Zerodha Review 2020 Is Free Investing Legit Pros Cons

Zerodha Review 2020 – Is Free Investing Legit? [Pros and Cons]

A complete Zerodha Review 2020– Brokerage, Trading Platform & More: Zerodha is the biggest discount broker in India and perfect for traders & investors looking for low brokerage, easy interface, and reliable trading platform. It offers a zero brokerage for delivery equity & direct mutual fund investments.

For all intraday, Futures & Options, currency, and commodity trades across NSE, BSE, MCX, it offers a brokerage of Flat ₹20 irrespective of the trading volume. It doesn’t matter whether you trade for Rs 1 lakh or 1 crore, you have to pay a flat low brokerage of Rs 20 per trade. Therefore, you can save a lot of brokerage charges on your trades using Zerodha as your broker.

In this Zerodha review, we will discuss the brokerage charges, account opening charges, maintenance charges, trading platforms, products, my personal experience of using Zerodha & more. By the end of this post, you’ll have a complete understanding of Zerodha trading services and whether this broker is right for you or not. Let’s get started.

Quick link to open a demat account with Zerodha.

Zerodha Review –Brokerage, Charges, Trading Platforms & More

1. Introduction

There are two types of stockbrokers in India. Full-Service brokers and Discount brokers. The full-service brokers offer a trading platform along with advisory. However, their brokerage charges are high. A few major full-service brokers in India are HDFC Securities, ICICI Direct, Motilal Oswal, etc.

On the other hand, discount brokers offer trading platforms with minimum brokerage charges. Nonetheless, they do not provide advisory services. The biggest advantage of a discount broker is that it saves a lot of brokerages for the traders/investors. On all other prospects, like performance, computerized trading systems etc- both offer similar facilities.

An important point to know here is that all the brokers- Full service or discount brokers are licensed and regulated in India by regulating bodies like SEBI.

Zerodha is a leading discount broker in India in terms of daily trading volume, growth and customer base. It is one of the most technologically advanced and cheap stockbrokers. Zerodha has over +1 million clients and contributes to over 10% of daily retail trading volumes across NSE, BSE, MCX.

Ironically, the term ‘Zerodha’ is derived from the fusion of an English and Sanskrit word. ‘Zero’+’Rodha’ where ‘Rodha’ means barrier. Overall, Zerodha means ‘Zero Barrier’.

It was started by Nitin Kamath, an Engineer by qualification, in 2010. Nithin bootstrapped and founded Zerodha in 2010 to overcome the hurdles he faced during his decade long stint as a trader. He was named one of the “Top 10 Businessmen to Watch Out for in 2016 in India” by The Economic Times for pioneering and scaling discount broking in India. Here are a few of the famous awards won by Zerodha recently:

ET Startup of the Year (2020)

— National Stock Exchange (NSE) “Retail brokerage of the year 2019” (& 2018)

— Outlook Money “Retail broker of the year 2017”

— Ernst & Young “Entrepreneur of the year (Startup) 2017”

2. Zerodha Brokerage Charges 

Zerodha offers trading services to buy and sell stocks, futures & options in equities, commodities, and currency segment. Here are the Zerodha brokerage charges:

– Free equity delivery

All your equity delivery investments (NSE, BSE), absolutely free — ₹0 brokerage.

– ₹20 intraday equity and F&O trades

₹20 or 0.03% (whichever is lower) per executed order on intraday trades across equity, currency, and commodity trades across NSE, BSE, and MCX.

TypeBrokerage Charges
Equity DeliveryRs. 0 (FREE)
Equity IntradayLower of Rs. 20 per executed order or 0.03%
Equity FuturesLower of Rs. 20 per executed order or 0.03%
Equity OptionsFlat Rs. 20 per executed order
Currency F&O Lower of Rs. 20 per executed order or 0.03%
CommodityLower of Rs. 20 per executed order or 0.03%

Quick note:

1. You can use this Zerodha Brokerage Calculator to get more ideas.

updated zerodha brokerage stocks

(Zerodha Brokerage Calculator)

2. Apart from brokerages, there are also a few other charges that you have to mandatorily pay on your transactions like Exchange transaction charge, STT, SEBI turnover charges, GST, etc.

You have to pay these charges no matter which stockbroker you prefer to trade in stocks and that too on both sides of transactions i.e. while buying and selling. However, the brokerage cost can be controlled by choosing a discount broker. For example, in the case of Zerodha, you can notice the total brokerage of Rs 40 for both sides of Intraday equity trading, even though the total turnover is Rs 8.4 Lakhs.

You can have read this blog post to understand the different charges while trading in stocks.

3. Zerodha Account Opening Charges & AMC

Here are the account opening charges for Zerodha

  1. Equity Trading Account: ₹200
  2. Commodity Account:₹100

If you want to trade in both equity and commodity, then you need to pay an account opening charge of Rs 200+Rs 100 = Rs 300. Anyways, if you are just interested in trading in stocks i.e. equities, you can open demat and trading for equity account at Rs 200. The demat account annual maintenance (AMC) charge is Rs 300 per year.

 4. Zerodha Products & Features

 Zerodha has built its own trading applications for the customers. It offers different trading terminals, websites, and mobile apps (Android/iOS) which are free for the customers.

— Kite 3.0

zerodha kite dashboard

Kite 3.0 is a modern technology-based trading platform with streaming market data, advanced charts, an elegant UI, and more. It is a minimalistic, intuitive, responsive, light, yet powerful web and mobile trading application offered by Zerodha. Kite provides Bandwidth consumption of fewer than 0.5 Kbps for a full market watch, extensive charting with over 100 indicators and 6 chart types, advanced order types like Brackets and cover, millisecond order placements, and more.

Overall, Kite provides an excellent experience to the users through its groundbreaking innovations presented with hassle-free usability.

— Kite mobile

zerodha mobile app

This is a mobile version of KITE for a seamless experience for mobile-users and available in both Android and iOS devices.

— Coin

Zerodha Coin is a platform that lets you buy mutual funds online directly from asset management companies. This platform is absolutely free since August 24, 2018. Here, you can make your investments without any commissions.

With the help of Zerodha Coin, you can have Direct mutual funds in DEMAT form, with the convenience of one portfolio across equity, MF, currency, etc. Moreover, it also provides a Single capital gain statement, P&L visualizations, and more. This Coin by Zerodha has made investments through SIPs really simple and flexible.

Other Partner Products

Apart from the above products, Zerodha also offers a few other partner programs:

  1. Smallcase: This thematic investment platform is powered by Kite Connect APIs. Smallcase helps users to invest in different themes by intelligently providing weighted baskets of stocks in each theme.
  2. Sensibull: This is an options trading platform which offers simplified options trading for new investors by providing powerful trading tools. Sensibull aims to make options trading safe, accessible, and most importantly, profitable for all.

