Auto and financials remained analysts’ favourite sectors as they eased chip concerns and added optimism about retail credit.

Eicher Motors saw the largest upgrade in the year to August, driven by upgrade cycles in the newly launched two-wheeler and commercial vehicle segments, followed by ITC, which saw strong sales growth across sectors.

Besides Eicher, two other car companies – Tata Motors and Maruti Suzuki – were also on the list of the biggest gainers in August. Three financial stocks, including insurance stocks, were on the list.

“The passenger vehicle (PV) segment continued to perform well in August 2022, with a surge in original equipment manufacturer (OEM) sales due to stronger orders and improved semiconductor supply leading to higher production,” ICICI Securities said on September 2, the report was released.

“Given the strong business outlook and strong earnings growth of 48.3% in FY22-24, valuations have yet to catch up with the expected performance recovery as the stock trades 20-25% below its historical average,” the report said.

Despite seeing its margins contract in the June quarter, ITC was in second place as analysts were optimistic about its notable sales growth, ability to withstand higher prices, operating leverage and premium products.

Its hotel business saw a notable increase in revenue after reopening, and its agribusiness, which earns huge revenue from grain and tobacco leaf exports, grew 82% year over year.

The company was also able to profit from the shift in cigarette sales from the grey market to organised retailing.
In the quarter that ended August, Reliance Industries saw the largest increase in “buy” calls at 10.26%, followed by ITC (8.73%) and Nestle (5.41%).

Despite uncertainty over fuel export tax policy, more analysts expressed confidence in RIL. After the most recent annual shareholder meeting, the brokerages reiterated their “buy” calls, citing the company’s new energy and 5G plans and clarity on its succession plans. Jefferies expects an Ebitda CAGR of 19% and an attributable PAT CAGR of 9% from FY22 to FY25.

The tech sector suffered its biggest downgrade in the year to August. Buy calls from three tech companies – HCL Technologies, Tata Consultancy Services and Tech Mahindra – fell 17% to 26.7%.

After technology, infrastructure-themed energy and energy have the largest share on this list. JSW Steel tops the list with 32% relegation over the past year. During this period, buy calls fell from 18 to 8. Brokerages have been bearish on the steel industry itself, citing a slow recovery in demand due to a slowing global economy. Export tariffs on goods and the resumption of production at Chinese steel mills also weighed on sentiment.