Biggest Target Price Upgrades And Downgrades After Q3 Results
Analysts hiked the target price for two in every three stocks after corporate earnings in the third quarter were aided by lower costs and tax cuts.
Of the 379 stocks analysed, target prices of 252 were upgraded since the September-quarter earnings season, according to Bloomberg data. 125 companies saw a cut in estimates, while two remained unchanged.
- Stocks with a market capitalisation of at least Rs 1,000 crore.
- Tracked by at least five analysts.
Here are the five companies that saw the biggest upgrade in target price:
Analysts upgraded the target price on the back of robust growth in specialty chemicals—its largest business, continued traction and focus on high-margin contract research and manufacturing services business and expansion into new products.
Analysts cited robust order wins for the quarter and the fiscal, resolution of the Kolkata metro project and strong guidance for the next financial year (35 percent revenue growth and Rs 7,000-8,000 crore order inflow).
Better-than-expected performance in the third quarter, aided by 57 percent and 18 percent year-on-year growth in consumer electronics and lighting segments, respectively, aided the upgrade. Expectations of higher margins due to benign commodity prices and focus on balance sheet strengthening helped.
Better-than-expected operational performance in the quarter ended December due to the company’s focus on cost-cutting initiatives, its guidance to sustain Ebitda margins at the current level and continued traction in personal care segment—which contributes 45 percent to the overall top line—aided penetration of laminated tubes.
Analysts cited volume growth in the domestic market, healthy Rabi sowing season, easing raw material costs and new product launches for the upgrade.
Here are the five companies that saw the biggest cut in target price:
Dishman Carbogen Amcis
Analysts cut target price estimate mainly on account of lower-than-expected performance in the December quarter. Revenue from the company’s domestic CRAMS business fell 33 percent year-on-year as certain ordered were deferred.
Slowdown in demand and a net loss of Rs 9 crore in the third quarter and a loss of Rs 41 crore in the nine months ended December, largely contributed by associate companies and joint ventures, led to the downgrade.
The company reported a loss and its revenue tumbled 43 percent year-on-year in the third quarter. The promoters have pledged 94 percent of their holding and overall outlook for the cable and distribution industry remains weak.
Himadri Specialty Chemicals
Revenue fell 27 percent year-on-year and 12 percent sequentially due to poor realisations on account of the slowdown across end-user industries—aluminium, graphite and steel. Profit fell 73 percent year-on-year and 61 percent on a quarterly basis. Analysts expect demand for its products to remain subdued.
Analysts cited poor third-quarter results and continued weakness in the retail and consumer segment for cutting the target price estimates. The IT company’s dollar revenue declined 5.9 percent sequentially in the quarter on the back of a 13.4 percent fall in core revenue. Seasonal furloughs also hurt its operational performance.
(The reasons for target price revisions were compiled from research reports by Emkay Research, IIFL Securities, Edelweiss Research and Prabhudas Lilladher, among others)