tata motors vs maruti suzuki case study

Case Study: Tata Motors Vs Maruti Suzuki

Case Study: Tata Motors Vs Maruti Suzuki

Hi there. Welcome to the day 20 of my ’30 days 30 post’ challenge, where I am writing one blog post daily for the 30 consecutive days.

Several of my blog readers have requested me to write an analysis on the real companies using the using different financial tools. That’s why in this post I’ve decided to write a case study on Tata Motors vs Maruti Suzuki.

I have chosen these big and well-known companies to show how the performance of the companies are reflected in their respective share prices. Overall, it’s going to be a very interesting post and there are many key takeaways that you can learn from this case study.

1. Tata Motors

tata motors

Tata Motors is a big multinational automobile company in India. We all have grown up seeing Tata Motors automobiles in our lives. It was originally founded in 1945 and currently, it’s headquartered in Mumbai.

Tata Motors has a diversified portfolio in both commercial and passenger vehicles. Its products include passenger cars, trucks, vans, coaches, buses, sports cars, construction equipment and military vehicles. It has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad, and Pune in India, as well as in Argentina, South Africa, Great Britain and Thailand.

Few of the popular cars offered by Tata Motors are Indica, Indigo, Zest, Bolt, Hexa, Tiago and Nano. (Recently, Tata Motors announced that it will discontinue the production of 10-years old Tata nano, the world’s cheapest car. Read more here.) Besides, the world famous luxury cars- Jaguar Land Rover (the maker of Jaguar and Land Rover cars) is also a subsidiary of Tata Motor

Overall, Tata motors is a big brand in India with a widely diversified product. So, does this makes tata motors a good investment option? Before deciding anything, let’s first look at a few of the key financials of Tata Motors.

Here’s a quick snapshot of the critical financial ratios of Tata Motors for the last 5 years.

Return on Equity Earnings per share (unadj) Debt/Equity Net Margin Book Value /Share
2017 13.0 26.2 1.0 2.8 201.1
2016 14.8 40.4 0.6 4.3 273.5
2015 25.3 51.1 1.0 5.3 202.0
2014 21.3 51.1 0.7 6.0 239.7
2013 26.3 36.5 0.9 5.2 139

(Source:  EquityMaster)

Damn, the financials of Tata Motors doesn’t looks good!!

Quick note: If you are not familiar with the terms mentioned in the above table, here’s a detailed explanation regarding the important financial ratios.

From the above table, you can notice that the Return on equity (ROE) of Tata Motors has been continuously declining for the last 5 years. Further, the earnings per share are also degrading for the same period. It went down from an EPS of 35.6 in 2013 to 26.2 in 2017.

On the other hand, if you look at the debt/equity ratio, you can find that it’s also fluctuating a lot. As a thumb rule, you should always invest in companies with a debt/equity ratio lower than 0.5 (the best scenario is when the company is debt free). However, for the case of Tata Motors, its debts are equity to quite high.

Moving on, if you look at the net profit margin, here again, you can notice a declining trend. The profit margin of Tata Motors has reduced from 5.2% in 2013 to 2.8 percent in 2017. This clearly is in sync with the declining market share of Tata Motors in the automobile industries. Once, Tata used to be a market leader in the commercial vehicle segment with over 60% customer share. However, these days there are a lot of competitors of Tatas and hence it has lost its monopoly and the profit margin along with it.

The competitive position of Tata Motors is a little complex to access because it works in both commercial and passenger vehicle segment. In the commercial vehicle segment, the key competitors of Tata motors are Ashok Leyland, Bharat Benz, Mahindra and Mahindra, Eicher Motors etc. In the passenger vehicle segments, the key competitors are Maruti Suzuki, Hyundai, Honda, Renault etc.  

If we look from the broader aspect, the Tata Group is doing really good with their prime companies like TCS, Tata Steel, Tata Chemicals, Titan, Tata tea, etc. However, the things are not similar in the case of Tata Motors. Tata Sons Chairman, N Chandrasekaran has been trying to improve the profitability of the company with the help of its MD Guenter Butschek, however, the changes are not reflecting in the financials.  

Although Tata Group has been a pioneer in the growing development of India and they have contributed a lot to India’s economy. However, just having a brand name is not enough to survive (and remain profitable) in this competitive business world.

2. Maruti Suzuki

maruti suzuki

The next company in this case study is Maruti Suzuki.

Maruti Suzuki is a leading automobile company in India. The company is headquartered at New Delhi. It is a 56.21% owned subsidiary of the Japanese car and motorcycle manufacturer Suzuki Motor. As of January 2017, it had a market share of 51% of the Indian passenger car market. Few of the popular products of Maruti Suzuki in India are Ciaz, Ertiga, Wagon R, Alto, Swift, Celerio, Swift Dzire, Baleno and Baleno RS, Omni, Alto 800, Eeco, Ignis etc.

Alto and Swift have been consistently ranked as the top-best selling cars in their respective segment (hatchback). In the last few decades, Maruti has built an amazing brand value in the automobile industry by providing best-affordable products and amazing customer service.

Now, let’s have a look at the financials of Maruti Suzuki for the last 5 years.

Return on Equity Earnings per share (unadj) Debt/Equity Net Margin Book Value /Share
2017 20.3 248.6 0 11.0 1227.3
2016 18.0 182.0 0 9.5 1013.5
2015 14.6 126.0 0 7.5 861.4
2014 13.3 94.4 0 6.4 711.6
2013 13.0 81.7 0 5.6 629.9

(Source: EquityMaster)

What!!! The difference in the financials of Tata Motors and Maruti Suzuki is like night and day.

From the above table, you can notice that how Maruti Suzuki has consistently given excellent performance. For the last 5 years, the return on equity (ROE) of Maruti has been continuously increasing. And in the same period, it’s earning per share (EPS) has increased over 3 times. That’s a real healthy sign of a fundamentally strong company.

Another, magnificent point regarding Maruti Suzuki company is that it’s totally debt free. The debt to equity ratio of Maruti is zero for the last five years.

Next, if you look at the profit margin, its also consistently increasing. From 5.6% in 2003, it has increased to 11% in 2017. This is a pre-eminent profit margin for the companies in the automobile industries.

Lastly, if you look at the book value per share, it’s also showing a healthy growth sign. Maruti’s book value per share has doubled in the last 5 years (from 629.9 in 2013 to over 1227.3 in 2017).

Overall, Maruti Suzuki has performed exceptionally well in this last five years.

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

Conclusion: Tata Motors Vs Maruti Suzuki

In this post, we looked at two big companies with amazing products and a big brand name. However, from our analysis, it is clear that Maruti Suzuki fulfills the criteria of a wonderful company to invest while Tata Motors clearly not.

According to the principles of value investing, the stock price should eventually reflect the performance of the underlying company. As 5 years is a sufficiently long time for this effect to apply, let us look at the price performance of both these companies over the last five years.

tata motors vs maruti suzuki

(Source- TradingView)

The above graph exactly shows what is expected. Maruti Suzuki has performed well better compared to the Tata Motors over the past 5 years. Maruti has increased the share price over 7-fold in this time frame. Whereas, the stock of Tata Motors is trading at a loss of around 10% compared to what it was trading 5 years ago.

Quick Note: If you are new to stock market and want to learn stock market investing from scratch, feel free to check out my online course here.

Bottomline:

From the above case study, you can learn that it’s not a rocket science to analyze stocks.

Selecting a winning stock is not a gambling. The returns from the stocks are in line with the performance of the underlying company. If you treat stock as a company and perform a smart analysis before investing, then I assure that the results will largely be amazing. Value investors simply win over the long time frame.

