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.
The Tata Motors shares has now once again fallen below the Rs 400 mark at Rs 397. 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 Nov 2017, Commercial and Passenger Vehicles sales performance in the domestic market surged to 52,464 units, a growth of 58%, over last year due to growing demand across segments, introduction of new products and strong customer initiatives.
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.
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 273, the dividend yield itself is a healthy 6 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.
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 Sept 30, 2017. Reliance reported a record net profit of Rs 8,265 crores. This was way above what the street was expecting. The retail, telecom, refining business and petchem are all firing.
The recent decision by the TRAI to reduce the interconnection charges payable by telecom operators that pay for cross-network calls to 6 paise a minute from 14 paise, is a big boost to the profitability of Reliance Jio.
The company has also started started operations of
its ROGC cracker, MEG and LLDPE plants at Jamnagar
This should also boost profitability in the coming quarters.
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 827, ex bonus.
Even at these levels the stock is trading at a p/e of just in the 13 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.
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