Introduction

Investing in stocks under ₹300 can be an attractive option for beginners and seasoned investors due to their affordability and accessibility. This guide explores five fundamentally strong stocks listed on the Indian stock market, each trading for less than ₹300. We will delve into the strengths of these companies and the benefits of including them in your investment portfolio.

Overview of the Top 5 Stocks Below ₹300

1. Oriental Carbon & Chemicals Limited (OCCL)

A Goenka Group subsidiary headed by Duncan JP was founded in 1978 and focused on chemicals, such as insoluble sulphur and sulfuric acid. The business is well-known for generating incredibly valuable insoluble sulphur and is certified by ISO40001 and ISO45001.

Strength:

• The stock trades at 0.44 times its book value.

• Gives a dividend yield of 5.00%.

• Pays a consistently high dividend, currently at 30.5%.

2. Ador Fontech Ltd

Ador Fontech Ltd. was founded in 1974 and offers services for surface, spraying, fusing, and reclamation of industrial components. Alloy electrodes, fume extractors, and welding machines are among its product offerings. These products are also traded and exported by the corporation.

Strengths:

• The company operates with almost no debt.

• Provides a dividend yield of 4.35%.

• Maintains a substantial dividend payout, currently at 90.0%.

3. Union Bank of India

Union Bank of India offers various banking services, including government contracts, merchant banking, insurance companies, mutual funds and wealth management. As of FY24, it is India’s fifth largest public sector bank, with a market share of around 6% in terms of deposits and 5.5% in terms of equity customers.

Strengths:

• The stock is trading at 0.95 times its book value.

• The company has achieved significant profit growth over the past five years, with a CAGR of 46.4%.

• Offers a solid dividend payout rate of 22.9%.

4. Canara Bank

Established in 1906, Canara Bank was India’s first public sector bank. In 2020, it merged with the former Syndicate Bank to strengthen its market position. The bank is headquartered in Bangalore.

Strengths:

• Trades at 1.09 times its book value.

• Has demonstrated impressive profit growth over the past five years, with a CAGR of 90.8%.

• Provides a substantial dividend payout of 19.2%.

  5. Castrol India Ltd

Castrol India Limited manufactures and distributes industrial and automotive lubricants. It provides a selection of oil lubricants and fluids for automobiles, motorbikes, and commercial vehicles, among other uses.

Strengths:

• Operates with minimal debt.

• Has a robust return on equity (ROE) history, with an average ROE of 45.7% over the past three years.

• Offers a generous dividend payout of 78.8%.

How to Invest in the Top 5 Stocks Under ₹300

To invest in these stocks, follow these steps:

1. Open a brokerage, trading, or demat account.

2. Identify stocks priced under ₹300 by setting price filters in your trading platform.

3. Place a "Buy" order for the stocks you are interested in.

4. Regularly monitor your investments to track performance.

Key Metrics to Consider When Choosing Stocks Under ₹300

When selecting stocks under ₹300, consider the following metrics to ensure sound investments:

• Stock Price: Focus on stocks trading below ₹300.

• Current Ratio: A current above 1 indicates liquidity and financial stability.

• Earnings Per Share (EPS): A higher EPS suggests better profitability per share.

• Dividend Per Share (DPS): Look for stocks with steady and reasonable dividend payouts.

• Net Profit Margin: A higher margin indicates efficient cost control and profitability.

• Debt-to-Equity Ratio: A lower ratio suggests less reliance on debt, making the company less risky.

• Price-to-Earnings (P/E) Ratio: A lower P/E ratio may indicate a stock is undervalued relative to its earnings.

• PEG Ratio: Adjusts the P/E ratio by considering the company's expected earnings growth rate.

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Why Invest in Stocks Under ₹300?

Investing in stocks below ₹300 can offer many benefits, including exposure to potential growth companies and the ability to diversify your portfolio on a budget. Because of their high volatility, these stocks can also provide short-term profit opportunities.

Who Should Invest in Stocks Under ₹300?

• New Investors: Those with limited capital seeking entry-level investments.

• Budget-Conscious Investors: Individuals looking to diversify with lower initial investments.

• Experienced Investors: Those exploring emerging market opportunities or seeking to diversify their portfolios.

Conclusion

Investing in stocks below ₹300 can be an intelligent choice for diversification with little capital. While these products are expensive, they offer excellent returns and growth. However, proper research, consideration of risk tolerance, and a long-term financial plan are important. With proper planning, investing in stocks below ₹300 can be profitable for novice and experienced investors.

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