Top 8 Best Blue Chip Stocks to invest now in 2018

Top 8 Best Blue Chip Stocks to invest now in 2018-minTop and Best Blue Chip Stocks to invest now in 2018


If you are looking to multiply your money in medium to long term, you need to invest your money in blue chip stocks. While there are several blue chip stocks to invest in India, one should invest in consistent performing stocks and which are available at reasonable price. What are bluechip stocks? What are various parameters an investor need to consider while selecting a blue chip stock for medium to long term investment? Which are the Top 8 Best Blue Chip Stocks to invest in India in 2017-2018? Should you invest in such Bluechip Stocks when markets are at peak now? This article would help you to answer few of these questions.

Also Read: Best Mutual Funds to invest that are low risk and provide high return

How I filtered these Top 8 Best Blue Chip Stocks to invest now in 2018?


Blue chip stocks are those which are growing consistently along with good share price appreciation. These blue chip stocks would create wealth to share holders and investors over a period of time. We have identified these top 10 blue chip stocks for 2018 based on the below parameters:

a) Annualized earnings growth in last 5 years: We have filtered companies which are consistently growing in terms of earnings. An Annualised revenue growth of more than 20% is considered as the best way to identify a good stock.

b) Debt – Equity Ratio of < 2: This is the ratio of company financial leverage calculated by dividing total liabilities by shareholders' equity. Means for every Rs 1 of investment by shareholders, there should not be more than Rs 2 of liabilities. The lower the ratio, the greater the chances that this company is able to manage the funds within own sources.

c) Average ROE > 20%: We have considered stocks that has average Return on Equity (RoE)  which is > 20%. Return on Equity is nothing but the Net Income over the shareholders' equity. Picking up stocks which have > 20% can reward investors faster in medium to long term.

d) Interest coverage ratio >2: Interest coverage ratio is the ratio used to determine how easily a company can pay interest on the outstanding debt. Interest coverage ratio = CBIT / Interest expenses. Any company where the interest coverage ratio is lower than 2, the performance of such company is questionable. Such companies struggle to make the interest payment from profits and such profits would decline year on year.

e) Market capitalization > Rs 6,000 Crores: Market capitalization is the total value of company outstanding shares. It is the simple arithmetic of outstanding shares issued by the company at market value. Any company where the market capitalization of > Rs 6,000 Crores can be considered as a blue chip stock. The higher the market capitalization, the higher the confidence in such company as they would have grown over a period of time.

f) PEG < 1.5: Price to Earnings growth (PEG) is key ratio that is used to determine the time it would take for an investor to double the money with such stock investment.

Top 8 Best Blue Chip Stocks to invest now in 2018


Some of the stocks are already recommended by us earlier as part of bluechip stocks in 2016 or 2017, hence they could be repetition. If you are have already invested, continue to invest in them.

1) Aurobindo Pharma – CMP Rs 672


Aurobindo Pharma is one of the leading Indian pharmaceutical research companies that manufactures and export drugs and formulations worldwide.

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 70% – Test Passed

Debt Equity Ratio should be < 2. Actual is 0.36 – Test Passed

Interest coverage ratio should be >2 – Actuals are 47 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 41,000 + Crores – Test Passed

PEG should be < 1.5 – Actuals are 0.25. Test Passed.

CMP of the share price is Rs 672. Its 52 week low is Rs 503 and 52 week high is Rs 895.

Considering the highest growth Aurobindo Pharma made in the last 5 years, this is definitely a good blue chip stock to invest in 2018.

2) Avanti Feeds – CMP Rs 2,614


Avanti Feeds is the leading manufacturer of Prawn and Fish Feeds and Shrimp Processor and Exporter from India. Avanti Feeds Limited has established joint venture with Thai Union Frozen Products PCL., the world's largest seafood processors and leading manufacturer of prawn and fish feeds in Thailand with integrated facilities from Hatchery to Shrimp & Fish processing and Exports

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 69% – Test Passed

Debt Equity Ratio should be < 2. Actual is 0.03 – Test Passed

Interest coverage ratio should be >2 – Actuals are 70 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 11,800 + Crores – Test Passed

PEG should be < 1.5 – Actuals are 0.44. Test Passed.

CMP of the share price is Rs 2,614. Its 52 week low is Rs 415 and 52 week high is Rs 2,940.

Avanti Feeds made 2nd highest growth rate in the last 5 years and this can turn as a multi bagger, hence it is the best blue chip stock to invest for 2018.

3) Ajanta Pharma – CMP Rs 1,336


Ajanta Pharma Limited is an Indian multinational, engaged in development, manufacturing and marketing of pharmaceutical formulations

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 41% – Test Passed

Debt Equity Ratio should be < 2. Actual is 0 – Test Passed

Interest coverage ratio should be >2 – Actuals are 186 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 11,000+ Crores – Test Passed

PEG should be < 1.5 – Actuals are 0.57. Test Passed.

