5 Indian Companies Best Placed to Fight Off Any Covid Scare

Covid is in the news again. The recent outbreak in China had many people spooked.

The Indian stock market too, took a hit in December.

However, it's the middle of January 2023 and so far in India, there has not been a spike in cases.

Maybe it could happen in the future. Or maybe covid has indeed been defeated. We can't say for sure right now.

But one thing is for sure. The market is putting covid behind it and moving on.

Now, that doesn't mean it wont crash. It could, due to any number of other reasons. But covid doesn't scare the market anymore.

But what if this confidence is misplaced? What if another major covid scare were to hit us sometime this year or later?

The market would certainly fall but there would be some stocks that would deal with it quite easily. There are companies well placed to fight off any find of covid scare.

In this editorial, we'll look at five of them. Please note that these stocks are not recommendations. On the other hand you should keep them in your watchlist. They are great buys at the right price.

#1 TCS

This is a no brainer. Tata Consultancy Services (TCS) sailed through the pandemic like so many other past crises.

In December 2022, our ace chartist and editor, Brijesh Bhatia, called TCS, the stock market's elephant in the room and with good reason.

TCS has 4% weightage in the Nifty. With the IT sector looking weak due to an anticipated global recession, the stock of TCS could weigh down the market.

However, if we were to consider a potential covid scare in the future, then you will be hard pressed to find a company more resilient than TCS.

The way it handled the pandemic has been exceptional. While its margins were under pressure throughout, it has delivered on revenues and profits in a commendable manner. It has also not suffered employee attrition as much as its peers.

The company delivered a decent performance in the December 2022 quarter. Its revenue was up 19% and net profit was up 11%. It also announced a dividend of Rs 75 per share.

TCS is among India's best largecap dividend growth stocks and it's also one of the top dividend stocks to watch out for in January.

#2 HUL

Among India's best FMCG stock and India's largest FMCG company, HUL has sailed through the pandemic. The company's sales and profits are more than 30% higher than FY2020, i.e. just before covid.

And this performance has come in spite of high inflation in FMCG products. The company has been successful in passing on rising input prices to its customers. This puts on full display, the strength of the company's moat i.e. competitive advantage.

It's one of the debt free companies in India and one of the high ROE stocks in India. It's high return ratios are entirely due to the strength of its brand, the quality and variety of its products, and the massive reach of its distribution network.

The company generates so much cash, it's not a surprise that it's one of the high dividend payout stocks in India.

In case there is another serious outbreak of covid in India, investors in HUL will sleep soundly as it operates in the 'essential services' category.

#3 L&T

The largest engineering company in India is unlikely to be impacted too much in the event of another covid outbreak.

Green Hydrogen? Check.

Defence? Check.

SpaceTech? Check.

Drones? Check.

The company is present, in a leadership position, in all the exciting sectors that will drive future growth.

It also has a strong presence in financial services and IT.

And then there is the core engineering project business that's firing on all cylinders thanks to the government's infrastructure push. After all, it's one of the top infrastructure companies in India.

In this stock, you get almost everything you could ask for as an investor. Covid is not going to stop this behemoth. L&T in a sweet spot right now in terms of growth and it's making the most of it.

#4 M&M

In the case of this stock, you can forget about any covid scare.

For investors looking for the next big thing, consider getting on board on this Mahindra group company or forever rue having missed an incredible journey.

In 2020 when Mahindra & Mahindra Ltd (M&M) announced a reshuffle of its top management. It was a transition during a difficult time for a company struggling to overcome a sales slump and mounting competition.

The company had been under mounting pressure from concerned shareholders worried about the group's capital allocation actions, particularly in its loss-making subsidiaries.

M&M, which had been the best performing stock in NIFTY between 2002-2018 with a CAGR of 31% crashed over the next two years with a CAGR of -54% by March, 2020.

But with the leadership reshuffle, there has been a marked change in the mindset of the Mahindra group as its focused on realigning the organisation with fresh thinking, and in the process consolidating the business.

Losses from subsidiaries are down 95%.

The company has full support from the entire group.

Its ROE has risen from the ashes to a respectable levels.

The change in M&M's management and the evolution of focused capital allocation strategy has been well appreciated by investors with the stock having appreciated over 50% over the last 12 months.

But the strategy is now entering a growth acceleration phase. It means the Mahindra growth story is only getting started.

#5 HDFC Bank

The merger between HDFC and HDFC bank has been an overhang on the stock. The short term outlook for the stock is not very positive.

Our ace chartist and editor, Brijesh Bhatia, wrote about this recently - Can HDFC Bank spoil the bank Nifty Party?

However, in the medium to long term, we believe this stock will shine through. Another covid wave is not going to change that.

It's a banking stock that can potential multibagger returns in the future.

HDFC Bank has said that it is focussing on deposit mobilisation and branch expansion to drive growth. The bank added 121 branches during the September 2022 quarter and 157 in the first half of the financial year 2023. It plans to open 521 branches in the second half.

It's also looking at deposit mobilisation to raise funds to repay the loans taken by HDFC after the merger.

The bank is also taking continuous digital initiatives to enhance customer relations and add value to them.

In a covid market scenario, HDFC Bank will likely be a relatively safe investment.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...