14 Fundamentally Strong Stocks in India (2024) & How to Find Them?

Last Updated on Oct 7, 2024 by Aishika Banerjee

What happens if you build a house on a poor foundation? It crumbles down. Therefore, getting the foundation, aka fundamentals, right is key to having a strong base for a stronger house. The same applies to your investment portfolio – building one with fundamentally strong companies can help weather market storms and remain on the relatively brighter side. But what are stocks with strong fundamentals, and how to identify them? Let’s decode that and take a look at the top 10 fundamentally strong stocks in India in 2024 in this article.

Best Fundamentally Strong Stocks in India: Updated October 2024

Name	Sub-Sector	Market Cap (Rs. in cr.)	Close Price (Rs.)	PE Ratio	Volatility (%)	Debt to Equity (%)	Return on Equity (%)	Net Income (Rs. in cr.)
Tata Consultancy Services Ltd	IT Services & Consulting	1,538,501.26	4,272.85	33.51	21.15	0.09	50.30	45,908.00
HDFC Bank Ltd	Private Banks	1,264,913.97	1,657.65	19.75	21.31	0.00	16.86	64,062.04
ICICI Bank Ltd	Private Banks	873,581.01	1,239.75	19.74	20.67	0.00	18.02	44,256.38
Infosys Ltd	IT Services & Consulting	794,478.61	1,918.15	30.29	23.04	0.09	31.94	26,233.00
State Bank of India	Public Banks	710,979.25	770.65	10.60	28.41	0.00	16.72	67,084.65
Hindustan Unilever Ltd	FMCG – Household Products	669,339.81	2,848.75	65.13	19.30	0.03	20.16	10,277.00
ITC Ltd	FMCG – Tobacco	629,820.13	503.55	30.78	19.56	0.00	28.33	20,458.78
HCL Technologies Ltd	IT Services & Consulting	480,771.63	1,776.60	30.62	22.88	0.08	23.49	15,702.00
Sun Pharmaceutical Industries Ltd	Pharmaceuticals	458,284.98	1,905.25	47.86	18.66	0.05	15.15	9,576.38
Bajaj Finance Ltd	Consumer Finance	446,014.46	7,211.35	30.86	25.03	3.82	22.05	14,451.17
Maruti Suzuki India Ltd	Four Wheelers	396,328.02	12,605.75	29.38	22.10	0.00	16.84	13,488.20
Axis Bank Ltd	Private Banks	364,520.39	1,178.40	13.81	24.67	0.00	18.34	26,386.20
Mahindra and Mahindra Ltd	Four Wheelers	361,559.42	3,017.45	32.09	30.53	1.34	15.37	11,268.64
Kotak Mahindra Bank Ltd	Private Banks	359,658.89	1,809.00	19.75	23.28	0.00	15.03	18,213.21

Note: The data is from 7th October 2024. The stock selection for stocks with good fundamentals was made on Tickertape Stock Screener and based on the following parameters.

• Stock Universe: Nifty 50
• Net Income: Positive – Set the lower value to zero
• Return on Equity: Set to High
• Debt-to-Equity Ratio: Set to Low

🚀 Pro Tip: Use Tickertape’s Portfolio Analysis to assess your investment portfolio’s diversification and performance.

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Details of the Top 10 Best Fundamental Stocks for Long Term

Tata Consultancy Services Ltd

Tata Consultancy Services Ltd (TCS) is a leading global IT services, consulting, and business solutions organisation founded in 1968 by Tata Sons. It is known for its high-quality services and innovative solutions in the technology sector.

TCS has a market capitalisation of Rs. 1,538,501.26 cr. Its PE ratio is 33.51. The stock has a volatility of 21.15%. The debt-to-equity ratio is 0.09%. The return on equity is 50.30%. TCS’s net income stands at Rs. 45,908.00 cr.