Besides, Zerodha has also started a few educational initiatives to improve financial literacy and increase the participation of the common people in the financial world. Here are a few other products offered by Zerodha

  1. Zerodha Varsity: An educational platform to educate people about investing and trading. Zerodha Varsity offers free modules on Technical analysis, fundamental analysis, futures, options, risk management, trading psychology & more. Recently, Zerodha Varsity also launched its Varsity mobile app.
  2. Trading Q&A: An online forum powered by Zerodha to answer people’s most troublesome investing and trading questions.

5. Pros and cons of Zerodha Discount broker

Here are a few advantages and disadvantages of using Zerodha trading platforms:

Pros of Opening Account with Zerodha

  1. Zero Brokerage Charges for Delivery
  2. Flat Charge for Intraday (Rs 20 or 0.03% whichever is lower per executed order for everything else)
  3. Same pricing for across all exchanges
  4. No upfront fee or turnover commitment
  5. Z-Connect, interactive blog, and portal for all your queries
  6. Trading, charting, and analysis, all rolled into one next-generation desktop platform Pi.
  7. Minimalistic, intuitive, responsive web-based trading platform Kite
  8. No minimum balance required to open Zerodha trading account
  9. Invest in direct mutual funds with same demat account through coin

Cons of Opening Account with Zerodha

  1. No advisory services or research report.
  2. 3-in-1 account (Saving+Demat+Trading) not available.
  3. Online IPO investment not available. (Now, Zerodha customers can invest in IPO’s through UPI payment. Read more about Zerodha IPO applying process here)

Note: Zerodha has recently started offering Zerodha IDFC FIRST Bank 3-in-1 account. However, to open a 3in1 account at Zerodha, you need to have an existing account with IDFC FIRST Bank. Accounts can only be opened online. Read more here.

6. Is Zerodha a Reliable Stockbroker? And is Free investing legit?

Is Zerodha safe for long-term investments? This is one of the biggest questions that come in the mind of first-time investors. Obviously, HDFC Securities, ICICI Direct, SBI cap, Kotak securities, etc are big brands in the name of the broking industry and been in the market for decades. Hence, they have built greater trust compared to Zerodha, especially for the ones who have never heard its name before.

Anyways, Zerodha, the discount broker, originated only in 2010. Therefore, if you’re not involved in the share market investments/tradings in the last decade, it’s no surprise to say that you might have not known this broker. However, in the short span of around 10 years, this broker has been able to beat all the big traditional brokers. Currently, Zerodha is the biggest stockbroker in India, based on the number of clients (over 15 lakh users), followed by ICICI Direct and HDFC securities ranking second and third.

Now, answering your question, Yes, Zerodha is safe and reliable. In fact, since origin, Zerodha has never faced any case of major violations from SEBI or any of the other exchanges. It is a profitable private company with no debts or liabilities. Here are a few points why Zerodha is safe and reliable for investors and traders.

  1. Zerodha is a zero-debt financial services company. There is no borrowing of any kind.
  2. There is no credit risk, less than 5% of Zerodha’s own capital is lent to customers in any form.
  3. Zerodha own funds in the business are greater than 25% of all client funds put together.
  4. Their ratio of ‘complaints to active clients’ is among the least on the exchange.
  5. Zerodha is profitable as a business and has enough reserves to sustain, even if there was an extended downturn in the economy.

Moreover, Zerodha is partnered with Central Depository Services Limited. CDSL’s main function is the holding securities either in certificated or uncertificated form, to enable the book-entry transfer of securities. Therefore, when it comes to the security of the shares in your demat account with Zerodha, you do not need to worry at all. The stockbrokers are just the agents of depositories.

Your stocks are actually held by central depositories and not by the depository participants (brokers). Therefore, even if something didn’t work out well with Zerodha, your stocks in the demat account are safely intact with CDSL. In short, Zerodha is completely legit and reliable for your trading or long-term investments in the Share market.

7. My experience of using Zerodha

It’s been over three years since I’m using Zerodha and I’m satisfied with the trading services provided by Zerodha.

Initially, I started with ICICI direct as my broker, but later I switched to Zerodha when I realized that I was paying way too much brokerages for my trading transactions.

Most beginners do not consider the brokerage charges while calculating the profits. I use to make the same mistake. And that’s why many times the final profits in my bank account (after deducting the brokerage and other charges) disappointed me as it was considerably lower than what I calculated in my head. I wish I had switched to a discount broker earlier as it could have saved me a lot of ‘unnecessary’ brokerages and moreover trading experience is even better on Zerodah. Nonetheless, I use Zerodha for making all my stock investments now.

Besides, there was one ‘cons’ of using Zerodha as a broker which bugged me in the past. And it was not having the facility for the customers to directly invest in Initial public offerings (IPOs) through the Zerodha dashboard. But this issue is also solved by Zerodha. Investors can now apply for IPOs directly within the Zerodha console. And the best part is that the process is really simple.

Finally, a lot of people complain that Zerodha doesn’t provide advisory services or buy/sell calls. I believe that one should never invest or trade based on the broker’s recommendation. There’s a conflict of interest here as the brokers will always make money when you trade and doesn’t matter whether you win or lose. Therefore, they might always motivate investors to trade frequently. Overall, Zerodha not giving advisory services doesn’t bother me. Moreover, they make us for these cons by providing educational initiates like Varsity.

8. How to open your trading & demat account with Zerodha?

Opening a demat and trading account with Zerodha is really fast and hassle-free. In fact, if you’ve all the documents, you can open your account and start trading within an hour.

Here are the documents required to open a demat and trading account at Zerodha: PAN CARD, Aadhar Card, 2 Passport size photos, Canceled cheque/ Saving bank account passbook. I will recommend keeping photocopies of all these documents ready before you apply for opening the accounts.

To open your trading & demat account at Zerodha, go to Zerodha website and click on ‘OPEN AN ACCOUNT’. Here is the direct link.

open demat at trading account at 5paisa

Note: You can find the detailed explanation on how to open your demat and trading account at Zerodha here.

9. Closing Thoughts

In the last decade, Zerodha has earned trust and respect among the trading population by providing reliable and technologically advanced trading services. It is definitely the largest discount broker in India. If you are looking to open your brokerage account with a reputable brand that offers low brokerages, and have a fast trading platform, Zerodha is definitely one of the best options.

That’s all for this post. I hope this Zerodha review is useful to you. If you have any additional queries regarding Zerodha or if you want to share your review of Zerodha, you can post it in our forum. I’ll be happy to answer your questions. Have a great day!

How to follow Stock Market? Basics for Beginners!

When a newbie enters the stock market, one of the first questions that come to their mind is How to follow stock Market? Here, by following the stock market, we mean how to know the share prices of the Indian companies, market index, or the most basic paraments of the market.

For seasoned investors, it’s easier to follow the stock market as they have been doing it for years. They already know lots of websites or apps to track and follow stocks or indexes. However, for beginners, they might get easily confused about how to follow stock market, and may even feel silly asking this basic question to a mature investor.

If you’re one such stock market beginner, do not worry. We have got you covered. In this post, we going to exactly teach you how to follow stock market. These few simple tricks about following the stock market and its trends, which once known, even a beginner can follow the market like a pro.

