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 people. But is it good to pick any stock and start trading?

No, 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 list of 5,500?

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 would have been a millionaire by now. But we know that only rare breed of people makes money in stock market.

What makes these people so rare? What makes them succeed among the crowd 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.

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

Even the best of stocks are very volatile. The volatility is mainly because of the price fluctuations that keeps happening everyday in the market. If idea is to prepare ones ‘own’ list of best stocks, one must prepare and review the list every 3 months. Stock fundamentals change with market price fluctuations. But how price can effect business fundamentals?

Best stocks are not only those stocks which has strong 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.

Moreover, companies business performance also keep changing from quarter to quarter. Performance of company will also reflect in their financial statements (fundamentals). Hence, every change in companies quarterly report and market price also reflects on ones ‘list of best stocks’.

Characteristics of Top Stocks :

* Market capitalization is high.
* Sales turnover is high compared to its competitors.
* High Sales growth rate over a period of last 5 years.
* Improving profit margin.
* Net Worth which is high and also improving.
* Fast cash flow.
* Reliable dividend payment history.
* Available at discounted price levels below its intrinsic value

How to screen 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 screen average and down performing companies. The criteria that we can 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 here. This way we can make sure that we do not miss out those stocks wich are liked by the market.

High Profit Margin

Once we have our list of stocks based on their market share, we must screen out those stocks which are not as profitable. For any investor the priority should be include highly profitable stocks in portfolio. The criteria that we can use to screen stocks in terms of high profitability is “Operating margin”. I know people would also like to see stocks with high PAT margin, but frankly speaking we must avoid focus on PAT margin. PAT is one fundamental which is most manipulated in majority companies income statement.

Low Debt & High Dividend Yield

Buying stocks of companies which dominate the market (in terms of sales) and also has high profitability is not enough. If company is able to manage high sales (market capture) by being dependent on debt, then it is not good. So one must always have a look into the debt levels of a company. High debt companies are high-risk stocks. The criteria that we can use to screen stocks to know about its debt level is “Debt to Equity Ratio”.

Investors love companies which pay high dividends. All value investors (like Warren Buffett) loves to site and earn high dividends. But not all companies pay dividends. Our focus should be to buy stocks which pay good dividends. In order to identify high dividend paying stocks, I like to see stock in terms of its “5 Year Average Dividend Yield”. This helps us to understand if the stock has been paying consistently high dividends or not.

A combination of low debt and high dividend payout can make a stock very likable.

Price Valuation

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 genrally 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 valuatin are “P/E”, “Price/Sales” & “Price to book value”. Where ever possible I try to check bests stocks price valuation in terms of stocks free cash flow.

I have developed a product which helps my user to learn to identify best stocks in totality. Means, along with fundamental check it also analyzes stocks in terms of its price valuation. Users who are interested to learn the concept of stocks analyses can buy this stock analysis worksheet.

Best Stock to Buy in India for long term in 2017

(Updated as on April’2017)

Business Fundamentals

SL Sector Name Market Cap (Rs.Billion) Revenue (Rs.Billion) Net Profit (Rs.Billion) Net Profit margin (5YA)
1 Basic Materials Hindustan Zinc 1,220.27 151.98 81.22 53.44
2 Basic Materials Asian Paints 1,029.70 285.11 29.91 10.49
3 Basic Materials National Aluminum Co. 147.87 117.58 14.10 11.99
4 Capital Goods Bharti Infratel 602.79 100.38 15.78 15.72
5 Capital Goods UltraTech Cement 1,093.85 276.42 28.83 10.43
6 Capital Goods Grasim Industries 489.71 391.08 40.24 10.29
7 Consumer Cyclical Bajaj Auto 811.80 237.59 36.04 15.17
8 Consumer Cyclical Tata Motors 1,488.55 2,832.81 141.92 5.01
9 Consumer Cyclical Apollo Tyres 106.23 234.09 15.03 6.42
10 Consumer/Non-Cyclical Dabur India 488.56 136.56 18.53 13.57
11 Consumer/Non-Cyclical Godrej Consumer 569.28 93.88 11.83 12.60
12 Consumer/Non-Cyclical Nestle India 644.12 92.24 10.03 10.87
13 Energy Coal India 1,816.60 764.52 162.77 21.29
14 Energy Cairn India 573.73 77.90 40.44 51.91
15 Energy Reliance Industries 4,294.61 5,307.33 332.24 6.26
16 Financial Kotak Mahindra Bank 1,605.45 319.20 68.76 21.54
17 Financial IndusInd Bank 852.45 175.57 51.90 29.56
18 Financial Bajaj Finserv 652.19 117.73 42.16 35.81
19 Healthcare Sun Pharma 1,651.07 319.95 76.31 23.85
20 Healthcare Lupin 639.78 142.08 22.79 16.04
21 Healthcare Pfizer 87.62 3,525.55 598.99 16.99
22 Services Zee Entertainment 514.37 64.38 12.36 19.20
23 Services Idea Cellular 309.52 369.33 27.11 7.34
24 Technology Tata Consultancy 4,791.69 1,167.73 259.94 22.26
25 Technology Infosys 2,336.51 679.15 153.22 22.56
26 Technology Wipro 1,274.24 546.85 95.70 17.50
27 Transportation Adani 703.30 81.93 31.94 38.99
28 Transportation Interglobe Aviation Ltd 380.05 178.23 14.94 8.38
29 Transportation Great Eastern Shipping 62.87 32.48 6.42 19.76
30 Utilities Reliance Power 134.93 105.03 18.73 17.83
31 Utilities JSW Energy 102.83 90.32 9.96 11.03
32 Utilities Indraprashtha Gas 142.09 64.86 7.05 10.87

