20 stocks that have eroded shareholder wealth in CY17

Shares of Anil Ambani-owned Reliance Communications (RCom) came under selling pressure again on Thursday and lost around 4.4% to Rs 9.75 levels, after the company recently defaulted on its interest payment obligation. On a year-to-date (YTD) basis, the stock has plummeted over 70%.

Besides RCom that has eroded shareholder wealth in CY17, shares of Videocon Industries, Religare Enterprises, Sintex, Lupin and Glenmark are some of the names in the BSE A group that have seen negative return thus far in CY17. By comparison, the benchmark indices – S&P BSE Sensex and Nifty50 – have gained around 25%.

Videocon is the top loser in this pack that has slipped nearly 86% to Rs 14 levels (YTD). The company that has an outstanding debt of nearly Rs 43,000 crore is learnt to have got in-principle approval of lenders to restructure debts after its promoters agreed to pump in Rs 3,000 crore as equity.

Religare Enterprises has slipped 82% thus far in CY17 to Rs 46 levels, but has recovered marginally from its 52-week low of Rs 42.70. Recently, the company reported that its standalone net loss has widened to Rs 47.39 crore for the first quarter ended June 30, 2017. It had registered a net loss of Rs 25.84 crore in the same quarter of 2016-17.

Given the backdrop, analysts say investors should not add these stocks to their portfolio as the business model remains weak and it will be difficult for these companies (RCom and Videocon) to claw back to profitability in the foreseeable future.

“There are better alternatives available in the market than these stocks. I don’t think RCom and Videocon have any value left. Even if RCom sells its assets, they will not be able to completely match the debt burden the Group is saddled with. There is no business viability. I don’t see any merit in investing in this stock just because it has corrected from a peak level of Rs 750 to under Rs 10 now. One should avoid ADAG Group stocks in total. Videocon, too, has a similar story,” advises A K Prabhakar, head of research at IDBI Capital.

Here are 20 ‘A Group’ stocks that have eroded shareholder wealth in 2017

Company Name Closing price on BSE (Rs) Change (%) *
Videocon Industries Ltd. 14.85 -85.7
Religare Enterprises Ltd. 46.20 -81.9
Reliance Communications Ltd. 10.15 -70.2
Sintex Industries Ltd. 24.85 -66.9
Lupin Ltd. 822.65 -44.6
Glenmark Ph
armaceuticals Ltd. 583.10 -34.4
Advanced Enzyme Technologies Ltd. 264.20 -33.4
Ajanta Pharma Ltd. 1237.00 -30.6
Strides Shasun Ltd. 764.10 -28.0
IL&FS Transportation Networks Ltd. 74.60 -26.7
Indo Count Industries  Ltd. 120.30 -26.5
Multi Commodity Exchange Of India Ltd. 934.35 -26.2
Dena Bank 24.55 -25.0
Dr. Reddys Laboratories Ltd. 2307.10 -24.6
Fortis Healthcare Ltd. 140.45 -22.2
Tata Motors – DVR Ordinary 237.30 -20.7
Reliance Naval  and Engineering Ltd. 43.75 -20.7
Sun Pharmaceutical Industries Ltd. 505.05 -19.8
HCL Infosystems Ltd. 46.30 -19.1
CRISIL Ltd. 1799.55 -18.6
Source: ACE Equity
* YTD change till Nov 15
Stocks from BSE A Group