Fall of market leaders! How 6 Nifty giants trapped investors with negative returns for 5 years
Over the past five years, six prominent Nifty companies have reported negative returns. Tata Consultancy Services and Infosys struggle under the strain of evolving IT service landscapes. Hindustan Unilever has seen a dip in stock value driven by weak rural demand and intensified competition. Meanwhile, HDFC Life Insurance is grappling with slower growth and profitability challenges, and both…
Six Nifty giants – Tata Consultancy Services, Infosys, Hindustan Unilever, HDFC Life Insurance, Asian Paints and HDFC Bank – have trapped investors with negative returns over the past five years, according to ACE Equity data. Despite their status as market leaders in their respective sectors, each of these stocks has struggled with unique challenges that have weighed on their performance.
TCS was the worst performer, slipping by 37% over the five-year period. Infosys trailed closely with a 34% decline. Both were impacted by the waning IT services growth model. As clients declined discretionary technology spending, IT companies faced pressure from artificial intelligence, which questioned pricing, headcount-based billing and long-term demand for traditional outsourcing services.
India's IT sector as a whole has lost about a fifth of its market value in the past year. Infosys has also faced company-specific headwinds, including weak guidance and weaker-than-expected demand for its services.
Hindustan Unilever, a consumer staple stock, has been affected by weak rural demand, inflation and increased competition. Its shares have fallen by 23% over the past five years, hitting a 52-week low after a quarter that saw revenue growth reach a 13-quarter high. HUL's valuation struggles are compounded by sustained cost inflation and lower pricing power.
HDFC Life Insurance has lost 18% in five years, primarily due to slower growth and pressure on profitability metrics. Despite a 9% rise in new business and annual premium equivalent, individual APE remained underwhelming, with a 10 basis point decline in VNB margin.
Asian Paints, which has fallen 13% over the past five years, is a case where a high-quality franchise met a tougher market. Demand for decorative paints weakened, raw material costs rose, and competition intensified after the entry of Birla Opus. Paint sector challenges include crude-linked raw material costs and rupee depreciation, which have put pressure on margins despite price hikes.
HDFC Bank, once considered one of India's most reliable compounders, has underperformed by 6.47% over the past five years. The merger with HDFC Ltd. expanded the bank's balance sheet but brought a smaller deposit base, squeezing margins and growth. The merger also led to elevated credit-deposit ratios and higher borrowing costs, adding to the bank's underperformance.
Despite these setbacks, largecaps are still seen as relatively safer long-term investments due to their stronger balance sheets, deep management teams, better access to capital and higher liquidity. However, the recent correction has shifted the market from a valuation-driven phase to an earnings-led one. Anil Rego, MD and Chief Investment Officer at Right Horizons PMS, remains optimistic about certain sectors like financials, manufacturing, industrials, autos, power and renewable energy, and consumer discretionary.
He advises investors to look for businesses where earnings growth is not yet fully reflected in valuations.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
