Best Large Cap Stocks to buy in India (2022): How to find them?
Best growth large-cap stocks to invest
Large cap stocks are quite popular among investors, especially beginners as they come with relatively low risk as compared to small and mid cap stocks. If you're planning to invest in the best large-cap stocks, then you're in the right place. In this article, we will not only provide you with a list of top large cap companies in India but also discuss other things you should know before investing in large cap shares. Let's begin!
Summary in Brief
- What Are Large Cap Stocks?
- Benefits of Investing in Large-Cap Stocks
- List of Top 10 Large-cap Stocks to Invest in 2022
- Who Should Consider Investing in Large Cap Stocks?
- Key Takeaway
- Frequently Asked Questions
What Are Large Cap Stocks?
Large cap stocks are one of the most popular choices of investors. They are offered by the large and well-established companies that have been functioning for decades.
For those who don't know, stocks are classified into three categories on the basis of their market capitalization. These three types of stocks are small-cap, mid-cap, and large-cap. Here, the large-cap stock is a stock offered by a large cap company with a market cap above Rs. 20,000 crores. Investing in these stocks is considered to be safe as compared to other stocks because these companies have a strong foothold in the market. Some of the best large-cap stocks are from companies in the growing sectors like FMCG, eCommerce, Financial services, social media, etc.
Additionally, these stocks are mostly considered for long-term investment because they offer low-risk and regular dividends.
Benefits of Investing in Large Cap Stocks
Following are the benefits of investing in large cap companies in India:
1. Higher Degree of Transparency
The first advantage of investing in large cap companies is that they are transparent. Because they have been around for decades, investors can easily access their data to evaluate the present and past performance before making any investment. You can access important information like stock movement and long-term growth trends before buying large cap stocks.
2. Better Stability
When compared to mid-cap and small-cap stocks, large-cap turn out to be more stable, making themselves ideal for investors looking for long-term investment. However, make one thing clear that these stocks are not immune to the market environment. The thing is, the price of these stocks may not grow as high as others but they offer low-risk and hence perfect for beginners with a low-risk appetite.
3. Powerful Management Team
The management team of a company plays a very important role in deciding its progress and growth. Generally, the management team of large-cap companies consists of industry leaders with considerable experience and expertise. These veterans in turn hire the best talents for the companies to ensure their growth.
And because the management team takes care of the company's long-term direction, senior-level appointments are noticed by investors with keen interest. The experience, skills and expertise of the management team build confidence in the investors about the long-term growth of the company.
4. Better Dividend
One of the reasons why investors favour large-cap stocks is their ability to payout dividends. These stocks pay good dividends to the investors which compensate for the low returns they provide than small-cap funds.
If you don't already know, in the phase of cyclic fluctuations, large-cap stocks were the first to offer confidence to individual and institutional investors.
List of Top Large Cap Growth Stocks India
|Stocks||Industry||Market Capitalization (Cr.)||P/E Ratio|
|AU Small Finance Bank||Consumer Finance||38,479||33.41|
|Polycab India||Power cable manufacturing||32,692||35.34|
|KEI Industries||Power cable manufacturing||10,332.39|
|Avanti Feeds||Consumer Staples||5,719.59||25.81|
|Bajaj Finance||Consumer Finance||3,29,757.64||46.92|
|Adani Gas ATGL||Utilities||2,49,744.87||494.88|
|JSW Steel||Iron and Steel||1,32,630.78||6.42|
|ADANITRANS||Utilities / Power Infrastructure||2,36,746.59||196.53|
Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns
How to Select the Best Growth Stocks in India
Below are the characteristics you should consider at the time of selecting the right growth stocks for your investment:
1. Higher Profit Margins
The best growth stocks are from companies with higher profit margins that are also increasing at a constant rate. Note that the negative profit margins can turn positive and generate dramatic returns when you hold the share for a long time. This can help you build a stunning portfolio. Moreover, companies that are growing at a faster rate and earning profit also keep increasing their profit margins. Such companies are generally more suitable for beginners as they offer low-risk as compared to others.
2. Solid Sales Growth
Companies that are growth-oriented increase their revenues significantly over time. The reason behind this is that the only way to maximize profits is to grow the revenues as well.
3. Projected Earnings of Company
When an analyst projects that a company's earnings are likely to increase, it is a positive indicator. Although the projections of analysts aren't always accurate, they are great for gauging market trends and performance.
4. Higher RoE (Return on Equity)
Return on Equity or ROE is equivalent to the net income of a company in terms of its shareholders' equity percentage. A company with higher RoE as compared to its competitors uses the capital in a more effective way to generate and grow profits.
5. Manageable Debt
Because it is possible to have a higher ROE through higher amounts of debt, it is very crucial to evaluate the liabilities of the shortlisted company. Make sure that the ROE of a company is not influenced by the debt it holds. Further, compare the debts of the given company with its competitors. Also, the past performance of the company should show a manageable debt trend. That's all.
Growth stocks are great investment options for investors who are willing to take moderate risk and want to enjoy higher returns on their investment over the long term. We have discussed the best growth stocks in India along with the guide to selecting the best for your portfolio. We hope this information helps!
Important things to remember:
1. Do Not Blindly Follow Hot Tips
No matter how credible the source is, never follow a stock marketing tip blindly without conducting thorough research personally. Always select the stocks after doing proper research and analysis on the performance as well as the companies. While some tips can work out to give you huge benefits, the wrong ones can push you down under the risk pretty quickly.
2. Eliminate Loser Stocks from Portfolio
There is absolutely no guarantee that a stock will rise after a great fall. Know that it is extremely important to be practical about what is possible and what's impossible in the stock market. So, upon realizing that a stock is performing poorly in your portfolio, accept your mistake and sell it immediately to prevent further losses.
3. Don't Exceed Your Investment Budget Abruptly
While it's true that long-term investments are way better than other forms of investment, you shouldn't exceed your investment budget in a haste. Instead, decide on a fixed amount and invest it across various good stocks. Rather than investing in only one stock, divide your budget evenly across multiple good-performing stocks and shares.
Is large cap high risk?
Large-cap funds are very similar to equity investments. While equity investments are considered to be high-risk in nature, large-cap stocks come in the category of low-risk investments. These are from well-established companies with a solid position and track record in the market.
Should I invest in large cap stocks?
If you are interested in investing for the long term and have a low-risk taking ability, then large-cap stocks are perfect for you. They are much safer than small and mid-cap shares.
Is large cap good for long term investment?
According to SEBI, large-cap companies are named among the top 100 companies in the country. Investing in these companies is a safer and low-risk option because they are well-established and have a proven track record when it comes to performance.
How much should I invest in large cap?
It is advisable to invest around 20-25% of your portfolio in large-cap companies. This will be enough to provide you with stability and growth at the same time.