10 Best Large Cap Stocks to Buy in India 2023

Best large-cap stocks are popular among new investors since they are less risky than small and mid-cap stocks. You have come to the best place if you're looking for the best large-cap stocks to buy. 

In this post, we will provide a list of the top large-cap stocks in India and discuss additional factors to consider before investing in large-cap stocks. Let's get started!

What are large-cap companies?

Market regulator, The Securities and Exchange Board of India (SEBI), defines large-caps as the first-to-100th business in total market capitalization. This includes equities from companies ranked in the top 100 by market capitalization on the stock exchange. 

Most of the stock market is made up of large-cap stocks, frequently the most important investments in many market participants' portfolios. 

The BSE SENSEX and NIFTY 50 are India's most prominent market indices. They only feature stocks with substantial market capitalizations. Large-cap stocks should be part of the investor's portfolio because they generate consistent income and sales. 

Large caps are corporations that have been in their respective industry for a long time and are among the most stable on exchanges.

Characteristics of large-cap stocks companies

Because of its size, a large-cap stock is easy to identify. It is also financially secure and has a widespread distribution network. 

Most of the time, these businesses sell high-quality items and well-known services throughout the country. Because of these characteristics, these businesses can weather economic downturns better. 

Even when the market is down, they may expand or make money. This is one reason these corporations are less affected by market movements than Mid Cap and Small Cap companies. 

These are large corporations that have been around for a long time. They have a track record of consistent and growing earnings and profits. These businesses are financially solid and have little to no debt. This indicates that they can weather economic downturns.

Furthermore, during a recession, it is frequently seen that a large corporation is less affected by poor financial conditions. 

Remembering that an investor should seek operational efficiency through rigorous working capital requirements and a superior cash conversion cycle is vital. Investors should avoid these large corporations with high promoter pledges. 

Promoters whose shareholdings remain constant or increase should be preferred above other major participants.

Large-size stocks are a fantastic alternative for investors who aim to attain their long-term goals in at least 8-10 years. However, investing in these companies is the best method for all investors to grow their money over time while minimizing risk and volatility. 

Investors can always put some of their money into large-cap companies. This gives steadier returns with less risk, depending on their risk profile.

10 best large-cap stocks to buy in India

ICICI Prudential Bluechip Fund

ICICI Prudential Bluechip Fund is yet one of the finest funds, according to ZFunds Ratings, because it gets strong scores in key areas such as volatility and capture ratio.

While it may only sometimes perform well, it has consistently outperformed its benchmark and the average returns for its category over longer periods. This Fund is a strong long-term investment option.

The Fund also invests a modest portion of its assets in mid-cap companies (approximately 6.42 percent). It's a fantastic fund to invest in for the long term.

Axis Bluechip Fund

It has consistently been one of the best-performing large-cap equities since its inception. The Fund invests nearly all of its assets (nearly 100%) in large-cap equities.

Thus, the Axis Bluechip Fund has the best consistency, capture ratio, and risk-adjusted score, according to ZFunds Ratings.

Long and short term, the Fund has consistently outperformed its benchmark. The Fund's high valuations appear to provide little value right now (in comparison to those with low valuations), but it is predicted to be less volatile than others.

Nippon India Large Cap Fund

The Nippon India Large Cap Fund is a mutual fund that invests in Japan.

Due to its strong valuation score, Nippon India Large Cap is ranked among the top ten large-cap funds by ZFunds Ratings. It also performs admirably in the critical parameter of concentration.

The Fund also has a limited allocation to mid-cap and small-cap equities, amounting to around 14% and 6%, respectively.

The Nippon India Large Cap fund has performed well over extended periods, and its current value suggests that it will continue to perform well in the next few years.

Mirae Asset Large Cap Fund

Mirae Asset Large Cap Fund is one of the best large-cap funds since it has historically delivered great returns and has a high ZFunds Rating score.

The Mirae Asset Large Cap Fund is rated among the best by ZFunds in capture ratio, risk-adjusted score, and consistency.

The Fund invests 13.6% and 1% of its assets in midcap and small-cap equities, respectively. The Fund has performed extra admirably in recent years and can outperform and outperform its benchmark in the years ahead.

