Last Updated on Jun 6, 2024 by Anjali Chourasiya
Investing in the stock market is a popular strategy for building wealth over time. When it comes to long-term investments, choosing the right stocks is crucial. The Nifty 500 index offers a broad spectrum of companies across various sectors, making it a rich resource for long-term investors. This article delves into some of the best long-term stocks from the Nifty 500, offering insights into their potential benefits and considerations for secure financial planning.
Table of Contents
Best long-term stocks in India – June 2024
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 5Y CAGR (%) | 5Y Avg Return on Equity (%) | 5Y Historical Revenue Growth (%) | 5Y Historical EPS Growth (%) | 1Y Forward EPS Growth (%) |
| Jindal Stainless Ltd | Iron & Steel | 58,076.84 | 758.65 | 21.41 | 82.52 | 17.45 | 23.28 | 61.80 | 37.17 |
| Dixon Technologies (India) Ltd | Home Electronics & Appliances | 55,623.32 | 8,851.40 | 151.25 | 78.82 | 22.74 | 42.75 | 41.22 | 73.47 |
| Tanla Platforms Ltd | Software Services | 12,063.74 | 859.35 | 22.00 | 71.16 | 19.69 | 31.37 | 73.22 | 15.54 |
| KPIT Technologies Ltd | IT Services & Consulting | 42,080.66 | 1,381.75 | 70.78 | 70.80 | 17.19 | 48.77 | 40.31 | 21.98 |
| Action Construction Equipment Ltd | Heavy Machinery | 17,276.60 | 1,269.40 | 52.65 | 64.64 | 15.75 | 17.21 | 41.97 | 20.15 |
| Persistent Systems Ltd | Software Services | 54,155.81 | 3,351.85 | 49.53 | 62.38 | 19.01 | 23.57 | 26.80 | 15.13 |
| Polycab India Ltd | Electrical Components & Equipments | 100,431.33 | 6,456.20 | 56.29 | 60.27 | 20.12 | 17.80 | 27.43 | 17.14 |
| Varun Beverages Ltd | Soft Drinks | 194,693.10 | 1,464.05 | 94.70 | 60.01 | 22.01 | 21.55 | 46.12 | 26.33 |
| APL Apollo Tubes Ltd | Building Products – Pipes | 47,019.60 | 1,434.50 | 64.20 | 55.71 | 22.07 | 20.49 | 33.48 | 38.94 |
| J B Chemicals and Pharmaceuticals Ltd | Pharmaceuticals | 25,881.40 | 1,746.25 | 46.83 | 55.51 | 19.33 | 15.89 | 24.73 | 25.67 |
Note: The data in the above table is from 29th February 2024. The stocks are filtered using Tickertape Stock Screener using the following parameters:
- Stock Universe – Nifty 500
- 5Y CAGR – Sorted from highest to lowest
- 5Y Average Return on Equity – High
- 5Y Historical Revenue Growth – Set the limit to 15 to High
- 5Y Historical EPS Growth – High
- 1Y Forward EPS Growth: Set the limit to 10 to High
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Overview of the Best Fundamental Stocks for Long Term
Jindal Stainless Ltd
Jindal Stainless Ltd, founded in 1970 by O.P. Jindal, is a leading stainless steel manufacturer in India. The company operates a range of manufacturing facilities that produce a variety of stainless steel products used in sectors such as infrastructure, automotive, railways, and consumer goods. Jindal Stainless is recognised for its innovation in producing high-quality steel and its commitment to sustainability.
As of now, Jindal Stainless Ltd has a market capitalisation of Rs. 58,076.84 cr. and a stock price of Rs. 758.65. The company’s PE ratio is 21.41. Over the past five years, the company has achieved a strong CAGR of 82.52%. It boasts an average return on equity (ROE) of 17.45%, historical revenue growth of 23.28%, and EPS growth of 61.80%. The forward EPS growth is projected at 37.17%.
Dixon Technologies (India) Ltd
Dixon Technologies (India) Ltd, established in 1993 by Sunil Vachani, is a premier electronics manufacturing services (EMS) provider in India. The company is involved in the production of a wide range of consumer electronics, home appliances, lighting products, and mobile phones. Dixon Technologies has partnerships with several major global and domestic brands, providing end-to-end solutions from design to manufacturing.
The company has a market capitalisation of Rs. 55,623.32 cr. and a stock price of Rs. 8,851.40. The PE ratio stands at 151.25, reflecting the high growth expectations. Dixon has achieved a 5-year CAGR of 78.82%, an average ROE of 22.74%, historical revenue growth of 42.75%, and EPS growth of 41.22%. The forward EPS growth is anticipated to be 73.47%.
