds, higher volumes, and optimization of the case mix/payor mix.

Real Estate

47

NBFC - Non Lending

39



The

Metal

companies within our coverage universe are likely to record a muted

Retail

26

revenue growth of 5% YoY, a 2% YoY decline in EBITDA, and an 8% YoY dip in

Cap. Goods

19

PAT. We expect

ferrous

companies to report revenue growth of 3% YoY and 6%

Insurance

19

QoQ, fueled by better volumes. Considering this, we believe margins for ferrous

NBFC - Lending

15

Cons. Durables

14

players will remain under pressure due to weak metal prices, which will be

Utilities

14

partly offset by moderated coking coal prices. We believe

non-ferrous

players

Telecom

13

will perform better than ferrous companies. However, the rising CoP might limit

Staffing

11

earnings growth.

Healthcare

10

Logistics

10



The

Cement

sector’s

earnings are projected to decline 45% YoY. We estimate

Chemicals

9

our cement coverage universe to report a volume growth of ~8% YoY in 3QFY25.

Banks-PVT

9

Cement prices have also moved upwards, driven by MoM price hikes of ~3-5%

Auto

9

(INR10-15/bag)

in Dec’24 across regions. The all-India

average cement price

MOFSL Univ.

8

Consumer

7

grew ~2% QoQ (down ~5% YoY) in 3QFY25. We estimate the average EBITDA/t

Technology

6

for our cement coverage to decline ~28% YoY (up 28% QoQ) to INR842. The

Banks-PSU

5

average opex/t for our coverage universe is estimated to decline ~4%/2% YoY/

Metals

5

QoQ, led by positive operating leverage and favorable fuel prices.

Media

5

Cement

2



The

O&G

sector is expected to report: 1) flat YoY sales (ex-OMCs), 2) flat YoY

Oil & Gas

1

EBITDA (ex-OMCs), and 3) a PAT decline of 4% YoY (ex-OMCs) in 3QFY25.

OMCs:

Infra

-9

Standalone EBITDA for HPCL/BPCL/IOCL is estimated to jump, with SG GRM

averaging USD5/bbl in 3Q (vs. USD3.6/bbl in 2Q).

CGD:

We estimate a YoY

volume growth of 13%/4%/6% for MAHGL/IGL/GUJGA.

Upstream:

For ONGC/

OINL, we expect oil sales volumes to remain flat YoY, while gas sales volumes

Sectoral PAT growth for the quarter-

ended

Dec’24

(YoY %)

might see a 7%/4% YoY decline. We reduce our Brent price assumption by 7%

for FY26 to USD70/bbl (vs. USD75/bbl earlier), and expect Brent to average

EMS

115

USD70/bbl is FY27 as well. The marketing margin outlook remains robust and

Real Estate

58

OMCs’ profitability is likely to remain strong.

Staffing

55

NBFC - Non Lending



The

Power Utility

companies under our coverage universe are anticipated to

39

Cons. Durables

31

report a revenue/EBITDA/adj. PAT growth of 14%/17%/8% YoY in 3QFY25.

Retail

30

Overall, healthy growth in power demand and RE generation should drive the

Cap. Goods

26

sector’s profitability in 3QFY25E.

Insurance

23



The

Real Estate

companies under our coverage universe are expected to report

Healthcare

19

Media

18

pre-sales of INR338b, +10% YoY/+46% QoQ in 3QFY25. New launches were

Banks-PSU

13

muted for our coverage companies, excluding DLF, GPL, BRGD, OBER, and PEPL.

Logistics

12

These companies launched key projects in NCR, MMR, Pune, and Bengaluru.

Technology

9

Cumulative collections for our coverage companies are likely to jump 47% YoY to

Infra

9

INR237b, implying a collection efficiency of ~70%, guided by strong executions in

NBFC - Lending

8

Utilities

8

the absence of new launches. The cumulative revenue recognition for our

MOFSL Univ.

6

coverage universe is expected at INR167b (up 47% YoY), with an EBITDA of INR47b

Chemicals

4

(up 44% YoY).

