Defensive stock companies that provide essential goods and services even during uncertainty. These stocks are expected to perform better than the broader index. Investors usually buy defensive stocks during uncertain times or economic downturns to protect their investments from losses. The sectors like Pharma, healthcare, FMCG companies like consumer utilities, and consumer staples tend to be stable. In this article, we will look at some of the defensive stocks in the event of a market crash.
How can these stocks safeguard investments during uncertain times?
These stocks offer protection during market volatility. They generally show lower price fluctuations compared to growth stocks, providing stability to a portfolio. These companies usually have strong balance sheets, consistent cash flows, and a history of paying dividends. These traits help investors to earn a steady income stream even when stock prices are down. During economic slowdowns, consumers continue to purchase necessities, allowing defensive stocks to maintain their performance relative to other market sectors.
Investors buy these stocks to reduce risk and protect capital. These stocks help in balancing the portfolio and offsetting potential losses from volatile investments. While FMCG and Pharma companies might not offer higher growth, especially during bull markets. In Bearish times, these stocks can outperform the index and other sectors. These measures of these stocks make them less risky to investors and helpful for those in the retirement stage.
List Of Best Defensive Stocks
Hindustan Unilever(HUL)
Hindustan Unilever is one of the manufacturer and seller of FMCG in India. This company has a product portfolio that involves various products under personal care and beauty products, refreshments and packaged foods, and homecare products.
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HUL is a subsidiary of Unilever Plc. Some of the prominent brands are Magnum, Fair and Lovely, Bru, Lakme, Dove, Ponds, Lipton, Pepsodent, Kissan, Taza, Knorr, and Surf Excel. They distribute their products through associates and distributors in India, Nepal, and overseas. They are headquartered in Mumbai.
Their operational revenues in FY24 stood at Rs. 61,896 crore, up 2.17% YoY from Rs. 60,580 crore in FY23. Net profits stood at Rs. 10,282 crore in FY24 compared to Rs. 10,117 crore in FY23. The stock returns from the past 6 months the returns were around 13.43%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – HUL return was 0.87% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – HUL return was 5.96% compared to Nifty return of -5.93%.
ITC
ITC operates as a diversified conglomerate. It is involved in the FMCG, paper boards, hotels, specialty papers, agribusiness, information technology, and packaging businesses.
ITC portfolio consists of leaf tobacco and cigarettes, personal care, foods, safety matches, stationery goods, incense sticks (agarbattis), specialty papers, paperboards and packaging materials, and agri commodities.
Their brands include Sunfeast, Aashirvaad, Bingo, Yippee!, Sunrise John Players, Farmland, Classmate, Aim, Gold Flake, and Superfine Printing. ITC operates across geographies like Europe, South-East Asian, and North American countries. It is headquartered in Kolkata.
Their operational revenues in FY24 stood at Rs. 61,896 crore, up 2.17% YoY from Rs. 60,580 crore in FY23. Net profits stood at Rs. 10,282 crore in FY24 compared to Rs. 10,117 crore in FY23. The stock returns from the past 6 months the returns were around 13.66%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – ITC return was -0.63% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – ITC return was -3.52% compared to Nifty return of -5.93%.
Britannia Industries
Britannia Industries are the manufacturer and seller of dairy and bakery products. The portfolio includes bakery products like bread, biscuits, cakes, croissants, rusks, and wafers. Dairy products include milk, butter, cheese, milk-related readymade beverages, and yogurt.
The company’s products have made its brand value known to many people. Their brands are Treat, Good Day, Bourbon, Tiger, 50-50, Crackers, MarieGold, NutriChoice and Milk Bikis. They sell these products through their distributors, sales channels, and vendors. Their presence is across the Middle East, Asia-Pacific, Africa, Europe, and the Americas. Britannia’s manufacturing plants are across India. It is headquartered in Bangalore.
Britannia Industries operational revenues in FY24 stood at Rs. 16,769 crores, up 2.87% YoY from Rs. 16,301 crores in FY23. Net profits stood at Rs. 2,134 crore in FY24 compared to Rs. 2,316 crore in FY23. The stock returns from the past 6 months the returns were around 17.13%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – Britannia’s return was -0.39% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – Britannia’s return was 3.04% compared to Nifty return of -5.93%.
Sun Pharma
Sun Pharma is into specialty pharma company. They provide a variety of formulations like generics and generic pharma. Their portfolio consists of the treatment of neurological, psychiatric, nephrological, orthopedic, gastroenterological, and ophthalmologic diseases and others.
The company is into R&D which involves process chemistry, product development, active pharmaceutical ingredients (APIs), manufacture of complex formulations, and over-the-counter products. They offer drugs in a variety of forms such as capsules, tablets, inhalers, injectables, creams, ointments, and liquids. They are headquartered in Mumbai.
Sun Pharma’s operational revenues in FY24 stood at Rs. 48,497 crore, up 10.51% YoY from Rs. 43,886 crore in FY23. Net profits stood at Rs. 9,610 crore in FY24 compared to Rs. 8,513 crore in FY23. The stock returns from the past 6 months the returns were around 16.87%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – Sun Pharma’s return was -0.65% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – Sun Pharma’s return was 1.60% compared to Nifty return of -5.93%.
Dabur India
Dabur India is into selling, marketing, and developing natural healthcare and ayurvedic products. Their portfolio consists of digestives, cough, cold syrups, and drops, health supplements, baby care products, and energizers. Dabur India promoters are of Burman Family Holdings.
