Best Defensive Stocks That Gave Outstanding Returns
One narrative you heard in the last few days is that defensive stocks have done very well. What exactly are defensive stocks? There are no hard and fast classification, but defensive stock have 3 characteristics. Firstly, demand for their products is perennial in nature. Seasonal products and services are out. Secondly, defensives are not subject to cycles like metals and cement stocks. Lastly, defensive stocks generally enjoy high levels of ROE and possibly higher P/E too.
8 defensive stocks and how they performed:
|
Defensive Stock |
CMP (03-Sep) |
YTD Returns (%) |
Nifty YTD |
Aug-21 (%) |
Nifty Aug-21 |
|
Hindustan Unilever |
₹ 2,767 |
15.51% |
23.90% |
16.75% |
8.69% |
|
Avenue Supermarts |
₹ 3,939 |
42.52% |
23.90% |
12.71% |
8.69% |
|
Dabur Ltd |
₹ 641 |
20.04% |
23.90% |
3.46% |
8.69% |
|
TCS |
₹ 3,842 |
34.21% |
23.90% |
19.54% |
8.69% |
|
Infosys Ltd |
₹ 1,701 |
35.42% |
23.90% |
5.96% |
8.69% |
|
Wipro Ltd |
₹ 655 |
69.61% |
23.90% |
9.16% |
8.69% |
|
Sun Pharma |
₹ 789 |
33.27% |
23.90% |
2.60% |
8.69% |
|
Cipla Ltd |
₹ 941 |
14.78% |
23.90% |
3.02% |
8.69% |
Data Source: NSE
1) Hindustan Unilever: India’s largest FMCG company has seen robust demand post pandemic and managed to pass on input cost spikes to customers. HUL outperformed Nifty in Aug-21 but underperformed Nifty YTD.
2) Avenue Supermarts: The owner of D-Mart brand saw retail sales and per store profits pick up sharply, despite COVID 2.0. Avenue Supermarts outperformed Nifty in Aug-21 and also YTD.
3) Dabur Ltd: The stock has seen good traction from its Ayurvedic FMCG brands, especially health drinks and immunity builders. It has been a steady performer in 2021.
4) TCS Ltd: The Tata software giant made the best of rising tech spend globally. While TCS does not give guidance, it saw operating margins steady. TCS outperformed Nifty in Aug-21 and also on YTD basis.
5) Infosys Ltd: The stock has been consistently re-rated in the last one year as it closed in its OPM gap with TCS and gave robust guidance. Infosys outperformed Nifty on YTD basis but returns were lower than Nifty in Aug-21.
6) Wipro Ltd: The new CEO, Thierry Delaporte, has brought in aggression and focus on high value clients. The impact is visible in the price. Wipro also outperformed Nifty in Aug-21 and also on YTD basis.
7) Sun Pharma: The company has managed to integrate its Ranbaxy acquisition and exit its financial ventures. It also benefited from the pandemic demand. Sun Pharma outperformed Nifty on YTD basis, though not necessarily in Aug-21.
8) Cipla Ltd: The Mumbai based pharma company has gained from COVID focus as also it recent inorganic focus on bio-similars. Cipla has been a solid performer in 2021.
With Nifty and Sensex at all-time highs, institutions and HNI clients are showing a clear preference for defensive picks.
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