Sleeping giants: Major stocks that underperformed in 2024

In the 2024 calendar, some stocks outperform and deliver impressive returns, while others lag. Today, we focus on "sleeping giant" stocks—market leaders whose share prices have underperformed over the past year.

There are many reasons for stock to underperform, such as weak financial results, management changes, rising competition, shifting industry trends, poor industry outlook, regulatory actions, or macroeconomic challenges. This article aims to identify these sleeping elephant stocks and explore their future.

Asian Paints

For Q3, the company expects challenges due to the high base from last year and current demand conditions. During the wedding season, recovery and increased government spending on infrastructure projects are expected. The management highlighted rising competition, especially in the economy segment, and aims to balance market share while maintaining ROI for dealers.

Reliance Industries

Meanwhile, RIL's telecom business showed strong growth in data usage, per-user earnings, and subscribers, while its retail segment stayed stable. Management expects better retail performance in Q3, supported by festive demand, and aims to regain growth momentum soon.

Bajaj Finance

The company aims to grow AUM by 27% in FY25 and 25-26% in the medium term, driven by new products, cross-selling, and customer acquisitions. It plans to focus on personal loans, gold loans, MFI, and two-wheeler loans while leveraging AI to reduce costs and improve efficiency. It targets an RoE of 20-22% and remains a leader in personal loans.

Titan

Jewellery EBIT margins dropped ~270bps YoY to 11.4% due to studded share decline and lower demand in solitaire. The management reduced its margin guidance to 11-11.5% due to a weaker product mix. While customs duty cuts may boost industry formalization long-term, near-term margins are likely to remain under pressure.

HDFC Life

The solvency ratio declined to 181%, while the 61st-month persistency ratio improved to 67.9%. Management remains flexible on margins, prioritizing VNB growth over strict targets. ULIP products are expected to stay around 30% of the total business mix. Management expects 18-20% growth for FY25 and plans to expand offerings in annuities and protection segments.

Dmart

Looking ahead, DMart plans to open 40-45 stores annually, with a target of 60-70 stores in a few years. Management is focusing on optimizing store sizes and expanding geographically to drive future growth.

Conclusion

From the above examples, it is clear that the stock performance is related to the company's financial performance and business outlook. Negative factors like rising competition, margin contractions changing industry trends hamper the stock price performance of a company.