Best Long Term Stocks to Buy in India – List of Top 10 Long Term Shares of 2022Last Updated Date: May 28, 2022
Check out the list of Best Long Term Stocks to Buy in India. Investing and trading are the two major activities in the stock market.
Investing in equity stocks is best suited for the long term. This is because investing intends to accumulate wealth and grow it over the years.
Thus, Long Term investment stocks are the best bet when investors wish to invest for their Long Term goals such as retirement, child higher education, etc.
To have successful Long Term investing, it is necessary to identify the best shares to buy for the long term.
Know about Long Term Stocks in India
Long Term stocks are those stock investments that the investor holds for a long period. While what qualifies as long term is subjective, it is generally considered more than 3-5 years.
Even the taxation rules define Long Term stock investments as those held for 3 years or more in India.
Long Term stocks are also those expected to grow considerably when held for a longer period – short-term fluctuations in these stocks thus do not matter much.
In this article, we have summarised the best Long Term stocks to buy today in India. We have also elaborated on the nature and growth potential of each one of these selected Long Term stocks.
Top 10 Long Term Stocks to Buy Today
Check out the Long Term Share Price & Ranking of Best Long Term Shares to buy Today or Tomorrow or for Long Term –
We have determined India’s best Long Term shares based on three major parameters.
- Stocks that have a profit CAGR greater than 10%
- Having an operating profit margin greater than 15%
- Stocks with a market capitalization greater than Rs.10,000 crores.
The top Long Term stocks identified on these parameters are then sorted based on their market capitalization. The stocks with the highest market cap have been ranked first and so on:
Further, we have listed five more long term stocks in our ‘honorable mentions’ category:
Market capitalization is a good comprehensive indicator of both the size and market value of a stock. Thus, this has been used as the basis for ultimate sorting.
Market capitalization is calculated by multiplying the market value of a share by the number of its shares listed and outstanding in the market.
Additionally, the other parameters such as profit CAGR and operating margin are indicators of the selected stocks’ profitability and growth sustenance.
These aspects are also good to know when picking the best stocks to buy in India for the long term. We will now elaborate on the important aspects of each of these selected stocks.
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HDFC Bank – Best Long Term Stocks in India
Ranked at the top of the list of best Long Term stocks in India is HDFC Ltd. This Company is among the largest private banks in the country.
HDFC was the first private bank to receive RBI approval in 1994. The private bank has 5779 branches and more than 17000 ATMs spread across 2956 locations.
HDFC Bank offers a wide array of banking services to its customers. These include retail banking, wholesale banking, and treasury services.
Retail banking services include loans and deposits to and from individual borrowers and small-scale businesses.
The Wholesale segment covers larger corporate houses. The treasury services include various customer services, including forex trading, derivatives trading, equity services, etc.
HDFC Bank recently clocked a hefty profit of Rs. Thirty-one thousand one hundred sixty-five crores in net profit.
HDFC Bank is a large-cap company with a market cap of Rs.81,442 crores. The stock also features in the headline NIFTY 50 Index. It is currently trading at a good market price of around Rs.1470.
Why invest in HDFC bank stocks?
The reasons that make this stock the top-ranked amongst long term shares to buy are:
- HDFC has a healthy NPA ratio of 1.32%. This makes it a safe stock for investors as well as makes it competitive amongst its peers
- HDFC Bank has grown considerably. It has witnessed a considerable 16% rise in its deposits.
- The bank is highly profitable, with a high return on capital of 16.6%.
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Hindustan Unilever – Best Stocks for Long Term Investment
Achieving the second rank amongst the best Long Term stocks in India is Hindustan Unilever Ltd. Hindustan Unilever is a leading fast-moving consumer goods (FMCG) brand.
The Company has 3 operating divisions- the home care segment, beauty and personal care segment, and food and beverages segment.
These divisions have earned revenue each of Rs. 14000 crores, Rs. 18000 crores and Rs.13000 crores respectively.
The overall annual net profit of the Company exceeds Rs.10,000 crores. Hindustan Unilever is home to 50 plus well-known consumer brands.
These include Domex, Dove, Vim, Lifebuoy, etc. It operates through a network of 4500 distributors through 8mn retail outlets.
Hindustan Unilever has a market capitalization of Rs.48,073 crores. Its share price trades around Rs.2048.
Why invest in Hindustan Unilever stocks?
The factors that make it ranked amongst the best stocks for Long Term investment are:
- The Company operates in a fast-growing, high-demand segment. As post-pandemic life returns to normal, the consumer market will only see growth in demand.
