Rise of Cybersecurity Stocks Amidst Increasing Threats

As the world increasingly moves online, with tasks accomplished through a few taps on a mobile phone, digitisation is advancing at an unprecedented rate. However, with increased online activity also comes a parallel rise in frauds and cyber threats, demanding our immediate attention.

In this article, we will discuss the growing importance of cybersecurity in response to escalating cyber threats, along with the performance of cybersecurity stocks and their growth potential. Additionally, we will explore the evolving landscape of cyber threats and the role of technology in defence.

Let’s start!

Why is there a Growing Need for Cybersecurity?

Imagine planning a trip to Goa with friends at a restaurant, only to find sponsored ads for the same trip on your social media apps shortly thereafter. Privacy has become a rare commodity in today’s world. Our personal, financial, and social information is constantly tracked by social media giants and e-commerce platforms. Moreover, as online transactions — from browsing to banking — have become ubiquitous, they have created fertile ground for cyber fraudsters.

To put this into perspective, India boasts approximately 700 million active internet users. A survey conducted by the private firm LocalCircles in 2022 revealed that 42% of Indians surveyed had experienced financial fraud in the past three years, with a staggering 74% unable to recover their losses.?

Additionally, according to RBI data, bank frauds in India have resulted in losses of at least Rs 100 crore per day over the past seven years. It’s not just individuals; even large corporate entities are falling victim to these frauds.

Which Cybersecurity Stocks Stand Out in India?

Some prominent cybersecurity stocks in India include:

Quick Heal Technologies Limited:?Engaged in providing security software products in both domestic and international markets, Quick Heal boasts a portfolio of cloud-based security and machine learning solutions to combat threats and malicious traffic. It maintains a 30% market share in the retail segment and anticipates further growth through deeper penetration into tier-I and tier-II cities, with a 5-year stock price CAGR of 20%.

SecureKloud Technologies:?Offering digital transformation solutions such as managed services, cloud enablement, cybersecurity, and AI-powered data analytics, SecureKloud’s flagship product, CloudAuth Multi-factor Authentication, secures various enterprise applications by authenticating unique identities within seconds. Despite a -12% 5-year stock price CAGR, SecureKloud remains a notable player in the cybersecurity domain.

Cybertech Systems and Software Limited:?Specialising in risk intelligence solutions for enterprises, Cybertech provides predictive risk mitigation and damage minimisation strategies across various industries, including government, education, utilities, public safety, defence, telecom, retail, healthcare, and manufacturing. The company has exhibited a robust 5-year stock price CAGR of 37%.

R S Software Limited:?Renowned for offering customised e-payment solutions to global corporations, R S Software’s flagship offerings include fraud prevention in digital payments. By developing predictive fraud models based on client data, the company offers a shared model for fraud detection, with a 5-year stock price CAGR of 23%.

What’s the Growth Potential?

The growth potential in the cybersecurity space is immense for the following reasons:

Continued Remote Work:?Even after the pandemic waned, many firms have allowed employees to continue working from home, rendering organisations more vulnerable to cyber threats. While working remotely, employees rely on their personal devices and home networks, lacking the robust security measures of corporate environments. These endpoints pose vulnerabilities that can compromise entire corporations.

Increasing Need for Privacy Protection:?As online activities face close scrutiny from social media giants, tech-savvy consumers increasingly prioritise privacy protection to avert data breaches. Consequently, this demographic is willing to invest in privacy protection measures.

Increasing Digitisation:?With government initiatives promoting digitisation, the demand for cybersecurity naturally surges. The widespread adoption of UPI, online banking, and e-commerce fuels this demand, promising a flourishing market for cybersecurity in the foreseeable future.

Evolving Landscape of Cyber Threats and Technological Role

As the threat landscape evolves and attackers become more sophisticated, cybersecurity assumes paramount importance. According to Statista’s Technology Market Outlook, the global cost of cybercrime is projected to exceed $20 trillion by 2027, excluding undetected cybercrimes. This burgeoning market underscores the critical need for robust cybersecurity measures.

Artificial Intelligence (AI)-powered fraud detection emerges as a pivotal solution to combat cyber frauds. Leveraging AI, cybersecurity systems can not only respond to threats but also predict and prevent them proactively. AI excels at identifying anomalies, malicious patterns, and zero-day attacks that often elude human analysts. This technology mirrors the effectiveness of ‘Truecaller’ in detecting spam and fraudulent calls.

Given the substantial benefits AI offers, the global AI market in cybersecurity is poised to expand from USD 10 billion to approximately USD 40 billion by 2026, growing at a CAGR of 20%.

In conclusion, the escalating cyber threats underscore the critical need for robust cybersecurity measures. Investing in cybersecurity stocks not only aligns with market trends but also positions investors to capitalise on the burgeoning demand for cybersecurity solutions in the digital age.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

*The companies mentioned in the article are for information purposes only. This is not investment advice.

*Disclaimer:?Teji Mandi Disclaimer