Recently, I shared an article on top 8 stocks where you can invest blindly. The top 8 stocks included:
#1 Reliance #2 HDFC Bank #3 HUL #4 Pidilite #5 Asian Paints #6 HDFC life #7 TCS #8 Titan
You can read the article: Here
Now many of you commented about stocks that I didn’t mention in this list. Even I felt that there are a lot of great companies that I didn’t include in the previous list. Hence, I have extended the previous list of 8 stocks and added 10 more stocks in the list. Please note that these companies are mainly the large cap companies with a proven track record, experienced management, strong competitive advantage, healthy financials and a bright future growth prospect.
In the previous video, some of you commented that these are already large cap companies, tell us the mid and small cap companies. While, their point is valid to an extent that these companies are already large, but that doesn’t mean these companies won’t grow. Indian growth story has a long journey and these large companies will become even larger. Yes, they might not have multifold return potential like mid and small cap but are also not so volatile like mid and small cap.
A lot of people make the mistake of ignoring these real gems and only search for “hidden gems”. In this process, they end up picking very small companies that sometimes collapse and destroy wealth. Hence, it is important to build a balanced portfolio of leaders in the segment as well as potential upcoming leaders. Now what should be the right allocation of large mid and small companies in the portfolio? It would depend upon your risk appetite.
I like to keep 50%-60% large caps and rest mid and small caps in my portfolio. I will share a spearate article on top mid and small cap companies. And these companies are only for long term investment. If you are someone who is looking for short term trading tips then you can skip this article. Alright, let’s get started.
#9 Infosys - IT
Technology is the future. And talking about technology, we can’t ignore the pioneer of IT industry in India i.e. Infosys. Established in 1931 by a bunch of young folks including Mr Narayan Murthy, Nandan Nilekani, S. Gopalkrishna, S.D. Shibulal and few others, Infosys has been one of the biggest wealth creators of the Indian corporate world. It is one of the most prestigious brands all over the world and has been the leading company for starting the IT revolution in India and making India an IT hub of the world.
Today, Infosys works with many top notch companies of the world and has customers across industries and geographies and holds a market cap of Rs 5.27 lakh crore.
In the last 10 years, Infosys revenue has jumped from Rs 27,501 Cr in Mar 2011 to Rs 90,791 Cr by Mar 2020. The profits have increased from Rs 6,835 Cr in Mar 2011 to Rs 16,594 Cr by Mar 2020.
In the last 10 years, Infosys share price has increased from Rs 400 in Jan 2011 to current levels of Rs 1250 in Jan 2021 with a CAGR of 12% in 10 years!
If we look at the future growth prospects, the biggest theme is digital. Be it any sector, technology would be a key differentiator. For example, ecommerce is the future of retail, UPI and online payments are the future of banking, machine learning and automation is the future of manufacturing and the list goes on. Today, every company needs a digital presence. And keep themself updated to stay competitive. Themes like cloud computing, machine learning, automation, advance analytics would continue to grow and companies like Infosys would be a key player in providing the IT support for all the sectors.
#10 HDFC AMC - AMC
Over the past few years, the mutual fund industry in India has almost exploded. Specially the young generation now understand the importance of mutual funds for long term financial planning. Now this has created an immense growth opportunity for companies that operate in mutual fund space. And one company that is among the leaders in AMC space is HDFC AMC.
Established in 1999, HDFC AMC is part of the most prestigious HDFC group of India and currently holds a market cap of Rs 61,000 Cr.
In the last 4 years, HDFC AMC revenue has jumped from Rs 1,490 Cr in Mar 2016 to Rs 2,124 Cr by Mar 2020. The profits have increased from Rs 478 Cr in Mar 2016 to Rs 1,262 Cr by Mar 2020.
Since its IPO in 2018, HDFC AMC share price has increased from Rs 1,750 in Aug 2018 to current levels of 2,880 in Jan 2021 at a CAGR of 22% in the last 2.5 years!
If we look at the future growth prospects of HDFC AMC, all I can say is “it is just the beginning”. Indian mutual fund industry is highly under-penetrated and very small compared to developed countries like USA. People have just started investing in the mutual fund. In the future, factors like increasing awareness about mutual fund investment, ease of investment with few clicks, growing economy, better returns, multiple investment options as per the risk profile of the individual and rising income level could continue to drive the growth in mutual fund space. This would eventually benefit the HDFC AMC.