HDFC Bank Ltd

HDFC Bank was incorporated in August 1994 after receiving approval from the RBI to establish a private sector bank under the Housing Development Finance Corporation Limited (HDFC). By January 1995, the bank began operations as a scheduled commercial bank. 

HDFC Bank Ltd has a market capitalisation of Rs. 1,264,913.97 cr. Its PE ratio is 19.75. The stock has a volatility of 21.31%. The debt-to-equity ratio is 0.00%. The return on equity is 16.86%. HDFC Bank’s net income stands at Rs. 64,062.04 cr.

ICICI Bank Ltd

On 5th January 1955, the Industrial Credit and Investment Corporation of India (ICICI) was founded, with Sir Arcot Ramasamy Mudaliar serving as its first Chairman. The Indian government launched it as a joint venture, in collaboration with the World Bank, public-sector banks, and insurance companies, to provide project financing for Indian industries.

ICICI Bank Ltd has a market capitalisation of Rs. 873,581.01 cr. Its PE ratio is 19.74. The stock has a volatility of 20.67%. The bank’s debt-to-equity ratio is 0.00%. The return on equity is 18.02%. ICICI Bank’s net income stands at Rs. 44,256.38 cr.

Infosys Ltd

Infosys Ltd, founded in 1981 by N. R. Narayana Murthy, is a multinational corporation that provides IT consulting and services. It is renowned for its innovation and leadership in the global IT sector.

Infosys has a market capitalisation of Rs. 794,478.61 cr. The company’s PE ratio is 30.29. The stock has a volatility of 23.04%. The debt-to-equity ratio is 0.09%. The return on equity is 31.94%. Infosys’s net income stands at Rs. 26,233.00 cr.

State Bank of India

State Bank of India (SBI), incorporated on 1st July 1955, is an Indian multinational public sector bank and financial services provider headquartered in Mumbai. As one of India’s largest banks, SBI holds a quarter of the market share and serves over 480 million customers. 

State Bank of India has a market capitalisation of Rs. 710,979.25 cr. The company’s PE ratio is 10.60. The stock has a volatility of 28.41%. The debt-to-equity ratio is 0.00%. The return on equity is 16.72%. SBI’s net income stands at Rs. 67,084.65 cr.

Hindustan Unilever Ltd

Unilever, a UK-based company, established its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, in 1931, followed by Lever Brothers India Limited in 1933 and United Traders Limited in 1935. These three entities merged in November 1956 to form Hindustan Unilever Ltd (HUL).

Hindustan Unilever Ltd has a market capitalisation of Rs. 669,339.81 cr. The company’s PE ratio is 65.13. The stock has a volatility of 19.30%. The debt-to-equity ratio is 0.03%. The return on equity is 20.16%. Hindustan Unilever’s net income stands at Rs. 10,277.00 cr.

ITC Ltd

ITC Ltd, originally known as Imperial Tobacco Company of India Limited, was established in 1910. It has a diversified presence in industries such as FMCG, hotels, packaging, paperboards, and specialty papers, and agribusiness.

ITC Ltd has a market capitalisation of Rs. 629,820.13 cr. The company’s PE ratio is 30.78. The stock has a volatility of 19.56%. The debt to equity ratio is 0.00%. The return on equity is 28.33%. ITC’s net income stands at Rs. 20,458.78 cr.

HCL Technologies Ltd

HCL Technologies Ltd, founded in 1976, is an Indian multinational IT services and consulting company. It operates in various sectors including technology, healthcare, and financial services.

HCL Technologies has a market capitalisation of Rs. 480,771.63 cr. The company’s PE ratio is 30.62. The stock has a volatility of 22.88%. The debt to equity ratio is 0.08%. The return on equity is 23.49%. HCL Technologies’s net income stands at Rs. 15,702.00 cr.

Sun Pharmaceutical Industries Ltd

Sun Pharmaceutical Industries Ltd, established in 1983, launched its operations in Kolkata with a focus on five products for psychiatric treatment. They built a manufacturing facility for tablets and capsules in Vapi, Gujarat, and opened an administrative office in Mumbai in 1986. 

