These 5 Stocks Are Down to Start 2025. What's Going On?

The Indian stock market has been highly unpredictable in recent months, with the broad indices near their 52-week lows.

This market volatility has forced investors to reassess their portfolios, frequently forcing a deeper look at stocks that are either undervalued or suffering issues.

While a drop in stock prices may indicate difficulty, it can also provide unique chances for those keeping an eye out for future recovery.

Today we would be having a look at such stocks while investigating the causes behind their slide, delve into the broader market variables at work, and determine whether these stocks may be hiding excellent chances for investors wanting to buy at a discount.

Whether you're a seasoned investor or seeking to make your next move, understanding these stocks could help you navigate the current market landscape.

Let's take a closer look at several stocks that may be worth adding to your watchlist.

#1 Tata Motors

First on the list is Tata Motors.

Tata Motors is involved in the production of a wide range of vehicles, including passenger cars, commercial vehicles, utility vehicles, electric vehicles, and defence vehicles.

It has operations in India, the UK, South Korea, South Africa, China, Brazil, Austria and Slovakia through a strong global network of subsidiaries, associate companies and Joint Ventures (JVs), including Jaguar Land Rover in the UK and Tata Daewoo in South Korea.

Coming to its financial performance, Tata Motors saw a slight increase in the revenue during the quarter Q3 FY25, by 2.7% to Rs 1.1 tn.

On the operating profit front, the company saw a decline of 15.4% YoY to Rs 130.4 bn. The operating profit margin for the quarter saw a decline to 11%, versus 14%, in Q3 FY24.

During Q3FY25, the company reported an 22% YoY decrease in consolidated net profit, reaching Rs 55.8 bn, down from Rs 71.4 bn in the same period last year. This decline in net profit reflects challenges in both domestic and international markets.

The share price over the past year reached its highest point on 30 July 2024, at Rs 1,161.8. Currently, the stock is trading at Rs 697, a discount of 40% from its highest price in the past year.

Going ahead, the company is prioritising the EV market, planning to mainstream EVs with a broader portfolio and a strengthened ecosystem to capture significant market share.

As supply constraints ease and demand rises in the latter half of FY25, Tata Motors remains vigilant about global market conditions, especially in China and Europe.

By balancing growth initiatives with careful resource management, Tata Motors is positioned to address immediate challenges while setting the stage for sustained, long-term growth.

To know more about the company, check out Tata Motors financial factsheet and its latest quarterly results.

#2 Asian Paints

Next in the list is, Asian Paints.

Asian Paints is the largest home decor company in India. The 80+ years old company has major brands like Asian Paints, Berger, Apco, etc under its umbrella.

The co. is into wall paints, wall coverings, waterproofing, texture painting, wall stickers, mechanized tools, adhesives, modular kitchens, sanitaryware, lightings, soft furnishings, and uPVC windows.

IT's the largest paint company in India, the 2^nd largest in Asia, and the 8^th largest in the world.

It holds a market share of over 55% in the organised domestic paints market, 60% in decorative paints, and 20% in automotive industrial coatings.

Coming to its financials, Asian Paints' Q2 results reflected a challenging environment, with consolidated net sales dropping 5.3% YoY to Rs 80.3 bn from Rs 84.8 bn in Q2FY24.

This decline was primarily due to intensified competition, which impacted the company's market share and sales volume.

The domestic decorative business experienced a 0.5% decline in volumes, with revenues in this segment decreasing by 6.7%.

The operating profit came in at Rs 12.4 bn, a notable drop from Rs 17.2 bn in Q2FY24, with margins shrinking to 15% on a YoY basis. The margin decline reflects both higher input costs and weaker demand in key markets.

Profit after tax (PAT) took a sharp hit. It dropped to Rs 6.9 bn, down from Rs 12.1 bn in the same quarter last year, driven by lower consumer spending and increased material costs.

The share price over the past year peaked on 12^th September 2024, at Rs 3,394. Currently, the stock is trading at Rs 2,255, reflecting a discount of 34% from its highest price in the past year.

Coming to its guidance, Asian Paints is facing intensified competition in the decorative paints sector from established players like Birla Opus, JSW Paints, and JK Paints, impacting its market share and pricing power.

To stay competitive, the company has increased dealer margins, offered price discounts, and introduced innovative products.

Asian Paints plans to regain momentum through strategic acquisitions, new product launches, and is anticipating a decline in input costs which will help stabilise margins.

Although demand may remain subdued in the near term due to economic challenges and weak consumer sentiment, the company's long-term strategy focuses on expanding its product portfolio to sustain its market leadership.

Despite current market pressures, Asian Paints is well-positioned to maintain its dominance in the industry through innovation and data-driven strategies.

For more information, you can check out its financial factsheet and quarterly results.

#3 Kalyan Jewellers

Next on our list is Kalyan Jewellers.

Kalyan Jewellers is a leading jewellery retailer in India, with a strong presence in both urban and semi-urban markets.

Known for its wide range of gold, diamond, and platinum offerings, the company has established trust and brand loyalty among customers.

The company is among India's top 5 gold jewellery retailers, accounting for about 6% of the total organised market share.

Coming to its financials, the sales grew 39.5% YoY to Rs 72.9 bn, in Q3 FY25.

