From Marico to TCS: Here are 10 defensive stock that may bounce back

The Great Defensive Slump: 2025 turned FMCG, IT, and pharma into market laggards. Yet with earnings stable and valuations cooling, their next move could surprise

The classic defensive sectors — fast-moving consumer goods (FMCG), information technology (IT) services, and pharmaceutical (pharma) — failed to live up to their reputation on the bourses in calendar year 2025.

 

These companies, traditionally considered recession- or slowdown-proof, were expected to offer stability and capital protection to equity investors amid market volatility and macroeconomic uncertainty. Instead, the three defensive sectors turned into the biggest sources of grief for investors over the past 12 months. They grossly underperformed the broader market, even as cyclical sectors such as banking, metals and mining, and automotive led the recovery in benchmark indices from their February lows.

 

 

IT services companies such as Tata Consultancy Services, Infosys, and Wipro have been the biggest laggards, followed by consumer-staple majors like Hindustan Unilever, ITC, and Asian Paints. The Nifty IT index, which tracks the market capitalisation of top IT exporters, is down 12.7 per cent since the end of October, compared to a 5.8 per cent rise in the broad-based Nifty 50 index. During the same period, the Nifty FMCG index shed 5.7 per cent of its value. Leading pharma firms such as Sun Pharmaceutical Industries, Cipla, and Dr Reddy’s Laboratories fared slightly better but remain in the red, with the Nifty Pharma index down 1.8 per cent since the end of October last year.

 

On a brighter note, the fall in defensive stocks has sharply compressed their valuations. IT companies’ trailing price-to-earnings (P/E) multiple has fallen to an average of 24.7x from 31.2x a year ago, while their price-to-book (P/B) ratio has declined to 7.3 from 9.5. FMCG companies’ trailing P/E now stands at 47.5x, down from 51x a year ago, and their P/B ratio has eased to around 11 from 12.4. In the pharma sector, top firms are now trading at an average trailing P/E of 32.5x, down from 39.8x a year ago, while their P/B ratio has dropped to 5 from 5.9 at the end of October last year. 

 

By comparison, the Nifty 50’s trailing P/E multiple has remained broadly unchanged at around 22.5x, while its P/B ratio has inched up to 3.63 from 3.5 a year ago. The relatively low valuations in defensive sectors offer downside protection and create room for a potential rally if sentiment turns positive.

 

Here are 10 defensive stocks that could stage a turnaround from current levels, based on changes in their valuations over the past year and their earnings growth in the past four quarters.

 

Tata Technologies 

 

 

·         The stock of product engineering services firm Tata Technologies, part of Tata Group, has been one of the biggest losers in the information technology sector over the past year, shedding 32 per cent and underperforming peers

 

·         After two quarters of sequential decline, revenue growth in the July-September quarter (Q2) saw recovery, rising 4.5 per cent in constant currency terms

 

·         While the automotive (auto) segment remained sluggish with just 0.3 per cent revenue growth, the non-auto segments helped offset the slowdown, growing 14.8 per cent sequentially

 

·         Though operating profit margins were 20 basis points lower sequentially in Q2, they were above estimates, largely driven by strong revenue performance

 

·         Going ahead, the company is targeting double-digit growth in 2026-27, backed by a healthy order book and improved visibility 

 

 

 

 

KPIT Technologies 

 

 

·         Though KPIT’s April–June quarter (Q1) revenue fell 3.2 per cent sequentially, it was better than estimates due to strong 6 per cent growth in the US market and Cloud-based connected services

 

·         Deal wins grew a robust 20 per cent year-on-year, driven by reprioritisation of existing programmes and rising demand for efficient, solution-based delivery

 

·         KPIT reiterated confidence in a stronger second half, supported by ongoing ramp-ups and an expanding pipeline

 

·         With a solid deal pipeline across business verticals, new partnerships, and higher adoption of new-age technologies, KPIT is expected to stage a better recovery, according to Axis Securities

 

·         JM Financial, however, has cut the company’s dollar revenue estimate for 2026-27 by 5–6 per cent due to delayed consolidation and lower-than-expected revenue contribution from Caresoft Global Technologies, Inc. in Q1. 

