This is a guest post (unedited version) from Sherin Devassy, a personal finance and investment blogger at The Money Maniac. You may visit his blog for more information on value investing guidelines and personal finance guidance. Sherin is an investor for long term and has built a stock portfolio including most of the above mentioned stocks with a very long term focus. You can contact him at email@example.com
Selection of a company to invest is not simple. But, in the same time, it is a simple task too. Commonsense plays major roles in selection by considering most important factors that any one can easily understand and adapt. By remembering legend investor Warren Buffett’s investment criteria’s, here I am listing 10 Indian companies that capable generate enormous wealth for long term investors.
Remember, companies mentioned in this article are not for short term investors. Most of them in this list have defensive character and suitable for investing to meet long term goals such as child higher education, marriage, buying a home etc. By remembering the classic rule, invest for long term, I assure any investments on this companies more than 15 to 20 years generate wealth like an ocean.
I have selected and listed these companies using some selection criteria’s. As the first, companies listed here have one or more product that is into the monopolistic position in Indian market and merely impossible to beat their position by others. Secondly, these companies have efficient management with innovative ideas and strong network across India. Finally, these companies have very few or no debt and registering year to year yearning growth.
1. Britannia Industries
Go to any shop, whether it is small or large mall, anywhere in India, whether it is a metropolitan city or remote village, you are able to find Britannia biscuits. Such strong brand along with extra ordinary sales network, bring this company as one of the gem in India.
There is only one name in India for cigarettes. ITC. Through it’s wide presence to each and every corner in India, efficient management, innovative ideas, ITC able to reward its investors to the utmost. It has strong brand like Wills, Gold Flakes that no one can beat in India market. ITC already operating to the FMCG sector and its brand started its strong presents all over India.
No name in India other than Nestle in the Child food sector. Nestle left no room for its competitors in this segment for decades. Also, there is no name in India market, famous than Maggi in the noodles segment. Along with above 2 strong monopolistic brands, Nestle manufacturing and marketing biscuits and confectionaries too. Nestle have real monopolistic business that each and every value investor looking for.
No need to say anything about Hindustan Unilever. People in India cannot survive without HUL products. It is operating into the FMCG sector with vast list of products where, most of them have clear monopolistic position in Indian market. Some of them are Surf Excel, Lux, Lifebouy, sunsilk, ponds are some but very few in their list. To identify the power of HUL product, try to find a shop or a corner where any of the HUL product have no presence.
5. United Spirits
Spirit is one of the most profitable business in the world. In India, spirit business providing maximum income to most of the states. It is difficult to find an adult in India who has not heard about McDowell’s or any of its variants. That is United Spirits. Presence in each and every corner of India, and being the 4th largest spirit company in the world, McDowell put its signature among other Indian companies as one of the best to invest. An only difference from others in this list is, United Spirit have debt but simply manageable. Buy this stock when the prices are down, hold it and see how your wealth zooming.
6. Glaxo Consumer Care
Can any one beat Horlicks or Boost in India? or Crocin? Impossible. Both of these three are the unbeaten brands from GSK consumer Healthcare for decades and will remain as stronger for next decades too. If the company has such solid brand names with monopolistic position, there are no points of thinking to invest on the stocks of this company. Wait to get the stock in the minimum price, that very rarely happening, and invest maximum.
Did you ever hear the products Vicks and Whisper? funny right. In India it is difficult to find a person who never used Vicks and difficult to find a women who not aware about Whisper. Vicks brand is a clear monopoly and even whisper too. P&G has special focus to feminine care which leads them to have one of the most admired feminine brands along with its long trusted monopolistic brand Vicks. Yes, these two brands are sufficient to select this company with confidence, to invest and zoom your wealth.
8. ICICI bank
ICICI bank has large number of branches across India with second largest bank in India status. Their credit card division is the best in India in the sense of services and products. ICICI direct is the most favored online trading platform for several years. Bank has efficient management and sales team with huge marketing network across India. This stock will be better to hold for long term and can consider as wealth zoomer. High volatility is the only drawback with this stock but recovery will be faster. Consider to have this stock in the portfolio for long term by carefully buying when the prices are down to the maximum.
9. Asian Paints
Asian paints are India’s most favorite decorative paint company with posh huge decorative paint collections. Anywhere in India, Asian paints are the well known name between big companies to small home makers. This is a classic good stock to generate long term wealth by taking advantage from its monopolistic position in the paint industry and most innovative ideas time to time.
You may feel wonder why I have added Bluestar with the above Indian Germs. There are reasons. Drastic changes in Indian climate which being hotter and hotter. Bluestar is the makers of Air conditioners and yes, it has the monopolistic business in India. In the coming years, requirements for air conditioners in offices as well as home, going to up and that add value to Bluestar’s business. A future based pick of this stock certainly add value to your portfolio as well as wealth too.
When selecting stocks, give preference to companies have at least one product in market that have monopolistic position. Remember to avoid sick commodity based companies by considering huge competitors in the same business, less earning and inability to meet inflation adjusted price to its products. Such business certainly have huge debt base and well organized labor force. Airline industry is the best example for organized labor, which can affect their operation in case of any strikes happening. Steel manufacturing industries are the example for sick, commodity type business with the above mentioned reasons.
All the above listed companies are able to adjust their price to beat inflation in a great way. Due to their monopolistic position in the market, they never loose the customers in case of any hike in price required due to inflation. As they don’t have any competitors, their customers will be with them. This is a wonder which help investors to zoom wealth to a great extend.
Asian Paints, Bluestar, Britannia, Glaxo, HUL, ICICI, ITC, Nestle, P&G