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Top Underperforming Stocks That Analysts Expect To Offer Best Returns

The stocks are expected to gain up to 80%, going by analyst price targets.

<div class="paragraphs"><p>(Source: Gerd Altmann/Pixabay)</p></div>
(Source: Gerd Altmann/Pixabay)

Indian benchmarks indices have largely been flat in the past one year as rate hikes by global central banks to contain runaway inflation turned the equity markets volatile.

S&P BSE Sensex rose rose 0.12% and BSE 500 advanced 2.8% during the period. From among the stocks that have underperformed the benchmarks the most, BQ Prime has identified five that offer the best upside based on Bloomberg data.

Selection criteria:

  • Stocks selected from BSE 500 Index.

  • Tracked by at least three analysts.

  • Among top 10 BSE 500 underperformers in the last one year.

Tanla Platforms

Tanla Platforms Ltd. is one of the top underperformers on BSE 500 over last one year, falling 61.5%. Tanla hit a 52-week low of Rs 506.10 on March 27.

The company is a play on the rising demand for CPaaS or communications platform as a service across industries for achieving enhanced customer engagement. Increase in smartphone penetration and greater regulatory push towards mandatory SMS alerts would drive the CPaaS market. According to industry reports, the Global CPaaS market is expected to grow at CAGR of 29% from 2020 to 2025, led by faster adoption of multichannel communication.

Yes Securities expects the adoption of CPaaS-based application-to-person messaging across industries will continue to drive volume growth for both enterprise and platform segments of Tanla, while the rising share of higher margin platform segment would drive operating margin.

Tanla is trading at a price-to-earnings of 37.13 and has a return on equity of 25.14%.

Gland Pharma

Investors in Gland Pharma Ltd. have seen wealth erode by 61% in the last one year.

The pharmaceutical company with a market cap of Rs 20,685 crore as on March 27 has a worldwide footprint spanning 60 countries, including the U.S., Europe, Canada, Australia, India, and other markets. It is one of the largest generic injectables manufacturing firms. In

The company's consolidated revenue fell 9.8% year-on year to Rs 999.8 crore in the third quarter ended December. Net profit stood at Rs 232 crore, down 15%.

The stock is trading at a PE multiple of 21.05 with an RoE of 12.84%. Gland Pharma shares hit a 52-week low of Rs 1,130.40 on March 13.

Intellect Design Arena

The shares of Intellect Design Arena Ltd. have fallen 54% in the last one year.

The tech services provider to banking and financial services companies indicated in the third-quarter earnings call that it continues to reinvest 5% of operating margin in developing platform capabilities. Ebitda or operating income improved sequentially and is expected to rise in the fourth quarter ending March, the management said. The company expects to cross $75 million in revenue in Q4.

The stock is trading at a 37.04 times its earnings with an RoE of 10.15%. The stock hit a 52-week low of Rs 388 levels on March 16.

Amber Enterprises

The Amber Enterprises Ltd.'s stock is down 50% in the last one year and hit a 52-week low of Rs 1,762.3 on March 27.

The company is a leading provider of components to the air conditioner original equipment and design manufacturers. It derives about 50% of its revenue from refrigeration and air conditioning components, and the rest from other components and mobility applications.

ICICI Direct expects the air conditioning AC industry to grow 30% year-on-year in FY23, supported by a revival in the real estate industry and changing lifestyle. Amber, with the largest market share of about 26% in terms of bills of materials, will be a major beneficiary of increased RAC demand. Amber is a major beneficiary of production-linked incentives.

The stocks is trading at a PE multiple of 368.03 with a RoE of 1.03%.

Mastek

Shares of Mastek Ltd., a digital transformation and software services company, have tumbled 50% in last one3 year.

Mastek offers data, apps, cloud services to public and private enterprises in the U.K., the U.S., the Middle East, Asia Pacific and India.

According to ICICI Direct, the recent acquisition of Evosys has enabled Mastek to provide end-to-end solutions and improves margin from around 14% to 21%. It is net debt free and has been delivering a healthy double- digit return ratio (RoCE of 20%).

The growth in new logo or brand acquisition, increasing deal size, expansion of sales and marketing, and market share gains are expected to drive annualised revenue growth of 8.2% in FY22-25, according to ICICI Direct.