#11 SBI Card - Credit card
From being a cash driven economy to a stage where today even your nearby local kirana shop is accepting digital payment, India has come a long way.
It would be difficult to believe just a few years ago that we would be doing digital payment even for a transaction of 10 Rs.
And guess what? It is only the beginning of digital transformation in India. One company that would largely benefit from this digital transformation is SBI cards.Established in 1998, SBI Card is India's second largest credit card issuer after HDFC bank, with more than 1 crore cardholders and it is the largest pure-play company in credit card business. It is a subsidiary of SBI which is India’s largest commercial bank and holds the current market cap of Rs 92,000 Cr.
In the last 6 years, SBI card revenue has jumped from Rs 1,438 Cr in Mar 2014 to Rs 9,281 Cr by Mar 2020. The profits have increased from Rs 293 Cr in Mar 2014 to Rs 1,245 Cr by Mar 2020.
SBI Card recently had an IPO in March 2020 at a price band of Rs 750. The IPO was opened at Rs 1000 but then COVID happened and share price tanked. Since then, it has almost doubled from lows of Rs 500 to current level of Rs 980.
If we look at the future growth prospects, it is just the beginning of digital transformation in India. Factors like India’s strong macroeconomic performance, together with its large working population, aspirational youth population, rising affluence, rapid urbanisation, rise of ecommerce and an increasing shift from cash transactions to card and digital payments will continue to propel the growth of India’s largely underpenetrated credit card industry.
Next company that I am going to tell you belongs to FMCG category. FMCG is known as fast moving consumer good and it includes your products like Tea, coffee, drinks, cereals, etc in food category, soap, shampoo, cream, detergents, toothpaste, etc. in the beauty and personal care category. Basically, the products that we use in our day to day life. Now, this is one of the most profitable categories of India and the advantage of FMCG companies is that it is a recession proof sector. Because no matter what, we will continue to consumer food and drink along with other essential items. So not just 1 but my next 3 recommendations are from FMCG category.
#12 Britannia - FMCG
Founded in 1892, Britannia is one of the oldest company and one of the biggest player in the food and beverage category in India. It is known for its brands like goodday, tiger, marie gold, little hearts, etc. Britannia is also among the leaders in categories like dairy products and bakery products like bread, cake, rusk, etc. As of today, Britannia has a market cap of Rs 84,000 Cr.
In the last 10 years, Britannia revenue has jumped from Rs 4600 Cr in Mar 2011 to Rs 11600 Cr by Mar 2020. The profits have increased from Rs 134 Cr in Mar 2011 to Rs 1400 Cr by Mar 2020.
In the last 10 years, Britannia share price has increased from Rs 180 in Jan 2011 to current levels of 3500 in Jan 2021 at a CAGR of 34.5%.
If we look at the future growth prospects, food is one category that we all love. Britannia has a huge scope of growth in each category of food including biscuit which has 90% penetration in Indian household and huge scope to increase the consumption, bakery products like cake, rusk which is highly fragmented and unorganised market, bread with healthier alternatives and other businesses like cream wafers, center filled croissants and salted snacks category where there is an increasing preference for premium and branded food products.
#13 ITC - FMCG
Next is ITC. I am sure many of you would be interested to know more about ITC. Established in 1910 as Imperial Tobacco Company of India Limited, ITC is again one of the oldest companies of India. ITC started its business from Tobacco and now aggressively transforming itself into a FMCG player.
Some of the top brands of ITC includes Ashirwad aata, Sunfeat, Bingo, Yipee, Fiama, Vivel, Engage, savlon, Classmate, Paperkraft, etc. ITC has a diversified business across FMCG, Tobacco, stationary products, hotels, agri business. Please note that around 45% revenue of the company is still from the tobacco business but FMCG business is growing at a fast rate and now contributes 27% in total business. As of today, ITC has a market cap of Rs 2.5 lakh crore.
