Market Movers: EPS Downgrades for Trent, Asian Paints, ITC; Big Boost for Bharti Airtel, Hindalco

The Indian stock market’s benchmark index, Nifty 50, has remained largely unchanged over the past twelve months, despite significant downward revisions in corporate earnings projections. According to a recent report by JM Financial, while stock prices have shown resilience, earnings estimates have been progressively lowered over the past year, signaling potential concerns about corporate profitability.

EPS Estimates for FY25E-27E Face Further Cuts

The report highlights a 5.8% decline in earnings per share (EPS) estimates for Nifty 50 companies for the financial years FY25E and FY26E over the past year. This downward revision trend extended into February 2025, with EPS estimates for the upcoming three financial years (FY25E-27E) experiencing further cuts in the range of 0.5% to 0.9%. This follows a sharper reduction observed in January 2025, when estimates were lowered by a more substantial 1.4% to 2.8%.

The consistent downward revision in EPS estimates suggests that analysts and market participants are factoring in macroeconomic challenges, sector-specific headwinds, or weaker-than-expected corporate performance in their projections. Despite these earnings downgrades, the Nifty 50 index has remained relatively stable, indicating that investors may still be pricing in long-term growth potential or other market dynamics.

While the report does not specify the key sectors driving these revisions, the broader trend of EPS cuts underscores a cautious outlook for corporate earnings growth in the near to medium term.

Sectoral Analysis: EPS Downgrades Persist but Show Improvement in February 2025

A closer look at sectoral trends within the Nifty 50 reveals that 60% of its constituent companies faced earnings per share (EPS) downgrades in February 2025. While this indicates that a significant portion of the index continued to experience downward revisions, it also marks a notable improvement compared to January 2025, when a higher 72% of Nifty 50 companies saw their earnings estimates cut.

Key Sectors Facing EPS Pressure

Certain sectors experienced steeper EPS cuts, with earnings estimates being reduced by more than 1% in February. The sectors most affected by these downward revisions included:

• Banking Sector: EPS estimates declined by 1.5%, reflecting potential concerns around loan growth, asset quality, or net interest margins.

• Cement Industry: Faced a 1.6% EPS reduction, possibly due to cost pressures, demand fluctuations, or pricing challenges.

• Oil & Gas Sector: Earnings expectations were revised downward by 1.5%, which could be attributed to factors such as crude price volatility, regulatory changes, or refining margins.

• Consumer Sector: Saw the most significant cut, with EPS estimates dropping by 3.3%, indicating potential challenges in demand recovery, input cost pressures, or shifts in consumer spending patterns.

While earnings downgrades persisted across multiple industries, the overall trend suggests a moderation in the pace of downward revisions, signaling that market sentiment and earnings expectations may be stabilizing compared to the previous month.

Sector-Wise Impact: Consumer, Banking, and Auto Lead EPS Downgrades, While IT and Pharma Show Resilience

An analysis of sectoral trends within the Nifty 50 highlights a widespread but uneven impact of earnings per share (EPS) downgrades across industries in February 2025. While some sectors faced substantial downward revisions, others showed relative stability, experiencing only minimal adjustments.

Sectors with the Highest EPS Downgrades

The consumer sector emerged as the most affected, with a staggering 88% of its Nifty 50 constituents witnessing EPS downgrades during the month. This suggests that demand uncertainties, cost pressures, or shifting consumer spending patterns could be weighing on earnings expectations in the sector.

Following closely behind, the banking and automobile sectors also saw widespread downward revisions, with 83% of their Nifty 50-listed firms experiencing cuts in their EPS estimates. This trend could reflect concerns related to loan growth, asset quality, interest rate dynamics in banking, and cost pressures, supply chain disruptions, or demand fluctuations in the automobile industry.

Other sectors that faced significant EPS reductions include:

• Oil & Gas: 67% of companies in this sector saw earnings estimates revised downward, potentially due to commodity price volatility, regulatory changes, or refining margin pressures.

• Metals & Mining: 60% of companies in this sector experienced EPS cuts, which may have been driven by fluctuations in global metal prices, demand concerns, or cost inflation.

Sectors That Showed Resilience

While several industries faced significant EPS downgrades, some sectors proved to be more resilient, experiencing only minimal revisions in February. These include:

• IT Services: Saw a negligible 0.1% EPS downgrade, indicating stable demand, steady deal pipelines, or controlled cost structures in the sector.

• Pharmaceuticals: Faced a 0.1% cut, suggesting limited earnings pressure despite ongoing sectoral challenges.

• Non-Banking Financial Companies (NBFCs): Also experienced a 0.1% downward revision, signaling relative stability compared to the broader financial sector.

• Infrastructure & Ports: Encountered a slightly higher 0.5% cut, but still fared better than many other industries.

Overall Trend

The sectoral analysis suggests that while EPS downgrades continued in February 2025, the impact was not uniform across industries. Consumer, banking, and auto companies bore the brunt of downward revisions, while IT services, pharmaceuticals, and NBFCs managed to hold steady with minimal earnings adjustments. This divergence indicates that sector-specific factors played a crucial role in shaping earnings expectations for Nifty 50 companies.

Sectors and Companies That Defied the Trend: EPS Upgrades in February 2025

Despite the overall trend of earnings per share (EPS) downgrades across multiple sectors, some industries managed to see positive revisions in February 2025, signaling resilience in specific areas of the economy. According to a report by JM Financial, sectors that experienced EPS upgrades included:

• Telecom: Led the way with a notable 5.7% increase, indicating strong earnings momentum, possibly driven by higher subscriber growth, better tariff realization, or improved operational efficiencies.

