5 MNC stocks stand out as oasis in a desert amid market turmoil

NEW DELHI: The entire pack of India-listed multinational companies (MNCs) has held up quite well amid the ongoing market turmoil. Data showed two of every three constituents of the Nifty MNC Index have outperformed Nifty50 so far this calendar.

But five of them have stood out; drugmakers Abbott India, Sanofi India and Pfizer, and FMCG giants Hindustan Unilever (HUL) and Nestle India.

Analysts largely have a positive outlook for these stocks. Select names from the pack may even outperform the broader market in the short term, they said.

Shares of Abbott India have jumped 19 per cent so far this calendar compared with a 33 per cent drop in Nifty50. Unlike other drugmakers, Abbott India’s 100 per cent revenues come from India. Foreign brokerage CLSA said it prefers pharma plays focused mainly on the domestic market.

At the price target of Rs 16,850, the brokerage values Abbott India at 42 times 12-month forward PE due to its strong earnings growth prospects and high return on equity (ROE).

Some brokerages are more bullish, with Dealmoney (erstwhile Destimoney Securities) offering a three-month target of Rs 18,770 on the stock. The scrip closed at Rs 15,826 on Friday. Indian markets were closed on Monday for an official holiday.

Among other MNC performers, HUL is up 13 per cent for the year and Nestle 6 per cent.

Due to the sharp drop in the market, maximum leverage is seen in stocks like Nestlé, said ICICIdirect.

“The current open interest on the Nestle India counter is the lowest seen since 2018 even as the stock reels near Rs 12,000. It means the current pullback is led by cash buying, which should make it a sustainable move for some time,” the brokerage said, and advised traders to buy the stock in the Rs 15,700-16,300 range for a three-month target of Rs 19,000.

The stock closed at Rs 15,150 on Friday.

MNC firms are traditionally known for strong parentage, technological proficiency and asset-light business models. They are usually well-capitalised, have low debt exposures and good dividend policies.

Calling HUL the new ‘Big Daddy’ following the merger of GSK Consumer Healthcare, Edelweiss Securities said the stock is its top pick in the FMCG space.

“We envisage HUL to be a key beneficiary of rural demand recovery and herbal push, and expect its decent volume growth to sustain riding its market leadership position, strong distribution network and intense use of data & analytics,” the brokerage said.

Shares of Pfizer and Sanofi India have fallen 6-7 per cent this year. ICICIdirect expects the MNC pharma companies to sustain low double-digit growth due to strong brand equity, several patent-protected drugs and strong product pipeline supported by good cash reserves. The brokerage likes Abbott India, Pfizer and Sanofi India in that pecking order.