 

 

 

Infosys 

 

 

·         Infosys has reported strong revenue performance over the past two quarters. In the second quarter, the company posted 2.2 per cent sequential growth, with broad-based gains across verticals and geographies

 

·         Large deal wins stood at $3.1 billion, up 26 per cent year-on-year, with most focused on cost reduction and vendor consolidation

 

·         Given the strong first half performance, Infosys has narrowed its revenue growth guidance for 2025-26 to 2–3 per cent from the earlier 1–3 per cent range

 

·         Margin guidance was maintained at 20–22 per cent, supported by pricing improvements under Project Maximus, currency tailwinds, and value-based selling

 

·         With improving demand visibility, a strong innovation pipeline, and disciplined capability allocation, the company remains well positioned for sustainable growth in an evolving digital landscape, says Geojit Securities 

 

 

 

 

Zydus Lifesciences 

 

 

·         Zydus Lifesciences delivered a strong performance in the first quarter, driven by chronics, which contributes 44 per cent of revenue

 

·         US formulations gained momentum through new abbreviated new drug application filings, approvals, and a robust 505(b)(2) pipeline, alongside expansion into paediatrics and rare diseases

 

·         The acquisition of Comfort Click marks Zydus’ entry into the global vitamin, mineral, and supplement market. The digital-first platform is expected to boost the consumer wellness segment and consolidated revenues

 

·         Investments in specialty drugs and vaccines are likely to contribute meaningfully beyond 2026-27

 

·         A strong balance sheet presents scope for growth through value-accretive acquisitions, observes Nomura

 

·         Antique Stock Broking has upgraded the stock to a ‘buy’, citing improving visibility on specialty launches, accretive global acquisitions, and strong execution across segments 

 

 

 

Dr Reddy’s Laboratories 

 

 

·         Dr Reddy’s consolidated July-September quarter (Q2) performance was weighed down by weakness in the North American market

 

·         Price erosion in the US is expected to continue in the near term, though some of the sales loss could be offset by new drug opportunities

 

·         India business revenues rose 13 per cent year-on-year in Q2, driven by launches, improved pricing, and higher volumes

 

·         The company will rely on a clutch of filings for future growth — including 73 abbreviated new drug applications and two new drug applications (via the hybrid pathway) awaiting approval

 

·         Among key revenue drivers is its largest glucagon-like peptide-1 product, semaglutide, though a temporary regulatory setback in the Canadian market poses a risk 

 

 

 

Varun Beverages 

 

 

·         PepsiCo’s largest bottler outside the US, Varun Beverages, has seen its stock price fall 18.3 per cent over the past 12 months, compared to a 5.7 per cent decline in the Nifty FMCG index and a 5.7 per cent rise in the Nifty 50

 

·         According to Elara Capital, the company’s volume and revenue growth in the July-September quarter (Q3) of calendar year (CY) 2025 were dented by weak demand for summer beverages

 

·         Domestic (standalone) net sales fell 0.7 per cent year-on-year (Y-o-Y) in Q3 CY 2025, while consolidated sales rose 1.9 per cent on the back of better performance in South Africa, Zimbabwe, and Morocco

 

·         Earnings were aided by higher other income and a sharp drop in interest expenses

 

·         Standalone net profit rose 17.3 per cent Y-o-Y in Q3 CY 2025, while consolidated earnings were up 19.6 per cent

 

·         The stock trades at a trailing price-to-earnings of 53.5x, down from 76.5x a year ago

 

·         Elara Capital has an ‘accumulate’ rating with a target price of ₹587, citing faster volume growth in its overseas business 

 

 

 

 

Pidilite Industries 

 

 

·         Adhesive and construction chemical major Pidilite Industries has faced both a growth slowdown and a decline in market capitalisation over the past year

