Nifty 50 earnings estimates have fallen 1.5% so far this earnings season as downgrades outnumbered upgrades, according to Jefferies.
Of the 47 stocks in its coverage, half beat estimates and about a fifth reported in-line earnings, Jefferies said in a report. Nine globally-linked contributed the most to earnings cut even as margin outlook improved across the board, it said.
Within the Jefferies coverage, 57% of the Nifty 50 stocks have seen downgrades after the earnings, while there was no change for 11%. About a third were upgraded.
Hindustan Unilever Ltd., Asian Paints Ltd., Tata Steel Ltd. and Oberoi Realty Ltd. saw meaningful upgrades in earnings per share, Jefferies said.
Tata Motors Ltd., Gland Pharma Ltd., HDFC AMC Ltd., Bandhan Bank Ltd., Wipro Ltd., Coforge Ltd., and JSW Steel Ltd. witnessed sharp cuts in EPS estimates.
Jefferies expects margin concerns to ease as metal price decline and energy prices moderate. Amid sectors, the brokerage sees margin pressure to persist for IT companies, most of which have reported sequential revenue growth—with the exception of Wipro. While attrition fell to a four-quarter low, it remained a challenge.
Jefferies said the asset quality trends of private banks were strong, and loan growth remained healthy.
Jefferies' sectoral views for the stocks within in coverage that have reported first-quarter numbers:
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