- It is a brand of the masses with a high position in the consumer market. 14 of its brands are listed in India’s top trusted brands
- Hindustan Unilever has a high net profit margin of 18%.
SBI – Top 10 Stocks to Buy for the Long Term
Next on the list of top 10 stocks to buy for the long term is SBI Bank. State Bank of India (SBI) is India’s largest public sector bank.
The bank services 45.92 crore customers through 22,219 branches and 71,968 BC outlets. It also has 62,617 ATMs across the country.
SBI has a healthy market share, serving both urban and rural areas. The bank’s three main loan lines are home loans, auto loans, and personal loans.
Their outstanding loan values are Rs. 503,779 crores, Rs. 76,332 crores and Rs.290,610 crores respectively. SBI has a market cap of Rs.44,097 crores. Its Long Term shares trade at approximately Rs.494.
Why invest in SBI stocks?
- It has a huge share market of 23.29% in deposits. This gives the Company a commanding position in the market
- Even in the pandemic situation, it registered a retail, personal loan growth of 16.47%
- It is one of the most trusted banks in the country, with a long legacy of success and service to its customers
Bajaj Finance – Top Long Term Investment Companies
Bajaj Finance Ltd is the next company featuring India’s top Long Term investment companies.
It is a non-banking financial company. 1987 is the year of incorporation of the Company. It began its operations in the name of Bajaj Auto Finance Ltd.
Bajaj Finance primarily operates in rural India through a network of 2988 offices. It provides finance in various areas such as MSME financing, consumer finance, and rural lending.
Bajaj Finance operates through two subsidiaries – Bajaj Housing Finance and Bajaj Financial Securities Ltd. The Company is highly profitable, netting a profit of nearly Rs.6000 crores from annual revenue of Rs.17,269 crores.
Bajaj Finance has a market capitalization of Rs.44,062 crores. Its Long Term stocks trade at a high price, around Rs.7260.
Why invest in Bajaj Finance stocks?
- It has the highest profitability ratio – 28.18% in the last reported results.
- The rural areas, which are its main market, remain largely under-penetrated for financial services. Thus, there is considerable scope for growth over the long term.
- It offers high shareholder returns to its investors – as high as 31%.
- Bajaj Finance Stock predictions say that the stock prices will rise in the next few months.
HDFC – Top Long Term Stocks in India
The fifth position in the top Long Term stocks in India is HDFC. HDFC is also an NBFC that operates primarily in the housing finance segment.
It has been in the business for a long time, established in 1977. HDFC’s total loan book stands at over Rs.6.2 trillion, with over 9 million units financed to date.
The key reason for its success is its extensive reach. HDFC has a network of 651 offices in India alone.
Additionally, it also has offices in Dubai, London, and Singapore. The housing loan segment includes home and land loans in rural and urban areas.
It also covers top-up loans, which are for house improvement-related needs. The Company has a high annual revenue of Rs.48,176 crores. HDFC has a market cap of Rs.43,342 crores. Its share price trades around Rs.2390.
Why invest in HDFC stocks?
- The housing segment has been stagnant for several years. Post pandemic, however, a huge spike in demand is expected. HDFC can capitalize on this.
- Its loan disbursements have already seen a 48% hike.
- HDFC is a highly stable and profitable company making it a good choice for long term investors.
Wipro – Top 10 Long Term Stocks
Next on the list of top 10 Long Term stocks are Wipro Ltd. Wipro, a leading global IT, consulting, and business process services company. 1945 is the year of incorporation of the Company.
Wipro entered the IT space in the 1980s. Today it has over 1000 active corporate customers. Wipro also provides IT services to the government and its agencies.
It also has high service exports. The Company’s annual revenue is Rs.8136 Mn, with net profitability of 17%. Wipro has a market cap of Rs.32,399 crores. Its high dividend Long Term stocks in India trade at around Rs.592.
Why invest in Wipro stocks?
- The Company has engaged all the latest technologies, including AI, robotics, cloud analytics, etc. It registers more than 2000 patents each year.
- Wipro has a consistently high dividend payout ratio of over 80%
- It focuses on bagging large clients for Long Term service deals.
- Wipro Share Forecast suggests that it has very good future potential.
Asian Paints – Best Long Term Stocks to Buy
The next list of best Long Term stocks to buy is Asian Paints Ltd. Asian Paints is India’s leading paint manufacturer and supplier.
Asian Paint’s product offerings include decorative paints, industrial paints, wall coverings, adhesives, and related services. 1942 is its year of establishment.
