Best Share to Buy for Long-Term

Long-term investing is a popular investment strategy for smart retail investors who want to grow their money over time. Benjamin Graham, the father of value investing, defined investing intelligence as someone who values ‘time in the market’ by choosing investment options that suit you best rather than investing on hearsay.

What is your Definition of Long-Term Investing

Along with fundamentals and qualitative aspects like management quality and efficiency, the financials must be viewed from a long-term perspective when looking for the best stocks to buy in India for the long term. For investors, long term usually refers to a period of more than 5 years.

Here are some of the best long-term investments in India:

1. HDFC Bank

One of the HDFC twins, HDFC Bank, was founded in 1994 and is owned by HDFC. Aditya Puri, the bank’s managing director, had been in charge since its inception and had become the private bank’s longest-serving MD. In 2020, Sashidhar Jagdishan took over as his replacement. Retail loans account for more than half of the bank’s loan portfolio, according to many analysts.

Retail banking, wholesale banking, and treasury are the bank’s main businesses. For the quarter ending December 31, 2021, standalone net profit increased by 18% to Rs 10,342 crore. In the previous financial year, the bank made a net profit of Rs 8,758 crore. The bank’s net revenues, which include NII and other income, increased by 12% to Rs 26,627 crore in Q3FY21 from Rs 23,760.8 crore.

2. Hindustan Unilever

HUL is one of India’s largest FMCG companies. Glow & Lovely (formerly Fair & Lovely), Lifebuoy, Clinic Plus, Vim Bar, Bru Coffee, and others are among the HUL brands. In 1933, the company was established. As of March 21, 2022, the company has outperformed the Sensex by more than 400 percent, whereas the Sensex has returned around 220 percent over the same time period. It reported a 17 percent increase in net profit for the quarter ended December 31, 2021, to Rs 2,243 crore, as it gained market share in both urban and rural areas as India recovered from coronavirus-related lockdowns.

3. SBI

India’s largest bank is the State Bank of India. In India, the bank has around 24,000 branches, with 190 overseas branches in 35 countries. After peaking at 5.73 percent of net advances at the end of March 2018, net NPAs have decreased in both financial years since then, falling to 3.01 percent at the end of March 2019 and 2.23 percent at the end of FY20.

It reported a 62 percent increase in net profit for the quarter ending December 2021, to Rs 8,432 crore, thanks to lower provisions for bad loans. Total provisions and contingencies for bad loans were Rs 6,974 crore in Q3FY21, down 33% from Rs 10,342 crore the previous quarter.

The bank’s gross bad loan ratio, which measures asset quality, dropped to 4.5 percent from 4.90 percent a quarter ago. Net NPAs, on the other hand, increased slightly from 1.23 percent at the end of the third quarter of 2020-21 to 1.34 percent.

4. HDFC

The parent company of HDFC Bank is HDFC, or Housing Finance Development Corporation. The housing finance company was founded in 1977 and claims to have financed more than 7 million housing units since that time. Housing finance is the main business of the larger HDFC Group, which also includes HDFC Bank, Life and General Insurance Arms, and other financial institutions.

For the nine months ended December 31, 2021, it saw a 14 percent increase in standalone Profit After Tax of Rs 10,042 crore, and a 48 percent increase in individual disbursements.

5. Bajaj Finance

In the last ten years, Bajaj Finance’s stock has given phenomenal returns. Over a ten-year period, the stock has returned nearly 8600 percent as of March 21, 2022. Bajaj Finance has focused on small-ticket loans in order to stay out of debt. As of March 31, 2020, it had a loan book of Rs 1.29 lakh crore. Bajaj Finance is a financial services company that is a subsidiary of Bajaj Finserv ltd.

For the quarter ending December 31, 2021, it reported an 85 percent increase in consolidated net profit of Rs 2,125 crore. In the previous year, it was Rs 1,146 crore. In Q3FY22, net interest income (NII) increased by 40% to Rs 6,000 crore, up from Rs 4,296 crore in Q3FY21. As of December 31, 2021, gross and net nonperforming assets (NPAs) were 1.73 percent and 0.78 percent, respectively, compared to 2.45 percent and 1.10 percent as of September 30, 2021.

6. Wipro

Wipro Limited, formerly Western Indian Vegetable Products Limited, is an Indian multinational conglomerate based in Bangalore, Karnataka. FMCG, lighting, Wipro Limited, formerly Western Indian Vegetable Products Limited, is an Indian multinational conglomerate with headquarters in Bangalore, Karnataka. FMCG, lighting, information technology, and consulting are just a few of the diverse businesses it operates. Azim Premji’s grandfather established one of the largest rice trading businesses, which has since grown into a multibillion-dollar conglomerate. Premji stepped down as executive chairman of Wipro on July 31, 2019, after nearly 53 years as the company’s chairman. His elder son, Rishad Premji, who was the company’s chief strategy officer at the time, took over.

For the quarter ending December 31, 2021, it reported a consolidated net profit of Rs 2,969 crore (attributable to shareholders) (Q3FY22). In the previous financial year, the firm made a net profit of Rs 2,968 crore. Its net profit increased 1.3 percent sequentially, according to the company. Its operating revenue increased by 29.6% to Rs 20,313.6 crore in the quarter ended December 2020, up from Rs 15,670 crore the previous quarter. IT services revenue was $2,639.7 million, up 2.3 percent quarter over quarter and 27.5 percent year over year.

