India has recently become the fourth-largest economy in the world and manufacturing stocks have played an important role in this growth story. Recently, various government-backed schemes like “Make in India” and Production Linked Incentive (PLI) schemes have helped manufacturing companies expand their business operations.
In this blog, we will explore the best manufacturing stocks in India and the benefits of investing in them.
What are Manufacturing Stocks?
Manufacturing stocks are the shares of those companies which are primarily involved in the production of goods. These companies use resources such as labor, machinery, and raw materials to create finished products. The products manufactured by these companies are sold to consumers, businesses, or the government.
| S.No. | Top Manufacturing Stocks (Based on Market Cap) |
|---|---|
| 1 | Reliance Industries Limited |
| 2 | ITC Limited |
| 3 | Sun Pharmaceutical Industries Limited |
| 4 | Bajaj Auto Limited |
| 5 | Tata Steel Limited |
| 6 | Hindalco Industries Limited |
| 7 | Dr. Reddy’s Laboratories Limited |
| 8 | Bosch Limited |
| 9 | Dixon Technologies (India) Limited |
| 10 | Bharat Forge Limited |
Market Information of Best Manufacturing Stocks
| Company | Current Market Price (in ₹) | Market Capitalisation (in ₹ crores) | 52-Week High (in ₹) | 52-Week Low (in ₹) |
|---|---|---|---|---|
| Reliance Industries Limited | 1,488 | 20,13,225 | 1,606 | 1,115 |
| ITC Limited | 419 | 5,24,360 | 495 | 390 |
| Sun Pharmaceutical Industries Limited | 1,688 | 4,04,888 | 1,960 | 1,553 |
| Bajaj Auto Limited | 8,086 | 2,25,806 | 12,774 | 7,088 |
| Tata Steel Limited | 160 | 1,99,924 | 170 | 123 |
| Hindalco Industries Limited | 669 | 1,50,317 | 773 | 546 |
| Dr. Reddy’s Laboratories Limited | 1,255 | 1,04,711 | 1,421 | 1,020 |
| Bosch Limited | 37,415 | 1,10,350 | 39,089 | 25,922 |
| Dixon Technologies Limited | 15,892 | 96,111 | 19,150 | 10,613 |
| Bharat Forge Limited | 1,208 | 57,751 | 1,771 | 919 |
Read Also: List of Best Monopoly Stocks in India
Best Manufacturing Companies Stocks in India – An Overview
A brief overview of the best manufacturing stocks in India is given below:
1. Reliance Industries Limited
Reliance Industries Limited was founded in 1966 by Mr. Dhirubhai Ambani, and in 1977, it launched its IPO. Later in 1980, it began expanding its business in the petrochemical sector. After the death of Dhirubhai Ambani, the company was divided among his two sons, Anil and Mukesh Ambani. Under the leadership of Mukesh Ambani, the company expanded into many sectors, including communications and retail, and reached new heights. The company’s headquarters are situated in Mumbai.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| -7.36% | 24.49% | 53.71% |
2. ITC Limited
ITC was initially known as Imperial Tobacco Company of India and was established in 1910. After changing its name to Indian Tobacco Company in 1970, the company changed its name again to ITC Limited in 1974. FMCG, hospitality, packaging, and other industries and among the sectors in which the company operates. The headquarters of the company is in Kolkata.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| -8.65% | 42.49% | 112.44% |
3. Sun Pharmaceutical Industries Limited
Sun Pharmaceutical Industries Limited was established in 1983 by Dilip Shanghvi to lower the cost and increase access to medications. The business has grown over time to rank fourth internationally in terms of generic pharmaceuticals and among the major pharmaceutical corporations in India. The company currently has more than 43 manufacturing facilities. The company has roughly 41,000 employees across the world. The company complies with the regulations laid down by several authorities, such as the US FDA, European Medicines Agency, etc. The company has its headquarters situated in Mumbai.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| 6.44% | 93.88% | 236.34% |
