Column : Dream stocks are disappearing

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SummaryBack in 2008, and even in early 2009, Bharti Airtel was on a roll, signing on subscribers by the minute.

Back in 2008, and even in early 2009, Bharti Airtel was on a roll, signing on subscribers by the minute. Few were willing to believe the story would end and so were reluctant to call a peak for the stock. But after hitting a lifetime high of R574.5 in October 2007 (price adjusted), the Bharti stock has never really regained its sheen and in early August this year it dropped to a near six-year low level of 257. One large and debilitating acquisition abroad, coupled with a regulatory quagmire at home, has completely changed the complexion of the counter.

Itís not just Bharti though, the stock market is littered with examples of darlings turning into disillusionments. Infosys, which listed in 1993, is probably the best example of a spectacular company not able to live up to expectations. It could be the change of guard at the IT major or it could be the challenging global environment but the software giant, reputed for its under-promising and over-delivering, has missed guidance way too many times in the last couple of years. That has cost it its premium valuations and the stock now trades at multiples below that of peer TCS; from a lifetime high of R3,479 in January 2011, the Infosys counter now quotes at levels of R2,500.

Once a must in every portfolio, and a stock that has made so many people wealthy, Reliance Industries Limited (RIL) has probably been the disappointment of the decade; to the dismay of fund managers, many of whom are compelled to hold the stock given its weight in the indices, RIL has underperformed the Sensex for more than three years now. The stock hit a lifetime high in mid-January 2008 of R1,626 but has lost almost half its value since then and even a buyback of nearly four crore shares has not helped it regain its sheen. Much like Infosys, RIL is sitting on piles of cash, but the core business isnít delivering enough and the new businesses could take a while to create value.

Indeed, hundreds of stocks have been feted for years only to be shunned once it was clear that the business wasnít shaping up the way it was expected to. Hero Honda was a hot favourite for years until the split with Honda changed it all. Smart investors are also aware that the good companies can bounce back and watch for the turning points.

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