Auto

3



The

Chemicals

sector is projected to report an earnings growth of 4% YoY in

Banks-PVT

2

Consumer

3QFY25 after six consecutive quarters of decline. With Brent remaining range-

1

Oil & Gas

-4

bound at USD70-75/bbl, chemical prices have remained subdued, as most of these

Metals

-8

prices are linked to crude oil. Additionally, a sustained increase in demand has not

Cement

-45

materialized over the past few quarters, further contributing to the lack of price

Telecom

Loss

movement.

January 2025

16

A PAUSE for THOUGHT!

Mastering the game!









The 3QFY25E snapshot:

We expect EBITDA/PBT/PAT to rise 9%/10%/6% YoY in

3QFY25 for the MOFSL Universe. Excluding Metals and O&G, EBITDA/PBT/PAT

for the MOFSL Universe would grow 13%/15%/10% YoY.

The

EBITDA margins

for the Capital Goods, Consumer Durables, Healthcare,

Telecom, and Utilities sectors are likely to expand, while margins for Auto,

Cement, Chemicals, Consumer, EMS, Logistics, Metals, Real Estate, Retail, and

Technology are anticipated to contract on a YoY basis.

Nifty earnings to grow 6% YoY in 3QFY25:

Ex-Commodities, the Nifty earnings

are anticipated to rise ~8% YoY. Bharti Airtel, SBI, Hindalco, BPCL, ICICI Bank, and

TCS are likely to drive Nifty earnings, while Coal India, JSW Steel, IndusInd Bank,

Tata Steel and TATA Motors are projected to drag the same.

The FY25E snapshot:

The MOFSL Universe and Nifty are likely to record 4% YoY

earnings growth each in FY25E. Excluding Metals and O&G, the MOFSL Universe

and Nifty should post a 12% and 11% YoY earnings growth, respectively.

Exhibit 15:

MOFSL and Nifty Universe to post 6% YoY earnings growth each, respectively, in 3QFY25 (INR b)

Sales

Sector

Dec-24

PAT growth sectors

4,708

EMS (7)

148

Real Estate (13)

167

Staffing (4)

122

Others (19)

687

NBFC - Non Lending (14)

70

Consumer Durables (5)

172

Retail (21)

676

Capital Goods (12)

999

Insurance (6)

747

Healthcare (24)

872

Media (3)

47

Med/Low growth sectors

9,507

Banks-PSU (6)

902

Logistics (8)

164

Technology (12)

1,965

Infrastructure (3)

43

NBFC - Lending (22)

435

Utilities (5)

766

Chemicals (12)

164

Automobiles (26)

3,260

Banks-Private (12)

925

Consumer (20)

884

PAT de-growth sectors

12,002

Oil & Gas (15)

7,876

Metals (10)

2,870

Cement (11)

561

Telecom (4)

695

MOFSL Universe (294)

26,217

MOFSL Ex OMCs (291)

21,830

MOFSL Ex Metals and O&G (269) 15,470

MOFSL Ex. Financials

23,139

Nifty (49)

14,611

Sensex (30)

10,472

Growth (%)

YoY

QoQ

21

8

85

-3

47

19

11

2

23

12

39

-1

14

3

26

18

19

7

19

14

10

0

5

4

8

4

5

2

10

5

6

1

-9

19

15

3

14

10

9

-2

9

7

9

2

7

-1

3

7

1

8

5

6

2

10

13

6

8

6

9

4

12

6

7

6

5

4

7

3

EBIDTA

Dec-24

704

9

47

4

145

39

17

78

116

35

203

11

3,098

605

61

441

12

351

269

29

430

693

209

1,875

941

499

78

357

5,677

5,444

4,237

3,954

3,633

2,885

Growth (%)

YoY

QoQ

27

14

80

9

44

29

10

7

45

59

59

-2

22

12

23

32

21

4

7

12

17

-3

13

8

10

1

17

-8

8

2

5

1

-6

15

15

0

17

12

7

-5

3

10

10

1

2

1

2

16

1

22

-2

8

-23

40

24

10

9

7

10

5

13

4

7

12

9

6

10

4

PAT

Growth (%)

