Best Long-Term Stocks to Buy in India for 2024: Features, How to Invest, Who Should Invest!

Last Updated on Jul 19, 2024 by Anjali Chourasiya

Long-term investment in fundamentally strong stocks is like a wealth-generating machine. On the one hand, you invest in a company with robust prospects and strong qualitative features and financials. On the other hand, you reap the benefits of compounding. Together, these work like magic and can potentially garner handsome returns in the long run. In this article, let’s take a look at the best stocks for long-term investment.

Best stocks to buy in India for the long-term

Name	Sub-Sector	Market Cap (Rs. in cr.)	Close Price (Rs.)	PE Ratio	5Y Avg Net Profit Margin (%)	5Y Hist Op. Cash Flow Growth (%)	Return on Equity (%)	Debt to Equity (%)
Indian Railway Catering and Tourism Corporation Ltd	Online Services	79,128.00	989.10	71.22	25.66	102.78	46.26	3.40
Hindustan Unilever Ltd	FMCG – Household Products	640,733.54	2,727.00	62.35	16.62	21.68	20.16	2.89
Bajaj Auto Ltd	Two Wheelers	262,039.51	9,386.05	33.99	16.52	21.40	26.43	6.60
Zydus Lifesciences Ltd	Pharmaceuticals	115,158.45	1,144.45	29.84	15.80	20.29	18.47	3.64
LTIMindtree Ltd	IT Services & Consulting	170,625.09	5,762.75	37.24	13.86	32.37	25.02	10.34
Pidilite Industries Ltd	Diversified Chemicals	159,436.31	3,134.75	92.19	13.40	26.38	21.53	4.44
Sun Pharmaceutical Industries Ltd	Pharmaceuticals	376,371.68	1,568.65	39.30	13.23	40.75	15.15	4.88
Siemens Ltd	Conglomerates	243,949.50	6,850.20	124.41	8.55	69.59	15.87	1.34
Havells India Ltd	Electrical Components & Equipments	110,870.64	1,768.50	87.25	7.79	31.26	18.06	4.07
Avenue Supermarts Ltd	Retail – Department Stores	326,062.82	5,010.70	128.57	5.01	29.22	15.99	4.00

Note: The information is dated 19th July 2024. We have listed the 10 best stocks to buy in India for the long term based on the following parameters on the Tickertape Stock Screener.

• Stock Universe: Nifty 100
• 5Y Net Profit Margin: Sort from highest to lowest
• 5Y Historical Operating Cash Flow: Set to High
• Return on Equity: Set to High
• Debt-to-Equity: Set to Low

Please note that these stock selection criteria and the stocks are provided for informational purposes only; it is essential to conduct your own research.

🚀 Pro Tip: Utilise Tickertape’s Market Mood Index to gauge market sentiment and make informed investment decisions based on real-time market data and trends.

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Note: The smallcases are mentioned only for educational purposes and are not meant to be recommendatory. Investors must conduct their own research and consult a financial expert before making any investment decisions. 

Disclosures for aforementioned smallcases

Details of top 10 stocks for long-term investment in India

Indian Railway Catering and Tourism Corporation Ltd (IRCTC)

Indian Railway Catering and Tourism Corporation Ltd (IRCTC) is a subsidiary of the Indian Railways, established in 1999. It handles the catering, tourism, and online ticketing operations of the Indian Railways. The company was set up to professionalise and manage the catering and hospitality services at stations, on trains, and other locations. IRCTC went public in October 2019.

As of 19th July 2024, IRCTC has a market capitalisation of Rs. 79,128 cr. The current stock price is Rs. 989.10. The company’s PE Ratio stands at 71.22. Over the past five years, IRCTC has maintained an average net profit margin of 25.66%. The company has demonstrated substantial growth in operating cash flow, with a five-year historical growth rate of 102.78%. IRCTC’s return on equity (ROE) is 46.26%. The company’s debt-to-equity ratio is 3.40%.

Hindustan Unilever Ltd

Hindustan Unilever Ltd (HUL) is a leading FMCG company in India, primarily dealing in household products. Established in 1933, HUL has a long-standing history of providing a wide range of consumer goods, including foods, beverages, cleaning agents, personal care products, and water purifiers.

As of 19th July 2024, HUL has a market capitalisation of Rs. 6,40,733.54 cr. The stock’s current price is Rs. 2,727.00, and it has a PE Ratio of 62.35. Over the past five years, HUL has achieved an average net profit margin of 16.62%. The company’s historical operating cash flow growth over the same period is 21.68%. HUL’s return on equity is 20.16%. The debt-to-equity ratio is 2.89%.

