Tata Motors, Bharti Airtel, HDFC Life: Stocks that saw upgrades in FY24 earnings estimates; should you buy these shares?

A total of eight Nifty stocks witnessed earnings per share (EPS) upgrades of over 5 per cent in FY24 estimates They included HDFC Life Insurance, SBI Life, Tata Motors, Bharti Airtel, Bajaj Auto, JSW Energy, Hero MotoCorp and Divi's Labs. Four of the eight stocks have price targets that suggest 8-25 per cent upside potential for the stocks. Price targets on three of the stocks suggest no upside. One stock has 13 per cent potential downside, average price target suggests.   

Q4 results: Hits & misses

Net-net, a total of 21 Nifty companies beat estimates on Q4 earnings, 13 others missed estimates while the rest of the companies came out with in line earnings, a study by Motilal Oswal suggested.

Among Nifty constituents, State Bank of India (SBI), Tata Motors, BPCL, Reliance Industries, Axis Bank and ITC reported higher-than-expected quarterly results. The list also includes names such as HDFC, JSW Steel, Kotak Mahindra Bank, Bharti Airtel, Mahindra & Mahindra, Bajaj Auto, Asian Paints, Eicher Motors, Hero MotoCorp, SBI Life, Nestle and Britannia Industries.

Companies that reported less-than-expected earnings included ONGC, Infosys, Coal India, Maruti Suzuki, Bajaj Finserv, Tata Steel, UPL, Dr Reddy’s Labs and Cipla, among others. HDFC Life, Tata Consumer, Grasim Industries, and Apollo Hospitals also missed Motilal's profit estimates.

For Phillip Capital, on the other hand, out of 46 Nifty companies (ex-Bajaj Finserv, Adani Enterprises, Adani Ports and Apollo Hospitals), 13 beat revenue estimates while 27 others reported in-line results. A total of 20 exceeded Ebitda and 24 exceeded earnings expectations. A total of six missed revenue, 15 Ebitda and 14 earnings estimates, Phillip Capital said.

FY24 earnings upgrades

HDFC Life Insurance saw the biggest FY24 earnings upgrades post March quarter results. EPS estimate for FY24 for this company stood at Rs 7.50, which was up 39.5 per cent over the pre-results estimates, Motilal Oswal Securities said. Similarly, EPS estimate for SBI Life went up 27.5 per cent to Rs 20 apiece. FY24 earnings estimates for Tata Motors rose 13 per cent. Bharti Airtel (8 per cent), Bajaj Auto (7.3 per cent), Divi's Labs (7 per cent) and Hero MotoCorp (5 per cent) also saw jump in FY24 EPS estimates this past earnings season.

Share price targets

Among the stocks seeing maximum earnings upgrade, shares of HDFC Life have an average price target of Rs 637, as per Trendlyne, which suggests 11 per cent potential upside for the stock. But for peer SBI Life, average price target of Rs 1,522 suggest 25 per cent potential upside. Tata Motors' average target price of Rs 598 suggests an 98 per cent upside potential. Bharti Airtel's target suggest 10 per cent upside.

Divis Labs' price target suggests a 13 per cent potential downside; targets for Bajaj Auto (down 4 per cent), JSW Steel (down 2 per cent) and Hero MotoCorp (down 1 per cent) suggest no upside.  

Stocks that analysts like

ITC, ICICI Bank, Bajaj Finance, HCL Technologies, Titan Company, Sun Pharma, ONGC, M&M and UltraTech Cement are among stocks that Motilal Oswal Securities prefer in the largecap pack.

Among large cap stocks, Nomura India likes ICICI Bank, Hindustan Unilever, Mahindra & Mahindra, Larsen & Toubro and Reliance Industries. Its least preferred largecap stocks included Maruti Suzuki, TCS, Eicher Motors and Bajaj Finance.

Phillip Capital has upgraded stocks such as Tata Steel, Hero MotoCorp, NMDC and Sun Pharma to buy; it upgraded JSW Energy to neutral.

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