Dec-24 YoY

QoQ

413

30

25

5

115

27

34

58

22

3

55

28

64

42

1,739

32

39

-6

12

31

11

37

30

56

72

26

4

22

23

2

126

19

-2

7

18

11

1,848

6

0

345

13

-12

36

12

7

309

9

3

5

9

26

210

8

5

103

8

5

16

4

-10

251

3

10

424

2

-2

150

1

5

693

-4

21

447

-4

21

222

-8

13

27

-45

19

-3

Loss

Loss

2,954

6

7

2,840

7

4

2,285

10

4

1,922

5

15

1,969

6

3

1,543

8

4

PAT

Delta

INRb

96

3

13

1

19

9

3

9

15

4

20

1

111

40

4

25

0

16

8

1

7

10

2

-30

-20

-19

-22

31

177

183

216

99

108

108

PAT

Delta

Share (%) Share (%)

14

54

0

2

1

7

0

1

2

11

1

5

0

2

1

5

2

8

1

2

4

12

0

1

63

63

12

22

1

2

10

14

0

0

7

9

3

4

1

0

8

4

14

5

5

1

23

-17

15

-11

8

-11

1

-13

0

18

100

100

January 2025

17

A PAUSE for THOUGHT!

Mastering the game!

Exhibit 16:

Expect a two-year PBT/PAT CAGR of 16%/17% each for the MOFSL Universe (INR b)

Sector

Automobiles (26)

Capital Goods (12)

Cement (11)

Chemicals (12)

Consumer (20)

Consumer Durables (5)

EMS (7)

Financials (60)

Banks-Private (12)

Banks-PSU (6)

Insurance (6)

NBFC - Lending (22)

NBFC - Non Lending (14)

Healthcare (24)

Infrastructure (3)

Logistics (8)

Media (3)

Metals (10)

Oil & Gas (15)

Oil Ex OMCs (12)

Real Estate (13)

Retail (21)

Staffing (4)

Technology (12)

Telecom (4)

Utilities (5)

Others (19)

MOFSL Universe (294)

MOFSL Ex Metals and O&G (269)

MOFSL Ex OMCs (291)

Nifty (49)

Sensex (30)

Growth (%)

PAT (INR b)

Two-yr

Dec-22 Dec-23 Sep-24 Dec-24 YoY

QoQ Dec-22 Dec-23 Sep-24 Dec-24

CAGR

178

70

34

29

177

11

2

1,047

448

352

16

208

22

117

6

28

9

231

458

433

24

36

2

381

-37

127

50

2,980

2,291

2,955

2,177

1,713

303

85

69

20

194

13

3

1,185

528

357

19

253

29

136

6

41

8

343

645

484

26

39

2

385

-11

123

42

3,654

2,667

3,493

2,438

1,877

303

103

31

24

192

15

8

1,438

564

539

23

267

45

173

6

41

8

297

512

482

30

31

2

409

28

130

11

3,793

2,984

3,763

2,623

2,067

321

6

106 25

39

-43

21

8

199

3

16

24

7

125

1,373 16

563

7

473 33

24

25

273

8

41

41

164 20

6

5

44

8

9

17

326

-5

636

-1

484

0

41

58

49

28

3

41

417

8

46

LP

133

9

71

70

4,028 10

3,067 15

3,876 11

2,697 11

2,129 13

34

23

7

-14

6

22

75

15

12

16

22

15

36

18

7

25

-1

19

18

6

30

18

36

5

LP

2

19

16

16

15

11

11

6

3

26

-10

4

10

-10

-4

0

-12

1

2

-9

-6

6

7

14

10

24

0

36

60

26

2

62

2

546

6

3

3

3

3

142

46

24

22

132

9

2

782

338

252

16

160

16

88

4

23

6

133

337

312

20

27

2

284

-59

91

42

2,154

1,685

2,129

1,563

1,209

244

57

50

15

149

9

2

955

414

306

18

194

23

105

4

32

6

241

467

347

22

29

2

284

-35

95

45

2,777

2,069

2,657

1,861

1,436

228

69

23

18

144

10

4

1,082

433

393

22

201

34

129

4

33

6

197

370

350

28

24

2

300

-17

97

3

2,756

2,189

2,735

1,903

1,480

251

72

27

16

150

12

5

1,032

424

345

22

210

32

126

5

36

7

222

447

333

34

37

3

309

-3

103

64

2,954

2,285

2,840

1,969

1,543

PBT (INR b)

Growth (%)

