Everyone looks for stable investment companies, as they tend to outperform the market during economic crises. One of such companies includes cash-rich companies.
In today’s blog post, we will give you an overview of the cash-rich companies along with the benefits of investing in them.
Meaning of Cash Rich Companies
Cash-rich companies are those that generally have higher cash reserves than other companies. These companies have a strong balance sheet and have a higher potential to outperform the economic downturns of the market. These companies have an adequate amount of cash to meet their daily operations, as well as long-term funding.
Top Cash Rich Stocks to Buy in India
- State Bank of India
- HDFC Bank Limited
- ICICI Bank Limited
- Reliance Industries Limited
- Union Bank of India Limited
- Canara Bank Limited
- Punjab National Bank Limited
- Life Insurance Corporation of India Limited
- Axis Bank Limited
- Bank of Baroda Limited
| Company | Current Market Price (in INR) | Market Capitalisation (in INR crore) | 52-Week High (in INR) | 52-Week Low (in INR) |
|---|---|---|---|---|
| State Bank of India Limited | 864 | 7,97,618 | 884 | 680 |
| HDFC Bank Limited | 965 | 14,82,658 | 1019 | 812 |
| ICICI Bank Limited | 1372 | 9,80,116 | 1500 | 1186 |
| Reliance Industries Ltd | 1369 | 18,52,189 | 1551 | 1115 |
| Union Bank of India Limited | 139 | 1,05,916 | 159 | 101 |
| Canara Bank Limited | 124 | 1,12,258 | 129 | 78 |
| Punjab National Bank Limited | 113 | 1,29,353 | 118 | 85 |
| Life Insurance Corporation of India Limited | 904 | 5,71,843 | 1008 | 715 |
| Axis Bank Limited | 1160 | 3,59,766 | 1247 | 934 |
| Bank of Baroda Limited | 260 | 1,34,249 | 272 | 191 |
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Overview of Cash Rich Companies Stocks to Buy in India 2025
The overview of the top cash-rich stocks to buy in India is as follows:
1. The State Bank of India Limited
The State Bank of India Limited first joint-stock bank in British India, the Bank of Calcutta, was founded in 1806, marking the beginning of the SBI. The Imperial Bank of India was nationalised and renamed the State Bank of India by the Indian government in 1955. Later, SBI purchased various commercial and state-affiliated banks.SBI currently has a robust distribution network with 65,627 ATMs and 22,405 branches. Its headquarters are situated in Mumbai.
2. HDFC Bank Limited
In 1994, HDFC Bank was founded. In January 1995, it obtained a banking licence from the Reserve Bank of India. The bank launched its Initial Public Offering (IPO) in March 1995 and went public on the National Stock Exchange and the Bombay Stock Exchange. HDFC Bank and Times Bank merged in 1999. To expand its branch network and customer base, HDFC Bank acquired Centurion Bank of Punjab. The headquarters of HDFC Bank is located in Mumbai.
3. ICICI Bank Limited
ICICI Bank stands for Industrial Credit and Investment Corporation of India. It is the second-largest private bank in India. The World Bank and the Indian government established ICICI in 1955. Apart from Japanese banks, ICICI was the first Asian bank and Indian company to list on the New York Stock Exchange (NYSE). Its headquarters are situated in Mumbai.
4.Reliance Industries Limited
Reliance Industries Limited company was founded in 1966 by Mr Dhirubhai Ambani, and in 1977, it launched an initial public offering (IPO). Later in 1980, it began expanding its business operations in the petrochemical sector. After his death, Dhirubhai Ambani’s two sons, Anil and Mukesh Ambani, divided the company. Under Mukesh Ambani’s leadership, the company expands into various sectors, including communications and retail, and achieves new heights. The company’s headquarters is situated in Mumbai.
5.Union Bank of India Limited
Mahatma Gandhi inaugurated the Union Bank of India, which was established in 1919 by an Indian businessman and holds historical significance. In 1969, the bank and numerous other prominent Indian banks were nationalised. The government’s efforts to consolidate the Indian banking industry resulted in the Union Bank’s 2020 merger with Corporation Bank and Andhra Bank. In addition to its many offices in other countries, such as Hong Kong, Sydney, and Dubai, the bank has more than 9500 branches across India. Its headquarters are situated in Kolkata.
6. Canara Bank Limited
The renowned philanthropist Ammembai Subba Rao Pai founded Canara Bank in 1906 under the name of Canara Hindu Permanent Fund. In 1910, it changed its name to Canara Bank. In 1969, the bank was nationalised by the Indian government. The bank came up with an IPO in 2017 and got itself listed on the Indian Stock Exchange. Its headquarters are situated in Bengaluru.
7. Punjab National Bank Limited
Punjab National Bank Limited was established in Lahore, Pakistan, in 1894 by Indian freedom fighter leader Lala Lajpat Rai. It is regarded as the nation’s first bank and was founded in Lahore, Pakistan. The bank shifted its headquarters to New Delhi after its independence. This and 13 other banks were nationalised later in 1969. It purchased Nedungadi Bank in 2003 and merged with United Bank of India and Oriental Bank of Commerce in 2020.
