Sell-off toll! HDFC twins, HUL, Dr.Reddy's among Nifty50 stks at 52-wk lows

Apart from the 8 stocks among the Nifty50 index, a total of 26 stocks too dropped to their respective 52-week lows among the Nifty500 index.

Shares of mortgage lender Housing Development Finance Corporation (HDFC), banking giant HDFC Bank, fast moving consumer goods (FMCG) companies – Hindustan Unilever (HUL) and Britannia Industries, cement manufacturers – UltraTech Cement and Shree Cement, pharma stock Dr Reddy’s Laboratories and two-wheeler major Hero MotoCorp were among eight stocks from Nifty50 index to hit their respective 52-week low on the back of a sharp sell-off in equities in the past couple of weeks.

Amid the weak global sentiment due to no headway in Russia-Ukraine conflict, the domestic benchmark indices started trade sharply lower on Friday and continued to trade with 2 per cent losses at 10:22 am. In the past one week, the S&P BSE Sensex and Nifty50 indices were down 3 per cent, while in past one month; these indices tanked as much as 8 per cent.

Besides these 8 stocks, total 26 stocks from the Nifty500 index hit their respective 52-week lows. The list includes Ashok Leyland, Apollo Tyres, Ramco Cement, Dalmia Bharat, JK Cements, Kansai Nerolac and SBI Cards and Payment Services.

Shares of cement and paints manufacturers continued to remain under pressure on concerns of earnings downgrade due to rising energy cost. There has been a substantial increase (up 75 per cent/52 per cent) in South African/ Australian coal prices in the last one month (40-50 per cent increase in two weeks).

At present, imported coal prices are significantly higher than their peak in October 2021 (e.g. South African coal price stood ~USD300/t v/s its peak of USD248/t). Petcoke prices too have started to rise. There will be a further increase in domestic/imported petcoke prices as cement companies would want to maximize the usage of petcoke.

Apart from higher coal/petcoke prices, the recent increase in crude prices/ocean freight rates may further put pressure on operating cost for the industry. Higher crude prices may lead to a rise in diesel price, which will lead to higher freight costs (a 5 per cent change in diesel price to impact opex by around Rs 20/t), analyst at Motilal Oswal Financial Services said in cement sector update. In the current scenario, the brokerage firm expects companies with stronger balance sheets to perform better than leveraged companies.

Shares of Endurance Technologies hit a fresh 52-week low of Rs 1,194.05 in intra-day today, and has tanked as much as 25 per cent in the past one month due to growth concerns. The stock of the automotive components manufacturer had reported a weak set of December quarter (Q3FY22) numbers. Endurance Technologies' profit after tax (PAT) halved to Rs 94.6 crore in Q3FY22 due to weak operational performance. The company had posted PAT of Rs 190 crore in the year-ago quarter (Q3FY21).

Consolidated revenue from operations was down 7 per cent year-on-year (YoY) at Rs 1,889 crore as against Rs 2,041 crore in previous year quarter. Earnings before interest tax and depreciation and amortization (Ebitda) decreased 41 per cent YoY at Rs 210.7 crore, while margins contracted 640 bps at 11.1 per cent during the quarter.

The management said the market this year is subdued with headwinds in the form of weak rural demand and higher cost of ownership. "In the EU (including UK), the number of new car registrations was down by 23.4 per cent YoY in Q3. The European automotive market has been deeply impacted by semi-conductor shortages and soaring energy prices," the management said.