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After 2200% returns, this stock lost nearly half its value in last 2 years

Updated : September 05, 2019 06:31 AM IST

The stock, which traded at around Rs 55.25 in September 1999, rose over 2200 percent to an all-time high of Rs 1,300 in November 2017.

Grasim shares, which currently trade at Rs 696, have declined about 46 percent since 2017.

Grasim Industries, the flagship company of the Aditya Birla Group, was a fruitful investment until 2017 when the stock entered a downward spiral, resulting in a loss of nearly half of its value in less than two years.

The stock, which traded at around Rs 55.25 in September 1999, rose over 2200 percent to an all-time high of Rs 1,300 in November 2017. Grasim shares, which currently trade at Rs 696, have declined about 46 percent since 2017.

The scrip has lost over 30 percent in the last 1 year and declined 15 percent since the beginning of 2019. In comparison, the benchmark Nifty has fallen 6 percent in the last 1 year and over 0.5 percent in 2019. Grasim hit its 52-week low of Rs 350 in May 2019.

The selloff in Grasim stock followed the sluggish performance in group companies, especially Vodafone Idea, where Grasim holds 11.6 percent stake. Vodafone Idea continues to make losses and the company would have to make huge capex in spectrum and rollout of 5G services, according to analysts.

Also, the weak macro environment is expected to weigh on Aditya Birla Capital, which holds a 56 percent stake in Grasim, in the near term.

BNP Paribas has downgraded Grasim to 'hold' factoring the funding requirement for Vodafone Idea by FY21. The brokerage noted that weak business outlook for Aditya Birla Capital and a bleeding Vodafone Idea investment provide little incentive to investors to buy Grasim at this stage, despite attractive valuations.

On the contrary, Grasim's cement business UltraTech, where it holds 60 percent stake, continues to do well, and analysts believe it is better for clients to play the upside in the cement business directly by buying into UltraTech.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions

After 2200% returns, this stock lost nearly half its value in last 2 years

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