The 10 Stocks That Disappointed Analysts The Most

Analysts have gone wrong with their predictions on one in every four Indian stocks.

Share prices of 66 of the 255 widely covered companies are trading below the lowest analyst target price, according to data available on Bloomberg. Financials and industrials account for nearly half of the stocks that disappointed the analysts.

Selection criteria:

• Stocks tracked by at least 10 analysts.
• Lagging the most to the lowest analyst target price.

Construction companies HG Infra Engineering Ltd. and NCC Ltd., and Indian Bank Ltd. are on top of the list of stocks that missed analyst estimates the most. Here are the 10 stocks that have completely gone against the consensus:

HG Infra

All 13 analysts tracking the Rajasthan-based construction company suggest a ‘Buy’. Yet, the stock trades more than 29 percent below its lowest target share price of Rs 300 apiece assigned by Karvy Broking. The company’s financials were impacted by higher interest costs and a construction slowdown because of elections.

NCC

Even as 17 of the 19 analysts tracking the stock recommend ‘Buy’, share prices of the construction firm have tumbled 39.5 percent so far this year as the newly formed YS Jaganmohan Reddy government in Andra Pradesh scrapped projects sanctioned by its predecessor. Brokerage CIMB upgraded the stock to ‘Hold’ but cut the target price to Rs 71 per share—the lowest—on Aug. 12.

Indian Bank

Eight out of 11 analysts tracking the lender suggest ‘Buy’ but its shares have fallen nearly by half this year on expectation of higher slippages, delay in recoveries from stressed sectors and uncertainty from merger with Allahabad Bank. B&K Securities has the lowest target price at Rs 160 and the only ‘Sell’ call among brokerages, having downgraded the stock on Sept 3.

Entertainment Network India

Shares of Entertainment Network (India) Ltd. operator of Radio Mirchi FM channels lag estimates on sharp weakness in advertising growth because of economic slowdown, increased adoption of digital content, and challenges from scaling up its non-radio business. Equirus Securities maintained ‘Add’ rating but cut the 12-month target from Rs 538 to Rs 427 apiece—the lowest—on Aug 8.

Sterlite Technologies

Sterlite Technologies Ltd.’s shares have fallen nearly by half so far this year because of concerns over promoters’ pledged shares, lower fibre cable prices and falling margin. Still, nine out of 12 analysts covering the stock have a ‘Buy’ rating. Yes Research has the lowest target price in its rating issued on July 19.

Dhanuka Agritech

The agro-chemical company’s shares have tumbled more than 30 percent so far in 2019 as a delayed monsoon hurt volume growth in the seasonally-strong April-June quarter, while margin narrowed to a four-quarter low as prices of key input shot up due to shutdown in China. Yet, not a single analyst covering the stock has a ‘Sell’ call. Spark Capital has the lowest target price, which was last updated on July 22.

Healthcare Global Enterprise

Shares of Healthcare Global Enterprises Ltd., India’s largest cancer treatment provider, tumbled as its losses more than doubled in the quarter ended June. High capital expenditure pushed its debt higher, increasing interest costs. Spark Capital upgraded the stock to ‘Add’ from ‘Reduce’ but cut the 12-month target price on Aug. 9.

Capacite Infraprojects

Slowdown in the real estate sector, liquidity issues, delayed debtor realisation, long gestation period in government orders dragged down shares of Capacite Infraprojects Ltd., a Mumbai-based construction company. Still, all 11 analysts tracking the stock suggest a ‘Buy’. Indsec Securities has the lowest price, but retained ‘Accumulate’ call.

Karur Vysya Bank

Shares of Karur Vysya Bank Ltd. have tumbled to their lowest since March 2014 as investors remained cautious over future growth due to contraction in advances, higher credit costs and asset quality concerns. B&K maintained ‘Hold’ but cut the target price estimate to the lowest among brokers to Rs 72 from Rs 75 apiece on July 27.

Ashoka Buildcon

All analysts covering Ashok Buildcon Ltd. suggest a ‘Buy’, making it the only second stock on the list with 100 percent consensus.

But the construction company’s shares have fallen this year amid weak order inflow from the state-run National Highway Authority of India, a delay in receiving appointment date (final permission to begin work is granted) for three projects, muted toll revenue and high debt due to investment in hybrid annuity projects—where the government bears part of the cost based on milestones.

On Sept. 20, Spark Capital downgraded the stock from ‘Buy’ to ‘Add’ and lowered the target price from Rs 160 per share to Rs 120 apiece, the lowest among brokers tracking the stock.

(The reasons for the stocks missing the analysts’ forecast have been compiled from the research reports of Edelweiss, HDFC Securities, Elara Capital and IIFL, among others.)