That’s all for this post. I hope it was useful to you. Happy Investing.

July 29, 2018 Investment Basics, Stocks 14 comments
Is it a good strategy to buy one stock of Infosys, HUL & HDFC Bank per month

Is it a Good Strategy to Buy One Stock of Infosys, HUL & HDFC Bank Per Month?

Is it a good strategy to buy one stock of Infosys, HUL & HDFC Bank per month?

Many times it becomes difficult to find the right time to enter a stock? Finding whether the company is undervalued or over-valued can be a tedious job.

Obviously, here we are talking about entering into a fundamentally strong company that has a good track record of past performance and fantastic future growth potential. However, valuation is a significant part of investing and should be given utmost importance while making your investment decision.

In this post, we’ll discuss whether it is a good strategy to buy one stock of Infosys, HUL & HDFC Bank per month?

But, before learning further regarding this strategy, let’s quickly analyze the businesses of these three companies mentioned in this post.

A Quick Study of Infosys, HUL & HDFC Bank:

Infosys: It is a leader in the Information Technology Industry. Infosys is the second-largest Indian IT company by 2017 revenues and 596th largest public company in the world concerning revenue. It provides business consulting, information technology and outsourcing services. Currently, the market capitalization of Infosys is Rs 275,866 Crores and has given an amazing return to its shareholders in the past.

Also read: How to Earn Rs 13,08,672 From Just One Stock?

HUL is a market leader in the personal care industry. It has a substantially strong brand value with products like 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.

HDFC Bank– HDFC Bank is India’s leading banking and financial service company. It is India’s largest private sector lender by assets. HDFC Bank provides many products and services which includes Wholesale banking, Retail banking, Treasury, Auto (car) Loans, Two Wheeler Loans, Personal Loans, Loan Against Property and Credit Cards. Read complete analysis of HDFC Bank here.

Disclaimer: This is not a stock recommendation. The examples used here are just to explain the strategy of monthly investing in diversified stocks. Please research the stock carefully before making any investment decision.

hdfc bank

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

Why can this strategy work?

“A good business is not a good investment if you overpay for it” -Warren Buffett.

What Mr. Buffett simply means is that if you buy a wonderful stock at a high valuation, the chances are that it will fall down to reach its real intrinsic value in future. (At a particular time in future, people will realize the stock’s true worth and the price of the stock will fall to reach its intrinsic value.) Therefore, even a good company doesn’t guarantee a good return if you overpay to purchase that stock.

Nevertheless, this problem of entering stocks at their true price can be avoided by purchasing an equal amount of stocks each month. It’s a fitting idea to invest monthly in diversified stocks. It will help you to avoid the dilemma of timing the market. You’ll be purchasing stocks on both the scenarios- whether the market is up or down.

Suppose a stock is going down week after week. Here, you have studied the stock and know that it’s fundamentally strong and capable of giving great returns in the long term. In such scenario, by consistently buying the stocks every month, you are averaging down the purchase price.

Similarly, if the stock is moving upwards every week, then again there can be few possibilities. Either you don’t buy and miss the opportunity of entering an astounding stock. Or purchase that stock at a high valuation. However, if you plan to invest systematically in that stock, you can avoid both these scenarios. You can make your position in the stock alongside reducing your purchase price by averaging down.

Also read: #3 Steps to Turn Your Investment Goals into Reality

Few Drawbacks of buying this strategy:

Like any other investing strategy, even this strategy is not perfect. Here are the few drawbacks of this strategy to buy one stock of Infosys, HUL & HDFC Bank per month:

  • Investing in just three stocks cannot be considered a diversified portfolio. Undoubtedly it is better than investing in only one stock. Nevertheless, if you want to reduce the risk, it’s better to invest in at least 4–5 stocks.
  • You might need to readjust your portfolio in future— Let’s say, one of the stock starts performing exceptionally well compared to the other. Here, the net allocation in that stock will increase significantly, and it might be possible that the distribution of other shares would become too little to affect your overall portfolio. Therefore, here you need to readjust your portfolio (add/sell) in future to make all the stocks equally proportionate to keep your portfolio diversified.
  • Last and biggest drawback- It’s really difficult to implement this strategy. Would you invest monthly in a stock if it’s price is going down consistently for the last one year? The problem is that people start to lose their patience and confidence (with time) in such scenarios.

To make this strategy work, you need to follow this approach strictly.

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. 

Conclusion:

Although investing equal amount monthly in fundamentally strong large-cap stocks seems like a good idea. However, this strategy has few drawbacks as discussed above. Nevertheless, as long as you’re are monitoring your portfolio actively and re-adjusting your portfolio timely, this strategy can help you avoid the problem of timing the market and buying overvalued stocks.

Moreover, this strategy is more useful if you are investing for long-term (+15-20 years). This is because here you have averaged out the extremes (lowest and top-most price) and purchased the stock at a correct averaged price. If the business remains excellent and profitable, this strategy will undoubtedly give great returns to the investors.

Also read: How Many Stocks Should you own for a Diversified Portfolio?

June 13, 2018 Investment Basics, Stocks No comments yet
Low PEG Ratio in Indian Stock Market min

17 Companies With Low PEG Ratio in Indian Stock Market.

PEG Ratio in Indian stock market can be a handy indicator to find undervalued stocks with good future growth potential. It is a better alternative to the Price to earnings ratio (PE ratio) to find winning stocks.

In this post, we are going to discuss what is a PEG ratio and how to find good companies using PEG ratio in Indian stock market.

The Problem with PE Ratio.

If you’ve been involved in the market for a while, you might know that PE ratio is one of the most widely used ratios by the financial experts or investors. PE ratio refers to the price to earnings ratio.

It is simply calculated by dividing the price per share of a company with its earnings per share (EPS).

However, the biggest problem with the PE ratio is that it totally ignores the growth prospects of a company.

Here, you might be able to find a good undervalued company. However, if the growth aspect of that company is not bright, then it might not be an amazing investment.

Moreover, many times, finding undervalued companies based on just PE ratio leads to the value trap for the bargain investors.

The value traps are those stocks which are ‘not’ cheap because the market has not realized their true potential or because of some temporary setbacks. These stocks are trading at a cheap valuation because the company has either lost its fire or else its fire is fading away. The investors who buy such stocks just by evaluating its low valuation falls in the value trap.

Read more here— Why Nobody Talks About VALUE TRAP? -The Bargain Hunter Dilemma

What is PEG Ratio?

PEG ratio or Price to Earnings to growth ratio is used to find the value of a stock by taking in consideration company’s earnings growth.

In simple words, PEG Ratio is calculated by dividing PE ratio of a stock by its percentage EPS growth rate.

PEG ratio in Indian stock market shows at what premium the stock price is trading with relative to its earnings growth performance.

For example, suppose the price to earnings ratio (PE ratio) of a company is 20. 

And its earnings growth is 15% per year. 

Then, the PEG ratio for that stock can be calculated by:

PEG ratio= PE ratio/ % Earnings growth= 20/15=1.33

As a thumb rule, companies with lower PEG ratio in Indian stock market should be preferred.

For example, let’s assume there are two companies- Company A and company B in the same industry. if the PEG ratio of company A is 1.5 and PEG ratio of company B is 2.75, then company A should be preferred as it has a lower PEG ratio.

Further, you should always compare the PEG ratio of the companies in the same industry. PEG ratios can vary from industry to industry as the growth rate of one industry may be faster than the other one.

Anyways, a company with less than one PEG ratio in the Indian stock market can be considered decent.

