What is Digital India?
Digital India is a flagship initiative launched under PM Modi in 2015 with the aim of empowering the country in the field of technology. Digital India’s goal is to improve online infrastructure to make Government services available to citizens digitally. It has launched many ‘Di-initiatives’ like its e-governance program, manufacturing electronics with microprocessor fabrication technology, and connecting villages to a national broadband highway using optical fibres.
Stocks Related to Digital India Initiative
Since the launch of this initiative, certain companies are predicted to grow in net income due to the government prioritizing their development and valuing their services. It is wise to consider these companies as potential investments due to their likelihood to benefit in the long-term from the Digital India program. Here is a list of sectors and their respective stocks that are linked to the initiative, so you can invest in a Digital India basket of your own choosing.
It’s likely that any Information Technology service provider will benefit the most from the Digital India program. However, ‘IT’ is an umbrella term for many other services that can be divided by sector. To discover stocks linked to Digital India look for the best performers in the last 5 years in the following sectors:
- Smart Cities
- Fibre Optics
e-Governance: Infosys, MindTree, TCS, Tech Mahindra, Wipro
IT companies like Tata Consultancy Services (TCS), MindTree, Infosys, Tech Mahindra, Wipro, and HCL Infosystem are very likely to benefit from the Digital India program. The mid-cap IT companies will shift more swiftly towards the profiting from the initiative as compared to the large-cap IT companies but both are safe long-term investments. Large-cap IT companies like Infosys Ltd. and MindTree stocks have performed well in the last quarter.
In fact, many Digital India portfolios like the ‘Aditya Birla Sun Life Digital India Fund’ have stocks from Infosys (at a major 28.78% in holdings), HCL, Tech Mahindra and TCS that, together, are yielding returns at 13.92% annually. Wipro must not be underestimated just because it is not on this particular portfolio. It has a current market capitalization of $23.43 billion and is part of the list of major Indian stocks on US markets like Nasdaq and NYSE.
Fibre Optic Network: Sterlite Technologies, Himachal Futuristic
There are several perks to investing in Sterlite Technologies stocks which deal in fibre optic cables. Foremostly, it is directly associated with Digital India due to its significance in expanding the fibre optic network across the country, making it a great investment for the long-term. Secondly, Sterlite Technologies is the market leader with a strategic plan to achieve a net income of $100 million sometime this year.
Himachal Futuristic, another fibre optics dealer, is part of the Digital India basket as it is one of the fastest-growing companies in India. HFCL has close links with Jio, currently the most popular network provider in India, which tightens its link to the initiative. There is also the expectation that there will be exponential data-growth in the next few years and the global deployment of 5G, both of which require innovations in fibre optics. Hence, investing in this sector is a wise decision.
Smart City Builders: Larsen & Toubro, Honeywell Automation
The Smart City Initiative, part of Digital India, has been a governmental priority for the last decade. The Indian government has employed smart city conglomerates- companies that handle engineering, technology, manufacturing, construction, and financial services to make the city better connected using the enhanced online infrastructure.
Larsen & Toubro is one such company contracted to work on cities like Jaipur which it successfully evolved into a ‘smart’ city. With Nagpur as its next project, this super-infra company’s stocks have steadily grown over the years from ₹900 in Dec of 2017 to ₹1300 in Dec of 2019. Another stock that is popular among Digital India baskets is Honeywell Automation India Ltd.
This company is a better performer as it provides heating, ventilation and air conditioning (HVAC) as well as fire safety-related resources. With the global demand for cooling increasing each year, Honeywell Automation has shown exponential growth in the last 5 years. It was valued at ₹8,900 at the beginning of 2016 to ₹36,800 at the beginning of 2020.
Within certain IT-related sectors like e-governance, smart city builders, and fibre optic providers, there are many companies that appear to be performing well due to the Digital India program. With the wave of digitization currently sweeping the nation, these stocks are projected to be valued highly among investors for years to come, thereby making them smart long-term investments.