CMP of the share price is Rs 1,336. Its 52 week low is Rs 1,120 and 52 week high is Rs 2,125.

Also Read: Top 10 Mutual Funds to invest in 2018 in India

4) PI Industries – CMP Rs 954


Incorporated in 1947, PI Industries Limited (PI) is a fast growing agri-sciences company with a unique business model across the AgChem value chain from R&amp;D to distribution providing innovative solutions by partnering with the best.

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 35% – Test Passed

Debt Equity Ratio should be < 2. Actual is 0.07 – Test Passed

Interest coverage ratio should be >2 – Actuals are 59 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 11,300 + Crores – Test Passed

PEG should be < 1.5 – Actuals are 0.78. Test Passed.

CMP of the share price is Rs 954. Its 52 week low is Rs 675 and 52 week high is Rs 985.

This is one of the best and top blue chip stock to invest for 2018.

5) Century Plyboards – CMP Rs 310


Century Plyboards is a leading manufacturer and supplier of quality plywood, laminate sheets, fiberboard, marine wood, MDF boards, sunmica and veneer wood products in different designs and costs.

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 28% – Test Passed

Debt Equity Ratio should be < 2. Actual is 0.87 – Test Passed

Interest coverage ratio should be >2 – Actuals are 9.1 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 6,500 + Crores – Test Passed

PEG should be < 1.5 – Actuals are 1.38. Test Passed.

CMP of the share price is Rs 310. Its 52 week low is Rs 154 and 52 week high is Rs 326.

6) Syngene International – CMP Rs 550


Incorporated in 1993, Syngene is India’s largest contract research organization, which supports R&D programs from lead generation to clinical supplies. Our multi-disciplinary skills in integrated drug discovery and development include capabilities in medicinal chemistry, biology, in vivo pharmacology, toxicology, custom synthesis, process R&D, GMP manufacturing, formulation and analytical development along with Clinical development services.

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 28% – Test Passed

Debt Equity Ratio should be < 2. Actual is 0.58 – Test Passed

Interest coverage ratio should be >2 – Actuals are 21 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 10,000+ Crores – Test Passed

PEG should be < 1.5 – Actuals are 1.28. – Test Passed

CMP of the share price is Rs 550. Its 52 week low is Rs 430 and 52 week high is Rs 663.

Low debt equity ratio makes this as one of the good blue chip stock to invest for 2018 for medium to long term investment. One should not invest for short term investment.

7) Adani Ports and Special Economic Zone – CMP Rs 386


Adani Ports and Special Economic Zone Limited is India’s largest private multi-port operator. APSEZ is a part of the Adani Group, an integrated infrastructure corporation.

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 26% – Test Passed

Debt Equity Ratio should be < 2. Actual is 1.27 – Test Passed

Interest coverage ratio should be >2 – Actuals are 4 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 82,000+ Crores – Test Passed

PEG should be < 1.5 – Actuals are 0.85. Test Passed.

CMP of the share price is Rs 386. Its 52 week low is Rs 245 and 52 week high is Rs 443.

Adani Ports Stock price has potential to go up and can be considered as one of the best Blue Chip Stocks for medium term investment. 

Also Read: Best Portfolio Management Services are providing upto 35% annualised returns – Should you opt?

8) Aarti Industries – CMP Rs 909


Aarti Industries is a leading Indian manufacturer of Speciality Chemicals and Pharmaceuticals with a global footprint. Chemicals manufactured by Aarti are used in the downstream manufacture of pharmaceuticals, agrochemicals, polymers, additives, surfactants, pigments, dyes, etc.

Annualised earnings growth in the last 5 years should be > 20% – Actuals are 22% – Test Passed

Debt Equity Ratio should be < 2. Actual is 1.15 – Test Passed

Interest coverage ratio should be >2 – Actuals are 4.5 – Test Passed

Market capitalization should be Rs 6,000 Crores – Actuals are Rs 7,200 + Crores – Test Passed

PEG should be < 1.5 – Actuals are 1.16. Test Passed.

CMP of the share price is Rs 909. Its 52 week low is Rs 653 and 52 week high is Rs 1,039.

Should you invest in these BlueChip Stocks now?


These are good bluechip stocks to invest in India. However, one should look for any market correction or short term corections in such stocks and invest in them. One can also slowly accumulate these stocks over a period of next 3-6 months instead of investing in one time. Investors need to hold for medium to long term of 4-8 years to get higher returns.

Disclaimer: I do not hold any of these stocks as of 2nd December, 2017. However, I have interest in investing in these stocks in the short term to medium term in future.

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Suresh

Top 8 Best Blue Chip Stocks to invest now in 2018

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