Why HDFC Life, Bata, 3 others have lagged Sensex for 5 years

Beating the benchmark might not be easy. But underperforming it for five straight years? That’s a let-down. From all listed stocks with a market cap exceeding Rs 500 crore, we found five stocks, including a large cap, that have lagged the BSE Sensex in each of the last five calendar years. Let’s unpack what has held these laggards back.

HDFC Life Insurance

For a business that consistently ranks among the top life insurers in India, HDFC Life’s stock performance tells a different story. Over the past five years, it has underperformed the Sensex every single year despite its strong brand recall and a diversified distribution network. The culprit is the company’s term insurance business, a key profitability driver for life insurers, that hasn’t scaled meaningfully. This is why despite solid topline growth (annual premium equivalent or first premiums from new policies growing two times from FY21 to FY25), profitability hasn’t kept pace.

At the same time, low-margin savings and annuity products have grown faster, diluting margins. For instance, new business margins, once north of 27 per cent, have remained range-bound in recent years. In addition, the merger with Exide Life, while adding distribution heft, also brought integration costs and operational drag. While synergy benefits are gradually flowing in, the journey hasn’t been margin-accretive yet.

Unless the company re-energises its high-margin product engine and delivers operating leverage, the stock could remain a laggard.

Bandhan Bank

Bandhan Bank’s roots in microfinance, while once a strength, have turned into a vulnerability. Over the past few years, Bandhan’s borrower base—largely low-income, informal sector women—has been disproportionately hit by Covid disruptions and natural calamities like floods. The result has been a prolonged asset quality overhang for the lender.

While Bandhan has diversified into mortgages and retail loans, over 40 per cent of its book remains exposed to the EEB (emerging entrepreneurs business) segment—its microfinance backbone. Gross NPAs have consistently hovered around elevated levels of 5 per cent and credit costs of more than 3 per cent remain above peers’ averages. The bank’s return ratios have also taken a hit with its return on assets (ROA) and return on equity (ROE) sharply falling from 4 and 20 per cent, respectively, in its debut year of FY18 to 1.5 and 12 per cent in FY25. 

To counter this, Bandhan has accelerated its shift towards a more balanced loan book, ramping up mortgages (home loans), SME lending, and wholesale banking. But the road to revival is steep. It depends on whether Bandhan can shed its legacy concentration risks fast enough to restore profitability.

Bata India

Bata India’s brand recall is unmatched. With nearly 2,000 stores and a heritage spanning nearly a century, it’s a household name in Indian footwear. But when it comes to stock performance, the story has faltered. So what went wrong?

One, its recovery from the Covid pandemic was slower than its peers. The company struggled with demand volatility in FY21 and FY22, relying heavily on physical retail at a time when e-commerce boomed. Even when retail rebounded, margins came under pressure due to higher raw material costs and cautious consumer spending across the industry. Two, its shift towards premium products and sneaker studios, though logical, are taking time to scale. The flagship premium innovations, like Floatz and Hush Puppies Office Sneakers, remain promising but haven’t materially lifted volumes or profitability. Three, growth has come at a cost. While the company has opened hundreds of franchise stores and revamped its merchandising, its low inventory turnover of 1.9 times, against the 3-4 times for industry, suggest execution woes and low demand.

Bata is still a brand people trust but in the stock market, that alone isn’t enough. Investors need evidence of consistent, scalable growth and margin resilience. Until then, Bata’s journey remains a reminder that a strong brand must be backed by equally strong execution.

SIS

SIS, India's largest security and facility management services company, has delivered consistent top-line growth—revenue has nearly tripled from FY17 to FY25, touching Rs 13,189 crore. But its stock has remained an also-ran.

The reason is its labour-intensive, low-margin business model where over 80 per cent of revenue goes into servicing employee expenses. Despite its scale and expansion into Australia, Singapore and New Zealand, EBIT margins, as a result, hover around just 3 per cent. And these margins haven’t improved meaningfully even with tech-based offerings like VProtect. 

Second, capital allocation hasn’t delivered tangible shareholder value. Though the company has completed nine acquisitions since FY17, the returns have been underwhelming. In FY25 alone, SIS wrote off Rs 306 crore of goodwill, largely from acquisitions in Australia, eroding trust in its inorganic growth strategy. Third, despite Rs 600 crore of free cash flow and multiple buybacks, investors remain seemingly sceptical of its ability to grow earnings meaningfully or defend margins.

SIS’s story is a classic example of operational execution not translating into shareholder returns, raising important questions about its capital use and the long-term scalability of its business model.

Entertainment Network (ENIL)

Owner of the iconic Mirchi brand, ENIL has long dominated the private FM radio space. But investors banking on its transformation story have been left disappointed.

ENIL’s core radio business, though still sizable, has been in a structural decline. Revenue in FY25 was still below the FY20 peak and traditional ad spend hasn’t meaningfully rebounded. Efforts to pivot through non-FCT (non-radio) events, brand solutions, and digital audio ads (like MPing) have grown, but not at a scale to offset the legacy drag.

The recent acquisition of Gaana shows strategic intent, but here too, monetisation remains a long road. ENIL has repositioned Gaana as a premium subscription-only service—brave but risky in a market flooded with free options and deep-pocketed rivals. FY24 saw the company return to profitability (net profit of Rs 33 crore) but return ratios remain anaemic and the business still burns cash on digital content creation and platform development.

ENIL is a case study of a traditional media business trying to reinvent itself in a fast-changing ecosystem. But for investors, transformation stories need visible scale, not just activity. Until digital revenues meaningfully replace radio revenue decline, ENIL may stay stuck in a half-reinvention limbo.

Before you leave

Consistent underperformance is rarely a coincidence. It often reflects structural problems, be it weak business models, poor capital allocation, or fading relevance. These five companies remind us that even familiar names can become value traps if fundamentals don't keep pace.

Thus, as investors, it's crucial to look beyond narratives and track long-term performance trends. That’s where the right tools and research come in. At Value Research Stock Advisor, we offer carefully vetted stock recommendations, backed by thorough research and expert analysis, to help you spot not just the winners but also avoid the losers so your long-term journey stays on track.

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