Top Stocks for Equity SIP-2023

A systematic investment plan (SIP) is a great way to invest in the stock market. It allows you to invest a fixed amount of money on a regular basis, regardless of the market conditions. This helps you to average out your cost of investment and reduces the risk of investing a lump sum at the wrong time. Read our blog to know more about equity SIPs, their functioning, and Fisdom recommended top stocks for SIP that can help you maximize your investment returns.

Read More – One Time Mandate (OTM) in SIP – Meaning, Benefits & How to Register?

What is Equity SIP

An equity SIP is a simple way to invest in stocks. It stands for Systematic Investment Plan. With a SIP, you invest a fixed amount of money in a particular stock or a group of stocks on a regular basis, such as every week/month/quarter, etc. This helps you to average out the cost of your investment over time.

For example, let’s say you want to invest in DMart. This stock is listed on the National Stock Exchange of India. You can invest in DMart either as a lump-sum amount or through a SIP by investing a fixed amount of money, such as Rs. 2,000 – 3,000 every month.

Over time, as the value of the Dmart stock goes up, the value of your investment will also go up. And, if the value of the stock goes down, the value of your investment will also go down. However, because you are investing a fixed amount of money every month, you will be buying more shares when the price is low and fewer shares when the price is high. This helps to average out the cost of your investment and reduce your risk.

Advantages of Equity SIP

There are many advantages to investing in SIPs. Some of the most important advantages include:

1. Regular investment: SIPs allow you to invest a fixed amount of money on a regular basis. This helps you to stay disciplined and avoid the temptation of market timing.
2. Cost averaging: SIPs help you to average out your cost of investment. This means that you will buy more shares when the market is down and fewer shares when the market is up. This helps to reduce the risk of your investment.
3. Economical: SIPs are a low-cost way to invest in the stock market. With equity SIPs, you invest a smaller amount every month instead of arranging for a large sum to make a bulk investment.

How to choose stocks for SIP?

There are a few things to consider when choosing stocks for SIP. Some of the most important factors to consider include:

• Company fundamentals: The company’s fundamentals are important to consider when choosing stocks for SIP. You should look for companies that have a strong track record of profitability, growth, and management.
• Valuation: The valuation of the stock is also important to consider. You should look for stocks that are trading at a reasonable valuation.
• Risk appetite: Your risk appetite is also important to consider when choosing stocks for SIP. If you are a risk-averse investor, you should choose stocks that are less volatile.

Top stocks for Equity SIP -2023

Here are the top stocks recommended by Fisdom Research that you can consider for SIP investment:

1. Reliance Industries 

Stock name	Current Market Price	Stock Price3 Year CAGR	Stock Price5 Year CAGR
Reliance Industries	Rs. 2,474	19.1%	22.1%

Data as of May 31, 2023

Reliance Industries Limited (RIL) is an Indian multinational conglomerate which features in the Fortune Global 500 company list, It is one of the most valuable companies in India. Founded in 1973, RIL has grown into a diversified business with interests in energy, petrochemicals, retail, and telecommunications.

RIL’s main businesses are:

• Energy: RIL is India’s largest private sector oil and gas company. It has a significant presence in the refining, petrochemicals, and LNG businesses.
• Petrochemicals: RIL is India’s largest producer of petrochemicals. It has a wide range of products, including polymers, fertilizers, and plastics.
• Retail: RIL is India’s largest retailer. It owns the Reliance Retail chain, which operates supermarkets, hypermarkets, and specialty stores.
• Telecommunications: RIL is India’s largest telecoms company. It owns the Reliance Jio Infocomm, which is the largest mobile network operator in India.

The company recorded double-digit growth in terms of profitability in Q4 FY23. RIL’s consolidated Profit After Tax jumped 19.11% YoY and 22.21% QoQ. However, the conglomerate’s Revenues from operations saw a small 2.1% YoY growth and a drop of 1.91% QoQ.

RIL’s Market capitalization as of June 2, 2023 is Rs. 16.7 lakh cr. With an employee strength of over 230,000, RIL is one of the major employers in the country. Through its diversified businesses, RIL has shown a strong track record of growth.

2. TATA Consultancy Services

Stock name	Current Market Price	Stock Price3 Year CAGR	Stock Price5 Year CAGR
TATA Consultancy Services	Rs. 3,289	18.6%	13.5%

Data as of May 31, 2023

Tata Consultancy Services (TCS), part of the Tata Group, is a multinational information technology services and consulting company. Established in 1968, today it operates in 150 locations across 46 countries and employs over 600,000 people worldwide.

TCS was the first Indian company to offer Information Technology (IT) services to global clients. Over the years, TCS has grown to become one of the largest IT services companies in the world. It has a strong track record of innovation and customer service.

TCS’s main businesses are:

• IT services: TCS provides a wide range of IT services, including software development, application maintenance, infrastructure management, and business process outsourcing.
• Consulting: TCS offers consulting services on a wide range of topics, including business transformation, IT strategy, and operations.
• Digital transformation: TCS helps clients transform their businesses through the use of digital technologies, such as cloud computing, big data, and artificial intelligence.

TCS has grown significantly over the years and its stock price today is a clear reflection of this. 

For Q4 FY23, the IT giant earned a consolidated Profit After Tax of Rs. 11,392 crores. This was a growth of 14.8% YoY. 

The company’s revenue from operations jumped by 16.9% YoY to Rs. 59,162 crores. TCS also declared a final dividend of Rs. 24 per equity share for the fiscal year. TCS’ share price gained by 1% on Wednesday with Q4 earnings in focus. TCS has a market capitalization of Rs. 12.16 trillion as of Jun 2, 2023. 

