Of the 19 Nifty companies that have announced their earnings, 15 have either met estimates on both the PAT and EBITDA front. The earnings upgrade/downgrade ratio is < 1.

The March quarter was expected to see recovery in earnings from corporate India, but the early trends suggest a different story.

January-March 2019 was a quarter of restrained growth momentum in India as reflected in high-frequency growth indicators including passenger vehicle sales, two-wheeler sales, air passenger traffic, etc.

“Early March quarter earnings indicate that the Indian economy has slowed and the much-awaited revival in earnings growth may be delayed further. This could extend investor unease about stock valuations,” Deepak Jasani, Head Retail Research, HDFC Securities told Moneycontrol.

“Aggregate net profit growth of 334 BSE-listed companies that reported March quarter earnings (till May 7) fell 1.5 percent from a year earlier after adjusting for one-time gains or losses,” he said quoting data from Capitaline.

Of the 19 Nifty companies that have announced their earnings, 15 have either met estimates on both the PAT and EBITDA front. The earnings upgrade/downgrade ratio is < 1.

“Among the MOFSL universe companies, 74%/82% have delivered PAT/EBITDA that is either in line or above our estimate. The trend in earnings revision remains in favor of downgrades,” Motilal Oswal said in a report.

Among the Nifty constituents, ICICI Bank, Yes Bank, Indiabulls Housing Finance and Bharti Airtel missed PAT estimates, while Maruti Suzuki, Ultratech Cement, Vedanta and Reliance Industries exceeded estimates.

Here is a list of top 10 stocks where brokerages slashed target prices post-March quarter results:

Asia Paints: CLSA, Macquarie slash target price

Asian Paints reported fourth-quarter earnings on May 9 that missed analysts’ estimates on weak operating income. Consolidated profit was lower by 1.7 percent year-on-year at Rs 487 crore in the quarter ended March 2019.

CNBC-TV18 poll estimated profit of Rs 570 crore and revenue of Rs 5,200 crore. EBITDA was expected at Rs 958 crore and margin at 18.4 percent for the quarter.

CLSA maintained its sell rating on Asian Paints post March quarter results and reduced its target price to Rs 1285 from Rs 1400 earlier.

The company posted weak March quarter results and a cautious management outlook dented sentiment. CLSA further added that investors need to watch monsoon progress as well as the easing of the credit cycle.

Shriram Transport Finance: HSBC slashes target price

Shriram Transport Finance Company reported a 22.4 percent fall in its net profit at Rs 746.04 crore for the fourth quarter ended March 31, 2019.

HSBC maintained its buy rating on Shriram Transport post-March quarter results but slashed its target price to Rs 1350 from Rs 1450 earlier.

Lower credit costs and tax write-back buoyed net income in the March quarter. Slower growth and lower net interest margins (NIMs) overshadow healthy asset quality performance, said the note.

HSBC is of the view that the risk-to-reward ratio is still favourable for investors despite near-term uncertainties.

Alembic Pharma: HSBC slashes target price

Although Alembic Pharma reported strong results for March quarter but sluggish sales in India dented sentiment. The net profit of Alembic Pharmaceuticals rose 32.21 percent to Rs 124 crore in the quarter ended March 2019, compared to Rs 93.79 crore during the previous quarter ended March 2018.

HSBC maintained its hold rating on Alembic Pharma post-March quarter results and slashed its target price to Rs 575 from Rs 600 earlier.

U.S. sales remain steady on a QoQ basis on new launches and few supply benefits, and India sales also remained sluggish.

The upward trend is likely to continue for operating costs on R&D pipeline and start-up costs. Investors should look for progress in R&D efforts for US market and recovery in India, said the note.

Vedanta: CLSA slashes target price

Global brokerage firms maintain their rating on Vedanta post the March quarter results, but CLSA slashed its target price to Rs 135 from Rs 170 earlier.

The metals & mining firm’s March quarter consolidated profit fell a sharp 43.3 percent year-on-year (YoY) to Rs 3,218 crore. Profit in the year-ago period stood at Rs 5,675 crore.

“There are concerns over related party transaction which is likely to remain an overhang. EBITDA improved on a QoQ basis for aluminium & overseas zinc business,” said the CLSA report. However, slow volume ramp-up in zinc & oil is a concern.

Edelweiss also maintain its hold rating on Vedanta post March quarter results and also slashed its target price to Rs 175 from Rs 200 earlier.

