5 Large-Cap Stocks to Buy

5 Large-Cap Stocks to Buy
by Nikita Bhoota 09/01/2020

Most of the investors would have stayed away from equity markets this year as the market started tumbling and entered a bear phase on account of covid19 outbreak across the world. However, the Sensex and Nifty jumped ~50% and ~52% respectively from March 2020 lows to August 26, 2020 supported by the huge global liquidity and coordinated efforts by countries across the globe to fight coronavirus (Covid-19) pandemic improved investor confidence.

However, some of the investors may think to liquidate their portfolio to take the advantage of rise in the markets. Additionally, investors may also fear that the increase of covid cases and delay in finding out the vaccine to cure covid19 disease will drag the market sooner or later. However, investors can consider investing in large-cap stocks. Large- cap stocks can be considered for investing due to their strong balance sheet, consistent financial performance and solid management. Also, large cap stocks do not fall as much as midcap and small-cap stocks at the time of crisis in the economy.

Thus, based on financial performance, management, business outlook and historical trend, 5 paisa have picked following 5 large-cap stocks to buy for  healthy returns in the long run.

SBI Life Insurance (SBI Life)

CMP: Rs 839
Target Price: Rs1,050 (1-year)
Upside:25.1 %

Aided by strong distribution, SBI Life, India’s largest private life insurer on an APE basis, is well placed to leverage this opportunity. SBILI’s distribution reach and customer base are enviable and have propelled it into becoming the largest private player in the space. Optimal-costs structure, SBI banca partnership and high agent productivity are key competitive advantages, apart from a massive under-penetrated customer base. SBILI’s product portfolio has changed composition over the years. While ULIPs were the key growth driver earlier, focus on protection is rising. This should result in structural expansion in margins.  SBI Life could show greater resilience against macro pressures vs. peers, helped by strong renewals. We forecast VNB Cagr of 11% over FY20-22E. The stock trades at 2.8X FY21E P/EV


New Premuim Income (Rs Cr)

VNB (Rs Cr)

VNB margin (%)

PAT (Rs Cr)

EV per share

P/EV (x)






















Source: 5paisa Research

Power Grid (PGCIL)

CMP: Rs.185
Target Price: Rs.220(1-year)
Upside: 18.9%

PGCIL is targeting project completion to the tune of Rs.20,000cr in FY21E, on its own and via subsidiaries. Debtor days have started decreasing, as SEBs of AP, Telangana, UP, etc have availed funds from PFC/REC, to pay off dues; others like Rajasthan, Maharashtra, etc are set to avail funds, which would lower the receivables.  PGCIL is well placed to bid and win projects, as & when announced by the Government; new projects would be driven by investments in RE projects, mainly driven by Government focus.  Company’s current project pipeline is Rs.51,000 cr (standalone: Rs.39,000cr) and adequate for clocking growth over the next 2-3 years. InvIT approvals are yet to come through. We expect marginal growth in revenue and PAT CAGR of 5.4% and 6% over FY20-22E respectively. The stock trades at 9.1x FY21EPS


Net Sales (Rs Cr)

OPM (%)

PAT (Rs Cr)

EPS (Rs)

PE (x)



















Source: 5paisa Research

Bharti Airtel

CMP: Rs.515

Target Price: Rs.612 (1-year)

Upside: 18.8%

The company has been competing well with JIO in domestic mobile revenue market share and has continued its aggressive capex. Prospects for market share defence look bright.  While prospects for tariff hikes looks weak for next few months, it is almost certain in the next 12-18 months and will have a massive positive impact on cash flows. 24.4% Ebitda cagr over FY20-22E, prospects for RMS improvement at the expense of Vodafone Idea and some capex moderation will bring sharp FCF improvement   Absence of Vodafone Idea from spectrum auctions will enable addition of capacity economically.  We expect revenue CAGR of 16.1% over FY20-22E. The stock is trading at EV/EBITDA of 11.2x FY21E


Net Sales (Rs Cr)

OPM (%)

Pre-Exceptional PAT(Rs Cr)





















Source: 5paisa Research

ICICI Lombard (ILOM)

CMP: Rs1,264

Target Price: Rs1,400 (1-year)

