If you do a quick search of Nifty stocks at 52-week lows, you would find some bluechip names, which you would have never imagined would be at these levels a year back. Some of these companies are witnessing a change in the business environment, which is putting pressure on margins and profitability. Take a look.
Dr Reddys Labs
This stock has dipped from levels of Rs 3,400 to the current price of Rs 1,933. The business environment for pharma companies is rapidly changing. Worries over US FDA warning letters and import alerts is weighing on these stocks. There is a price erosion in the major markets like the US, which is impacting the performance of these companies. In fact, growth is slowing and it is hard to imagine the environment changing rapidly in the near future. Even at these levels there maybe a huge element of risk in buying these stocks. One needs to be really careful and take a calculated risk. Check stock quote of Dr Reddys here
Infosys is a stock that has also dropped to 52-week lows, largely on account of the Vishal Sikka exit as also the fast changing business environment. The battle between the Board of Directors of Infosys and some of the founders is now out in the open. This has caused a collateral damage to the stock and nobody seems to know where the shares are headed. Apart from this client spends are dropping and there are H1B visa related issues. All these are likely to play on the quarterly numbers at the company, which may further cause a slide in the share price. Vishal Sikka's departure could not have come at a worse time for the company.
Oil and gas exploration major, ONGC is another stock that has collapsed in the last few days. In fact, the price at which the stock is available makes it a decent bet in terms of dividend yield. This is among the few stocks that investors could still buy at the 52-week low. The stock has dropped from levels of Rs 211 to the current levels of Rs 157. OGC is largely a play on crude oil prices. Should these sustain at higher levels, we could see ONGC shares rallying. Recently, the buyout of the government stake in HPCL has been an overhang on the stock. However, not a bad bet at the current levels.
This is another bluechip pharma stock like Dr Reddys which has come crashing down due to margin pressures for the generic business in the US. One good thing for companies like Lupin and Cipla is that they also derive a significant amount of business from the Indian markets. The Lupin stock has dropped from levels of Rs 1,800 to Rs 920 and it always difficult to predict the movement of these stocks.
Other pharma stocks languishing
Other pharma stocks like Glenmark, Wockhardt and Sun Pharma are also at 52-week lows. What we have mentioned are largely the bluechip names, which have crashed anywhere between 50 to 100 per cent over their 52-week highs.
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