Trent, Asian Paints, ITC lead EPS cuts in February; Bharti Airtel, Hindalco see top upgrades

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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