Please note that although this post about ‘how to follow stock market’ is basically targeted for beginners, however, intermediate and advanced level investors can also get benefits from this article. Do read it till the end to get the maximum benefits. Also, there is a bonus tip for the readers in the last section. Let’s get started.

How to follow Stock Market?

Here are a few of the simple yet powerful websites from where you can follow stock market.  Below, we have also described how to easily navigate and use these sites efficiently. Here it goes:

1. Google Search

Google is the first and easiest source to follow a stock. Just type the name of the stock and google will give you all the details about that stock. For example, if you want to follow the stock of Tata Motors and want to know its, just type ‘Tata motors share price’ on google. The result will be like this:

tata motors share price nov 2020

Please note that here you have to type “Company name + Share” or “Company name + Stock” to get the stock details.

Further, On Google, you can track the share price movement of the stock for a given period of 1 day, 5day, 1 month, 1 year, 5 years or max, by simply clicking on different tabs. For example, if you click on ‘1 month’ in the tab, you can see the price movement of that stock for the last 1 month i.e. how the share price moved in the last 30 days to date.

The best part is that the simplicity of google makes it best for beginners to start following the market. The only disadvantage of tracking stock market prices on Google is that you have to type the names of different stocks every time when you want to track that stocks. If you have many stocks to track, say more than 10 (Ex Reliance, Tata Steel, HPCL, ONGC, BPCL, Titan, Infosys…..) then it will become a hectic job for you as you have to type the stock name over and over again. Here a shortcut is “Following” the stock or creating a watchlist.

Nevertheless, Google is the first place for all the beginners where they can learn how to follow the stock market. Therefore, you should also get used to it. Try googling the stock price of a few stocks and indexes on google on your own now.

Exercise: Type “Nifty50” on google and see what appears.

Further, also try different stocks that you are interested in. This is the first step to learn how to follow stock market. In case, you do not remember much names, here is a list of few major stocks in NIFTY50 that you can search:

 NameIndustryWeight
1.Reliance Industries Ltd.Energy - Oil & Gas14.00%
2.HDFC Bank Ltd.Banking9.56%
3.Infosys Ltd.Information Technology7.56%
4.Housing Development Finance Corporation Ltd.Financial Services6.59%
5.Tata Consultancy Services Ltd.Information Technology5.12%
6.ICICI Bank Ltd.Banking4.80%
7.Kotak Mahindra Bank Ltd.Banking4.27%
8.Hindustan Unilever Ltd.Consumer Goods4.22%
9.ITC Ltd.Consumer Goods3.62%
10.Bharti Airtel Ltd.Telecommunication2.85%
11.Larsen & Toubro Ltd.Construction2.38%
12.AXIS Bank Ltd.Banking2.08%
13.Bajaj Finance Ltd.Financial Services1.84%
14.Maruti Suzuki India Ltd.Automobile1.78%
15.Asian Paints Ltd.Consumer Goods1.65%
16.HCL Technologies Ltd.Information Technology1.64%
17.State Bank of India Banking1.57%
18.Nestle India Ltd.Consumer Goods1.26%
19.Mahindra & Mahindra Ltd.Automobile1.24%
20.Sun Pharmaceutical Industries Ltd.Pharmaceuticals1.23%
21.Dr. Reddy’s Laboratories Ltd.Pharmaceuticals1.17%
22.UltraTech Cement Ltd.Cement1.02%
23.Power Grid Corporation of India Ltd.Energy - Power0.98%
24.HDFC LifeInsurance0.97%
25.Britannia Industries Ltd.Consumer Goods0.96%
26.Titan Company Ltd.Consumer Goods0.93%
27.Tech Mahindra Ltd.Information Technology0.90%
28.NTPC Ltd.Energy - Power0.90%
29.Wipro Ltd.Information Technology0.89%
30.Bajaj Auto Ltd.Automobile0.84%
31.Bajaj Finserv Ltd.Financial Services0.80%
32.Cipla Ltd.Pharmaceuticals0.78%
33.Hero MotoCorp Ltd.Automobile0.74%
34.Bharat Petroleum Corp. Ltd.Energy - Oil & Gas0.71%
35.IndusInd Bank Ltd.Banking0.68%
36.Shree Cement Ltd.Cement0.62%
37.Eicher Motors Ltd. Automobile0.61%
38.Oil & Natural Gas Corporation Ltd.Energy - Oil & Gas0.61%
39.Coal India Ltd.Energy & Mining0.58%
40.Tata Steel Ltd.Metals0.58%
41.UPL Ltd. Chemicals0.56%
42.Grasim Industries Ltd.Cement0.53%
43.Hindalco Industries Ltd.Metals0.51%
44.Adani Port and Special Economic ZoneInfrastructure0.51%
45.JSW Steel Ltd.Metals0.48%
46.Indian Oil Corporation Ltd.Energy - Oil & Gas0.48%
47.Tata Motors Ltd.Automobile0.40%
48.GAIL (India) Ltd.Energy - Oil & Gas0.38%
49.Bharti Infratel Ltd. Telecommunication0.35%
50Zee Entertainment Enterprises Ltd.Media & Entertainment0.27%

NOTE: Do not search Facebook, Google, Apple’s stock price. Although you can find the share details of these companies, but the stock prices will be shown in dollars on Google. This is because these are foreign stocks and listed in foreign stock exchanges, not India. They trade in foreign currency.

Only Indian companies are listed on Indian Stock Exchanges. Therefore, companies like Apple, Facebook, Samsung, etc that are not Indian companies can’t be traded in India. They are listed on their respective country’s stock exchange. For example- Facebook on New York Stock Exchange (NYSE), Samsung on South Korea Exchange, etc.

2. Trade Brains Portal

First of all, if you are confused about where to get started, you can start by visiting the ALL STOCKS page at Trade Brains Portal. Here, you’ll get the list of all the +5,000 publically listed companies in India and also their industry. You can start researching on this page to at least know Indian stocks and what stock investment options are available to you.

Next, you can make a watchlist of stocks on Trade Brains Portal. This means that you can save stocks in your own created list for tracking their price movements and also you can set a target price. Let’s say you add 10 stocks to your watchlist. Now, you just have to go to your watchlist whenever you want to follow the stocks or market.

(Image: Watchlist of Trade Brains Portal)

Trade Brains Portal – How to use for Stock Research?

3. Moneycontrol

Moneycontrol is probably the oldest and most popular website in India if you want to learn how to follow stock market. The website gives you all the info you want to know about a stock along with the latest financial news.  In addition, moneycontrol also offers a mobile app, which is in fact even better than the website. You can download the app and easily follow the market using it.

On the website or app, enter the stock name on the top search box and you will get all the details that you wish to see. You can read this article if you wish to know more about moneycontrol features:

Money Control App – Best hacks for Beginners

4. Screener.in

screener website

Screener.in is another of the powerful financial website for fundamental analysis of stocks. One of the good features of this site is that the last 10 Years’ financial reports of all the Indian companies are available here.