Bajaj Auto Ltd

Bajaj Auto Ltd is a major player in the two-wheeler industry in India. Founded in 1945, the company manufactures motorcycles, scooters, and three-wheelers.

As of 19th July 2024, Bajaj Auto has a market capitalisation of Rs. 2,62,039.51 cr. The stock is priced at Rs. 9,386.05, with a PE Ratio of 33.99. The company has maintained an average net profit margin of 16.52% over the past five years. Its five-year historical operating cash flow growth stands at 21.40%. Bajaj Auto’s return on equity is 26.43%. The debt-to-equity ratio is 6.60%.

Zydus Lifesciences Ltd

Zydus Lifesciences Ltd, formerly known as Cadila Healthcare, is a prominent pharmaceutical company in India. Established in 1952, Zydus Lifesciences focuses on manufacturing generic drugs, vaccines, biosimilars, and novel therapeutics.

As of 19th July 2024, Zydus Lifesciences has a market capitalisation of Rs. 1,15,158.45 cr. The stock’s current price is Rs. 1,144.45, and it has a PE Ratio of 29.84. Over the past five years, the company has achieved an average net profit margin of 15.80%. The historical operating cash flow growth over the same period is 20.29%. Zydus Lifesciences’ return on equity is 18.47%, and its debt-to-equity ratio is 3.64%.

LTIMindtree Ltd

LTIMindtree Ltd is a prominent player in the IT services and consulting sector. Formed from the merger of Larsen & Toubro Infotech and Mindtree in 2022, the company provides a wide range of digital, cloud, and IT consulting services to clients worldwide.

As of 19th July 2024, LTIMindtree has a market capitalisation of Rs. 1,70,625.09 cr. The stock is priced at Rs. 5,762.75, with a PE Ratio of 37.24. The company has maintained an average net profit margin of 13.86% over the past five years. Its five-year historical operating cash flow growth stands at 32.37%. LTIMindtree’s return on equity is 25.02%. The debt-to-equity ratio is 10.34%.

Pidilite Industries Ltd

Pidilite Industries Ltd is a leading manufacturer of adhesives, sealants, and construction chemicals in India. Established in 1959, the company is well-known for its flagship brand, Fevicol, and other popular products in the consumer and industrial segments.

As of 19th July 2024, Pidilite Industries has a market capitalisation of Rs. 1,59,436.31 cr. The stock’s current price is Rs. 3,134.75, and it has a PE Ratio of 92.19. Over the past five years, the company has achieved an average net profit margin of 13.40%. The historical operating cash flow growth over the same period is 26.38%. Pidilite’s return on equity is 21.53%. The debt-to-equity ratio is 4.44%.

Sun Pharmaceutical Industries Ltd

Sun Pharmaceutical Industries Ltd is one of the largest pharmaceutical companies in India. Founded in 1983, the company manufactures and markets a wide range of pharmaceutical formulations and active pharmaceutical ingredients (APIs).

As of 19th July 2024, Sun Pharmaceutical Industries has a market capitalisation of Rs. 3,76,371.68 cr. The stock’s current price is Rs. 1,568.65, and it has a PE Ratio of 39.30. Over the past five years, the company has achieved an average net profit margin of 13.23%. The historical operating cash flow growth over the same period is 40.75%. Sun Pharma’s return on equity is 15.15%. The debt-to-equity ratio is 4.88%.

Siemens Ltd

Siemens Ltd is a leading conglomerate in India, operating in various sectors including energy, healthcare, industry, and infrastructure. Established in 1922, the company provides a wide range of solutions and services.

As of 19th July 2024, Siemens Ltd has a market capitalisation of Rs. 2,43,949.50 cr. The stock’s current price is Rs. 6,850.20, and it has a PE Ratio of 124.41. Over the past five years, the company has achieved an average net profit margin of 8.55%. The historical operating cash flow growth over the same period is 69.59%. Siemens’ return on equity is 15.87%. The debt-to-equity ratio is 1.34%.

Havells India Ltd

Havells India Ltd is a prominent player in the electrical components and equipment sector. Founded in 1958, the company manufactures a wide range of products including switchgear, cables, lighting, and consumer appliances.

As of 19th July 2024, Havells India has a market capitalisation of Rs. 1,10,870.64 cr. The stock’s current price is Rs. 1,768.50, and it has a PE Ratio of 87.25. Over the past five years, the company has achieved an average net profit margin of 7.79%. The historical operating cash flow growth over the same period is 31.26%. Havells’ return on equity is 18.06%. The debt-to-equity ratio is 4.07%.