Debt Levels & Price Valuation

SL Sector Name Debt Equity (Average 5Y) Dividend Yield (%) P/E PEG
1 Basic Materials Hindustan Zinc 0.00 9.62 16.48 0.02
2 Basic Materials Asian Paints 0.02 0.70 52.15 -0.02
3 Basic Materials National Aluminum Co. 0.00 2.63 26.78 -9.05
4 Capital Goods Bharti Infratel 0.00 0.92 20.98 0.95
5 Capital Goods UltraTech Cement 0.30 0.24 40.39 -17.18
6 Capital Goods Grasim Industries 0.10 0.43 15.80 -3.54
7 Consumer Cyclical Bajaj Auto 0.01 1.96 19.32 4.85
8 Consumer Cyclical Tata Motors 0.36 0.11 18.84 -0.64
9 Consumer Cyclical Apollo Tyres 0.51 0.96 9.48 0.26
10 Consumer/Non-Cyclical Dabur India 0.04 0.82 38.12 2.55
11 Consumer/Non-Cyclical Godrej Consumer 0.04 0.34 46.58 14.68
12 Consumer/Non-Cyclical Nestle India 0.11 0.73 69.41 -6.84
13 Energy Coal India 0.02 9.36 16.83 1.12
14 Energy Cairn India 0.00 0.98 48.62 0.60
15 Energy Reliance Industries 0.38 0.80 14.88 2.22
16 Financial Kotak Mahindra Bank 1.72 0.06 34.95 -7.12
17 Financial IndusInd Bank 2.02 0.32 31.20 1.71
18 Financial Bajaj Finserv 0.00 0.04 28.98 2.04
19 Healthcare Sun Pharma 0.21 0.15 20.18 -0.11
20 Healthcare Lupin 0.04 0.52 22.30 0.77
21 Healthcare Pfizer 0.00 0.77 26.39 -8.73
22 Services Zee Entertainment 0.00 0.42 52.63 6.56
23 Services Idea Cellular 1.00 0.70 61.21 1.85
24 Technology Tata Consultancy 0.00 1.80 18.30 1.16
25 Technology Infosys 0.00 2.38 16.34 -1.15
26 Technology Wipro 0.17 1.16 14.80 1.29
27 Transportation Adani 0.98 0.32 19.08 1.03
28 Transportation Interglobe Aviation Ltd 5.11 1.43 21.30 0.32
29 Transportation Great Eastern Shipping 0.58 3.24 7.88 0.23
30 Utilities Reliance Power 0.16 2.08 11.14 2.08
31 Utilities JSW Energy 0.63 3.18 11.57 0.35
32 Utilities Indraprashtha Gas 0.16 0.59 30.60 4.85

 

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

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

  2. hi Sir,

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

    Please respond

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

  4. 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

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

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

  7. Excellent Analysis

  8. 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.

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

  10. 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

  11. excellent article! Thanks for the detailed analysis.

  12. Good fundamental advice for investors.

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

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

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

  16. 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?

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

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

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

  20. 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

  21. please suggest some share for long term investment

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

  23. 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.

  24. 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……

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

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

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

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

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

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

    Choose an industry with less or no competitors.

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

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

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

    Thanks

  33. 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.

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

  35. 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.

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

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

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

  38. Good and relevant feedback

  39. 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

  40. 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.

  41. 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.

  42. 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?

  43. Cool Value Investing Strategies. Thanks for sharing

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

  45. 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?

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

  47. 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

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

  49. 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.

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

  51. 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.

  52. 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

  53. 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

  54. 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

  55. 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.

  56. 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.)

  57. 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

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

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

  60. 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.

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

  62. 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.

  63. I want to get multibagger tips

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

  65. 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

  66. rich information by you

  67. nice piece of info , good article

  68. 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

  69. 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.

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

  71. What is CIL – coal India ltd.?

  72. 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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