Hero Moto, M&M, Hindalco lead Nifty EPS upgrades for FY25; TechM, Tata Steel shares see downgrades

Since the last earnings season, only two Nifty stocks Hero MotoCorp Ltd and Mahindra & Mahindra Ltd (M&M) have seen earnings per share (EPS) upgrades of over 5 per cent each for the ongoing financial year. This is against six index constituents such as Tech Mahindra, Tata Steel, JSW Steel and Bharati Airtel that have seen earnings downgrades in excess of 5 per cent during the same period. Q1 earnings season is set to kick start on July 11, with results of Tata Consultancy Services Ltd. 

For Nifty, EPS estimate for FY25 stands at Rs 1,134, down 0.7 per cent since Q4 results, MOFSL said in a strategy note. In the case of Hero MotoCorp, EPS estimate stands at Rs 255.40 for FY25, up 7.2 per cent. The two-wheeler maker has seen 8.7 per cent jump in FY26 EPS estimate at Rs 304.20. EPS growth for FY25 is seen at 24.9 per cent and for FY26 at 19.1 per cent.

For M&M, EPS estimate came in at Rs 108.20 for FY25, up 5.9 per cent. The auto maker has seen 8.7 per cent jump in FY26 EPS estimate at Rs 304.20. EPS growth for FY25 is seen at 24.9 per cent and for FY24 at 19.1 per cent.

Hindalco Industries (up 3.2 per cent), Nestle India (up 2.9 per cent), Dr Reddy's Labs (up 2.4 per cent), Sun Pharma (up 2.5 per cent) and Reliance industries (up 1.5 per cent) are some other Nifty constituents seeing earnings upgrades since Q4 results. 

Downgrades were led by TechM. The IT major saw its FY25 EPS estimate falling 13.7 per cent to Rs 43.90 apiece. It was followed by Tata Steel and JSW Steel, which witnessed downgrades of 12.7 per cent and 12 per cent, respectively. Bharti Airtel, Titan Company and Apollo Hospitals are three other Nifty companies seeing earnings downgrades in excess of 5 per cent. 

 Among largecaps, MOFSL likes ICICI Bank, State Bank of India (SBI), Larsen & Toubro (L&T), M&M, HCL Technologies Ltd, Coal India, Titan Company, and Hindalco Industries among others. 

"Constructing a model portfolio against the backdrop of a stellar performance of the markets and the underlying expensive valuations presents a unique challenge of participating in the growth without overpaying for it. Our portfolio construction, as always, is driven by earnings growth visibility. While we continue to remain bullish on Domestic Cyclicals, we are incrementally turning more constructive on Technology," MOFSL said.