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Select companies likely to recover fast after lockdown

Stocks in power, telecom & hospitals could benefit as they may see a quick recovery after the lockdown ends.

, ET Bureau|
Last Updated: Apr 10, 2020, 09.42 AM IST
Select stocks in power utilities, telecom, city gas distributors and hospitals could also benefit as they are likely to see a quick recovery after the lockdown ends, according to CLSA.
Pharmaceuticals and consumer staples stocks, being essentials, are expected to do well during the ongoing pandemic. But select stocks in power utilities, telecom, city gas distributors and hospitals could also benefit as they are likely to see a quick recovery after lockdown ends, according to CLSA. Here’s why CLSA expects these stocks to see a quick business normalisation:

Recent prepaid tariff hikes will drive near- and medium-term earnings growth for the company. Telecom is relatively insulated from the coronavirus crisis and the impending Trai decision on floor tariffs will be a big positive for Bharti Airtel, said CLSA.

Power Grid Corporation of India presents resilience in its core earnings due to India’s solid regulatory regime, while some of its growth could get shifted due to project delays as a result of the lockdown. Power Grid is a highly defensive business and trades at a rather inexpensive price-to-earnings ratio of eight times on FY20 estimates, said CLSA.

NTPC is one of the few regulated entities to have double-digit regulated equity growth over FY20-FY23, said CLSA. The stock can outperform in 2020 as it has robust renewable energy growth which should expand its return on equity by 190 bps over FY20-FY22, said CLSA.

Stocks snip 2

Indraprastha Gas (IGL) and Mahanagar Gas (MGL) have seen a severe impact on CNG volumes from the collapse in road traffic. Volumes should normalise within weeks of the end of lockdown. The recent price change could boost margins and even partly negate the impact of the volume decline, the brokerage said.

The hospital chain has been impacted by travel restrictions. Higher-yielding overseas patient volumes may take time to recover, but inter-state patient volumes may normalise relatively quickly once the lockdown ends. Lower hospital revenue may be partly negated by better than-modelled growth in the pharmacy and diagnostics businesses, CLSA said.

Relatively resilient to the shutdown as 90% of its sales is nondiscretionary products. Crompton Greaves Consumer Electricals is the market leader in fans and residential pumps segments, in which demand is likely to sharply bounce back following the end of the shutdown.

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7 Apr, 2020
India is likely to go for 'staggered' exit post 21-day Covid-19 lockdown. Experts believe that labour shortage will be a key problem post lockdown as contract workers have migrated back to villages and it will take time for things to settle.Industries where day-to-day capital requirements are minimal or players who are distributors of capital will bounce back faster, say Equirus Securities.The brokerage has listed 14 largecap stocks that can offer good returns over the next one year.

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