Top 5 Blueprint Growth Stocks to Add to Your Watchlist

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Your investment portfolio should also include companies that experience constant growth and offer stability in the face of adverse market conditions.

So in which stocks to invest?

Enter blue chip companies.

Bluechip companies are well established, financially sound businesses with stable growth. While blue-chip stocks can often be expensive, they are low risk investments. These companies have zero or low debt and are resistant to economic downturns.

These stocks can be part of the portfolio of any investor, whether beginner or experienced.

Here are the top 5 blue-chip growth stocks on the market right now. We have pre-screened them using the Equitymaster Stock Screener.

# 1 Bandhan Bank

Bandhan Bank is the first blue chip growth stock on our list.

The bank is India’s youngest universal bank that aims to reach the unbanked and underbanked segments of the population.

He benefits from the huge untapped microcredit space in India as he already has established experience in the microfinance industry.

It also has a strong presence in metropolitan, urban, semi-urban and rural areas in India, with more than 5,300 outlets serving 23 million customers.

The bank recently finalized its merger with GRUH Finance, the former housing finance subsidiary of HDFC, to extend its scope to housing finance activities.

Over the past three years, the bank’s net interest income and net profit grew at a CAGR of 18.9% and 4.2%, respectively.

This is mainly due to the growth of micro-advances to emerging entrepreneurs and the fall in the cost of funds. The company also maintained a net profit margin of around 24%.

Going forward, Bandhan Bank is focused on improving the quality of its assets by increasing the share of individual loans and reducing the share of group microfinance loans.

For the September 2021 quarter, the bank recorded a marginal increase in turnover to ??36.7 billion. However, the company reported a net loss of ??30 billion for the quarter due to higher provisions.

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Bandhan Bank.

# 2 Bajaj Finance

Next on our list is Bajaj Finance, one of the largest and most diverse depository non-bank financial services (NBFC-D) companies in India.

The company is a subsidiary of Bajaj Finserv and mainly deals with lending. The company also accepts deposits from the public and businesses and offers a variety of financial service products.

It has two wholly owned subsidiaries, namely Bajaj Housing Finance and Bajaj Financial Services, through which it has diversified into the home loan and stock market business.

Bajaj Finance net interest income and net profit have grown at a CAGR of 13.4% and 3.4% over the past three years. An increase in loans and advances has driven its profitability.

The company’s three-year average net profit margin is 19.4% and the three-year average dividend payout is 11.2%.

Going forward, through the launch of digital platforms, the company is building a digital ecosystem of five applications. This will allow a seamless shopping experience for customers and will also improve the operational efficiency of the business.

In its recent quarterly results, Bajaj Finance’s operating income increased 18.6% year-on-year thanks to strong rural growth. Net profit also increased 53.5% year-on-year.

Bajaj Finance.

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Bajaj Finance.

# 3 PI Industries

PI Industries is the third company on our stock list.

The company is a leading player in the field of agrochemicals and has a diversified product portfolio. It also has a strong presence in national and international markets.

The company has five formulation plants and 14 multi-purpose manufacturing plants at four sites. PI Industries also holds over 100 patents to its name.

PI Industries revenue has grown steadily at a CAGR of around 17.4% over the past three years, while net profit has increased at a CAGR of 21.4%.

Going forward, strong export growth and a healthy order book will boost the company’s revenue and profits over the medium term.

In July 2021, PI Industries acquired a stake in Ind-Swift Laboratories to acquire its active pharmaceutical ingredients (API) business. With this acquisition, the company diversified into the pharmaceutical sector.

In the latest quarterly results, PI Industries reported a 17% year-over-year increase in revenue to ??13.8 billion. Net profit increased 5.7% year-on-year.

PI Industries.

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PI Industries.

# 4 Divis Laboratories

Divis Laboratories, a pharmaceutical company, is fourth on our list.

The company mainly manufactures active pharmaceutical ingredients (APIs), intermediates and nutraceutical ingredients.

It is present in more than 95 countries with a diversified product portfolio of 130 products spread across various therapeutic areas.

Divis Laboratories is ranked among the top three API manufacturers in the world and one of the leading API companies in India.

Over the past three years, the company’s revenue and net profit increased at a CAGR of 11.3% and 13.6%, respectively. Growth in volumes and cost efficiency initiatives taken by the company led to higher profits.

In 2022, Divi Laboratories plans a capex of ??6 to 10 billion to Kakinada to expand the capacity of its generic business. This will be operational during fiscal year 2023. It should also benefit from the growth of the global pharmaceutical industry in the medium term.

In recent quarterly results, the company’s revenue and profits increased 13.6% and 16.7% year-on-year, respectively. The growth in revenues and profits is a result of the investment initiatives the company has taken over the past two years.

# 4 Divis Laboratories.

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# 4 Divis Laboratories.

# 5 HDFC

The last company on our list is a pioneer in housing finance in India – Housing Development Finance Corporation Limited (HDFC).

The company is one of the leading housing finance companies in India and has an established presence in the mortgage finance market.

It is also present in banking, insurance and asset management through its subsidiaries HDFC Bank, HDFC Life Insurance and HDFC Asset Management.

HDFC has an established operating history, sound asset quality, well-defined risk management procedures and strict underwriting standards.

Over the past three years, the company’s net interest income and net profit have grown at a CAGR of 18.3% and 4.9%, respectively. Income growth was driven by higher demand for home loans.

Going forward, strong demand for home loans is expected to boost the company’s net margins over the medium term.

For the September 2021 quarter, HDFC reported a 13.2% year-over-year increase in revenue. Net profit edged up 3%.

HDFC

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HDFC

Why are blue chip stocks a good investment?

Bluechip shares have a long history of growth and profitability.

They are diverse businesses that sell high quality products and services. These companies also have the ability to rebound strongly in adverse conditions.

However, since these are mature companies, their growth rate may not be as high as that of small and mid-cap companies.

Nonetheless, blue chip stocks are low risk investments, and any investor, new or experienced, can consider including them in their portfolio for the long term.

By doing this, you don’t have to worry about the timing of the market. You just have to be patient enough for the stocks to create wealth for you.

Before considering investing in a stock, it is important to check the fundamentals and valuations of the company.

Good investment!

Disclaimer: This article is for informational purposes only. This is not a stock market recommendation and should not be treated as such.

(This article is syndicated from Equitymaster.com)

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