Once looked like a luxury, work from home (WFH) has become a reality for many in the times of COVID-19. Almost all the companies have shifted some parts of their workforce to WFH.
Most of the employees in service sectors and across various other industries have started working from home in the past six months and the trend suggests that it is here to stay as the world shifts to a new normal.
Companies have realised that WFH is definitive in the long run, and continue to redraw their business strategy, helping them improve resource utilisation and aid in their cost-saving measures, suggest experts.
According to a BNP Paribas report, WFH is likely to benefit stocks in sectors such as IT services, financials, consumer, telecom, oil & gas, and real estate.
With more than 90,000 new cases being recorded daily, WFH is the new normal. “The 6-month return performance of pharmaceuticals as a sector stands out, followed by automotive, amply supported by IT, energy and metals,” Gopal Kavalireddi, Head of research, FYERS told Moneycontrol.
“There is no reason to believe that the performing sectors of the last 6 months cannot continue their run. IT, pharma and auto stocks should definitely be on the radar of investors,” he said.
Kavalireddi further added that investors would be better off investing in top quality companies, which have the balance sheet strength and management capability to withstand the current downturn and take advantage of the emerging opportunities.
Ajit Mishra, VP Research, Religare Broking believes that telecom and FMCG are the ones who will reap maximum benefit from work from the home theme, and players such as Reliance Industries, Bharti Airtel, Britannia, HUL and Dabur are his preferred picks from these sectors.
We have collated a list of stocks from various experts that are likely to benefit the most from Work From Home strategy:
Expert: Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities
Both RIL and Bharti Airtel could benefit as people work from home. Both are beneficiaries of rising data consumption and an increase in demand for live streaming.
Also, the increased use of online meeting apps is leading to higher demand for data on both mobiles and other devices. An increase in ARPUs could drive earnings for players like Bharti and Jio in the future.
Retail loans account for more than 60 percent of the loan book of ICICI Bank. The bank is at the forefront in terms of technology offering and should benefit due to online transactions and app-based mobile banking.
Valuations on Price/Book Value look cheap if we exclude the subsidiary valuations. Most of the subsidiaries in broking, insurance, and asset management should also benefit in the future.
The company benefits from both traditional IT service offerings and also from its domain expertise in providing IT solutions to telecom companies.
The company is witnessing strong demand in areas such as cloud and data and analytics.
Tech Mahindra is also well placed to benefit from 5G opportunity and it has identified five areas of focus to capture 5G spends.
Since telecom companies could benefit from WFH, Tech Mahindra could be an indirect beneficiary of the same.
TV viewing along with OTT streaming is likely to go up as more people save commute time. Sticky subscription revenue and pick up in advertisement revenue bodes well for the company.
As the management delivers on governance and free cash flows there is scope for re-rating in the future.
Expert: Gaurav Garg is Head of Research at CapitalVia Global Research Limited
TCS has a target of shifting 75 percent of its workforce across the globe to work from home by 2025. This could result in huge savings in terms of facilities, transport, and rentals. In addition to employee transport, the company can cut down on visa and travel expenses if remote working becomes a norm globally. Travel accounts for about 2 percent of overall revenue.HUL:
The demand for ready to eat and ready to cook products could increase as there has been a decline in the frequency of eating out. This could benefit the FMCG sector.
Expert: Ajit Mishra, VP Research, Religare Broking
Due to the outbreak of the virus, immunity-boosting products have gain importance and are in high demand so players like Dabur, largely an Ayurvedic manufacturing company would benefit the most.
Brokerage Firm: BNP Paribas
A shift toward the WFH model would reduce the need for vehicles for office-to-home rides. We suspect this would result in a decline in demand for commuter vehicles and would give rise to a preference for vehicles for leisure purposes.
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