 

·         Its share price is down 8.1 per cent since October last year, underperforming the fast-moving consumer goods (FMCG) indices and the broader market

 

·         Consolidated net sales rose 9.9 per cent year-on-year in the July-September quarter (Q2), while net profit increased 8.4 per cent

 

·         Motilal Oswal Securities estimates underlying volume growth of 10 per cent in Q2, better than expected given the current challenging environment

 

·         Operating margins expanded in Q2, aided by a decline in vinyl acetate monomer prices — a key raw material in the adhesive business

 

·         The stock trades at a trailing price-to-earnings of 65.5x, down from 81.6x a year ago, but still among the highest in the FMCG space — which could limit upside potential 

 

 

 

ITC 

 

 

·         The tobacco-to-fast-moving consumer goods (FMCG) major ITC has underperformed on the bourses, with its stock down 13.8 per cent since October last year

 

·         Analysts noted that July-September quarter (Q2) results were largely in line, with 6 per cent year-on-year (Y-o-Y) volume growth in the cigarette business, though margins fell to multi-quarter lows due to a sharp rise in tobacco leaf prices

 

·         Overall earnings were pressured by muted growth in paper and packaging and agribusiness

 

·         The non-tobacco FMCG division reported 6.9 per cent Y-o-Y revenue growth in Q2 (up from 5.2 per cent in the first quarter), led by staples, dairy, premium personal wash, and incense sticks

 

·         Consolidated net sales declined 2.8 per cent Y-o-Y in Q2, while net profit rose 2.7 per cent

 

·         The stock trades at a trailing price-to-earnings of 26.2x, down from 30.5x a year ago. Relatively low valuations offer room for upside from current levels 

 

 

 

 

Marico 

 

 

·         Hair, edible oil, and food major Marico has been a surprise outperformer in the fast-moving consumer goods space over the past year, driven by stronger-than-industry growth in its core Parachute coconut oil business

 

·         Marico’s share price is up 12.8 per cent since October last year, outperforming both the Nifty FMCG and Nifty 50 indices

 

·         According to Centrum Broking, domestic revenues in the April–June quarter (Q1) rose 27 per cent year-on-year (on a base of 7 per cent growth in Q1 2024–25), driven by 9 per cent volume growth

 

·         Parachute reported 1 per cent volume degrowth but 31 per cent value growth, with about 140 basis point market-share gains

 

·         In Q1, earnings before interest, tax, depreciation, and amortisation rose 4.6 per cent year-on-year, while adjusted net profit increased 8.2 per cent

 

·         Marico plans to grow revenues to ₹20,000 crore over the next five years, implying a compound annual growth rate of about 13 per cent between 2024-25 and 2029-30. Analysts, however, expect near-term margin pressure from rising copra prices

 

·         The stock trades at a trailing price-to-earnings of 56x, up from 54.6x a year ago, limiting near-term upside 

 

 

 

 

Tata Consultancy Services 

 

 

·         Tata Consultancy Services (TCS) has been one of the biggest losers in the index over the past year, amid investor concerns over growth and margins

 

·         The company’s market capitalisation is down 23 per cent since October 2024, as it struggles with low single-digit revenue and profit growth

 

·         In the second quarter, net sales rose just 2.4 per cent year-on-year, while net profit grew 1.4 per cent — among the slowest in its peer set

 

·         Management expects growth in 2025-26 (FY26) to surpass 2024-25 levels, though analysts remain sceptical given the lack of clarity and a 1 per cent decline in international business (in constant currency) during the first half of FY26

 

·         TCS plans to invest $5–7 billion over the next five to seven years to develop local data centres with up to 1 gigawatt capacity

 

·         Analysts at Motilal Oswal Securities do not expect incremental revenues or earnings from this data centre foray in the near term

 

·         The stock trades at a trailing price-to-earnings of 22x, down from 29.8x a year ago — its lowest valuation in five years, offering some downside protection