Upside: 10.8%

ICICI Lombard (ILOM) has entered into a definitive agreement, to acquire Bharti AXA’s (BAX’) general insurance business via an equity swap for an implied value of Rs46.16bn, resulting in 7.9% dilution, with ICICI Bank’s stake falling to 48.1% (from 51.9%). The merged entity would have a GDPI market share of 8.7% (for FY20) and is expected to close by end-FY21. Operational synergies include expansion in South India, stronger motor franchise, significant cost savings, a robust corporate & branch distribution network and tax savings. The deal involves an equity swap at 2:115 ratio, resulting in issuance of 35.76m shares. The merger is subject to approvals, including ones from RBI and IRDAI. While there is risk of regulator asking ICICI to reduce holding in ILOM as a condition for approval (e.g. HDFC Ergo-Apollo), ICICI is committed to closing the deal irrespective, as per Mgmt. Despite stake falling to 48.1%, retaining Board control may help them consolidate ILOM. Management believes this transaction will enable long-term value creation for shareholders through both, revenue and cost synergies. The stock trades at 35.8x FY21E EPS.



GDPI (Rs Cr)

PAT (Rs Cr)

EPS (Rs)

















 Source: 5paisa Research

Infosys (INFO)

CMP: Rs951

Target Price: Rs1,050 (1-year)

Upside: 15%

INFO is well placed to gain wallet share within clients, led by its cloud offerings and automation-led efficiency solutions, further boosted by an institutionalized large deals team with focus on higher win rates. With ~60% of revenue coming from lesser impacted verticals including Communications and Hi-Tech, we expect revenue CAGR of 19.2% over FY20-FY22E.   INFO had invested in building digital skills and increasing localization over the past two years. With the investment phase now behind, margins should start to improve. INFO is focused on strategic margin levers including pyramid optimization, improved onsite mix, lower subcontracting costs and automation. We expect margins to remain resilient in the near term and expand by ~130bps over FY20-22E. The stock trades at 23.1x FY21EPS.



Net Sales (Rs Cr)

OPM (%)

PAT(Rs Cr)





















Source: 5paisa Research

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Everything you need to know about Burger King IPO

Everything you need to know about Burger King IPO
by Mrinmai Shinde 12/01/2020
Quick service restaurant chain, Burger King India is launching its three-days long IPO from 2nd December to 4th December. The company has set the price band at ?59-?60 per share for its IPO.

Through the IPO the company aims at raising ?810 crore. Of the total amount the promoter entity QSR Asia Pte Ltd will sell up to 60 million shares, which would amount to ?360 crore while a fresh issue of shares will aggregate to ?450 crore. The company has also raised a pre-IPO funding of ?92 crore from public markets investor Amansa Investments Ltd at ?58.5 per share.

Burger King IPO details at a glance

IPO Date

Dec 2, 2020 - Dec 4, 2020

Finalisation of Basis of Allotment

Dec 9, 2020

Initiation of refunds

Dec 10, 2020

Transfer of shares to demat accounts

Dec 11, 2020

Listing Date

Dec 14, 2020

Issue Size

?810.00 Cr

Fresh Issue

?450.00 Cr

Offer for Sale

?360.00 Cr

Face Value

?10 per equity share

IPO Price

?59 to ?60 per equity share

Min Order Quantity (each lot)

250 Equity Shares

Min Amount Cut off


Maximum Lots allowed

3250 Shares (13 lots)

Want to know our suggestion? Read here - Burger King IPO Note.

Things you need to know:

Burger King India Limited is one of the fastest growing international QSR chains in India during the first five years of operations based on the number of restaurants. Talking about the global presence, when measured by the number of restaurants, with a network of 18,675 restaurants in over 100 countries, Burger King is the second-largest fast food burger brand globally. In India, the company owns 261 restaurants which include eight Sub-Franchised Burger King Restaurants, across 17 states and union territories and 57 cities across India.

Burger King India has exclusive franchise rights in India and a strong customer value preposition. Apart from the customer loyalty and brand value, strong management and a vertically scalable supply chain are the company’s key strengths. The company will use the funds raised through the IPO to finance the roll-out of new company-owned Burger King Restaurants, repayment or prepayment of outstanding borrowings and to meet the general corporate purposes.

If you are looking for the short-term gains through the IPO, you need to bear in mind that if there is a spike in the Covid cases and there is another round of lockdown, then the business might take a hit. The termination of the Master Franchise and Development Agreement could also pose a threat to the business. Lack of identification of the locations when expanding in new regions, and deteriorating relations with third party delivery aggregators apart from perceived and real health concerns along with shifting food preferences and habits are a few things to look for. Having said that, the investment would turn out to be promising in long term.