Avenue Supermarts Ltd

Avenue Supermarts Ltd, the operator of DMart retail stores, is a leading player in the Indian retail sector. Founded in 2002 by Radhakishan Damani, DMart has grown rapidly to become one of the largest and most successful retail chains in India.

As of 19th July 2024, Avenue Supermarts has a market capitalisation of Rs. 3,26,062.82 cr. The stock’s current price is Rs. 5,010.70, and it has a PE Ratio of 128.57. Over the past five years, the company has achieved an average net profit margin of 5.01%. The historical operating cash flow growth over the same period is 29.22%. Avenue Supermarts’ return on equity is 15.99%. The debt-to-equity ratio is 4.00%.

A brief on the filters used to discover the top stocks for long-term investment

• Operating cash flow means the amount of cash generated by a company from its business operations (the revenue). It excludes costs associated with long-term capital investment. 5Y historical operating cash flow growth is expressed as the Compounded Annual Growth Rate (CAGR) of cash flow from operations over the last five financial years. The higher the number, the better it is.
• The net profit margin is expressed as the net profit or income as a percentage of revenue. It suggests how much of each rupee in revenue translates into profit. It helps understand whether a company is generating enough profit from its sales and also if its operating and overhead costs are under control. Therefore, it is an important indicator of a company’s financial health. 5-yr average net profit margin gets an average of the net profit margin in the last five financial years. The higher the number, the better it is.
• Return on equity (ROE) is a measure of a company’s profitability and how efficiently it is generated. ROE is derived by dividing a company’s net income by its shareholders’ equity. A higher ROE suggests that the company is efficiently converting its equity into profits. So the higher the ROE, the better it is.
• Although debt helps raise funds to run a company, it adds to a company’s liabilities. Too much debt can significantly impact earnings and, in the worst-case scenario, lead to bankruptcy or liquidation if it gets out of hand. Therefore, the debt to equity ratio becomes a critical metric for investors. This ratio compares a company’s total debt to its total equity, indicating the relative proportion of shareholders’ equity and debt used to finance assets. A higher ratio suggests potential over-reliance on debt, posing financial risks, while a lower ratio indicates a stronger equity position and generally implies greater financial stability. 

Apart from these, you can also use other parameters like EPS and market cap to understand the company better.

Why invest in stocks for the long term?

The answer is – to reap the benefits of compounded growth.

To understand this, you will have to know the power of compounding. Only then can you appreciate the role of ‘time’ in multiplying your returns over the long term.

Compounding works just like the multiplier effect. When you invest in an avenue, at first, your principal or initial investment earns interest. Later, the interest portion, along with the initial investment, also earns interest. That is how your investment multiplies!

Here’s a simple numerical example to help you understand the power of compounding. Mr A invests Rs. 1 lakh in a 5-yr deposit that earns simple interest of 10% p.a. At the end of 5 yrs, their investment grows to Rs. 1.5 lakh. But Mr Z invests Rs. 1 lakh in a 5-yr deposit that earns a compound interest of 10% p.a. At the end of the tenure, Mr Z’s investment will have grown to Rs. 1.61 lakh. It means they will earn Rs. 11,000 more than Mr A.

This is why you should consider top stocks to buy for the long term in India.

How to choose stocks for long-term investment in India? 

If you want a short and sweet answer, then fundamental analysis it is. We have a detailed article on A Step-By-Step Guide to Fundamental Analysis. We highly encourage you to go through it – give your 14 minutes to read it and, in turn, better understand how to pick the best stocks for the long term.

For now, we will discuss it in brief.

The fundamental stock analysis means researching the underlying company’s fundamentals. Meaning business segments, products and services, historical financials, stock price trends, management, competitors, and so on.

Now, how do you evaluate quantitative factors such as financials? You can compare past financial statements and key financial ratios such as the PE ratio, net profit margin, debt level, and so on. Coming to competitors, you can do a peer analysis.

Put together, these findings reveal how the company has performed so far and signal its potential performance. That way, you will be in a better place to decide whether a company is worth investing in or not.

Fundamental analysis also means ascertaining whether a stock is fairly priced or not. We have yet another detailed article to help you understand why knowing the intrinsic value of a stock is important and how you can make sound investment decisions based on it. Read What Is the Intrinsic Value of a Stock and How To Calculate It?

How to Invest in Stocks for Long-Term Investment in India?