HDFC Top 100 Fund

The HDFC Top 100 Fund is one of the top large-cap funds since it has provided consistent returns over time. According to the ZFunds evaluations, the HDFC Top 100 fund has an excellent overall score with the best values, concentration, and volatility.

The Fund also includes a modest percentage of Mid-cap and Small-cap companies, approximately 9% and 1%, respectively.

HDFC Top 100 Fund may generate good returns in the coming years because of its great value.

ITC Ltd

ITC Ltd. is involved in various enterprises and controls most of the Indian cigarette market. For a long time, it has also made a lot of money. 

ITC has evolved from a tobacco-only corporation to a commercial conglomerate that performs a variety of things and has the potential to develop.

This company is well-known for its high liquidity, low debt, and positive cash flow. The operating margin for the entire company was 34.1% in Q4FY22. 

To assist the business in regaining footing, the government maintained the cigarette tax in the Union Budget for 2022. This will be extremely beneficial to ITC, whose revenues have decreased by half due to the pandemic.

Hindustan Unilever Limited

Hindustan Unilever Ltd. (HUL) is one of India's leading manufacturers of fast-moving consumer goods. It has been in existence for about 80 years. 

Every year, five brands generate more than Rs. 2,000 Crs in sales, while seven of its brands generate more than Rs. 

HUL sells various goods, including food, beverages, cleaning supplies, personal care items, and water purifiers.

As of FY22, the overall financial risk profile is supported by significant net cash accrual and little debt. HUL is known for paying out many dividends, with a dividend yield of 1.57%. 

The Indian FMCG business includes organized and unorganized competitors across all segments and products. And HUL continues to confront intense competition from new players, including multinationals, in all its major segments, including soaps and detergents, personal care products, and packaged meals.

Tata Consultancy Services Ltd.

Tata Consultancy Services is a business (TCS) Consultancy Services Ltd. (TCS) is the largest Indian firm worldwide in the IT and IT-enabled services outsourcing sector.

It also offers a diverse range of services and operations that may be scaled up or down to meet the demands of its clients.

The company's finances remain robust, as seen by its high operating profitability of 27.67%. It has an excellent capital structure and strong liquidity position, as visible by its strong cash position as of Q4FY22. 

The company's attrition rate in IT services has increased due to supply issues. It was 17.4% in the third quarter of FY22, the lowest in the industry.

Reliance Industries Ltd.

Reliance Industries (RIL), the flagship firm of the Reliance group, is India's largest private business. The operations of RIL are highly integrated, and the corporation is present throughout the energy value chain.

Reliance Jio, RIL's telecom business, had around 40.40 crore customers as of March 2022. This made it the country's largest operator. The company has established a reliable market position in an organized retail sector and has reduced its debt on a consolidated basis.

RIL said that key investors would invest over Rs. 1.5 lakh crore in its digital and retail businesses. It also just completed a rights offering. This will help it pay down debt and enhance its financial risk profile in the future.

Housing Development Finance Corporation Ltd

Housing Development Finance Corporation Ltd. (HDFC) is the reliable market leader in India's housing finance industry, with a robust distribution network of 651 outlets. 

HDFC is well-known for having been in business for a long time. The company has sufficient capital, obtains sufficient funds, has strict underwriting requirements and risk management systems, and covers up with good assets.

HDFC maintains one of the housing finance business's most stable asset quality characteristics, with a Gross NPA ratio of 1.91%. However, asset quality deteriorated slightly in FY22. 

Key risks include a reduction in the group's overall credit rating, a significant drop in asset quality, and an increase in the debt-to-equity ratio to more than seven times. 

The company has announced a merger with HDFC Bank. This could provide the organization with greater prospects and a brighter future.

What are the benefits of investing in large-cap stocks?

Investing in large stocks in India has the following advantages: 

They have a higher degree of transparency 

The first advantage of investing in large corporations is that they are simple to understand. We all know that they have been there for a long time.

Investors can obtain statistics on how they are performing currently and in the past before investing. 

Before purchasing large-cap stocks, you can learn vital information, such as how the stock performs and long-term growth tendencies.

Increased stability

Large-cap stocks are more stable than mid-cap and small-cap companies, making them an excellent choice for long-term investors. Make it clear, however, that these equities are resistant to market fluctuations. 

