SBI, Tata Motors Motilal Oswal among top winners and losers after dull Q2 earnings season

In a downbeat Q2 for corporate India, where Nifty-50 earnings grew a modest 4% year-on-year—the slowest in 17 quarters—Motilal Oswal Financial Services highlighted stocks that bucked the trend. The brokerage identified State Bank of India (SBI) and Larsen & Toubro (L&T) among the ten winners as providing resilience and growth, while Tata Motors and Asian Paints rounded out the back five struggling with cost pressures and operational bottlenecks.

Motilal Oswal’s Q2 FY25 earnings report paints a striking picture of contrasts in corporate performance. With Nifty-50 earnings falling below historical averages and Motilal Oswal’s broader universe down 1% year-on-year, against this muted backdrop some stocks have stood out for their resilience and growth potential. On the other hand, the report identified laggards that struggled with valuation concerns, cost pressures and operational challenges during Q2 earnings.

The brokerage said it has cut its FY25 Nifty EPS estimates by 5% from August 2024, forecasting a modest 5% growth for the Nifty’s earnings – marking the first year of single-digit growth in five years. However, the firm added, “Compared to muted 1H, we expect corporate earnings to recover in 2HFY25, supported by increased rural spending, buoyant wedding season in 2HFY25 and increased government spending.”

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Winners choose:

1. Among the winners, State Bank of India (SBI) emerged with strong financial performance, backed by strong capital position and stable loan growth. The bank is expected to grow its earnings significantly, showing a solid EPS CAGR of 13.7% by FY26.
2. Larsen & Toubro (L&T) was another brokerage pick and is also performing well, with its EPS in FY24 at Rs. 111.1 in FY25 to Rs. 137.2, which translates into a robust 20.1% CAGR by FY26.
3. Sun Pharmaceutical Industries FY24 EPS at Rs. 49.3 in FY25 to Rs. 59.3 and expects steady growth, with an estimated CAGR of 16.9% by FY26.
4. Mahindra & Mahindra (M&M) is benefiting from strong rural demand, with its EPS in FY24 at Rs. 99.7 in FY25 to Rs. 116.2, marking a CAGR of 17.1%.
5. Indian hotels, buoyed by recovery in travel and wedding season enthusiasm, FY24 EPS at Rs. 11.8 in FY25 to Rs. 14.8, reflecting a growth rate of 22.1%.
6. Page Industries continues to perform strongly in premium apparel, delivering 20.3% EPS growth through FY26.
7. Ipca Laboratories is seeing strong demand in its pharma segment, with FY24 EPS at Rs. 34.4 in FY25 to Rs. 44.8, which is a significant 27.0% CAGR.
8. Angel One, benefiting from its digital transformation and wealth management initiatives, estimates an EPS CAGR of 25.0% by FY26.
9. Amber Enterprises, capitalizing on its consumer durables pipeline, reported FY24 EPS at Rs. 78.0 in FY25 to Rs. 113.0, representing an impressive 48.6% CAGR.
10. Finally, Atul Limited continues to perform strongly in the specialty chemicals space, with an EPS CAGR of 26.1% by FY26.

Left behind:

Among the laggards, Tata Motors is expected to see limited growth, with its EPS growth almost flat for FY25, reflecting profitability challenges. Asian Paints faces cost pressures and valuation concerns, leading to a more moderate growth outlook. Avenue Supermarts (Demart) struggles with operational inefficiencies and high valuations, while ABB India is constrained by valuation pressures. IndusInd Bank expects earnings growth but grapples with profitability and asset quality issues.

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