The Company has 26 manufacturing facilities and sells its products to over 60 countries. The Company has a 17,30,000 KL per annum paint installed capacity.
Its annual revenue is Rs.18,517 crores with a net profit of Rs. 4000 crores. Asian Paints has a market cap of Rs.29,782 crores. Its Long Term shares in India are approximately 3079.
Why invest in Asian Paints stocks?
- Continuously innovating – last year alone, it developed 48 new paint variants and received 14 new patents
- Asian Paints has an 83.9% market share in decorative paints – putting it in a monopolistic position.
- The Company has a high dividend payout ratio of 56%
Adani Green Energy – Top Long Term Stocks to Buy
The next on the list of top Long Term stocks to buy is Adani Green Energy Ltd. Adani Green Energy is a producer and supplier of various forms of renewable energy.
It is the world’s largest supplier of solar power in the world. The Company has an installed capacity of 3470 MW. It has added 925 MW of assets in the last year alone.
Last year, it produced 11023 MW of solar energy, 1927 MW of wind energy, and 2290 MW of hybrid energy. The Company’s annual revenue is 3124 crores. It earned a net profit of Rs.2632 crores.
Adani Green Energy has a market cap of Rs. 29,638 crores. Its share price is around Rs.1914.
Why invest in Adani Green Energy Ltd. stocks?
- It has huge Long Term potential as it is expected to grow to become the world’s largest renewable power company by FY 2029-30
- India has an ambitious target of 450 GW of renewable energy by FY 2030; this will contribute to the growth of Adani Green Energy.
- It has an extremely high-profit margin, making it a good buy for investors.
- According to Adani Green Energy Stock Prediction, it is expected to provide decent returns.
Bajaj Finserv – Best Long Term Companies in India
Taking the ninth position in the list of best Long Term companies in India is Bajaj Finserv Ltd. Bajaj Finserv has its headquarters in Pune, Maharashtra.
It is an NBFC. Business operating model is that of a financial conglomerate. Its main operating subsidiaries are Bajaj Finance and, Bajaj Life Insurance, Bajaj General Insurance.
The service offerings include financial services such as various types of loans, from business loans to home loans and consumer loans to personal loans.
It also offers a variety of insurance services and investment services. Bajaj Finserv is a huge company with annual revenue of Rs.60,000 crores.
Bajaj Finserv has a market cap of Rs.27,152 crores. Its share price is very high, trading at around Rs.17060.
Why invest in Bajaj Finserv Ltd stocks?
- It is a one-stop-shop for all investor’s needs – right from taking a loan to insurance coverage to investing and savings
- The Company has high growth potential, having grown 20% in the last year alone.
- It is famous for constantly innovating its product and service offerings keeping it at the top of its segment.
- The company has a strong balance sheet which attracts all types of Investors.
Larsen & Toubro – Low-price Long Term Stock
Rounding off the list of Long Term stock is Larsen & Toubro Ltd. L&T provides various engineering services. These include EPC contracts, Hi-tech manufacturing, developmental projects, etc.
The Company provides these services to several segments such as infrastructure, power, defense, heavy industries, hydrocarbon, IT, and financial.
It not only provides services within India but also to other countries such as Saudi, Qatar, UAE, Oman, Kuwait, Bangladesh, Africa, etc. Its annual revenue is over 60,000 crores.
The Company has a market cap of Rs.24,756 crores. Its share price trades around Rs.1756.
Why invest in Larsen & Toubro Ltd. stocks?
- India’s urban areas are growing rapidly. This is a great growth booster for L&T
- It has adopted all the latest technologies in its service offerings, including AI, Robotics, etc
- Larsen & Turbo Stock predictions say that the stock prices will rise in the next few months.
Adani Total Gas – Best Stocks for Long Term Investment
Adani Total Gas is the first Company to make it to the honorable mention list of best stocks for Long Term investment.
It is a leading manufacturer of natural gas in the country. The Company has registered a 22% growth in its business. It has added 102 CNG stations, 500 commercial, and 40,939 domestic customers in the last year alone.
It has a market cap of Rs. 24,250 crores. Its share price trades around Rs.2149.
Axis Bank – Long Term Companies’ Stocks to Buy
Axis Bank Ltd features Long Term companies’ stocks to buy next in our honorable mentions category. It is one of the leading banks in the country.
Its annual interest income is Rs.29,000 crores, with net profitability of Rs.6588 crores.
Axis Bank has a market cap of Rs.23319 crores, with its share price around Rs. 761. Its net profit has grown 305% in the last year alone.