This year has seen a lot of good IPOs, which has encouraged a lot of new investors to enter the markets. Apart from Burger King, the other companies that issued IPOs this year include SBI Card, Rossari Biotech, Mindspace Business Parks REIT, Route Mobile, Happiest Minds Technologies, Angel Broking, Chemcon Speciality Chemicals, Computer Age Management Services, Mazagon Dock Shipbuilders, UTI AMC, Likhitha Infrastructure, Equitas Small Finance Bank and Gland Pharma.

How to apply for Burger King IPO?
  • In 5paisa Trading App, go to IPO Section reflected on the home screen
  • Click on Apply IPO
  • Enter Quantity and Price to bid for
  • Enter UPI id to block funds on
  • Later in the day you will receive funds block confirmation in your UPI app, which needs to be approved

If you are not a 5pasia customer, you can apply for the IPO using any supported UPI apps. Click here to find the list of UPI apps and banks supporting the IPO application.

Watch the video below to know more about the Burger King IPO

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All you need to know about mutual funds taxation

All you need to know about mutual funds taxation

Mutual funds are considered to be a tax efficient form of investment compared to other instruments; and rightly so. However, there are several layers to it. Once we understood these properly, we can make a very effective use of this investment option for our benefit. Let us look at the finer aspects of mutual fund taxation in India. 

Equity versus non-equity funds

The key to taxation of mutual funds in India is based on whether the fund in question is an equity fund or a non-equity fund. According to the Income Tax Act, a mutual fund scheme is classified as an equity fund if the proportion of holdings in equities is above 65%. Thus, your typical large cap funds, mid cap funds, index funds, sector funds and even arbitrage funds will classify as equity funds for taxation purposes. All funds that do not fall in the above category of equity funds are classified as non-equity funds. This distinction has larger implications for the taxation of dividends and capital gains.

Taxation of dividends on mutual funds

Dividends are taxed differently based on the types of mutual funds. Let us look at equity funds first. In the case of equity funds, the dividends are entirely tax free in the hands of the mutual fund investor. However, effective Budget 2018, the dividends paid by equity funds are subject to dividend distribution tax (DDT) at the rate of 11.648% (10% DDT + 12% surcharge + 4% cess). This reduces the amount of dividend received.

In the case of non-equity funds, the DDT is much steeper. Dividends paid out by debt funds, liquid funds and income funds are subject to DDT at the rate of 29.12% (25% DDT + 12% surcharge + 4% cess). This is almost at par with the peak income tax rates payable. Hence it is advisable to opt for a growth plan and structure a systematic withdrawal plan (SWP) rather than opting for dividend plans of debt funds.

Taxation of capital gains on mutual funds

Capital gains are the profits made when the sale price is higher than the cost price. Let us look at equity funds first. In case of equity funds, gains are classified as long term if held for 1 year or more and as short term gains if held for less than 1 year. STCG is taxed at 15% plus cess, which makes it 15.6%. Long term capital gains on equity funds were tax free till April 2018. Effective Budget 2018, LTCG on equity funds are taxed at 10% flat on the annual gains in excess of Rs.1 lakh. Flat tax means; even if you hold the equity fund for 10 years, there is no benefit of indexation available.

In case of non-equity funds or debt funds; gains are classified as long term if held for 3 years or more and as short term gains if held for less than 3 years. STCG is taxed at your peak tax rate applicable since it is added to your other income. In the case of long term capital gains on debt funds, they are taxed at 20% flat but with the benefit of indexation. One can also structure purchases in late March and sale in early April to get benefits of dual indexation.

Tax rebate for ELSS funds

This is a special category of equity oriented funds that offer tax exemptions under Section 80C subject to a lock-in period of 3 years. The funds cannot be withdrawn during this 3 year lock in period. The Section 80C continues to offer a blanket upper limit of Rs.1.50 lakhs and ELSS is part of this overall limit. What is interesting is that this enhances the effective yield on ELSS funds. For example, if you are in the 30% tax bracket and if you contribute to ELSS then you get a 30% tax break on the contribution. When you invest Rs.100, you are effectively investing only Rs.70. When the yields are calculated on Rs.70 instead of Rs.100, you can see the differential benefits of an ELSS due to the tax break.

Write-offs and carry forward of losses

Finally, just as profits on mutual funds are taxed, losses can be written off against profits. Obviously, capital losses can only be set off against capital gains (no other head of income). Short term losses can be set off against long term and short term gains while long term losses can only be set off against long term gains. In addition, any unabsorbed losses can be carried forward for a period of 8 assessment years, subsequent to the year when the losses arose.

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Five changes in the new PPF scheme you should know about

Five changes in the new PPF scheme you should know about

Government of India has recently notified the Public Provident Fund (PPF) Scheme, 2019 which replaces the erstwhile Public Provident Fund (PPF) Scheme, 1968. Broadly, there are five changes that have been made in different aspects of the PPF scheme. Here is what you need to know about the tweaks in PPF 2019.

