There is strong uncertainty on how the future will pan out, but one thing is certain that companies with strong balance sheet strength should be able to ride out comfortably from the COVID-19 related story, Pankaj Pandey, Head of Research at ICICIdirect said in a ‘Market Podcast’ with Moneycontrol.
If one looks at the brighter side of the situation, when it (COVID-19 lockdown) ends, will bring strong “pent up demand” across various sectors/business. Hence, there are several dislocated opportunities across the “pent up demand” theme.
He lists out a few companies that will be direct beneficiaries of the above theme. The universe of stocks that we would like to bet have the following in common –
a) Strong brands and products with an established distribution network coupled with reasonable pricing power
b) Credible management and clean governance record, who have seen such turbulence in the past and have come out stronger from such a crisis
c) From a financial perspective, these companies have solid balance sheets coupled with the ability to generate strong cash flows and comfortable leverage profiles.
More importantly, companies have a track record of creating shareholder wealth across business cycles.