Quick Tip: Never make your investment decision based on just one factor. Although PEG ratio can give you an answer to how cheap or expensive is the stock concerning the rate at which its earnings are presently rising. However, it doesn’t tell you the whole picture of the company.

Also read: #19 Most Important Financial Ratios for Investors

17 COMPANIES WITH LOW PEG RATIO IN INDIAN STOCK MARKET

There are thousands of stock in the Indian stock market. Therefore using PEG ratio to shortlist few good companies to investigate further ones can be a good approach. Here is the list of 17 companies with low PEG ratio in the Indian stock market.

17 COMPANIES WITH LOW PEG RATIO IN INDIAN STOCK MARKET-min

(Source: Screener)

Quick NOTE: I have used an elementary filter to find these stocks. The stocks mentioned above has a market capitalization higher than Rs 50,000 crores and a PEG ratio between zero to 1.5. An important point to highlight here is that the large-cap companies generally have reached saturation and have a lower EPS growth compared to the mid and small-cap companies. However, if you can find a fundamentally strong large cap (which gives decent dividends) with low PEG ratio, then it’s a beautiful scenario for a value investor.

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. 

Conclusion:

PEG ratio is a very powerful tool to find undervalued companies with keeping in mind its growth prospects. Many financial experts consider PEG ratio to be more helpful than PE Ratio and this topic is still controversial.

However, for a smart investor- it doesn’t matters which one is better. The more important lesson here is how to use them to make an intelligent decision!!

Also read: No-Nonsense way to use PE Ratio.

June 12, 2018 Investment Basics, Stocks 2 comments
wipro case study- How 100 shares of WIPRO grew to be ovet crores

Case Study: How 100 shares of WIPRO grew to be over Rs 3.28 crores in 27 years?

Case Study: How investment in 100 shares of WIPRO grew to be over Rs 3.28 crores in 27 years?

Indian stock market is filled with the examples of amazing stocks which has created enough wealth for its loyal shareholders to live a long happy life. Last week, we discussed one such stock- the case study of Infosys.

In this post, we are going to discuss the case study of WIPRO- an Indian information technology giant company owned by Azim Premji.

WIPRO Wealth Creation Story:

Assume you bought 100 shares of WIPRO in 1990. At that time, the face value of one stock of WIPRO was Rs 10. For simplicity, we are considering that you bought the stocks at the face value. Hence, your initial investment would have been Rs 1,000.

(Note: Stocks in the Indian stock market rarely trade below their face value. Most of the shares trade at a high premium compared to their face value. However, there has been a number of adjustment in the share price of the company since 1990 because of various bonuses and stock split. Therefore, just for simplicity, we are considering that you purchased the stock at the face value. Moreover, when you compare the appreciated value with the purchase price, you’ll understand that it wouldn’t have made much difference even if you had bought this stock at a little premium.)

Since 1990, WIPRO has given seven bonuses to its shareholders and one stock split (till 2017). Let’s also assume that you didn’t touch the stock after buying. This means that you didn’t sell any stock since the purchase and also avoided any profit booking.

Now, let us analyze the bonuses and stock split of WIPRO for past 27 years.

  • 1990: 100 shares
  • 1992: 200 shares (1:1 bonus on 12-08-1992)
  • 1995: 400 shares (1:1 bonus on 24-02-1995)
  • 1997: 1,200 shares (2:1 bonus on 20-10-1997)
  • 1999: 6,000 shares (5:1 split on 27-09-1999)
  • 2004: 18,000 shares (2:1 bonus on 25-06-2004)
  • 2005: 36,000 shares (1:1 bonus on 22-08-2005)
  • 2010: 60,000 shares (2:3 bonus on 15-06-2010)
  • 2017: 1,20,000 shares (1:1 bonus on 13-06-2017)

(Source: Money Control)

In short, 100 shares of WIPRO bought in 1990 would have turned out to be 1,20,000 share by 2017.

Also read: Stock split vs bonus share – Basics of stock market

Capital Appreciation:

Let’s find out the current worth of the 100 shares that you bought in 1990.

As of May 2018, the market price of one share of Wipro is Rs 273.75

Total Number of share= 1,20,000
Net Value = Rs 273.75 * 1,20,000 = Rs 3,28,50,000.

The net appreciated value would be worth over 3.28 crores.

Your small investment in the 100 shares of WIPRO in 1990 would have turned out to be worth over 3.28 crores in next 27 years.

Don’t forget the dividends…

In the last 27 years, WIPRO has given a decent annual dividend to its shareholders. However, here we are just considering the dividends for the last four years.

Annual dividend per share by WIPRO for last 4 years–

  • 2014: Rs 8.00
  • 2015: Rs 12.00
  • 2016: Rs 6.00
  • 2017: Rs 4.00

Annual dividend received by the shareholders can be calculated using this formula:

Annual dividend received= Dividend per share * Total Number of shares

Assuming that you bought 100 shares of WIPRO in 1990, here are the annual dividends that you would have received:

  • Dividends (2014) = Rs 8 * 60,000 = Rs 4,80,000
  • Dividends (2015) = Rs 12 * 60,000 = Rs 7,20,000
  • And Dividends (2016) = Rs 6 * 60,000 = Rs 3,60,000

Moreover, for the year 2017, the total number of shares in your portfolio would have turned out to be 1,20,000.

Dividends (2017) = Rs 4 * 1,20,000 = Rs 4,80,000

Overall, you would have received dividends worth Rs 4,80,000 in just an year by literally doing nothing.

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. 

The best part…

Even if you don’t sell your stocks, you are holding a total of 1,20,000 shares in your portfolio and hence are eligible to get dividends on all those shares.

Moreover, dividends increase over time. If the company announces a bigger dividend next year, you will receive even a bigger passive income through dividends. In addition, if the company announces any bonuses in future, even your grandchildren lives can be considered as secured 🙂 (kidding!!).

Also read: How ‘Not’ to Kill The Goose That Lays the Golden Eggs?

Conclusion:

Time and again, the stock market has proved that the long-term investment is the real strategy to create huge wealth.

WIPRO is just an example. There are a number of companies in the Indian stock market which has given even a better return compared to WIPRO. For example- Eicher Motors, MRF, Symphony, Page Industries etc. Although it’s little difficult to hold a stock for such long-term and not to book any profit. However, if you are a conservative investor with good patience level, then you can definitely receive amazing returns from your investments.

In the end, here’s a quote by Warren Buffett:

“Our favorite holding period is forever.” 

Also read: How to Earn Rs 13,08,672 From Just One Stock?

May 31, 2018 Investment Basics, Stocks 1 comment
How to Earn Rs 13,08,672 From Just One Stock

How to Earn Rs 13,08,672 From Just One Stock?

How to Earn Rs 13,08,672 From Just One Stock?

Have you ever considered getting a deposit of Rs 13,08,672 per year in your bank account by doing nothing?

Yeah. It’s possible.

And in this post, we’ll discuss how a long-term investor can earn over Rs 13,08,672 per year just by purchasing good stocks at a decent price and holding it for a very long time horizon.

Infosys stocks

infosys

Infosys became public in February 1993 and started issuing its shares at Rs 95 per share.

Since then, this company has given seven bonuses and one stock split. In simple words, it means that if you had bought 100 shares of Infosys in 1993, today you would own 51,200 shares.

Now, let us analyze its bonuses & splits for the last 25 years:

1993: 100 shares
1994: 200 shares (1:1 bonus on 30/06/1994)
1997: 400 shares (1:1 bonus on 18/06/1997)
1999: 800 shares (1:1 bonus on 25/01/1999)
1999: 1,600 shares (2:1 split on 30/11/1999)
2004: 6,400 shares (3:1 bonus on 13/4/2004)
2006: 12,800 shares (1:1 bonus on 14/4/2006)
2014: 25,600 shares (1:1 bonus on 10/10/2014)
2015: 51,200 shares (1:1 bonus on 24/4/2015)

Also read: Stock split vs bonus share – Basics of stock market

Capital Appreciation

Suppose you purchased 100 shares in 1993.

