EPS downgrades exceed upgrades in 3 months
earnings upgrade-to-downgrade ratio has weakened over the past three months, with 251 companies in the Nifty 500 universe experiencing downgrades for FY24, compared with 152 upgrades, Bloomberg data showed. Among the Nifty 50 companies, 30 experienced downgrades, while 19 underwent upgrades in this period.
A Bloomberg earnings upgrade or downgrade is the consensus estimate by equity analysts tracking the stock, indicating expectations of higher or lower profits, respectively.
To be sure, the December quarter earnings season has been better than expected for the aggregate universe of listed companies in India. Still, keenly-tracked sectors such as IT, lenders, chemicals, consumer goods, home improvement, infrastructure, cement, metals, oil and gas, and telecom, among others, have reported weak earnings.
Companies such as UPL, FSN E-Commerce, Adani Wilmar, BHEL, Vedanta, SAIL, Sharda Cropchem, Lux Industries, Glenmark Pharma, Tata Steel, Adani Enterprises, Navin Fluorine, and Deepak Fertilisers, among others, have seen EPS downgrades of 25% to 90% in the past three months.
The global economic slowdown, driven by persistently high interest rates and sticky inflation, threatens to moderate earnings growth while EBITDA margin expansion would slow amid demand deceleration, analysts said.
«The moderation in topline growth across the broader economy corresponds with the global economic slowdown attributed to elevated interest rates and inflation,» said Vinod Nair, head of research, Geojit Financial Services. «Expansion