“Vedanta’s Q4FY19 EBITDA was down 22 percent on a YoY basis but it met consensus owing to cost efficiencies at Zinc (Zn) International and aluminium (Al) divisions. Going ahead, despite sustained cost efficiencies at key divisions, we see lower Zn prices keeping earnings growth in check and stock performance muted,” said the report.

Hindustan  Unilever: CLSA cuts target price to Rs 1950

Global brokerages remain fairly mixed on HUL post Q4 results after the FMCG major registered 14 percent jump in its March quarter (Q4FY19) net profit at Rs 1,538 crore against Rs 1,351 crore in the same quarter last fiscal.

CLSA maintained its outperform rating on Hindustan Unilever post March quarter results but slashed its 12-month target price to Rs 1950 from Rs 2010 earlier.

The volume growth of 7 percent looks good in the context of peer performance. There is a marked shift in the near-term outlook as growth rates have moderated.

From current levels, margin gains will be relatively modest, said the CLSA note. The global investment bank tweaked EPS to factor in the higher tax rate. “We have yet to build in upgrade from GSK acquisition,” said the note.

TVS Motor Company: Nomura cuts target price

TVS Motor Company on Tuesday reported a 19.2 percent decline in its standalone profit after tax (PAT) to Rs 133.8 crore for the fourth quarter of 2018-19. The company had posted a profit after tax (PAT) of Rs 165.6 crore a year ago.

Nomura maintained its reduce rating on TVS Motor Company post March quarter results, and slashed its target price to Rs 359 from Rs 411.

March quarter’s margins were significantly below estimates due to higher commodity costs. Rising costs and competition is likely to keep margins under pressure, and as volume growth slows, the stock will find it difficult to sustain current valuation.

Bharti Infratel: CLSA cuts target price

Bharti Infratel posted a consolidated net profit of Rs 608 crore in the last quarter of 2018-19, almost flat on year, as consolidation in the telecom sector resulting in reduced tenancies.

CLSA downgraded Bharti Infratel to sell from outperform post March quarter results but slashed its target price to Rs 285 from Rs 300.

The tenancy outlook is likely to remain muted as exits spiked 60 percent on a QoQ basis while tenancy additions were down by 11 percent on a QoQ basis.

The brokerage firm slashed FY20-21 estimates by 2-4 percent. The global investment bank expects tenancies to see a 2.5 percent CAGR over FY19-21.

Indiabulls Housing Finance: Credit Suisse slashes target price

Indiabulls Housing Finance reported a 7 percent year-on-year degrowth in consolidated profit at Rs 1,001.4 crore, but net interest income grew 5.8 percent to Rs 1,591 crore in the quarter ended March 2019, both missing analyst estimates.

Credit Suisse maintained its neutral call post-March quarter results but reduced its target price to Rs 800 from Rs 1,000 earlier. CNBC-TV18 poll estimates for profit were at Rs 1,050 crore and NII was likely to be at Rs 1,618 crore for the quarter.

“We are comfortable on liquidity front compared to most peers but growth took a hit in March quarter. NII decline was lower as net interest margin expanded 50 bps,” said the note.

Gross NPAs largely are stable, aided by higher write-offs. Credit Suisse forecasts only 5 percent AUM growth in FY20 and cut earnings estimates by 13-16 percent.

“Conversion to a bank is key to secure consistent asset growth and regulatory approval for the same is the key catalyst for the stock,” it said.

ICICI Securities: CLSA slashes target price

ICICI Securities, a subsidiary of ICICI Group, reported 19.5 percent decline in consolidated profit at Rs 121.5 crore for the March quarter of 2018-19 financial year.

CLSA maintained its buy call on ICICI Securities post-March quarter results but slashed its target price to Rs 310 from Rs 360 earlier.

“We lower earnings estimates for FY20-21 to factor in the weaker momentum of capital markets and tighter regulations. Its valuation is at a discount to the global average and an earnings turnaround could drive a re-rating,” said the report.

During 4QFY19, I-Sec’s revenue fell by 20 percent YoY due to weak capital market trends (broking, IB and distribution) as well as tighter regulations on distribution fees. Even the growth in its active client base moderated to 10 percent YoY for FY19.

Sterlite Technologies: Equirus Securities cuts target price marginally

Equirus Securities maintained its Long rating on Sterlite Technologies post March quarter results but slashed its target price to Rs 340 from Rs 350 earlier.

The pressure on optic fibre realisations is likely to continue in the near term. Services business ramp-up is much faster than expected. The lower valuation multiple is likely to factor moderation in earnings growth, said the note.

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