Top Blue Chip Stocks 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 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 give 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. A few 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 it 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 Stocks?
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), trustable, 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, etc.
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).
Signature Characteristics of Blue Chip Companies
Here are a few signature characteristics which you can look forward to while researching blue chip companies—
- They are large reputed companies.
- They have widely used products/services.
- Most of these companies are listed in the market for a very long time.
- Blue chip companies have survived a number of bear phases, market crises, financial troubles, etc. But they are still going strong.
- 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).
- 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.
Financial characteristics of Blue Chip Stocks
Apart from the signature characteristics discussed above, here are a 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 the long term).
3. Low debt-to-equity ratio: The bluest of the blue chips are (generally) debt-free stocks. However, a lower and more 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- a 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.
Top Blue Chip Stocks in India
Now that you have understood the basic concept, here is the list of the 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.)
Top Blue Chip Stocks in India #1 – Reliance Industries
This 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.
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 in market capitalization. It is also the highest income taxpayer company in the private sector in India. As of Jan 2023, RELIANCE Industries is the biggest company in India with a marketcap of Rs. 1,669,450 crores.
Top Blue Chip Stocks in India #2 – Hindustan Unilever (HUL)
HUL 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.
Top Blue Chip Stocks in India #3 – HDFC BANK
HDFC Bank is India’s leading banking and financial service company. It is India’s largest private sector lender by assets and has a market cap of Rs. 892,643 crores. (Jan 2023).
HDFC Bank provides a number of products and services which include 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 the third-largest company by market capitalization on the Indian stock exchanges.
Top Blue Chip Stocks in India #4 – Asian Paints
Asian paint is one of the largest Indian paint companies and manufacturers. 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 285 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 distributing of paints, coatings, products related to home décor, bath fittings and providing of related services.
Top Blue Chip Stocks in India #5 – Tata Consultancy Services (TCS)
Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service, consulting and business solutions company. They currently operate in 46 countries. It was established in 1968 as a division of Tata Sons Limited. As of December 31, 2021, TCS employed 528,748 professionals.
Top Blue Chip Stocks in India #6 – Infosys
Infosys Limited is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has its headquarters in Bengaluru, Karnataka, India. As of Jan 2023, its market capitalization of Infosys was Rs. 629,441 crores.
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 276,319 employees at the end of December 2021.
Top Blue Chip Stocks in India #7 – ITC
Indian Tobacco Company (ITC) is one of the biggest conglomerate companies in India. ITC was formed in August 1910 under the name of Imperial Tobacco Company of India Limited. It has a diversified business that includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, Agri-Business & Information Technology. Currently, ITC has 23,829 employees.
As of 2022, ITC Ltd sells 75 percent of cigarettes in India. A 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 from the cigarette industry, a 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’s share price is currently hovering around Rs. 290.
Top Blue Chip Stocks in India #8 – Sun Pharma
Sun Pharma Sun Pharma was established in 1983 with just 5 products to sell in only two states: Bihar and West Bengal. Eventually, the company started expanding across the nation, and currently, it is India’s biggest pharmaceutical company.
As of FY22, the company has 43 manufacturing plants across the world with more than 37,000 global employee bases and the company is also ranked 9th in the US Generic Markets. As of FY22, the company has footprints in more than 100 countries across the globe and is ranked 4th among global specialty generic companies. The company is engaged in manufacturing products in the following therapy areas: Cardiology, CNS Disorders, Pain, Ophthalmology, Diabetes, Oncology, Allergy- Asthma, and Gastroenterology.
Further, Caraco Pharmaceutical Labs, Sun Pharmaceutical Industries Inc., Sun Pharma (Bangladesh), and Alkaloids Chemical Company Exclusive Group Ltd. are the subsidiaries of the company.
Top Blue Chip Stocks in India #9 – Bajaj Auto
Bajaj 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.
Top Blue Chip Stocks in India #10 – Nestle India
Nestle 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 on better understanding the changing lifestyles of India and anticipating consumer needs in order to provide Taste, Nutrition, Health, and Wellness through its product offerings.
The 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.)
