- Date : 13/10/2020
- Read: 5 mins
A look at work-from-home stocks and how the pandemic changed investors' portfolio choices.
Ever since the COVID-19 pandemic broke out, the impact on business and economy has been the subject of constant scrutiny. Recently, the National Statistical Office's admission about the GDP verified these fears, with a 23.9% contraction in the first quarter. As most industries are getting back to work, we are bound to see some recovery in the days to come.
However, even during the coronavirus lockdown, some businesses found themselves adept to suit the rapidly changing circumstances, or improvised and ended up doing good business. These businesses met the needs of a work-from-home environment and came up with fitting solutions.
Apart from them, most of whom are IT or ITES, there are other stocks which cope well in this time of crisis. Known as defensives, they include industries like pharmaceutical and healthcare, agriculture, dairy, freight rail, power, and telecom, which protect the economy from demand slowdown and supply disruptions.
While you were working online from home, here are some stocks that flourished.
1. Reliance Jio
Digital and consumer tech stocks have performed well worldwide. Closer home, Reliance Jio Infocomm, promoted through its listed company Reliance Industries, is witnessing a good response from investors. Its massive customer base and increasing product portfolio make it a promising stock. Although its not listed yet, high-profile investors like Facebook offers investors for a slice of the Jio pie.
Nasdaq-listed Zoom Video Communications facilitated remote work through its videoconferencing platform. The coronavirus lockdown saw Zoom attain a 273% growth on its year-to-date (YTD) valuation. The company has been able to create virtual coworking spaces for employers across the world.
Messaging and collaborative service software Slack saw its stock price rise 43% on YTD gains. This NYSE-listed company also benefited from service delivery aimed at work-from-home jobs. It is now looking to go beyond remote work solutions with plans of category expansion.
This cloud storage provider was a consistent performer even before the pandemic. After COVID-19 struck, it achieved a 25% increase in daily trials while the enterprise-level product went up by 40%. Dropbox is popular for its integrating capabilities when used with video meeting and collaborative software.
5. NIIT Technologies
Now renamed Coforge Limited, NIIT Technologies climbed over Rs 400 YTD to reach Rs 1900+ per share. Among India’s prominent tech companies, NIIT has recovered remarkably from its March 2020 low when its share price fell below Rs 900. Experts have put an encouraging value on this stock on the back of some good order wins and a steady delivery pipeline. The company provides services outsourcing, cloud computing, and application development, all of which fit the work-from-home bill.
6. GSK India
Moving on to non-IT sectors that are not directly associated with remote teams or their operations, pharma companies were obviously expected to perform well during this health crisis. In terms of share price, Glaxo is gradually reaching its YTD peak achieved in late January this year. In addition to progress in several drug areas, the company is looking to set up new biopharma and consumer healthcare divisions.
7. Rallis India
Tata’s agrochemical company Rallis India has been riding the agriculture sector’s immunity and is likely to continue to forge ahead. It recovered 60% from its March low and is expected to rise a further 20% in the next quarter. India has a huge domestic fertiliser consumption, and Rallis can expect revenue growth with many agrochemical companies due to go off-patent in the coming days.
8. Apollo Hospitals
Unsurprisingly, healthcare major Apollo Hospitals recovered most of its pre-March fall in share price. With a steady flow of patients and the continued growth of its pharmacy segment, the company expects its shares to appreciate by 15%–17% in the next half-year.
9. HDFC Life
HDFC Life registered a high YTD in the middle of the pandemic. It registered robust growth even during the early days of the lockdown. The increasing relevance of insurance due to COVID-19 and the awareness around it can be the main reason for this growth. Besides, the industry as a whole is poised for higher growth and penetration. Experts expect the firm’s shares to grow another 20% in six months.
The rise of work-from-home companies has been gathering steam and they received a massive push with the pandemic-driven demands of the customer base. Although near-normalcy is expected to resume in a post-pandemic world, a bigger and permanent group of remote employees is likely to be the new normal.
Also benefiting from the pandemic are products and services that manage to withstand – and even blossom – in the present scenario. Together, they are adding a new dimension to the portfolio choices of investors. Here are some important things to know before investing in the stock market.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.