4. Bajaj Auto Limited
Bajaj Auto Limited was established in 1945 and operates in the two and three-wheeler market. The company was initially known as M/s Bachraj Trading Corporation Private Limited. In 1959, the Indian government granted it authorisation to manufacture and sell two and three-wheelers. It became a public company in 1960 and over the years has become the third largest two-wheeler company in the world. The company has its headquarters situated in Maharashtra.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| -14.32% | 109.39% | 178.81% |
5. Tata Steel Limited
The company was founded in 1907 by Mr. Jamsetji Tata, a well-known Indian entrepreneur. Earlier, the company was known as Tata Iron and Steel Company Limited (TISCO); later, the company changed its name to Tata Steel Limited. The company supplied steel to defence companies during the Second World War. It also acquired various international companies such as NatStel Holdings. The company has its headquarters situated in Mumbai.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| -5.00% | 76.10% | 372.71% |
6. Hindalco Limited
Hindalco Limited The Aditya Birla Group established the company in 1958. The company is primarily engaged in smelting copper, aluminium, etc. The company initially worked with Kaiser Aluminium in the USA and also with the local state government of Bihar. The company acquired various units between 2000 and 2017, and strengthened its position in the market. The company has its headquarters situated in Mumbai.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| -3.63% | 88.12% | 397.67% |
7. Dr. Reddy’s Laboratories Limited
Dr. Reddy’s Laboratories Limited was founded in 1984 by Dr. Kallam Anji Reddy, and its main business operations were focused on the creation and manufacturing of active pharmaceutical ingredients (APIs). The company decided to list it on the Indian Stock Exchange in 1993, and it also listed on the New York Stock Exchange in 2001 and became the first asian pharmaceutical company to get itself listed on the New York Stock Exchange. The company partnered with RDIF to provide the Sputnik V COVID-19 vaccine. The headquarters of the company is situated in Hyderabad.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| -7.27% | 38.90% | 60.32% |
8. Bosch Limited
Bosch Limited is the flagship company of Bosch Group in India. It began selling its products in India from September 1922 through a partnership with Illies and Company in Calcutta. The company partnered with the Ghaziabad Engineering Corporation and Motor Industries Company and started manufacturing spark plugs and diesel injection pumps. The company has its headquarters in Bangalore.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| 7.55% | 133.37% | 176.34% |
9. Dixon Technologies Limited
Dixon Technologies Limited was founded in 1993 by Sunil Vachani and is engaged in the manufacturing of electronics manufacturing services (EMS). The product portfolio of the company includes consumer electronics, home appliances, lighting products, mobile phones, security devices, telecom products, etc. The company has 23 plants spread across India. The company has its headquarters situated in Noida.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| 27.27% | 313.22% | 1,128.49% |
10. Bharat Forge Limited
Bharat Forge Limited was founded in 1961 by Nilkanthrao A. Kalyani. It is a flagship company of the Kalyani Group. It is one of the largest manufacturers of automotive components such as crankshafts, connecting rods, and fuel injection systems. It is also providing components to the Indian Armed Forces, establishing it as one of the largest forging companies in the World. The company has its headquarters situated in Pune, Maharashtra.
