Low Risk for FY27 EPS Growth of 14%

研报英文原文证据摘录

Low Risk for FY27 EPS Growth of 14%

al economy. We note though the share of cos in MSCI India with GDP series with base year 2022-23 considered from FY24

onwards

a larger rural exposure (Consumer staples, 2Whlr, direct financiers) is <10%. Meanwhile, the

lower monsoon may be a positive for sectors like power, cement & building materials (higher Exhibit 3 - EBITDA margin trend for MSCI India

construction activity), travel, ACs etc. These sectors have a higher weight in MSCI. As such, cos. (ex-Energy, Metals, fin)

22.9corporate earnings may not be negatively impacted by the monsoon rainfall weakness. 24.023.0 (%) 22.4 23.4 22.3 22.1 22.2 22.1 22.2

22.0

Revenue growth important for earnings; confidence is high. JEF expects Nominal GDP 21.0 20.6

growth to be ~3-3.5ppt higher in FY27 at ~12-12.5% YoY. This is supported partly by higher 20.019.0

inflation. As highlighted above, while monsoon can be a small drag on GDP growth, the broader 18.0

economic activity is robust and we don't expect real GDP growth to be around 6.5%. The higher FY20 FY21 FY22 MSCIFY23India (ex-Energy,FY24 Metals,FY25fin) FY26 FY27E FY28E

.

Nominal GDP growth (GDP delator to be around 6%) should support revenue growth. Source: Companies, Jefferies. Estimates are Jefferies estimates

*Excludes Tata Motors CV (TMCV) and Vedanta Aluminium

Modest margin improvement built in FY27E - Limits earnings risk. Our analysis of MSCI (VAML)

India companies (excluding Energy, Metals and Financials) shows that over FY24-26, avg. 57%

of the cos missed EBITDA margin expectations. This time, our EBITDA margin estimates for

MSCI India cos. (ex-Energy, Metals and Financials) imply only a marginal 10bps improvement

in FY27, taking aggregate margins to 22.2%, inline with the past 3-yr average, and hence not

a tall ask.