Even as the benchmark equity indices currently trade around record highs, there are plenty of stocks which caught investor fancy in their heyday, but have since fallen to almost a tenth of their peak values. Mounting debt, rising defaults and bad management practices have marred the chances of these stocks, leading to losses for investors. Here are nine stocks that were investor darlings once, but have been in the news recently for all the wrong reasons.
Shares of Anil Ambani-led Reliance Infrastructure fell from an all-time high of Rs 2,486.05 in January 2008 to Rs 56.50 as of Monday’s close on BSE, implying a fall of 98 per cent. The scrip is in a free fall ever since the auditors raised questions about the company’s ability to continue in business. It also posted its biggest-ever loss on impairments for subsidiaries in Q4FY19.
Shares of another Anil Ambani company Reliance Communications declined from a record high of Rs 792.30 in January 2008 to Rs 1.25 as of Monday’s close on BSE, implying a fall of 99 per cent. The stock is under selling pressure over debt concerns around the company and its group peers.
Shares of Dewan Housing Finance Corporation (DHFL) dropped from an all-time high of Rs 665.80 in November 2017 to Rs 78.75 as of Monday’s close on BSE, implying a fall of 88 per cent. The stock of mortgage financier is under pressure after it defaulted on debt repayments this year. Even domestic rating agencies Icra and Crisil downgraded the stock rating.
Shares of Jet Airways dropped from an-all time high of Rs 1,340.70 to Rs 73.20 as of Monday’s close on BSE, implying a fall of 94 per cent. The scrip is on decline after the company halted its operations owing to financial crisis and the NCLT admitted it for insolvency proceedings.
Shares of Jaiprakash Power Ventures Ltd fell from a record high of Rs 137 on 4 January 2008 to Rs 2.04 as of Monday’s close on BSE, implying a fall of 98 per cent. The shares have been under pressure on account of dismal financial performance and elevated debt levels.
Shares of PC Jeweller dipped from all-time high of Rs 586.45 on 19 January 2018 to Rs 49.75 as of Monday’s close on BSE, implying a fall of 91 per cent. The shares are under pressure after the firm reported a net loss during the fourth quarter of FY19 owing to loss in export business. Even CRISIL and CARE Ratings revised their ratings to the firm’s bank loan facilities and fixed deposit programme.
Shares of IL&FS fell from an all-time high of Rs 358.45 on 9 September 2010 to Rs 2.75 as of Monday’s close on BSE, implying a fall of 99 per cent. Debt default and liquidity crisis at the infrastructure and finance company have put the shares under pressure for sometime now.
Shares of J&K Bank dropped from Rs 187.29 on 23 May 2014 to Rs 44 as of Monday’s close on BSE, implying a fall of 75 per cent. The company is under pressure after Jammu and Kashmir government had started investigations against the former J&K Bank chairman on corruption allegations.
Shares of Manpasand Beverages fell from a record high of Rs 488.20 on 22 September 2017 to Rs 29.25 as of Monday’s close on BSE, implying a fall of 94 per cent. The stock is under pressure after the fruit juice maker came under scrutiny over lapses in corporate governance, which led to arrest of its top executives.
What analysts say
“Whether to hold or to exit will purely depend upon where the Investor has purchased. As it is evident, these stocks have lost over 90% from their peak. However, if we presume that the stocks have been purchased somewhere midway of the range, the investor has no option but to exit. More so, because even if they hold on to these nearly dead investments, they might take years to recover and that too not fully. Remaining invested for so long will also involve opportunity cost for the investors,” said veteran technical analyst Milan Vaishnav.
The revival of shares of companies such as Jet Airways depends how the business is revived, he added. “Only if the business is revived which is nearly unlikely, they are not justifying even Re 1 as its value. So, better if Investors exit most of these stocks and reinvest the proceeds, if any, in better liquid large-cap stocks,” he added.
A leading brokerage, requesting anonymity, said that the recovery of these stocks seems unlikely in the near term. “Unless there is a complete debt resolution and revival strategy in place these stocks are unlikely to revive,” it added.