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Best Stocks to Buy in India for long term in 2017

Indian stock market has thousands of stocks in its holding. These stocks are bought and sold each day by millions of people.

But is it good to pick ‘any’ stock and start trading?

No, we cannot buy any stock for investing. Out of all stocks that we have in the market, only a very tiny minority qualifies as a good buy. Hence stock picking must be done with extreme care. The focus should be on best stocks to buy in India for long term.

To a novice, it can be overwhelming to identify best stocks. Majority people know only, TCS, Reliance Industries, Infosys etc. These are big names which are always in news.

But in reality, there are more than 5,500 stocks listed in BSE. So the question arises, which are the best stocks among this list of whooping 5,500 numbers?

The list of best stocks to buy in India are not readily available even on internet. What is advisable is to MAKE ONES OWN LIST.

Yes, this is the best way to play the stock market game. Have your ‘own’ list of best stocks.

If one could copy others and make money, probably every stock trader in this world would be a millionaire. But the fact is, only the elite makes money in stock market.

What makes these people so unique and rare? What makes them succeed among the huge horde of average performing investors?

Their ability to screen the best stocks from plethora of non-performing stocks makes them successful.

In this article we will see how to screen best stocks. This way, one can start screening stocks on their own.

Stock Analysis Worksheet

In general, to screen best stocks, one must focus on ‘business fundamentals’ PLUS few minor ‘technical analysis’.

Even the best of stocks has vert volatile price movements. If idea is to prepare ones ‘own’ list of best stocks, one must prepare and review their list every 3 months.

Your ‘list of best stocks’ change with market price fluctuations. But how price can effect ones list of best stock?

What are best stocks?

Best stocks are not only those stocks which has strong business fundamentals. They must also be available at right price.

Hence, when price falls, those stocks which were not attractive earlier becomes attractive. Similarly, when price rises, those socks which were preferable earlier, becomes overvalued, hence move out of the list.

Market price movement of stocks cannot alter the business health (core fundamentals) of the company, but it effects its market price valuations.

When valuation is good, it means stock is trading at price levels below its intrinsic value. When valuation is bad, it means stock is trading at price levels above its intrinsic value.

Companies business performance also keep changing from quarter to quarter (3 months). Performance of companies are declared in their financial statements (quarterly).

This is the reason why, I ask you to recheck your list of best stocks every 3 months.

Every change in companies ‘quarterly reports’ and ‘market price’ will reflect on ones ‘list of best stocks’.

Characteristics of Top Stocks :

What one must glance at to know if a stock is a good buy or not? Frankly speaking, to identify a best stock, superficial observation is not enough. One must dig deep into companies details.

But before digging deep into reports, these are few factors that gives a hint about the companies ‘fundamentals’ and ‘price valuation’.

I personally glance at these values before doing a more detailed stock analysis.

To start with, I ask following questions about stocks?

* Company ranks in the list of top 100 market cap stocks?
* Company ranks in the list of top 100 stocks in terms of its sales turnover?
* Compared to its competitors, how company ranks in terms of its sales turnover?
* Is the 5 years sales growth rate of company beating inflation?
* Companies profit margin has improved over last 5 years?
* How fat is the Net Worth improving?
* Net cash flow from operation has been positive in last 5 years?
* The company has a reliable dividend payment history?
* Stock of company is available which P/E ratio, compared to its competitors?

The screener one can use to identify best stocks to buy in India

High Market Share

Out of all stocks that trade in Indian stock market, I love those stocks which has high market share in its sector.

This is one of those ‘easy’ screening criteria based on which we can remove average and down performing companies.

The criteria that I use to screen stocks in terms of market share is “Revenue”.

But I also like to keep the parameter of “Market Capitalization” as my screener.

A combination of high revenue and high market capitalisation ensures that we do not miss out any stocks wich are liked by the market.

High Profits and high Margin

Once we have a list of stocks based on their market share, we must use another important screen.

The use of this screen will remove not so profitable companies from our list.

For any investor the priority should be to include only highly profitable companies in the investment portfolio. No matter how high is the market share of the company, if its operations are not profitable enough, it will be difficult for the company to maintain its market share.

