June quarter earnings season began on a positive note by technology and FMCG companies but the hopes of easing asset quality concerns were ruined by banks as they started releasing their numbers for Q1.
HDFC Bank and RBL Bank management ringed the bell of caution about growth going ahead due to rising provisions and slippages.
Cautious commentary, along with economic and consumption slowdown, and FII selling dented market sentiment.
"Markets continued their downslide yet again for the third consecutive day on July 22. HDFC Bank and HDFC were the top losers. Higher provisions and management commentary of further pain combined with a decade high valuation P/E multiple of 30x leaves enough room for the bears to pounce on HDFC Bank," Umesh Mehta, Head of Research, Samco Securities told Moneycontrol.
However, despite the big names disappointing traders, there are stocks that have encouraged brokerages to raise target price on them.
Here are top five stocks where brokerages raised their target price after June quarter earnings:
Infosys: Buy | Target: Raised to Rs 820 from Rs 785
Citi upgraded Infosys to buy and increased its price target to Rs 820 from Rs 785 per share as the risk-reward is favourable now.
While IT company's EBIT in Q1FY20 is in-line, deal wins and revenue guidance being raised are positives, the global brokerage said, adding attrition remained elevated.
The brokerage feels the stock will likely rerate and the discount to TCS will narrow. EPS numbers unchanged but Citi raised its multiple to 21x from 20x. Relative preference over TCS remained unchanged, it said.
Dabur India: Buy | Target: Raised to Rs 480 from Rs 460
While retaining buy call on Dabur India, HSBC raised its price target to Rs 480 from Rs 460 as company's volume growth of 9.6 percent and EBITDA in Q1 were significantly ahead of consensus estimates.
Dabur maintained its cautious outlook on demand but said its valuation looked reasonable and operating momentum was the key catalyst.
ACC: Buy | Target: Raised to Rs 2,050 from Rs 2,000
CLSA maintained its buy call on the stock and raised target price to Rs 2,050 from Rs 2,000 per share as ACC's EBITDA expanded to an 8-year high in Q2.
The research house raised EPS forecasts by 3-4 percent. Cement pricing, a key stock price driver, needs to be monitored, it said.
Federal Bank: Buy | Target: Raised to Rs 125 from Rs 114
Jefferies retained its buy rating on the private sector lender and increased its price target to Rs 125 from Rs 114 per share as Q1 was in-line and is promising a steady improvement going ahead.
The soft loan growth in Q1 was offset by steady NIM, strong fee line and treasury gains. Credit cost was held up but a few chinks need a closer watch, though weak saving account growth is a mid-term concern, it said.
Bank stayed away from large corp sectors where risk-reward is unfavourable. Growth estimates cut by 4-5 percent and it reflected in -2.6/+1.1/+0.5 percent change in EPS for FY20-22.
Avenue Supermarts: Upgraded to Neutral | Target: Raised to Rs 1,330 from Rs 1,175
Credit Suisse upgraded Avenue Supermarts, the operator of retail chain D-Mart, to neutral from underperform and also raised its target to Rs 1,330 from Rs 1,175, citing the stock underperformance.
The stock underperformed in past one year as concerns on margin dilution played out. With focus back to core states, the margin concern is expected to be abating, the brokerage said. It lited FY20/FY21 earnings estimates by 2-4 percent.Disclaimer: The views and investment tips expressed by brokerages on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.