Analysts lowered earnings estimates of three out of every five companies after the June quarter numbers.
Earnings-per-share estimates were downgraded for 57 percent of the 251 companies tracked by at least 10 analysts, according to Bloomberg data. Analysts raised the forecasts for 39 percent and kept estimates unchanged for 4 percent companies.
The combined earnings per share of the Nifty 50 companies missed the consensus by 7 percent in the quarter ended June, according to BloombergQuint's calculations. That's when India's benchmarks are scaling new all-time highs. The Sensex and the Nifty touched a record of 38,694 and 11,692, respectively, yesterday, driven by a rally in select stocks.
Sector Trends
Earnings per share estimates have been upgraded for only three of the 10 sectors—technology, energy and consumer staples. All information technology stocks, barring Tata Consultancy Services Ltd. and Redington India, have been revised upwards.
The positive stance on technology stocks comes on the back of a depreciating rupee. The domestic currency can further weaken by 5-6 percent over the next year, according to Dhananjay Sinha, head of research at Emkay Global Financial Services.
The communications sector, however, is the worst impacted with all stocks, except Sun TV and Just Dial, witnessing an earnings downgrade for the financial year through March 2019.
Stock Upgrades
Here's a snapshot of the top upgrades
- DLF: The cash flow will improve after planned capital raise and the management is confident of achieving residential sales of over Rs 2,000 crore, Deutsche Bank said.
- Mahindra & Mahindra: It is the only automobile company to report earnings in line with estimates.
- National Aluminum Company: It met June quarter estimates driven by strong alumina prices, a Narnolia Securities report said.
- Ashoka Buildcon: Earnings upgrade largely because of robust execution pipeline, ICICI Direct said in a report.
- L&T Finance Holdings: Rural and housing continue to report strong growth and return on equity, according to a JPMorgan report.
Stock Downgrades
Here's a snapshot of the top downgrades
- Bharti Airtel and Interglobe Aviation: Earnings downgraded due to weak results.
- Narayana Hrudalaya: Margin pressure due to losses suffered by new hospitals, the management said after earnings.
- Healthcare Global: Lower margin in the June quarter, according to exchange filings.
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