There is no question that India is one of the leading emerging markets. With plenty of potential for growth, the Indian economy is one of the hottest places investors are looking to park their money. Diversifying your portfolio with choice Indian stocks is a great way to achieve above-average profits while limiting risk. The Bombay Stock Exchange (BSE) is Asia’s oldest stock exchange, currently over 5,200 Indian companies are listed on the exchange. Below are three stocks that have an excellent chance to grow in value, both short and long-term. (All dollar values are in USD):
Coal India Limited (CIL) (BSE: 533278)
Coal India is a state-run coal mining company located in Kolkata, India. CIL is the world’s largest coal miner, last year revenue exceeded $12 billion and yielded a remarkable net profit margin of just over 85%. The company is the world’s largest holder of coal reserves and controls 80% of the Indian coal market. CIL is 90% owned by the Indian government with the remaining 10% owned by the public. Coal India was founded in 1975 but didn’t go public until 2010, where it had the biggest initial public offering (IPO) in Indian history. The IPO raised just shy of $3 billion and investors who were lucky enough to get their hands on the freshly minted shares profited 40% on the stocks first day alone.
CIL currently trades for just over $340 per share and represents a great long-term investment due to the worlds continued dependence on fossil fuels such as coal. Some experts believe that there may be a coal shortage in the not so distant future, if this happens expect prices to rise drastically. Coal India currently has over 21 billion tons of extractable coal in reserves, enough to meet its current production for the next 50 years putting it in a great position to benefit if demand for coal begins to exceed supply.
Axis Bank Limited (BSE: 532215)
Axis is a financial services firm headquartered in Mumbai. Axis Bank is the third largest bank in India and has over 1000 branches and 22,000 employees country-wide. It is considered one of the “new private sector” banks, founded in 1994 after the Indian government reformed the banking sector and began allowing new privately owned banks to form for the first time in years. Axis holds nearly $50 billion in assets. Revenue was just shy of $4 billion in 2011 for a net income of $670 million. A price-to-equity (P/E) ratio of over 14 is also impressive for a company in the banking industry.
Sun Pharmaceutical Industries Limited (BSE: 524715)
Sun is an international pharmaceutical company located in Mumbai. It was founded in 1983 and currently employs 12,000 workers. The company specializes in therapeutic areas, focusing on drug formulations for neurology, psychiatry, gastroenterology, and cardiology patients. Sun has a very impressive profit margin, turning $1.2 billion in 2011 sales into a net income of $380 million. The company features a very impressive P/E ratio of 42.2 and is considered to be a good income stock because of its regular dividend payments.
