The Indian stock market offers countless options to investors seeking a decent profit both through long and short term investment. Long term investors need to be extra careful about which the stocks they choose to put their money in to book maximum profit. While it is a general perception that investing in popular stocks is the safest option for such investors, experts offering stock recommendations for long term tend to disagree. Rather they advice their clients to exercise caution while investing in such stocks as these are generally traded at overvalued prices.
Given that there is no sure way of identifying the safest and most profitable stocks for long term investment, finding such stocks in an expensive market can be quite challenging. One way to overcome this challenge is by considering the basic fundamentals, business prospects and the management outlook of potential stocks.
Given below is a listing of the 10 best stocks to buy in India for long term, shortlisted after careful consideration of the aforementioned factors.
1. Petronet LNG
This gas distribution company currently operates from its two terminals located in Kochi and Dahej, with the capacity expansion of the latter underway. There is also a hope for rise in revenue with the completion of the Kochi-Mangalore gas pipeline. Given the long term nature of its products and the expected increase in demand of gas distribution, the stock of Petronet LNG is a good long term investment option.
2. Sanwaria Consumer
The company, which at one time dealt only in soya products has now expanded into various FMCG products and is expected to show a turnover of 5000 crore by next year. With plans of opening its own chain of retail stores and taking its products to the global market has made its stock a favourable choice for long term investment stocks.
3. Music Broadcast Ltd
MBL is an entertainment company that operates through 39 radio stations in 12 of the 15 largest cities in India. While the current leadership of the company stands at 52.5 million, it is expected to gain further benefits from price enhancement in radio advertising. With such strong visibility of earnings, investing in the stock of MBL for long term is definitely advisable.
4. Omkar Speciality
The company manufactures organic and inorganic intermediates for consumption in various industries. Despite suffering a massive drop in its stock price, the future looks promising for the company, especially with the management having guided for a sales growth of 15%. The company is also planning to expand into the FMCG sector, which is another reason for long-term investment in its stock.
5. Emami Ltd
This beauty care company has been reaping the benefit of low competition and high pricing power by creating new categories with its products. The company has predicted an expected sales growth of 17% in H2FY18, thanks to a strong winter stocking, continued traction in non-winter brands and new launches. This is expected to keep the revenue momentum strong and making the company’s stock good choice for long-term investment.
6. Godrej Agrovet
This leading entity of Godrej group deals in variety if agricultural and veterinary products. The company boasts of an asset light business model, is capital efficient and has planned an expansion in portfolio. With such strengths and the expected sales growth over FY17-19E predicted to be in the range of 16%, long term investment in the stock of Godrej Agrovet is highly recommended.
7. Indian Bank
This mid-sized PSU bank has been offering the best returns among PSB’s. Moreover, the RoA and RoE of the bank is expected to be 1% and 13.1% for the FY19E. The strong adequacy ratio 13.6%, combined with the bank’s branch expansion plans will boost the loan book over the next few years. All these factors combine to make Indian Bank’s stock the right choice for long term investment.
8. Skipper Ltd
Skipper Ltd is a leading manufacturer of a wide range of engineering products in India and across the globe. The company is already enjoying a comfortable order book position with revenue visibility of 18-24 months. The company is also set to benefit from plans of 100% electrification of the Indian Railways and enhancement of solar capacities, making long term investment in its stock a profitable option.
9. Escorts Ltd
Escorts is a leading agri-machines, construction equipments and railway products manufacturer in India. The company is likely to benefit from newer launches, focus on non-key markets and sustained cost efficiency measures, in terms of market share gains and enhanced margins. The stock is expected to get re-rated to reflect a significant improvement in profitability especially for long-term investors.
The company Trent primarily operates stores across three formats i.e. Westside, Landmark and Star, with Westside being its flagship format. Trent has more upside potential with stronger earnings prospects for long term investors. This is hoped to be achieved through an aggressive expansion drive for Westside besides being well-poised to tap the retail opportunity in India for a better long term growth.