Best Stocks Under Rs. 500 to invest in India 2023

People think that buying stocks takes a sizable amount of money. However, that is untrue. With as little as ₹ 500, a potential investor can start investing in stocks. All you need is to keep a close check on the performance of the stock, market volatility, industry performance, and other important aspects.
A list of fundamentally sound equities priced under 500 rupees has been compiled in this blog for your consideration.

Key Considerations Before Investing in Stocks Priced Under Rs. 500

Crafting a profitable stock portfolio demands careful consideration of several factors. When venturing into investments in stocks priced below Rs 500, there are several significant aspects to weigh.

• Historical Performance of the Stock:

Begin by evaluating the historical performance of the stock. Analyze its trajectory over recent years and explore its future prospects. This assessment offers valuable insights into the company's position within the market compared to its competitors.

• Volatility Analysis:

Acknowledge the inherent volatility of stock markets. Before committing to a stock priced under 500, assess its volatility. Align your risk tolerance with the stock's volatility profile – proceed if you are comfortable with higher risk, otherwise, explore alternative options.

• Revenue Growth Examination:

Scrutinize the revenue growth of the stock. The earnings and revenue generated by a company serve as direct indicators of its performance and expansion potential. A comparative analysis of revenue growth between companies simplifies the process of selecting appropriate stocks for your portfolio.

• Company Size Assessment:

Consider the size of the company as a pivotal factor in your investment decision. The company's size significantly influences the level of risk you are willing to undertake. Evaluate the company's market capitalization to ensure it aligns with your risk appetite.

• Evaluation of Fundamental Ratios:

Selecting the right stocks necessitates a calculated approach. Prior to making an investment choice, delve into essential ratios such as the Price-to-Book-Value Ratio, Price-to-Earnings Ratio, Debt to Equity Ratio, among others. Accessing these metrics simplifies the investment decision-making process and offers insights into the company's market positioning. 
Crafting a successful investment strategy involves a comprehensive evaluation of these factors. By taking a holistic approach to analyzing stocks priced under Rs 500, you can enhance your chances of building a rewarding and well-balanced portfolio."

• Methodology

Fundamentally Strong stocks Under ₹ 500

Overview of the Best Stocks to Buy Under 500

1. Wipro

Key Operational highlights

•  Partner to Industry
i) 1,444 active global clients
ii) Top customer concentration at 3.1% of revenue
iii) Twenty-one $100M+ relationships
•  Global footprint
i) Part of NYSE TMT Index
ii) Present in six continents
iii) Employees across 65 countries

Financial Highlights

• The revenue generated by the IT Services segment amounted to $2,778.5 million, denominated in dollar terms. Notably, the IT Services Segment Revenue experienced a decrease of 2.1% quarter-on-quarter (QoQ), while simultaneously marking an increase of 0.8% year-on-year (YoY).
• The Non-GAAP IT Services Constant Currency (CC) revenue exhibited a decline of 2.8% QoQ, juxtaposed with a growth of 1.1% YoY.
• Operating Margins within the IT Services sector reached 16.0%, reflecting a noteworthy improvement of 112 basis points (bps) in a YoY comparison.
• The net income attributable to equity shareholders for the quarter amounted to ₹28.7 billion, showcasing a substantial growth of 12.0% YoY. This financial performance translated into an Earnings Per Share (EPS) of ₹5.23, signifying an appreciable increase of 11.5% YoY.

Key Risk

Over the previous five years, the company's revenue growth was just 10.7%, which is bad.

Outlook

The Indian IT services sector is projected to grow by 8.3% YoY in FY 2023, driven by IT modernization like application modernization, cloud migration, and platformization. Enterprises prioritize cost reduction and operational efficiency, leading to opportunities as client vendor portfolios realign. Digital revenue is expected to make up 32%-34% of total industry revenue in FY 2023, highlighting the industry's digital transformation.
Outlook for Quarter ending September 30, 2023- We expect the revenue from our IT Services business segment to be in the range of $2,722 million to $2,805 million* 

Wipro Share Price

2. Hindustan Zinc

Key Operational Highlights

• Record Q1 Mined Metal and Silver Production: Achieved the highest-ever Q1 production of mined metal, reflecting a remarkable 2% year-on-year (YoY) increase, and silver production demonstrated a commendable 1% YoY growth. This performance underscores consistent metal production efforts.
• Cost of Production Optimization: Successfully reduced the cost of production by 6% compared to the previous year (YoY), and achieved a 2% decrease quarter-on-quarter (QoQ). Notably, this marks the first sequential improvement observed in the recent past.
• Strategic Focus on Cost Efficiency and Volume Maintenance: Maintained a strategic focus on optimizing costs while ensuring consistent production volumes. This approach effectively mitigated the adverse effects of the declining London Metal Exchange (LME) prices.
• Inauguration of Dedicated Women’s Facility: In a significant step towards inclusivity and workplace diversity, a dedicated women’s facility was inaugurated at the Rampura Agucha mine. Located 500 meters below the surface, this initiative aims to create a conducive environment for female employees. 
These key operational highlights underscore the company’s commitment to sustainable growth, efficient resource management, and the well-being of its workforce.

