Investors often want to invest their hard-earned money in stocks where their money grows with time. But, identifying the stocks of companies that deliver fruitful returns is always an issue. If you are looking for the top 10 fundamentally strong companies in the share market, then you are at the right place.
In this post, We will discuss the top10 companies with good fundamentals that are scaling up their business and enjoying windstorms in their respective sectors.
Let’s check the top 10 fundamental strong stocks for 2021 that you can own to make a good return.
1. Bharat Electronics Limited (BEL)
BEL is Navratna Company under the flagship of Ministry of Defense in Government of India, which has specialization in production and services of electronic components used for defense equipment. Bharat Electronics Limited provides its electronic components for the civil sector in India and also has a hold on the foreign market. For the Financial Year (FY) 2019-20, 82% of the sales revenue of the company has been obtained from the Indian defense sector while the rest of the revenue compromises from the other sector. Defense’s contribution in its sales revenue has increased 14% from the previous financial year.
The company has a growth of 6.94% in FY 2019-20 in its annual reports and it is expected by authorities of the company to have a healthy growth of 12-15% during FY 2020-21. The company has a market capitalization of 320.899B Rs, the Price to Earnings ratio (P/E) of 18.6401, and the Price to Revenue ratio (P/R) of 2.4759 for the current session. On the debit side, the company has a Net debt of 594.1M Rs and a debt to equity ratio (D/E) of 0.0059 for the Most Recent Quarter (MRQ).
Apart from having healthy performance till now, the company has the probability to outperform its expected growth as the government of India is focusing more on self-reliance in the defense sector.
2. Cipla Ltd.
Cipla Limited together with its subsidiaries companies has R&D and manufacturing units for pharmaceutical products. They have market capture in the USA, South Africa, and many other foreign countries. In this time of the pandemic, a new door has been opened for the R&D team of the pharmaceutical sector, as patients having several and serious post-Covid complexities in the heart, liver, and respiratory system of their body.
The company has a growth of 15.42% for the current QoQ (Quarter on Quarter) basis which is the highest in the past 3 years. The company also has a market capitalization of 666.414B Rs. along with P/E, P/R, and D/E of 36.2449, 3.6814, and 0.1856 respectively. Along with opportunities for new product and volume growth, Cipla Ltd. has a higher probability to outweigh its expected growth.
3. Infosys Ltd.
Infosys is one of the largest IT Companies in Indian as well as in the global market has emerged as the fastest wealth creator. This tech company has given outstanding returns to long-term investors in the past so it is included in our top 10 fundamentally strong companies list. It has a compound annual growth rate (CAGR) of 30% and profit after tax (PAT) of 33% for the past 25 years. Apart from the past performance and current debt-free balance sheet, they have bagged a contract for 16 large deals worth $3.15b for Q2FY21 (The highest ever recorded).
Infosys has traction in digitalization which assists them to grow in the current scenario of a pandemic. The company has a P/E of 31.17 and a net profit of 4845 Cr. Rs. It has a PAT of 20.34% for which is the highest among all other IT-based companies. All these indices make it the best choice among other companies in the IT sector.
4. Bandhan Bank Ltd.
Bandhan Bank is the largest Microfinance institution in India. It was incepted in 2001 as a microfinance services provider and later in the year 2014 it registered to function as a bank. It has more than 20% market share in India and more than 50% market share in north-east and eastern India. This bank has a strong record of showing growth in the balance sheet. It has CAGR growth of 44% for the past 10 years and PAT is also growing consistently in past years. PAT growth for past 3 FY is 54.94%, 45.03% and 21.01%.
The company has a growth in income of 17.82% in terms of QoQ for the quarter ending in September 2020. Bandhan bank has reported strong business trends and economic activities due to the involvement of its services in rural India. It also holds COVID-related / excess standard provisions of INR17.4b to manage higher delinquencies over FY21. This indicates that it is going to outperform in the current financial year.
5. Bharti Airtel Ltd.
Airtel has a strong customer base and penetration in services of telecom, DTH, Broadband, and Payment banks in India. Out of these sectors, it has a major role in the telecom sector in India. It has the highest 4g subscriber in India. Arpu rating of the company is also increasing and it is likely to increase further in the telecom sector to enable them to invest in new technologies which are going to increase the Profitability of Bharti Airtel. The company has a healthier balance sheet than other competitors for the current quarter and a strong execution track record. It has a diversified earnings stream which enables it to invest in new technologies. It has a total income growth of 6.2% for the quarter ending in September 2020 which is higher in terms of QoQ.
In recent time, the regulatory authority of GOI in telecom has permitted 74% FDI in Airtel payment banks which assist them to collect funds for the investment in advanced technologies.
6. Sun Pharmaceutical Industries Limited.
It is one of the largest pharmaceutical companies in India that holds 8.2% of the market share in the Indian market. It has 31 brands out of the top 300 brands in the Indian pharmaceutical market. The company has invested 12600 crores worth of cumulative R&D investments over the past 6 years i.e. 2015-20 which results quite well. It has earned $410 million in global specialty business in FY 2020. The company was above the analyst’s estimates on all fronts mainly on account of operational performances, tax gain, and lower interest expense. The net profit margin of the company has been increased from 12.78% to 20.58% on a QoQ basis for the current quarter ended in September 2020.
7. Biocon Limited.
Biocon limited is an integrated biotechnology enterprise with a presence in pharmaceuticals, enzymes, custom research, and clinical research. The company produces various pharmaceutical products i.e. immune suppressants and anti-diabetic drugs. The biologic segment of the company will grow significantly, and the company is ready to harness opportunities in a similar biological space. Revenue for the operation has grown by 11% YoY basis while PAT increased by 10.3% on a YoY basis, which indicates the profitability of the firm.
8. Amber Enterprises India:
This enterprise manufactures parts for Refrigeration and air conditioning equipment in India as well as export globally. This company has shown structural growth since its inception. It has held on more than 75%. Amber Enterprise Company is a key supplier to top 10 AC brands. Major overseas brands are looking for the ‘china + 1 strategy’ for their manufacturing center after the scenario of ‘Covid’ so this enterprise is ready to harness this opportunity in near future. For the past 3 years, it had consistent total revenue growth increasing and it is 43.77% for FY 2020 while having a CAGR of 33.33% for the past 3 years.
9. HCL Technology Limited.
HCL Technology limited offers software development, Process outsourcing, infrastructure management services, and BPO services globally. Since the starting of the pandemic of covid, the demand for IT-based services has increased significantly. The result of the same is expected in its annual performance. This company has a P/E of 22.14 which is below than the other IT sector’s companies. This company has given the preturn of 122.55% in 3 years while Nifty IT has given the return of 114.41% for the same period. For the past 3 years, it has had revenue growth of 13.6 % CAGR and Net profit growth of 8.7% CAGR.
10. Gujarat gas limited.
Gujarat gas limited is the largest city-based gas Distributor Company. It distributes CNG/LNG in 23 districts of the Gujarat and Union territory of Dadra and Nagar Haveli. It has a large number of consumers in residential, commercial, and industrial segments. This company has a good record of building up cash reserves. It has consistently increased its ROE in the previous 5 years. It has a QoQ revenue growth of 135.07% which is the highest in the last 3 years. The company has an annual growth of 32.01% outperformed Its 3-year CAGR of 26.29%.