Five such stocks that have outperformed the Nifty50 in the past financial year and have been resilient despite tough economic conditions
From the general election to the slowing economy to coronavirus pandemic, financial year 2019-20, witnessed it all. Share markets have been reeling under pressure since the novel coronavirus (COVID-19) pandemic broke in the country and elsewhere. Domestic stock market benchmarks Sensex and Nifty slumped 24 per cent and 26 per cent, respectively, posting their worst performance in over a decade. In 2008-09, the Sensex had declined 37.9 per cent, while the Nifty50 cracked 36.2 per cent due to global financial crisis. Apart from these, factors such as massive corporate tax rate cuts, tussle between the RBI and the government, Union Budget, a total of 185 bps repo rate cut, Ayodhya verdict, abrogation of Article 370, US-China trade deal were among the major triggers during this financial year. However, even during this fall in markets, there are certain shares that not only outperformed the benchmark, but also gave investors stellar returns during the year. Abbott India is one such stock that gained over 100 per cent in FY 20. Nirali Shah, Senior Research Analyst, Samco Securities picks five such stocks that have outperformed the Nifty50 in the past financial year and have been resilient despite tough economic conditions.
Abbott India: Abbott India has gained a whopping 109% in FY20. Additionally, this stock is not deterred by the current pandemic. The Pharma MNC stood strong despite the crash in markets which makes it extremely attractive. The company’s 9 out of top 10 brands are leaders in their respective participating markets and their rigorous restructuring measures have aided to achieve this market-beating performance. Over the years, the company has also operated with a net debt-free structure having more than sufficient cushion of cash.
Hindustan Unilever: The FMCG giant, Hindustan Unilever has also gained over 32% in FY20. HUL boasts of a wide network that has become its biggest asset in a weak consumption scenario. The company also has high brand recall with its top 5 brands contributing to an annual turnover of over Rs 2000 crore. With healthy free cash flows and consistent operating margins of around 20%, the company has managed to outperform the NIFTY50 handsomely over the year.
Pidilite: Pidilite is another company that has outperformed NIFTY50 in FY20. It gained over 7% in the period. This adhesives manufacturer is a high-quality company that enjoys a monopoly in its business. The owner of the famous Fevicol brand, Pidilite maintains a robust balance sheet and return ratios. Favorable raw material prices have also been a key margin booster for this Company.
Nestle India: Nestle India, the Maggi maker, has also gained over 48% in FY20. The company has been seeing continued growth and sound performance in its Maggi and chocolate brands which has enabled it to tide through rough times. It’s strong parentage and market leadership are important levers assisting in key strategic initiatives. Additionally, Nestle was added to the NIFTY 50 club last year which has caught the attention of various market participants.
Berger Paints: Berger Paints’ stock price has boomed 52% over the past year. It has not only managed to outperform Nifty 50 but also the country’s largest paint company Asian Paints. Being the second-largest decorative paint company in India, it has a vast distribution network and a strong presence in the East and North. The company has posted robust growth over the years with focus on premiumization.