The Indian stock market benchmark index, Nifty 50, has remained largely flat over the past twelve months, even as earnings estimates have seen notable downward revisions, according to a report by JM Financial.
EPS Cuts Continue for FY25E-27E
The brokerage report highlights that both FY25E and FY26E earnings per share (EPS) estimates for Nifty 50 companies have been cut by 5.8% over the past year. The downward revision trend persisted in February 2025, with EPS estimates for FY25E-27E seeing cuts in the range of 0.5% – 0.9%, following a steeper 1.4% – 2.8% cut in January 2025.
A sectoral analysis shows that 60% of Nifty 50 companies experienced EPS downgrades in February 2025, an improvement from 72% in January 2025. Key sectors witnessing EPS cuts exceeding 1% included Banks (-1.5%), Cement (-1.6%), Oil & Gas (-1.5%), and Consumer (-3.3%).
Sector-Wise Impact
The consumer sector saw the highest number of downward revisions, with 88% of its Nifty 50 constituents facing EPS cuts in February 2025. Similarly, the banking and automobile sectors saw EPS downgrades in 83% of their Nifty 50-listed firms, while 67% of Oil & Gas and 60% of Metals & Mining companies also faced downward revisions.
On the other hand, certain sectors were more resilient to EPS cuts, with IT Services (-0.1%), Pharmaceuticals (-0.1%), NBFCs (-0.1%), and Infrastructure & Ports (-0.5%) seeing minimal downgrades.
Despite the broader decline, some sectors managed to see EPS upgrades in February 2025. These included: Telecom (+5.7%), Industrials (+0.9%), Metals & Mining (+0.2%) and Insurance (+0.1%), as per JM Financial.
Nifty 50 companies with highest EPS upgrades and cuts in February 2025:
Bharti Airtel led the EPS upgrades with a 5.7% increase, followed by Hindalco Industries (+2.1%), Coal India (+1.3%), Bharat Electronics (+0.9%), Bharat Petroleum Corporation Ltd (BPCL) (+0.7%), NTPC (+0.6%).
On the downside, Kotak Mahindra Bank saw the steepest EPS cut of (-11.1%), followed by Trent Ltd (-8.2%), and IndusInd Bank (-7.8%). Other major companies facing notable EPS cuts include Asian Paints (-6.0%), ONGC (-5.1%), and ITC (-4.0%), indicating pressure in consumer and energy sectors.
Market Outlook
While the Nifty 50 index has remained range-bound over the past year, the persistent downward revision in earnings estimates indicates cautious investor sentiment. The market remains vulnerable to sector-specific headwinds, particularly in banking, consumer, and commodity-linked sectors. However, pockets of growth in telecom, industrials, and insurance suggest that certain industries are poised for resilience amid the broader EPS downgrade cycle.
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