Blue-Chip Blues: A quarter of India's top stocks have failed to deliver meaningful returns

Synopsis

A significant portion of BSE 100 companies, 23 to be exact, have struggled to deliver robust annual returns over the past three years, with many trading below their historical valuations. Consumer, IT, and BFSI sectors show a concentration of these underperformers. Despite challenges like cautious client spending and rural demand concerns, some giants like RIL and TCS are poised for growth driven by new ventures and expansion.

ET Intelligence Group: One out of every four BSE 100 companies, 23 to be precise, have failed to generate meaningful annualised returns over the past three years, with the number narrowing to 21 on a five-year basis. These companies have yielded 5% or less return over the said periods.

The BSE 100 delivered annualised returns of 9.3% over three years and 9.8% over five years, while the Sensex generated annualised returns of 6.3% and 8.2%, respectively.

Sectorally, the laggards are concentrated in the consumer sector with six companies, followed by five companies from the IT and BFSI sector. Valuations, however, suggest potential as 20 of the 23 stocks trade below their three-year average multiples.

Agencies

Returns Radar 23 of BSE 100’s big names, including RIL, TCS, HUL and HDFC Bank, have yielded 5% or less over 3 years

Notably, 12 of these companies are constituents of the Nifty 50. Some of the names include Asian Paints, HDFC Bank, HDFC Life Insurance, Hindustan Unilever (HUL), Infosys, ITC, Reliance Industries (RIL), Tata Consultancy Services (TCS) and Wipro.

For the BFSI sector, the outlook is based on deposit and credit growth, margin stability after rate cuts, and improving asset quality.

For FMCG companies, the growth outlook depends on demand sustainability especially in the rural market. Havells India expects stronger FY27 growth aided by a favourable base, price increases and market share gains after a challenging FY26 due to weak summer season, commodity inflation, and disruptions in West Asia. Growth for Avenue Supermarts is expected to be strong driven by continued store additions, better same-store sales growth, and the resilience of its value-retail model despite rising quick-commerce competition. For ITC, the growth outlook is muted given the higher cigarette tax may impact volume.

IT companies are facing issues such as cautious client spending and AI-led pricing and margin pressure. Analysts expect Tata Consultancy Services and Infosys to fare better than peers in the near term.

RIL's growth is expected to be driven by its consumer and emerging energy businesses, with Jio monetisation, retail expansion, FMCG scale-up and new-energy initiatives.

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