7. Asian Paints

In the early 1950s, Asian Paints began as a small operation in a garage. Now, nearly seven decades later, it not only has a stronger presence in our country, but also in 20 other countries. As of March 21, 2022, the stock has returned more than 900 percent in the last ten years. The company’s growth has been aided by a number of factors, including efficient cash management and repainting revenues, which have kept it safe from real estate problems if it had relied solely on new painting.

Smart advertising, such as ‘Har Ghar Kuch Kehta Hai,’ which sticks in customers’ minds, as well as a genuine focus on smaller cities and retail segments, have helped the company to improve its game. For the quarter ending December 31, 2021, it reported an 18 percent drop in consolidated net profit to Rs 1,016 crore. In the previous year, it was Rs 1,238 crore.

8. Adani Green

Adani Green Energy Limited, based in Ahmedabad, Gujarat, is an Indian renewable energy company. The Adani Group of India owns it. The Kamuthi Solar Power Project, which is one of the world’s largest solar photovoltaic plants, is operated by the company.

As of March 17, 2022, the stock had returned over 5,000% in the previous three years.

9. Bajaj Finserv

Bajaj Finserv is a non-banking financial services company based in India. Lending, asset management, wealth management, and insurance are its main areas of focus. Because the company has such a large customer base, it has a great opportunity to cross-sell its insurance products. This aids in keeping insurance marketing costs under control, resulting in higher margins when compared to competitors. In the ten years leading up to March 21, 2022, the company’s stock had returned more than 2,500 percent.

Its consolidated net profits for the quarter ended December fell 2.63 percent to Rs 1,256 crore, down from Rs 1,290 crore the year before. The company reported that total revenue from operations increased 10.21% year on year (YoY) to Rs 17,589 crore from Rs 15,959 crore the previous quarter.

10. Larsen & Toubro

Larsen & Toubro Ltd, or L&T, is an Indian multinational conglomerate headquartered in Mumbai with interests in engineering, construction, manufacturing, technology, and financial services. As of March 21, 2022, the stock had returned around 200 percent over the previous ten years. Higher raw material and fuel prices impacted margins, resulting in a 17 percent drop in consolidated net profit to Rs 2,055 crore for the quarter ending December 31, 2021. In the previous fiscal year, the company made a net profit of Rs 2,467 crore. In Q3FY21, consolidated revenue from operations increased by 11% to Rs 39,563 crore, up from Rs 35,596 crore in Q3FY20.

What Criteria did we use to Choose the Shares

Let’s take a look at the criteria we used to compile a list.

We looked at three different things:

• A Market Capitalization of at least Rs 10,000 crores is Required

Simply put, the market cap is the company’s market value. It is the price at which you can purchase all of the company’s outstanding shares. It’s calculated by multiplying the number of outstanding shares by the market price of each share. Because the stock price is a moving target, the market cap fluctuates as well. It indicates the company’s size. More well-known companies with higher mcaps have already progressed to a certain point and are less prone to volatility and risk. As a result, a high market cap is an excellent measure to single out companies for guaranteed and less volatile returns.

• The Operating Profit Margin is Greater than 15%

Operating profits are the profits generated by a company’s core business. Asian Paints, for example, will focus on manufacturing and selling various types of paint. Any other businesses it owns are ancillary or subsidiary businesses. The operating profit margin, or OPM, compares a company’s operating profit to its revenue.

OPM Stands for Operating Profit Divided by Sales Revenue

OPM= operating profit/sales revenue

That is, how much profit does a company make from its core businesses for every Re 1 of sales? It’s a good indicator because most analysts believe a company has real value when it generates profits from its core operations rather than from ad hoc financing activities. It reflects a business’s long-term viability, efficiency, and health.

• Over a three-year period, profit growth should be greater than 10%

While operating profit only considers the core business, net profit considers all aspects of a business. It also takes into account costs such as taxes and interest on a loan, as well as the overall business’s real earnings. The bottom line is the net profit, which appears at the bottom of the profit statement after all costs and expenses have been accounted for.

We sorted the companies by market cap in descending order after obtaining a list of at least 80 stocks that met the above criteria.

Disclaimer: Before selecting stocks for your portfolio based on your goals and risk tolerance, please conduct your own research. The criteria we used are solely for educational purposes. This is not a suggestion.

What to Keep in Mind When Investing for the Long Term

• Select a few financials, examine qualitative aspects such as management quality, ethics, and CSR activities, and evaluate them using historical data and a three-year or longer period of time.
• Filter companies by market capitalization and select industry leaders with a track record of long-term success.
• Match your risk tolerance to the company’s risks. To learn about industry-specific factors and risks, conduct a business and industry analysis.
• Only invest in a company if you are familiar with it and its operations.

Final Thought

Your returns will compound over time if you wait long enough. If you do not withdraw your returns or interest earned in the middle, your returns will compound on an accumulated number rather than just your principle. We can rule out volatility and short-term risks by using time.

Now repeat the exercise with larger sums of money and a longer period of time. Any investment’s essence and appeal is in the long run.

Best Share to Buy for Long-Term

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