Analyst Call Tracker: What drove the biggest downgrades and upgrades this year

During the last one year, as of the March quarter, Tech Mahindra, Tata Consultancy Services, HDFC Life Insurance Co, Hindustan Unilever Ltd and LTI Mindtree Ltd saw most rating upgrades from brokerages.

During the last one year, as of the March quarter, Tech Mahindra, Tata Consultancy Services, HDFC Life Insurance Co, Hindustan Unilever Ltd and LTI Mindtree Ltd saw most rating upgrades from brokerages.

On the other side were UPL, Tata Motors, Nestle India Grasim Industries and Sun Pharmaceutical Industries with most downgrades, according to Moneycontrol's Analyst Tracker.

Most upgrades

According to the tracker, Tech Mahindra had 21 buy calls, 10 hold calls and  14 sell calls against 14 buy calls, 12 hold calls and 7 calls in Q4FY23. Analysts at Mirae Asset recently highlighted the management's three-year strategic roadmap of "improving profitability, new capital allocation plans and higher RoCE of more than 30 percent."

Mirae sees FY25 to be a year of turnaround for the company and the company continuing the journey next year by concentrating on more business from the most important clients and cutting down costs.

Mirae Asset upgraded their recommendation on the stock from "hold" to "add."

Another tech stock that gained favour with analysts was TCS. It had 28 buy calls, compared to 22 buy calls during the same period last year.

The number of hold calls fell from 13 to 10 while sell calls stayed steady at 10.

Analysts at JP Morgan said that they believe the stock is a cross-cycle champion that will benefit from "cost takeout deals in the short term and discretionary digital transformation deals in the medium term".

The brokerage firm feels there's room for profit margins to grow, and it expects earnings to increase by 4 percent due to an 80 basis points improvement in margins this year.

The stock with the third most upgrades during the quarter was Hindustan Unilever. In a March 2024 report on consumption, analysts at BNP Paribas noted that the home care division was now seeing higher competitive intensity. "While the near-term growth prospects appear muted, margin improvement is set to drive earnings growth,” the report said. BNP Paribas has a neutral rating on the stock.

TCS and Tech Mahindra shares have gained over 20 percent in the last one year. On May 10, TCS closed at Rs 3,895.00 and Tech Mahindra at Rs 1,264. HUL stock has fallen around 6 percent in the last one year.

Most downgrades

In terms of downgrades, UPL continues to see downgrades from analysts. The stock has fallen over 31 percent in the last one year.

According to Moneycontrol's analyst tracker, UPL has 17 buy calls, 7 hold calls and 7 sell calls against 23 buy calls, 7 hold call and 2 sell calls. In a February 2024 report, post the Q3 earnings, analysts at Nuvama downgraded the stock from buy to reduce due to disappointing Q3 results with "persistent losses, much below estimate and consensus.

Though margin pressure—amid falling raw material prices and higher discounts to collect payments—shall subside in FY2025, the brokerage said that it still sees a risk of credit rating downgrades and pressure on balance sheet. Similarly, analysts at DAM Capital also downgraded the stock to a sell as they believed that UPL's realisations would continue to remain under pressure.

MOSL analysts had downgraded Tata Motors to ‘neutral’ in March as they saw limited upside to the stock because of the price factoring in most of the positive triggers.

As per Moneycontrol's analyst tracker, the stock has 24 buy calls, 4 hold calls and 5 sell calls against 28 buy calls, 2 hold call and 4 sell calls. Tata Motors was trading at Rs 1,047 on May 10, gaining around 100 percent in the last one year.

Nestle India  stock has 24 buy calls, 4 hold calls and 5 sell calls against 28 buy calls, 2 hold call and 4 sell calls. Analysts have mostly remained positive on the stock, despite some downgrades. In a recent report, Axis Securities said it was positive on the company despite the challenging environment of slow demand recovery and volatile raw material prices.

According to the brokerage, the company has consistently delivered resilient performance, led by efforts towards rural penetration, focus on innovation and premiumisation of the core categories "We believe Nestle has all the right levers for long-term sustainable growth," the report added. Stock for Nestle India has gained over 14 percent in the last one year , trading at Rs 2,527.10 on May 10.