Price Target Cut For Two In Every Three Indian Stocks
The stocks with the biggest downgrades and upgrades in target price since June end...
Analysts cut target price for two in every three stocks since June as slowing demand, weak corporate earnings and geopolitical tensions dampened the sentiment.
Target prices were lowered for 66.9 percent of the 251 stocks tracked by at least 10 analysts since June end, according to data available on Bloomberg.
Consumer discretionary and industrial sectors saw the biggest downgrades, reflecting a slowdown in consumption as auto sales have fallen and consumer goods volume growth has softened. Among stocks, analysts lowered the price target the most for Yes Bank Ltd. and Vodafone Idea Ltd.
Here are the sectors and stocks with worst downgrades:
- Selection criteria: Stocks tracked by at least 10 analysts.
Eight out of 10 sectors saw cuts in target price estimates since June end. Utilities and consumer staples saw marginal upgrades in the 12-month target price.
Biggest Downgrades
Jefferies, which has the lowest price target of Rs 50—against Monday’s closing price of Rs 62.25—doesn’t have a positive outlook on earnings after the private lender’s profit tumbled more than 90 percent as its bad-loan clean-up continued. The brokerage cited increase in below-investment-grade loan book and as half the new non-performing assets coming from outside watch list for its lack of optimism.
Declining subscriber base, lower ARPU on account of downtrading, poor core operating performance and high debt are some of the key concerns pointed out by multiple brokerages while lowering the target price.
Contraction in revenue from top 10 clients in six out of the last eight quarters, lack of scale onsite, headwinds from automation and insourcing are likely to keep growth and margins volatile for the software consulting and outsourcing services provider, according to CLSA.
A portfolio with a 67 percent share of vehicle finance amid an auto slowdown, higher cost of borrowing and management commentary citing weak demand are key challenges for the non-bank lender, according to multiple brokerage reports.
Biggest Upgrades
A jump in unique visitors, paid listings, robust mobile traffic growth and increasing focus to tap smaller cities and towns led analysts to increase the target price of the parent company of the local search services provider.
A diverse product portfolio with lower concentration of unit-linked plans and industry leading margins contributed to increase in target price.
The Tata Group-owned retailer reported higher-than-expected earnings growth in the quarter ended June, aided by a 12 percent same-store sales growth on a yearly basis. The company plans to invest Rs 350-400 crore in the ongoing going financial year, a twofold jump over the previous year, to add more than 100 Westside and Zudio outlets.
India’s largest city gas distributor reported its highest quarterly profit in the three months ended June, outperforming its peers. That was aided low liquefied natural gas prices and higher demand from ceramic tilemakers in Morbi, Gujarat after the National Green Tribunal ordered a shutdown of units operating on coal gas.
Highest-ever operating profit, favorable industry dynamics after grounding of Jet Airways India Ltd. and sustained lower crude oil prices worked in favour of budget airline.
(Reasons for upgrades and downgrades compiled from reports by CLSA, Jefferies, JPMorgan, Emkay Global, and Edelweiss Securities, among others)