• Industrials: Saw a 0.9% rise in EPS estimates, reflecting steady infrastructure investments, order book growth, or operational efficiencies in the sector.

• Metals & Mining: Experienced a 0.2% increase, suggesting improving commodity prices or demand stability in the industry.

• Insurance: Witnessed a modest 0.1% upgrade, indicating stable premium collections, improved underwriting profitability, or favorable regulatory developments.

Nifty 50 Companies with the Highest EPS Upgrades in February 2025

Among individual companies, Bharti Airtel led the EPS upgrades, with a significant 5.7% increase. This suggests strong performance in the telecom space, potentially driven by higher average revenue per user (ARPU), subscriber additions, or cost efficiencies.

Other Nifty 50 companies that saw notable EPS upgrades included:

• Hindalco Industries: +2.1%, likely benefiting from favorable commodity pricing, strong demand for aluminum, or operational improvements.

• Coal India: +1.3%, potentially reflecting higher coal production, improved realizations, or stable domestic demand.

• Bharat Electronics (BEL): +0.9%, suggesting strong order inflows, defense sector growth, or improving execution capabilities.

• Bharat Petroleum Corporation Ltd (BPCL): +0.7%, which could be driven by refining margin improvements, better fuel demand, or operational efficiencies.

• NTPC: +0.6%, indicating stable power demand, capacity expansion, or improved financial performance.

Key Takeaways

While a large portion of the Nifty 50 experienced EPS downgrades in February 2025, certain sectors and companies defied the trend, posting earnings estimate upgrades. The telecom sector, led by Bharti Airtel, saw the biggest gains, while industrials, metals & mining, and insurance also recorded marginal improvements. Among individual companies, Hindalco, Coal India, BEL, BPCL, and NTPC stood out as key beneficiaries of positive earnings revisions, suggesting sector-specific tailwinds and company-level strengths driving investor confidence.

Major EPS Downgrades in February 2025: Kotak Mahindra Bank, Trent, and IndusInd Bank Lead the Decline

While some companies saw earnings per share (EPS) upgrades in February 2025, several Nifty 50 constituents faced significant downward revisions, reflecting sectoral and company-specific pressures. Among them, Kotak Mahindra Bank recorded the sharpest EPS cut of 11.1%, signaling potential challenges related to loan growth, net interest margins, asset quality, or regulatory changes impacting the bank’s earnings outlook.

Following closely, Trent Ltd., a key player in the retail sector, saw an 8.2% reduction in EPS estimates, suggesting possible concerns around consumer demand, operational costs, or expansion-related expenditures.

IndusInd Bank also faced a steep 7.8% EPS downgrade, indicating market concerns over asset quality, provisioning requirements, or competitive pressures within the banking sector.

Other Major Companies Facing EPS Cuts

Apart from these three companies, several other well-known firms saw notable reductions in their earnings estimates, particularly in the consumer and energy sectors:

• Asian Paints: Faced a 6.0% EPS downgrade, likely due to cost pressures from raw materials, demand fluctuations, or competitive pricing challenges in the paints and coatings industry.

• ONGC (Oil & Natural Gas Corporation): Saw its EPS estimates cut by 5.1%, reflecting potential concerns over crude oil price volatility, production challenges, or regulatory factors affecting the energy sector.

• ITC: Experienced a 4.0% reduction in EPS estimates, which could be attributed to pressures in its FMCG, cigarettes, or agribusiness segments, alongside broader consumer sector challenges.

Sectoral Impact

The presence of Asian Paints and ITC among the biggest EPS downgrades highlights the pressure on consumer-facing sectors, where demand uncertainty and cost inflation may be impacting profitability. Similarly, the energy sector, represented by ONGC, faced downward revisions, potentially due to external macroeconomic factors affecting the industry.

Overall, these EPS cuts reflect sector-specific headwinds that are shaping earnings expectations for key Nifty 50 companies, with banks, consumer-focused businesses, and energy firms bearing the brunt of downward revisions in February 2025.

Market Outlook: Nifty 50 Holds Steady Amidst Persistent EPS Downgrades

Over the past year, the Nifty 50 index has remained largely range-bound, showing limited movement despite ongoing fluctuations in earnings expectations. However, the consistent downward revision in earnings per share (EPS) estimates suggests that investor sentiment remains cautious, with analysts factoring in sectoral challenges and macroeconomic uncertainties.

Sectoral Headwinds Continue to Weigh on the Market

The broader market remains susceptible to sector-specific pressures, with industries such as banking, consumer goods, and commodities facing notable earnings downgrades. The banking sector has seen widespread EPS cuts, reflecting concerns about loan growth, asset quality, and interest rate dynamics. Similarly, the consumer sector has struggled with demand fluctuations and cost pressures, leading to earnings revisions for key players. Meanwhile, commodity-linked sectors, including oil & gas and metals, have faced headwinds due to global price volatility, regulatory changes, and shifting supply-demand dynamics.

Pockets of Growth Amidst the Broader Downtrend

Despite these challenges, certain industries have demonstrated resilience, with telecom, industrials, and insurance standing out as areas of growth. The telecom sector has led EPS upgrades, reflecting stronger revenue streams and operational efficiencies. The industrials sector has also seen positive earnings revisions, likely driven by infrastructure development, order book expansion, and steady demand. Additionally, the insurance industry has remained relatively stable, with modest EPS upgrades signaling consistent business fundamentals and premium growth.

Overall Sentiment

While earnings downgrades have dominated the market landscape, the presence of select growth pockets in key industries indicates that not all sectors are under pressure. As the market navigates ongoing uncertainties and sectoral shifts, the contrast between struggling and resilient sectors highlights the importance of industry-specific factors in shaping earnings expectations and broader market trends.