In order to find best large cap stocks, attention shall be given to earning potential and market valuation of stocks. Large cap stocks are the most favoured stocks of the market. Investors would like to invest in best large cap stocks to get dual benefit of capital appreciation and portfolio stability. Most large cap stocks also provides a possibility to earn dividend income. So, investors whose objective is to buy high quality stocks, buying best large cap stocks at proper market valuation will be ideal.
Why we are proposing large cap stocks as best stocks? The reason is logical and it will draw general agreement. In recent times, the political stability in India is not so good. Inflation is very high. Rupee is getting devalued. Corruption stories involving even the top leaders of country is common. GDP growth rate is touching its bottom. Among all of these pessimism the biggest victim is common man and stock market. The debt crisis in Europe and middle east country is also showing its teeth. This has also resulted in price fall of even the fundamentally strongest of companies. There is little doubt that present crisis is not going to subside soon. At present what we are seeing is a stagnant stock market index. In this situation, quality companies are available at discounted price levels. This is a very good time to identify best large cap stocks and include them in our portfolio.
In the backdrop where the market in in doldrums, there has been no devaluation of fundamental strengths of good companies. Only due to global / local disturbances (like eurozone crisis, bad governance etc) their market value in plummeting. For prospective investors this is the right time to grab some best large cap stocks. Investors shall enter the market with a medium term investment horizon of 3/5 years. But quality stocks now and hold them without thinking of selling for next at least 3 years.
I will not compare the present crisis same as debt crisis of US of 2008. But for sure the investors who had missed the opportunity in 2008 then can take full advantage now. Talking about SENSEX, which has been hovering around 16500-19000 levels in last 2 years. Market has a probability of touching at least 21,000 mark in next one years (growth of 15.5% in one year).
At present the inflation in India has also touched double digit. In such high inflationary market, there can be nothing better for a investors to buy best large cap stocks. The strategy is to buy large cap stock and stay invested for long ermt. Individual stocks may give even more return than averaged return of ETF’s. But careful analysis of value is important. Here we will discuss about some top stock picks for 2012 which will be a good buy for medium term buyers. For long term buyers some stocks may give good dividend yield and may be held for longer period of time.
There are some general advantages of investing in large cap stocks that made them qualify among our top stock picks for 2012. Some inherent advantages of large cap stocks are their strong financial health which is reflected in their Balance Sheet, high dividend payout which is evident from their income statement and big brand name. These stocks fall under our top stock picks for 2012 because they enjoy a competitive advantage that other smaller companies lack. In the present situation of market filled with deep concerns of eurozone crisis, these large cap stocks have the resilience to sustain even the worst of crisis leave alone this particular eurozone crisis. So it is sure that these companies will eventually come out of this mess, they will show some value appreciation and they will return back your invested money. In short and simple terms, we have selected large cap stocks as our top stock picks for 2012 because the risk attached with investing in these stocks are minimal. Moreover at present troubled these stocks are available at discounted rates, so better grab them. In normal times these same stocks will always be available at overvalued price levels, but today you can have one within acceptable price limits.
The large cap stocks has great advantage of possessing excessive free cash that is increasing every year in normal times. This is the reason why you will observe that these stocks pays continually increasing dividends year after year. So if you are a income focused investor, probably valuing these large cap stocks in terms of their dividend yield will be much better. After some quick analysis you will find that top stock picks for 2012 can be nothing other than the large and stable companies that shows high dividend yields. The increasing dividend trend of such large cap stock makes it top stock picks for 2012 which has further advantage of dividend compounding in times to come. Most of these large cap companies will also have operation in more than one companies, so you will not be required to worry about any specific currency (US or EURO) getting devalued or overvalued.
Some top performing large cap companies have already been listed in my previous article called as “Blue Chip Stocks” listed in random order but are top 50 large cap stocks listed in Bombay stock exchange.
We have evaluated these stocks in terms of their profitability, financial health and shareholders return in terms of hard cash (dividend). We would like to comment that even though a stock may be extremely profitable and has a mind-blowing balance sheet, but if it is not giving suitable return to its shareholders then it is not a good buy. Market price appreciation is not something that large cap stocks are know for, but dividend yield is for sure can be a good criteria of evaluation. If you are time the purchase of a large cap stocks at high dividend yield you can be sure to get a dual advantage of capital appreciation in times to come (if you sell). So our selection top stock picks for 2012 will be blue chip stocks, evaluated in terms of (1) market cap, (2) financial health, (4) profit margin and of course (5) dividend yield.
The value stocks of Indian stock market that we are suggesting also have growth prospects in medium term. In listing the stocks here, extra care has been taken to select those stocks which has shown substantial earning growth in last five years. Stocks which are trading at lower P/E multiples has been given weightage. In addition to these consideration has been shown to ‘margin of safety’ by selecting only those stocks which are trading at PEG of 0.66 and below (and not at 1).
