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Best Shares To Invest In India For Long Term
Here are a list of best shares that one can invest for though the markets have run-up sharply.
At 33,300 points on the Sensex one would need serious courage to invest heavily, given that valuations look stretched. However, there are certain stocks that look undervalued and could be good bargins for the long term. Here are a few such stocks, which could be among the best shares to invest in India from a 2-year perspective.
Amara Raja Batteries
Amara Raja Batteries did not have the best of quarter for the June ending period. Net profits were placed at Rs 99.85 crores, as against Rs 99.19 crores in the previous quarter ending March 31, 2017.
Lead, which is a key input for the company, saw prices firing, which impacted Amara Raja Batteries financial performance. However, the one reason to recommend the shares is the sharp fall in the share price from levels of Rs 1060 to the current price of Rs 680.
In fact, the stock is also trading way below its 200-day moving average of Rs 880.
Amara Raja: Expansion To Augur Well
The company's automotive segment continues to grow very rapidly, which is why it is expanding its capacity.
The first phase of expansion would involve three lines, which would take the company's 2W capacity to 15mn per annum by FY18E. In the 4 wheeler space, Amara Raja Batteries added capacity of 2.25mn. These expansions are likely to have a positive impact on earnings in he next couple of years.
The debt to equity ratio of the company is a small 0.2 and is likely to reduce to 0.1 in the next couple of years.
An EPS of Rs 38 is possible by 2018-19. If you discount the same 25 times, the stock should trade at Rs 950 from the current levels of Rs 680. Premium valuations are accorded to Amara Raja because of its low debt, low equity, high promoter holding and solid brand equity.
Check stock quote of Amara Raja here
Bank of Baroda
Bank of Baroda is the third largest government owned bank in the country.
After the announcement of fresh infusion of capital in government banks, there was a buying frenzy in government banking stocks and the share rallied to as much as Rs 205. However, the stock has fallen to Rs 165.
We believe that dividend paying government banks like Bank of Baroda would get higher capital infusion from the government. bank of Baroda is well placed to receive greater capital and hence better ability to lend.
We have seen several banks including government and private sector banks, reporting a slight drop in their non performing assets. The belief now is that NPAs are likely to be only better in the next few quarters. From a 2-year perspective, Bank of Baroda is a good share to bet on.
Check stock quote of Bank of Baroda here
Lupin
Lupin shares have crashed 17 per cent in a single day with the stock now trading at Rs 860.
This is the lowest levels that we have seen the share price plunge since 2014. The reason for the slump is that the company received a warning letter from the USFDA (United States Food and Drug Administration) pertaining to its two manufacturing facilities located in Goa and Indore (Pithampur Unit II).
These two plants contribute approximately 20 per cent to the company's revenues. Nobody can be sure when issues with the US FDA can actually resolve. However, the fact is that the stock is now available at just 16 times, one year forward earnings.
The company has said that there would be no disruption to production from these facilities, however, new product approvals would be delayed.
Now, we wish to state that this stock is a highly risky bet, with potential to make money and lose money.
Check stock quote of Lupin here
Disclaimer
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author and his family do not own any shares in the above mentioned stocks.