8. Life Insurance Corporation of India Limited
LIC was established in 1956 through a special Act known as the Life Insurance Corporation Act 1956. In 1960, the company established its first foreign branch in the UK. In 2001, the company got itself registered under IRDAI. The company’s headquarters is situated in Mumbai.
9. Axis Bank Limited
Axis Bank was first founded as UTI Bank through a partnership between the Government of India, the Life Insurance Corporation of India, and other companies. Shikha Sharma was named MD and CEO of UTI Bank, which was renamed the bank to “Axis Bank” by the middle of 2007. The headquarters of Axis Bank is situated in Mumbai.
10 .Bank of Baroda Limited
Bank of Baroda Limited was started in 1908 by the king of Baroda, Maharaja Sayajirao Gaekwad. He started the bank in order to assist the local economy’s growth. In 1969, the Indian government took over the bank and nationalised it. After merging with Dena Bank and Vijaya Bank in 2019, Bank of Baroda became the third-largest public sector bank in India. Its headquarters are situated in Baroda.
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Key Performance Indicators (KPIs)
The key performance indicators of top cash-rich companies are as follows:
| Company | ROE (%) | ROCE (%) | Operating Profit Margin (%) | Net Profit Margin (%) | Cash and Reserve (in INR crore) |
|---|---|---|---|---|---|
| State Bank of India Limited | 16.87 | 1.91 | 21.80 | 16.09 | 262965 |
| HDFC Bank Limited | 13.56 | 2.62 | 25.58 | 21.83 | 132227 |
| ICICI Bank Limited | 16.45 | 3.13 | 26.47 | 29.20 | 113747 |
| Reliance Industries Limited | 8.25 | 8.70 | 13.50 | 8.37 | 106502 |
| Union Bank of India Limited | 16.65 | 2.14 | 30.24 | 16.52 | 87764 |
| Canara Bank Limited | 17.72 | 1.92 | 24.77 | 14.25 | 86867 |
| Punjab National Bank Limited | 13.88 | 1.49 | 29.18 | 14.06 | 71420 |
| Life Insurance Corporation of India Limited | 38.15 | 0.97 | 6.13 | 5.42 | 69885 |
| Axis Bank Limited | 14.98 | 2.84 | 33.11 | 22.07 | 65564 |
| Bank of Baroda Limited | 14.14 | 2.12 | 27.41 | 15.99 | 53800 |
Benefits of Investing in Cash Rich Stocks
The key benefits of investing in cash-rich stocks are as follows:
- Strong Financials: Companies with larger cash reserves can bear the economic downturns. The risk related to bankruptcy can be reduced to a certain extent.
- Regular Dividends: Generally, companies distribute their surplus cash reserves in the form of dividends to their shareholders. It can be a regular source of income for such passive investors.
- Lower Debt: Companies having higher cash reserves generally have lower debt. Because of this, they have strong balance sheets.
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Factors to consider before investing in Cash Rich Stocks
There are various factors which one should consider before investing in cash-rich stocks, a few of which are as follows:
- Utilisation of Cash Reserves: The companies can utilise the cash reserve in many forms, such as paying debts, growth, etc. Therefore, one must consider the objective of utilising the company’s cash reserve.
- Sectoral Outlook: The sector in which the company belongs needs to be taken into account before choosing a cash-rich stock. Industries with higher growth potential can be considered as an investment option.
- Other Valuations: Along with the cash reserves of the companies, other valuation metrics also need to be considered before investing in cash-rich companies.
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Conclusion
On a concluding note, investors looking for stable companies and consistent profit can consider investing in cash-rich companies. Such companies generally have a strong financial balance sheet which provides them a financial cushion to bear any economic downturns. However, a cash reserve alone cannot be the only factor to invest in such companies; there are certain other factors, such as P/E Ratio, P/B Ratio, etc. It is advisable to consider your risk profile and consult your investment advisor before making any investment decision.
Frequently Asked Questions (FAQs)
Are cash-rich stocks a safer investment option?
Cash-rich companies are not completely risk-free, but they are typically safer than companies which have lower cash reserves. Investors should take into account the company’s valuation, industry outlook, efficiency of management, and cash usage plans.
Which sector generally has the highest cash-rich companies?
Sectors like IT, PSUs, FMCG, etc., generally have cash-rich companies. Their profit margins are comparatively higher than others, and they have consistent revenues.
How to identify the cash-rich stocks?
One should check the balance sheet of the companies and check their reserve and surplus section, where you will find the available cash balance.
Can cash-rich companies survive any economic downturns?
Yes, cash-rich companies have a higher potential to survive the economic downturns than other companies.
Do cash-rich companies regularly declare dividends?
Yes, cash-rich companies generally declare regular dividends.
