Introduction:
The Nifty500 index has seen significant volatility over the past year, with some stocks experiencing steep declines. As of March 21, 2025, the top 5 losing stocks in the index are Sun Pharma Advanced Research Company Ltd, IndusInd Bank, Sonata Software, Adani Green Energy, and Sterling and Wilson, with losses ranging from 45.41% to 58.12%. In this blog, we’ll explore the reasons behind their decline, assess whether these issues are temporary or structural, and analyze their potential for recovery.
1. Sun Pharma Advanced Research Company Ltd: A Biotech Bet on R&D
- 1-Year Loss: -58.12%
- Primary Reason: High R&D expenses with no marketed products.
- Recovery Potential: Temporary if clinical trials succeed.
Sun Pharma Advanced Research Company Ltd (SPARC) is a clinical-stage biopharmaceutical company focused on developing innovative drugs. However, its heavy investment in R&D has led to consistent losses. In December 2024, the company reported a net loss of Rs 80 crore, with R&D expenses accounting for 87.5% of total costs in FY21.
Despite the losses, SPARC’s pipeline in oncology, immunology, and neurodegenerative diseases shows promise. Key trials, such as SCO-088 for Parkinson’s and SCD-044 for psoriasis, are expected to yield results by early 2025. If successful, these could lead to licensing deals and milestone payments, potentially reversing the stock’s decline.
Source: Screener – SPARC Financials
2. IndusInd Bank: Accounting Woes and Loan Stress
- 1-Year Loss: -52.35%
- Primary Reason: Accounting discrepancies and stress in unsecured loans.
- Recovery Potential: Likely temporary if issues are resolved.
IndusInd Bank’s decline stems from accounting errors in derivative accounts, which reduced its net worth by 2.35%. Additionally, the bank faced stress in its unsecured loan portfolio, leading to a 39.2% drop in net profit in Q2 2024. If you want to know more about what went wrong with IndusInd Bank, click here.
The bank’s challenges are compounded by governance concerns, including uncertainty around the CEO’s term extension. However, if the accounting issues are resolved and loan portfolio stress is managed, the stock could recover.
Source: Business Standard – IndusInd Bank Crash
3. Sonata Software: Earnings Disappointment
- 1-Year Loss: -48.52%
- Primary Reason: Disappointing earnings and margin contraction.
- Recovery Potential: Likely temporary if performance improves.
Sonata Software’s stock fell due to weak earnings, with Q4 2024 net profit dropping 3% year-on-year despite a 25% revenue increase. The IT services sector has faced margin pressures, impacting profitability.
However, the company’s strong deal pipeline, with a book-to-bill ratio of 1.24 in Q1 2024, suggests potential for future growth. If Sonata can improve operational efficiency and execute on its deals, recovery is possible.
Source: BusinessToday – Sonata Software Q4 Earnings
4. Adani Green Energy: Legal and Market Challenges
- 1-Year Loss: -48.36%
- Primary Reason: Bribery charges and market cap decline.
- Recovery Potential: Structural if legal issues persist, temporary if resolved.
Adani Green Energy faced a significant drop due to bribery charges and a decline in market capitalization by Rs 87,805 crore in 2024. The company also canceled a $600 million bond offering, signaling funding challenges.
Despite these issues, Adani Green Energy remains a leader in India’s renewable energy sector, with a target of 50 GW capacity by 2030. If the legal issues are resolved and funding is secured, the stock could recover.
Source: Economic Times – Adani Green Energy News
5. Sterling and Wilson: Promoter Sales and Volatility
- 1-Year Loss: -45.41%
- Primary Reason: Promoter stake sales and insider selling.
- Recovery Potential: Likely temporary if fundamentals hold.
Sterling and Wilson’s decline was driven by promoter stake sales, reducing their holdings from 69% in June 2023 to 52.9% by June 2024. This triggered profit booking and a 17.4% drop in 2025.
However, the company has returned to profitability, and its focus on renewable energy projects positions it well for future growth. If it secures new projects and maintains profitability, the stock could recover.
Source: Equitymaster – Sterling and Wilson Analysis
Summary Table: Key Metrics and Recovery Potential
| Stock Name | 1-Year Loss (%) | Primary Reason for Fall | Recovery Potential | Key Catalysts |
|---|---|---|---|---|
| Sun Pharma Advanced Research Company Ltd | -58.12 | High R&D losses, no marketed products | Temporary if trials succeed | Clinical trial readouts in 2025 |
| IndusInd Bank | -52.35 | Accounting issues, loan stress | Likely temporary | Resolution of accounting discrepancies |
| Sonata Software | -48.52 | Disappointing earnings, margin contraction | Likely temporary | Deal execution, margin improvement |
| Adani Green Energy | -48.36 | Bribery charges, market cap decline | Structural if unresolved | Legal resolution, funding for 50 GW target |
| Sterling and Wilson | -45.41 | Promoter stake sales, insider selling | Likely temporary | New project wins, profitability |
*as on 22/03/2025
Conclusion
The top 5 losing stocks in the Nifty500 index have faced unique challenges, from R&D losses to legal issues. While some declines may be temporary, others could have structural implications. Investors should closely monitor upcoming catalysts, such as clinical trial results, earnings performance, and legal resolutions, to assess recovery potential.
FAQs
1. Why did Sun Pharma Advanced Research Company Ltd fall by 58.12%?
Sun Pharma Advanced Research Company Ltd (SPARC) declined due to consistent losses from high R&D expenses without any marketed products. However, its pipeline in oncology, immunology, and neurodegenerative diseases offers recovery potential if clinical trials succeed.
2. What caused IndusInd Bank’s 52.35% drop?
IndusInd Bank’s decline was driven by accounting discrepancies, stress in unsecured loans, and governance concerns. The fall could be temporary if these issues are resolved.
3. Is Sonata Software’s 48.52% decline permanent?
Sonata Software’s fall is likely temporary, caused by disappointing earnings and margin pressures. A strong deal pipeline and potential margin improvements could drive recovery.
4. What are the challenges facing Adani Green Energy?
Adani Green Energy faced a 48.36% drop due to bribery charges, a decline in market capitalization, and funding challenges. Recovery depends on resolving legal issues and securing funding for its 50 GW target by 2030.
5. Why did Sterling and Wilson fall by 45.41%?
Sterling and Wilson’s decline was driven by promoter stake sales and insider selling. The fall is likely temporary if the company maintains profitability and secures new renewable energy projects.
6. Which stock has the highest recovery potential?
Sun Pharma Advanced Research Company Ltd and Sonata Software have high recovery potential if their R&D trials succeed and earnings improve, respectively.
7. Where can I find more details about these stocks?
For detailed financials and analysis, visit Trendlyne and other sources linked in this blog.