Sun Pharmaceutical Industries has a market capitalisation of Rs. 458,284.98 cr. The company’s PE ratio is 47.86. The stock has a volatility of 18.66%. The debt to equity ratio is 0.05%. The return on equity is 15.15%. Sun Pharmaceutical’s net income stands at Rs. 9,576.38 cr.

Bajaj Finance Ltd

Bajaj Finance Limited (BFL), the lending division of Bajaj Finserv, began operations on 25 March 1987 as Bajaj Auto Finance Limited. Initially focused on providing loans for two- and three-wheelers, the company gradually broadened its offerings to include loans for consumer durables, businesses, and property. 

Bajaj Finance Ltd has a market capitalisation of Rs. 446,014.46 cr. The company’s PE ratio is 30.86. The stock has a volatility of 25.03%. The debt to equity ratio is 3.82%. The return on equity is 22.05%. Bajaj Finance’s net income stands at Rs. 14,451.17 cr.

What Are Fundamentally Strong Stocks?

Fundamentally strong stocks refer to shares of companies that exhibit a solid foundation in their financial health and operational performance. These stocks are typically associated with companies that demonstrate a robust business model, consistent revenue streams, and effective management practices. When you invest in fundamentally strong stocks, you may be looking at companies that have the potential to withstand market volatility and generate stable returns over the long term.

Features of Companies With Strong Fundamentals

Fundamentally strong stocks are often characterised by several key attributes. Understanding these attributes can help you identify companies that may offer enduring value and financial stability. Let’s delve into the main features that define fundamentally strong stocks.

Consistent Revenue Growth

One of the primary indicators of a fundamentally strong company is consistent revenue growth. Companies that show a steady increase in revenue over several years are often seen as having a solid business model and effective sales strategies. This growth can suggest that the company is expanding its market share, innovating its product offerings, or enhancing its customer base. You can evaluate a company’s revenue growth by examining its financial statements, which provide detailed insights into its sales performance over time.

Strong Profit Margins

Profit margins are a critical aspect of a company’s financial health. They measure the amount of profit a company makes relative to its revenue. Higher profit margins indicate that the company efficiently manages its costs and maximises its earnings. You can assess a company’s profitability by looking at its gross, operating, and net profit margins. Companies with strong profit margins are generally better positioned to reinvest in their business, pay down debt, and provide returns to shareholders.

Low Debt Levels

Fundamentally strong companies in India with low levels of debt are often considered more financially stable. High debt levels can be burdensome, especially during economic downturns, as they require regular interest payments and can limit a company’s financial flexibility. By examining the debt-to-equity ratio, you can evaluate how much debt a company has relative to its equity. A lower debt-to-equity ratio may suggest that the company is less reliant on borrowing and has a stronger balance sheet, which can be a sign of financial prudence and resilience.

Efficient Management

The effectiveness of a company’s management team plays a crucial role in its success and long-term sustainability. Strong management is often reflected in strategic decision-making, operational efficiency, and the company’s ability to adapt to changing market conditions. You can evaluate a company’s management by reviewing their track record, experience, and the overall performance of the company under their leadership. Effective management teams are typically proactive, innovative, and capable of navigating challenges while capitalising on opportunities.

Strong Cash Flow

A company’s cash flow from operations is an essential indicator of its financial health. Positive cash flow means that the company generates enough cash to cover its operating expenses, reinvest in its business, and provide returns to shareholders. You can review a company’s cash flow statements to understand how well it manages its cash resources. Companies with strong cash flow are generally better positioned to weather economic downturns and invest in growth opportunities without relying heavily on external financing.

Market Position and Competitive Advantage

Companies with a strong market position and a competitive advantage tend to be more stable and resilient. These companies have unique products, services, or capabilities that set them apart from their competitors. You can analyse a company’s market share, brand strength, and the uniqueness of its offerings to assess its competitive edge. Companies with a durable competitive advantage are often able to maintain their market position, protect their profit margins, and achieve sustainable growth.

