The first quarter financial performance of Indian corporates is mainly in line with estimates, said a study by Motilal Oswal Financial.

According to the domestic brokerage, in Q1 FY24, aggregate earnings of the 120 MOFSL universe companies have been in line with its estimates and risen 47 per cent y-o-y.  

Nifty trades at a 12-month forward P/E of 19.1x, at a 5 per cent discount to its long-period average (LPA), Motilal Oswal said in its strategy report.

Tata Motors pushes auto cos into fast lane

“Once again the earnings growth was propelled by domestic cyclicals, such as BFSI and Auto. BFSI recorded a 42 per cent y-o-y growth, while auto sector registered a profit of ₹10,200 crore (as against the loss of ₹2,900 crore in 1Q FY23) driven by Tata Motors. Excluding Tata Motors, the Auto Universe posted a healthy 82 per cent earnings growth in Q1-FY24 so far,” the report said. 

Nifty cos: A mixed show

Among the Nifty 50 constituents, companies that missed Motilal Oswal’s profit estimates include BPCL, Infosys, HCL Technologies, HUL, LTIMindtree, Tech Mahindra, and Tata Steel. Companies such as Tata Motors, HDFC Bank, Kotak Mahindra Bank, Maruti Suzuki, JSW Steel, Asian Paints, Dr Reddy’s Labs, Cipla, Nestle, UPL, and SBI Life Insurance have exceeded their profit estimates. 

Profits of the 33 Nifty companies that have declared results so far have risen 43 per cent y-o-y (as against Motilal’s estimate of 41 per cent), fuelled by Tata Motors, BPCL, HDFC Bank, ICICI Bank and Axis Bank. The strategy report emphasised that the metals sector continued to drag the aggregates with a 64 per cent y-o-y decline in earnings, led by Tata Steel (down by 92 per cent y-o-y) and Vedanta (down by 81 per cent y-o-y).  

Earnings growth of banks remained steady even as margin trajectory has turned across several banks (barring Union Bank, which posted a 15bp q-o-q expansion), Motilal Oswal said. Asset quality continued to improve while SMA and restructured pool remained in control, it added. 

OMCs sizzle

Meanwhile, the OMC’s (oil marketing companies) profitability surged to ₹24,300 crore in 1Q FY24 as against the loss of ₹8,300 crore in 1QFY23 due to strong marketing margins. The oil and gas sector reported mixed results. Motilal Oswal remarked the underperformance of RIL has been led by weak transportation fuel cracks and lower downstream chemical margins. 

On the IT Services front, companies reported weak performance in the said quarter with flattish median revenue growth.