Hence it is equally important to look and lump-sum profits and profit margin all together.

The criteria that we can use to screen stocks in terms of its ‘profit’ and ‘profitability’ is (a) net profit & (b) gross margin.

People love to see stocks with high and improving net profits (PAT). But frankly speaking we must avoid focusing too much attention on net profits. High improving PAT is good but its not everything.

Along with PAT, I screen stocks based on its gross margin as well.

Our list is ready, go ahead a buy?

Yes, now we have a list of stocks which has high revenue, high market market capitalisation, high PAT and high gross margin.

In short, we have list of market leaders which are also has a very profitable business.

So are we ready to buy them now?

Not so soon. What we know is stocks which has strong business fundamentals. But generally such companies trade at extremely expensive price levels.

So we need another screener, right?

Yes this screener is easier as data related to that is more easily available on internet.

Market price valuation of stocks

After all the fundamental checks on the companies, it is essential to look into the price valuation of stocks as well.

In order to identify best stocks, price check is essential. It is true that fundamentally strong stocks generally trade at overvalued price levels.

Hence it is a must to do price valuation checks before buying one.

The criteria that we can use to screen stocks to know its price valuation are as follows:

#1. Price Earning Ratio (P/E)

This ratio will tell us, compared to companies profits, how high its market price is placed. By using this ratio we can even compare two companies of different sectors. A a very old rule of thumb, a P/E ratio of above 15 signifies that the stock is overvalued. But such simplification is not advisable. It is better to compare P/E of stocks you are analysing with other stocks of same sector. Try to figure our the average P/E ratio of that sector (add P/E ratio of all companies of that sector and dividend it by number of companies). Generally the companies that we have in our list will have P/E above this average P/E ratio. Track their P/E ratio. The buy time will come when their P/E falls below the average P/E you have calculated just now.

#2. PEG Ratio

There will be some companies whose P/E ratio will be exorbitantly high. Do not discard such companies right away. Calculate its PEG ratio first (PE ratio dividend by 5 year EPS growth rate). If PEG is ore than 1, only then you discard it. Since last several years, PEG ratio is one valuation that has worked very well to identify value stocks.

#3. Dividend Yield

I love valuing stocks based on its dividend yield. This is like a litmus test for all stocks. Majority stocks fail this test, but I still like my ‘list of best stocks” to cross this test.

We must not focus too much on dividend yield itself. What is more important is to check the dividend patter for last 5 years.

A stocks which has continuously increased its dividend payout in last five years is very likeable.

So how to test stocks for its dividends?

Note last five years dividend/share of any stock. Calculate an average of dividend/share. Now divide this average dividend per share with its current market price.

The higher is this value, more undervalued is the stock.

As a rule of thumb, a stock with average dividend per share for last 5 years is above 4%, is a good buy.

I have also developed a product which can help you to learn to identify best stocks in totality. Along with fundamental checks, it also analyzes stocks in terms of its price valuation. Users who are interested to learn the concept of stocks analyses can buy my stock analysis worksheet.

Best Stock to Buy in India for long term in 2017

(Updated as on June’2017)

Best Stocks to watch in India – Quotes

SL Stock Price Market Cap (Rs.Cr.) P/E Div. Yield
1 AIA 1,451.90 13,694.00 29.98 1.24%
2 Cummins India 932.00 25,832.00 35.20 1.50%
3 Eicher Motors 29,325.00 79,399.00 51.15 0.00%
4 Nestle India 6,714.00 64,066.00 66.44 0.94%
5 Siemens Ltd 1,384.00 48,754.00 16.75 2.42%
6 ABB India 1,437.00 30,704.00 77.40 0.28%
7 HDFC 1,606.00 255,792.00 34.28 1.13%
8 Blue Dart Express 4,467.00 10,530.00 75.96 0.34%
9 Bosch Ltd 23,894.00 72,738.00 50.19 0.69%
10 Britannia Industries 3,643.00 42,903.00 51.71 0.60%
11 Colgate Palmolive India 1,020.00 27,905.00 48.08 0.98%

