3 stocks that spiralled down for five consecutive fiscals
Three stocks that exhibited a declining trend for five successive financials years include UCO Bank, Indian Overseas Bank and Reliance Power.
The weak operational performance caused the shares of these companies to drop 74 per cent, 77 per cent and 96 per cent, respectively. So far in FY20, the stocks have plummeted 5 per cent, 23 per cent and 52 per cent, respectively.
UCO Bank reported a net loss of Rs. 4,321 crore in FY19 as against Rs. 4,436 crore in FY18. This marks the 4th year in a row for the bank to report losses. The loss was incurred primarily on account of higher provisioning requirements on non-performing assets. The provision coverage ratio increased to 74.93 per cent in FY19 from 61.38 per cent in FY18. The percentage of GNPA increased marginally to 25 per cent in FY19 from 24.64 per cent in FY18.
Indian Overseas Bank incurred net losses to the tune of Rs. 16,809 crore in the last five years. However, the company did succeed in containing the net losses to Rs. 3,738 crore in FY19 as against Rs. 6,300.5 crore in FY18. Net Interest Income (NII) declined 14.66 per cent YoY to Rs. 1,479 crore in FY19. The Provision Coverage Ratio surged to 71.39 per cent in FY19 from 59.45 per cent in FY18. The asset quality improved as gross bad loans reduced to 21.97 per cent in FY19 from 25.28 per cent in FY18. Furthermore, Net NPAs dropped to 10.81 per cent in FY19 from 15.33 per cent in FY18.
On the other hand, Reliance Power reported a cumulative profit for the last 5 years. High-interest obligations in conjunction with auditor concerns dampened the company’s stock performance. Reliance Power made massive investments at the beginning of the project cycle. However, the project failed to generate commensurate receivables. This led to higher debt which ultimately caused the stock to fall.
On Thursday, the shares of UCO Bank opened at Rs. 18.10, and hit a high and low of Rs. 18.10 and Rs. 17.65, respectively. The stock closed at Rs. 17.95, down 0.83 per cent.
Meanwhile, the shares of Indian Overseas Bank opened at Rs. 11.14, and hit a high and low of Rs. 11.45 and Rs. 11.14, respectively. At the close of market hours, the stock was trading at Rs. 11.32, down 1.05 per cent.
Reliance Power opened at Rs. 4.15, and hit a high and low of Rs. 4.75 and Rs. 4.05, respectively. The stock closed at Rs. 5.43, up 29.90 per cent.