Strong Fundamental Stocks
It will help if you familiarise yourself with the company’s fundamentals before investing in stocks. The actual or fair market value is determined by fundamental analysis. It’s advantageous if you’re looking for direct equities with long-term potential. This article will look at ten fundamentally strong companies that offer long-term shares investment opportunities.
What is a Fundamentally Strong Company
Fundamentally strong companies are loosely defined as having a healthy financial status, which implies lower debts, moats, and other distinguishing characteristics. These businesses are cash-rich and have little obligation. They can withstand extreme volatility and are strong businesses.
Invest in these ten financially strong businesses:-
1. Reliance Industries
Reliance Industries has the highest market capitalization in India as of December 2021, at Rs. 15,94,374.07 crore. Qwik Mart, Reliance Gas, Jio, CNBC TV 18, and Forbes India are some of Reliance Industries’ most well-known brands and products.
Reliance Industry Key Metrics
| Parameter | Score |
|---|---|
| P/E | 35.76 |
| P/B | 2.20 |
| P/S | 2.67 |
| Profit Margins | 3 |
| Growth | 4.2 |
| CFO/Sales | 4.3 |
| Roce | 3.3 |
| Debt/Equity | 0.51 (Standalone) |
2. Tata Consultancy Services
Tata Consultancy Services, or TCS, is a leading global provider of IT services and business solutions. The IT behemoth’s market capitalization, at Rs. 13,80,929.52 crore, is the second-highest in India and the highest return stocks among its industry peers.
TCS Key Metrics
| Parameter | Score |
|---|---|
| P/E | 42.29 |
| P/B | 15.74 |
| P/S | 7.76 |
| Profit Margins | 4.5 |
| Growth | 3.7 |
| CFO/Sales | 5.2 |
| Roce | 8 |
| Debt/Equity | 0 |
3. HDFC Bank
HDFC Bank has a market capitalization of Rs. 8,10,049.47 crore as of December 2021. The banking and financial services firm is India’s largest private sector bank in terms of assets.
HDFC Key Metrics
| Parameter | Score |
|---|---|
| P/E | 24.92 |
| P/B | 3.77 |
| P/S | 6.22 |
| Profit Margins | 6.3 |
| Growth | 4.4 |
| CFO/Sales | 2.3 |
| Roce | 3.5 |
| Debt/Equity | 0.4 (Consolated) |
4. Infosys
Infosys has a market capitalization of Rs. 7,95,972.88 crore. India’s second-largest IT company, offering a wide range of core and digital products and services.
Infosys Key Metrics
| Parameter | Score |
|---|---|
| P/E | 40.65 |
| P/B | 10.25 |
| P/S | 7.25 |
| Profit Margins | 4.4 |
| Growth | 3.7 |
| CFO/Sales | 6.2 |
| Roce | 6.9 |
| Debt/Equity | 0 |
5. Hindustan Unilever
Hindustan Unilever (HUL) is one of India’s largest FMCG companies, with a market capitalization of Rs 5,46,634.44 crore. HUL has over 44 brands spanning 14 different categories, ranging from hair and skin essentials to food and beverages.
Key Metrics of Hindustan Unilever
| Parameter | Score |
|---|---|
| P/E | 57.40 |
| P/B | 9.62 |
| P/S | 10.96 |
| Profit Margins | 4.9 |
| Growth | 5.9 |
| CFO/Sales | 5.9 |
| Roce | 9.9 |
| Debt/Equity | 0 |
6. Bajaj Finance
Bajaj Finance, a subsidiary of Bajaj Finserv Limited, has a market capitalization of Rs. 4,14,603.79 crore. Bajaj Finance Limited is an Indian non-banking financial company that specializes in small and medium-sized business (SMB) and commercial lending, as well as consumer and wealth management.
Key Metrics of Bajaj Finance
| Parameter | Score |
|---|---|
| P/E | 95.72 |
| P/B | 11.46 |
| P/S | 14.82 |
| Profit Margins | 5.9 |
| Growth | 6.5 |
| CFO/Sales | 1.9 |
| Roce | 4.6 |
| Debt/Equity | 2.8 (Standalone) |
7. Asian Paints
Asian Paints has grown from humble beginnings in 1942 to become India’s premium paint company. It is the ninth-largest paint company globally, with a market capitalization of Rs. 3,22,713.25 crore.