Your initial investment would have cost you: 100 shares x Rs 95 = Rs 9,500.

Today, the market price of one share of Infosys is Rs 1,181.

Net Appreciated Worth = Rs 1,181 * 51,200 = Rs 6,04,77,200

Worth over Rs 6.04 Crores today.

Your small investment of Rs 9,500 would be worth over Rs 6.04 Crores in 25 years.

Also read: Why Warren Buffet Suggests- ‘Price Is What You Pay, Value Is What You Get’?

Don’t forget the Dividends…

In the last 25 years, Infosys has given decent dividends to its shareholders. For simplicity, let’s calculate the dividends earned for the last two years only.

For the last two years, here are the annual dividends are given by Infosys to its shareholders:

2016: Rs 24.26
2017: Rs 25.56

Assuming that you bought 100 shares of Infosys in 1993, it would have turned out to be 51,200 shares by now.

Now, let us calculate the annual dividends.

Dividend (2016) = Rs 24.26 * 51,200 = Rs 12,42,112

Dividend (2017) = Rs 25.56 * 51,200 = Rs 13,08,672

Dividends worth Rs 13,08,672 in just an year.

The best part:

Even if you do not sell your shares, you can enjoy the dividends for the rest of your life. Plus capital appreciation on your assets too…

Also read: How ‘Not’ to Kill The Goose That Lays the Golden Eggs?

Conclusion: Invest for the long-term

This is the best example to show you the power of holding good stocks for long term.

Besides Infosys, there are a number of good stocks in the Indian share market which has given even better returns to its shareholder for over decades.

Overall, you can create an amazing wealth if you focus on buying amazing stocks at a decent price and have the patience to hold it for the long term.

Value investing works- may be not in the short term, but definitely in the long-term.

(Source: Infosys Website, Annual Reports, Corporate Announcements, Moneycontrol)

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. 

May 18, 2018 Investment Basics, Stocks 12 comments

How IPOs performed in 2017? A Quick Analysis.

A quick analysis on how IPOs performed in 2017:

2017 was a big year for IPOs. There were a number of mega-buster IPO’s that launched in 2017 like BSE, CDSL, Avenue Supermarket, SBI Life Insurance etc.

Here is the quick summary of the IPOs that got listed in 2017:

Total No of IPO’s in 2017 = 38
Total amount raised = 75,475.37 crores

The number of IPOs listed in 2017 was highest compared to the last 5 years, in which none of the previous 5 years crossed over 30 IPOs in a year (please refer the below chart).

Although it might be a little early to decide the performance of IPOs who got listed in the year 2018, as many of them who got listed on/after August or September, aren’t even six months old in the market.

And from the long-term investor’s point of view, it might be too early to evaluate their true potential.

However, the last year 2017 was amazing for the equity. Even the benchmark Index Sensex and nifty gave over 27% returns (to be exact, nifty gave a return of 28.6%). And even if in that bull run, some IPOs got beaten up badly, then it might be worth ‘re-considering’ for the long-term investment.

Also read: Is it worth investing in IPOs?

How IPOs performed in 2017?

Before you look at the list of the IPOs, there are two points worth noting:

  1. The change is compared to the listing price (not the offered price).
  2. Different IPOs got listed at the different time of the year. So, we cannot compare their returns (as different listing date). For example, if an IPO got listed in January, it returns will be totally different than that of the another that got listed in November or December.

Here is the list of top performers of the IPOs that got listed last year.

ipo performance top performers 2017

And here is the list of the bottom performers in 2017:

ipo performance bottom performers 2017

(Source: IndiaInfoLine)

Conclusion:

Out of 38 IPOs listed last year, only 10 IPOs gave a return of over 20%. Nevertheless, as discussed above, the majority of this IPOs are not even a year old and hence, it’s too soon to comment on their returns since listing.

Moreover, some of the IPO’s that got listed in the year 2017 has given over 100% return within a year. For example: Apex frozen (+287.13%), Shankara Build (+225.4%), Avenue Supermarket- Dmart (+96.29%) etc.

On the other hand, there were few ‘big IPOs‘ which failed miserably last year, even when the market gave a return of over 27%. For example: S Chand & Company (-33.52%), Bharat Road -13.13, SBI Life Insurance (-6.01), Khadim India (-3.58%) etc.

Overall, if you are planning to invest in the IPOs the key point is still the same. Focus more on ‘quality’ over the ‘hype created by the media’.

If the listing price seems to be ‘over-valued’, then wait for it to correct. It’s not necessary to buy the stock only at the IPO, you can even buy the stock after it enters the market.

Also read: Top upcoming IPOs of 2018: NSE, ReNew Power, HAL and more

I hope this post is useful to the readers. #HappyInvesting.

February 14, 2018 Stocks No comments yet
Biggest Wealth Creator of 2017

#21 Biggest Wealth Creator of 2017- Up to 1,450% return in a year

#21 biggest Wealth Creator of 2017- Up to 1,450% return in a year

2017 has been a good year for the Indian share market investors.

The benchmark index nifty has given an astonishing return of 28.75% in 2017. Many of the investors have been able to beat the market and had multiplied their wealth in this time period.

In this post, I’m giving you the list of top 21 biggest wealth creators of 2017. Four of the shares from this list has given over 1,000% returns. HEG Ltd tops this list with giving 1,450% return to its investors in a single year.

HEG 1 Year Returns 2017

#21 biggest Wealth Creator of 2017

Here is the list of the biggest wealth creator stocks in 2017:

S.No Name Last Market Price 1-Year Price Change (%)
1 HEG 2437.6 1450.49
2 Indiabulls Ventures 267.7 1190.82
3 California Software Company 87.65 1150.73
4 Soril Holdings Ventures 224.05 1020.65
5 Sanwaria Agro Oils Ltd 27.6 960.48
6 Graphite India 725 872.72
7 Bhansali Eng Polymers 197.3 740.94
8 Goa Carbon Ltd 888.8 727.03
9 Weizmann Forex Ltd 1430 723.26
10 Yuken India 3489.9 721.36
11 Aditya Consumer Marketing 151.95 700.00
12 Frontier Springs 262 687.10
13 Goldstone Infratech Ltd 209 645.32
14 Rain Industries 372.15 577.01
15 Mohota Industries 423.5 571.96
16 Aditya Vision 103.7 564.74
17 Jindal Worldwide 583.55 552.60
18 Venkys India 2799 550.11
19 Shalimar Wires Ind 22.5 525.33
20 Eldeco Housing And Ind 2499.95 496.82
21 Bombay Dyeing 285.8 487

Disclaimer: This post is just for informational purpose and should not be taken as any kind of stock recommendation. Please study the stocks before investing or take the help of your financial advisor.

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

Seeing the magnificent returns from the market in 2017, the investors are now optimistic towards the year 2018 for even better returns.

Bulls seem to continue taking the change in 2018.

Tags: Biggest wealth creators of 2017, wealth creator stocks India 2017, best performing stocks in 2017, best wealth creator of 2017 India
January 2, 2018 Stocks No comments yet
How to find debt free companies in India using screener

How to find debt free companies in India? [Using Screener]

How to find debt free companies in India using Screener website?

Debt is a very important factor to check while investing in any company.

While zero debt on a company validates its financial health, on the other hand, a heavy debt on the company can be taken as a sign to stay away from it.

