Q3FY24 Review | Nifty 500 firms deliver 25% YoY growth; BFSI, oil & gas shine: IOC, HDFC Bank among top 5

The earnings growth was fueled by the strong performance of the BFSI and automobiles sectors which reported 22 per cent and 59 per cent YoY growth in Q3FY24 respectively, according to leading brokerage firms. The oil & gas sector also grew 40 per cent YoY in the December quarter fueled by the soaring profitability of oil marketing companies (OMCs) due to strong marketing margins.

Also Read: Corporates likely to report 15% EPS growth in FY25; Steel sector to outshine, IT boasts high valuations

Top 5 contribute 33%; heavyweights propel earnings

The earnings performance of the Nifty 500 companies was propelled by just a few heavyweights. The top five companies, i.e., Indian Oil Corporation (IOC), HDFC Bank, Tata Motors, GAIL, and Adani Power contributed 33 per cent to the incremental YoY accretion in earnings during the quarter.

Out of the the 496 companies within the Nifty 500 that have declared their December quarter results, 329 companies recorded earnings growth, while 167 posted an earnings decline/loss in Q3FY24. Among the companies that declared profits, 251 posted an earnings growth of over 15 per cent YoY for the quarter.

Also Read: BFSI Q3 review: Large private banks better placed than others, says Anand Rathi; prefers ICICI Bank, SBI among others

Key sectoral highlights

-Out of the 18 sectors (including BFSI) within the Nifty 500, 13 sectors reported profit growth, while five posted a decline during the October-December quarter. 

-Auto: Automobile reported a 59 per cent YoY jump in earnings in 3QFY24. While most of the companies delivered healthy earnings growth, heavyweights such as Tata Motors, Maruti Suzuki, and Bajaj Auto drove the earnings significantly. Healthy auto volumes, with a recovery in two wheelers, and strong margins drove sector profitability.

-Financials: BFSI clocked 22 per cent YoY earnings growth in 3QFY24. Both private and PSU banks continued to lead with ~25 per cent YoY earnings growth. The quarter witnessed healthy business growth, controlled provisions, persistent non-interest margin, pressure, and high opex. Most of the banks witnessed stagnant or a slight dip in margins, barring select PSU banks.

-Consumer: Earnings improved 15 per cent YoY during the December quarter. Muted volume growth led to weak cumulative sales growth, however, moderating input prices continued to drive profitability.

-Technology: Earnings growth moderated to one per cent YoY due to continued weakness in key verticals and geographies, with BFSI, Consumer, and Communications reporting muted growth. The mid- and small-cap IT services companies continued to outperform large caps in Q3FY24 as well.

-Metals: The sector reported 88 per cent YoY earnings growth in Q3FY24. Better operating performance on a YoY basis, led by lower input costs, led to a strong earnings recovery for the sector.

-Infra/Cement/Healthcare/Utilities/Capital Goods posted strong earnings growth of 39 per cent/35 per cent/28 per cent/26 per cent/12 per cent YoY. Conversely, Chemicals/Media/ Retail recorded an earnings decline of 70 per cent/18 per cent/five per cent YoY during the December quarter.

Also Read: Q3 earnings review: Nifty 50 beats estimates, says Motilal Oswal, lists top earnings upgrades and downgrades

Nifty 500 vs Nifty 50

The earnings growth of 25 per cent YoY delivered by Nifty 500 firms in the December quarter outperformed the benchmark Nifty 50 firms which rendered a growth of 17.3 per cent YoY during the period, according to domestic brokerage house Motilal Oswal Financial Services.

Nifty 500 aggregate sales grew 4.1 per cent YoY compared to a 6.2 per cent YoY growth achieved by the Nifty 50 in the December quarter. 

On the operational front, the aggregate earnings before interest, taxes, depreciation, and amortization (EBITDA) growth by Nifty 500 firms stood at 15 per cent, compared to 10 per cent by Nifty 50 in the quarter-under-review.

Nifty 500 is India’s first broad-based stock market index of the stock market. It contains top 500 listed companies on the National Stock Exchange (NSE). The index represents about 96.1 per cent of free float market capitalization and about 96.5 per cent of the total turnover on the NSE. 

On the other hand, Nifty 50 is the benchmark stock market index of the NSE. The index represents the top 50 blue-chip companies of the approximately 1,600 firms listed on the NSE and captures approximately 59 per cent of its float-adjusted market capitalization.
 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Published: 24 Feb 2024, 04:01 PM IST