Two-yr

YoY

QoQ

CAGR

3

26

-45

4

1

31

115

8

2

13

23

8

39

19

9

12

18

-8

-4

-4

58

30

55

9

Loss

8

42

6

10

7

6

8

33

26

6

-15

7

16

73

15

12

17

16

15

38

19

8

24

9

29

15

3

33

18

23

4

Loss

6

23

17

16

16

12

13

10

4

19

-10

5

11

27

-5

-2

-12

2

5

-6

-2

26

7

11

13

21

-5

22

56

28

3

Loss

5

1,739

7

4

4

3

4

Sales/PAT for the MOFSL Universe to grow 8%/6% YoY in 3QFY25

Exhibit 17:

Expect sales for the MOFSL Universe to grow 8%

YoY in 3QFY25

Exhibit 18: Expect MOFSL Universe earnings to grow 6% YoY

in

3QFY25

3

January 2025

18

A PAUSE for THOUGHT!

Mastering the game!

Exhibit 19: Expect EBITDA margin (ex-Financials and O&G)

to decline slightly by 10bp YoY at 19.8% in 3QFY25

Average: 20.2%

Exhibit 20: Expect PAT margin to also contract 20bp YoY to

9.6% during the quarter

Average: 9.3%

Source: MOFSL, excluding Financials and OMCs

Source: MOFSL, excluding Financials and OMCs

Exhibit 21:

PSU Banks, Telecom, Technology, and Healthcare to lead; while Cement, O&G, and Metals to drag earnings in

3QFY25

40 31

25

20

13

19 16

15

10

9

9

8

7

4

4

3

3

2

1

1

1

0

19

20

22

2,777

2,954

January 2025

19

A PAUSE for THOUGHT!

Mastering the game!

Exhibit 22:

Quarterly sectoral PAT trend (INR b)

–

MOFSL Universe to report a 6% YoY growth in PAT in 3QFY25

Sector

Automobiles

Banks-Private

Banks-PSU

Insurance

NBFC - Lending

NBFC - Non Lending

Capital Goods

Cement

Chemicals

Consumer

Consumer Durables

EMS

Healthcare

Infrastructure

Logistics

Media

Metals

Oil & Gas

Real Estate

Retail

Staffing

Technology

Telecom

Utilities

Others

MOFSL Universe

Dec-21 Mar-22 June-22 Sep-22 Dec-22 Mar-23 June-23 Sep-23 Dec-23 Mar-24 June-24 Sep-24 Dec-24E

59

86

13

97

142

186

187

221

244

261

238

228

251

258

289

266

301

338

369

363

409

414

436

427

433

424

150

152

133

226

252

300

307

294

306

379

347

393

345

8

16

14

15

16

20

18

19

18

20

23

22

22

132

140

128

147

160

175

177

197

194

215

204

201

210

15

14

13

18

16

17

20

21

23

26

30

34

32

38

63

32

41

46

69

46

58

57

88

56

69

72

33

43

43

20

24

38

44

42

50

51

34

23

27

18

22

25

24

22

25

20

18

15

15

16

18

16

119

116

124

127

132

134

150

144

149

145

153

144

150

7

10

7

7

9

11

10

9

9

13

14

10

12

1

2

1

2

2

4

2

2

2

4

3

4

5

87

79

78

97

88

81

98

110

105

116

127

129

126

3

6

8

4

4

5

5

3

4

5

4

4

5

23

22

29

26

23

29

27

30

32

32

34

33

36

8

7

8

5

6

3

6

8

6

4

6

6

7

353

414

333

139

133

242

227

191

241

212

266

197

222

418

449

244

276

337

536

632

624

467

498

371

370

447

21

25

15

15

20

32

18

19

22

38

29

28

34

28

18

25

22

27

16

22

22

29

19

22

24

37

2

2

2

2

2

2

2

2

2

1

2

2

3

256

263

242

264

284

286

271

277

284

291

292

300

309

-45

-25

-48

-42

-59

-21

-32

-43

-35

-25

-19

-17

-3

84

117

84

84

91

102

86

83

95

107

91

97

103

19

7

11

7

42

41

48

19

45

41

35

3

64

2,094 2,336 1,829 1,924 2,154 2,702 2,753 2,782 2,777 2,994 2,804 2,756 2,954

Expect Nifty constituents’

earnings

to rise 6% YoY in 3QFY25







We expect sales/EBITDA/PBT/PAT for Nifty constituents to improve 5%/9%/

11%/6% YoY.

