RoydadNaft –  India’s flagship equity indices, Sensex and Nifty 50, are trading near record highs despite lagging many Asian peers this year. Yet beneath this bullish surface lies another story: a large number of stocks are stuck near their 52-week lows, potentially offering savvy investors attractive bargains as the year draws to a close.

The broader Indian market has gained about 9.5% in 2025, but that rally has been driven by a narrow group of companies.

Among 828 Indian companies with market capitalizations above $500 million, 109 stocks were within 5% of their 52-week lows as of December 5, with another 139 only marginally higher. Together, these underperformers roughly double the number of large-cap stocks trading near their 52-week highs.

It’s tempting to assume these laggards are cheap for good reason, but their fundamentals often paint a brighter picture. Many boast strong earnings growth forecasts, solid balance sheets, and valuations that remain reasonable.

In fact, 14 of the 109 most beaten-down stocks meet strict quality criteria: expected earnings-per-share growth exceeding 10% through 2027, low net debt, and price-to-earnings ratios at or below their projected growth rates, according to FactSet consensus data.

Several are well-known, highly liquid names, including four companies valued at over $1 billion: Inox Wind (wind energy), telecom firm HFCL, Tata Chemicals, and logistics leader Blue Dart. All feature impressive projected earnings growth—the lowest being Blue Dart at a still-robust 28%.

What dragged them down?

The declines stem largely from company-specific issues rather than broader sector weakness, compounded by investors’ intense focus on the artificial intelligence theme.

Inox Wind entered 2025 looking expensive at a P/E of 29.6. A July share issuance priced below market value then sparked dilution fears among minority shareholders.

Blue Dart also started the year at a lofty 41 times earnings. Sentiment soured further in September when the government issued a tax demand on one of its subsidiaries.

Tata Chemicals was hit by falling soda ash prices—its core product—and a production outage at its U.S. plant.

HFCL disappointed with a 24% revenue drop in the first nine months of the year, after beginning 2025 at a P/E of 36.4. Adding to concerns, its promoters pledged more than half their shares as loan collateral, raising the risk of forced sales if the stock fell further.

None of these challenges appear insurmountable. But in a year when foreign investors largely shunned Indian equities, even minor issues had outsized impacts on share prices.

Year-end bargain hunting

The dominance of the AI theme has also weighed heavily on many Indian stocks this year, diverting attention from other sectors. Markets often misprice assets during such single-theme manias, creating opportunities for “neglected” stocks with strong fundamentals to later outperform.

A similar pattern played out recently in India: many quality companies heavily sold off in 2024 became standout performers in 2025.

At the end of 2024, 98 stocks traded at or near 52-week lows. Of these, 18 were high-quality names with strong earnings forecasts, clean balance sheets, and reasonable growth-adjusted valuations. Fifteen of them—including nine with market caps above $5 billion—went on to outperform the broader market’s 9.5% return through December 22, 2025.

Those companies had attractive earnings outlooks and P/E ratios (with the exception of Reliance Industries) at or below their expected growth rates. In hindsight, their strong 2025 performance was hardly surprising.

The same setup may not repeat this year, especially amid ongoing U.S.-India trade tensions. Finding great opportunities becomes harder in sharply rising markets.

Still, even in a strong bull run, high-quality stocks can lag behind and become undervalued. It just takes diligent searching—in the right places.