India's Most Profitable Bluechip Stocks. Here are the Top 8... (2022)

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Aug 21, 2022

India's Most Profitable Bluechip Stocks. Here are the Top 8... (1)

Reclaiming its mojo, the BSE Sensex reclaimed the 60,000 mark this week. Though heavy selling on Friday pushed the index a tad lower from those levels.

Experts say this is a time to be worried because no one is able to explain the dichotomy between markets and the economy.

Some are even saying this could be a bubble phase in select bluechip stocks that was just waiting for the pin to burst.

Now, we do not mean to scare you. You should be fine as long as you stick to profitable and well-established companies.

If you are new to the world of investing, you'll probably hear the veterans of the industry talk a lot about bluechip stocks.

Bluechip companies are the largest and fundamentally strong companies that are established, and mature businesses generating consistent profits and return.

These companies are accompanied by a brand name that everyone recognises. This has helped these businesses create their competitive moat over industry rivals.

Being well-capitalised makes these businesses robust. Generally, you will find a healthy mix of high net worth individuals (HNIs), foreign institutional investors (FIIs), domestic institutional investors (DIIs) and common shareholders who have opted to invest in these fundamentally strong stocks.

Combining their core characteristics makes these bluechip companies a safe bet for investors. They are also some of the high profit stocks in India to invest in.

We used Equitymaster's powerful stock screener to filter out the most profitable bluechip stocks for your watchlist.

This was done taking into consideration key parameters like growth and profitability to further refine the stock list.

Let's get the ball rolling...

#1 Reliance Industries

Founded by Dhirubhai Ambani, Reliance Industries is a Fortune 500 company and the largest private sector corporation in India.

The company evolved from a textile and polyester business to one of the most diversified conglomerates that includes petrochemicals, energy, retail, natural gas, media, and telecom.

It holds significant market share across its business segments and commands a strong brand recall among its customers.

What's more, the company has largely invested in high growth sectors that is set to lead the company's next leg of growth.

In financial year 2021-22, the company reported revenue of Rs 7.9. tn. This is a 47% year on year (YoY) growth. In the last ten years, the company's revenues have increased at a compound annual growth rate (CAGR) of 7%.

Profit after tax (PAT) for the same year stands at Rs 675.7 bn. The company pegged a healthy profit CAGR of 12% over the last decade.

Over the next few years, the company intends to achieve a zero debt status while continuing to foray into new business opportunities in emerging sectors like new energy.

Additionally, Reliance is focussed on strengthening its capabilities through key partnerships and acquisitions.

To know more about Reliance Industries, check out its factsheet.

#2 Oil & Natural Gas Corporation (ONGC)

Oil & National Gas Corporation (ONGC) is India's largest oil and gas producer and perhaps one of the most undervalued stocks in the bluechip arena at the moment.

The company produced 43.4 Metric Tonne Oil Equivalent (MMTOE) of oil and gas in financial year 2021-22. ONGC produces 73% of India's total crude oil and 79% of natural gas. It operates 35 projects in 15 countries through a wholly owned subsidiary called ONGC Videsh.

With its long presence in the market, ONGC continues to enjoy a leadership position with its proven reserves, stable performance of its subsidiaries and competitive cost structure globally.

In the backdrop of this unprecedented geo-political tension between Russia and Ukraine and disruption in the global supply chain, the company recorded sales of Rs 5.3 tn in the financial year 2021-22. This is a YoY growth of 47.4%.

Over the last decade, ONGC has maintained a steady sales CAGR of 13%.

The company clocked a PAT of Rs 478.3 bn, an increase of 135.1% YoY. Profit CAGR stands at 6% for the last 10 years.

ONGC's dividend yield stood at a little over 6% for the financial year 2021-22.

Going forward, the company has plans to pivot toward a more sustainable and value accretive energy entity while continuing to be a key player in India's evolving energy ecosystem.

To know more about ONGC, check out its factsheet.

#3 Tata Steel

Incorporated in 1907, Tata Steel is Asia's first integrated private steel company and a leading manufacturer of steel around the globe.

Currently, the manufacturing capacity of crude steel stands at 34 MTPA. This has built the foundation of the company's portfolio of steel products such as hot rolled, cold rolled, coated steel, rebars, wire rods, tubes, wires, etc.

