In FY2025, it is anticipated that Indian corporations will post 15% growth in earnings per share (EPS), fueled by robust domestic consumption, regulatory reforms, and robust corporate balance sheets. In a recent analysis titled “Annual Equity Assessment Report 2024,” domestic wealth management Client Associates stated that Indian corporates are still on track to generate double-digit EPS growth in the current fiscal year, which runs from February 23 to April 24.
According to Client Associates, Sensex firms are now seeing a slight earnings upgrade as a result of declining commodity prices, stronger-than-expected domestic economic activity, the government’s emphasis on capital investment, and stable credit growth.
It is anticipated that the Indian economy will expand by roughly 6.5% in FY25, primarily due to robust domestic demand and well-targeted policies.
Corporate and private banks are projected to record a healthy improvement in sectoral profitability due to the combination of reducing non-performing assets (NPAs) and better-than-expected lending growth. Information technology (IT) earnings have been downgraded consecutively because of a high base from the prior year, high labor expenses, and a fall in global IT spending.
Due to a boost in margins from the drop in major raw material prices, the fast-moving consumer goods (FMCG) industry recorded a little improvement in earnings. The auto industry is expected to achieve positive earnings growth for the current fiscal year. Infrastructure companies due to all-time high order book and stable volumes are set to deliver a better-than-average earnings.
Sector-wise status
Banks: Large private banks are anticipated to post a net profit gain of around 14%, nevertheless. With an estimated EPS growth of 19.5% in FY25, IndusInd Bank is predicted to have the greatest growth, ahead of HDFC Bank with 16.68%. In FY2024, banks are predicted to post growth of 25%.
IT: Due to a strong foundation, anticipated interest rate declines, cost-cutting initiatives taken by IT companies, and a renewed emphasis on artificial intelligence, the IT sector is predicted to post double-digit earnings growth of about 14% in FY25. Tech Mahindra is expected to achieve the biggest EPS growth of any IT company in FY25, at 72.67 percent, followed by HCL Technologies. In FY2024, IT services companies are predicted to achieve a pitiful EPS increase of 3.53%.
Automobiles: Given the anticipated drop in borrowing rates and the strength of private demand, auto businesses are projected to generate high earnings per share (EPS) growth of 13.93 percent in FY2025. Of all the car companies, Tata Motors is expected to achieve the greatest EPS growth in FY25 at 18.27%, followed by Maruti Suzuki.
FMCG: In FY25, the FMCG industry is predicted to post a consistent net profit rise of 11.88 percent. Client Associates reports that the volume rise has exceeded market forecasts by a small amount. The recent declines in wheat and palm oil prices are assisting FMCG companies in increasing their profit margins. Nestle India is predicted to post the most EPS growth in FY25 at 12.50 percent, followed by Hindustan Unilever Ltd (HUL).
Energy and Telecommunications: A 74.61% increase in net profit is anticipated from Airtel in FY25 as a result of segment-specific pricing increases and a greater emphasis on 2G to 4G conversions. Larsen & Toubro is anticipated to see a 24.34 percent profit gain in FY25 as a result of a record-breaking order book in the Gulf region’s hydrocarbon industry. Reliance Industries’ earnings growth for FY24 has been lowered because of the Jio segment’s increased interest payments and a muted performance. The oil and chemical industries suffer from windfall taxes as well.
Materials: A low base in the preceding two years is projected to cause steel businesses to report abnormally large growth in FY2025. In FY2023 and FY2024, the profitability of steel businesses was hurt by a decrease in global steel demand and a decrease in steel prices.Tata Steel is expected to achieve the biggest EPS rise of any steel major in FY25, at 134.97 percent, followed by JSW Steel.