Bharti Airtel, SBI, Hindalco, BPCL, ICICI Bank, and TCS are likely to drive Nifty

earnings, while Coal India, JSW Steel, IndusInd Bank, Tata Motors, and Ultratech

Cement are projected to drag the same.

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

Whereas 14 Nifty companies are expected to report a YoY decline in PAT.

Exhibit 23:

Sector-wise PAT breakdown for the Nifty constituents in 3QFY25E (YoY %)

99

Telecom,

Insurance, Retail,

Cap Goods, and

NBFCs are likely to

lead Nifty earnings

in 3QFY25

36

26

26

16

13

12

10

7

6

6

5

4

3

-2

-16

-36

January 2025

20

A PAUSE for THOUGHT!

Mastering the game!

Exhibit 24:

Expect Nifty’s revenue to

grow 5% YoY in 3QFY25

Exhibit 25:

Expect Nifty’s EBITDA to grow 9% YoY in 3QFY25

Exhibit 26:

Expect Nifty’s PAT to rise by 6% YoY in 3QFY25

108

84

39

8

26

35

17

10

20

10

21

24

29

11

19

12

3

3

6

-23

-33

January 2025

21

A PAUSE for THOUGHT!

Mastering the game!

Exhibit 27:

Nifty’s earnings snapshot for

3QFY25 (INR b)

Sales (INR b) Growth (%) EBIDTA (INR b) Growth (%) PAT (INR b) Growth (%) Contribution to PAT

Dec-24

YoY QoQ

Dec-24

YoY QoQ Dec-24

YoY QoQ (%) growth (%)

Company

Sector

130

7.5 -0.8

26

6.3 -2.6

22

6.1

-2.3 1.1

0.1

Bajaj Auto

Automobiles

50

20.5 18.2

13

20.0 20.3

11

12.3

1.7

0.6

0.1

Eicher Motors

Automobiles

101

4.2 -3.2

14

-3.1 -6.2

11

-5.5 -7.4 0.6

0.0

Hero MotoCorp

Automobiles

312

23.5 13.4

44

37.4 12.6

32

30.3 -16.7 1.6

0.4

Mahindra & MahindraAutomobiles

385

15.6 3.5

44

12.1 -0.8

35

11.2 -5.2 1.8

0.2

Maruti Suzuki

Automobiles

1,150

4.0 13.3

147

-3.8 25.7

66

-7.7 96.0 3.3

-0.3

Tata Motors

Automobiles

137

9.0

1.3

103

12.7 -3.9

64

5.2

-7.6 3.2

0.2

Axis Bank

Banks-Private

303

6.5

0.7

248

4.7

0.2

166

1.7

-1.0 8.5

0.2

HDFC Bank

Banks-Private

207

10.9 3.3

167

13.5 -0.1

114

11.2 -2.8 5.8

0.7

ICICI Bank

Banks-Private

53

-0.3 -1.2

36

-10.8 0.1

14

-37.6 7.9

0.7

-0.5

IndusInd Bank

Banks-Private

71

8.9

1.7

52

14.6 2.6

34

12.4

1.0

1.7

0.2

Kotak Mahindra Bank Banks-Private

423

6.2

1.6

270

33.0 -7.7

162

13

-11.4 8.2

1.1

State Bank

Banks-PSU

183

20.1 10.4

10

13.0 3.1

4

18.8

0.2

0.2

0.0

HDFC Life Insur.

