Analysts went wrong with their predictions for two-thirds of India’s 50 largest companies this year.
Shares of 32 of the Nifty 50 companies failed to meet 12-month target price estimates made at the start of the year, according to Bloomberg data. Only 18 met or exceeded forecasts.
That’s because the markets remained volatile for the better part of the year. After starting the year on a strong note, the benchmark index crashed more than 14 percent in 40 trading sessions as crude surged and the rupee weakened, non-bank lenders faced a liquidity crisis and uncertainty prevailed ahead of the key state elections.
Analysts were most off the mark for Tata Motors Ltd. The auto maker’s shares tumbled as demand for trucks slowed and its luxury brand Jaguar Land Rover, which contributes more than two-thirds of its revenue, saw its sales decline.
Yes Bank Ltd and Hindustan Petroleum Corporation Ltd followed, missing target price estimates by more than 50 percent.
Here’s the list of stocks that missed estimates by the widest margin:
The Stocks That Disappointed Most
Gap between current market price and analysts' projection 12 months ago (percent)
The stocks that met or beat 12-month target price estimates were led by software services exporters as the rupee weakened. Tata Consultancy Services Ltd, India’s largest information technology company, surprised the most.
“We continue to remain selective and believe companies with better organic revenue growth prospects will protect operating margin better in the medium term, generating higher earnings growth and TCS remains as one of our top picks,” UBS said in its recent report.
Here’s the list of stocks that met or beat estimates:
The Stocks That Beat Estimates
Gap between current market price and analysts' projection 12 months ago (percent)
Pain in Broader Markets
In the broader market, three-fourths of the 247 companies tracked by at least 10 analysts missed analysts’ stock-price forecast made at the start of the year.
Navkar Corporation Ltd disappointed the most. The stock trades nearly 76 percent below its target price at the start of the year. Mortgage lender Dewan Housing Finance Company Ltd bore the brunt as payment defaults at IL&FS Ltd spooked investors about non-bank lenders.
The Losers
Gap between current market price and analysts' projection 12 months ago (percent)
Adani Power beat the forecast by the biggest margin and trades at a price twice the analysts’ estimate. Mindtree and NIIT Technologies are 76 percent higher than where analysts had expected them to be at the beginning of the year.
The Winners
Gap between current market price and analysts' projection 12 months ago (percent)
(This was first published on BloombergQuint and has been republished with permission.)
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