2 High Quality Zero Debt Defensive Stocks To Buy Now

Though the market is highly volatile and the bottom is still unsure of, experts suggests that we are very close to the 'point of maximum opportunity'. Nonetheless, if you are skeptical of the market momentum and want to play safe, here are defensive stocks that are also debt free and also the leaders in their segment which you can bet now for good upside in the long term.

1.TCS:

The prominent IT company has come crashing down in the market mayhem and has seen the worst slide in its m-cap among Sensex companies. The m-cap of the IT major is at Rs. 1,130,244 crore.

The company combines tech expertise and business intelligence to catalyze change and deliver results. While it has fallen on a YTD basis by 17% and over 23% from its all time high price of Rs. 4043 to last trade at Rs. 3088.9, its fundamentals are largely intact. This said we mean the valuations are now turning better. For TCS, the TTM P/E is 29.49. Also, the company is a cash rich company good in consistent dividend payments. For Fy22, the company announced a total of Rs. 43 per share as dividend in 4 tranches.

 

Company's consistently improving financials

Revenues and net income for the Fy22 rose on a yearly basis to Rs. 1,95,772 crore and Rs. 38,327 crore. Also, EPS for the scrip increased from 86.19 in Fy20 to 104.18. A higher EPS indicates greater value because investors will pay more for a company's shares if they think the company has higher profits relative to its share price

Also, the company's free cash flow is on a rising trajectory, being reported at Rs. 36,969 crore in Fy22.

Inflation concerns risks IT exports to the US, nonetheless Middle East offers opportunity

So, as the recessionary trend is foreseen amid huge monetary tightening, there is seen a threat to IT firms as their major clientele are US firms. Nevertheless, reportedly digitisation spree in other areas of the world including Middle East can be well capitalised on by the Indian IT firms.

"This has created a wave of demand in AI, robotics, cloud, cybersecurity, data analytics and other digital technologies. The governments are addressing this demand-supply gap with a very structured approach, addressing the immediate needs through extremely talent friendly policies and significant investments in the academic institutions to nurture the local talent for future," said Rajiv Kumar, HR head, Middle East and Africa, at the Nasscom's delegation.

 

2. HUL:

The household and personal products company has a presence of nearly a century in the country. The economic standing fails to impact the demand for products that the company primarily offers.With 50+ brands spanning categories such as fabric solutions, home and hygiene, life essentials, skin cleansing, skincare, hair care, colour cosmetics, oral care, deodorants, tea, coffee, ice cream & frozen desserts, foods and health food drinks, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf excel, Rin, Wheel, Glow & Lovely, Pond's, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Simple, Love Beauty Planet, TRESemmé, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall's, Horlicks and Pureit.

Financials: Sales at the company for the fiscal year 2022 has been at Rs. 52,887 crore. Net income also at the company is also showing gains YoY from Rs. 6054 crore in Fy 2019 to Rs. 8879 crore in Fy22.

The company is again a debt free concern down almost 26% from its all time or 52-week high price of Rs. 2859.3 to last trade at Rs. 2110.45.

 

Better placed among peers both on technology and e-commerce front

Motilal Oswal bets on the stock for a target price of Rs. 2700 and mentions that the company "continues to strengthen the key drivers of its success in India over the last decade, including: pioneering the use of technology to generate data and facilitate decision making; focusing on decentralisation and localised strategies based on its WiMI framework; recognising trends and investing in them early on; funnelling cost savings back into the business; and its strong execution ability, which has led to a positive momentum in earnings.

Hindustan Unilever is the best placed among peers on the technology as well as the e-commerce strategy front to deal with potentially-significant disruptions ahead", notes the brokerage.

 

Disclaimer:

The stocks are discussed for their defensive standing and good financials, fundamentals, nevertheless do not take the stocks as a recommendation to advice into them.

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