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These top 10 stocks were upgraded, downgraded by Motilal Oswal after Q1 results

These top 10 stocks were upgraded, downgraded by Motilal Oswal after Q1 results

These top 10 stocks were upgraded, downgraded by Motilal Oswal after Q1 results
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By Pranati Deva  Aug 20, 2019 10:35:14 AM IST (Published)

A large number of brokerages have downgraded various companies following lower-than-expected quarterly results. Also, tepid commentaries from corporates suggest more legs to earnings downgrades in the coming months.

The June-quarter earnings for Nifty50 companies were largely muted, hurt by weak demand, slow private sector capital expenditure, liquidity tightness, and global trade issues.

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A large number of brokerages have downgraded various companies following lower-than-expected quarterly results. Also, tepid commentaries from corporates suggest more legs to earnings downgrades in the coming months.
Motilal Oswal cut EPS of Nifty companies by 4 percent in the first quarter.
In 1QFY20, profits were entirely driven by banks, while commodities and automobiles dragged the aggregates. Sales growth for the Nifty50 companies was the slowest since December 2016, dragged by automobiles and commodities like metals and oil & Gas, said an earnings report by Motilal Oswal.
"Consumer companies also reported a deceleration in top-line growth and guided for moderation in near-term volume growth. Cement was the only sector which exceeded expectations on sales, led by higher realizations, even as volume growth was tepid at 2 percent. Meanwhile, Healthcare, Retail and Technology companies met sales growth expectations," the report said.
Profits for automobiles, metals, and oil & gas universe declined by 53 percent, 42 percent and 19 percent YoY, respectively, it noted, adding that excluding Tata Motors, automobiles’ profit declined 20 percent.
After many quarters, Pharma Universe delivered an in-line performance, with 20 percent profit growth, meanwhile, consumer, utilities and technology stocks posted in-line 12 percent, 9 percent, and 8 percent profit growth, respectively.
For FY20, the brokerage expects 13 percent profit growth and 16.4 percent EPS growth in Nifty companies. 90 percent of incremental profits in FY20 for the Nifty are coming from Financials and ex-Financials, Nifty profits are expected to stay flat YoY, it added.
"For the MOSL Universe, at the sectoral level, automobiles and oil & gas have seen an 8 percent earnings cut each, while PSU banks, metals, and telecoms’ earnings were revised downward by 7 percent, 10 percent, and 11 percent, respectively. Cement, capital goods, healthcare, private banks, and technology have also seen 1-3 percent cuts. Meanwhile, Consumer, NBFC and utilities’ earnings estimates remained stable for FY20," the report noted.
Among the stocks, the brokerage's top upgrades include Bharti Infratel, Asian Paints, Sun Pharma, and Zee, while, top downgrades were Tata Steel, Tata Motors, IOC, BPCL, and SBI.
The brokerage has already cut FY20/21 Nifty EPS estimates have been cut by 3.9/2.9 percent. They expect Nifty EPS to grow 16.4 percent in FY20 and 19.7 percent in FY21 and nearly 74 percent of the earnings cut is driven by SBI, IOC, ONGC, Tata Steel, BPCL and Tata Motors, it further said.
Here are the top upgrades and downgrades by MOSL post Q1 earnings:
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