IT And Telecom To Gain From COVID-19 Pandemic, Says Experts - Report!

The coronavirus pandemic has affected almost every sector of the economy and business all over the world. Despite the losses and crisis, IT and telecom firms could infact gain from the pandemic by looking at the nature of their business.

As per experts, sectors like mining, automobiles and consumer discretionary have been negatively hit at this hour but the two sectors, that have the opportunity to gain from it are IT and Telecom.

According to Money Control report, Jyoti Roy, DVP Equity Strategist, Angel Broking states that telecom is one of the few sectors which has strong revenue visibility. It is also expected to be the biggest beneficiary from the data boom due to increased proliferation of work from home.

Amid this lockdown, the telecom sector has been one of the best performing sectors; it has also outperformed the Nifty significantly during the period, reports Money Control.

Meanwhile, Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers said "Currently both the sectors have a positive outlook as far as long term is concerned and both these sectors have emerged favourite for the investors in the current crisis. However, Telecom has been better placed in terms of growth while IT is more of a stable and defensive play largely."

Looking into the other side, experts note that work from home has become the new norm and most of the companies in India are planning to make 75 percent of its workforce working remotely by 2025. With these new shifts in models, IT companies will face a reduction in travel, admin and real estate cost.

"IT spending is estimated to decline by 8 percent in 2020 against a 5.8 percent growth forecasted earlier by Gartner as the focus will turn to cost reduction. A broad-based recovery is expected in the latter half of FY21 powered by spending in healthcare, insurance and education segments. Given positive prospects and stability in business we remain positive on the sector for the long-term," said Renjith R G, Associate Director at Geojit Financial Services.

"Work from home and social distancing have paved the way for remote working, video conferencing and other telecommunication technology which is a key driver for the telecom sector. These drivers could help companies to sustain their user base in the short to medium-term. The overhang of AGR dues might force telcos to bring tariff hikes and funds, which could be inevitable in FY21 and FY22. We remain positive in the long term due to trio monopoly and a better outlook for demand while cautious in the short to medium–term due to high valuation, heavy balance sheet, cash flow issue and fund requirements," Renjith added.