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The Top 20 Disruptive Tech Stocks in India

Feb 28, 2022

The Top 20 Disruptive Tech Stocks in India

Makeup Kar Liya!

This is just one of the puns I recently read on Nykaa. The company is one of the startups with the best listings in recent times.

Nykaa's (brand name for FSN E-Commerce) disclosures, post listing, is not going down well with investors and analysts.

Critics of the stock market performance of hot new age stocks have been having a field day.

Social media and publications are full of memes and headlines on what made the stocks crash after their stellar market debut.

The confidence in the potential of new age companies, especially disruptive tech stocks, has sunk to a lows.

The debacle of Chinese and American tech majors like Alibaba, Facebook, Zoom Video etc, has dealt a heavy blow to investors hoping for quick riches.

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After the recent spate of market corrections in India, most of the newly listed stocks are trading 40% to 50% below their listing prices.

Now, keeping the short-term market misery aside, there is good reason why technology stocks should elicit a lot of interest.

In the Indian markets, we are yet to see any big company going bust due to some technological disruption.

But if we look at what happened in the US and Chinese markets over the last 50 years, a majority of index constituents belonged to the non-technology sectors.

For instance, look at this table of the ten biggest American companies of the 1970s.

Rank Company Industry
1 IBM Tech
2 AT&T Telecom
3 Eastman Kodak Film
4 General Motors Autos
5 Standard Oil of N.J. Oil & Gas
6 Texaco Oil & Gas
7 Sears, Roebuck Retail
8 General Electric Conglomerate
9 Polaroid Film
10 Gulf Oil Oil & Gas
Source: Equitymaster

Most are from like oil & gas, retail and telecom...the dominant sectors of the times. These companies were thought to be unbeatable at that time.

Almost everyone thought the stock prices of these companies could resist any market correction.

But just look at what happened in just a few decades.

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Some of the biggest companies faded away. They eventually went bankrupt. Others had to sell assets to survive...or take a bailout from the US government.

Eastman Kodak, Polaroid, Texaco, Sears...all went bankrupt. Even mighty General Motors had filed for bankruptcy. Gulf Oil and Standard Oil were saved by mergers.

Who would have thought that the most powerful companies of the United States of America would be wiped out from the face of the earth in just a few decades?

But it happened.

Now, if we look at the top ten American companies on the benchmark indices, here's how it looks.

Rank Company Industry
1 Apple Tech
2 Microsoft Tech
3 Alphabet (Google) Tech
4 Amazon Tech
5 Meta (Facebook) Tech
6 Tesla Tech
7 Berkshire Hathaway Conglomerate Holding Company
8 TSMC Tech
9 Tencent Tech
10 Nvidia Tech
Source: Equitymaster

As you can see, all nine of the ten big companies today are technology ones.

You can observe a similar trend in China too over the past 20 years.

So, going by history, blindly buying only the largest businesses in India, is fraught with risks.

You need to evaluate if the businesses are readying themselves for the tectonic shift underway in various technologies.

And if the business can prevent themselves from getting technologically redundant.

But doing that alone won't be enough.

You need to prepare yourself TODAY to buy the 'Apple's and 'Alphabet's of tomorrow. The Indian ones.

Now, I'm sure you will agree with me that betting on any and every tech startup IPO is NOT the best way forward.

Rather, you must begin to identify the traits that made Apple the company it is today.

To create the massive moat around its business, Apple had to offer products that were overwhelmingly more attractive than its competitors.

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It also had to continue to do this with each new generation of its products, again and again, and again. Doing so meant that consumers had access to continually improving products, which increased their utility and productivity massively over time.

Just think about how Apple's first iMac led millions of consumers to use the Internet (and

Just think about how Apple's iPod and online music store created the first large scale (and legal) online music business.

Just think about how the iPad led millions and millions of people around the world to start thinking about TV shows and movies as something you stream on Netflix instead of something you watch on TV.

Over time, not only was the company's track record of building great new products unassailable. But it was also generating billions in free cash flow year after year.

As a result, investors in Apple were rewarded with tremendous amounts of wealth in few decades.

Of course, there are some concerns about Apple too. Like its dependence on China. In fact, all technology stocks are subject to massive execution risks.

But the thing to remember is that you need to buy a bunch of such great stocks. You need about 20 stocks to get a reasonably diversification. Then allocate more funds over the years as your conviction in their execution improves.

On doing so, the gains you'll make on the few super-high-quality businesses will dwarf the losses in a few others.

So take your first step to buy the Top 20 Disruptive Tech Stocks in India.

Join Richa and me Today at 5 pm sharp, at the Equitymaster Venture online event.

We will share with you the secret of making venture capitalist-like returns in India's best disruptive businesses.

You can reserve your free seat here.

Warm regards,

Tanushree Banerjee
Editor, StockSelect
Equitymaster Agora Research Private Limited (Research Analyst)

PS: Join Tanushree and Richa at Equitymaster Venture a special free online summit to discover the secret of making VC-like returns in the stock market.

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