In the last 10 years, ITC revenue has jumped from Rs 22,500 Cr in Mar 2011 to Rs 49,300 Cr by Mar 2020. The profits have increased from Rs 5,000 Cr in Mar 2011 to Rs 15,300 Cr by Mar 2020.
In the last 10 years, ITC share price have increased from Rs 100 in Jan 2011 to the level of Rs 300+ in July 2017 but since then it has fallen and currently trading at Rs 200. The major reason is its transformation phase from tobacco major to FMCG major.
In the long term, ITC would transform itself into a FMCG major and that’s where I see a huge growth potential. One of the key strength for an FMCG company is its “distribution network.” Over the last 100+ years, ITC has created a very strong distribution network. You can find ITC products in every nook and corner of the country. Specially its wills and gold flake cigarette. Now ITC is using the same distribution network to sell its other FMCG categories which is growing at a very fast rate. Moreover, ITC has a very strong financial strength to create a strong brand in the FMCG category. Recently, it has also forayed into the healthy food category including Ashirwaad nature’s superfood like gluten free flour, ragi flour, multi millet and many more products including dairy and instant meals like instant idli sambar, instant poha ,etc. This healthy food and instant food category has a bright future prospect due to the increasingly busier lifestyle of Indians and the preference for healthy food.
#14 Dabur - FMCG
Established in 1884, Dabur claims to be one of the best ayurvedic and natural health care company. Dabur has a wide range of products in categories including hair oil, shampoo, health supplement, digestive, skincare, food, oral care, home care, etc. Dabur chyawanprash and dabur honey is one of the most common household product in India. Some of the other brands include Dabur Amla, Dabur Vatika, Dabur Hajmola, Pudin Hara, Red paste, Meswak, odomos, etc. As of today, Dabur has a market cap of Rs 91,000 Cr.
In the last 10 years, Dabur revenue has jumped from Rs 4,070 Cr in Mar 2011 to Rs 8,685 Cr by Mar 2020. The profits have increased from Rs 569 Cr in Mar 2011 to Rs 1,445 Cr by Mar 2020.
In the last 10 years, Dabur share price has increased from Rs 100 in Jan 2011 to current levels of 500 in Jan 2021 at a CAGR of 17%.
In the long term, I expect Dabur to grow on account of increased consumer focus on healthcare, particularly preventive healthcare, with preference for ayurveda based solutions that boost immunity. Dabur being one of the leaders in ayurveda based FMCG product should continue to grow at a good rate.
#15 Eicher motor: Bikes
If there is a brand in India with a die hard fan following then it is “Royal Enfield”. Once a struggling business, Eicher motor is one of the great turnaround story of Indian corporate world. Established in 1948, Eicher motor is the leader in Indian premium segment bike with a range of royal enfield bikes including meteor, interceptor, continental, himalayan, classic and bullet. They also have a strong presence in the commercial vehicle category including trucks and buses. Eicher motor has a current market cap of Rs 74,000 Cr.
In the last 10 years, Eicher motor revenue has jumped from Rs 4397 Cr in Dec 2010 to Rs 9,154 Cr by Mar 2020. The profits have increased from Rs 189 Cr in Dec 2010 to Rs 1827 Cr by Mar 2020.
In the last 10 years, Eicher motor share price has increased from Rs 100 in Jan 2011 to current levels of 2750 in Jan 2021 at a CAGR of 39%. Please note that we are considering the bonus and split adjusted share price.
If we talk about the future growth prospect for eicher motor, the biggest trend is premiumisation. Due to rising income levels, increase in spending and better lifestyle, and world’s youngest population, today’s youth prefer premium bikes and are willing to shell out more money for it. This trend would continue to grow and help eicher motor in its growth. Eicher motor has great growth opportunity not only in Indian market but also across the world. Company is already working on increasing its production facility in Chennai to cater to the growing demand and working on new product development.
#16 Jubilant Foodworks - Food
Next stock is the list is Jubilant Foodworks. If I ask you what is the most popular food in the world? Then one name that would immediately pop up in your head is “Pizza”. And when you think of Pizza in India, one name that strike your brain is “Dominos Pizza” specially the “Cheese Burst Pizza”. Personally, I am a big fan of Domino's cheese burst pizza.
