Volatile stock market… Uncertain Sensex… All your dreams of making it big in stocks now face the danger of wiped out… Caveat is that you need to hold your stocks for a long period: ten years if you can to reap the benefits of picking stocks that will create value for you.
Here are the top picks which have the potential to be multi-baggers (a stock that grows manifold over a period of time) if held with an investment horizon of ten years:
- Large caps are selected because of their proven track record and ability to grab mega opportunities through their financial strength.
- Mid caps if the management has the vision and management band width to scale up rapidly to become large caps.
A. Commodities
- Reliance Industries – Perennially evergreen company
- Reliance Petroleum – Largest refinery with very high Nelson complexity index that will lead to highest gross refining margins, GRMs
- Tata Steel – formerly Tisco; lowest cost producer of steel plus large value addition through Corus acquisition
- Hindalco – lowest cost producer of aluminium plus large value addition through Novelis Fusion Technology
- Sterlite Industries – commodity powerhouse at a time when globally commodities are in a super cycle
- Sesa Goa – largest reserves of iron ore in private sector
B. Telecom
- RCom – marketing aggressiveness plus financial engineering plus political acumen
C. Auto
- Tata Motors – from world's cheapest car to luxury Jaguar to SUV Landrover to trucks -- will be in global top five in 5 years
D. Finance
- ICICI Bank – proactive, aggressive fund raising and lending taking full advantage of slow decision making at PSU banks
- Reliance Capital – straddling all areas of non-banking financial services
E. Infrastructure
- L&T – another evergreen company, value unlocking through listing of subsidiaries, very strong core business
- Patel Engineering – strong position in high margin high technology construction sector, real estate development
F. Pharma
- Glenmark – innovator, out-licensor of drugs in fast growing therapeutic areas like lifestyle diseases
- Cipla – innovator copier, low cost supplier of essential medicines people can't do without
G. Realty
- DLF – proxy for the Indian real estate sector
- Unitech – number 2 and tries harder than number 1
- Sobha Developers – fully integrated real estate contractor who graduated to property developer status
Note: Please note that these are my recommendations. I would advise my readers to understand the nuances of each stock thoroughly before making decisions.