Huge debt restricts a company from expanding and decreases profits.

A low debt company can enjoy higher profit margin and higher solvency. On the contrary, high debt companies have to pay high interests and hence have a higher cost of capital.

Few of the debt free companies in India are Maruti Suzuki, ITC, Hero motocorp, Titan company etc.

In this post, I’m going to explain how you can find the debt free companies in India using screener website. Moreover, you will learn this within 2 minutes and step-by-step.

Firstly, I wanted to give just the names of debt free companies in India in this post. However, then I realized that this list might change as the companies may take debts in future. Hence, it’s better to teach you how to find the debt free companies in India than just to give names.

Nevertheless, there is a list of these debt-free companies in the last section of this post.

Once you have found the debt free company, you can analyze it further to check its financial and economic health before investing.

Note: I have explained in details how to check the debt and other financials of a company in my online course: HOW TO PICK WINNING STOCKS. Feel free to check it out here.

However, here is what you need to know first before we start:

Debt to equity ratio:

The debt-to-equity ratio measures the relationship between the amount of capital that has been borrowed (i.e. debt) and the amount of capital contributed by shareholders (i.e. equity).

Debt to Equity Ratio =(Total Liabilities)/(Total Shareholder Equity)

Generally, as a firm’s debt-to-equity ratio increases, it becomes riskier.

A lower debt-to-equity number means that a company is using less leverage and has a stronger equity position.

As a thumb of rule, companies with the debt-to-equity ratio more than 1 are risky and should be considered carefully before investing.

How to find debt free companies in India using Screener?

Here is exactly what you need to do to find the list of debt free companies in India using Screener website:

1. Go to the screener.

2. Login with your credentials (email id and password)

screener website

3. Scroll down to find the query builder.

4. In the query builder, write the following:

Debt to Equity = 0

query debt free companies screener

5. Run the query

6. You will get the list of all the debt-free companies in India.

debt free companies

Further, you can also customize this search.

For example, if you want to find the large-cap companies (with market capitalization > 50,000 crores) and debt to equity ratio less than 0.5, you can write the following in query builder:

Debt to equity < 0.5 AND
Market capitalization > 50000

large cap with zero debt

This will give you the list of all the large-cap companies with D/E ratio < 0.5

low debt companies in india-low debt to equity with large cap

Source: Screener

Note: You can also use various other financial ratios like PE, P/BV, ROE, PEG etc in the same query builder to filter companies. I’ll teach to do it in another blog post.

List of large cap debt free companies in India:

debt free companies in India large cap

Source: Screener

That’s it. This is all you need to do to find the debt free companies in India. Isn’t it simple?

Also read: 7 Must Know Websites for Indian Stock Market Investors.

I hope this post is useful to the readers. Please comment below if you have any questions.

Tags: How to find debt free companies in india, zero debt companies in india, how to find zero debt companies, how to find debt free companies, list of debt free companies in indian stock market, debt free companies, zero debt companies, debt free companies screener, debt free large companies, debt free large caps, zero debt large companies, zero debt to equity, zero debt companies india
December 13, 2017 Stocks 5 comments
Stocks that gave more than 500% return in 2017

Stocks that gave more than 500% return in 2017

Stocks that gave more than 500% return in 2017

Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson

2017 has been a good year for the Indian stock market. After a small setback during demonetization, the market has taken a positive trend. Even GST has been implemented smoothly this year.

The investors remained bullish throughout the year. NSE Index ‘Nifty’ has given a return of 27% till now (From January’17 to November 2017).

Also read: #12 Companies with Highest Share Price in India.

In this post, I am going to give the names of those stocks that gave more than 500% return in 2017. There are also few stocks on this list which gave more than 1,000% return in last 1 year. For example Indiabulls Ventures, Soril Holdings, and HEG.

Note that if you just were happy with 1-2 times returns, you might have missed the multi-bagger returns from all these stocks. Do not cut your winners and stay invested for long.

Here is the list of 5-baggers to 12-baggers in last 1 year. Are you holding any?

Stocks that gave more than 500% return in 2017:

Name Last Price Market Cap 1-Year Change (%)
Indiabulls Ventures 259.85 115.64B 1.24K
Soril Holdings Ventures 228.55 10.99B 1.09K
HEG 1651.5 69.24B 1.04K
California Software Company 74.45 879.77M 962.13
Goa Carbon Ltd 873.7 8.38B 849.69
Blue Circle Services 38 773.19M 845.27
Graphite India 579.9 116.46B 714.99
Yuken India 2808 8.34B 685.92
Rai Saheb Rekh 400 5.98B 651.10
Goldstone Infratech Ltd 197.9 6.83B 631.52
Sanwaria Agro Oils Ltd 18.2 13.99B 620.15
Bhansali Eng Polymers 162.75 26.54B 591.16
Rain Industries 327.55 112.37B 581.22
CC Constructions Ltd 97.05 2.61B 572.19
Bella Casa Fashion Retail Ltd 210 2.17B 565.64
Akme Star Housing Finance 117 1.43B 554.05
Venkys India 2875.05 40.23B 553.33
Lancer Container Lines 175.45 1.05B 539.01
Jindal Worldwide Ltd 1159.25 22.31B 506.70
Aditya Consumer Marketing 101 1.48B 500.00

Note: You can get this list using stock screener from INVESTING website.

Further, I will not suggest you buy these stocks just because they have given good returns in the last 1 year. Study the company carefully before investing.

New to stock market? Here is an amazing online video course for the beginners: HOW TO PICK WINNING STOCKS?

That’s all. I hope this post on ‘Stocks that gave more than 500% return in 2017’ is informational to the investors.

Happy Investing.

Tags: Stocks that gave more than 500% return in 2017, multi-bagger stocks 2017, 10-bagger stocks 2017, multi-bagger stocks in India 2017
November 25, 2017 Stocks 2 comments
Successful Stock Market Investors in India

Rakesh Jhunjhunwala Latest Stock Portfolio

Rakesh Jhunjhunwala latest stock portfolio: Rakesh Jhunjhunwala, the big bull of Indian stock market, is one of the most successful investors in India. He has created a huge wealth by investing in Indian stock market.

Starting with the initial investment of only Rs 5,000, currently he is sitting on a huge net worth of around Rs 15,000 crores.

Many of the stocks in his portfolio has holding period of over 5 years and given multiple times returns on his investment.

Also read: 3 Insanely Successful Stock Market Investors in India that you need to Know.

His Idealogy:

Rakesh Jhunjhunwala follows the idealogy of Warren buffet and believes in long term investment.

He strongly advocates the growth of India and it’s rising economy.

Mr. Jhunjhunwala is also believes in learning from mistakes. He often says- ‘Mistakes are your learning friends. The idea is to keep these mistakes small.’

In today’s post, I am going to present top stocks in Rakesh Jhunjhunwala’s latest stock portfolio.

Note:

My sincere request to the readers that please do not copy the portfolio of Mr Rakesh Jhunjhunwala blindly. He has his own strategy of investing and might have bought the stocks when it was selling at a decent price. You do not want to pay double amount of what Mr Jhunjhunwala has paid and expect the same returns.

The motive of this post is to educate the readers with the portfolio of a successful stock investors, so that you can learn few new ideas and create your own portfolio.

However, if you want to buy these stocks, make sure to study the stocks carefully. Do not buy the stocks just because Rakesh Jhunjhunwala has bought these stocks. Study the stocks, make your strategy and then invest.

