3 Turnaround Stocks to Keep on Your Watchlist

Turnarounds don't happen every day in the stock market, but when they do, they can create outsized opportunities.

Turnarounds are companies that were written off a few years ago because of poor management decisions, heavy debt, or just being in a bad business cycle.

Now, some of them are quietly fixing the basics, cutting waste, paying down debt, and getting their growth engines back on track. That's why keeping an eye on turnaround stories matters.

They won't all succeed, but the ones that do often reward early believers far more than steady compounders.

Let's break down three Indian stocks that are starting to show those early signs of a genuine recovery and deserve a spot on your watchlist.

Take a look...

#1 Greaves Cotton

First on the list is Greaves Cotton, a company with an engineering legacy spanning over 165 years.

It has evolved from being primarily a single-cylinder diesel engine company to a fuel-agnostic, multi-product company, building a complete sustainable mobility ecosystem.

But this transformation wasn't easy for the company.

On one hand, it faced the looming threat of its single-cylinder diesel engine business declining over the years, and on the other, it had to invest in its future for years without seeing a single rupee of revenue in return.

This dual-front effort resulted in a subdued financial performance over a decade. But now, things seem to be turning around for the company.

Greaves Cotton reported a 16.5% YoY increase in revenue for the first quarter of FY26.

Its operating profit rose by 108.6% YoY in 1QFY26. The operating profit margins expanded to 7.6% from 4.3% in 1QFY25.

This improvement contrasts with previous periods, where the overall operating performance was dragged down by continued losses in the e-mobility business in FY25, which led to a downgrade in the company's credit ratings.

However, the 1QFY26 results demonstrated a positive shift. The core businesses has been pivotal in this turnaround.

Exports made up 14% of the revenue in 1QFY26, driven by strong demand for Euro-V+ auto engines and CPCB IV+ gensets, significantly contributing to margin improvement.

While Greaves Electric Mobility recorded operating losses in FY25 and its e-2W market share declined to 3.6% in FY25, the 1Q FY26 performance shows improvement.

1QFY26 revenues were Rs 1.37 bn, with its e-2W business achieving an 84% YoY retail sales growth. Its market share also increased to 4.2% from 3.4% in the previous year.

The company is focused on optimising its EV business for better margins and transitioning to a more demand-driven model.

Greaves Finance also significantly scaled up its assets under management (AUM) to Rs 3 bn, reflecting strong portfolio quality and prudent risk controls.

The management is focused on operational excellence, cost optimisation, and diversifying the portfolio beyond the shrinking diesel 3W engine market. They're working to maintain operating margins in the 13-14% range for the standalone business.

For more details, check out Greaves Cotton's financial factsheet.

#2 Deep Industries

Coming second on the list is Deep Industries, a comprehensive solutions provider in the oil and gas support services sector, with over three decades of experience.

Its service portfolio covers more than 70% of the post-exploration value chain in the oil and gas sector.

Key offerings include natural gas compression services, where it operates one of India's largest fleets, drilling and workover rig services, possessing 12 workover rigs and 6 drilling rigs, and natural gas dehydration services, being a pioneer in providing these systems on a Build, Own, and Operate basis.

Being present in the oil and gas field means the company's business is inherently cyclic.

Due to of subdued exploration activity in the oil and gas sector, the company's topline and bottom line were stagnant for the last 5 years.

The company's latest financial results indicate a significant turnaround from the previous fiscal year's consolidated performance.

The turnaround is evident in the revenue for 1QFY26, as it rose 61.6% YoY. Operating profit grew 61.2% YoY. The net profit for the quarter was up 59.3% YoY.

This strong growth is mainly due to the efficient execution of various contracts awarded in the prior year, with no contribution from the recent Kandla Energy acquisition yet.

Deep Industries' order book stood at a robust Rs 30.5 bn as of August 2025, providing a strong financial foundation for future growth.

The company anticipates sustained YoY revenue growth of over 30% for at least the next 2 to 3 years based on its existing order book.

Key developments supporting this positive outlook include successfully taking charge of the Rajahmundry field enhancement operations, which are expected to significantly boost output and generate around Rs 1.4 bn in full-year revenue from FY26.

The company is actively pursuing the recovery of old receivables, totalling over Rs 3.5bn from Kandla and Dolphin, and is optimistic about retrieving a substantial amount, with no further write-offs expected in FY26.

This operational momentum, coupled with a favourable policy environment focused on national energy security, positions Deep Industries for sustainable growth and long-term value creation.

For more details, check out Deep Industries' financial factsheet.

#3 HEG

On number three comes HEG Manufacturer of graphite electrodes, which are crucial consumables for Electric Arc Furnaces (EAF) used in steel production.

These electrodes function as electrical conductors in EAFs, generating the heat necessary to melt steel scrap.

HEG has one of the world's largest single-site graphite electrode plants. Following a recent expansion, it has become the third-largest producer in the Western world.

The company maintains a competitive cost position, operating as one of the lowest-cost producers globally.

A significant portion of its production, 65-70%, is exported to about 35 countries, indicating a diversified sales footprint and customer base.

The company's performance was weaker in the previous quarter (1QFY25) primarily due to prevailing challenging market conditions.

Production outside of China fell by about 1.2% due to ongoing macroeconomic headwinds and muted industrial recovery. China's steel production declined 2.4%, but its surging exports increased global competition and exerted pressure on steel prices.

Consequently, the graphite electrode market faced challenging conditions, with weak demand and spot market prices under sustained pressure.

The industry's average utilisation level outside China was low, estimated between 60% to 65%.

But things seem to have changed for the better. In its latest results, HEG recorded a revenue growth of 8%. Operating profit grew 172% YoY, and net profit grew 355% YoY.

This notable improvement positions HEG as a potential turnaround stock. The anticipated turnaround is supported by several factors.

The global transition towards low-emission Electric Arc Furnace (EAF) steelmaking continues to gain momentum, driven by regulatory actions and decarbonisation targets.

EAFs has a significantly lower carbon footprint compared to traditional blast furnaces, making them central to the steel industry's transformation.

This shift is expected to generate substantial incremental demand for graphite electrodes, estimated at 150,000 to 200,000 tons annually by 2030 (excluding China).

Over the last two years, about 11 m tons of new EAF capacities have been installed in the Western world, with another 50-55 m tons expected by 2027, and an additional 40 m tons between 2028 and 2030, totalling about 100 m tons of new capacity.

This unprecedented growth in EAF capacity is expected to drive demand for electrodes. Additionally, supply rationalisation by some other industry majors and currently low prices are expected to lead to market stabilisation and pricing recovery.

HEG is proactively addressing this future demand by announcing an expansion plan to increase its existing capacity from 100,000 tons to 115,000 tons by January-March 2028, which will further reduce costs and increase market share.

The management believes that once the global graphite electrode industry utilisation levels cross 80% to 85%, prices will firm up, which they anticipate within two to three quarters.

For more information, check out HEG's financial factsheet.

Conclusion

Turnaround stocks never go up in a straight line. Some will stumble, others will exceed every expectation.

What matters is spotting the companies where the fundamentals are genuinely improving, not just where the share price looks cheap.

Therefore, it's important to conduct thorough research on financials and corporate governance before making investment decisions, ensuring they align with your financial goals and risk tolerance.

Happy investing.

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