In addition, you can also download data from this website in excel form. Further, you can add stocks to your Wishlist to get notifications in your mail the alerts if there is any corporate action on the stocks in your Wishlist. Therefore, you can easily stay updated with the latest news like quarterly results, dividend dates, etc once you log in to the site and add the stock names to your Wishlist.

5. Yahoo Finance

Yahoo Finance and Google Finance are the most searched finances website for stock market analysis. This website is very resourceful to learn how to follow stock market and contains massive data of stocks along with the latest news and other powerful tools. Yahoo Finance is very friendly and you will get all the major information which you want to learn about the stock here.

Summary

In this post, we tried to cover e major sources on how to follow stock market. Surely, there are many other websites too that can be used if you want to keep up-to-date with the market trends. However, for beginners, we recommend you to first familiarize yourself with these websites and get used to how to get the stock information from these sites. Definitely, these websites will give you all the information that you want to learn about the stock market. Do check them out.

Here is a summary of links to all the financial websites discussed in this post for your ease.

  1. Google: http://www.google.com
  2. Money control: http://www.moneycontrol.com
  3. Screener: https://www.screener.in
  4. Economic Times market: http://economictimes.indiatimes.com/markets
  5. Yahoo Finance: https://in.finance.yahoo.com

That’s all for this post. If you think we missed any big website that needs to be mentioned in our post on how to follow stock market, please comment below. We will be happy to get feedback. Have a great day and happy investing!

5 Top FMCG companies in India in 2020 - Best FMCG Shares cover

5 Top FMCG companies in India in 2020 – Best FMCG Shares

List of the best FMCG companies in India 2020: All our lives depend on FMCG (Fast Moving Consumer Goods) products that satisfy our basic needs. FMCG products are those that have a short shelf life that is produced in high volumes with low cost and are made for rapid consumption.

This industry include household items, over the counter medicines, food, personal care items, and stationery and consumer electronics, etc. The fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector and has created employment for more than three million people.

Today, we take a look at the top 5 FMCG companies in India that are responsible for keeping over 1.3 billion Indians on their feet every day.

Top 5 FMCG companies in India in 2020

1. Hindustan Unilever Limited (HUL)

Market cap: Rs 521,882 Cr / PE : 71.20

Hindustan Unilever best FMCG Shares

HUL is one of India’s oldest FMCG companies. It is a subsidiary of Unilever, a British-dutch company. The company was established in 1933 and has headquarters in Mumbai. HUL has served over 2 billion customers for over 87 years.

HUL has over 35 brands across 20 categories such as soaps, detergent, skincare, cosmetics, tea, toothpaste. The brand includes famous names like Surf, Excel, Dove, Lux, Lifebuoy, Clinic Plus, Wheel, Sunsilk, Knorr, Axe, etc.

hul company infographic

2. ITC Limited

Market Cap: Rs 240,076 Cr/ PE : 15.84

itc top fmcg share in indiaITC Ltd. has flourished in the Indian markets for over 110 years giving them a deep understanding of the Indian Consumer. The ITC is known to guarantee a certain standard in production and packaging. They have broad distribution channels in India. This has allowed them to penetrate into even the most rural areas through several retail shops.

Their products include Bingo, Sunfeast, Aashirvaad, Fiama Di Wills, Vivel, Savlon soaps and handwash, Papercraft, and Classmate. ITC sells 81% of the tobacco products in Asia including brands like Wills Navy Cut, Gold Flake Kings, Silk Cut, India Kings, Bristol, Gold Flake Super Star, Gold Flake Premium Lights, Classic Menthol, etc.

ITC company infographic

3. Nestlé India

Market Cap: Rs 159,330 Cr / PE : 80.90

Nestle India top fmcg companies in India

Nestle is a transnational food and beverage company headquartered in Switzerland. Globally the company has been around for more than 150 years. In India, Nestle dates back to 1912 when it began operating as Nestle Anglo-Swiss Condensed Milk Company. They cater to the nutritional and wellness requirements of Indian consumers. In 2016, they were rated 33 in Forbes list of largest public companies.

Nestle sells a plethora of products including beverages, bottled water, milkshakes, breakfast cereals, instant foods, performance, and health care nutrition, etc. A few of the 2000 brands they currently own are Nescafe, Maggi, Milky Bar, Kit Kat, Bar One, Milkmaid, Nestea, etc.  How Nestle India Makes Money(1)

Quick Note: If you want to look into the financials and fundamentals of these companies, you can find it on our stock research and analysis portal here.

4. Britannia Industries

Market cap: Rs 93,866 Cr / PE : 63.18

britannia industries fmcg companies in India

Britannia Industries is one of the oldest food-producing companies in the country. It was established in 1892 in Kolkata with an initial investment of merely Rs. 295. Their products are available in more than 5 million retail outlets. More than 50% of Indian households are proud users of their range of food items. The FMCG is known as the first Zero Trans Fat Business in the country. They have an extensive distribution network in India and 60 other countries. 

how britannia ind makes money

Their products include Good Day, Tiger, Milk Bikis, Bourbon, Marie Gold, Cake, Cheese, Milk, and Yogurt. The company is the largest brand in the organized bread market.

5. Marico

Marketcap: Rs 46911 Cr / PE : 41.40

marico fmcg company

Marico was established in 1990 in Mumbai. It began as a brand for coconut and refined edible oil and later expanded into various kinds of consumer goods. It is currently operating in 25 countries in the emerging markets of Asia and Africa. They maintain their innovation in manufacturing and packaging to preserve the tagline “Make a difference”.  

how marico makes money

Marico’s household brand includes Parachute, Saffola, Nihar, Livon, Set Wet, Mediker. Its global products include Parachute, Haircode, Caivil, Black Chic, Isoplus, Code 10, and X-men.

Closing Thoughts

With the ever-growing needs and constantly improving standards of living the FMCG’s play an even larger role. In order to fulfill these requirements, there are several other FMCG’s too that compete for a significant spot in this market. They include Colgate Palmolive, Parle Agro, P&G, The Godrej Group, Amul, Patanjali, Dabur, etc.

how dabur india makes money

In this highly competitive environment, the FMCG’s have managed to keep customers satisfied by reaching out to every nook and corner of the country making each and every FMCG an integral part of the economy.

Indian GDP Shrunk by 23.9% in First Quarter 2020 - But Why cover

Indian GDP Shrunk by 23.9% in First Quarter 2020 – But Why?

A study on why Indian GDP Shrunk by 23.9% in the first quarter of 2020: Hit by the Covid-19 pandemic, India, the world’s fifth-largest economy has been turned into the second-worst performer in the Covid-19 hit the quarter of the financial year 2020-21. India’s Gross Domestic Product (GDP) has shrunk by 23.9% in the first quarter of the financial year 2020-21.

Generally in forecasts, it is of rare occurrence to find the negative performances beating the downward trends. But that is exactly what has happened in the first quarter as although a negative GDP was predicted but nothing close to wiping out 1/4th of the GDP. Today, we take a look at the reasons behind the decline and the possible future.

business today Indian GDP Shrunk by 23.9% in First Quarter 2020(Image Credits: BusinessToday.in)

Why did the Indian GDP Shrunk by 23.9%?