Rakesh Jhunjhunwala latest stock portfolio:

Company Name Sector Current Price (in Rs) No of stocks (in lakhs) Investment value (Rs in Crores)
Titan Company Ltd Jewellery/Luxury goods 595 740 4,380
Lupin Ltd Pharma 1042 79 830
Escorts Ltd Auto tractors 698 112 780
DHFL Finance- Housing 546 100 546
Delta corp Ltd Construction/ Real estate 213 225 480
CRISIL Ltd Miscellaneous /Ratings 1785 400 714
Rallis India Ltd Chemicals/ Pesticides 229 195 445
Karur Vysya Bank Ltd Private Bank 143 216 310
MCX- Multi commodity exchange of India Ltd Miscellaneous 1063 200 212
Edelweiss Financial Services Ltd Finance 266 90 240
Aptech Limited Computer/software 309 95 297
NCC Ltd Construction & contracting 85 567 490
Federal Bank Ltd Private Bank 117 416 490
Aurobindo Pharma Ltd Pharma 744 65 490
VIP Industries Plastics 262 52 137
Jai Prakash Associates Conglomerate 19.90 250 50

Read more at: Jhunjhunwala is making a killing with contra bets; portfolio stocks up 200% 

titan company

Summary:

Here is a quick review of the Rakesh Jhunjhunwala latest portfolio:

If you want to get in-depth knowledge about Indian Stock Market, I will highly recommend you to read this book: How to avoid loss and earn consistently in the stock market by Prasenjit Paul

That’s all. I hope this post is useful to the readers.

If I have missed any big company name in Rakesh Jhunjhunwala latest stock portfolio, do comment below.

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October 7, 2017 Portfolio, Stocks 7 comments
How To Invest Rs 10,000 In India for High Returns

How To Invest Rs 10,000 In India for High Returns?

How To Invest Rs 10,000 In India for High Returns? Investing is the best way to grow your money. Gone are the days when people kept their fortune (gold) buried below their land. Everyone is now interested to make more money through their investments.

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” – Robert G. Allen

However, when I look around, a very few people know how to invest their money intelligently. Most are even not aware of the investment options available to them in India. Today, I am going to suggest the best answer on how to invest Rs 10,000 in India for maximum returns. Therefore, be with me for the next 8-10 minutes to start your journey of financial investment as a successful investor.

There are a number of investment options available in India to invest Rs 10,000 or more. Here are the few options and the expected average returns in a year duration:

  1. Savings: 4–6% per year
  2. Fixed Deposit: 6–8% per year
  3. Mutual funds: 10–18% per year
  4. Stock Market: 15–25% per year

Besides, other investment options available in India are Real estates, gold, silver, forex, cryptocurrencies, commodities like petroleum etc. However, for an investment of Rs 10,000- these are little out of scope.

So, how to Invest Rs 10,000 In India for High Returns? Among all the options mentioned above, Investment in the Stock market and Real Estate are the ones that have consistently out-performed all the other investment options in long duration. However, investing in real estate won’t be possible with an amount of Rs 10,000 until you take a lot of credits.

Hence, Stock market is the best option available for investment of Rs 10,000 to get maximum returns.

Also read: Sensex has given 9x returns in last 20 years; it is time to be a buyer now

Here is a graphical comparison of returns on Stocks, bonds, gold etc for a period of over 200 years.

stock vs bond vs gold

(Source: http://www.aaii.com/files/images/articles/9298-figure-1.jpg)

Note: Although the above graph doesn’t show returns from Indian stock market, however, stocks (in general) follow the same trend compared to other investment options all over the world. Please ignore the figures in the chart.

Now. let us analyze the past of Indian stock market and find out -how much return you might have got, if you had invested Rs 10.000 in a few famous companies, a few years ago.

  • Eicher Motors (over 80 times returns in the last 10 years)

Products: Royal Enfield, Eicher Trucks etc- 

If you had invested Rs 10,000 in Eicher motors 10 years back, then currently your return would have been over Rs 8,00,000 i.e. 8 lakhs. I wish my dad had bought the stocks of Eicher motors instead of Royal Enfield ‘bullet’ bike 10 years ago 🙁

Eicher motors multibagger stocks How To Invest Rs 10,000 In India for High ReturnsEicher motors share multibagger stocks How To Invest Rs 10,000 In India for High Returns

  • Page Industries (over 50 times return in last 10 years)

Products: Innerwear & Leisurewear (JOCKEY) etc- 

If you had invested Rs 10,000 in Page Industries 10 years back, currently you would have been sitting of a huge pile of over Rs 5,00,000 i.e 5 lakhs. Wish people had paid more attention to their underwears :p

Page industries stock multibagger stocks How To Invest Rs 10,000 In India for High Returns

Also Read: How to follow Stock Market!

  • MRF (Over 17 times return in last 10 years)

Product: Tyres-

If you had invested Rs 10,000 in MRF 10 years ago, you would have got a handsome return of Rs 1,70,000 i.e. Rs 1.7 lakhs now. Just if any bike servicing guy had noticed how many people are using MRF tyres and had bought few stocks of MRF Tyres a few years back, he would have been a rich happy man by now.

If you want to get in-depth knowledge about Indian Stock Market, I will highly recommend you to read this book: How to avoid loss and earn consistently in the stock market by Prasenjit Paul

MRF multibagger stocks How To Invest Rs 10,000 In India for High Returns

MRF stock price multibagger stocks How To Invest Rs 10,000 In India for High Returns

  • Symphony (Over 12 times return in last 5 Years)

Products: Domestic air coolers, industrial air coolers, and water heaters –

If you had bought the stocks of SYMPHONY worth Rs 10,000 just 5 years ago, you would have got a return of over 1,20,000 i.e. 1.2 lakhs now. Huh, we enjoyed the air cooler but ignored the company 5 years back. Our bad 🙁

Symphony multibagger stocks How To Invest Rs 10,000 In India for High Returns

Symphony share price multibagger stocks How To Invest Rs 10,000 In India for High Returns

Eicher Motors, Page Industries, MRF, Symphony– all are common companies in the Indian market, which every Indian might already know. Most of the people have directly or indirectly used their products. Further, we can also notice that all these multi-bagger companies (companies which have given multiple time returns) have provided a great product/service to their customers, which resulted in constant growth in sales and profits.

Also Read:

How To Invest Rs 10,000 In India in Stock Market?

Here are few tips on how to invest Rs 10,000 in India in stocks to get maximum returns:

  • Do the research carefully:

Invest in the company, not the stock. If the company is doing great, the stock will also perform well. Research the company carefully before buying a stock.  Understand the company first. Learn about its product and services. Study the company’s fundamentals. If you want to read more about how to select a stock, you can find an excellent post here: How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

  • Invest in just one or two stock:

Everywhere there is a hullabaloo about diversification while investing- ‘Do not put all your eggs in the same basket’. However, in reality, the concept is different if we expect maximum returns from small investments. Do not diversify your portfolio when you are investing just Rs 10,000. Instead, invest in just one or two great stock.

Diversification is used when you are investing a huge amount of money like Rs 50k or above. It’s the big bets which can help you to get great returns. Diversification kills the profit when the investment in small.

Let’s understand this with an example. Suppose, you invested Rs 10,000 in a good stock. The stock gave a return of +50% percent in a year. Then, the total return amount will be Rs 15,000. Now, let us assume another scenario in which you invested Rs 10,000 in 3 stocks. The return on the stocks after a year are +10%, +50%, and +15%. The overall return amount will be Rs 12,500 (+25%). All the three stocks cannot give similar returns and one of them might be fundamentally strongest. If only you had invested in the fundamentally strongest among the three, you would have been able to get a double return (from 25% to 50%) on your investment.

