4 Indian digital stocks to add to your 2022 watchlist

The “Digital India” campaign was launched in 2015 by the Indian government to improve the country’s digital and online infrastructure. It aimed to promote the delivery of government services electronically to citizens.

Under this initiative, the government planned to improve connectivity in rural areas with facilities such as high-speed internet.

Make no mistake, this is a megatrend happening in front of us. As the Digital India megatrend picks up speed, some businesses will benefit for years to come. Last year, in October 2021, we wrote to you about the Top 5 Digital India Stocks.

In the article, we listed ITI, Sterlite Technologies, Tech Mahindra, RailTel Corp and Nelco.

Let’s look at some other stocks riding the Indian megatrend Digital India…

These companies are spearheading and profiting from the digital revolution in India.

#1 Customer

With its niche offering in areas such as Aerospace & Defense, Communication, Transportation and Semiconductor, Cyient has established itself with healthy growth over the years.

Towards digital transformation, the company is working on several fronts.

In the prior year, Cyient acquired Cyient DLM to bring system integration and prototyping capabilities to its engineering departments, enabling it to deliver design-to-production solutions to customers.

The recent acquisition of WorkForce Delta by Cyient has already bolstered its suite of digital solutions, IntelliCyient.

The company has also expanded its portfolio of digital solutions for the aerospace industry. Additionally, it has also partnered with leading industry forums such as TM Forum to accelerate technology-driven transformation.

The company has also achieved Select Tier status in the Amazon Web Services (AWS) Partner Network thanks to its evolving expertise in digital transformation solutions.

From humble beginnings as a GIS data conversion provider, Cyient has grown into a formidable engineering player operating in critical industries such as aerospace, defense, communications and utilities – sectors which, incidentally, essentially contribute to the company’s overall revenue.

Over the past year, the company’s shares have gained 43% compared to BSE Sensex’s 21% gain.

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Data source: BSE


Next on our list we have Himachal Futuristic (HFCL), a diversified telecom infrastructure facilitator with an active interest spanning telecom infrastructure development, system integration, manufacturing and supply of telecom equipment. high-end, fiber optics and fiber optic cables (OFC).

How does HFCL make it onto this list? The company has good growth prospects for the next few years as optical fiber is one of the main requirements when India moves to a 5G network.

OFCs will remain in demand as 5G trials are already underway. Just recently, HFCL announced that CommAgility’s new 5G radio software will be used in its 5G indoor small cells.

The company also has close ties with Jio, which is strengthening its ties with the Digital India initiative.

the Indian telecom sector is at an inflection point. In the annual report, the company mentioned that as the Indian government focuses on rural connectivity through Digital India Drive, HFCL is ready for the next big upgrade.

HFCL’s dedicated R&D center develops a portfolio of next-generation 5G and Wi-Fi products and systems integration services.

Having the largest market share in OFC supplies in India and being the largest producer of Wi-Fi systems, HFCL is expected to grow by leaps and bounds.

No wonder investors are already pricing in the tailwinds of digitalization. Take a look at the table below. It shows the spectacular performance of HFCL on the stock exchanges.

Data source: BSE

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Data source: BSE

#3 CDS

Now that’s a no-brainer. You probably thought of Tata Consultancy Services (TCS) when you started reading this article.

In its latest quarterly results presentation, TCS said it believes the Indian market will be driven by the platform as more businesses and government entities digitize their processes.

TCS Chief N Ganapathy Subramaniam said the company is positioning itself to provide applications and platforms to integrate with India’s digital stack and deliver solutions to government, industry and even B2C customers.

While most IT companies, whether large or medium, have strived to increase their digital reach, the top 2 companies – Infosys and TCS have better leveraged this opportunity. Both companies have bagged major government projects and positioned their platform offerings.

Both companies have consistently raised their revenue forecasts, expecting technology spending to continue, especially for digital services such as the cloud.

Over the past year, shares of TCS have gained 12% while Infosys has fared better with gains of 28%.

Data source: BSE

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Data source: BSE

#4 Tata Elxsi

Another Tata Group company to feature in this list is Tata Elxsi.

The company is already experiencing significant growth in all major verticals it operates through digital transformation. In the automotive market, Tata Elxsi has entered into important and strategic agreements with OEMs and suppliers in the electric and autonomous segment.

Tata Elxsi is one of the world’s leading providers of design and technology services in industries such as automotive, media, communications and healthcare.

From Artificial Intelligence (AI), Internet of Things (IoT), Big Data Analytics, Cloud, Mobility, Virtual Reality, Driverless Cars, Electric Vehicles (EV) to semiconductors, the company is riding the megatrends of many new era technologies.

While the business offers opportunities on new era technologies, the post-pandemic scenario has made this opportunity greater. Since Tata Elxsi focuses on high growth sectors and emerging technology areas, its growth story remains intact.

This can be seen from the performance of its share price. Even though the company is trading at high valuations, investors are betting big on the company’s future.

Source: ACE Stocks

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Source: ACE Stocks

Going forward, Tata Elxsi hopes to capitalize on the digital surge triggered by the pandemic.

India Digitization Stock Snapshot from Equitymaster’s Stock Screener

Here is a quick overview of companies focusing on digital India based on crucial financial data.

Master of Equity

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Master of Equity

Please note that these parameters can be modified according to your selection criteria.

This will help you identify and eliminate actions that do not meet your requirements and focus on actions that are well within the metrics.

Is there an index that tracks Digital India stocks?

Last year, in December, NSE subsidiary NSE Indices launched a digital index that tracks the performance of companies exposed to the digital theme.

This index aims to track the performance of a portfolio of stocks that broadly represent the digital theme in core industries such as software, e-commerce, IT services, industrial electronics and telecommunications service companies.

Digitization is advancing rapidly and is affecting every aspect of our lives.

To give new impetus to the digital theme, companies are accelerating the pace of their transformation. For example, RailTel Corporation is setting up Edge Data Centers (EDC) with other partners. This aims to accelerate the pace of digital transformation and effective digital delivery in rural and semi-urban areas.

RailTel has long worked with Indian Railways to turn train stations into digital hubs by providing public Wi-Fi at stations across the country.

Meanwhile, India got another boost today as Google partnered with Bharti Airtel. The company plans to invest nearly 75 billion to help develop India’s digital ecosystem.

As companies focus on forming and growing their ecosystem to accelerate their digital transformation, India has emerged as the largest and fastest growing digital consumer market.

India’s internet economy has seen a surge in the last 5 years with the increase in affordable smartphones and data consumption.

Over US$100 billion in digital payments were recorded in India in 2021. The number of internet users in the country grew by 8.2% (47 million) between 2020 and 2021.

Warning: This article is for information only. This is not a stock recommendation and should not be treated as such.

This article is syndicated from equitymaster.com

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