Their products involve shampoos, hair oils, toothpaste and toothpowders, moisturizing creams and lotions, fruit juices, room fresheners, beverages, and others. Some of their brands are Hajmola, Vatika, Odonil, Dabur Amla, and Odomos.
The company’s product range is sold through distributors, retail chains, specialized channels, and e-commerce platforms. They have a presence in Africa, India, South Asia, the Middle East, Europe and the US. They are headquartered in Ghaziabad.
Dabur India’s operational revenues in FY24 stood at Rs. 12,404 crore, up 7.58% YoY from Rs. 11,530 crore in FY23. Net profits stood at Rs. 1,811 crore in FY24 compared to Rs. 1,701 crore in FY23. The stock returns from the past 6 months the returns were around 20.12%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – Dabur India’s return was 1.03% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – India Return’s return was 6.13% compared to Nifty return of -5.93%.
Cipla
Cipla manufactures and distributes branded medicines, active pharmaceutical ingredients (APIs), and generics. They offer products in areas like cardiovascular and pediatric diseases, HIV/AIDS, dermatological and cosmetological conditions, neurological, hepatitis, infectious diseases and critical care, diabetes, malaria, ophthalmic, respiratory, cancer, and others.
The company is also into biosimilar and consumer healthcare businesses. They manufacture spacers and related devices, metered-dose inhaler devices, and conduct R&D to develop new medicines. The company’s operations are in India, Canada, the US, South Africa and others. They are headquartered in Mumbai.
Cipla’s operational revenues in FY24 stood at Rs. 25,774 crore, up 13.28% YoY from Rs. 22,753 crore in FY23. Net profits stood at Rs. 4,154 crore in FY24 compared to Rs. 2,833 crore in FY23. The stock returns from the past 6 months the returns were around 8.07%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – Cipla’s return was -0.90% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – Cipla’s return was 0.07% compared to Nifty return of -5.93%.
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Tata Consumer Products
Tata Consumer Products are into manufacturing and selling of non-alcoholic beverages and food products. Tata Consumer promote brands like coffee and tea products under Tata Tea, Eight O’Clock Coffee, Vitax, Tata Coffee Grand, Tetley, and Joekels. They merchandise Himalayan, a packaged water. Tata Gluco Plus and Tata Fruski, as their brands.
Tata Consumer Products include besan, pulses, spices, breakfast cereals, ready-to-cook, and snacks under Tata Sampann and Soulfull brands. Their business operations are spread across Europe, the Middle East, Asia-Pacific, North America and Africa. They are headquartered in Mumbai.
The company’s operational revenues in FY24 stood at Rs. 15,206 crore, up 10.32% YoY from Rs. 13,783 crore in FY23. Net profits stood at Rs. 1,215 crore in FY24 compared to Rs. 1,320 crore in FY23. The stock returns from the past 6 months the returns were around 4.13%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – Tata Consumer’s return was 0.48% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – Tata Consumer’s return was 1.67% compared to Nifty return of -5.93%.
Nestle India
Nestle India is into manufacturing, promoting, and selling consumer food and beverages. Their portfolio consists of nutritional products, dairy products, prepared dishes, beverages, chocolates, and others. They market their products under the brands – Everyday, Nestea, Nescafe, KitKat, Maggi, Munch, Bar-One, Polo, Milkybar, Milkmaid, Nangrow, and others. Nestle SA is the parent company of Nestle India.
Nestle exports its products to various nations across the world including Australia, the US, New Zealand, and Singapore. They are headquartered in Gurgaon.
The company changed its financial year from the end of December each year to March each year. Nestle India’s operational revenues in FY24 stood at Rs. 24,394 crore, up 44.37% YoY from Rs. 16,897 crore in December FY22. Net profits stood at Rs. 3,933 crore in FY24 compared to Rs. 2,391 crore in FY23. The stock returns from the past 6 months the returns were around 2.43%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – Nestle India’s return was 0.63% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – Nestle India’s return was 3.09% compared to Nifty return of -5.93%.
Apollo Hospitals Enterprise
Apollo Hospitals Enterprise is in the business of healthcare services. They offer clinical and diagnostic services, healthcare services, third-party admin services, medical business process outsourcing, and health insurance.
The hospital provides services in treatments for diseases like orthopedic, heart, cancer, spinal cord, gastroenterological, neurological, and urological diseases and others. Apollo also offers preventive health care and critical care services. They operate hospitals in India, Mauritius, Bangladesh, and the UK. They are headquartered in Chennai.
Apollo Hospital Enterprise’s operational revenues in FY24 stood at Rs. 19,059 crore, up 14.73% YoY from Rs. 16,612 crore in FY23. Net profits stood at Rs. 935 crore in FY24 compared to Rs. 844 crore in FY23. The stock returns from the past 6 months the returns were around 8.39%.
Performance of the Stock in Recent Market Crashes
BOJ and US Job Market Data (5th August 2024) – Apollo’s return was -0.34% compared to Nifty return of -2.68%.
Indian Election Results (4th June 2024) – Apollo’s return was -0.09% compared to Nifty return of -5.93%.
Conclusion
As we conclude the article, we have looked into some of the defensive stocks in India. Stocks during uncertain times help the portfolio to be stable. Sectors like pharma, healthcare, and FMCG provide essential goods and services, making them resilient to economic downturns.
Defensive stocks help balance portfolios and offset potential losses from more volatile investments, providing a safety net in turbulent market conditions. As we looked into some companies, they have not provided higher returns compared to the index but might outperform during a bearish market.
What do you think about these companies as a defensive bet? Let us know your views and suggestions for other companies in the comment section below.
Written by Santhosh
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