INSUBCONTINENT EXCLUSIVE:
Peter Lynch is one of the most successful and well-known investors of our time.Long-term investing is an age-old investing practice that
requires investors to invest with a long-term horizon, for example more than 7 years.Many investors followed this practice and have made
good returns on their portfolios.Among the ones who practice buy and hold investing is Peter Lynch, one of the most successful and
well-known investors of our time.Lynch believes in 'investing in what you know'
According to him, investors should invest in only those companies in which they understand the business model and fundamentals.He is also a
strong advocate of investing in undervalued companies
He believes companies with a price to earnings ratio below the industry average have the potential to perform better than others.Here are
five stocks that Peter Lynch might pick from the Indian stock market.#1 Indus TowersFirst on our list is Indus Towers, one of the largest
telecom tower companies in the world.The company's primary business is to set up, operate and maintain wireless communication towers
Few of its customers are Bharti Airtel, Reliance Jio, and Vodafone Idea.As of December 2020, the company had over 175,000 towers in 318,000
locations covering 22 telecom circles.In 2020, Bharati Infratel merged with Indus Towers
As a result, Indus Towers market share increased significantly and became a market leader with a 31% market share.As a result, Indus Tower's
revenue has grown at 24.5% CAGR in the last three years.The company's net profit has also grown at a CAGR of 25.4% during the same
period.Indus Tower has the highest tenancy ratio of 1.81 among telecom tower companies
from the last three years
The three-year average dividend payout and dividend yield of the company stands at 158.4% and 6.4%, respectively.Going forward, growing 4G
volumes and emerging technologies such as 5G, artificial intelligence, robotics, and the internet of things, will provide an opportunity for
the company to expand its offerings.#2 Gland PharmaNext on our list is Gland Pharma, one of the fastest-growing generic injectable focused
companies.The company primarily is in the business of contract manufacturing of injectables used in vials and pre-filled syringes.It
supplies its products to over 60 countries, covering major therapeutic areas such as cardiac, gastrointestinal, hormones, respiratory, and
vitamins and minerals.The company has long term supply contracts with global pharmaceutical companies and majorly operates in the
business-to-business model (B2B).Though it co-develops some of its products with its partners, it manufactures most of the injectables on
its own.In India, it operates mostly in the business-to-consumer (B2C) model
It sells its products to end customers such as hospitals, government facilities, and nursing homes.Gland Pharma has a manufacturing capacity
of 727 m units across four finished formulation facilities and four active pharmaceutical ingredients (API) facilities in India.It plans to
invest Rs 7.7 bn in capex over the next two years to expand its manufacturing capacity in its existing plants.Gland Pharma's revenue has
grown at a steady rate of 19% CAGR in the last three years
The growth was driven by new product launches and volume growth of its existing products in key markets such as the US, Canada, Australia,
and Europe.Its net profit has also grown at a CAGR of 30% during the same period.Going forward, the company is building capacity for biotech
and vaccine manufacturing
It is awaiting its manufacturing license to initiate the manufacturing of Covid-19 vaccine Sputnik Light.#3 Divi's LaboratoriesThird on
our list is another pharmaceutical company, Divi's Laboratories.It manufactures APIs, nutraceutical ingredients, and custom synthesis of
APIs for global companies.The company has a diversified portfolio of over 130 products spread across various therapeutic areas, including
anti-inflammatory, anti-viral, and antidepressants.Divis Laboratories has a presence in over 95 countries and is ranked one among the top
three API manufacturers globally
In India, it is one of the top API companies.It has two manufacturing facilities in India with six different manufacturing units producing a
diverse range of products.In the last three years, the company's revenue has grown at a CAGR of 11.3%
Growth in volumes led to higher revenues.Its net profit also grew at a CAGR of 13.6% on account of cost efficiency initiatives taken by the
company.Divi's Lab has been paying dividends consistently for the past three years
The company's average dividend payout stands at 29.7%.The company is also almost debt-free.Going forward, the company is planning a capex
of Rs 6-10 bn in Kakinada to expand the capacity of its generics business
This will be operational in the financial year 2023.#4 HDFCNext on our list is Housing Development Finance Corporation Limited (HDFC), a
pioneer in housing finance in India.The company primarily engages in the business of providing housing loans
It also has an established presence in the mortgage finance market.Through its subsidiaries HDFC Bank, HDFC Life Insurance, and HDFC Asset
to over 9 m people and has become a leading finance company in the country.It has an established track record of operations, a strong market
Higher demand for housing loans has led to higher revenues.Its net profit has also grown at a CAGR of 4.9%.The company has seen high growth
in individual loans, followed by non-individual loans for the quarter.Strong demand for housing loans is expected to drive the company's
revenues and net margins in the medium term.#5 Bandhan BankLast on our list is Bandhan Bank, India's youngest universal bank.A bank that
last-mile banking services to the unbanked and under-banked segments of the population.The bank has a pan-India presence and serves over 23
CAGR in the last three years
margin averaged at 24% in the last three years
The lower cost of funds has helped the bank maintain a healthy profit margin.Since it already has an established track record in the
concentrating on improving its asset quality mix by growing the share of individual loans and bringing down the share of group microfinance
loans.Snapshot of top 5 stocks in India that pass Peter Lynch filter from Equitymaster's stock screenerHere's a quick view of the top
companies based on crucial financials.Please note that these parameters can be changed according to your selection criteria.This will help
you identify and eliminate stocks that are not meeting your requirements and emphasise those stocks that are well inside the metrics.Should
you invest like Peter Lynch?Peter Lynch always stressed on investing in businesses that you understand.According to him, before investing in
a business, you need to understand what it does and how.He believes in doing diligent research about the company and its fundamentals
According to him, one shouldn't miss out on the fundamentals such as profit margins, PEG ratio, cash position, and debt-to-equity
However, he was always updated on the companies he invested in
As long as there were no drastic changes in the business, he didn't sell.He never tried to time the market nor predicted its direction
If he believed in the company, he would invest in it.If you wish to participate in the stock market and invest like Peter Lynch, it is
does.Also, aim for long term investments if you believe in the business
Don't try to time the market.These small guidelines can take you a long way in your investing journey.Happy Investing!Disclaimer: This
article is for information purposes only
been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
