It's December, which means that analysts are scrambling over each other to predict the market's path for the next year. Morgan Stanley for instance, forecasts that the Sensex will touch 1,05,000 in 2025.
Morgan Stanley was quite gung-ho about the Sensex in December 2023 as well, and predicted 86,000 for 2024. The index only briefly flirted with the 86,000 level this year but then tumbled.
Humans are bad at guessing the future. In 1924 for example, people predicted that food would be unaffordable in 2024 - "milk will be served with a medicine dropper and an egg will be the price of a woman’s love.” So at least Morgan Stanley has been a bit more accurate.
The market saw a lot of volatility this year. Financial and industrial stocks surged while auto and FMCG stocks tanked. Signs of the economy slowing down and a sell-off by foreign investors led to a correction in September.
But certain stocks emerged as the clear winners of 2024, even as others struggled. This saw different company CEOs saying very different things about the 2025 outlook. For example PB Fintech, one of the top gainers, has been quite optimistic, saying, “We are not seeing any signs of a slowdown yet.” On the other hand, Asian Paints, one of the top losers, has been more guarded, with CEO Amit Syngle stating, “We are being cautious about demand because we feel that other consumer industries have seen challenging demand conditions.”
Why are some companies still doing well, while others struggled? We take a closer look at the top winners and losers in the Nifty 200 index.
In this week's Analyticks,
- The top ten: Winners and losers of 2024
- Screener: Consistent Highest Return Stocks over Five Years
The Fundamentals vs. Valuations struggle
Fundamentals matter! Investors pay especially close attention to company financials in volatile markets. As a result, companies with strong fundamentals (reflected by Trendlyne Durability Scores above 60) saw skyrocketing prices.The laggards tended to have poor durability scores.
Even after market corrections, fundamentals have continued to drive stock performance—for instance, the rise of BSE Ltd. and the fall of Bajaj Auto.
However, stretched valuations among top gainers hint at either peaking prices or a TINA (There Is No Alternative) problem within sectors. Investors may be piling into these stocks due to a lack of better options, despite high valuations.
Let us dive into the top gainers and losers of 2024. Within each top ten list, we look more closely at the top five winners and losers.
Top Gainers: These stocks got a boost from strong financials, and a booming sector story
Oracle Financial Services Software
Oracle has benefitted from a surge in technology spending by banks – a 7% increase among the top 5 US banks, which are embracing GenAI. Oracle generates 90% of its revenue from product licenses, including solutions like Oracle FLEXCUBE Universal Banking.
It reported 18% YoY growth in revenue and a 38% YoY jump in net profits in Q2FY25. Oracle Corp, its parent company in the US, has also outperformed major tech giants like Microsoft, Apple, and Salesforce this year.
PB Fintech, the parent company of Policybazaar and Paisabazaar, has shifted towards Unit Linked Insurance Plans (ULIPs). This pivot, along with strong insurance renewals have helped it beat challenges in the credit business. Revenue increased 47% YoY in H1FY25.
Revenue from new businesses - such as corporate insurance, an agent aggregator platform, and the UAE retail insurance - surged 87% YoY in Q2FY25. The company has secured the account aggregator (NBFC-AA) license from the RBI, adding another growth lever.
Dixon Technologies has evolved from manufacturing LED TVs to becoming a one-stop shop for electronics manufacturing services (EMS) in India. It manufactures mobile phones, refrigerators, wearables, and lighting products and is now venturing into laptops and IT hardware manufacturing. Its big-name partners include Xiaomi, Samsung, Apple, Nokia, Motorola, Panasonic, Acer and Bosch.
With revenue growth of more than 200% YoY in H1FY25, Dixon's mobile and EMS division is the fastest-growing segment. It is one of the key beneficiaries of the government’s Production-Linked Incentive (PLI) scheme. Its revenue has surged from over Rs. 12,000 crore in FY23 to nearly the same in Q2FY25 alone.
RVNL has won some coveted railway projects, including the Nagpur metro, infrastructure work in the Central zone, an EPC contract in Maharashtra, and much more. It has expanded internationally through projects in Saudi Arabia, Botswana, Dubai, Uzbekistan and the Maldives.
The company's inclusion in the MSCI India Index has attracted foreign investors, increasing FII shareholding from 2% to 5% last year. However, its revenue and profit have declined by 13% YoY and 26% YoY in H1FY25, raising doubts over its ability to keep the rally going.
The government's push for indigenous defence manufacturing has given Cochin Shipyard a big boost, with defence contracts making up 70% of its order book. It can now build and repair larger vessels such as LNG carriers and new-generation aircraft carriers.
It booked solid growth in revenue and net profits of 26% YoY and 30% YoY in H1FY25. It has a total order book of Rs. 22,500 crore, a shipbuilding pipeline worth Rs. 7,800 crore, and mid-stage proposals valued at Rs. 30,000 crore.
Top Losers: The backbenchers of 2024
Having Vodafone Idea in your portfolio feels like a recipe for heartburn. Each year, the company sees a rollercoaster of highs and lows, where brief moments of optimism are interrupted by more challenges. The company's debt pile of over Rs. 2 lakh crore has been worsened by negative equity. From 22.75 crores in September 2023 to 21.25 crores in September 2024, its subscriber count has reduced year after year.
