Introduction

Investing in shares in a lower bracket, like less than ₹2000, can be an appealing way to balance the low investment cost with profit aspirations. This article overviews five possible and fundamentally sound Indian stocks trading below ₹2000. We will reveal their essential traits and strengths and explain why they could be a smart move for your investment portfolio.

1. HDFC Bank

HDFC Bank Ltd. is in Mumbai and remains India's premier financial house. At about $145 billion as of April 2024, it is considerably important for the Indian banking scenario.

Strength:

• Profit growth: The bank has shown impressive profit growth over the last five years, with a compound annual growth rate (CAGR) of 23.4%.

• Dividend yield: HDFC Bank maintains a substantial dividend payout ratio of 22.9%, reflecting its commitment to return value to shareholders.

• Sales Growth: The company recorded a sales growth of 16.4% over the last decade, which shows its consistent performance.

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2. Bajaj Finserv

Bajaj Finserv Limited provides asset finance, insurance, and retirement solutions. The company has a strong market presence and is well-known worldwide for its comprehensive financial solutions.

Strength:

• Profit performance: Bajaj Finserv has recorded strong profit growth with a CAGR of 20.4% over the last five years.

• Sales Growth: The company boasts a moderate % sales growth rate of 27.6% over the past decade, highlighting its impressive expansion and market growth.

• Outlook: The company expects to report strong quarterly results, reflecting the continued strength of its business.

3. Jyoti Resins and Adhesives Ltd.

Founded in 2006, Jyoti Resins and Adhesives Ltd. specialises in synthetic resin adhesives. It is notably the second largest-selling wood adhesive brand in India's retail sector.

Strengths:

• Debt Levels: The company maintains a virtually debt-free status, contributing to its financial stability.

• Profit Growth: Jyoti Resins has achieved remarkable profit growth with a CAGR of 98.1% over the last five years.

• Return on Equity: The company has demonstrated a strong return on equity (ROE), with a three-year ROE of 48.2%.

• Revenue Growth: Its median revenue growth over the last decade is 31.7%, reflecting significant business growth.

4. Dalmia Bharat

Dalmia Bharat Founded in 1939, Dalmia Bharat holds a crucial position in the Indian cement market. The company is India's fourth-largest cement maker and the key market player in Eastern India.

Strengths:

Market Position: Dalmia Bharat is one of the leading cement producers, holding approximately 18% of the market in Eastern India and having 15 manufacturing plants.

Production Capacity: The company had a total cement manufacturing capacity of around 44 MnTPA.

Dalmia Bharat is a company that manufactures all types of cement and is also the biggest slag cementmanufacturer in India.

5. Dynacons Systems & Solutions Ltd

Dynacons Systems & Solutions Ltd, founded in 1995, specialises in IT infrastructure services and operates exclusively in the system integration and services market.

Strengths:

• Debt Reduction: The company has reduced debt levels, enhancing its financial health.

• Profit Growth: Dynacons Systems has achieved robust profit growth with a CAGR of 66.7% over the past five years.

• Return on Equity: The company boasts a strong three-year ROE of 37.8%.

• Revenue and Working Capital: The company's median revenue growth rate has been 27.5% over the last decade, and its working capital requirements have decreased from 46.9 days to 35.4 days.

Why Invest in Stocks Priced Below ₹2000?

The benefits of investing in stocks at a price lower than ₹2000 are immense. Stocks below ₹2000 usually belong to stable companies, and their fundamental stability is quite good. They offer optimum growth and stability so investors can spread their holdings without much upfront cost.

In addition, such stocks may also hold impressive upside potential. Companies in the growth phase typically witness an increase in the stock price throughout their growth period as they grow and increase their market share. Most such companies also pay out dividends so that, apart from capital gains, they also serve as a source of income.

The other advantage of such investments is that investors can exploit market inefficiencies. Stocks can sometimes be undervalued because of temporary conditions prevailing in the market or because potential investors have limited awareness. After proper research, you can identify undervalued stocks and invest before the market recognises their true worth.

Conclusion

The listed stocks below ₹2000 provide an excellent investment opportunity in balancing affordability and price appreciation. Although the stock price does not have to be the most significant criterion in investment decision-making, the fundamental analysis assessment of each stock is necessary. A more integral approach incorporating allocation and sector diversification would be beneficial in improving portfolio performance and investment outcomes.

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