Cyber War: 3 Indian Companies that Dominate the Cyber Security Space

Cyber war. Cyber security. Cybercrime. Cyber-attacks. Ransomware. Phishing emails.

These are terms that you often hear but do not really identify with unless it strikes you personally.

Today, the story is personal.

As an organisation, Equitymaster was the victim of a recent ransomware attack. It wreaked havoc on our business.

We were at the risk of losing everything that we had worked on with commitment and integrity for more than 25 years that we have been serving our loyal customers.

While our team worked day and night to recover what we could, it brought to light some really disturbing and difficult facts to life.

Experts predict that 2022 is going to be the year of ransomware attacks where enterprises, small and medium scale businesses (SMBs), and individuals from around the world, may be targeted every 11 seconds.

And what's the estimated global monetary loss as a result of these cyber-attacks? A whopping US$ 20 bn.

What's more, this trend is expected to continue well beyond 2022.

It's not a happy thought and one that is sure to give you sleepless nights.

Robust Legislation is the Need of the Hour

If you think that this is simply an occidental phenomenon, think again. Things are happening close to home, and we are a living proof of that.

Cyber threat numbers in India have been steadily rising over the last 18 months. The number of attacks hit an eye-popping 9 m as early as February 2021. It's almost double the 4.5 m attacks in July 2020 as Indian workers began mass 'working from home'.

The situation is daunting and one that needs to be addressed urgently.

The bottom line is we are at war. A cyber war. And we need to ensure that we are in a position to defend ourselves.

In the backdrop of some really high profile attacks in 2021, the government of India has taken some tangible steps to develop a legal framework of cyber security policies.

Other than having robust legislation with a high degree of data governance in place that can deal with breaches, the attacks must be accompanied by significant legal penalties for those responsible for the crimes.

Can Corporates Find Opportunities in Growing India's Cyber Security Space?

The rising number of cyber-attacks has opened up several opportune gateways. As experts believe, this will grow the Indian cybersecurity industry which is estimated to reach US$ 13.6 bn by 2025.

India's cyber security industry witnessed a 21% CAGR amidst the pandemic with revenues from cyber security products and services hitting US$ 9.9 bn in 2021. The start-up community was quick to pick up on the trend raking in additional revenues of US$ 1.4 bn.

An increase in regulatory attention to data and privacy and quick digitisation were some of the factors fuelling this rapid growth momentum.

With a double digit growth rate, the industry is maturing. It may just be the right time for investors to explore possibilities of portfolio diversification by investing in cyber security stocks in India.

No doubt there is an element of risk involved. But if you are game enough to do some heavy lifting in an industry that is on an upward growth trajectory, then take a look at these three Indian companies that are currently dominating the cyber security space.

#1 Quick Heal Technologies

As cyber-attacks continue to grow in scale and sophistication in India, Quick Heal Technologies has been 'quick' to solidify its presence in the cyber security space.

This 27-year-old, Pune based company is a name that is synonymous with anti-virus software in India. It started out as a bootstrapped start-up in 1995 and has today evolved into a 360 degree cyber security solutions provider in India.

With flagship products like Quick Heal and Seqrite, the company has forayed into a space that caters to both retail and enterprise level security solutions.

With its range of offerings on data encryption and data loss prevention, endpoint security, network security, enterprise mobility management and server protection the company boasts of a clientele spread across retail, enterprise, SMB, and governments.

The pandemic undoubtedly triggered a rise in cyberattacks putting a large number of business enterprises and organisations at risk.

Quick Heal rapidly acted on this trend and introduced the 'Seqrite Hawkk', a cutting-edge suite of next-gen cybersecurity solutions for business enterprises in 2021.

Riding on this cyber war wave, the company is expected to continue with its investments to expand its Hawkk umbrella further. This move will enable Quick Heal to make its mark in EDR or endpoint detection and response, data privacy, zero trust, and a range of cloud-based network security products.

Quick Heal is well positioned to leverage its strengths to capture future opportunities with a growing product portfolio. The company's strong and experienced management and a debt free balance sheet will help it further strengthen revenues and profits.

With a promoter holding of 72.8% and a PAT of 43.8%, the company is in a strong position to feature as one of the best cyber security stocks in the market today.

#2 Sasken Technologies

Sasken Technologies per se is not the conventional player that is seemingly dominating the cyber security space in India.

Unlike its peers who have been directly involved in security products and services for a number of years addressing cyber security challenges in India, Sasken only actively forayed into the space during the pandemic.

That is not to say that the company did not have any footprint in this space at all. Sasken has played a crucial role in delivering Android Security Management services. This was designed to address 6,000+ CVEs or common vulnerabilities and exposures on over 90 models of consumer electronics and enterprise device customers.

As enterprises worldwide migrated to working online, a vast amount of data was being shared that needed robust security protocols to protect it from cyber threats and breaches. Sasken recognised the opportunity and decided to productise a range of cyber security solutions that would meet the needs of their customers.

The company leveraged its existing capabilities to stay at the forefront of developing digital technologies that leaned upon advancements in the cyber security arena.

Sasken accelerated its pace of developing a secure cyber mesh that could be deployed to protect business operations on distributed cloud and computing platforms across all stages of the network, right from the data source to the application layer, anywhere, anytime.

What makes Sasken an investible entity is its debt free status and healthy profit growth of 12.5%. Add to that the attractive 6.5% dividend yield in the fiscal year 2021 and it firmly pegs the company as a top cyber security stock that pays a dividend.

#3 Expleo Solutions

Expleo Solutions already comes with a strong history of cyber security offerings.

The company has developed and implemented cyber security strategies and assets with a range of services such as risk management, IoT/ICS security?, cyber protection, endpoint security, 5G, AI, and blockchain-based security and payment security solutions in the Indian market.

The company decided to partner with TEHTRIS in November 2021, a well-known French enterprise that specialises in cyber security services.

The partnership decision came about in the backdrop of the pandemic when the company determined a need to have a more diverse and flexible bouquet of cyber security offerings to meet the ongoing demands of a 'work from home' workforce.

This strategic joining of forces between these two entities enabled the company to become a leading provider of cyber security software and services in India. The alliance created a strong opportunity for Expleo to develop a new business capability in the cyber security space.

The marriage between the two entities permitted Expleo to offer TEHTRIS' exclusive range of proprietary software comprising threat prevention, detection and treatment with in-house solutions or on SaaS mode to its customers.

Moreover, the partnership opened up the gateway to more collaborative prospects with TEHTRIS' cutting-edge and innovative security consultancy services.

There is also the possibility to explore more innovative solutions to cyber security in order to meet the needs of an evolving market in the future.

These strategic investments in new-age capabilities have already pushed the company's revenue to cross the Rs 1 bn mark in fiscal 2022.

Backed by a confident management team and traction in demand, Expleo is on track to clock 23.9% CAGR growth between the financial year 2021 - 2024 making it one of the strongest contenders for the best cyber security stocks in India today.

Cyber Security in India is Now a Boardroom Agenda

India's tech scene is in a transformative mode. With the government of India supporting 'Make in India' initiatives, the market of opportunities to build expertise and capabilities in the cyber security space is only going to expand.

Companies like 3i Infotech and Xchanging Solutions are some of the upcoming names that are spreading their wings in India's cyber security market.

Moreover, strategic partnerships between start-ups and academia with corporate backing will enable the country to emerge as a hub for 'all things digital with security' in the foreseeable future.

As companies brace for future cyber wars, businesses worldwide are estimated to spend US$ 151 bn on cyber security by 2023. The industry may be at that juncture where it can provide significant investment potential for serious investors.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.