- Market Capitalization more than Rs 2000 Crore (Rs 20 Billion)
- Annual Earning Growth (EPS Growth) of more than 20% in the span of last five years
- Current Price to Earning Ratio (P/E) shall be less than 10
- PEG of Less than 0.66
Best Large Cap Stocks in India
(Updated as on May’2014)
|SL||Company||Market Price (Rs.)||Market cap (Rs Cr.)||Revenue CAGR in % (last 3 FY)||EPS CAGR in % (last 3 FY)||ROCE in %||Div. Yield %|
|1||Cairn India Ltd||334.85||63,876.99||121.02||125.00||22.27||3.73|
|2||Tata Consultancy Services Ltd||2,198.95||430,714.49||29.90||28.30||47.02||1.14|
|3||HCL Technologies Ltd||1,383.55||96,768.81||28.22||46.20||33.10||1.16|
|6||Hindustan Unilever Ltd||553.60||119,726.85||15.04||21.45||95.12||2.08|
|7||Asian Paints Ltd||514.75||49,374.72||18.10||10.05||38.20||7.30|
|8||Petronet LNG Ltd||144.60||10,845.00||43.50||41.64||22.13||1.73|
|9||Godrej Consumer Products Ltd||785.05||26,721.37||46.36||28.52||13.10||0.92|
|10||Rural Electrification Corporation Ltd||251.50||24,834.59||26.83||23.75||10.48||3.68|
|11||Power Finance Corporation Ltd||195.55||25,813.40||29.08||17.51||10.37||5.01|
|12||Mahindra & Mahindra Ltd||1,065.15||65,601.74||32.98||15.93||13.35||1.22|
|13||Divis Laboratories Ltd||1,352.05||17,946.30||31.57||20.76||25.11||1.11|
|14||Dr Reddys Laboratories Ltd||2,744.75||46,690.67||19.16||62.84||19.28||0.55|
|15||GAIL (India) Ltd||370.35||46,978.05||23.64||9.54||13.02||2.73|
|16||Axis Bank Ltd||1,537.95||72,167.69||32.71||22.29||5.56||1.17|
|17||IndusInd Bank Ltd||490.55||25,775.75||37.15||33.49||6.97||0.61|
|18||Torrent Pharmaceuticals Ltd||643.00||10,881.04||19.33||23.24||15.89||3.42|
|19||Bajaj Finance Ltd||1,870.50||9,379.06||52.05||69.64||12.50||0.80|
|22||Bank of Baroda||806.20||33,961.66||28.35||9.33||4.64||4.03|
|24||State Bank of India||2,051.75||153,178.12||18.84||12.32||5.12||2.75|
|25||UltraTech Cement Ltd||2,025.65||55,551.63||43.76||3.54||16.30||0.44|
|26||Havells India Ltd||909.35||11,350.60||12.40||59.14||20.15||1.37|
|27||Glenmark Pharmaceuticals Ltd||609.45||16,529.75||26.43||23.58||15.37||0.33|
|28||Cummins India Ltd||526.90||14,605.67||17.28||7.13||31.13||2.47|
|29||Eicher Motors Ltd||6,404.35||17,326.97||15.70||27.60||25.55||0.47|
|30||Punjab National Bank||785.30||28,433.36||25.22||3.62||6.30||4.71|
|31||JSW Energy Ltd||53.60||8,790.69||55.96||6.62||11.63||3.73|
|32||Jammu and Kashmir Bank Ltd||1,665.15||8,072.31||26.15||27.20||6.93||3.00|
|34||Bajaj Finserv Ltd||822.30||13,084.60||57.29||36.78||8.62||0.18|
|35||ICICI Bank Ltd||1,274.55||147,189.24||14.18||25.72||2.01||1.57|
|36||Nestle India Ltd||4,694.90||45,266.35||13.32||10.92||36.26||0.77|
|38||Federal Bank Ltd||92.30||7,894.53||19.36||24.68||6.88||9.75|
|39||Pidilite Industries Ltd||300.45||15,402.33||18.79||15.37||26.39||0.87|
|40||Sun TV Network Ltd||366.40||14,439.27||9.80||10.92||34.66||2.52|
|41||ING Vysya Bank Ltd||587.35||11,057.27||29.61||25.03||6.67||0.94|
|42||Bank of India||239.35||15,372.56||21.27||11.62||5.01||6.27|
|43||Tech Mahindra Ltd||1,801.65||42,005.83||14.11||20.63||16.91||0.28|
|44||Berger Paints India Ltd||242.80||8,412.56||20.95||21.94||17.56||0.74|
|47||Ipca Laboratories Ltd||840.25||10,603.87||20.70||16.06||21.44||0.54|
|48||Shriram Transport Finance Company Ltd||724.75||16,443.35||15.98||18.55||12.23||0.97|
|49||Motherson Sumi Systems Ltd||260.50||22,973.99||55.73||5.27||6.04||0.77|
|50||Procter & Gamble Hygiene and Health Care Ltd||3,370.20||10,940.01||23.09||4.17||23.00||0.74|
|51||United Breweries Ltd||772.55||20,426.61||19.66||20.35||10.15||0.09|
|52||Aditya Birla Nuvo Ltd||1,121.45||14,588.38||18.09||80.40||4.95||0.58|
|53||ABB India Ltd||812.15||17,210.11||7.09||40.91||11.14||0.37|
|54||Ambuja Cements Ltd||199.00||30,770.63||7.54||0.06||13.27||1.81|
|56||Container Corporation Of India Ltd||976.40||19,037.26||6.01||6.17||13.86||1.69|
|57||Reliance Capital Ltd||340.25||8,357.66||8.03||23.30||9.06||2.35|
|58||Godrej Industries Ltd||292.00||9,795.29||26.85||22.18||5.30||0.60|
|60||Idea Cellular Ltd||130.70||43,387.59||21.81||1.80||8.51||0.23|
|61||Neyveli Lignite Corporation Ltd||68.15||11,433.59||10.63||5.33||7.40||4.11|
|62||IDBI Bank Ltd||68.00||10,906.79||17.31||0.22||6.06||6.21|
|63||Oriental Bank of Commerce||251.25||7,533.71||19.96||0.17||6.56||5.25|
|65||Reliance Infrastructure Ltd||513.40||13,501.91||15.40||11.25||4.64||1.44|
|66||Sundaram Finance Ltd||699.05||7,766.73||21.99||0.83||12.87||0.64|
|67||Exide Industries Ltd||116.50||9,902.50||13.10||3.64||5.65||1.46|
|68||Bharat Electronics Ltd||1,228.50||9,828.00||5.35||7.30||3.24||1.82|