On a global level, economies are affected due to the lasting effects of the pandemic, the supply chain disruption due to the Russia Ukraine war, and the rising inflation. However, some stocks do well irrespective of an economic downturn.
Defensive stocks are blue-chip companies that have a strong financial history. These stocks tend to give consistent returns in terms of dividends. Businesses that sell products that people will consume, irrespective of an economic downturn like consumer staples, food, utilities, pharma, and healthcare fall under this category.
These stocks are preferred during market turmoil because they tend to give returns despite market conditions. These stocks also tend to have a low beta that is generally less than 1. Many times, defensive stocks outperform the markets irrespective of economic trends.
Here are a few defensive stocks that investors can add to their watchlist:
ITC Limited
This share was mocked through social media memes for being slow. However, the cigarettes-to-hotels conglomerate is now the top performer in Nifty pack on a year-to-date basis. So far, the shares have rallied 33.18% as per year-to-date data against an 8.47% fall in the Nifty 50 index.
In Friday’s training session, the stock reached its new 52-week high of Rs 294.45. In the last five days, the stock is up by 2.28%. In a month it has gained more than 9.5%.
Though the stock’s movement was slow in the past, it has been rewarding its shareholders with dividends. It has a dividend yield of 3.94%. The beta of the stock is 0.77.
Axis Securities has a buy call on ITC with a target price of Rs 313 with a time period of four weeks which represents an upside of 7%.
In FY22, the company earned a revenue of Rs 60668 Crores compared to Rs 49272 which it earned a year ago. The profit margins of the company also improved as it earned Rs 15485 crores in FY22 compared to Rs 13389 in FY21.
Britannia Industries Limited
The shares of the Wadia Group company which specializes in the food industry have rallied 10.51% in the last five days. As per year-to-date data, the shares have gained 5.04% against an 8.47% fall in the fifty-share index.
In Friday’s trading session, the stock gained 0.2% till the afternoon and was trading at Rs 3,816 levels. In the last five days, the price has zoomed by 5.5%. In the span of a month, it has gone up by more than 13%. The shares reached their 52-week high of Rs 4,153 in September 2021.
The stock has a dividend yield of 1.48%. Recently, the company declared an equity dividend of ₹ 56.5 per share or 5650% of ₹1, the face value of its shares, for the year ending March 2022. The beta of the stock is 0.56.
Further, it will become a beneficiary of the fall of crude palm oil prices since it’s a key raw material in its manufacturing process and this might influence its share price in a positive manner.
In FY22, the company earned a revenue of Rs 14136 crores compared to Rs 13136 Crores in the year before. However, the net profit of the company declined as it earned Rs 1516 Crores in the year compared to Rs 1849 in FY21.
Hindustan Unilever Limited
The shares of FMCG major, Hindustan Unilever Limited zoomed 11.48% in the past five days. They have gained 4.86% against a negative return in the Nifty 50 index. Further, the shares have a dividend yield of 1.37%.
In Friday’s trading session, the stock went up by 0.56% till the afternoon and traded at Rs 2,486 levels. In the last five days, the stock has gained more than 8.5%. In the last month, the price is up by 13%. The shares reached their 52-week high of Rs 2,859 in September 2021.
The stock has a dividend yield of 1.37%. Last month the board of the company gave an equity dividend of ₹19 per share for the year ending March 2022. The beta of the stock is 0.66.
The company’s products include food, beverages, cleaning agents, personal care products, water purifiers, and other fast-moving consumer goods.
In FY22, the company earned a revenue of Rs 52446 Crores as compared to Rs 47028 which it earned a year ago. The profit margin of the company also improved as it reported a net profit of Rs 8887 Crores as compared to Rs 8000 crores in FY21.
Written By – Simran Bafna
Disclaimer
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