The operating profit for the quarter stood at Rs 4.4 bn, with a slight decline in the operating profit margin to 6% versus 7%, in Q3 FY24.

The net profit for the quarter grew to Rs 2.2 bn. However, the net profit margin declined to 3 % versus 3.4%, in Q3 FY24.

The stock price reached its highest point at Rs 787.9 on 2 January 2025. Currently, it is trading at Rs 440, a 44% discount from its highest price over the past year.

Looking ahead, Kalyan's growth trajectory appears robust for FY25. It plans to open 80 new stores across India, up from 57 in FY24.

Profitability is set to get a boost as well, driven by a revised franchise agreement, which is expected to enhance margins without additional capital expenditure, and the repayment of Rs 3.5-4 bn in debt.

On the retail front, Kalyan is steadily improving margins by increasing sales of studded jewellery, both in southern markets and beyond.

The company has also demonstrated consistent performance, with same-store sales growing 12% in the first quarter: 13% in the South and 11% in other regions.

To know more about the company, check out its financial factsheet and latest quarterly results.

#4 Cochin Shipyard

Next on the list is Cochin Shipyard.

Cochin Shipyard Limited stands out as one of India's most modern and advanced shipyards.

It is India's first greenfield shipbuilding yard and the only shipyard with a shipbuilding capacity of 110,000 deadweight tons (DWT) and a repairing capacity of 125,000 DWT. The company has developed India's first indigenous aircraft carrier, INS Vikrant.

The company has cemented its position as a leader in constructing and maintaining maritime vessels, including tankers, bulk carriers, passenger ships and defence vessels.

Coming to its financial performance, the company saw an increase in sales of 15% YoY to Rs 10.9 bn, in Q2 FY25.

The operating profit for the quarter stood at Rs 1.9 bn, which remained flat YoY. On the operating profit margin front, the company saw a slight decline to 18%, versus 20%, YoY.

The net profit for the quarter stood at Rs 1.9 bn. The net profit margin for the quarter was 17.6% versus 20%, in Q2 FY24.

The share price over the past year reached its highest point on 11^th July 2024, at Rs 2,979.4 Currently, the stock is trading at Rs 1,459, a discount of 51% from its highest price within the past year.

The company's robust order book, good execution capabilities, and expanding export share, position it for continued growth.

Government spending on defence is expected to rise, with the upcoming Union Budget likely to allocate additional funds to the sector. This further supports the outlook for Cochin Shipyard and its potential for a recovery.

On the financial front, Cochin Shipyard has demonstrated impressive growth between FY20 and FY24, with revenue and net profit increasing at a CAGR of 13.2% and 11.2%, respectively.

Looking forward, the company is investing Rs 28 bn in infrastructure expansion, which includes a new dry dock and ship repair yard in Kochi. This will enhance its capacity to build and maintain large warships.

Additionally, the company's expansion into Mumbai, Kolkata, and Port Blair, along with the development of subsidiary shipyards in Kolkata and Malpe, underscores its commitment to strengthening India's defence capabilities.

For more details, see the Cochin Shipyard company fact sheet and quarterly results.

#5 NTPC

Next in the list is NTPC.

NTPC is a key player in the power sector, producing and distributing large quantities of electricity to various utility providers.

It's a leading Indian central public sector undertaking (PSU) in the power generation sector.

The company has a diversified portfolio of power generation sources, including coal, gas, hydro, solar, and wind.

Coming to its financials, NTPC reported revenue of Rs 450.5 bn for Q3 FY25, up from Rs 428.2 bn, in Q3FY24.

The operating profit for the quarter stood at Rs 133.2 bn. while the operating profit margin rose to 30%, versus 27%, YoY.

In the net profit front, the company saw a decline to Rs 51.7 bn, versus Rs 52.1 bn. The net profit margin stood at 11.5%, versus 12.2%, YoY.

The share price over the past year reached its highest point on 30^th September 2024, at Rs 448 Currently, the stock is trading at Rs 323, representing a discount of 28% from its highest price within the past year.

Going forward, the company is enhancing coal mining capacity to secure fuel supply, aiming to increase production from 40 million metric tons in FY25 to 67 million metric tons by FY29.

Additionally, NTPC is poised for significant growth in renewable energy, targeting 60 GW by FY32, including solar, wind, and storage projects.

The management remains optimistic about future capacity additions, with plans to award 13.6 GW of thermal capacity by FY27.

For more details, see the NTPC company fact sheet and quarterly results.

Conclusion

While the current market volatility offers a unique chance to capitalise on undervalued stocks, it is crucial to acknowledge the risks that accompany such investments.

The uncertainty in the broader market, combined with potential economic headwinds, could prolong the recovery of certain sectors or even deepen the downturn in others.

As tempting as discounted stocks may be, investors must remain cautious and assess each opportunity based on its long-term fundamentals, rather than short-term market fluctuations.

The path to potential gains is rarely without its bumps and prudent evaluation of any investment opportunity remains essential. In the unpredictable world of stocks, staying informed and conscious of market trends will be the key to making wise, profitable decisions.

Investors should also consider corporate governance as one of the criteria for due diligence before considering an investment.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...