These star performer stocks of FY21 are trading at a discount; Are they on your watch list?

The COVID-19 pandemic, which emerged in late 2019 and escalated into a global crisis in 2020, has had an unprecedented impact on the world economy. As nations grappled with the rapid spread of the virus, implemented stringent lockdown measures, and experienced disruptions across sectors, the global financial landscape was profoundly affected. 

The Indian economy, one of the fastest-growing economies in the world, was also severely hit by the pandemic. The stringent lockdown measures imposed to curb the virus’s spread brought economic activities to a standstill.  

Sectors like manufacturing, construction, retail, and services faced immense challenges, resulting in a contraction in GDP growth. The large informal sector, which forms a significant part of India’s economy, was particularly hard-hit, with millions losing their livelihoods. 

The global stock markets faced extreme volatility during the pandemic. Investors were gripped by uncertainty and panic, leading to substantial sell-offs and plunging stock prices.  

Furthermore, the Indian stock market, represented by indices like the BSE Sensex and NSE Nifty, witnessed a roller coaster ride during the pandemic. Initially, the market experienced a significant crash in March 2020 as the virus spread rapidly. Investor sentiments turned negative, leading to panic selling and substantial declines in stock prices. 

Following the introduction of stimulus packages and monetary easing measures by governments and central banks globally, the markets underwent a gradual stabilization and recovery phase. As a result of the stimulus packages implemented by the government, stocks began to rebound from their lower points and started establishing higher highs, eventually reaching new 52-week highs. Among all the stocks, stocks mentioned in the article displayed exceptional returns, showcasing their remarkable recovery from the lows experienced during the Covid-19 downturn. 

Irrespective of their financial performance, the stocks embarked on an upward trajectory following the Covid-19 downturn and started achieving new milestones. However, at present, these stocks are trading at a discount compared to their all-time high prices and are facing selling pressure. Furthermore, some of these stocks are currently trading at levels that are more than 50% below their respective all-time highs. 

In 2021, the majority of stocks experienced significant growth, with multibagger returns However, two exceptions to this trend were IRCTC Ltd and Avenue Supermarts Ltd. Nonetheless, if we consider the returns from the closing price on April 01, 2020, to the all-time high price, all stocks displayed remarkable returns. For instance, Rajratan Global Wire Ltd witnessed a staggering return of over 3600%, while Deepak Fertilizers generated a return of 1400%. 

Upon analysing the provided data, it is evident that the shares of IRCTC Ltd are currently trading at a price-to-earnings (PE) ratio of 51.25. However, in the year FY21, the PE ratio was more than three times the current value, standing at 173.1. Similar trends can be observed for Jubilant Foodworks, which had a PE ratio almost twice as high in FY21 compared to the present. On the other hand, certain stocks like Rajratan Global Wire and Deepak Nitrite are currently trading at PE ratios higher than those recorded in FY21. 

Despite these stocks currently trading at a discount from their all-time highs, it is important to note that the potential to generate returns has not diminished for these companies. These companies have earned a strong reputation in their respective sectors and possess significant potential for generating multibagger returns in the future. Investors must keep these stocks on their radar.