Autos, Industrials, Materials, and Utilities sectors drove headline earnings growth, surpassing expectations. Conversely, sectors such as Energy and Healthcare exceeded expectations, while Staples and Discretionary (excluding Autos) fell short in terms of EBITDA growth.
The third quarter of FY24 witnessed resilient earnings, with the BSE 100 and Nifty registering an 18 percent and 13 percent growth in EBITDA compared to the previous year, as per the latest India Equity Strategy report by CITI. According to the report, auto and healthcare were the key sectors that exceeded earnings estimates, while financials and materials fell short of projections.
For the quarter, according to the report, autos, industrials, materials and utilities drove headline earnings growth against expectations. On the other hand, sectors such as industrials, energy and healthcare saw ‘beats’, while staples and discretionary (excluding autos) saw a ‘miss’ on EBITDA growth.
CITI analysts are overweight on state-run utilities and defence, industrials, banks and insurance. They are underweight on consumer discretionary, IT services and metals, while neutral on autos and transportation, consumer staples, NBFCS, Real Estate and Cement. In terms of stocks, their preferred list includes Maruti, Eicher Motors, Cholamandalam Investment & Finance, HDFC Bank, ICICI Bank, SBI Life, BPCL, GAIL and L&T.
Looking ahead, the report indicates that their analysts will closely monitor the outcome of the general elections, although recent state elections and incremental opinion polls suggest a low probability of any surprises. Additionally, Citi global economists anticipate a global growth slowdown and a US recession, while India economists expect delays in the rate cut cycle.
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