Best Stocks to watch in India based on getmoneyrich’s stock analysis worksheet

SL Stock Price Valuation Business Fundamentals Profitability Ratio Price Histroy Overall Grading
1 AIA Engineering 24 / 100 77 / 100 85 / 100 100 / 100 72 / 100
2 Cummins India 34 / 100 81 / 100 97 / 100 100 / 100 78 / 100
3 Eicher Motors 24 / 100 93 / 100 84 / 100 100 / 100 76 / 100
4 Nestle India 19 / 100 88 / 100 100 / 100 100 / 100 77 / 100
5 Siemens Ltd 47 / 100 93 / 100 67 / 100 85 / 100 73 / 100
6 ABB India 9 / 100 57 / 100 39 / 100 33 / 100 34 / 100
7 HDFC 45 / 100 61 / 100 65 / 100 100 / 100 68 / 100
8 Blue Dart Express 23 / 100 92 / 100 83 / 100 100 / 100 75 / 100
9 Bosch Ltd 15 / 100 96 / 100 82 / 100 100 / 100 74 / 100
10 Britannia Industries 16 / 100 46 / 100 83 / 100 100 / 100 61 / 100
11 Colgate Palmolive India 24 / 100 69 / 100 100 / 100 100 / 100 73 / 100

Rating of our best stocks by Morningstar

SL Stock Valuation Uncertainity Financial Health Moat
1 AIA Overvalued High Strong Wide
2 Cummins India Overvalued High Strong Wide
3 Eicher Motors Overvalued High Moderate Wide
4 Nestle India Overvalued Medium Strong Wide
5 Siemens Ltd Overvalued Medium Strong Wide
6 ABB India Overvalued High Strong Wide
7 HDFC Fairly Valued Medium Moderate Wide
8 Blue Dart Express Fairly Valued High Strong Wide
9 Bosch Ltd Fairly Valued High Strong Wide
10 Britannia Industries Overvalued High Strong Wide
11 Colgate Palmolive India Overvalued High Strong Wide



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Disclaimer: All blog posts of getmoneyrich.com are for information only. No blog posts should be considered as an investment advice or as a recommendation. The user must self-analyze all securities before investing in one.

About the Author

Mani
I am a Blogger with a passion for investment education. I started blogging in 2007-08. Blogging didn’t happened to me as a coincidence, it was a conscious decision. The idea with which I started blogging still stands true. In my starting days my finances remained tight. I was reading heavily about how to manage finance. One day I got hold of a book which my father gifted me in 2003. It was stacked below my graduation books. It was a small-thin book with its cover named "Rich Dad Poor Dad".....more

101 Comments on "Best Stocks to Buy in India for long term in 2017"

  1. Sir I am new in this field .
    Want to invest 5000 to 10000 rs every month.
    Where I invest 1) stock market 2) mutual fund 3) sip
    Please guide me . I want good return

  2. Hi
    I am a beginner, trying to invest 10K. Plz suggest which shares to be buy.

  3. I have been investing in mutual fund since 4 years and getting good returns also . Now i want to invest in share also for 4-8 years …so could you please guide to which company and sector i should invest … please suggest

  4. Hi,
    Can you please suggest me best stock to buy for 1 year

    • Sowmya, stocks investing must be done with long term holding strategy (>5 years). 1Y holding time is too short a period.

  5. bhagyalakshmi.D | May 3, 2017 at 10:07 pm | Reply

    Hi , please suggest good investment for 2-3 year term

  6. What is long term and short term
    How to hold share.
    Can i buy or sell share after 1 or 2 days.

  7. hi Sir,

    what is ur opinion on Pasupati Acrylon, its trading @ 24.70/- at present and ROCE is above 20 etc.

    Please respond

  8. Hello, which penny stock to by for 2 years perspective, planning to invest 5-10K ?

  9. Hello All, I am new and looking forward to enter in this field, can anyone help me about it?
    What are the required things to start and enter into stock market,
    I want to know the requirements,
    How can I do it online?
    What’s are the conditions they are having to start?
    Do I need any account like DEMAT account?