Lower interest payable on loan against PPF

In line with the falling rates of interest, the PPF 2019 reduces the loan interest spread over the interest paid on PPF. Under the erstwhile PPF scheme 1968, an interest rate of 2% per annum above the prevailing PPF interest rate was payable in case the investor took a loan against the PPF balance. For example, if the PPF interest rate is 7.9%, then the loan against PPF will entail an interest payable at the rate of 9.9%. In the new PPF scheme 2019, this interest spread has been reduced from 2% to 1%. Effectively, in the above instance considered, your interest payable on the loan against PPF will not be 9.9% but 8.9%. This will be beneficial to PPF investors as the cost of taking loans comes down substantially.

Changes in case of premature closure of PPF account

Premature closure of the PPF Account after 5 years was already permitted in 2016 and that has been retained. However, what changed are the conditions under which the said PPF account can be closed prematurely. A special form, Form 5 has been created under PPF Scheme, 2019 for this purpose. It may be recollected that since 2016, the premature closure of PPF was allowed on grounds of serious ailments or life threatening diseases affecting the account holder, spouse, dependent children or parents. In addition, the PPF Scheme 2019 has added higher education of the PPF account holder or his/her dependent children. In these cases,  however production of documents and fee bills in confirmation of admission in a recognised institute of higher education in India or abroad is mandatory. In addition, the PPF Scheme 2019 also permits premature closure of the PPF scheme after completion of 5 years in the event of the change in the residency status of account holder. The clause that reduces the interest rate on premature withdrawal by 1% will continue.

Denominations of deposits in PPF

To make the PPF scheme administratively simpler, it will permit deposits only in multiples of Rs.50. It may be recollected that the PPF Scheme 1968 allowed deposits in multiples of Rs.5 also. There will be no upper limit on the number of deposits that can be made in the PPF account. However, the erstwhile limits of minimum annual contribution of Rs.500 and maximum annual contribution of Rs.150,000 have been retained. This is a very minor change to the PPF scheme and is more to bring about administrative simplicity so that the department does not have to deal with too many small denomination deposits in the PPF account.

Ambiguity in the matter of NRIs

We really cannot say that this is a change, but the new scheme surely brings about a degree of ambiguity on the NRI front. While the PPF Scheme 1968 explicitly prohibited NRIs from investing in PPF accounts, the PPF Scheme 2019 is largely silent on the subject. While  the PPF Scheme 2019 does not explicitly prohibit NRIs from opening a PPF Account the new application form requires a declaration that the individual is a resident of India. This can lead us to assume that logically the NRIs are prohibited from investing in PPF under the New PPF 2019 too. Apart from the investment by NRIs, there is also ambiguity about whether residents who become NRIs can continue with their PPF scheme.

Under the PPF Scheme 1968, a resident Indian who subsequently became a NRI during the tenure of the PPF could continue to subscribe to the PPF till its maturity. However, the PPF Scheme 2019 is silent on this subject. But it does put down that change of residency is a ground on which PPF account can be terminated prematurely after 5 years. This can lead us to logically conclude that such schemes cannot be continued in the event of the resident becoming a NRI during the tenure of the PPF.

Finally, some routine changes in forms

At a procedural level, there have been some changes as under:

  • Account Opening shifted from Form A to Form 1

  • Partial Withdrawal shifted from Form C to Form 2

  • Account closure after maturity shifted from Form C to Form 3

  • PPF Loan shifted from Form D to Form 2

  • PPF Extension shifted from Form H to Form 4

  • Premature Closure vide New Form 5

  • Nomination: Form E to Form 1

Nomination form has been combined with account opening form while the partial withdrawal form has been combined with the loan form.

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Ways to put your money to work

Ways to put your money to work

The fundamental question lot of investors ask is whether they are saving enough. There are doubts as to whether they are earning enough to start saving. The answer is to put your money to work and that is only possible if you start today. This blog will help you understand how to put your money to work right away with a small corpus?

Start with an equity mutual fund SIP

There is no rocket science about an equity mutual fund SIP. You identify a good fund based on past performance and consistency and allocate a fixed sum each month. Don’t let your income levels be an impediment. You can do SIPs with amounts as small as Rs.500 per month. Of course, the onus is on you to stretch your savings to the maximum extent possible. The advantage of the SIP is that you don’t worry about timing the market. Rupee cost averaging ensures that you create wealth over the long term by keeping your cost of acquisition under control.