Earlier, when this issue of the state of the economy came up at the 41st GST Council Meeting on Friday, Finance Minister Nirmala Sitharaman looked into the celestial factor and stated:

“This year we are facing an extraordinary situation…we are facing an act of God which might even result in the contraction of the economy.” – Nirmala Sitharaman, Finance Minister

Now, let us look into some of the hard facts. The Indian economy suffered due to the nationwide lockdown imposed. This was during the April- June quarter of which the lockdown covered a major portion. India had one of the longest and strictest Covid-19 lockdowns in the world. And unfortunately enough also suffered is suffering through the worst economic consequences. In comparison to other countries around the globe, India has been one of the worst-hit.

In order to understand how exactly the GDP was affected and how it can recover, we must first take a look at the components that form a part of the growth. These are consumption, government expenditure, investment, and the nation’s current account deficit (imports – exports).

  1. Consumption generally has the greatest impact on GDP. In the last quarter, consumption accounted for 56.4 percent of the country’s GDP. But when compared to figures from 2019 there is a drop of Rs 5,31,803 crore in private consumption or 27 percent. This has been one of the major reasons as to why the GDP has contracted. This is because people simply are not willing to consume more as most expect tougher times ahead.
  2. The Investment portion made up 32 percent of India’s GDP. This portion too fell by Rs 5,33,003 crore in comparison to last year. When coupled consumption these two components made up for 88 percent of the total GDP shrinkage 
  3. The government expenditure share of the GDP stood at 11 percent. This component rose by 16% due to the relief measures provided by the government. This increase in expenditure, unfortunately, could not make up for the total decline from the consumption and investment portion.
  4. The current account deficit which historically has always been in negative recorded positive rates. But this too was not due to exports exceeding regular imports. It was simply due to the lack of imports due to a lack of demand.

P. Chidambaram (Member of Parliament, Rajya Sabha) on Indian economy shrunk by 23.9% in 2020Image: P. Chidambaram (Member of Parliament, Rajya Sabha)

The National Statistical Office (NSO) in an official statement released that “The GDP has shrunk from Rs 35.35 lakh crore in Q1 of 2019-20 to Rs 26.90 lakh crore in the first quarter of Q1 of 2020-21, showing a contraction of 23.9 percent as compared to 5.2 percent growth in Q1 2019-20,”.

What does the future hold for the Indian economy?

The future of the Indian economy depends on how well is the purchasing capacity distributed among the general public. This is generally spread out by the income earned by the citizens.

But the pandemic has rendered millions jobless forcing them to cut back on their spending habits. This reduces the consumption portion. When there is a fall in consumption businesses avoid making investments as they already are aware of the lack of demand. These two portions, unfortunately, depend on individuals as they cannot be forced to spend. One factor that can be controlled is government expenditure in order to boost the GDP.

But unfortunately, enough even prior to the pandemic the government had already exceeded their resources by borrowing. The only option remains is to keep borrow from the RBI which has maintained amounts close to 18% of the GDP as a reserve. An infusion will provide some relief and may get the consumption portion moving as long as inflation is kept on check.

For the remaining quarters to come analysts have predicted that even though the GDP will improve but will still keep performing negatively. This recovery phase is expected to also likely extend into the first half of 2022. But these estimates depend on current figures and will change depending on how deeply COVID-19 outbreaks occur throughout the country

What is Open Interest(OI)? How to interpret it in Options Trading?

What is Open Interest (OI)? How to interpret it?

Understanding Open Interest: The term open interest (OI) is one of the most popular terminologies used among stock market traders. In this article, we are going to discuss what exactly is Open Interest. Here, we’ll discuss it’s definition, what does an increase or decrease in open interest implies, the difference between open interest vs volumes, and how one should interpret open interest. Let’s get started.

Open Interest Definition

Open Interest is the total number of the futures contracts (or Options) held by market participants at any given point of time. The total number of open interest contracts keeps on changing with every transaction executed. The open interest is said to be the best indicator to gauge the market sentiment and understand the reliability of the price movements.

Therefore, for an open interest to exist, there must be a buyer for every seller and vise-versa. Here, the relationship between buyer and seller creates one open interest. So, when buyers and sellers come together and initiate one new position, then open interest is increased by one unit. And when the same buyer and seller decrease their position, an open interest is reduced. But, if a buyer and seller passes their position to a new buyer and seller, then the Open interest remains unchanged, its just a transfer of position.

What does the Increase/Decrease in Open Interest Imply?

An increase in Open Interest means that new money is flowing in the market. And it generally indicates that the present trend (Bullish, Bearish, or sideways) is expected to continue.

A decline is an open interest usually implies, that the current trend is expected to halt and we could see a reversal in the market. To know the current open Interest, we just need to know the total from the buyer or seller side and not both.

Difference between Open Interest (OI) and Volumes

There is generally a common misconception that both OI and volumes mean one and the same thing. However, they are two different concepts, giving out two different sets of data. But, both the data can be used in conjuncture. Let us understand the concept of Open Interest with the help of an example.

Say, there are five traders (A, B, C, D, E) trading the Nifty futures contract. Let us understand, as to how their trading has an impact on the open interest and its calculation.

On Monday: ‘A’ buys 20 Nifty futures contract and ‘B’ also buys 10 Nifty futures contract. While ‘C’ sells 30 Nifty futures contract in the market. Therefore, we have a buying activity of 30 futures contracts and a selling activity of 30 futures contracts. Hence, the total Open Interest is 30.

TraderBuy (L = Long)Sell (S = Short)Contract held
A2020L
B1010L
C3030S
D
E
Total30

On Tuesday: C wants to get rid of half the position and ‘D’ comes into the market and takes 15 short contacts from C. Here just the mere transfer of position happened and no new contracts were added. So, the open Interest will still stand at 30.

TraderBuy (L = Long)Sell (S = Short)Contract held
A
B
C1515L
D1515S
E
Total30

On Wednesday: D wants to add 15 more short contracts. And both A & B want to add 5 long contracts each, to their existing long positions. And C wants to exit 5 more short contract position form here existing position of 15 short contracts. Therefore, 10 more long contracts (both A & B) are added in the market. And the contract between C and D would be just a mere transfer of positions. In short, the table on Wednesday would look like this:

TraderBuy (L = Long)Sell (S = Short)Contract held
A55L
B55L
C55L
D1515S
E
Total30

On Thursday: Trader E decides to enter the market. And wants to sell 50 Nifty futures contracts. Therefore, trader D decides to exit his 30 lots position and transfers his position to E. While trader A & B add position so 10 lots each to their existing positions. Overall, 20 new lots get added to the system and the final table at the end of Thursday looks like:

TraderLSContractsLSContractsLSContractsLSContracts
A2020L20L525L1035L
B1010L10L515L1025L
C3030S1515S510S10S
D1515S1530S300
E5050S

If we carefully analyze and look at the table above, it gives us a fair sense that open interest is eventually a zero-sum game. If we add all the longs and subtract them with all the shorts in the market. The end result is eventually zero.

open interest data money controlFigure 1: Open Interest data (Moneycontrol.com)

Now, if we look at the snapshot above (Fig 1), it is the data showing the shares with the highest change in the open interest for the day. With the change in the open interest, the share price has also gone up and which is usually an indication that the buying momentum is expected to continue in these ten shares.