    • Yes, u need to have demat a/c anyway please read my BLOG, u will get lot of information on stock market further u can mail/call me if u have further doubts.
      GOD BLESS

  10. Good Works Brother. Thank you so much for making me know the basics of investing.

  11. Hi sir , i am fresher. I bought tara jewel but it is in loss. Will it come good position .pls suggest me .

  12. Excellent Analysis

  13. Hi sir, Which stock can i buy now, can you suggest some ideas please. I am ready to hold my sotck up to 1 year time period.

  14. Sir I can buy Kopran and stel holdings.Please suggest me

  15. Rahul Sikarwar | February 10, 2017 at 8:02 pm | Reply

    Dear Sir ,I am fresher,i want to invest 2000 rs per Month in Stock market for long term purpose approx 10 year.please suggest me Where should I invest.
    Thanks & Regards
    Rahul Sikarwar

  16. excellent article! Thanks for the detailed analysis.

  17. Good fundamental advice for investors.

  18. Sir I have 1 lakh what should I do for becom much money

  19. Very precise post on basic fundamentals of stock market analysis. Thanks.

  20. Hi sir…. I buy FEL 3000 share @ 18 rupees. then what is its future after 5year

  21. Now if I buy 100 high value shares such as MRF, HONEYWELL AUTOMATION, EICHER etc will I be able to sell those when the market comes up…I mean , will there buyers to buy those?

  22. HELLO SIR CAN U PLE SUGGEST THE PENNY STOCK BELOW 50 RS SHARE PRICE.. MY INVESTMENT IS ONLY 10K FOR LONG TERM

  23. if u do not believe just watch one week and will feel

  24. if u want to triple ur invest in just 3 years buy tara jewel and 50percent return in just one year

  25. Surbhi Girotra | December 1, 2016 at 7:54 pm | Reply

    Hello Sir, I want to invest 3 lkh in different stocks for one or one and half year. Please suggest the best option to go for.

    • C PRABHAKAR RAJU | April 14, 2017 at 10:42 am | Reply

      Best 3 stocks according to me
      Escorts ltd, Edelweiss Financials and RBL Bank.
      Will give good returns in 1 to 2 years. Can double from the current prices

  26. please suggest some share for long term investment

  27. Good day, can you tell me if it’s still right to buy sunil hitec engineers?

  28. Hi, I want to know how to start to buy shares, what is the procedures . please help on this. I am very new to this.

  29. Sir, how would you rank (1) Karur Vysya Bank PE around 9.5 BV of 1.5 (2) Renaissance Jewellery PE 5 only BV 0.5 with benefits of forex income. Both regular dividend paying companies, conservative management but steadily increasing growth. Largely missed out by investors it seems……

  30. Sir, as a beginner I want to start with minimum like starting with 10000 for short terms. kindly advise…

  31. How to buy vadilal Ind,eros international ,stampede

  32. Aditya Mahobia | November 4, 2016 at 5:19 pm | Reply

    Gurudev,
    AAp ka Jawab nahi.
    Pranam.Excellent website.

  33. Wow! this is so amazing techniques!! thank you!!

  34. JOHNSON JOSEPH ROZARIO | October 21, 2016 at 2:27 pm | Reply

    Choose an industry with less or no competitors.

  35. I want to invest five lacs for longterm like 5 years.Please suggest.

  36. SIR, I WOULD LIKE TO INVEST IN STOCK FOR LONG TERM 10 YEARS RS 50 LKH. PLEASE SUGGEST ME THKS. RAJU

  37. Hi mani
    please suggest some share for long term investment

    Thanks

  38. I had an amount of 50000..where should I invest for 5 years..

    • if u have 50k money then i think two kind of investment for u :
      1st: secure investment : HDFC GUILT Mutual Fund, HDFC Midterm opportunity mf
      2nd: Aggresive Inv : Buy HDFC EQUITY FUND or SBI BLUE CHEAP FUND
      If u want to buy Stocks then go for bajaj finance or bajaj fin serv
      but personaly suggest u, dont enter in direct equity market, it requires regular investment and its risky without complete protfolio, and in 50k amount u can’t make portfolio correctly.
      Go for mutual fund its safe.