Established in 1995, Jubilant foodworks is the parent company of Dominos pizza in India. Jubilant foodworks hold the master franchize of US based Dominos and Dunkin Donut in India, Nepal Srilanka and Bangladesh. As of today, Jubilant foodworks has a market cap of Rs 34,000 Cr.
In the last 10 years, Jubilant foodworks revenue has jumped from Rs 678 Cr in Mar 2011 to Rs 3,927 Cr by Mar 2020. The profits have increased from Rs 72 Cr in Mar 2011 to Rs 280 Cr by Mar 2020. In the last 10 years, Jubilant foodworks share price has increased from Rs 300 in Jan 2011 to current levels of Rs 2,600 in Jan 2021 at a CAGR of 24%.
If we look at the future growth prospects, Indian society is evolving with a rise in the working population, nuclear/individual households and more outdoor activities such as leisure trips and outings with friends, families and colleagues. These factors are driving the frequency of eating out. There is an increased brand consciousness and people want to experiment with new cuisines, which is contributing to the country’s expanding food service sector and the dominance of full-service restaurants in India. Recently, Jubilant foodworks has announced its entry into the ready-to-cook sauces, gravies, and pastes market capitalizing on the growing home-cooking trend in India. Jubilant foodworks has also announced entry into Biryani restaurant business.
#17 Kotak Mahindra Bank - Bank
Established in 1985 by Mr Uday Kotak, a prominent Indian banker, Kotak Mahindra received the banking license from RBI in 2003. Since then, Kotak Mahindra has grown leaps and bounds. Kotak mahindra has a current market cap of Rs 3.4 lakh Cr.
In the last 10 years, Kotak Mahindra revenue has consistently increased from Rs 5,973 Cr in Mar 2011 to Rs 33,474 Cr by Mar 2020. The profits have also consistently increased from Rs 1,567 Cr in Mar 2011 to Rs 8,593 Cr by Mar 2020. In the last 10 years, Kotak Mahindra share price has increased from Rs 200 in Jan 2011 to current levels of Rs 1700 in Jan 2021 at a CAGR of 24%.
If we discuss the future growth, Banking is the backbone of the economy. For any business to grow, they need to take loan from bank. For us to buy a house or car, we need to take a loan from bank. So every money transaction in the country is routed via bank. And for the economy to grow, bank will play a crucial role. Kotak Mahindra is one of the fastest growing bank in India and in terms of NPA also Kotak Mahindra is very comfortable. It has one of the highest interest coverage ratios among the top private banks. Overall, Kotak Mahindra would play a key role in the growth of the economy and would also continue to grow.
#18 L&T - Infrastructure
Final stock in the list is L&T. Established in 1938 by 2 Danish engineers, L&T is the major technology, engineering, construction, manufacturing, IT and financial services conglomerate. For example, in construction, its business include construction of buildings, factories, heavy civil infrastructure, smart cities, etc. In also provides end to end services for hydrocarbon engineering, power, metallurgy, heavy engineering, defence, ship building, metro rail, etc. As of today, L&T has a market cap of Rs 1.87 lakh Cr.
In the last 10 years, L&T revenue has consistently increased from Rs 51,900 Cr in Mar 2010 to Rs 1.45 lakh Cr by Mar 2020. The profits have also consistently increased from Rs 4,400 Cr in Mar 2011 to Rs 9,500 Cr by Mar 2020. In the last 10 years, L&T share price has increased from Rs 700 in Jan 2010 to current levels of Rs 1340 in Jan 2021.
In terms of future growth, Indian Government is focusing a lot on building the infrastructure of the country including highways, smart cities, manufacturing facilities, bridges, ports, airports, etc. L&T would being the largest player in construction space, would play a key role in building the infrastructure of our country.
With this, we have covered the next top 10 stocks for long term making the total stock count to 18. Please note that these are not the only top companies. There are many more. It is just that I have picked these 18 companies from the large cap category. While some of the stocks are still available at good valuations, some have become super expensive. Hence, be careful with your investments. The better strategy would be to invest systematically over a period of time or investing on dips. Please note that this list is based on my personal opinion. Do not invest blindly based on this article. Consult your financial advisor before investing your money.