Open a trading account and think long term equities

An investment of Rs.10,000 in Wipro in 1980 would be worth Rs.550 crore today. Similarly, an investment of Rs.1 lakh in Havells in 1997 would be worth Rs.35 crore today. These are real life examples of stocks that have created incredible wealth. The best way to tap such opportunities is to open your trading account and start creating a portfolio of equities for the long term. Of course, you must diversify your portfolio but quality stocks have never disappointed investors over the long run. Ideally, use an online trading platform to keep it cost-effective and simple.

How about IPOs; most have done well

An IPO brings some unique advantages to an investor wanting to put money to work. In the last one year we have seen most IPOs doing extremely well as only selected IPOs have forayed in the market. Secondly, the IPO allotment process is structured in such a way as to ensure maximum allotment to applicants. Small applications stand a better chance of getting allotment. In the few years, IPO pricing has become less aggressive and that is also likely to work in favour of investors.

Look at alternatives like gold bonds and gold ETFs

As an investor you have a choice of buying as low as 1 gram of gold and holding them in investment form. No worries about conversion costs, storage, insurance etc. The quantity is guaranteed and the price is pegged to the domestic gold price. Gold bonds issued by RBI are backed by the government and also carry interest rate of 2.5% per annum. Of course, these are interval bond and if you are looking at gold investments on tap, then gold ETFs could be your answer. The point is, gold does very well in volatile times and adds stability to your investment portfolio.

Index ETFs are a good passive option to put money to work

Passive investing is about just buying into an index. That is exactly what an index ETF does. These exchange traded funds (ETFs) are mirrors of indices like the Nifty or the Sensex. Remember, the Sensex has given 17% annualized returns over the last 40 years. The added bonus is that the costs of an index ETF are nearly 150 bps lower than an active equity fund. Here again the basic investment is very low and with your trading and demat account in place, you put money to work right away.

Don’t fret that your corpus is small. It is never too small to put money to work.

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5 Things to Consider for New Investors

5 Things to Consider for New Investors

So you just opened your trading cum demat account and have received your trading toolkit! Are you all set to start trading? Not exactly! Here are five things you need to do before you start using your trading account full time. This will act as a toolkit for you to give you confidence to begin trading.

1) Ensure to use a secured trading environment

This may look like a mundane task but it is very important because this is how you are going to interface with your trading account. You can use the PC to access online trading account or your smart phone to run the mobile app. The most important thing is security. If you are using a PC, let it be dedicated to trading activity and protected anti-virus and anti-malware. Keep your trading account and demat account passwords confidential and don’t write them down. In case you are using the mobile app, avoid using public wi-fi at malls or airports. Use of trading account through a cyber café must be strictly avoided on safety considerations.

2) Activate your trading account and change password

Once your trading environment is set, the next step is to use the password and user name sent to you to activate your trading cum demat account. Once you activate the trading account, change the password for greater confidentiality. Don’t let the password be obvious references like your name or date of birth. Ensure that the password strength is classified as “Strong or Very Strong”. Your trading account is now ready to be funded and used.

3) Go through the fine print of the member agreement

It is said that the devil lies in the detail and it is no different when it comes to trading accounts. Firstly, verify the brokerage rates for equity, F&O and currency trades as specified in the member agreement. Secondly, verify your rights and obligations under various conditions and whether there are any limitations imposed. Thirdly, when you are giving a power of attorney (POA), you must ensure that you know the risks and have taken efforts to protect your interests. These must be clear before you start trading.

4) Create your trading and investment plan

It is not a great idea to directly jump into using your trading account without a plan in place. Have a short term trading plan and also a long term investment plan. For trading, you must document how much risk you are willing to take per day, per position and overall. Your plan must also include how you will use stop losses and profit targets to manage risk. The investment plan should include finer points like your holding period, downside risk, willingness to double up positions, hedging strategies etc. The trading plan must be documented before you start operating the trading account.

5) Start with small trades to understand the process flow

Now you come to the last stage, which is putting your trading plan into action. Start with small trades. Don’t jump into F&O trading right away. Test the waters with small cash market trades. You must be clear on how to verify and modify the trades in the order book, how to cross check the trade book with the ledger and finally how to reconcile the contract notes with your demat account. Ensure that the demat credit happens latest by T+2 and the bank credit happens latest by T+3 date. You must increase commitments only after you are comfortable with the trading and demat process flow.

Receiving the trading toolkit is not an invitation to jump into trading. Adopt a more calibrated approach and put the bells and whistles in place first.