Dividend History

While not all fundamentally strong companies pay dividends, a consistent dividend history can indicate financial stability and a commitment to returning value to shareholders. Companies that regularly pay and increase dividends often have stable earnings and a solid cash flow. You can check a company’s dividend payout history to see if it has a track record of providing returns to its shareholders. Dividend-paying companies are often viewed as more mature and financially secure.

Focusing on these key features allows you to identify fundamentally strong stocks that may offer long-term value and stability. However, it is important to conduct thorough research and consider various factors before making any investment decisions.

Why Is Fundamental Analysis of Stocks Important?

The importance of fundamental analysis of stocks is not limited to one reason. Here are a few reasons why.  

• It helps to determine the fair value of a stock.
• You can evaluate the health and performance of a company by looking at its financials and macroeconomic factors. 
• It helps an investor to gauge whether a stock is overvalued or undervalued. 
• An investor can understand the company’s strength and capability to stand out from its competitors. 
• It also helps the investor understand the business model of a firm. 

Factors to Consider When Investing in the Best Fundamentally Strong Stocks

When you are considering investing in fundamentally strong stocks, it is crucial to analyse several key factors. These factors may provide you with a comprehensive understanding of the stock’s potential for long-term growth and stability.

1. Financial Health:
   You can start by examining the company’s balance sheet, income statement, and cash flow statement. You may look for indicators such as low debt levels, consistent revenue growth, and positive cash flow. A company with a strong financial foundation may be better equipped to weather economic downturns.
2. Profitability Ratios:
   Evaluating profitability ratios such as return on equity (ROE), return on assets (ROA), and net profit margin can give you insights into how efficiently a company is generating profits. Companies with higher profitability ratios may often be considered fundamentally strong.
3. Earnings Growth:
   Consistent earnings growth over the years might indicate a company’s ability to expand and adapt to market changes. You can review historical earnings data and future earnings projections to assess growth potential.
4. Valuation Metrics:
   It is important to analyse valuation metrics such as the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and price-to-sales (P/S) ratio. Fundamentally strong but undervalued stocks may offer better investment opportunities, as their market price might not fully reflect their intrinsic value.
5. Management Quality:
   The quality and experience of a company’s management team can significantly impact its performance. You can look for companies with a proven track record of good governance, strategic decision-making, and transparent communication.
6. Competitive Advantage:
   Companies with a strong competitive advantage, often referred to as an economic moat, may sustain their profitability over the long term. This can include factors like brand strength, patents, or unique technology.

How to Find Fundamentally Strong Stocks?

Identifying fundamentally strong stocks involves thorough research and analysis. Here are some steps you can follow to make an informed decision:

Utilise Tickertape Stock Screener

Utilising Tickertape Stock Screener can help you refine your fundamentally strong stocks list. It allows you to filter and compare stocks with over 200 parameters. You can also create a custom filter in case you didn’t get what you are looking for. You can use the Tickertape Stock Screener to filter and identify the best fundamentally strong stocks based on multiple parameters such as financial performance, valuation ratios, and more.