3. HDFC Bank

Stock name	Current Market Price	Stock Price3 Year CAGR	Stock Price5 Year CAGR
HDFC Bank	Rs. 1,610	19.2%	8.6%

Data as of May 31, 2023

HDFC Bank was established in 1994 and today it is India’s largest private sector bank by assets. It offers a wide range of banking and financial services, including savings and current accounts, loans, mortgages, credit cards, investment banking, and insurance.

The Bank’s network includes 21,683 banking outlets in the form of –

• 6342 branches,
• 15,431 business correspondents, 
• 18,130 ATMs/ Cash Deposits and Withdrawal Machines

HDFC is a leading player in the country’s payments ecosystem. Every third rupee spent on cards in India happens on an HDFC Bank’s issued instrument. HDFC Bank has about 3.67 crore debit cards, 1.48 crore credit cards and about 21.34 lakh acceptance points. 

HDFC bank’s stock has delivered good growth of close to 19% CAGR over the last 3 years. Company has been maintaining a healthy dividend payout of 19%.   

4. ICICI Bank

Stock name	Current Market Price	Stock Price3 Year CAGR	Stock Price5 Year CAGR
ICICI Bank	Rs. 949	41.9%	27.1%

Data as of May 31, 2023

ICICI Bank is one of India’s large private sector banks offering a diversified portfolio of financial products and services to retail, SME and corporate customers. The bank is well-established with an extensive network of branches, ATMs and other touch-points.

Presently, ICICI bank operates through a network of 5,300 branches and 15,200 ATMs across India. 30% of the bank’s branches are located in metro cities. 

ICICI bank stocks have delivered good growth of 42% CAGR in the last 3 years and 27% CAGR over 5 years. The bank focuses on maintaining a low interest coverage ratio. 

The bank is also involved in various related activities through its subsidiaries which include:

• ICICI Prudential Life Insurance Co. Ltd 
• ICICI Lombard General Insurance Co. Ltd
• ICICI Prudential Asset Management Co. Ltd 
• ICICI Securities Ltd 
• ICICI Securities Primary Dealership Ltd

5. Hindustan Unilever

Stock name	Current Market Price	Stock Price3 Year CAGR	Stock Price5 Year CAGR
Hindustan Unilever	Rs. 2,667	9.0%	10.5%

Data as of  May 31, 2023

Hindustan Unilever is a FMCG giant that primarily operates in Home Care, Beauty & Personal Care and Foods & Refreshment segments. The Company has manufacturing facilities across the country and sells primarily in India.

HUL’s portfolio is broadly divided into:

1. Beauty & Personal Care Segment (drives 42% of revenues):

• Wide portfolio: Over 900 SKUs across multiple categories, catering to 14 consumer clusters in India.
• Strong margins: Generates approximately 29% margins, the highest among divisions.
• Brands: Dove, Lifebuoy, Lux, Pears, etc

2. Home Care Segment (drives 29% of revenues):

• Diverse portfolio: Offers products across various categories, covering mass, popular, and premium segments.
• Brands: Vim, Cif, Domex, etc.

3. Foods & Refreshments Segment (drives 29% of revenues):

• Product range: Includes ketchups, jams, tea, coffee, soups, ice creams, and nutrition products.
• Focus areas: Improved innovation, increased penetration, and the “Winning in Many Indias” (WiMi) strategy.
• Brands: Knorr, Kissan, Hellmann’s, Annapurna, etc.

The company’s brands are widely available across India, with a presence in over 80 lakh+ stores. An impressive statistic reveals that around 90% of Indian households use the company’s branded products. India contributes to 96% of the company’s revenues, with the remaining 4% coming from international sales. The company holds a market-leading position in multiple categories such as skin cleansing, skin care, hair care, fabric wash, household care, tea, health food drinks, and ketchup, dominating approximately 90% of its businesses.

Company’s Q4 FY23 financial performance:

• Performing above industry estimates, HUL reported revenues of Rs 15,215 crores and operating profit of Rs 3,574 crore. 
• The company’s margin stood at 23.5%, slightly below the projected 23.8%.

Factors to consider while investing in stocks through SIP

Here are some of the top factors to consider while investing in stocks through a SIP:

• Investment goals: What is the purpose of the investment? Is it for the long term or the short term? The investment goals will help to determine how much risk can be taken.
• Risk tolerance: How much risk are you willing to take with your investment? Stocks are a risky investment, but they can also be a very rewarding investment over the long term. If you are not comfortable with risk, you may want to consider investing in a more conservative asset class, such as bonds.
• Time horizon: How long do you have until you need the money you are investing? If you need the money in the short term, you may want to consider investing in a more liquid asset, such as a money market fund. If you have a long time horizon, you can afford to invest in riskier assets, such as stocks.
• Cost of investing: There are a number of costs associated with investing in stocks, such as brokerage fees and management fees. Be sure to factor these costs into your decision when choosing a SIP.
• Performance of the stock market: The stock market is volatile, and the value of your investment can go up and down. Be prepared for this volatility and don’t panic if the market takes a downturn.

Conclusion

Investing in SIPs offers a disciplined approach to stock market investment, reducing the risk of market timing. Top stocks can provide potential returns for SIP investors. Consider factors like company fundamentals, valuation, risk appetite, and market performance when selecting stocks. This strategy can help maximize investment returns and mitigate risk. To begin your SIP journey, download the Fisdom app on your smartphone and make the most of such investment opportunities.

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**Important Disclaimer**

This blog post and the information included here are not intended to serve as investment advice and should NOT be used as a substitute for the advice of an appropriately qualified and licensed professional registered investment adviser.

Please note the information provided here is for educational/informational purposes only. Although we attempt to provide accurate and up-to-date information, no guarantee is made to that effect. Investments in the securities market are subject to market risks, please read the scheme related documents carefully.