Financial Performance

• EBITDA : EBITDA stood at approximately INR 3.4 thousand crore. However, this figure reflects a decline of 36% year-on-year (YoY) due to the considerable decrease in London Metal Exchange (LME) prices, partially mitigated by reduced input commodity costs.
• Profit After Tax (PAT): The Profit After Tax was around INR 2.0 thousand crore, registering a decline of 36% YoY. This reduction is primarily attributed to the substantial decrease in LME prices, although partially balanced by lower input commodity prices.
• Resilient EBITDA Margin: The company maintained a robust EBITDA margin of 46%, indicating a consistent ability to generate earnings before various operational costs and financial considerations.
• Cost of Production (COP): The Cost of Production was noted at $1,194 per metric ton (MT), showcasing a decline when compared to Q4 FY23 ($1,214/MT) and Q1 FY23 ($1,264/MT). This decline is primarily attributed to factors such as softer coal costs, decreased input commodity prices, improved domestic coal availability, and strong operational performance.

Key Risk

• High Valuation: The stock is currently trading at a substantial valuation of 10.3 times its book value, potentially indicating an elevated level of market expectations that could lead to increased volatility or limited potential for further price appreciation.
• Promoter Pledging: A notable risk factor arises from the fact that 99.4% of the promoters' holdings have been pledged. This significant level of pledged shares could expose the stock to heightened vulnerability in case of market fluctuations or unforeseen financial challenges, potentially impacting investor sentiment and stock performance.

Outlook

Global zinc demand faces uncertainty due to macro-economic factors, while domestic demand remains sturdy in construction and infrastructure. Robust domestic lead demand is driven by automotive and industrial battery sectors, bolstered by 'Make in India' initiatives. 
Growing investments and jewellery demand boost domestic silver consumption, while global silver demand is expected to rise in solar energy. Temporary halts in global zinc mining result from price decline and cost pressures. Zinc inventories in LME warehouses show a significant increase, reflecting evolving market conditions.

Hindustan Zinc Share Price

3. Adani Power Ltd

Key Operational Highlights

• Revenue Visibility: The company has secured 81% of its capacity through Long-Term (LT) and Medium-Term (MT) Power Purchase Agreements (PPAs), ensuring a stable revenue stream. Its strategic positions in Merit Order Dispatch further enhance its operational reliability, while the advantageous near-pithead location allows flexibility in dispatching open capacities.
• Fuel security: The company has 79% of its domestic fuel-based capacity secured through Fuel Supply Agreements (FSAs), and its substantial logistics footprint guarantees prompt fuel availability. Leveraging strategic synergies with a sister concern's prominent role in the logistics sector further enhances its operational effectiveness.

Financial Highlights

• Operating margin stability: The company derives 74% of its capacity from advanced Ultrasupercritical / supercritical technologies, supported by operational excellence that maintains high availability and a strong System Heat Rate (SHR). This setup enables efficient fuel cost recovery through Power Purchase Agreements (PPAs).
• Robust cash flows, low leverage: The company benefits from an enhanced payment track record of DISCOMs, successful regulatory dues liquidation, and effective cash flow management aimed at reducing leverage. This strategy creates headroom for capitalizing on emerging opportunities.
• Capital management and leverage reduction: The company has executed a sound capital management plan, leading to prudent returns deployment, revitalizing its financial position. This effort is reflected in improved debt coverage indicators and a credit rating upgrade from BBB- to A.

Key Risk

• Dividend Payment Deferral: Despite consistent profit reporting, the company has refrained from paying out dividends, potentially raising concerns among investors about the allocation of profits and shareholder returns.
• Low Tax Rate: The company's observed low tax rate could prompt scrutiny from regulatory bodies or stakeholders, possibly leading to tax-related challenges or financial adjustments.
• Interest Cost Capitalization: There is a possibility that the company is capitalizing interest costs, which might affect the accuracy of reported financial statements and could impact financial ratios and overall transparency.
• Promoter Pledging: A notable risk factor is that 25.1% of the promoters' holdings have been pledged. Such a significant level of pledged shares could expose the stock to increased vulnerability during market fluctuations or unforeseen financial challenges, potentially influencing investor sentiment and stock performance.
• Earnings Composition: The inclusion of a substantial "other income" amounting to Rs. 9,585 crore in the earnings raises questions about the sustainability and core operating performance of the company, potentially impacting investor perceptions and valuation assessments.

Outlook

• Impressive Profit Growth: The company has achieved a remarkable 48.1% Compound Annual Growth Rate (CAGR) in profits over the last 5 years, reflecting a consistent upward trajectory and sound financial performance.
• Stellar Return on Equity (ROE): With a robust track record, the company has demonstrated a commendable Return on Equity (ROE) of 33.8% over a span of 3 years. This highlights the efficiency in converting shareholder equity into profitable returns.
• Enhanced Working Capital Management: The company has successfully streamlined its operations, significantly reducing its working capital requirements from 103 days to 74.2 days. This improved efficiency underscores the company's adeptness in managing 

Adani Power Share Price