Investing in stocks for the long term may be a rewarding strategy, especially in a dynamic market like India. Long-term investments allow you to benefit from the power of compounding and ride out market volatility. Here are some key steps to guide you through the process:

1. Research and Identify the Best Long-Term Stocks

When considering long-term investment stocks, thorough research may be essential. You can look for companies with strong fundamentals, consistent earnings growth, and a competitive edge in their industry. Use Tickertape Stock Screener and asset pages to thoroughly understand a stock before investing.

2. Evaluate the Company’s Financial Health

Before investing, you should evaluate the company’s financial health by reviewing its revenue, profit margins, debt levels, and cash flow. Companies with strong financials are more likely to provide sustained returns over the long term. Tickertape provides detailed financial data for each stock along with a detailed Scorecard to help you assess the financial health of a company based on these essential metrics. Here’s an example.

3. Diversify Your Portfolio

Diversification may be a key strategy for minimising risk. Instead of putting all your money into one stock, you can spread your investments across various sectors and industries. This approach may help protect your portfolio from sector-specific downturns. You might want to include a mix of the best shares for the long term, such as technology, finance, and healthcare stocks. Tickertape’s Portfolio can help you create a well-diversified portfolio. Connect now and check if you have a well diversified portfolio!

4. Monitor Economic and Market Trends

Keeping an eye on broader economic and market trends may provide valuable insights into which stocks to buy for the long term. Factors like inflation, interest rates, and economic policies can impact stock performance. For this purpose, turn on Tickertape Alerts today!

5. Set Long-Term Goals and Stay Patient

Investing for the long term requires patience and a clear set of goals. Define your investment objectives, such as retirement savings or wealth accumulation, and stay committed to your strategy. Market fluctuations are normal, but maintaining a long-term perspective can help you stay focused on your goals.

Investing in long-term stocks in India may require careful planning and strategic decision-making. By focusing on strong companies with growth potential and maintaining a diversified portfolio, you can increase your chances of achieving sustained returns. Whether you’re looking for the best stocks to invest in 2024 or the best Indian stocks for the next 10 years, thorough research and a disciplined approach can help you navigate the market effectively.

Factors to consider when finding the best stocks to buy today in India for the long-term

Look for Companies That Innovate

When searching for the best stocks to buy today in India for the long-term, you might want to look for companies that innovate. Innovation may allow companies to develop better, future-proof products, potentially driving the company towards growth. A company that doesn’t innovate might lose ground compared to its more innovative competitors.

Identify Companies with Long-Term Relevance

You may want to identify companies whose products will remain relevant for a long time. Long-term investment in stocks can mean staying invested for over five years. Therefore, you would likely want to bet your money on a company that will still be operational and thriving in the years to come.

Ensure the Company Has Sound Management

Ensuring that the company’s management is sound and skilled is crucial. Since people run a company, the business’s growth can be significantly impacted if the leadership team is not capable. Additionally, ensure that the management is ethical and that the company has good corporate governance. Avoiding companies with poor governance, such as the infamous Satyam case, could be beneficial.

Be Cautious with Cyclical Businesses

It is essential to understand that not all businesses experience linear growth. Cyclical businesses, such as those in the cement, auto, and sugar industries, may incur losses at their cycle’s peak. Therefore, it could be wise to exercise caution when investing in such companies. For long-term investments, it often makes sense to consider safer companies that have demonstrated consistent linear growth over time.

Look for Transparent Disclosures

You might also want to find out whether the company is transparent when it comes to disclosures. Avoiding businesses that do not provide proper and adequate disclosures, especially about related party transactions, may be prudent. Transparency in disclosures can give you better insights into the company’s operations and financial health.

Advantages of investing in the best stocks for long term investment

Compounding Returns

Investing in the best stocks for the next five years may lead to significant compounding returns. As you reinvest profits, you can earn returns on your returns, potentially increasing your investment value exponentially over time. This compounding effect might help grow your investments substantially over the long term.

Dividend Income

Many of the best long-term stocks offer the advantage of dividend payments. This can provide you with a steady income stream in addition to any capital gains from the increase in stock price. Dividend income may be particularly beneficial during periods of market volatility, as it offers a consistent return regardless of short-term price fluctuations.

Reduced Volatility

Long-term investments in the best shares to buy today for the long term may weather short-term market volatility better than short-term investments. Over time, markets have historically trended upwards, which can smooth out the bumps of short-term fluctuations. By holding onto your investments for an extended period, you might experience less volatility and more stable returns.

Benefit from Economic Growth

Investing in the best shares to buy for the long term may allow you to benefit from economic growth. As economies expand, corporate earnings tend to increase, which can positively impact stock prices and investor returns. By choosing companies positioned to take advantage of economic growth, you might enhance your overall investment returns.

