Indian Companies Hit 52-Week Lows Amid Raw Material Inflation

HDFC Bank and several other major Indian companies hit their 52-week lows on Wednesday.

The affected stocks include HDFC Bank, ITC, Hindustan Unilever (HUL), Dabur India, IRFC, UPL, Procter & Gamble Hygiene and Health Care, and KEC International. Among these, HDFC Bank dropped below its previous low of ₹722 touched on August 12, while HUL declined below its earlier low of ₹2,019 hit on July 28.

The fast-moving consumer goods (FMCG) sector has been under pressure due to high raw material costs. Brent crude and palm oil prices have increased by 47% and 13% year-to-date, respectively, which might keep margins under pressure for FMCG companies.

Analysts at JM Financial Institutional Securities expect HDFC Bank's net interest margin (NIM) performance to improve over the medium term due to a gradual run-off of high-cost borrowings. They also predict that the bank will deliver 15% loan and 14% earnings per share (EPS) compound annual growth rate (CAGR) over FY26-28E.

Analysts at Motilal Oswal Financial Services (MOFSL) believe ITC's cigarette revenue and earnings before interest and tax (EBIT) performance will be volatile in the near term due to slower-than-expected price hikes on cigarettes. They also predict that the company's full cigarette portfolio will help it navigate the tax increase, but competitive pressure from illicit cigarettes may take a toll on the formal cigarette industry.