In addition, there is not much to lose for small investment like Rs 10,000. People diversify their portfolio so that they won’t lose lakhs of rupees (and go bankrupt) if their investment strategies failed. However, if you are planning to invest just Rs 10,000; then the reason for investment must be that you have extra savings and you want to get a good return on the investment. In such cases, go for a big sure shot.

Quick Note: If you do not have a big risk appetite, then ignore this tip and diversify your investments. 

warren buffet- How To Invest Rs 10,000 In India for High Return

  • Invest in what you know: 

You don’t need to find an unknown hidden stock to get multi-bagger returns. There are a number of common well-known stocks (Eicher motors, Symphony, Page Industries, MRF etc) which have given multiple times returns in the past and will give in the future. Look for a growing company around you. Study if they are listed on the stock exchange. Learn the fundamentals of those stocks. And if they are fundamentally healthy, invest in the stocks. This is an effective way to find multi-bagger stocks, even for regular investors.

This concept was introduced by the legendary fund manager Peter Lynch in his best selling book ‘ONE UP ON  WALL STREET’.

  • Invest in Mid-caps:

These companies have the potential to become a large-cap company in the long term frame. They have a high growth rate compared to the large caps which have already reached saturation and the chances of large caps giving multiple time returns are highly unlikely. In addition, Mid-cap companies have good capital to stay out of debt and live a long life. A good growing mid-cap stock can easily become a multi-bagger.

Few people advice to buy penny stock or the small-cap stocks for getting high returns. However, for the small caps, the chances of the company growing broke is also high. Most small-cap companies are not able to sustain in harsh economic conditions which is sure to occur once or twice in the long-term period. Therefore, investing in small-cap companies has more risk than reward.

That’s all. I hope this post ‘How to invest Rs 10,000 in India for maximum returns’ is useful to the readers. In addition, do comment below if you have any doubts or suggestions on how to invest Rs 10,000 in India in the stock market. I will be happy to read your feedback. #HappyInvesting

Quick Note: If you are new to stocks and confused where to start, here’s an amazing online course for the newbie investors: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS. Enroll now and start your stock market journey today!

July 21, 2017 Investment Basics, Stocks 54 comments
Best Stocks for Long term Investment in India

Best Stocks for Long term Investment in India.

Best Stocks for Long term Investment in India. In this post, I am going to describe three great stocks which anyone can keep in your portfolio for the long term. I have selected these stocks from different sectors in order to diversify the portfolio.

The stock selection is based on the fundamental analysis. If you want to read more about how I select stock for long term investment, you can read it here: How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

Best Stocks for Long term Investment in India:

1. ITC:

itc best stock for long term investment in India 2017

Indian Tobacco Company (ITC) is one of the biggest conglomerate company in India. It has a diversified business which includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, Agri-Business & Information Technology.

ITC was formed in August 1910 under the name of Imperial Tobacco Company of India Limited. Currently, it has over 25,000 employees. Now, let us discuss few of the leading products of ITC:

ITC Ltd sells 81 percent of the cigarettes in India. ITC’s major cigarette brands include Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star, Insignia, India Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Citric Twist, Ice Burst, Mild & Ultra Mild), 555, Silk Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players, Flake and Duke & Royal.

Many of the FMCG sector companies are facing competition with Baba Ramdeo’s Patanjali. But, I am damn sure that Patanjali will never enter the cigarette’s sector as by doing so they will lose their core values. Hence, ITC will continue to have a monopoly in this sector of the market.

Other businesses

  • Foods: Aashirvaad, Mint-o, gum-o, B natural, Sunfeast, Candyman, Bingo! and Yippee!. ITC is present across 6 categories in the Foods business namely Staples, Snack Foods, Ready-To-Eat Foods, Juices, Dairy Product and Confectionery.
  • Lifestyle apparel: ITC sells its products under the Wills Lifestyle and John Players brands.
  • Personal care products include perfumes, haircare and skincare categories. Major brands are Fiama Di Wills, Vivel, Essenza Di Wills, Superia and Engage.
  • Stationery: Brands include Classmate, PaperKraft and Colour Crew.
  • Safety Matches and Agarbattis: Ship i Kno and Aim brands of safety matches and the Mangaldeep brand of agarbattis (Incense Sticks).
  • Hotels: ITC’s Hotels division (under brands including WelcomHotel) is India’s second largest hotel chain with over 90 hotels throughout India.
  • Paperboard: Products such as specialty paper, graphics, and other paper are sold under the ITC brand by the ITC Paperboards and Specialty Papers Division like Classmate product of ITC well known for there quality.
  • Packaging and Printing: ITC’s Packaging and Printing division operates manufacturing facilities at Haridwar and Chennai and services domestic and export markets.
  • Information Technology: ITC operates through its fully owned subsidiary ITC Infotech India Limited, which is a SEI CMM Level 5 company.

itc best stock for long term investment in India 2017

Source: ITC- Wikipedia

ITC Revenue source

Fig: ITC Gross Revenue  (Source: ITC Annual Report 2017)

Now that we have studied about the product and services of ITC, let’s move forward to find out the company’s financials to understand how healthy the company it.

Financial Study of ITC:

ITC is a large-cap company with market capitalization of over 410,000 crores.  It is currently trading at a PE of 39 against the industry PE of 40.5. The return on equity (ROE) for the last 3 is above 25%.

Let’s first look at the annual results of ITC.

Source: https://www.screener.in/company/ITC/

The annual results are showing a good yearly growth of ITC.

From the report, we can notice that the sales, operating profit, and the net profit of ITC are consistently increasing for the last 10 years. Moreover, the net profit has almost doubled in the last 5 years. ITC has been maintaining a healthy average dividend payout of 57.86% for last 3 years. Although dividends are not criteria to choose best stocks for long-term investment in India, however, a good consistent dividend is a sign of a healthy company.

Further, in the latest press release, the management of ITC has told that ITC will continue to give similar results in the future. The sales of ITC are expected to double from the current by the year 2020.

Now, let’s study the balance sheet of ITC to find out further.

Here, we can notice that the debt of ITC is very small compared to its total assets. Therefore, ITC can be considered as a virtually debt-free company.

Overall, studying the company minutely, it can be concluded that ITC is fundamentally very strong and one of the best Stocks for Long-term Investment in India. You should keep ITC in your portfolio for at least the next 3-4 years to get a good consistent return.

Quick Note: If you are new to stock analysis, here’s a video that can help you understand how to perform fundamental analysis of stocks. I hope this video is useful to you.

2. HDFC BANK:

Stocks for Long term Investment in India 2017

HDFC Bank is India’s leading banking and financial service company. It is India’s largest private sector lender by assets. It has 84,325 employees and has a presence in Bahrain, Hong Kong, and Dubai.

HDFC Bank is the largest bank in India by market capitalization and was ranked 69th in 2016 BrandZ Top 100 Most Valuable Global Brands. 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.

The total revenue collected by HDFC bank in 2016 was around Rs 74,373 crores. The net profit in the same financial year was Rs 12,817 crores.

Source: HDFC Bank – Wikipedia

Now, let’s look at the financials of the company to check its fundamentals.

A financial study of HDFC Bank:

HDFC bank is a large-cap company with a market capitalization of Rs 430,900 Crores. It is currently trading at a PE of 29 against the Industry PE of 26. The return on equity (ROE) for the last three years is averaged 19.5%.

From the annual results of HDFC Bank, we can notice that the sales and profit are consistently increasing over the last decade.

The net profit has more than doubled in the last five years.