Know the Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
|---|---|---|
| -25.68% | 90.09% | 229.79% |
Read Also: List Of Best FMCG Stocks In India
Key Performance Indicators (KPIs)
The key performance metrics of manufacturing companies are mentioned below:
| Company | Operating Profit Margin (%) | Net Profit Margin (%) | ROE (%) | ROCE (%) | Debt to Equity |
|---|---|---|---|---|---|
| Reliance Industries Limited | 13.50 | 8.37 | 8.25 | 8.70 | 0.41 |
| ITC Limited | 35.66 | 46.38 | 49.61 | 36.41 | 0 |
| Sun Pharmaceutical Industries Limited | 27.88 | 20.88 | 15.13 | 19.83 | 0.03 |
| Bajaj Auto Limited | 22.60 | 16.15 | 20.81 | 27.05 | 0.26 |
| Tata Steel Limited | 7.51 | 1.36 | 3.75 | 8.49 | 0.98 |
| Hindalco Industries Limited | 11.16 | 6.70 | 12.93 | 13.28 | 0.50 |
| Dr. Reddy’s Laboratories Limited | 24.32 | 17.47 | 16.85 | 21.81 | 0.12 |
| Bosch Limited | 15.19 | 11.12 | 14.58 | 19.57 | 0 |
| Dixon Technologies Limited | 3.20 | 3.12 | 36.39 | 29.88 | 0.07 |
| Bharat Forge Limited | 13.45 | 6.06 | 10.17 | 17.86 | 0.68 |
Read Also: List of Best Telecom Stocks in India
Benefits of Investing in Manufacturing Stocks
There are significant benefits of investing in manufacturing stocks, a few of which are as follows:
- Economic Growth: Investment in manufacturing companies provides an opportunity to participate in the growing Indian economy as these companies are key contributors to the GDP growth of the country.
- Government Incentives: The government supports manufacturing companies by providing them with various incentives and subsidies, which can help them grow their businesses.
- Capital Appreciation: Investors in manufacturing companies can benefit from long-term stock price appreciation, which helps them build substantial wealth over time.
- Portfolio Diversification: One can diversify their portfolio by investing in different manufacturing stocks to avoid excessive risks.
Factors to be Considered before Investing in Manufacturing Stocks
The key factors that one should consider before investing in manufacturing stocks are as follows:
- Cost of Raw Material: The increasing cost of raw materials impacts the profit margins of the manufacturing companies. Therefore, one is required to check the profitability of the company in which they are planning to invest.
- Export Risk: Some manufacturing companies export their product to other countries. Any change in global demand can impact their revenue.
- Product Portfolio: The company’s diversified product portfolio helps it maintain stable financial performance risk during economic downturns.
- Financial: A company’s financial report must be analyzed before making any investment.
Read Also: List of Best Metal Stocks in India
Future of Manufacturing Stocks
The Indian Manufacturing sector is expected to grow to a valuation of $1 trillion by 2030, with companies in this space playing a crucial role. The sector includes industries such as automobiles and auto components, steel, electronic equipment, and more. With the rise of increasing per capita income in India, this sector will be the direct beneficiary as consumption increases. The government also supports the manufacturing sector by providing various incentive plans and “Make in India” initiatives. Hence, we can say that to participate in the growing Indian economy, one can invest in the manufacturing sector stocks, but only after consulting their financial advisor.
Read Also: List Of Best Battery Stocks in India
Conclusion
On a concluding note, investing in manufacturing stocks provides you with an opportunity to participate in the country’s growing economy. The manufacturing sector is considered the backbone of the economy. However, investment in this sector involves certain risk as some of the companies are cyclical, and the rise in raw material costs can impact their profit margins adversely. Therefore, before investing in manufacturing stocks, you must consult your investment advisor.
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Frequently Asked Questions (FAQs)
Which companies are the top manufacturing companies in India?
The top manufacturing companies in India are Reliance Industries Limited, ITC Limited, Sun Pharmaceutical Industries Limited, Bajaj Auto Limited, Tata Steel Limited, etc.
Are manufacturing stocks cyclical in nature?
Yes, some manufacturing stocks are cyclical in nature, such as companies involved in steel and automobile manufacturing. However, there are other manufacturing companies that aren’t cyclical, such as those operating in the FMCG and healthcare sectors.
What are manufacturing stocks?
Manufacturing stocks are the shares of those companies that are primarily engaged in the production of goods. These companies operate across a wide range of sectors, including defence, steel, cement, machines, consumer goods, etc.
What are the major risks involved while investing in manufacturing stocks?
The major risks involved while investing in manufacturing stocks are their cyclical nature, cost of raw materials, global events, etc.
How can I invest in manufacturing companies?
One can easily invest in manufacturing companies using their demat and trading accounts. Now you can easily open a demat account online without paying any fees as Pocketful offers free brokerage on delivery-based trades.