      • M S Raghavan | June 18, 2017 at 8:47 am | Reply

        Good one, what is the minimum amount you advice to have a reasonable portfolio of stocks regards MSR

  39. Please update the analysis for the month of September 16. We are looking for new ideas.

  40. Upinder Singh | August 26, 2016 at 1:19 am | Reply

    Hi Dear, it seems you forgot the more important facet of evaluation professed for a defensive investor I.e. Calculating & comparing the intrinsic value of each company with market price. Hope it is added soon for benefit f most investors.

  41. Sir,
    I am in this field only two years. I want more knowledge in trading Expecting good ideas.

  42. mayur shirsat khanota | August 18, 2016 at 5:36 pm | Reply

    can hindalco buy for next 6 month???? what should be target

  43. Good and relevant feedback

  44. Sangameshwar Vishwanath | August 1, 2016 at 2:12 pm | Reply

    Sir iam a small trader I have rs 50000 I want to invest for a long term please suggest me some multi bagger stocks a friend suggested me gmr infra.
    is it right to buy or suggest me some company .
    please sir.
    rgds
    v sangameesh

  45. Sir I bought 15000 shares of Alok Ind @ 7.00 rs 1 year ago. Pl suggest me what will be target in next 1 year.

  46. Dear Sir

    Am thinking of investing in stock (first timer). I have divided the time frame for waiting into 2 years, 5 years, 10 years and further. Kindly suggest me stocks accordingly. The companies that i have shorlisted are TCS, TVS, Maruti Suzuki, LIC Housing Finance Ltd.
    Thanks in advance

    • as per my view for longterm go for :
      Bajaj Finance, Bajaj Finserv,Ipca LAb, Cipla, Sun pharma, Chola Madlam, Edelweiss Finance, L&T Finance, Hind Zinc, NBCC, Heidelberg Cement, RBL Bank, ICICI, sbi, ICICI Pru, LIC Housing, PNB, Marico, Berger Paint, can be buy inosys but avoid IT sector. Invest in Banking Finance 40-45%, pharma 20-25% and remaining or others.

      Dont buy as per any sugession, invest as per ur own research. No tips can make u huge profit, otherwise every tips company will become Ambani or Tata in 2-3 years.

  47. Hi ..I am planning to buy Suprajit Engineering,Minda Corporation,Capital First shares each one 50 thousand planning to buy…can u suggest some one is it good ones?

  48. Cool Value Investing Strategies. Thanks for sharing

  49. Great piece of analytics and view. Just sums up the stock investment in one go. Appreciate this article. Please keep writing such informative blogs.

  50. Hello Sir,

    I am having a stock of Suzlon of 10000 quantity, purchased 5years back @ 36. what is your view on this stock. Should I keep this stock for still long term?

  51. I have bought 150 shares of icici bank @248 what about its future can it be a multibagger?

  52. sandeep dhillon | July 4, 2016 at 1:40 pm | Reply

    sir ..I want to invest 5 lack for 1 year suggest me best share …what will be excepted value of that stock after 1 year
    tnx

  53. VERY USEFUL INFORMATION. I HAVE INVESTED IN COAL INDIA 300CSHARES , 200SHARESIN NMDC & 300 SHARES IN DCB BANK. WHAT IS FUTURS.

  54. Hi,
    I have bought 10000 shares of JP Power @ RS. 6.72 2 years ago. Please advice me what to do. Can I hold it for next 10 years?

    • As per experts review by that time (10 years) the stock price would be around 160 to 240 range, better you sell 5000 units and buy andhra cements which is trading for 8.15rupees.

  55. Very useful information with deep study about so many companies. Really,a Knowledge worthy article.

  56. Prahladnayak | June 15, 2016 at 11:14 pm | Reply

    Dear sir ….I want to invest 100000 for five years please suggest me best 3 companys.

    • Invest in State bank of india, Andhra cement, Yes bank, ITC limited, Infosys, Sun Pharma, Bajaj Electricals, and trying to concentrate on small and mid caps which gives you good returns in long term investments. and don’t put all eggs in one basket.

