FY25 PAT growth is now forecasted at 2%/5% YoY for the MOFSL Universe/Nifty, signaling a weak earnings backdrop for the year.
The firm has also revised its FY25E and FY26E Nifty EPS growth projections to 2.9% and 3.8%, respectively, citing broad-based earnings softness. Excluding Metals and O&G, earnings are projected to grow 14% YoY in FY25, but headline numbers remain underwhelming due to sectoral drag. The EBITDA margin (ex-Financials) is expected to expand marginally by 20 basis points to 17.1% in Q4FY25.
Despite this near-term weakness, Motilal Oswal remains optimistic about the medium- to long-term outlook, supported by strong domestic SIP flows, a relatively light political calendar in CY25, and anticipated government spending in urban consumption and infrastructure.
However, volatility is expected to persist in the near term amid global macro pressures and trade uncertainties. The firm views the recent market correction—with the Nifty trading 3% below its long-period average P/E—as a valuation opportunity, especially in large caps, despite the earnings softness.
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Motilal Oswal’s sector-wise expectations for Q4FY25 earnings:
Metals: Expected to post strong 24% YoY earnings growth, aided by a low base in Q4FY24—its best quarterly performance in the last four quarters.Telecom: Projected to report a second consecutive profitable quarter, with Rs 7 billion in earnings, driven by improved margins at Bharti Airtel (down from Rs 12 billion in Q3FY25).
Healthcare: Expected to post 11% YoY earnings growth, continuing its positive trend after seven straight quarters of 15%+ growth.
Technology: Likely to grow earnings by 6% YoY—its weakest performance in the last four quarters—due to a soft base.
Capital Goods: Expected to grow earnings 6% YoY, following a strong streak of seven consecutive quarters with 20%+ growth.
Auto: Likely to see muted earnings growth of 1% YoY, improving slightly from a 2% YoY decline in Q3FY25.
Chemicals: Forecasted to post a 13% YoY earnings recovery, marking the first quarter of growth after seven consecutive declines.Oil & Gas (O&G): Expected to suffer a 25% YoY earnings decline, mainly due to weakness in Oil Marketing Companies (OMCs).
Cement: Projected to report a 14% YoY earnings decline—its fourth consecutive quarter of contraction—amid weak pricing and margin pressure.Real Estate: After eight strong quarters, the sector is expected to post a 16% YoY earnings decline, its weakest since December 2020.
Stocks to buy
Despite slightly muted expectations from the upcoming quarter, Motilal Oswal has identified several stock ideas for growth amid volatility.
Top large-cap picks:
Reliance Industries, Bharti Airtel, ICICI Bank, HUL, L&T, Kotak Mahindra Bank, M&M, Titan, Trent, and TCS.
Preferred midcap and smallcap picks:Indian Hotels, HDFC AMC, Dixon Technologies, JSW Infra, BSE, Coforge, Page Industries, IPCA Labs, Suzlon, and SRF.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
