Even as increasing number of market experts hail the Indian equities to be attractively valued, nearly a third of the Nifty companies, 50% of the analysts? recommendations are to either ?hold? or to ?sell? the stocks. According to data compiled by Bloomberg, there are 14 blue-chip companies from the 50-share benchmark Nifty, on which 50% or more analysts are suggesting either holding or selling the stocks. The list includes capital goods largecaps like Siemens and Bhel, cement companies ACC and Ambuja Cement and IT major Wipro, among others.
While lower order inflows and weak order books have affected the investor confidence in the capital goods and engineering companies broadly, Siemens appears to be the most disliked stock amongst analysts. More than a third of the 24 brokerage houses covering the stock has recommended to sell the stock since the start of 2012. Besides, lower revenue visibility and sustained contraction in margins has led to downgrades of the stock as analysts lowered their FY12-FY13 earnings estimates of the company. Higher interest rates have also affected outlook on the short-cycle orders which account for almost half of the company?s revenues.
Even Bhel was avoided by the street with 46% of the 54 analysts suggesting to sell the stock while 35% asking to hold it during the last one year. ACC is the second most disliked stock as 52% of the recommendations since June 2011 was to exit the stock. The main overhang for the cement companies ACC and Ambuja cement was the risk attached to likely CCI ruling on cartel activities of the companies and rising overcapacity of some of the players. Last week, the CCI announced a levy of R6,300 Crore to 11 cement companies, including R1,148 crore charged to ACC and R1,164 crore to Ambuja Cement for manipulating supplies and prices.
In a recent report, Kotak Securities, which maintains a sell on both these companies, said it remains ?concerned about the ramifications of the ruling on the pricing power enjoyed by the sector and its corresponding ability to sustain profitability in the face of rising cost pressure?.
Some of the other stocks which bear substantial selling recommendations include pharma major Ranbaxy, largecap realty player DLF, and giant Hero Motocorp which all have more than 35% of sell recommendations. In the recent past, major IT companies, including Infosys, Wipro and TCS, have seen a slew of downgrades hitting them after the IT bellwether Infosys failed to meet its already downgraded March 2012 quarter guidance and announced a muted revenue guidance for FY13.