Thus the prices of these companies may rise less than those of other stocks. They are low-risk and ideal for novices who want to make only a few changes.

A solid management team

The firm's management staff is mostly responsible for its progress and growth. Large-cap companies typically have management teams comprised of industry leaders with extensive expertise and knowledge. 

Investors pay close attention to senior-level hiring since the management team oversees the company's long-term development. 

Thus, investors are confident in the company's long-term growth since the management team has extensive experience, abilities, and understanding.

Increased dividend

One reason investors appreciate large-cap stocks is that they can pay dividends. These stocks pay out high dividends to investors, making up for the fact that they don't return as much money as small-cap funds.

If you previously knew, large-cap stocks were the first to give investors confidence while the market was going through cyclical adjustments.

How to select the best large-cap stocks in India? Tips to follow

Here are some things to consider while selecting the best large-cap stocks to invest in:

Having a high-profit margin

The best stocks are those that are profitable and increasing at a steady rate. Remember that negative profit margins might turn positive and provide large profits if you own the company for a long time. This will assist you in putting together a stunning portfolio. 

Furthermore, the profit margins of organizations growing quicker and producing more money continue to rise. Such businesses are usually preferable for beginners to others because they pose less risk.

Consistent sales growth

Companies that prioritize expansion make significantly more money over time. This is because the only way to make the most money is to bring in more.

The amount of money the company intends to make

When an expert predicts that a company's earnings will rise, it's a good indicator. Analysts' forecasts aren't always correct, but they are a wonderful method to track market trends and performance.

Increased RoE 

Return on Equity (ROE) measures a company's net income as a percentage of its shareholders' equity. 

A company with a greater RoE makes better use of its capital to produce money and grow its profits when compared to its competitors.

Capable of handling debt 

Because a firm's ROE can increase if it has more debt, it is critical to look at how much debt the company on the shortlist has. Ensure that a company's debt does not impact its return on equity. 

Also, compare the debts of the provided company to those of its competitors. Furthermore, the company's track record should demonstrate that it has been able to manage its debts. So there you have it.

Who should think of investing in large-cap stocks? 

If you're a first-time investor, you might want to buy large-cap stocks. These stocks are easy to find, stable, and at lower risk than most mid-cap and small-cap stocks.

If you are a low-risk investor, buying large-cap stocks is the best way to grow your wealth without taking on more and more risk.

Buy large-cap stocks that pay regular dividends if you want a steady income from your investment.

Large-cap stocks help investors build more stable, diverse, and liquid portfolios.

Advantages and disadvantages of large-cap stocks

Advantage

• It gets easier for you to diversify your portfolio within different industries.

• These companies are enjoying huge dominant positions in the market.

• They are in low debt.

• They have high liquidity.

Disadvantages

• These firms are steady, although they lag behind their smaller and mid-sized peers during economic upswings.

• These stocks are a bit suitable in comparison to short-term investments.

• Mid or small-cap stocks can generate higher returns in opposition to the higher risk than the large-cap stocks.

Related questions: FAQs

Are large-cap corporations risky?

Investing in large-cap funds is similar to investing in stocks. While stock investments are considered high-risk, large-cap stocks are regarded as low-risk. These are from companies that have been around for a long time and have a good market reputation.

Should I invest in large caps?

Large-cap stocks are ideal for long-term investors who wish to avoid excessive risk. Small and mid-cap stocks are significantly riskier than these. If you are a low-risk investor, buying large-cap stocks is the best way to grow your wealth. 

Is a large cap a good long-term investment?

The majority of the top 100 corporations in the country are large-cap companies. Because these companies are well-known and have a track record of success, investing in them is a safer, less risky option.

How much should I invest in large-cap stocks?

Large-cap firms should account for 20 to 25% of your portfolio. This will provide you with enough to keep you stable while also allowing you to expand.

Conclusion

Buying large-cap stocks are one of the most popular options for investors. They are available through large, well-known companies that have been in operation for many years.

Investing in these firms is considered secure compared to other equities because they have a solid market presence.

Furthermore, most investors consider these stocks to be long-term investments. This is because they are low-risk and offer regular dividends.