Introduction
All the investment advisors must have told you that inflation is on the rise, prompting you to safeguard your portfolio by investing in assets that outpace inflation. But have you considered the potential of investing in stocks that benefit despite high-inflation environments? Instead of merely aiming to beat inflation, why not explore stocks that grow even when inflation is rising?
These companies possess a distinct advantage in pricing power. They are major players with products that dominate their respective markets. When faced with rising inflation, they can increase product prices without a significant impact on sales. Plus, there are hardly any alternatives to these products in the market.
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In this blog, let us dive into the top 4 stocks that can help you safeguard your portfolio with inflation-beating investments, as they also stand to benefit from a high-inflation economy.
Colgate-Palmolive India Ltd
Colgate-Palmolive India Ltd is in the business of manufacturing and trading dental and personal care products like toothpaste, toothpowder, toothbrushes, mouthwash, and personal grooming items. These offerings are marketed under established brands of Colgate and Palmolive.
Colgate, the company's flagship brand stands out as one of India's most renowned oral care brands. It has an impressive market penetration of approximately 88% in the domestic sector. On the other hand, Palmolive represents the company's line of personal care products.
Colgate-Palmolive India Ltd maintains a remarkable financial standing, with minimal debt. It has a strong track record of ROE of 69.6% over the past three years. Moreover, the company consistently has a healthy dividend payout ratio of 101%.
CRISIL Ltd
CRISIL Ltd is a globally diversified analytical firm that specialises in offering a wide array of services, like ratings, research, risk assessment, and policy advisory services. Within India, CRISIL holds the position of the leading ratings agency and serves as a primary source of top-tier research for major banks and prominent corporations.
CRISIL stands as the largest credit rating agency in India. The company extends its rating services to over 8,000 significant corporate entities and financial institutions. Impressively, this business segment, while contributing 28% of the company's revenues, accounts for 51% of its total profits.
In alignment with SEBI regulations, CRISIL has established a wholly owned subsidiary, CRISIL Ratings Ltd, to manage its credit ratings business.
CRISIL Ltd has achieved near debt-free status. The company also has had an ROE of 30.4% over the past three years. CRISIL also upholds a dividend payout of 67.2%.
State Bank of India
State Bank of India is a Fortune 500 company and one of the most prominent Indian multinational public sector banking and financial services institutions. With a rich history spanning over two centuries, it is India's largest and oldest bank.
Currently, the bank has an extensive network comprising 22,219 branches and approximately 62,617 ATMs, offering widespread coverage throughout India. It operates around 71,968 business correspondent outlets across the country.
SBI has a substantial market presence, with a 22.84% market share in deposits and a 19.69% share in advances within India. The bank serves a vast customer base of approximately 45 crore individuals.
Over the past five years, the company has demonstrated remarkable profit growth at a CAGR of 76.1%. Moreover, it has consistently maintained a commendable dividend payout of 17.3%.
Tata Consumer Products Ltd.
Tata Consumer Products Ltd. is a prominent member of the Tata Group, renowned for its significant presence in the food and beverages sector, both in India and on the global stage. The company is the world's second-largest tea company and enjoys a dominant market position in multiple regions.
Apart from its strong foothold in South Asia, particularly India, Tata Consumer Products operates in diverse international markets, including Canada, the UK, North America, Australia, Europe, the Middle East, and Africa.
Tata Consumer products has a diverse array of well-recognised brands as per below:
Tata Salt: India's largest salt brand.
Tata Tea: The second-largest tea brand in India.
Tetley: The third-largest tea brand in the UK and the largest tea brand in Canada.
Himalayan: India's foremost natural mineral water brand.
Eight O'Clock: The fourth-largest roast and ground coffee brand in the USA.
Tata Sampann: A national brand offering a range of pulses, spices, dry fruits, and other essential staples.
Tata Consumer is financially robust and almost debt-free. It has consistently maintained a healthy dividend payout of 56.1%, reflecting its commitment to rewarding shareholders.
Conclusion
When looking for the answer to “How to beat inflation in India?’ one must make smart investment decisions. It is not prudent to take on higher risks when beating inflation. Instead, taking calculated risks and investing in resilient stocks like Colgate Palmolive India Ltd, CRISIL Ltd, State Bank of India, and Tata Consumer Products Ltd, is the way to go.
They stand the chance to provide not just financial stability but the potential for substantial growth in the face of escalating inflation. Safeguarding your portfolio with such robust assets is not merely an option, it is a strategic necessity to ensure your financial well-being and peace of mind for uncertain times ahead.
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