With revenue of Rs 2.4 tn in financial year 2021-22, the company experienced an increase of Rs 874.8 bn, a 55.9% YoY growth. The sales CAGR for the last 10 years is 6%.

The company has continued to service its debt. This has helped it deliver some of the highest profits in its history. The PAT recorded for financial year 2021-22 was Rs 411 bn. The company's profits have shown a healthy 29% CAGR growth in the last decade.

Tata Steel is known for its steady dividend payouts. The dividend yield was a healthy 3.9% in 2022. The ROE stands at 16.5% for the same time period.

A stock split was executed by Tata Steel on 28 July in order to provide more liquidity in the market. Still considered one of the most coveted Tata group stocks, the shares of the company are trading at Rs 112.9 apiece.

It is among the strong Tata group companies.

To know more about Tata Steel, check out its factsheet.

#4 Tata Consultancy Services

With a market capitalisation of Rs 12.1 tn, Tata Consultancy Services (TCS) is the largest information technology (IT) services, consulting, and business solutions provider in India. It's the flagship company of the Tata Group.

With a presence in 55 countries, TCS has been a preferred partner for companies worldwide to facilitate their transformation journeys through a cognitive powered, consulting led bouquet of integrated engineering services and business solutions.

In the financial year 2021-22, the company generated revenues of Rs 1.9 tn, a YoY jump of 16.8% over past year.

Over the last decade, revenue growth of 292.2% was recorded by the company. The sales CAGR for 10 years stands at 15%.

TCS has comfortably outperformed its biggest industry peers globally recording a PAT of Rs 384.5 bn, an increase of Rs 58.9 YoY. The profit CAGR for 10 years stands at 14%.

Over the last decade, the company has delivered a steady dividend yield averaging 1.9%. For the financial year 2021-22, TCS announced a dividend of Rs 43 per share and concluded its fourth buyback of shares, also the largest in India's history.

The ROE for the financial year 2021-22 stands at 50.7%.

According to the latest annual report for 2021-22 the company has experienced 17.5% growth in market value. Key divisions instrumental in this growth were life sciences and healthcare as well as the retail and consumer, which grew by 20.6% and 20% respectively.

TCS continues to successfully navigate through most economic downturns with its strong fundamentals and experienced promoters.

To know more about Tata Consultancy Services, check out its factsheet.

#5 HDFC Bank

Incorporated in August 1994, HDFC Bank is the largest private sector bank in India. In fact, it was one of the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up shop as one of India's first private sector banks in the country.

The company is a premier financial institution that is engaged in providing a wide portfolio of banking and financial services including retail banking, wholesale banking and treasury operations.

With a 60% market share, HDFC boasts of the largest banking networks in semi-urban and rural India and enjoys a dominant position in the auto loans segment and cash management services.

The turnover for the company in the financial year 2021-22 was Rs 1.4 tn.

HDFC Bank has recorded a sales CAGR of a healthy 17% over the last 10 years.

PAT for the financial year 2021-22 stands at Rs 381.5 bn, a 19.8% jump over the previous year. The profit CAGR over the last decade is at a promising 22%.

The bank has a good track record of paying dividends. The ROE for 2021-22 was 16.6%.

With a merger in the pipeline, HDFC Bank is aggressively growing its deposits. It's gives stiff competition to public sector banks (PSBs) through strategic usage of technology, rationalisation of branches and focused integration and expansion of business to newer markets.

To know more about HDFC Bank, check out its factsheet.

#6 Indian Oil Corporation

Indian Oil Corporation (IOC) with its distinguished legacy of more than 100 years, accounts for the largest market share of India's petroleum product consumption.

A Maharatna energy company, IOC has a presence in oil, gas, petrochemicals, and alternative energy sources.

With subsidiaries across 7 countries, IOC boasts of a strong geographical presence. It has a 32.2% share of national refining capacity which is 80.6 MMTPA. It also manages one of the largest oil pipeline networks for fuel distribution and transportation in the world.

IOC reported revenues of Rs 7.5 tn in the financial year 2021-22. In the last fiscal year 2020-21, the company recorded sales of Rs 5.3 tn. This is a jump of 41.4% YoY.t

The sales CAGR for IOC over the last decade is 4%.

With a PAT of Rs 244.9 bn, the company recorded its highest ever profit in the financial year 2021-22. This was a YoY growth of 19.1%. The profit CAGR for the company stands at 9% over the last 10 years.