— Open Interest and Volume interpretation

From the discussion above it is clear that OI tells us information about the contract which are open and live in the market. But, the volume gives us information about the number of trades executed in the market.

The volume data is reset at the end of the day and the new counter starts at the beginning of the next day, but the data of the OI is a continuation from the previous day. 10 lots bought and 10 lots amount to 10 volume and 10 OI for the day.

— Interpreting Open Interest

PriceOpen Interest (OI)Expectation from market
IncreaseIncreaseThe buying momentum is most likely expected to continue
DecreaseDecreaseLong unwinding can be seen i.e., buyers are exiting from the market
IncreaseDecreaseShort covering can be seen in the market.
DecreaseIncreaseWe could be a reversal in buying momentum as we can see more shorts than longs in the Market.

Conclusion

In this article, we tried to simplify the concept of open interest in share market and what it interprets. Here are a few of the top takeaways from this post:

  • Open interest gives you information about the total number of contracts which are outstanding in the market.
  • It is an excellent indicator to understand the market sentiment and expected momentum in the market.
  • When the contract switches hands, it’s just a transfer of positions and Open interest does not change.
  • The data of volume refreshes every day but Open Interest is a continuous data.

That’s all for this post. I hope it was useful for you. If you still have any queries related to open interest in the share market, please comment below. I’ll be glad to help you out. Happy trading.

Top Electric Vehicle Manufactures in India - EVs in India cover

Top Electric Vehicle Manufacturers in India – EVs Outlook & Future!

List of the Top Electric Vehicle Manufacturers in India: When it comes to travel new technologies just keep popping up around the world. These alternative technologies in transport are mainly based around electronic vehicles with many companies jumping on the bandwagon to get some traction before the industry gets a radical shift away from traditional fossil fuels.

This change can also be seen as catchup that existing companies are trying to play in the electric vehicle (EV) segment with companies like Tesla and the bars set by them before its too late. Today, we take a look at the electric vehicle segment in India and the top manufacturing industries for investors to watch out for in this segment.

electric vehicles

Why electric and What is the plan ahead?

One of the major reasons why countries are forced into adopting an electric alternative is climate change. India according to Environmental Pollution Index (EPI) 2018 is ranked 178 out of 180 in terms of air quality. One of the strategies adopted to combat this has been the push for electric vehicles[EV]. This will not only improve the environment but also India’s overall economic health. India currently imports crude oil and which sets us back in a deficit of approx $60 billion. 

The aim set by the government has been 100% electrification by 2030. This is a humungous target considering the early stages of adoption that we currently are in. The electric vehicle adoption rate in India is less than 1% according to a McKinsey&Company report. According to Bloomberg, in the six years leading up to October 2019, India has barely sold more than 8000 electric cars. If compared to countries like China these sales figured are achieved in less than 2 days.  

Top Electric Vehicles (EV) MANUFACTURERS IN INDIA 2020

Some state government realizing their role have tried to eradicate one of the major barriers to owning an EV i.e. the high initial cost. This can be seen in the example of Maharashtra where subsidies were announced amounting to 1 lakh for electric vehicles. Consequently, Maharashtra had the highest sales volume in 2017 in the Indian electric car market. The government has also realized that it is best to target their efforts towards the public transport system in the initial stages.

This is because the purchase of EV in the private sector will depend on major other factors like attractiveness etc. The public transport system being one of the most heavily used in a country like India will definitely offer a huge boost to the sector. 

Top Electric Vehicle Manufacturers in India

The Indian EV industry being in its nascent stages does not have an established market leader in all vehicle types. There are 10+ major players existing in the 2 wheeler segment, 3-4 in Electric buses, and few in car manufacturing. The following are the top  Electric Vehicle[EV] Manufacturers in India.

1. Mahindra Electric

mahindra electrical EV manufacturer in India

Mahindra is the pioneer for EV in the Indian space. Being the first major EV manufacturer it launched Mahindra Reva, its first EV as early as 2001. The Mahindra Reva was India’s first electric car. Over the years Mahindra has gone ahead to set up a dedicated R&D center in Bengaluru.

Some of its other EV variants include the Mahindra E20 and eVerito. Mahindra however has not only focussed on the manufacture of EV’s but also battery packs and has partnered with various institutions in order to boost EV charging.

2. Tata Motors

Tata Motors Electric Vehicles 

Tata is Indias biggest automobile manufacturer  It automobile segment ranges from the manufacture of cars, utility vehicles, buses, trucks, and defense vehicles. Its associate companies include Jaguar Land Rover and Tata Daewoo. But when it comes to the EV segment Tata is a new entrant when compared to Mahindra.  

In India, Tata Motors has an industrial joint venture with Fiat. One of Tata’s major benefits has been its ability to use resources from around the world.  Tata’s innovation efforts are focused on developing auto technologies that are sustainable as well as suited. With design and R&D centers located in India, the UK, Italy, and Korea. Tata Motors in collaboration with its subsidiary, the UK based Tata Motors European Technical Centre (TMETC), are looking to have a major play in the EVs market in India.

When it comes to EV’s, Tata has focussed on the Passenger Vehicles and Electric Buses market in India. When it comes to four-wheelers Tata offers 3 vehicles to pick from. The Tigor EV, Nano EV, and the Tiago electric variant. In the Electric bus segment, Tata expects its demand from State transport Unions. The expected demand is estimated to be around 400,000 buses in the long run.

Apart from EV’s, Tata has also focussed on setting up charging stations in its efforts to improve the industry infrastructure.

3. Hyundai

Hyndai electric vehicles

Hyundai burst into the Indian EV segment with its launch of the Hyundai Kona EV in India. The South Korean global giant in the world of automobiles has stated that Kona was specifically designed to suit Indian operating conditions. One of the USP’s of the vehicle is its 452km range in one charge. This suited perfectly with Indians ‘Kitna Deti hai’ demand when it comes to vehicles.

Just to put things in perspective the range difference of the Kona and other market leaders is in hundreds of kilometers. The Kona, however, has an Ex-showroom cost of Rs.23.8 lakhs making it extremely expensive for Indian markets. Addressing this Hyundai has however said that another EV is in developmental stages keeping affordability in mind in order to serve the mass market. This EV is expected to be ready to enter the market in the next 2-3 years.

4. Ashok Leyland

Ashok leyland electric vehicles

Ashok Leyland,  the Hinduja Group’s flagship company, is the 4th largest bus manufacturer in the world and a market leader for trucks in India. The company has tied up with Sun Mobility in order to enhance its expertise in the vehicle domain.

Ashok Leyland designs electric variants specifically for Indian conditions and has also introduced battery swapping in electric buses to address e-mobility needs in the country. It has launched multiple electric bus variants like the Circuit, HYBUS,  Electric Euro 6 Truck, and announced the iBUS. The immediate focus of the company, however, is currently in giving more thrusts to exports.  