Tanla Platforms Ltd
Founded in 1999 by Uday Reddy, Tanla Platforms Ltd is a significant player in cloud communications, providing solutions such as A2P messaging and CPaaS (Communication Platform as a Service). The company is also a pioneer in implementing blockchain technology for secure and efficient communication services. Tanla Platforms serves a diverse clientele, including enterprises across various sectors.
Tanla Platforms has a market capitalisation of Rs. 12,063.74 cr. and a stock price of Rs. 859.35. The PE ratio is 22.00. The company has demonstrated a 5-year CAGR of 71.16%, with an average ROE of 19.69%. Historical revenue growth over the past five years is 31.37%, and EPS growth is 73.22%. The forward EPS growth is projected at 15.54%.
KPIT Technologies Ltd
KPIT Technologies Ltd, established in 1990 by Ravi Pandit and Kishor Patil, specialises in IT consulting and product engineering solutions, particularly for the automotive sector. The company focuses on areas such as automotive diagnostics, AUTOSAR, connected vehicles, and electric powertrain. KPIT Technologies is known for its technological expertise and innovative solutions that cater to the evolving needs of the automotive industry.
KPIT Technologies has a market capitalisation of Rs. 42,080.66 cr. and a stock price of Rs. 1,381.75. The PE ratio is 70.78. The company has achieved a 5-year CAGR of 70.80%, with an average ROE of 17.19%. Historical revenue growth over the past five years is 48.77%, and EPS growth is 40.31%. The forward EPS growth is expected to be 21.98%.
Action Construction Equipment Ltd
Founded in 1995 by Vijay Agarwal, Action Construction Equipment Ltd (ACE) is India’s leading material handling and construction equipment manufacturing company. ACE’s product range includes mobile cranes, tower cranes, loaders, and other heavy machinery. The company has a strong presence in the Indian market and exports its products to over 20 countries.
ACE has a market capitalisation of Rs. 17,276.60 cr. and a stock price of Rs. 1,269.40. The PE ratio is 52.65. The company has recorded a 5-year CAGR of 64.64%, an average ROE of 15.75%, historical revenue growth of 17.21%, and EPS growth of 41.97%. The forward EPS growth is projected at 20.15%.
Persistent Systems Ltd
Persistent Systems Ltd, founded in 1990 by Anand Deshpande, is a global software services company that provides digital business acceleration, enterprise modernization, and product engineering services. The company is known for its work in cloud computing, data analytics, and software-driven business transformation.
Persistent Systems has a market capitalisation of Rs. 54,155.81 cr. and a stock price of Rs. 3,351.85. The company’s PE ratio is 49.53. It has achieved a 5-year CAGR of 62.38%, an average ROE of 19.01%, historical revenue growth of 23.57%, and EPS growth of 26.80%. The forward EPS growth is expected to be 15.13%.
Polycab India Ltd
Polycab India Ltd, founded in 1996, is the largest manufacturer of cables and wires in India and has a significant presence in the consumer electrical goods segment, including fans, lighting, and switches. The company has a widespread distribution network and a strong brand presence in both urban and rural markets.
Polycab India has a market capitalisation of Rs. 100,431.33 cr. and a stock price of Rs. 6,456.20. The PE ratio is 56.29. The company has achieved a 5-year CAGR of 60.27%, with an average ROE of 20.12%. Historical revenue growth over the past five years is 17.80%, and EPS growth is 27.43%. The forward EPS growth is projected at 17.14%.
Varun Beverages Ltd
Founded in 1995, Varun Beverages Ltd is the second-largest bottling company of PepsiCo’s beverages globally, operating in India and several other countries. The company produces and distributes a wide range of carbonated and non-carbonated drinks, including popular brands like Pepsi, Mountain Dew, and Tropicana.
Varun Beverages has a market capitalisation of Rs. 194,693.10 cr. and a stock price of Rs. 1,464.05. The PE ratio stands at 94.70. The company has demonstrated a 5-year CAGR of 60.01%, with an average ROE of 22.01%. Historical revenue growth over the past five years is 21.55%, and EPS growth is 46.12%. The forward EPS growth is expected to be 26.33%.
APL Apollo Tubes Ltd
APL Apollo Tubes Ltd, established in 1986 by Sanjay Gupta, is the largest producer of structural steel tubes in India. The company offers a wide range of products, including hollow sections, black pipes, and galvanised tubes, serving the construction, automotive, and industrial sectors.
