NIFTY EARNINGS PROJECTION

 Elara Securities said Nifty50 consensus FY23 EPS estimate has been cut by 1 per cent and FY24 by FY24 in the past three months, to Rs 879 and Rs 1,020, respectively.

“We believe this was led by earnings erosion driven by margin pressures. While global factors may put a downward pressure on markets in the near term, sustained earnings would provide strong support from any sharp fall,” it said.

For

Securities, 42 per cent of Nifty50 companies beat its PAT estimates, while 26 per cent missed its forecasts.

“Nifty EPS for FY23 was reduced by 0.7 per cent to Rs 864 largely due to notable downgrades in

, , , and earnings. Conversely, FY24 EPS was broadly unchanged at Rs 1,002 against Rs 1,003 earlier,” the brokerage said.

Are valuations reasonable?

Nifty50’s 12-month forward P/E now stands at 18.7 times against its long term average LPA of 18.4 times. At 2.9 times, the 12-month forward P/B stands at a 10 per cent premium to the Nifty’s historical average of 2.7 times. After the recent correction, India’s market capitalisation to GDP now stands at 100 per cent of FY23E GDP against its long-term average of 81 per cent.

“After the correction, we find more value in largecaps than midcaps given the relative valuation equation. That said, we reiterate that earnings delivery is crucial for markets to hold, in an adverse milieu of volatile and challenging macros,” Motilal Oswal said in a note.

Nifty50 target

For Axis Securities, Q4FY22 earnings were largely in line with expectations, with the number of earnings beat at 2 times the number of misses, with 85 per cent of the Nifty50 companies either beating or being in line with the revenue expectation. The brokerage has a March 2023 target of 18,400 for Nifty50.

BofA Securities is cautious. It has a Nifty50 target at 16,000.

Sudip Bandyopadhyay of Inditrade CapitalUnder said it is better to be cautious as it is very difficult to assign a Nifty50 target in December or next March.

“Whatever we do we say it will be in the realm of speculation. It is better to be careful and watch the developments and there are too many developments happening all around us and we have to be careful. I think that is all I would say, assigning an index target is not what I can do really at this stage.