After weak quarterly results from big companies, experts have now lowered earnings estimates for the rest of the year. According to Bloomberg data, earnings per share (EPS) estimates for Nifty 50 for FY25 have seen a 10.5% cut in October alone. The consensus EPS estimate for the index now stands at Rs 1134 as against a high of Rs 1279 in early August this year.

First let us tell you what is EPS?  What does it mean for evaluating a stock?

EPS means Earning Per Share. How much profit do investors get per share? Method to calculate EPS: Total income of the company/total shares. What happened now? Companies in Nifty 50 that missed Street estimates in the September quarter include Hindustan Unilever, Tata Consumer Products, Bajaj Auto, IndusInd Bank and others. Similarly, among companies in Nifty 100, the biggest cut in FY25 earnings was seen in JSW Steel, InterGlobe Aviation, Indian Oil Corporation, UltraTech Cement, Ambuja Cements, Avenue Supermarts and BPCL. The performance of oil marketing companies was affected by several factors, including under-recovery in LPG- petroleum gas, inventory losses and weak margins. Heavy rains during the quarter adversely impacted the tea and packaged beverage segments of consumer staples companies, but increased slippages and higher credit costs dragged down IndusInd Bank's earnings. Needless to say, stocks of all these companies have already fallen between 5% and 18% following their second quarter numbers. Meanwhile, Jefferies has slashed earnings estimates for more than 60% of the 98 companies it covers that have reported their second quarter results. According to the brokerage, this cut in earnings is the highest since the start of 2020. In an investor note on October 30, Jefferies wrote, "Above-normal rainfall and weak government spending have impacted earnings results. The brokerage further said that clear trends should emerge in the December quarter, but some slowdown is likely. Among sectors, cement, energy, loan companies, mid-caps, automobiles and consumer staples saw earnings decline, while technology, non-loan financial services companies and property developers outperformed. Despite an 8% decline from the peak, the benchmark Nifty 50 is currently trading at 22 times its one-year forward earnings, a premium of 13% to its five-year average.