Other Popular Best Blue Chip Stocks in India
|Company Name||Industry||3 Years Average ROE||Market Cap (Rs. Cr.)|
|Adani Total Gas Ltd.||Trading||27.2||408,590|
|Asian Paints Ltd.||Paints||25.8||279,045|
|Aurobindo Pharma Ltd.||Pharmaceuticals & Drugs||15.5||25,497|
|Avenue Supermarts Ltd.||Retailing||11.8||250,281|
|Bajaj Auto Ltd.||Automobile Two & Three Wheelers||20.5||104,325|
|Bajaj Finance Ltd.||Finance - NBFC||16.6||361,913|
|Bandhan Bank Ltd.||Bank - Private||11.4||38,338|
|Berger Paints India Ltd.||Paints||23.7||54,604|
|Bharat Petroleum Corporation Ltd.||Refineries||20.4||75,946|
|Britannia Industries Ltd.||Consumer Food||42.0||104,443|
|Zydus Lifesciences Ltd.||Pharmaceuticals & Drugs||16.33||44,674|
|Cholamandalam Investment & Finance Company Ltd.||Finance - NBFC||17.67||58,480|
|Coal India Ltd.||Mining & Minerals||45.2||132,560|
|Colgate-Palmolive (India) Ltd.||Household & Personal Products||67.4||40,371|
|Dabur India Ltd.||Household & Personal Products||23.6||96,331|
|Divi's Laboratories Ltd.||Pharmaceuticals & Drugs||24.2||88,977|
|Eicher Motors Ltd.||Automobile Two & Three Wheelers||15.1||86,475|
|Gland Pharma Ltd.||Pharmaceuticals & Drugs||20.4||23,957|
|Godrej Consumer Products Ltd.||Household & Personal Products||19.0||93,802|
|Havells India Ltd.||Electric Equipment||20.24||73,465|
|HCL Technologies Ltd.||IT - Software||21.7||292,479|
|HDFC Asset Management Company Ltd.||Finance - Asset Management||30.4||45,934|
|HDFC Bank Ltd.||Bank - Private||16.58||892,643|
|HDFC Life Insurance Co Ltd.||Insurance||14.9||129,918|
|Hero MotoCorp Ltd.||Automobile Two & Three Wheelers||18.2||54,523|
|Hindustan Unilever Ltd.||Household & Personal Products||28.4||616,533|
|Hindustan Zinc Ltd.||Metal - Non Ferrous||22.5||147,759|
|Honeywell Automation India Ltd.||Consumer Durables - Electronics||18.3||35,037|
|Housing Development Finance Corporation Ltd.||Finance - Housing||14.6||478,915|
|ICICI Lombard General Insurance Co Ltd.||Insurance||18.7||61,640|
|ICICI Prudential Life Insurance Company Ltd.||Insurance||9.10||67,548|
|Infosys Ltd.||IT - Software||27.2||629,441|
|JSW Steel Ltd.||Steel & Iron Products||25.3||185,763|
|Marico Ltd.||Consumer Food||36.0||64,205|
|Maruti Suzuki India Ltd.||Automobiles - Passenger Cars||7.58||255,360|
|Muthoot Finance Ltd.||Finance - NBFC||26.2||42,660|
|Nestle India Ltd.||Consumer Food||93.56||190,752|
|Pidilite Industries Ltd.||Chemicals||22.8||127,340|
|Power Grid Corporation Of India Ltd.||Power Generation/Distribution||18.2||149,275|
|Procter & Gamble Hygiene & Health Care Ltd.||Household & Personal Products||61.8||45,175|
|SBI Cards And Payment Services Ltd.||Finance - NBFC||22.2||74,460|
|SBI Life Insurance Company Ltd.||Insurance||15.2||131,404|
|Tata Consultancy Services Ltd.||IT - Software||40.0||1,234,765|
|Tech Mahindra Ltd.||IT - Software||19.6||97,685|
|Titan Company Ltd.||Diamond & Jewellery||21.4||214,596|
|Wipro Ltd.||IT - Software||19.1||216,131|
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 bets 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!!
Start Your Financial Learning Journey
Want to learn Stock Market and other Financial Products? Make sure to check out, FinGrad, the learning initiative by Trade Brains. Click here to start your financial learning journey with us. And do not miss out on the Introductory Offer!!