Analysts Lower Targets For 90% Of Indian Stocks Amid Covid-19 Crisis

Analysts lowered target prices for 90 percent of Indian stocks in the past two months as the Yes Bank Ltd.’s fiasco, falling crude and now the lockdown to contain the new coronavirus pandemic are expected to drag growth further below its lowest level in 11 years.Target prices were cut for 253 of the 281 stocks tracked by at least 10 analysts, according to Bloomberg data. Of the 28 companies that saw an increase in their price targets, only three offer a double-digit return potential.The underscores the level of pessimism in the market as the Covid-19 pandemic has stalled businesses across the world, with the International Monetary Fund already declaring a recession. In India, the shock is expected to impact earnings of companies in the next two financial years even though the Reserve Bank of India infused record liquidity and cut rates to their lowest since 2004, and the government announced a Rs 1.7-lakh-crore relief for the poor.Forecast for earnings per share—a measure of profitability—has been lowered for 44 of the Nifty 50 constituents for FY21 and nearly half of the Nifty 50 stocks, excluding financials, are trading at single-digit valuations.The deepest cut in target prices were seen by banks, oil explorers, hotel operators, cement makers and an aviation company..BanksYes Bank’s target price was lowered due to a forced bailout by investors at a lower price. Analysts also expect the capital-raising done would be insufficient to cover for its high bad loans.IndusInd Bank Ltd.’s target price was lowered due to deposit outflows by institutional investors following the Yes Bank fiasco. Lower lending rates and slower growth is expected to impact margins of most banks over the next few quarters.ONGC, Oil IndiaA sharp drop in crude oil prices and a cut in gas prices led analysts to lower their target prices for oil and gas explorers. That’s because the selling price of oil and gas are currently below their production costs.Indian Hotels And SpiceJetA worldwide lockdown triggered by the outbreak of the novel coronavirus will hurt the incomes of hotel and aviation industries. The impact will largely be seen in the first quarter—usually the best quarter for the tourism industry due to the holiday season..Balkrishna IndustriesVisibility of demand recovery and lower commodity prices led analysts to hike the company’s target price.Navin FluorineHigher revenue exposure to pharmaceutical companies which has greater secular demand and a jump in sales following shutdown of chemical plants in China have kept analysts bullish on the company.DrugmakersThe pharmaceutical sector is among the few that provides earnings visibility and analysts are bullish over hopes of growth even as consumer demand for some drugs fell during the Covid-19 crisis..(Corrects an earlier version that misstated change in target price as change in stock price in the graphics)

Analysts Lower Targets For 90% Of Indian Stocks Amid Covid-19 Crisis

The world’s biggest lockdown to contain the coronavirus pandemic threatens the Indian economy.

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