YES Bank, ZEEL, SBI Cards among 10 largecaps down up to 48% from their 52-wk highs; should you buy?

The volatility in the midcap and smallcap stocks, following a secular rally in the broader markets, has increased the attraction of larger peers, thanks to severe selling pressure in the broader markets. These stocks are trading at attractive valuations compared to smaller peers, with better comfort during the turbulent times.

A host of largecap stocks, including some index constituents, have been trading atleast 20 per cent below their 52-week highs. These stocks have been technically in the beer grip. A stock or an index is said to have entered the bear grip when it falls 20 per cent or more from its recent peak, mostly taken from a 52-week high.

With a strong catch-up of midcaps and smallcaps in the last couple of months, we believe the margin of safety in terms of valuations for these segments at current levels has reduced as compared to that available in largecaps, said Axis Securities. "The broader market may see some time correction in certain pockets in the near term and flows will likely shift to largecaps," it said.

AMFI has recommended various means, such as rebalancing portfolios to increase the weightage of largecap stocks, and moderating flows into small and midcap funds. Another aspect worth mentioning is that there is a higher chance of markets delivering negative returns in the month of March than in any other month, said Ashika Stock Broking.

Shares of Zee Entertainment Enterprises have crashed about 48 per cent from their 52-week highs at Rs 299.5 hit on December 12, 2023. It has been hammered since its merger deal with Sony Pictures Networks has been into jeopardy. The National Company Law Tribunal hearing regarding Zee Entertainment's plea to enforce the stalled $10-billion merger with Sony has been pushed to a later date.

Domestic brokerage firm Prabhudas Lilladher has suggested to 'hold' the stock for a target price of Rs 167 on the stock. However, the global broking firm CLSA had downgraded Zee to 'sell' from 'buy' with a revised target price of Rs 198.

UPL is another stock, which has corrected about 38 per cent from its 52-week high of Rs 760.45 scaled in May 2023. The counter has been a consistent underperformer, leading its way out of the Nifty50 pack. The stock had reported a dismal performance in the Q3 results. Kotak Institutional Equities has downgraded UPL to 'sell' with a target price of Rs 390.

Private lenders- YES Bank and AU Small Finance Bank are also about 30 per cent down from their respective 52-week highs. YES Bank has been seeing some buying action and turned into a multibagger. However, the stock was soon swamped by the profit booking sentiments. AU Bank has been struggling on the back of muted Q3 results, operational inefficiency and increased NPAs.

Motilal Oswal Financial Services has a target price of Rs 800 on AU Small Finance Bank. However, Kushal Gandhi, Technical Research Analyst at Stoxbox has suggested to buy YES Bank with a target price of Rs 27 and keeping a stop loss of Rs 22.50

Image: Largecap Bears

SBI Cards And Payment Services is down 25 per cent from its 52-week highs, while Jubilant FoodWorks has dropped about 24 per cent from those levels. Both the stocks have been struggling lately on the back of subdued operational performances, which is impacting their performance.

CLSA maintained a sell rating on Jubilant FoodWorks with a target price of Rs 439, citing its profitability in Turkey and Bangladesh is in line with expectations. However, there is currency risk as cash flows in Turkish lira and the debt is in euros, it said. On the other hand, Morgan Stanley downgraded SBI Card last month to 'equal weight' and reduced the price to Rs 750.

Financial players including Bajaj Finance and IDFC First Bank are also down 21 per cent each from their 52-week highs. Nomura has maintained a 'buy' rating on Bajaj Finance but slashed the target price to Rs 7,200 from Rs 8,800 earlier. NBFCs are on a slippery slope, and growth drivers are at risk, it said.

BOB Capital Markets has a 'buy' rating on IDFC First Bank. "Strategic realignment of the balance sheet to improve overall performance but the bank still lags in operational efficiencies," it said. Another brokerage firm Keynote Capitals also has a 'buy' tag for the stock with a target price of Rs 99.

Page Industries and Asian Paints are the other two names in the list. Asian Paints has been lately marred by the Grasim's entry in the paint business, increasing competition and denting margins for the blue-chip counter. Page Industries has also suffered issues of increased competition and shifting consumer spending patterns.

Global brokerage firm Macquarie is positive on Asian Paints as it maintained an 'outperform' rating with a target price of Rs 4,000 on the stock. Elara Capital in a research report last month assigned SELL rating on Asian Paints shares for a target of Rs 2,840. Meanwhile,  Elara is positive on Page Industries. The brokerage firm has a 'buy' tag for the with a target price of Rs 46,304.