Selecting our Top 10 Fundamentally Strong Stocks in India 2021 was based on Fundamental analysis of stocks and how it provides the real picture of the company. It gives the historical data of important factors like the revenue growth, profitability, balance sheet strength, cashflow, valuation, etc. through various ratios and concepts.
Fundamentally strong stocks are less risky than others in any economic or financial downturns in the market. They are generally good for a long term holding (1 year and above).
How did we select our list of “Top 10 Fundamentally Strong Stocks in India 2021”:
Cash flow Margin – The stocks with more than 20% of Cash Flow Margin. (Cash Flow Margin: Operating Cash flow/Net revenue)
5Y Sales CAGR – The Stocks with more than 7% of Sales CAGR for the past 5 Years.
5Y Avg. NPM – The stocks with more than 15% of Average Net profit Margin for the past 5 years.
5Y Avg. RoE – The stocks with more than 15% of Average Return on Equity for the past 5 years.
Top 10 Fundamentally Strong Stocks in India 2021:
- HDFC AMC Ltd – HDFC AMC Ltd – HDFC Asset Management Company (HDFC AMC) is Promoted by HDFC Ltd (52.72% of share), is one of the largest AMCs in India with total assets under management (AUM) of 3,95,476 Cr. as of Mar 2021.
- CDSL – Central Depository Services (CDSL) is one of two depositories in India and the only one to be listed. Despite being a late entrant in the market, CDSL has been gaining market share from NSDL. Today it has become a market leader with 64% market share.
- Clean Science and Tech. Ltd – The company manufactures functionally critical Speciality Chemicals, Pharmaceutical Intermediates and FMCG Chemicals. The differentiation in the process manufacturing between Clean science and peers assisted company to offer products at competitive price and thereby helped it gain meaningful market share across its product portfolio.
- CAMS Ltd – Computer Age Management Services (CAMS) is India’s largest registrar & transfer agent (RTA) of mutual funds with ~70% market share of MF AUM. This company maintains a zero-debt position for more than a decade.
- Eris LifeSciences Ltd – Eris Lifesciences Ltd is the only publicly listed Indian pharmaceutical company with a pure-play domestic branded formulations business model. Established in 2007, Eris is by far the youngest company in the IPM Top-25.
- Divi’s Laboratories Ltd. – The Company has a market presence in 95 countries and ~17,000 employees and is one of the leading pharmaceutical companies in the world. The company has a strong financial record with 18% Revenue CAGR and 17% PAT CAGR over the past 10 years.
- Dr. Lalpath Labs Ltd – Dr. Lal PathLabs Limited (DLPL) provides diagnostic and related healthcare tests and services in India and internationally. The company has 231 clinical laboratories, 3,705 patient service centers (PSC) and 9,247 pick-up points (PUP) as of March 2021. The company has a strong financial record with 21% Revenue CAGR and 26% PAT CAGR over the past 10 years.
- CRISIL Ltd – The company is the largest credit rating agency in India having multiple segments like Ratings business, Research business and Advisory business. On those, Ratings business is the most Profitable business of company and accounts for 51% of total profits while contributing only 28% of revenues.
- Vinati Organics Ltd. – The company ranked #1 manufacturer of IBB and ATBS with a global market share of 65% for both the chemical products.
- UTI AMC Ltd – With 55+ years, UTI is credited with establishing the very first mutual fund in the country and is considered one of the oldest active asset management companies in India. This longstanding history has allowed it to develop a large sales and distribution channel with 163 UTI AMC Branches, 257 Business Development Associates and Chief Agents, 83 Official Points of Acceptances and 53,000 Independent Financial Advisors (IFAs) across the country.
Please read our other article on “Are Index Options more profitable or Stock Options” https://equitygyan74899394.wordpress.com/2021/10/23/are-index-options-more-profitable-or-stock-options/