Note: when you study the Earnings per share (EPS) of HDFC bank, you will notice that EPS fell in 2012 (compared to 2011). However, in actual, this is because of the stock split. HDFC Bank split its share in the ratio 10:2 in July 2011. While doing the fundamental analysis of a stock, you should give extra care to stock splits and bonus issues.

Now, let’s check the balance sheet of HDFC Bank.

Source: https://www.screener.in/company/HDFCBANK/

Here we observe that the compounded sales growth of HDFC bank is around 24% for the 10-year average and around 19% for the last 3 years. In addition, the average compounded profit growth for the last three years is 19.73%.

Further, while investing Stocks for Long-term Investment in India in the banking sector, you should always check the gross non-performing asset (NPA) percentage. As a thumb rule, companies with gross NPA less than 2% is considered worth investigating. For HDFC Bank, the gross NPA is around 1.05%, which is good.

Overall, HDFC has shown amazing results in the past and the company’s future also looks very healthy. This makes HDFC a good stock for long term investment in India in the banking sector.

If you are new to stock market and want to learn stocks from scratch, I will highly recommend you to read this book: ONE UP ON THE WALL STREET by Peter Lynch- best selling book for stock market beginners.

3. ASIAN PAINTS:

Stocks for Long term Investment in India

The paint industry is an evergreen industry and you should always keep a good stock from this sector in your portfolio.

Whatever may be the economy of the country, new houses will be consistently made, and new companies will regularly open. And in all these, a paint company will be required.

Asian Paints 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.

As of 2015, it has the largest market share with 54.1% in the Indian paint industry. Asian Paints is the holding company of Berger International.

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.

Source: Asian Paints Ltd – Wikipedia

Now, let us look at the financials of the Asian Paints.

The financial study of Asian Paints:

Asian paints is a large-cap company with a market capitalization of Rs 107,175 crores. It is currently trading at a PE of 59 compared to the industry PE of 55. The return on equity (ROE) for the last three years is averaged to be 29%.

Here are the annual results of Asian Paints.

Source: https://www.screener.in/company/ASIANPAINT/consolidated/

Here, we can notice a positive trend in the financial growth of Asian Paints. The sales and profits are consistently increasing year-by-year. The net profit of Asian paints has doubled itself in the last 5 years and has become more than 6 times in the last 10 years.

Here, we can also notice that Asian paint is a virtually debt-free company. The total debt of Asian paints is around Rs 37.21 crores against the net worth of Rs 6,950 crores.

Overall, Asian paints is a fundamentally strong company with a healthy growth rate and should be considered worth investing as one of the great stocks for long-term investment in India.

Conclusion:

All the three stocks explained in this post- ITC, HDFC Bank, and Asian paints are large-cap companies. They have almost a monopoly in the market with a huge moat. The management of these companies is transparent and effective. In short, these three stocks are few among the best stocks for long term investment in India.

I hope this post “Best Stocks for Long term Investment in India” is useful to the readers. Do comment below what are your opinions about these stocks. Happy Investing.

Quick Note: The stocks discussed in this post are for educational purpose only and focuses to teach the steps and strategies to evaluate stocks. It should not be treated as an advisory or recommendation. 

Want to learn how to select good stocks for long term investment? Check out our amazing online course for the stock market beginners: HOW TO PICK WINNING PICKS? The course is currently available at a discount.

Disclaimer: This post is a personal research and opinion of the author and should not be taken as an advisory. Please study the stock carefully before investing or take the help of your financial advisor.
July 18, 2017 Stocks 49 comments
10 Common Stocks at Rs 100 or less as Market Price

10 Common Stocks at Rs 100 or less as Market Price.

10 Common Stocks at Rs 100 or less as Market Price. Many people think that they require huge lot of money to invest in share market. But it is not so true.There are lots of company in Indian stock market whose market price is even less than the cost of a burger.

There are a number of penny stocks trading between Rs 1 to 10 (find more here). Even, big companies like Ashok leyland, Tata Power, Steel Authority etc are also selling at a market price lower that Rs 100. So, today I am listing the list of such 10 Common Stocks at Rs 100 or less as Market Price.

10 Common Stocks at Rs 100 or less as Market Price

S.No Company Price (In Rs)
1 Idea Cellular 86.70
2 Federal Bank 92.70
3 Ashok Leyland 82.50
4 Tata Power 85.55
5 Crompton Greaves 79.50
6 IDBI Bank 75.10
7 National HyroElectric Power Corporation (NHPC) 32.25
8 Reliance comm 36.80
9 SAIL (Steel Authority India Ltd) 63.85
10 Bombay Dyeing 83.50

Funny, the stock prices of these companies are even less than the Ola or Uber ride fare.  Still people speculate that buying stocks are expensive.

In addition, you can further find a list of large number of stocks, who range from RS 1 to 100  here: http://money.rediff.com/companies/price-sorted/10-100

Disclaimer: Please note that I am not recommending  you to buy these stocks just because their price is low. You should always buy a stock only when its selling at a bargain price. Bargain stocks are not such stocks whose share price is low. Its those stocks which are trading at a much lower than its intrinsic value.

Tags: 10 Common Stocks at Rs 100 or less, Indian stock market 10 Common Stocks at Rs 100 or less as Market Price, 10 Common Stocks at Rs 100 or less as Market Price in India

May 10, 2017 Market, Stocks 2 comments
10 Common Stocks that gave more than 100% return last year

10 Common Stocks that Gave More Than 100% Return Last Year -2017

10 Common Stocks that gave more than 100% return last year. Peter lynch, the legendary investor and fund manager, used to say ‘‘Invest in what you know’’ in his best-selling book “One up on the Wall Street”. By this he means –‘there are a number of common stocks which anyone can find easily around them if they are looking’. You do not need to find a rare petroleum stock which no over has ever heard.  You just have to look around and find some decent companies in your surroundings to invest in.

“Know what you own, and know why you own it.”

“The simpler it is, the better I like it.”

“The worst thing you can do is invest in companies you know nothing about. Unfortunately, buying stocks on ignorance is still a popular American pastime.”

– Peter Lynch

So, toady I have compiled a list of 10 such common stocks which a common people could have found easily while walking in their city or during travelling in the city-bus.

Here is the list of the 10 Common Stocks that gave more than 100 percent return last year. I hope few of them are in your portfolio for over a year.

10 Common Stocks that gave more than 100% return last year.

STOCK 8-May-17 9-May-16 % Change
SENSEX 29926.15 25688.86 16.49
NIFTY 9314.05 7866.05 18.40
INDIAN BANK 352 92.9 278.90
RURAL ELECTRIFICATION 216.6 84.82 155.36
FEDERAL BANK 118.9 49.15 141.91
BAJAJ FINSERV 4409.05 1875 135.14
SUN TV 851 364.5 133.47
PUNJAB NATIONAL BANK 176 82.8 112.56
BANK OF INDIA 185.4 89.35 107.49
INDIAN IOL CORP (IOC) 428.55 209.9 104.16
JAYPEE INFRATECH 14 6.95 101.43
MRF 67501 33650 100.59

Here is the list of other six common stocks that has given more than 50 percent return for the last year.

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10 Common Stocks that gave more than 50% return last year.

STOCK 8-May-17 9-May-16 % Change
GITANJALI  GEMS 68.75 35.65 92.84
HPCL 531.5 278.5 90.84
MARUTI SUZUKI 6626 3846.5 72.26
YES BANK 1616.25 945.05 71.02
APOLLO TYRES 240.45 157.2 52.95
TATA COMM 652.05 429.08 51.96

 

Tags: 10 Common Stocks that gave more than 100% return last year, List of 10 Common Stocks that gave more than 100% return last year 2016-17

May 8, 2017 Market, Stocks 2 comments
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