Update on 3Q Equity Earnings

06 Feb 2023

47 companies have reported earnings so far, with EBITDA and earnings at 8% and 4%, respectively, which is better than the estimates. Autos have fared better than the estimate and a modest beat across most other sectors. The earnings of 27 Nifty companies are up 13% year over year, 8% higher than the consensus. While the valuations have cooled off, they remain near +1 SD above long-term averages. Citi analysts retain their Dec’23 Nifty target of 18300.

• 1. 3Q Earing Trend: Overall, 3Q earnings so far have beaten expectations by 5%, largely driven by autos. Financials came in at +29% YoY, which is 2% lower than the expectation. Among other sectors, materials were down by 56% YoY, though this was 20% ahead of expectations.
   



• 2. FY23/24E NIFTY EPS growth: Citi's FY 23/24E Nifty EPS forecast is 11% for FY 23 and 14% for FY 24, compared to 12% and 17% consensus. The growth expectations are largely driven by the consumer discretionary and industrial sectors.


• 3. Ownership: Driven by net inflows of US$5.5 billion in 3QFY23, the FII shareholding in Indian stocks has marginally increased by 20 basis points QoQ. DMF holdings have also increased by $6 bn in the 3Q. FIIs' QoQ allocation to the Top-100 stocks decreased by 50 basis points, while DMFs' increased by 40 basis points, and decrease of 190 basis points for insurers. DMFs increased their exposure to PSUs (led by positions in smaller PSU banks) from 10 basis points to 220 basis points QoQ.




• Citi’s Key Overweight sectors are Banks, PSU Utilities and Capital Goods and Key Underweight sectors are Discretionary and IT Services.