Other leading EV Manufacturers and associated industries

The Indian EV market being in its nascent stages is viewed as an opportunity waiting to be exploited. Other players that also have products in the EV market include MG Motors, Maruti Suzuki, Renault, Audi, Volvo, Hero, Ather, etc. An expansion in the EV industry will also see other associated industries catch on too. This includes the battery and EV chargers. Interests have been shown by many companies like Siemens, Schneider, Delta, etc.

But unfortunately, these companies will only move in once a significant demand arises in the public 4 wheeler segment. On the other hand, one of the major factors for the EV industry not expanding has been consumer concerns regarding the lack of Fast Chargers in India. 

Unorganized and small players are dominating due to the limited scale of business. In order to combat this, the NITI Ayog is laying a key role in setting up EV chargers. There are currently 270 units of installed EV chargers in India. NITI Aayog has partnered with NTPC in order to set up 100,000 EV charging stations across India. Other government entities like BHEL have partnered with ISRO in order to develop batteries using Lithium technologies.

Most lithium requirements are currently imported from China, South Korea, Vietnam, Singapore, and Japan. Other players who have shown interest in the Lithium battery production business in India include Reliance, Suzuki, Toshiba, Denso Corp, JSW Group, Adani, Mahindra, Hero Electric, Panasonic, Exide Batteries, Amara Raja. 

Closing Thoughts

In this article, we discussed the list of the top Electric Vehicle Manufacturers in India, their current work in EV segment, and future prospects. The Indian government had set up the aim of replacing all internal combustion engines with EV’s by 2030. A report from Mckinsey and Company from 2017 indicated that 40% of electrification was a more realistic picture of mobility in 2030. This report, however, was prior to the Pandemic. This, in turn, will further set back electrification in the industry for years to come.

In addition, the steps taken in order to enable acceptance of EV will not suit their main purpose if alternative means of electricity production are not implemented. Currently, up to 60% of the electricity is produced from coal. Although the government has set major aims to bolster the growth of EVs a lot more has to be done in order to ensure they are implemented. 

10 Best Blue Chip Companies in India that You Should Know

10 Best Blue Chip Companies in India that You Should Know!

List of Best Blue Chip Companies in India: If you start counting the numbers, you’ll find that the stocks can be categorized into many groups. Based on market capitalization, they can be defined as small-cap, mid-cap, and large-cap companies. Based on the stock characteristics, there are categorized as growth stocks, value stocks, and dividends (income) stocks.

However, there is one particular type of stock that gets a lot of attention from every kind of investor (beginners to the seasoned players)- and they are the BLUE CHIP stocks. Moreover, when most newbies enter the exciting world of the stock market, they are suggested to look into blue chip stocks as safer investment options. However, being new to investing, most of them are simply confused and are not able to understand what other means when they say blue chip companies.

In this post, we are going to look into what exactly are blue chip stocks and then cover ten of the best blue chip companies in India that every investor should know. Please note that this is going to be a long post, but I promise that it will be worth reading. Therefore, without wasting any further time, let us understand the blue chip companies in India.

A Quick Introductory Story

… but blue chip companies are boring. It’s better to invest in growth stocks with huge upside potentials.”, Gaurav argued energetically.

Yes, blue chips are not the ‘hot’ stocks in the market. However, they are a good option for the investors who are looking for low-risk investments with decent returns.”, I replied.

Gaurav has been investing in the stock market for the last two years and he likes to discuss his investment strategies with me. Nevertheless, his investment style is totally different from that of mine. Gaurav loves to invest majorly in mid-caps and small-cap companies (including penny stocks) which can grow at a fast pace. On the other hand, I like investing in a diversified portfolio.

That’s true, dude. But most of these blue chip companies have already reached a saturation point. They can not continue to grow at the same pace and hence can’t similar returns as they used to give in the past. Once a company has sold a billion products, it’s difficult to find the next billion customers.”, Gaurav challenged me with his witty reply. 

I know the rule of large numbers, Gaurav. Thank you for reminding me. Moreover, I agree that the large-cap companies cannot maintain the same pace of growth forever. But bro, it doesn’t mean that they won’t be profitable in future or can’t give good returns to their shareholders… They have already established their brand. If they use their resources efficiently, they can make huge fortunes for themselves as well as for their shareholders… 

For example- take the case of Reliance Industries. Reliance is a market leader in its industry and has a lot of customers. But they are also using their capital efficiently to grow their business. Two years back, they entered a new market- Telecommunication Industries, and now they are also a leader in that industry.

Because of their strong financials- they were able to bring the latest 4G technology to the Indian market and hence were able to quickly acquire a lot of customers. As the initial set-up cost in this industry is very high, they have created an entry barrier for the small and mid-cap companies. This is what a blue-chip company can do if they use their resources properly.

Gaurav looked a little mind-boggled. That’s why I thought better to give him another example to make him understand the capabilities of blue chip companies.

Let’s discuss another example- Hindustan Unilever. If you think that HUL cannot grow any further because it is a large-cap company, then you might need to reconsider it. HUL already have popular products in the market like Lux, Lifebuoy, Surf Excel etc which are generating them a good revenue from those products. But, they still have a large rural area to cover. They are not so popular in the village areas, are they? So, they can definitely grow in the rural areas…”

…besides, as they have enough resources and financials, they are also continuously working on new product development in their Research & development (R&D) department. If they can make another great product, their profits will add-up in the future….

Finally, when Gaurav didn’t argue further, I concluded-

…a good blue chip company is like Rahul Dravid. If you want fast scorers (or T-20 players), then you may not like his batting style. However, if you are looking for dependable players, then you will definitely appreciate Rahul Dravid’s consistency.”

What are Blue Chip companies?

Blue chip companies are large and well-established companies with a history of consistent performance.  These companies are financially strong (usually debt-free or very low debts) and are capable to survive in tough market situations.

Most of the blue chip companies are the market leaders in their industry. A few of the common examples of blue chip companies in India are HDFC Bank, HUL, ITC, Asian Paints, Maruti Suzuki etc.

best blue chip stocks for long term investment

— Signature Characteristics of Blue Chip Companies

Here are a few signature characteristics which you can look forward while researching blue chip companies—

  1. They are large reputed companies.
  2. They have widely used products/services.
  3. Most of these companies are listed in the market for a very long time.
  4. Blue chip companies have survived a number of bear phases, market crises, financial troubles, etc. But they are still going strong.
  5. Blue chip companies have a strong balance sheet (a large number of assets compared to liabilities) and a healthy income statement (revenues and profits continuously growing for the last few decades).
  6. These companies have a good past track record of stable growth.

Almost all blue chip stocks are older companies. You might already know many of the blue chip companies in India and have been using their products/services in your day-to-day life.

For example-  Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit —- all these products are offered by the same blue chip company in India – Hindustan Unilever (HUL).

New to stocks? Confused where to begin?  Here’s an amazing online course for beginners: ‘HOW TO PICK WINNING STOCKS?‘ This course is currently available at a discount. 