APL Apollo Tubes has a market capitalisation of Rs. 47,019.60 cr. and a stock price of Rs. 1,434.50. The PE ratio is 64.20. The company has achieved a 5-year CAGR of 55.71%, with an average ROE of 22.07%. Historical revenue growth over the past five years is 20.49%, and EPS growth is 33.48%. The forward EPS growth is projected at 38.94%.
J B Chemicals and Pharmaceuticals Ltd
Founded in 1976, J B Chemicals and Pharmaceuticals Ltd is a leading pharmaceutical company in India, known for its formulations and active pharmaceutical ingredients (APIs). The company’s product portfolio includes a range of therapeutic categories such as cardiovascular, gastrointestinal, and anti-infective drugs.
J B Chemicals and Pharmaceuticals has a market capitalisation of Rs. 25,881.40 cr. and a stock price of Rs. 1,746.25. The company’s PE ratio is 46.83. It has achieved a 5-year CAGR of 55.51%, with an average ROE of 19.33%. Historical revenue growth over the past five years is 15.89%, and EPS growth is 24.73%. The forward EPS growth is expected to be 25.67%.
Importance of Long-Term Investment
Long-term investment in stocks is often viewed as a strategic approach to building wealth. Unlike short-term trading, which involves frequent buying and selling to capitalise on market fluctuations, long-term investments focus on holding assets over several years. This strategy can help investors weather market volatility, as historical data shows that markets tend to trend upwards over extended periods.
Investing for the long term allows for the potential of compounded growth. Compounding refers to the process where the earnings on an investment generate their own earnings. For instance, reinvesting dividends can significantly increase the overall returns over time. This concept is best illustrated by the story of the legendary investor Warren Buffett, whose wealth primarily accumulated through the power of compounding.
Moreover, long-term investments typically attract lower capital gains tax rates. In many jurisdictions, holding an investment for more than a year qualifies for long-term capital gains tax, which is often lower than the tax on short-term gains. This tax efficiency can contribute to higher net returns.
Advantages of Investing in Stocks for the Long Term
Compounded Growth
Compounded growth is one of the most compelling advantages of long-term investing. When investors reinvest their earnings, these earnings begin to generate their own returns. Over time, this compounding effect can lead to substantial growth. For example, if you invest INR 1,00,000 at an annual return rate of 10%, the investment could grow to approximately INR 2,59,374 in ten years due to compounding.
Lower Tax Burden
Holding investments for the long term often qualifies for lower tax rates on capital gains. For instance, in India, long-term capital gains (LTCG) on equity investments held for more than a year are taxed at 10% for gains exceeding INR 1 lakh, whereas short-term capital gains (STCG) are taxed at 15%. This tax advantage can significantly enhance the overall returns from long-term investments.
Reduced Transaction Costs
Frequent trading incurs high transaction costs, including brokerage fees, which can erode investment returns. By adopting a long-term investment approach, investors can minimise these costs. For example, if an investor makes only one transaction per year compared to monthly trades, the savings on brokerage fees can be substantial over a decade.
Market Recovery Potential
The stock market is inherently volatile, and short-term fluctuations are inevitable. However, long-term investments have the potential to recover from market downturns. Historical trends show that markets generally recover from crashes and continue to grow. For example, after the 2008 financial crisis, major indices like the Nifty 50 recovered and surpassed their previous highs in the following years.
Disadvantages of Investing in Stocks for the Long Term
Market Volatility
While long-term investing can help mitigate the impact of market volatility, it does not eliminate it. Investors need to be prepared for periods of significant market downturns. For instance, during the COVID-19 pandemic, global stock markets experienced sharp declines, affecting long-term portfolios. Patience and a long-term perspective are essential to withstand such volatility.
Opportunity Cost
Long-term investments may lock up capital, preventing investors from taking advantage of other opportunities that may arise. For example, an investor with funds tied up in long-term stocks might miss out on a lucrative real estate deal or a promising new business venture.
Risk of Poor Performance
Not all long-term investments perform well. Some companies may face unforeseen challenges, leading to prolonged periods of underperformance. For instance, the technology sector saw significant disruptions with companies like Nokia, which once dominated the mobile phone market but later struggled to compete with newer players.
Guidelines for Selecting Stocks for Long-Term Investment
Fundamental Analysis
You can evaluate a company’s financial health by examining its revenue, profit margins, and cash flow. Companies with consistent revenue growth and healthy profit margins are often considered stable investments. For example, a company like HDFC Bank, which has shown consistent profit growth, might be viewed as a strong candidate for long-term investment.
