Large cap stocks are the shares with a large market capitalization. There are many individuals who prefer buying into the large cap stocks. They are much safer and less volatile. Read what is large cap stocks and difference between large cap, small cap and midcap stocks here
Tata Motors is always a great large cap stock to own. In fact, at around 8 times one year forward earnings this is the cheapest Sensex stock to own.
There are a number of positives that could work in favour of the Tata Motors in the coming quarters. The first is that there could be faster economic growth that could happen thus pushing demand for the company's commercial vehicles higher.
In fact, for the month of n March 2018, Tata Motors registered a growth of 35% at 69,440 units as against 51,309 units over last year due to the continued strong sales performance of its Commercial and Passenger Vehicles Business in the domestic market.
The cumulative domestic sales performance of the Commercial and Passenger Vehicles business for FY18 was 586,639 units compared to 478,362 units, a growth of 23%, over FY17
Also, the company is increasingly seeing decent growth in countries like the US and China, which are amongst the largest markets for Tata Motors' Jaguar Landrover (JLR) range of vehicles. JLR reported its best ever sales in the month of Sept in the US.
A faster pace of launches and the improved product mix could see improved margins in the coming quarters. The Tata Motors stock could easily see an uptick of at least 20 per cent in the coming quarters, given that the company has hardly participated in the recent Sensex rally. A great large cap stock to own in 2018.
We like Coal India for a number of reasons. The first and the most important is that even if the stock falls, the dividend that ones gets easily compensates for any downward risk in the stock.
At the current market price of Rs 279, the dividend yield itself is a healthy 5 per cent. This dividend is enough to compensate in case there is a drop in the share price. There are other reasons which make this stock among the best largecap stocks in India.
Among these include the solid monopoly business that Coal India has. Apart from this, it is a high margin business, and the company is debt free. Continuity of business along with almost very little dangers to business, make it a great large cap stock to own.
The government's recent thrust on "power for all" should keep coal demand high in the months to come. The risks of a downside are minimum at this point. The company tends to declare dividends in the month of Feb, so watch for this stock this month.
Reliance Industries is another stock that is worth buying. Just take a look at the company's quarterly numbers.
The company had a phenomenal quarter for the period ending De 31, 2017. Reliance reported a record net profit of Rs 9,423 crores, which was a jump of 25 per cent.
What is interesting is that Reliance Jio has turned profitable and with an increasing number of subscribers the company is expected to continue doing well.
The petrochemical business also reported strong earnings before interest and taxes (EBIT), a measure of operating profitability, of Rs5,753 crore, an increase of 73% from a year ago.
On most parameters the company did well including the Gross Refining Margins.
Fundamentals of Reliance Industries
The company can report an EPS of Rs 65 for FY 2017-18. The stock has ran up significantly in the past and is now trading at Rs 944, ex bonus.
Even at these levels the stock is trading at a p/e of just in the 15 range. This one of the best large cap stocks that has the potential to rally in the long term considering the revenues from telecom that is likely to play out and also benefits from retail, and petchem expansion. Check stock quote of Reliance Industries here
Why to buy large cap stocks in India?
There are many reasons to be buying into large cap stocks in India. The first is that these are the bluest of blue chips. These stocks tend to fall to a smaller extent as compared to stocks from the mid cap and small cap space. What this means is that you can protect your capital and prevent a damage to it, as compared to small and mid cap stocks. Secondly, they are more liquid and hence you can sell larger quantities. Thirdly, it is easy to get a loan against shares for stocks from the large cap space.
This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.