KOCHI: Even as the country’s benchmark stock index Sensex is ruling at a record high and giving a 35 per cent return in the past two years, stocks from Kerala companies seem to have missed the bus.
As per an Express analysis, only four stocks of companies from Kerala — Geojit Financial Services, V-Guard, Cochin Minerals & Rutile (CMRL) and Federal Bank — outperformed the broader market, while as many as five companies’ stocks gave negative returns to investors.
The top performer among the Kerala stocks is Geojit Financial Services, which posted a growth of 77 per cent since August 2016, followed by V-Guard (73.12 per cent), CMRL (41.78 per cent) and the Aluva-headquartered Federal Bank (39 per cent). The bellwether Sensex grew from 27,714 to 37,521 from August 2016 to August 3, 2018, a growth of 35.38 per cent.
Compared to the Sensex returns, several popular Kerala-based stocks disappointed in a big way. Kitex is a prime example. The share price of the Kizhakkambalam-based company fell from Rs 332 in August 2016 to Rs 128 on August 3, causing a 61.44 per cent erosion in investors’ wealth.
We are witnessing a price correction: Vijayakumar
Dhanalaxmi Bank saw its share price drop by 26.50 per cent from Rs 23.20 a piece to Rs 17.05. Wonderla Amusement Park saw its share price slip by 14.05 per cent to from Rs 392.20 a piece to Rs 337.10 in the past two years.
On the other hand, Muthoot Finance saw a marginal gain of 4.31 per cent in the past 24 months, while Manappuram Finance gave a decent 27.80 per cent returns. However, these were lower than the Sensex returns.
Kerala stocks recorded below par performances in the past two years even when compared to BSE Mid-cap and BSE Small-cap indices. While BSE Small-cap index gave a 36 per cent return, BSE Mid-cap gave a return of 30 per cent since August 2016.
Cochin Shipyard, which came out with its IPO last year at Rs 432/share and hit a high of Rs 528.15/share on the listing day itself, also failed to sustain its performance. The share of the Kochi-based PSU shipbuilder is trading at Rs 458/share, down over 13 per cent from the highs, and just 6 per cent higher than the IPO price.
“We are witnessing a price correction after a slew of developments like SEBI reclassification of mutual funds and large fund flows into mid- and small-cap SIPs after demonetisation,” said V K Vijayakumar, chief investment strategist, Geojit Financial Service.
The trend of a large number of retail investors settling for small, mid-cap stocks has led to an overvaluation of these shares, resulting in their mediocre performance, he said. “The introduction of Additional Surveillance Measures by SEBI, which imposes trading curbs on excessively volatile stocks, and auditor exits from various mid- and small-cap companies have created a sense of scepticism among traders towards such stocks,” he said.
“We don’t even have one company from the state under the large-cap category and only three companies are there in the mid-cap category. This restricts institutional interest into these stocks,” said Hedge Equities Founder & CMD Alex K Babu. “It’s time Kerala companies start thinking big and become market leaders. We strongly believe V-Guard and Muthoot Finance are on track to become large caps.”
“Recently, stock exchanges have lifted the margin on several shares. This has gradually reduced the price fluctuation. If the stocks have no volatility, investing in such shares are a waste of money and effort. Also, the surveillance system brought in by Sebi on mid-cap shares is also a reason for the choppy market,” said Unnikuttan, a share trader.