Industry Position
Companies that lead their industry or possess a unique competitive advantage might perform better over the long run. For instance, Reliance Industries, with its dominant position in the Indian market and diversified business model, is often considered a robust long-term investment.
Management Quality
The quality of a company’s management can significantly impact its long-term success. Companies with experienced leadership teams and clear strategic visions are generally viewed as more likely to succeed. For example, Infosys has maintained strong performance due to its capable management team and clear business strategy.
Valuation Metrics
Valuation metrics like the P/E ratio, P/B ratio, and dividend yield can help assess whether a stock is fairly valued. A low P/E ratio compared to industry peers might indicate an undervalued stock with growth potential. For instance, Tata Consultancy Services (TCS) has a P/E ratio that is often compared with other IT firms to gauge its valuation.
How to Invest in Long-Term Stocks?
Research
Tickertape offers comprehensive stock performance analysis, featuring over 200 filters and tools to help you select the right stocks. For instance, Tickertape’s Scorecard assesses stocks based on profitability, performance, entry and exit points, valuation, and growth. Additionally, you can set custom alerts on the platform to stay updated with significant stock movements and news, ensuring you never miss an important update. Set your alerts now!
Diversification
Spreading your investments across different sectors and industries can help mitigate risks. For example, diversifying investments in sectors like technology, pharmaceuticals, and finance can protect your portfolio from sector-specific downturns.
Regular Monitoring
While long-term investments require patience, it’s essential to review your portfolio periodically. Regular monitoring helps ensure that your investments align with your financial goals and market conditions. For instance, reviewing your portfolio annually can help you make necessary adjustments based on changing market dynamics.
Who Should Consider Investing in Long-Term Stocks?
Long-term stock investments might be suitable for individuals who:
- Seek to build wealth over time.
- Are willing to withstand short-term market volatility.
- Prefer a more hands-off approach to investing.
Long-term investing is often considered appropriate for individuals with a higher risk tolerance and a longer investment horizon. For example, young professionals looking to build a retirement corpus might benefit from a long-term investment strategy.
To Conclude
Before deciding on which long-term stock to invest in, here are a few things to keep in mind –
- Do your due diligence on the financials, like – the balance sheet, income statement, etc., to identify financially sound companies.
- Explore stocks that align with your risk appetite.
- Invest in a business that you follow and understand.
- Check for the ‘Analyst Buy Reco‘ as it represents buy recommendations from an Analyst aligned with Tickertape. To get this information, go to your desired stock page, and click on ‘Forecast’. There you will get the percentages of Analyst buy recommendations. For instance, here’s an analyst buy reco of Reliance Industries Ltd.
- Conduct a peer comparison to evaluate the company’s performance against its competitor.
In addition to evaluating the stocks on the above parameters, you can also evaluate profitability, valuation, technical indicators and many more with the pro version of Tickertape. Explore today!
FAQs
What are the best long-term stocks in India?
The best stocks for long-term in India as of 4th June 2024 are:
– Jindal Stainless Ltd
– Dixon Technologies (India) Ltd
– Tanla Platforms Ltd
– KPIT Technologies Ltd
– Action Construction Equipment Ltd
– Persistent Systems Ltd
– Polycab India Ltd
– Varun Beverages Ltd
– APL Apollo Tubes Ltd
– J B Chemicals and Pharmaceuticals Ltd
The list is sorted using the Tickertape Stock Screener. It is based on the 5Y CAGR of the stocks.
Why should I invest in long-term stocks?
Investing in long-term stocks offers several potential benefits. You can enjoy compounded growth, lower transaction costs, and the chance to recover from market downturns, which may lead to more stable and substantial returns over time.
How do I choose long-term stocks?
Choosing long-term stocks involves evaluating a company’s financial health, industry position, and management quality. Tickertape Stock Screener has over 200 filters to help you analyse these factors and make informed decisions. You can also create custom filters, use pre-built screens, and create your stock universe. Further, it allows you to connect your watchlist and analyse it. Connect and analyse now!
What are the risks of long-term stock investment?
Long-term investments come with risks such as market volatility, opportunity costs, and the possibility of poor performance. Additionally, economic and industry changes can impact the performance of your investments.
Who should consider long-term stock investment?
Long-term stock investment is ideal for individuals looking to build wealth gradually and those willing to endure short-term market fluctuations. It is especially suitable for retirement savers and young investors who can benefit from compounding over time.
As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!
