The corporate earnings for the first quarter of FY25 largely met expectations, driven mainly by domestic cyclical sectors, according to a recent review by Motilal Oswal Securities Limited (MOSL). Sectors like healthcare, real estate, capital goods, and metals made significant contributions to overall growth, while Oil Marketing Companies (OMCs) weighed down earnings.
Nifty-50 earnings rose by 4 percent year-on-year, slightly surpassing MOSL's estimate of 3 percent growth. However, the overall performance was hindered by the drag from OMCs. Excluding OMCs, the Nifty achieved a 9 percent earnings growth, just below the brokerage's 10 percent growth expectation, showing that other sectors held up well despite challenges in the oil sector.
Looking ahead, MOSL anticipates that earnings momentum will continue but at a slower pace, with growth expected to taper to around 15 percent over FY24-26. The key investment themes highlighted by MOSL include Industrials and Capex, Consumer Discretionary, Real Estate, and PSU Banks.
While several sectors showed resilience, a few notable companies experienced significant declines in their Profit After Tax (PAT) during the June quarter. Now, let's examine three stocks that saw a more than 25 percent drop in their Profit After Tax (PAT) during the June quarter.
Asian Paints reported a 25 percent decline in consolidated net profit, amounting to ₹1,170 crore, compared to ₹1,383 crore in the corresponding period last year. The company's total revenue from operations in the first quarter of the current fiscal year dropped by 2.3 percent to ₹8,943 crore, down from ₹9,154 crore in the year-ago period. This revenue decline was largely due to price cuts implemented in the previous quarter and a shift in product mix. Despite a 7 percent increase in domestic decorative business volume, revenue decreased by 3 percent. Total expenses rose to ₹7,559.04 crore, compared to ₹7,305.09 crore in the same period last fiscal year. The stock has already fallen almost 4 percent in the last 1 year and over 10 percent in 2024 YTD.
JSW Steel reported a 64 percent decline in consolidated net profit for the first quarter, amounting to ₹845 crore, significantly missing the Street estimates of around ₹1,254 crore. Revenue from operations for the June quarter increased by 2 percent year-on-year to ₹42,943 crore. However, EBITDA fell by 22 percent year-on-year to ₹5,510 crore, with margins shrinking by 390 basis points to 12.8 percent. The company's crude steel production for the quarter stood at 5.3 million tonnes, down 3 percent year-on-year and 7 percent quarter-on-quarter, while steel sales increased by 3 percent year-on-year to 5.09 million tonnes. The stock has risen over 15 percent in the last 1 year and added over 3 percent in 2024 YTD.
Bharat Petroleum Corporation Ltd (BPCL) reported a 73 percent drop in net profit for the June quarter, with profits falling to ₹2,841.55 crore, compared to ₹10,644.30 crore in the same period last year. This sharp decline was due to reduced refinery margins and a fuel price reduction that impacted marketing margins. Sequentially, BPCL's net profit fell by 40.6 percent from ₹4,789.5 crore in the preceding quarter. Revenue from operations in Q1FY25 saw a marginal decline of 0.1 percent to ₹1.28 lakh crore, while total expenses increased by 8.5 percent to ₹1.25 lakh crore. The stock has soared over 88 percent in the last 1 year and over 47 percent in 2024 YTD.
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