  57. Thanks for sharing your insights.
    I think NMDC should also be included in your list.
    Recently I invested a huge amount of money in that stock trailing at 90. It can be a multibagger.
    Read the specimen of subscriber mail from my blog favoring the same intent – https://www.quora.com/Which-is-the-best-stock-to-invest-Rs-100000/answer/Sowmay-Jain

  58. to be on a safer side n to gain long term gains ….. buy sensex nd nifty according to the weightage of respective stocks …….. sensex nd nifty will surely increase n give u handsome retuns in long term….
    as we have seen sensex in 1979 ..rs 100 , and presently rs 27000… shows ur investment had increased 270 times in 35 years

  59. Sampath Kumar Patel Midivelli | May 23, 2016 at 12:58 pm | Reply

    Mani Garu,

    I wanted to invest 5 lacs in 5 stocks (one lakh in one stock) in long term perspective (over 10 years of time). Please advice the stocks.

    Thanks,
    Sampath

  60. Ketan patel | May 22, 2016 at 8:51 pm | Reply

    Hi what is your suggestion on SKM egg products stock. It has 11.77 EPS and 6.55 P/E ration and current stock price is 77.15 rupees. Can we add this stock in portfolio.

    • Hello Ketan, SKM Engg looks to be a new company listed in NSE (only last 5 years record is available on internet). In the last 5 years, its EPS has been as following: 9.57, 2.58, 0.39, -4.41, -3.54. If you want to buy this stock, I will suggest you to do a more deeper study of its fundamentals. On face of it, SKM Engg seems to be improving but remains on the riskier side.

  61. A Mohapatra | May 16, 2016 at 3:53 pm | Reply

    Hi Mani,
    Nice article and very well written. Just one suggestion, it would be really nice if you can put the publication date in the first line such that we can figure out the relevance of numbers stated as per current time. Also would like to know how you captured the data and what are the points we as a long term equity holder would look for, beyond the numbers mentioned.
    Keep the good work 🙂

    • Thanks for advice. The publication is updated once every month. Like the list which is now live will be relevant for the complete May’2016 (unless and until the stock market faces some major correction etc.)

  62. Hi Mani,

    Thanks for all valuable information. I was going through Financial Technologies and it seems there is some typo error in PEG of this share. It should be more then 4 (18.68/4.39) and Iam new to stockmarket. there is rummer in news to sell this stock. Kindly guide me what will be future of this stock

  63. Please mention good company to invest in equity / mutual fund as SIP.

  64. i invested 1 lac in suzlon stock @ Rs.29. please answer my question regarding future growth of company

  65. I invested 2 lac in NMDC stock for @ Rs.100 please answer my question regarding future growth of the company and its depend upon china market.

  66. its a nice home work. keep it up.

  67. Nice work,aparting knowledge to all those having less understanding of share market.Basic knowledge share market is very important to avoid any major losses.
    Great job and very good article.

  68. I want to get multibagger tips

  69. Yes I would like to have information on companies that have satisfactory PE / PEG ratio and also those do not have any leverage ratios

  70. GYAN SINGH FLORA | December 23, 2015 at 9:09 pm | Reply

    I AM INTERESTED TO JOIN THE GROUP “GETMONEYRICH.COM”.LET ME GET UPDATES RELATED TO FINANCIAL MARKET SITUATION FOR INDIAN SHARES.
    THANKS!

    GYAN FLORA

  71. rich information by you

  72. nice piece of info , good article

  73. Sandip Malakar | August 9, 2015 at 8:02 pm | Reply

    The best all round profitable, debt free, high growth, less cost company share name for long-term

  74. Why to spend time to analyse stocks. It is better to play safe. Best way to enter in stock market is via SIP way or by buying direct mutual funds.

  75. Can anyone please let me know that CIL is coal India ltd or something esle?

  76. What is CIL – coal India ltd.?

  77. Sir, You have done great work. Highly appreciated ! But, I am confused with Your conclusion about HUL and nestle, How can they be power houses if the PEG is so high. It doesnt seem the right time to buy any of them based on Peter Lynch`s theory. Moreover there is negative sentiment in the maket regarding the oil price which may decline to 40$ in future, is Cairn India still a safe buy. Can anyone provide the feedback.

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