Earnings upgrades and downgrades by analysts have been equally split so far this fiscal even as a deadlier second wave of Covid-19 slowed down a nascent economic rebound.
Analysts downgraded FY22 adjusted earnings per share estimate for 195 companies in the NSE 500 index, according to Bloomberg data—forecasts for 403 are available. 193 witnessed upgrades in the last three months. There was no change in EPS estimate of 15 companies.
India reported record virus infections in the first two months of the ongoing fiscal, overwhelming the nation’s healthcare. That forced several states to lock down, disrupting demand. Input prices are rising across sectors. And the pace of vaccination is slower than expected, prompting analysts to lower earnings forecasts.
Kotak Institutional Equities expects an 11% sequential decline in net income for its coverage universe in the first quarter.
A Jefferies report said the pace of earnings upgrades has reduced after fourth quarter. The sharp slowdown in domestic economy in the three months ended June has driven earnings cuts in autos, consumer discretionary & FMCG, telecom, and retail, it said.
Cement, property, and utilities sectors have seen the best EPS resilience, according to Jefferies. The biggest upgrades came for metals, it said.
Still, better-than-expected revenue in the fourth quarter has helped Nifty earnings estimates for FY22 jump 5% since April 1, according to Jefferies.
BloombergQuint compiled a list of top 5 large, mid, and small caps that have seen the largest upgrades and downgrades in their FY22E EPS in the last three months.
Large caps or Nifty 50
FY22E adjusted EPS was:
Upgraded for 24 stocks.
Downgraded for 26 stocks.
Mid caps or Nifty Midcap 100
FY22E adjusted EPS was:
Upgraded for 45 stocks.
Downgraded for 46 stocks.
Unchanged for nine stocks.
Small caps or Nifty Smallcap 100
FY22E adjusted EPS was:
Upgraded for 39 stocks.
Downgraded for 38 stocks.
Unchanged for 23 stocks.
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