In 2012-13, the dividend yield for the company was 2.2% which in 2021-22 has gone up to 10.6%. The ROE stands at 21.4% for 2021-22.

The ongoing political turbulence in Europe has opened another window of opportunity for IOC that could potentially see some gains in the foreseeable future.

A strong and robust distribution network, high operating margins along with capex investments in the pipeline segment will be the key growth drivers for IOC in the foreseeable future.

The company with its established connection with the central government is also going to be a major player that will redefine India's energy future in alignment with the government of India's initiatives like 'Atmanirbhar Bharat'.

To know more about Indian Oil Corporation, check out its factsheet.

#7 Infosys

Infosys has played a pivotal role in defining India's emergence as the global destination for software services talent. It is India's second-largest information technology (IT) services provider with a journey that spans over four decades and clients across 50+ countries.

The company is a global leader in emerging digital services and consulting with expertise in emerging technologies such as artificial intelligence (AI), machine learning (ML), blockchain, cloud computing, Internet of Things (IoT), security and data analytics and metaverse solutions.

As a result of rapid digitisation specifically in the technology, energy, and utility sectors, Infosys has grown at a good pace, generating revenues of Rs 1.2 tn in the financial year 2021-22.

Infosys' sales on a CAGR basis in the last ten years is a healthy 14%.

The company has delivered a good profit of Rs 221.5 bn, a YoY increase of 14%. The profit CAGR for the last decade stands at 10%. The company has no debt and continues to maintain a strong liquidity position.

Across the last decade, the company has averaged a dividend yield of 2.4% and recorded an ROE of 30.4%.

To strengthen its digital capabilities and expand its global footprint, Infosys has acquired key companies. It continues to maintain its leadership position in the market through alliances with leading technology partners.

With its large scale of operations, Infosys has been able to maintain lower operating costs than its immediate industry rivals that in turn has allowed the company to offer more competitive pricing to its customers.

To know more about Infosys, check out its factsheet.

#8 State Bank of India

The only Indian bank to be featured on the Fortune 500 company list, the State Bank of India is the country's largest and oldest public sector banks with a history of over 200 years.

This Indian multinational bank was founded in 1806 enjoys a dominating leadership position in the Indian market with a customer base of over 450 m.

The bank has a market share of 22.9% in deposits and 19.7% share in advances in India with well-diversified loan book exposed to various sectors.

SBI has always been the banker of choice to the government of India.

The bank generated an income of Rs 2.9 tn in the financial year 2021-22 experiencing marginal growth in revenue of 4.3% over the previous fiscal year. A 7% sales CAGR was recorded for SBI over the last decade.

PAT for the financial year 2021-22 stands at Rs 363.6 bn, a 49.7% jump over the previous year. The profit CAGR over the last decade is at a steady 9%.

SBI has always had a track record of paying healthy dividends to its shareholders. The ROE for 2021-22 was 12.2%.

The bank has proven that it can operate successfully under tough economic conditions. SBI is expected to explore emerging opportunities in digital banking and further strengthen its foothold in the market and increase penetration by scaling partnerships with fintech firms and finance companies.

To know more about State Bank of India, check out its factsheet.

Does the Slow Rate of Gains Justify Investing in Bluechip Stocks?

We all know that bluechip stocks are in a league of their own. We also know that they grow at a steady yet slow pace in comparison to small or mid cap companies.

The question is - if your goal is to create wealth quickly, does it make sense to allocate a significant portion of your investment in bluechip stocks?

If you are looking for a scheme that gets you rich overnight, then bluechip stocks are perhaps not the best way to go.

However, if you are looking for stocks that offer consistent and steady returns year on year, then bluechip stocks should definitely feature in your portfolio.

Most importantly, these profitable stocks come with strong fundamentals and healthy finances providing your portfolio with the much needed balance if it is already risk heavy.

The cherry on the cake would be to get them at throwaways prices which is true with some of the companies that come with heavy promoter holdings.

So, why worry when you can make money whilst minimising risk to a great extent...

At the end of the day, minimizing the risk by having a decent margin of safety is what matters the most.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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1 Responses to "India's Most Profitable Bluechip Stocks. Here are the Top 8..."

ASHIM

Aug 24, 2022

Very good selection. Only surprising that TATA MOTORS and TATA ELXSI were excluded.

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