1. Financial Performance: You should check the revenue growth, profit margins, and debt levels of companies. Strong financials may indicate a company’s ability to withstand market fluctuations and continue investing in growth. By examining a company’s balance sheet, income statement, and cash flow statement, you can gain detailed insights into its financial health.
2. Valuation Ratios: It is helpful to use valuation metrics such as the Price-to-Earnings (P/E) ratio, Price-to-Book (P/B) ratio, and Price-to-Sales (P/S) ratio to compare companies within the sector. These ratios might help you determine if a stock is undervalued or overvalued compared to its peers. Identifying fundamentally strong but undervalued stocks can offer significant investment opportunities.
3. Profitability Ratios: You can evaluate profitability ratios such as Return on Equity (ROE) and Return on Assets (ROA). These ratios may provide you with insights into how efficiently a company is generating profits from its equity and assets. Companies with higher profitability ratios are often considered fundamentally strong.
4. Dividend Yield: If you prefer stocks that offer regular dividends, you can screen for companies that have a history of paying dividends. This might provide you with a steady income stream. Companies with a consistent dividend history often have stable earnings and solid cash flow.
5. Debt Levels: It is important to assess the company’s debt levels using the debt-to-equity ratio. Companies with low levels of debt are often considered more financially stable. A lower debt-to-equity ratio may suggest that the company is less reliant on borrowing and has a stronger balance sheet.
6. Growth Prospects: You can evaluate the future growth potential of companies by analysing their investment in research and development, new product launches, and expansion plans. Companies with strong growth prospects, including fundamentally strong stocks for long term, might offer substantial returns over the long term.

Analyse Industry Trends

Staying updated on industry trends and market conditions may provide you with a broader perspective on the future performance of stocks. Factors such as economic growth, regulatory changes, and technological advancements can influence the performance of fundamentally strong stocks.

Research and Reports

You can leverage research reports and expert analyses available on platforms like Tickertape. These reports may provide in-depth insights into the performance and potential of various stocks, helping you make an informed decision. Regularly reviewing market news, financial reports, and expert opinions can keep you updated on the latest developments and trends. For this, you can turn on Tickertape Alerts for your favourite stocks. Try it now!

How to Buy Fundamentally Strong Stocks?

You can buy stocks with strong fundamentals just like you purchase any other stocks. One of the easiest and most efficient ways to buy/sell stocks is via Tickertape. From filtering stocks and evaluating their feasibility of investing to placing stock orders, Tickertape supports the end-to-end process of placing stock orders. Let’s take a look at how to place a buy order for stocks on Tickertape using the Basket and Transaction features.

Transaction and Basket features work along the lines of online purchases. Once you shortlist the stocks that you want to buy, add them to the Basket and execute a single buy order using Transactions. Thanks to these features, you don’t have to jump platforms to research your investments and place buy orders.

Before starting a transaction on Tickertape, make sure that your broker account is connected to your Tickertape account. Once done, follow these steps:

Buying multiple stocks on Tickertape is really that simple.

Advantages of Investing in the Best Fundamental Stocks

Investing in stocks with strong fundamentals may offer several advantages. These benefits can enhance your investment portfolio’s overall performance and provide a more secure investment avenue.

1. Stability and Lower Risk:
   Fundamentally strong stocks are generally characterised by stable earnings and robust financial health. This stability may help mitigate risks associated with market volatility. You might find that these fundamental strong stocks are less prone to drastic price swings compared to other stocks.
2. Potential for Long-term Growth:
   Companies with good fundamentals often have sustainable business models and a clear growth trajectory. By investing in these stocks, you may benefit from the company’s long-term expansion and increasing shareholder value.
3. Dividend Income:
   Many fundamentally strong companies offer regular dividends to their shareholders. This dividend income can provide you with a steady cash flow, which might be particularly beneficial for income-focused investors.
4. Better Resilience During Economic Downturns:
   Fundamentally strong stocks may demonstrate better resilience during economic downturns. Companies with healthy balance sheets and strong cash positions might be better equipped to navigate challenging economic conditions.
5. Informed Investment Decisions:
   Investing in stocks with solid fundamentals, including the top 100 fundamentally strong stocks in India, may involve thorough research and analysis. This process might help you make more informed investment decisions, reducing the likelihood of investing in poorly performing stocks.

Risks of Investing in Stocks with Good Fundamentals

While investing in fundamentally strong stocks has its advantages, it is also essential to be aware of the potential risks involved. Understanding these risks can help you make more balanced and well-informed investment choices.