Ultratech Cement – Best Shares for Long Term Investment
Next on the list of honorable mentions of best shares for Long Term investment is Ultra tech Cement Ltd. It is a leading cement manufacturer and supplier.
The Company has annual revenues above Rs.40,000 crores. It is a highly profitable company with an EBITDA of Rs.12,000 crores.
The Company has a market cap of Rs.19077 crores. Its share price is trading around Rs.6602.
Nestle – Top Long Term Stocks to Buy
Nestle Ltd is also amongst the top Long Term stocks to buy in India. It is a top food and beverage company in India.
Its products include powdered beverages, confectionery, milk products, prepared dishes, and cooking aids. Its group revenue is Rs.87.1 Bn.
The Company has a market cap of Rs.16622 crores. Its share price is high, around Rs.17,380.
Power Grid Corp – Best Stocks to Buy for Long Term
The last on our list of best stocks to buy for the long term in India is Power Grid Corp Ltd. It is an Indian PSU that transmits bulk power across different states. It is a scheduled Maharatna PSU.
Its market capitalization is Rs.15116 crores, and its share price trades around Rs.217.
How to identify a good Long Term stock for trading?
Now that you have detailed information on the top 15 Long Term stocks, you can start investing. However, this list is extensive, and you may wish to drill it down.
For this purpose, we have identified certain parameters to help you identify which shares to buy for the long term:
Analyze Financial history – The Company should be profitable and have a good track record of consistent performance to be suitable for the long term.
Stability and base – As Long Term investing is the goal, companies that are stable and large with established records are better suited.
P/E ratio – A decently valued company should be preferred in PE Ratio as it will have the capacity to generate wealth over the long term
Fundamental analysis metrics to identify long term shares
As mentioned in the first point above, ensuring a good Long Term stock’s financial history is key. This can be done by undertaking fundamental analysis.
Fundamental analysis is a study of a company’s financial information. It analyses its financial health, stability, position in a competition, etc.
The fundamental analysis also involves comparing the results with competitions and industry averages.
In our quest to find the best stock to buy in India for the long term, looking at fundamental analysis metrics is important.
In the next paragraph, we will highlight the financial ratios to be considered while identifying which stocks to buy for the long term.
Financial ratios to identify long term investment:
To invest in Long Term stocks, we must study some important financial ratios. These include:
Price to Earnings ratio (P/E) – This ratio is derived by comparing the market price of the share to its earnings per share. The intention is to gauge how fairly priced the Company’s share is about its real value.
The higher the P/E ratio, the higher value is. Stocks with an exceptionally high P/E ratio or whose P/E ratio is way above the industry average should be excluded.
This is because the shares are already overvalued and may not be able to unlock additional value for investors.
Price to Book ratio (P/B) – This ratio compares the market price to the Company’s book value. It gives investors an idea of what they can get if the company liquidates.
Earnings per share (EPS) – Calculated by dividing distributable net profit over the number of outstanding shares. A healthy EPS indicates that a company can earn profits for its investors.
Free Cash Flow (FCF) – It indicates the surplus cash flow remaining after paying off operating and capital expenses.
This is important for investors as it helps them understand whether the Company has funds to pay investors profits after covering all mandatory expenses.
Return on Equity (RoE) – Derived by dividing net profit over the average shareholders’ equity. ROE is a good indicator of the investor return generating ability of the Company.
We can decide which share to buy for the long term by studying these ratios.
Why invest in Long Term stocks?
Long Term stocks tend to be stable and provide good capital growth over the long investing period (more than 3-5 years). These stocks are less risky than short-term small-cap stocks.
Thus, investors can look to them for the stability of their capital. Investors can consider adding them to their portfolio to earn reasonable growth, safety, and stability.
The long-term stock should be considered for funding investors’ Long Term financial goals. Thus, it is important to correctly identify which stocks to buy for the long term.
Pros and Cons of Blue-chip companies
Blue-chip companies are large-cap companies that are generally preferred over the long term. These are considered the best stocks to buy today for the long term.
The pros of blue-chip companies are that they are large, established companies with a proven financial track record. Thus, they have stability and security.
On the other hand, however, the cons are that since they are very large, they have already achieved high growth in the past years. Thus, their ability to generate high growth is limited.
Best Long Term Shares – Conclusion
Overall, investing for the long term is important as it gives investors the ability to grow their portfolios and accumulate wealth.
The best shares to buy for the long term can be across different sectors. It is important to accumulate shares from different sectors as it provides diversification to your portfolio.
So go ahead, pick the best Long Term shares from the list and begin your Long Term investing journey.
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