— Why are they called blue chips?

Oliver Gingold- who worked at Dow Jones, is credited to name the phrase ‘Blue Chip’ in 1923. The term ‘blue chips’ became popular after he wrote an article where he used ‘Blue chips’ to refer the stocks trading at a price of $200 or more.  

Quick Note: There are other sets of investors who believe that blue chip companies got its name from the Poker game, as in that game- blue chips are relatively more valuable. Similar to the game, the stocks which are more valuable in the market are termed blue chip stocks.

Although Oliver Gingold used the term ‘blue chips’ for high priced stocks, however, later people started using this word more often to define high-quality stocks (instead of high priced stocks).

— Financial characteristics of blue chip stocks

Apart from the signature characteristics discussed above, here are few key financial characteristics of blue chip companies –

1. Blue chip companies have a large market capitalization -As a thumb rule, the market cap of most of the blue chip companies in India is greater than Rs 20,000 Crores.

2. Good past performance: Blue chip companies have a track record of good past performance (like consistently increasing annual revenue over a long-term).

3. Low debt to equity ratio: The bluest of the blue chips are (generally) debt free stocks. However, a lower and stable debt to equity ratio can also be considered as a significant characteristic of blue chip companies.

4. Good dividend history: Blue chip companies are known to reward decent dividends to their loyal shareholders.

5. Other characteristics: Apart from the above four- few other key characteristics of blue chip companies are a high return on equity (ROE), high-interest coverage ratio, low price to sales ratio etc.

Also read: How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

10 Best Blue Chip Companies in India:

Now that you have understood the basic concept, here is the list of top 10 best blue chip companies in India. (Disclaimer- Please note that the companies mentioned below are based on the author’s research and personal opinion. It should not be considered as a stock recommendation.) 

Reliance Industries

reliance industriesThis company needs no introduction. Reliance Industries is an Indian conglomerate holding company and owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications.

In December 2015, Reliance Industries soft-launched Jio (Reliance Jio Infocomm Limited) and it crossed 8.3 million users as of January 2018.

Reliance is one of the most profitable companies in India and the second-largest publicly traded company in India by market capitalization. On 18 October 2007, Reliance Industries became the first Indian company to reach $100 billion market capitalization. It is also the highest income tax payer in the private sector in India.

how reliance industries makes money 2020

Hindustan Unilever (HUL)

hulHUL is one of the largest Fast Moving Consumer Goods (FMCG) Company in India with a heritage of over 80 years. It is a subsidiary of Unilever, a British Dutch Company. HUL’s products include foods, beverages, cleaning agents, personal care products, and water purifiers.

Few famous products of HUL are Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.

hul company infographic

HDFC BANK

hdfc bankHDFC Bank is India’s leading banking and financial service company. It is India’s largest private sector lender by assets and has 84,325 employees (as of March 2017).

HDFC Bank provides a number of products and services which includes Wholesale banking, Retail banking, Treasury, Auto (car) Loans, Two Wheeler Loans, Personal Loans, Loan Against Property and Credit Cards. It is also the largest bank in India by market capitalization and was ranked 69th in 2016 BrandZ Top 100 Most Valuable Global Brands.

Asian Paints

Asian paint is one of the largest Indian paint company and manufacturer. Since its foundation in 1942, Asian paint has come a long way to become India’s leading and Asia’s fourth-largest paint company, with a turnover of Rs 170.85 billion. It operates in 19 countries and has 26 paint manufacturing facilities in the world, servicing consumers in over 65 countries.

Asian Paints is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.

Tata Consultancy Services (TCS)

Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service, consulting and business solutions company. It was established in 1968 as a division of Tata Sons Limited. As of March 31, 2018, TCS employed 394,998 professionals.

TCS is one of the largest Indian companies by market capitalization (Rs 722,700 Crores as of June 2018). It is now placed among the most valuable IT services brands worldwide. TCS alone generates 70% dividends of its parent company, Tata Sons.

Infosys

infosysInfosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has its headquarters in Bengaluru, Karnataka, India. Infosys is the second-largest Indian IT company by 2017 and 596th largest public company in the world in terms of revenue. On April 19, 2018, its market capitalization was $37.32 billion.

Infosys main business includes software development, maintenance, and independent validation services to companies in finance, insurance, manufacturing and other domains. It had a total of 200,364 employees at the end of March 2017.

ITC

itcIndian Tobacco Company (ITC) is one of the biggest conglomerate company in India. ITC was formed in August 1910 under the name of Imperial Tobacco Company of India Limited. It has a diversified business which includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, Agri-Business & Information Technology. Currently, ITC has over 25,000 employees.

As of 2016, ITC Ltd sells 81 percent of the cigarettes in India. Few of the major cigarette brands of ITC include Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star, Insignia, India Kings etc.

Apart for the cigarette industry, few other well-known businesses of ITC are Aashirvaad, Mint-o, gum-o, B natural, Sunfeast, Candyman, Bingo!, Yippee!, Wills Lifestyle, John Players, Fiama Di Wills, Vivel, Essenza Di Wills, Superia, Engage, Classmate, PaperKraft etc.

ITC company infographic

Eicher Motors

Eicher Motors is an automobile manufacturer and parent company of Royal Enfield, a manufacturer of luxury motorcycles. Royal Enfield has made its distinctive motorcycles since 1901 which makes it the world’s oldest motorcycle brand in continuous production. Royal Enfield operates in over 40 countries around the world.

The Eicher Group has diversified business interests in design and development, manufacturing, and local and international marketing of trucks, buses, motorcycles, automotive gears, and components.

Bajaj Auto

bajaj autoBajaj Auto is a global two-wheeler and three-wheeler Indian manufacturing company. It manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto was founded by Jamnalal Bajaj in Rajasthan in the 1940s. It is the world’s sixth-largest manufacturer of motorcycles and the second-largest in India. 

A few of the popular motorcycle products of Bajaj Auto are Platina, Discover, Pulsar and Avenger and CT 100. In the three-wheeler segment, it is the world’s largest manufacturer and accounts for almost 84% of India’s three-wheeler exports.

Nestle India

nestleNestle India is a subsidiary of Nestle SA of Switzerland- which is the world’s largest food and beverage company. It was incorporated in the year 1956. Nestle India Ltd has 8 manufacturing facilities and 4 branch offices in India.  The Company has continuously focused its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings.

Few famous products of Nestle India are Maggi, Nescafe, KitKat, MUNCH, MILKY BAR, BARONE, NESTLE CLASSIC, ALPINO etc. (On 8 March 2018, Nestle Indias food brand MAGGI completed 35 years of existence in India.)

Also read: Market Capitalization Basics: Large cap, Mid cap & Small cap companies

Closing Thoughts

Most people invest in blue chip companies become of their long history of consistent performance and a similar expectation of standard performance in the future. Blue chip companies are low-risk high return bet for the long term.

Many blue chip companies in India like Tata, Reliance, Infosys etc are considered as ‘Too-big-to-fail’ companies as they have survived and remained profitable for a very long time. Nevertheless, this is not always true!!