PSU banks constituted half of the top 10 losers in the BSE 200 universe in 2015 as rising NPAs and poor profits eroded investor confidence in these counters, reports Pavan Burugula in Mumbai.
Bank of India (BOI),Oriental Bank of Commerce (OBC), Indian Overseas Bank (IOB),UCO Bank and Jammu & Kashmir Bank are among the worst performers in the BSE 200 in the year so far, Bloomberg data showed, with their values declining anywhere between 45% and 60%. The NSE PSU Bank index has lost 28.32% during the year so far while the broader banking index has lost close to 10%.
In Q2FY15, public sector lenders as a group earned Rs 533 crore less than private banks and in the July-September quarter, this gap widened significantly to Rs 2,898 crore due to higher provisioning owing to the larger share of NPAs.
BOI has been the biggest wealth destroyer in the current calendar year as its scrip has slumped nearly 60%. BOI had reported a loss of Rs 1,126 crore in Q2FY16 — highest among its peers — as its provisions at Rs 3,237 crore increased more than three times on an annualised basis. The OBC scrip lost 57.7% during the year while the IOB stock was reduced to nearly half during calendar 2015.
Debt-heavy companies like Unitech and Jaiprakash Associates also took a beating in the markets as their shares are trading at just about a quarter of their highest value in the last one year. The Unitech share has slumped since June 2015 over news the company had defaulted on its loan repayments.
Amid severe pressure on cash flows and non-payment on its non-convertible debentures, Jaiprakash Associates witnessed Rs 39, 516 crore of long- and short-term debt instruments of three of its group companies being downgraded to “default” level by rating agency CARE. Despite the company carrying out an extensive asset sale exercise — it sold as many as nine assets in the last two years equalling enterprise value of Rs 27,611 crore — its debt to Ebitda ratio stood at 12 times in FY15, showed a Credit Suisse analysis. Not surprisingly, the stock has lost nearly half of its value in 2015 so far.
As global commodity prices fell to multi-year lows, the stock performance of leading metals producers also bore the brunt. Share prices of large-caps Vedanta and Hindalco have fallen by 57% and 49.6%, respectively, as the street reacted to waning profitability of these companies. The standalone earnings of both these companies have dropped by more than 40% in the first half of FY16, compared to same period last year.
The Hyderabad-based Kaveri Seeds is at the bottom of the list of worst performers of 2015, having lost 47% of its value. Unattractive cotton prices affected the sales of cotton seeds — largest constituent of its revenue. The cotton seed volume of Kaveri Seeds fell by 26% during FY16 also as it reported a net loss of Rs 46.75 crore in three months to September 2015.