Key Metrics of Asian Paints
| Parameter | Score |
|---|---|
| P/E | 93.08 |
| P/B | 22.09 |
| P/S | 12.35 |
| Profit Margins | 5.4 |
| Growth | 5.9 |
| CFO/Sales | 5.7 |
| Roce | 6.4 |
| Debt/Equity | 0 |
8. Titan Company
Titan, an Indian luxury goods company, specializes in the production of fashion accessories, primarily watches, jewellery, and eyewear. Titan has a market capitalization of Rs. 2,16,325.79 crore as of December 2021.
Key Metrics of Titan Company
| Parameter | Score |
|---|---|
| P/E | 230.29 |
| P/B | 29.87 |
| P/S | 8.3 |
| Profit Margins | 3.8 |
| Growth | 5.1 |
| CFO/Sales | 1.8 |
| Roce | 5 |
| Debt/Equity | 0.54 (Standalone) |
9. Nestlé India
Nestlé India is the Indian subsidiary of the Swiss multinational corporation Nestlé, which manufactures chocolates, confectionaries, food, and beverages. Nestlé India has a market capitalization of Rs. 1,87,014.07 crore as of December 2021.
Key Metrics of Nestlé India
| Parameter | Score |
|---|---|
| P/E | 77.14 |
| P/B | 79.38 |
| P/S | 12.98 |
| Profit Margins | 4.3 |
| Growth | 2.9 |
| CFO/Sales | 3.4 |
| Roce | 10 |
| Debt/Equity | 0.02 (Standalone) |
10. Pidilite Industries
With its Fevicol adhesives, the Indian manufacturing company has become a household name. Pidilite Industries has a market capitalization of Rs. 1,23,698.42 crore as of December 2021.
Key Metrics of Pidilite Industries
| Parameter | Score |
|---|---|
| P/E | 110.38 |
| P/B | 21.41 |
| P/S | 13.6 |
| Profit Margins | 5.6 |
| Growth | 2.2 |
| CFO/Sales | 4.1 |
| Roce | 6.2 |
| Debt/Equity | 0.01 (Standalone) |
Final Thoughts
A company with solid fundamentals can use its share capital and reserves to run operations with the least debt possible. Low debt dependency is essential for shareholders because it indicates that the company is self-sustaining and less risky. In theory, the stock prices of fundamentally strong companies should be resistant to economic downturns. Companies with increasing net worth, declining or zero debt, and consistent profitability are characteristics of such businesses.
How can you tell if a company’s stock is fundamentally sound?
Recognize the business. You must have a thorough understanding of the company you intend to invest in.
Examine the company’s financial statements.
Take a look at your debt.
Find out who your company’s competitors are.
Examine the prospects for the future.
Review all aspects regularly.
What is Fundamentally Strong Company
Companies that are fundamentally strong are loosely defined as having a healthy financial status, which implies lower debts, moats, and other distinguishing characteristics. These businesses are cash-rich and have little debt. They have the ability to withstand extreme volatility and are strong businesses.
What is the significance of fundamental analysis?
Fundamental analysis aids in determining the intrinsic value of a stock in order to determine its long-term investment potential. This analysis will also take into account the economy’s overall state, as well as factors like production, interest rates, employment, earnings, housing, GDP, management, and manufacturing.
What Does It Mean When a Market Is Technically Sound?
Analysts look at a variety of indicators to see if a stock, a sector, or the markets as a whole has a technically strong market.
The advance/decline line (A/D), the Arms Index (TRIN), and moving averages are all indicators that technical analysts pay attention to.
How do you evaluate a stock’s fundamentals?
Fundamental analysis determines a company’s underlying value and potential for future growth by looking at its revenues, earnings, future growth, return on equity, profit margins, and other data. The financial statements of a company contain all of this information.
What is a good PE ratio?
A higher P/E ratio indicates that investors are willing to pay a higher share price today in anticipation of future growth. The S&P 500’s average P/E has historically ranged from 13 to 15. A company with a current P/E of 25, which is above the S&P average, trades at 25 times earnings, for example.
