Top 5 worst performer of 2024: Despite NSE 500’s 20% rally, these stocks eroded investors' wealth

NSE 500 or NIFTY 500 is an index that represents the top 500 companies of NSE, based on the market capitalisation and average daily turnover. As of September 30, 2024, it represents about 92% of the free float market capitalisation of the stocks listed on the NSE.

NSE 500 consists of large, mid, and small-cap stocks. It is commonly used as an industry benchmark to evaluate the performance of the Indian stock market as a whole.

On a year-to-date(YTD) basis, the NSE 500 has delivered 20.07% in 2024. Here's why the top five stocks eroded investors wealth by over 50% in 2024.

Below are the 5 worst performed stocks of 2024 from the NSE 500 universe

(Source - Tradingview.com, as on December 11, 2024 at 10.05 am)

Financially, VI struggled. The company had muted revenue growth in the four preceding quarters. Its operating margin hovered between 40-42%, while net losses decreased in Q2FY25 to ₹7,176 crore down 17.88% YoY.

VI’s cash crunch and payment obligation are the significant challenges in operations. To tackle this, Vi plans for another tariff hike of 15–20 % in 15 months which will improve revenue and free cash flow. However may lead to additional loss of subscribers in an already oligopolistic telecom industry. While gross subscriber addition remains strong, the net subscribers have shown a decline.

This decline in share price was largely attributed to the call-off of its proposed merger with Sony, expected to be worth $10 billion. After Sony Group withdrew from the agreement, due to disagreements over leadership and unmet closing conditions.

However, Zee suffered a significant financial cost of ₹432 crore in merger expenses and ₹331 crore in impairment charges for the closure of certain businesses to comply with merger conditions. In the Q2FY25, Zee reported a consolidated net profit of ₹209 crore, up 70% YoY. While its revenue fell 18 % YoY to ₹2,001 crore.

Selling pressure increased after the All India Consumer Products Distributors Federation (AICPDF) flagged the large unsold inventory of the company lying with distributors and retailers. This is reportedly causing a financial burden of ₹300 crore, which was denied by the company.

Additionally, in Q2FY25 the company reported a loss for the first time since listing in November 2023. Honasa’s revenue decreased 6.9% YoY to ₹462 crore, at the operating level it reported a loss of ₹31 crore and at the bottom line a net loss was ₹19 crore.

In Q1FY25, the company reported weak earnings, after an 87% YoY drop in net profit at ₹26 crore, on account of a five-fold rise in provisions and contingencies. Further during Q2FY25 poor performance continued with a 93% drop in net profit at ₹13 crore, again largely on account of additional provision to cover risky loan assets. The bank made an additional provision of ₹146 crore to cover stress in its microfinance portfolio, which constitutes just about 16% of the total portfolio.

Its gross non-performing assets ratio rose by 28 bps sequentially to 2.95% at the end of September and Net NPA increased by 16 bps to 0.97%.

Conclusion

Despite the NSE 500 delivering a good return of 20.07% YTD in 2024, stocks like Vodafone Idea, Zee Entertainment, Honasa Consumer, CreditAccess Grameen, and Equitas Small Finance Bank not only underperformed, it also burnt the hole in the investors' pocket. This led to the erosion of investor's wealth due to operational and financial issues of these companies coupled with macroeconomic challenges.