Opportunity for Significant Growth

Identifying the best shares for long-term investment may provide the potential for significant growth. Companies with strong fundamentals and growth prospects can see their stock values increase considerably over the years. By focusing on these companies, you might achieve substantial growth in your investment portfolio over the long term.

Disadvantages of investing in stocks for long term investment

Capital Risk

Stock investments come with capital risk, as there’s always a possibility that the value of the best long term stocks can decline over time, especially if the selected companies do not perform as expected.

Liquidity Concerns

While stocks are generally considered liquid assets, investing with a long-term perspective may tie up capital that could be needed for unforeseen expenses. This is particularly true for investments in smaller, less liquid stocks.

Opportunity Cost

Investing in the best share for long term investment means locking in capital that could potentially earn higher returns elsewhere. This opportunity cost requires careful consideration, especially in rapidly changing markets.

Market Changes and Disruptions

Long-term investments are susceptible to market changes and technological disruptions. Industries that seem promising today may be overtaken by new technologies or shifts in consumer preferences over time.

Emotional Stress

Holding onto investments through market ups and downs can be emotionally challenging. Watching the value of what you believed was the best share for long term investment fluctuate can test an investor’s patience and resilience.

Strategies for long term investment 

Though long-term investment in stocks can benefit you in many ways, there are a few important rules you must consider before jumping right into it. 

Understanding the Risk

Risk is an unavoidable factor. Hence, it is highly important to analyse and balance your risks throughout your portfolio. When you build your portfolio for the long term, consider taking the help of a professional for risk analysis. 

Picking a Strategy That Fits Your Needs

Knowing your risk profile can help you decide on the kind of stocks you want to invest in. As a result, curate a strategy that helps you multiply your profits while keeping in check your risk-tolerance levels. However, also keep in mind that no investment strategy works all the time. Hence, keep the long-term goals in mind and include diversification in your portfolio.

Including Diversification in Your Stock Portfolio

A diversification strategy includes adding a variety of stocks/investment instruments to your portfolio that have different expected risks and returns. It may help you protect against events that might affect your portfolio and should still earn solid returns over the long term.

Time Horizon

One popular way of lowering your risk is by committing to your investments for longer. The longer the holding period is, the better your portfolio is able to sail through the ups and downs of the market. So, you can use time as a huge ally in your investing.

Who Can Invest in Long-Term Stocks?

Investing in long-term stocks is a strategy that can benefit a wide range of individuals. Here are five comprehensive points on who can invest in long-term stocks and why it might be suitable for them:

1. Young Professionals and Beginner Investors

Young professionals and beginner investors have a significant advantage when it comes to long-term investing. With time on their side, they can leverage the power of compounding to grow their wealth substantially. Starting early with investments in the best long term stocks allows them to ride out market volatility and benefit from the market’s overall upward trend.

2. Middle-Aged Individuals and Parents Saving for Children’s Future

Middle-aged individuals focused on building a robust retirement fund, as well as parents saving for their children’s education or future needs, can benefit from long-term stocks. By diversifying their portfolio with shares to buy for long term, they can achieve a balance of growth and security, ensuring substantial funds are available when needed.

3. Retirees and Conservative Investors

Retirees and conservative investors often seek stable, income-generating investments. Companies with a history of stable earnings, strong financial health, and regular dividend payouts are ideal for this group. The best long term stocks in India often include blue-chip companies that offer reliability and steady returns, providing growth potential and protection against inflation.

4. Aggressive Investors and Entrepreneurs

Aggressive investors and entrepreneurs looking for high returns can focus on growth stocks and emerging sectors. Investing in the best share for long term in rapidly growing industries allows them to potentially achieve significant gains, benefiting from the expansion and innovation within these sectors.

5. High-Net-Worth Individuals and Institutional Investors

High-net-worth individuals (HNWIs) and institutional investors such as pension funds, mutual funds, and insurance companies look for stable, high-performing stocks to ensure steady returns for their stakeholders. Including the best stocks to invest in 2024 and the top 50 shares for long term investment in their portfolio helps achieve a balanced mix of growth and security.

Conclusion

Investing in long-term stocks can benefit a wide range of investors, from young professionals to retirees. By focusing on strong, well-established companies and maintaining a diversified portfolio, you can achieve significant growth and stability. Whether you’re building a retirement fund or saving for your children’s future, a disciplined and patient approach to long-term investing can help you reach your financial goals.

FAQs About Best Long Term Stocks