Insurance

259

15.3 26.9

18

6.5 23.4

5

56.1 -5.1 0.3

0.1

SBI Life Insurance

Insurance

93

21.9 5.6

77

24.6 4.7

41

12.9

2.3

2.1

0.3

Bajaj Finance

NBFC - Lending

291

20.0 5.3

82

22.3 3.6

26

21.9 26.0 1.3

0.3

Bajaj Finserv

NBFC - Lending

57

15.2 3.5

41

11.7 3.5

21

15.8

1.7

1.1

0.2

Shriram Finance

NBFC - Lending

50

20.1 8.4

12

18.3 -10.6

10

15.4 -5.6 0.5

0.1

Bharat Electronics

Capital Goods

664

20.4 7.8

69

20.3 8.9

38

28.7 11.7 1.9

0.5

Larsen & Toubro

Capital Goods

83

29.7 8.9

5

-11.0 42.9

0

-99.4 -99.8 0.0

-0.1

Grasim Industries

Cement

170

1.7

8.9

28

-14.4 38.0

13

-27.3 57.5 0.7

-0.3

Ultratech Cement

Cement

86

-5.0 7.7

16

-21.1 30.8

12

-20.7 33.9 0.6

-0.2

Asian Paints

Consumer

46

7.0 -2.4

8

-1.8 2.9

6

0.0

5.1

0.3

0.0

Britannia

Consumer

161

3.1

0.8

38

4.7

1.2

27

6.9

4.0

1.4

0.1

Hind. Unilever

Consumer

192

6.7 -7.3

68

4.8

0.8

53

-0.9

6.0

2.7

0.0

ITC

Consumer

48

5.4 -5.0

12

3.5 -1.7

8

1.2

5.3

0.4

0.0

Nestle

Consumer

44

16.0 4.7

6

-3.6 -11.9

3

-3.3 -12.7 0.2

0.0

Tata Consumer

Consumer

55

12.4 -2.5

8

23.4 -7.1

3

40.7 -8.9 0.2

0.1

Apollo Hospitals

Healthcare

70

5.5 -1.2

18

1.7 -5.8

12

-0.9 -8.9 0.6

0.0

Cipla

Healthcare

80

11.2 0.1

21

1.6 -6.4

12

-13.7 -12.5 0.6

-0.1

Dr Reddy’ s Labs

Healthcare

134

10.1 0.9

36

15.1 -4.9

30

19.7

1.1

1.5

0.3

Sun Pharma

Healthcare

75

8.3

6.1

44

4.9

0.5

26

11.8

6.9

1.3

0.2

Adani Ports

Logistics

367

1.6 19.7

104

-13.0 45.2

84

-17.6 32.8 4.2

-1.0

Coal India

Metals

595

12.7 2.3

77

30.8 -2.7

38

61.6 -11.8 1.9

0.8

Hindalco

Metals

421

0.4

6.2

51

-29.5 -6.8

8

-64.1 34.5 0.4

-0.9

JSW Steel

Metals

523

-5.5 -3.0

45

-27.7 -18.0

2

-77.1 -57.0 0.1

-0.4

Tata Steel

Metals

1,014

-12.2 -1.4

81

28.6 77.6

48

41.3 100.3 2.4

0.8

BPCL

Oil & Gas

321

-7.8 -5.3

187

9.0

2.6

95

-4.4 -21.1 4.8

-0.3

ONGC

Oil & Gas

2,308

2.5 -0.3

421

3.5

7.8

177

2.7

7.0

9.0

0.3

Reliance Inds.

Oil & Gas

184

29.9 26.6

19

18.5 21.5

12

15.5 30.7 0.6

0.1

Titan Company

Retail

46

40.0 14.9

9

39.9 36.1

5

58.6 28.7 0.3

0.1

Trent

Retail

300

5.3

3.8

68

1.2

6.2

45

4.1

7.0

2.3

0.1

HCL Technologies

Technology

414

6.7

1.1

98

6.7

0.0

68

12.0

5.1

3.5

0.4

Infosys

Technology

645

6.4

0.3

171

4.3

2.0

127

8.1

6.4

6.5

0.6

TCS

Technology

132

0.7 -0.9

17

26.6 -2.0

10

43.1 -17.7 0.5

0.2

Tech Mahindra

Technology

222

-0.2 -0.7

45

5.7 -2.3

30

9.7

-7.9 1.5

0.2

Wipro

Technology

445

17.5 7.3

246

24.0 12.5

50

98.7 26.6 2.5

1.4

Bharti Airtel

Telecom

397

0.7 -1.5

117

17.8 21.0

48

9.9

13.9 2.4

0.3

NTPC

Utilities

114

7.1 11.4

99

5.3 12.6

40

2.3

13.1 2.0

0.1

Power Grid Corp.

Utilities

14,611

5.4

3.6

3,633

8.6

5.6

1,969

5.8

3.4 100

6

Nifty Universe

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

January 2025

22