Brokers highlight that the financial position will become more vulnerable once AGR dues become payable from FY26 onwards. According to Kotak Institutional Equities, the company is staring at a cash shortage of Rs. 10,400 crore over FY25-27 and Rs. 74,000 crore during FY28-32.
The banking sector faces pressures from rising stress in unsecured lending and microfinance portfolios. IndusInd Bank pushed microfinance loans aggressively in recent quarters, and these now account for 9% of IndusInd’s loan book as of September 2024. The gross NPAs in this segment have jumped from 5.16% in Q1FY25 to 6.54% in Q2FY25. That has led to a 39% YoY drop in net profit of Q2FY25.
The bank faces a long road to recovery. Although other banks are also stretched, the impact on credit costs for IndusInd is higher (140 bps vs. 50-60 bps), according to Macquarie Capital. Analysts expect microfinance stress to remain high even in Q3.
A once-star consumer play is struggling with weak demand, rising raw material costs, and unseasonal rainfall, which have impacted the paint industry and affected revenues, margins and profits.
Rising competition within the paint industry has also eroded the market share of Asian Paints. Sales and profits have been declining year-on-year for the last three quarters. FIIs have been exiting from this stock gradually, from over 20% in FY22 to 17% in FY23 to 15% in September 2024.
Despite impressive revenue growth averaging 22% YoY, Bandhan Bank's asset quality problem has raised its ugly head again, with gross NPAs rising from 3.8% in Q4FY24 to 4.7% in Q2 FY25.
Impressive loan book growth has delivered over 30% YoY net profit growth in the last four quarters. However, weakness in its microfinance portfolio and governance-related issues have taken a toll on the stock prices. Recently, ICRA downgraded the non-convertible debentures (NCDs) to AA- from AA.
Adani Total Gas saw a steady 5-10% YoY revenue growth over the past year. However, after four consecutive quarters of double-digit net profit growth, the company's Q2FY25 net profit increased by a modest 7%. Due to limited availability, the government has reduced the allocation of Administrative Price Mechanism (APM) gas to City Gas Distribution (CGD). Adani Total Gas has seen a 13% reduction in its allocations, which will affect its financials.
The controversies have also left it limping. The Hindenburg report and the US bribery case have negatively impacted Adani Group stocks, discouraging foreign investors. Foreign shareholding has declined from 17% in September 2022 to 13% in September 2024.
2024 was a sector story
In 2024, sectors such as insurance, chemicals, construction materials, FMCG and private sector banks have lagged the index, especially after recent market corrections. But sectors like durables, industrials, financial services, realty, healthcare, technology, and public sector banks have shown resilience and growth.
Improving capital expenditure spending has raised the growth outlook across some industries. A stronger US economy and the China plus one strategy has raised the export potential for Indian manufacturers in pharma, chemicals and IT. However, depressed demand and stagnant incomes have put pressure on consumer, microfinance and auto.
2025 comes with a new US administration, continuing chaos in the Middle East, and a new RBI governor. Can Sensex touch 1,05,000 next year, or will the predictors be crying into their cups? We shall see.
Screener: Consistent Highest Return Stocks over Five Years
Electrical equipment stocks have the highest price growth in five years
The Indian stock market has been facing pressure for a few months now due to an increase in inflation, global conflicts, and high foreign institutional investor (FII) selloff. This week, we ook at stocks that have given consistently high returns over the last five years. This screener shows stocks which saw the highest performance in the past 5 years while also rising in the past one or two years.
The screener majorly consists of stocks from the heavy electrical equipment, electric utilities, industrial machinery, iron & steel products, and IT consulting & software industries. The most notable stocks appearing in the screener are CG Power & Industrial Solutions, Elecon Engineering, HBL Power Systems, RattanIndia Enterprises, Mazagon Dock Shipbuilders, BSE, Jupiter Wagons, and Suzlon Energy.
CG Power & Industrial Solutions has the highest 5-year price change of 6,461.3% among Nifty 500 stocks in the screener. This heavy electrical equipment company has continued to rise by 75.3% over the past year despite poor market conditions. It has recovered from a sharp decline in revenue and net profit during the Covid lockdown and has achieved its pre-Covid levels of Rs 8,152.2 crore and Rs 1,427 crore, respectively in FY24. On the other hand, it has posted a net loss during FY16-20 which rose sharply to first a net profit of Rs 1,427 crore in FY24. Consistently falling raw material costs and the company’s efforts to reduce procurement and production expenses helped in net profit growth.
Elecon Engineering comes in next with a 4,167.4% growth in its stock price over the last five years. This industrial machinery stock has continued to grow by 41% in the past year. It has given a moderate revenue CAGR growth of 9% over the last five years due to the effect of the lockdown, however, over the past three years, its CAGR growth has rebounded to 23.6%. Similarly, its net profit gave a net profit CAGR of 38.4% over the last five years compared to a CAGR of 83.4% over the past three years. The company took strong measures to curb expenses during the Covid period which has helped it to achieve its highest operating profit margin of 24% in FY24, contributing to net profit growth.
You can find some popular screeners here.
