Select companies likely to recover fast after lockdown

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 normalization.

BHARTI AIRTEL

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

Power Grid Corporation of India NSE -2.74 % 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

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.

APOLLO HOSPITALS

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.