1. Market Risk:
   Despite strong fundamentals, stocks are still subject to market risk. Broader economic factors, geopolitical events, and changes in market sentiment can impact the stock price. You might experience losses even if the company’s fundamentals remain strong.
2. Valuation Risk:
   At times, fundamentally strong stocks may be overvalued. Investing in overvalued stocks can result in lower returns or potential losses if the market corrects the overvaluation. You can mitigate this risk by carefully analysing valuation metrics before investing and you can also look for fundamentally strong stocks with low prices.
3. Sector-Specific Risks:
   Even if a company has strong fundamentals, sector-specific risks can affect its performance. Regulatory changes, technological disruptions, or shifts in consumer preferences can impact the entire sector, including fundamentally strong companies within it.
4. Management and Operational Risks:
   The quality of management plays a crucial role in a company’s success. Poor management decisions, ethical lapses, or operational inefficiencies can negatively impact the performance of even the most fundamentally strong companies.
5. Liquidity Risk:
   Some fundamentally strong but undervalued stocks might have low trading volumes. Low liquidity can make it difficult for you to buy or sell shares without significantly affecting the stock price. This can be particularly challenging during market downturns, even in the case of the best fundamental stocks in India.

Who Can Invest in Fundamentally Strong Stocks?

Investing in fundamentally strong stocks may be suitable for a wide range of investors, each with different financial goals and risk tolerance levels. If you are considering investing in these technically strong stocks, it’s important to understand if they align with your investment profile. Here are some types of investors who might find fundamentally strong stocks appealing:

Long-Term Investors

If you are a long-term investor looking to build wealth over an extended period, fundamentally strong stocks may be an excellent choice for you. These fundamental strong shares often represent companies with stable earnings, robust financial health, and a strong market position. By investing in such companies, you can potentially benefit from consistent growth and compounding returns over the years.

Risk-Averse Investors

For risk-averse investors, fundamentally strong stocks may offer a relatively safer investment option. These companies typically have lower volatility compared to more speculative stocks. The stability and resilience of fundamentally strong companies can provide a cushion against market fluctuations, making them a preferred choice for investors who prioritise capital preservation.

Dividend Seekers

If you are an investor who values regular income from your investments, you might be interested in fundamentally strong stocks that pay dividends. Many companies with strong fundamentals have a history of paying consistent dividends. These dividend payments can provide you with a steady income stream, which can be particularly beneficial during periods of market uncertainty.

Value Investors

Value investors often seek stocks that are undervalued by the market but have strong underlying fundamentals. If you identify as a value investor, fundamentally strong but undervalued stocks may offer significant investment opportunities. By investing in these good fundamental stocks in India, you might benefit from potential price appreciation as the market recognises the intrinsic value of the company.

Growth-Oriented Investors

If your investment strategy focuses on capital growth, fundamentally strong stocks with solid growth prospects might align with your goals. Companies that invest in research and development, innovate, and expand their market presence may offer substantial returns over the long term. Growth-oriented investors can benefit from the potential upside of these well-managed, financially sound companies.

Retirees and Conservative Investors

Retirees and conservative investors often look for investments that provide stability and income. Fundamentally strong stocks may offer the dual benefits of capital preservation and dividend income. The financial stability and resilience of these companies can help protect your investment while providing a steady cash flow.

Novice Investors

If you are new to investing, fundamentally strong stocks can be a good starting point. These stocks are often easier to understand and analyse compared to more speculative or complex investments. By starting with fundamentally strong companies, you can build a solid foundation for your investment portfolio and gain confidence in your investment decisions.

To Conclude

Fundamentally strong stocks offer a solid foundation for investors seeking stability and growth in their portfolios. By focusing on companies with robust financial health, efficient management, and promising growth prospects, you can make more informed and strategic investment decisions. Whether you are a long-term investor, a risk-averse individual, or someone looking for consistent dividend income, fundamentally strong stocks can provide the reliability and potential for returns that you seek. Always remember that thorough research and a clear understanding of your financial goals are crucial, and it is always worthwhile to consult a professional before investing.

Frequently Asked Questions (FAQs) About Fundamentally Strong Stocks