Analyst call tracker | JSW Steel saw maximum downgrades in the last one year; however, HDFC Life topped the list with maximum upgrades

While 2022 has been the year of economic recovery for India amid geopolitical tensions due to the Russia-Ukraine crisis, investors managed to find pockets of opportunities to invest in.

Some wealth managers invested in stocks that would benefit from the crisis, while others banked on domestic economic recovery for investment ideas.

During the year, several companies saw massive upgrades and downgrades, largely reflecting investor sentiment. Let’s take a look at some of these companies:

Maximum upgrades and downgrades in last one year

HDFC Life Insurance Company saw the maximum upgrades over the past one year with 32 ‘buy’ calls from ‘28’ a year ago. Last year, there were 11 ‘hold’ calls on the insurance company’s stock, which have shrunk to two now.

What analysts like about the insurer is its ability to maintain its market share and leadership amongst its peers. HDFC Life Insurance Company’s well-balanced product and distribution mix have also been positives.

Eicher Motors, Grasim Industries and ITC have followed HDFC Life Insurance Company in terms of witnessing maximum upgrades over the past one year.

Meanwhile, JSW Steel faced the maximum downgrades. From 19 ‘buy’ recommendations a year ago, the stock slipped to just six buy calls, even as the ‘sell’ ratings soared to 16 from six a year ago.

Most analysts believe that the current valuation limits the upside potential in the stock, which is one of the primary reasons for the downgrades in JSW Steel.

“…we perceive high valuations and leverage (amidst lower steel prices) as key deterrents,” ICICI Securities said about JSW Steel.

Tech Mahindra was right behind JSW Steel with ‘buy’ calls falling to 27 from 42 last year, and ‘sell’ rating jumping to seven from one.

As per analysts, weak margin performance in the first half of FY23 and limited gains in technology stocks got the market jittery.

Following JSW Steel and Tech Mahindra, Bharat Petroleum Corporation, Divi’s Laboratories and Tata Steel are the other names that saw extreme downgrades over the past one year.

Maximum upgrades and downgrades over past one quarter

Over the past one quarter, Britannia Industries, HCL Technologies and Axis Bank have seen the highest upgrades.

Britannia Industries is building up a strong adjacencies portfolio, which will help in driving strong growth in the long run, said Sharekhan by BNP Paribas.

“On the other hand, in the core biscuit category, the company is consistently gaining market share (Q2 was the 38th consecutive quarter of share gain), which is aiding the company to achieve growth ahead of the industry’s growth. Thus, drivers are in place to achieve consistent double-digit earnings growth in the coming years,” the brokerage firm added.

Interestingly, among the top 10 companies that witnessed the maximum upgrades over a quarter, Axis Bank clocked the highest number of ‘buy’ ratings at 49, followed by UltraTech Cement at 42.

With asset quality issues behind, Axis Bank remains focused on building a stronger, consistent, and sustainable franchise which is why analysts have taken a liking to it.

On the contrary, Oil and Natural Gas Corporation (ONGC) has the lowest number of ‘buy’ recommendations.

Meanwhile, Divi’s Laboratories, Bajaj Finserv and Tata Motors have been ranked high among companies that saw the highest number of downgrades over the past quarter.

‘Hold’ rating on the automaker’s stock increased to six this quarter from three a quarter ago.

The luxury carmaker’s JLR sales have already been under stress. The company had even lowered the financial guidance for the year after a disappointing Q2 performance resulting from the semiconductor shortage.

Telecom giant, Bharti Airtel, is also one of the companies that saw maximum downgrades. With revenue and margin under pressure, Bharti Airtel is expected to hike tariff by about 10 percent in Q4 of FY23, FY24, and FY25, Jefferies reportedly said.

Maximum upgrades and downgrades over past one month Bajaj Finance, Hindustan Unilever and Wipro have topped the list of maximum upgrades over the past one month.

“Over the last one month, the market positioning has shifted towards banks and domestic-cyclical stocks,” Axis Securities pointed out in a strategy note.

According to Prabhudas Lilladher, Hindustan Unilever’s twin acquisitions of OZiva and Wellbeing Nutrition have shown its intent to grow into emerging growth segments in Health, Wellness and Nutrition.

Meanwhile, Coal India saw maximum downgrades over the past one month. Some analysts have cited weakness in demand and international coal prices as concerns for the coal major.

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