Best Stocks Under Rs. 500 in India

Investing in the stock market provides a good option for progressive wealth accumulation, and you don't always need a large budget to begin. In 2023, there will be several potential stocks priced below Rs 500. In this article, we'll look at the best five stocks in this category that you should consider adding to your investment portfolio.
 

What are Stocks Under Rs. 500?

Stocks priced under Rs. 500 are shares of firms that may be purchased for less than Rs 500 apiece. These are often shares of small to mid-sized businesses that appeal to investors seeking growth potential at a cheaper investment cost. They give an option to purchase additional shares and perhaps profit more if the stock's value increases.
 

 

Top Stocks Under 500 Rs

It is not necessary to spend a lot of money when starting your journey in the stock market. Here is a list of 10 best stocks under Rs 500 with higher growth potential:

Company NameIndustry CMP in RsMarket Cap in Cr RsP/E Ratio 52-Week High52-Week Low
Coal India Limited Coal4662,87,1527.7527226
IIFL Securities LimitedFinance - Investment2226,83913.324060.3
Bharat Petroleum Corporation LimitedRefineries2971,28,9844.76344166
NMDCIron & Steel 24872,66412.6286104
Petronet LNGOil Exploration & Production 31847,72213.5334192
Hindustan Petroleum Corporation LimitedRefineries33270,6334.37397159
Indian Oil Corporation LimitedRefineries 1642,31,7305.5219785.5
JK Tyres & Industries LimitedAuto Ancillaries - Tyres & Rubber Products39510,30112.8554206
Prakash Pipes LimitedPlastic Products4691,12312.5493170
Ashoka Buildcon LimitedConstruction - Infrastructure2326,51314.724979.4

Disclaimer: All the information mentioned above is accurate as of 27th June 2024. However, it is important to conduct a thorough research before making any investment decisions in these stocks
 

Overview of Best Stocks Under 500 Rs

Below is the overview of top 10 stocks under Rs 500. Do have a look before making any investment:

Coal India

Coal India Limited established in 1973 as Coal Mines Authority Limited. The company is engaged in the business of mining and production of coal. It also operates coal washeries. The major consumers of Coal India are power and steel sectors. Consumers from other sectors include cement, fertilisers, brick kilns and more.

  • Coal India is almost debt free.
  • The stock is providing a good dividend yield of 5.17%.
  • The company has a good return on equity (ROE) track record of 51.8% in 3 years.
  • Coal India has been maintaining a healthy dividend payout of 51.8%.

IIFL Securities Limited

IIFL Securities Limited was incorporated in 1996 as a broking arm of the IIFL Group. The company provides retail and institutional equities, financial products distribution, commodity broking, currency broking, investment banking, financial planning and wealth management services to retail and institutional customers across India. 

  • IIFL Securities has delivered good profit growth of 24.6% CAGR over the last 5 years.
  • The company has a good return on equity (ROE) track record of 27.0% in 3 years. 
  • IIFL Securities has been maintaining a healthy dividend payout of 28.2%.

Bharat Petroleum Corporation Limited

Bharat Petroleum Corporation Limited established in 1952 is a public sector company which is engaged in the business of refining crude oil and marketing of petroleum products.

  • Bharat Petroleum Corporation has reduced debt.
  • The company has delivered good profit growth of 28.2% CAGR over the last 5 years.
  • The company has been maintaining a healthy dividend payout of 28.6%.

NMDC Limited

NMDC Limited established in 1958 is engaged in the exploration and production of iron ore along with Diamond, production and sale of Sponge Iron and generation and sale of Wind Power.

  • NMDC has a good return on equity (ROE) track record of 29.0% in 3 years.
  • The company has been maintaining a healthy dividend payout of 39.5%.

Petronet LNG

Petronet LNG Limited was established in 1998 to develop, design, construct, own and operate Liquefied Natural Gas (LNG) Import and regasification terminals in India.

  • Petronet LNG has a good return on equity (ROE) track record of 24.0% in 3 years.
  • The company has been maintaining a healthy dividend payout of 36.8%.

Hindustan Petroleum Corporation Limited 

Hindustan Petroleum Corporation Limited was established in 1952 is engaged in the business of refining of crude oil and marketing of petroleum products, production of hydrocarbons as well as providing services for management of E&P Blocks.

  • Hindustan Petroleum Corporation is providing a good dividend yield of 3.01%.

Indian Oil Corporation Limited

Indian Oil Corporation Limited established in 1964 is a Maharatna Company controlled by the Government of India that has business interests straddling the entire hydrocarbon value chain - from refining, pipeline transportation and marketing of petroleum products to R&D, exploration & production, marketing of natural gas and petrochemicals. The company has a leadership position in the oil refining & petroleum marketing sector of India.

  • Indian Oil Corporation is providing a good dividend yield of 7.37%.
  • The company has delivered good profit growth of 19.3% CAGR over the last 5 years.
  • The company has been maintaining a healthy dividend payout of 43.0%.

JK Tyres & Industries Limited

JK Tyre & Industries incorporated in 1951 is a one of the leading tyre manufacturers in India and amongst the top 25 manufacturers in the world. JK Tyres & Industries has delivered good profit growth of 32.9% CAGR over the last 5 years.

  • The company has been maintaining a healthy dividend payout of 17.1%.

Prakash Pipes Limited

Prakash Pipes Limited incorporated in 2017 is engaged in the manufacturing of PVC pipes & fittings and packaging products. The company was created out of a demerger from Prakash Industries Limited.

  • Prakash Pipes has delivered good profit growth of 25.8% CAGR over the last 5 years.

Ashoka Buildcon Limited

Ashoka Buildcon Limited established in 1993 is engaged in the business of construction and infrastructure facilities on EPC and BOT basis. The company is also involved in the sale of RMC (ready mix concrete).

  • Ashoka Buildcon has a good return on equity (ROE) track record of 29.7% in 3 years.
  • The company's median sales growth is 21.0% as of the last 10 years.
  • The company's working capital requirements have reduced from 44.9 days to 11.6 days.
     

Key Factors Considered for Stock Selection

Here are some of the key factors to consider while selecting the stocks under Rs. 500

  1. Sustained sales growth over the past five years is a key factor in evaluating companies, indicating consistent performance and potential for future expansion.
  2. A strong return on equity (ROE) of 15% or higher is essential, reflecting a company's ability to generate favourable returns for its shareholders.
  3. Promoter's ownership of more than 50% of the company's shares is preferred, as it demonstrates a firm commitment from the company's founders or major stakeholders.
  4. A favourable debt-to-equity ratio of less than 1 is sought, indicating a balanced and sustainable financial structure.
  5. To mitigate the risk of bankruptcy, each company's Altman Z Score should exceed 3, providing added confidence in avoiding bankruptcy-related issues in the near future.
     

Conclusion
Overall, these stocks are investing heavily in capital expenditures to boost sales. All of these firms have good balance sheets and return ratios, so their stocks may do well in the long run. If you want to invest in any of them, you should conduct your own research and carefully consider your risk-return profile. Finally, for all this, you need a reliable stock market app for your investment needs. 

FAQs on Best Stocks to Buy Under Rs. 500

Stocks under Rs. 500 can be riskier due to market volatility and lower market capitalization, but careful selection based on strong financial metrics can mitigate some risks.

Look for companies with consistent sales growth, high ROE, significant promoter's ownership, a low debt-to-equity ratio, and a high Altman Z Score.

Promoter's ownership over 50% signals strong commitment from the founders or major stakeholders, indicating confidence in the company's future prospects and stability.

A favorable debt-to-equity ratio of less than 1 indicates a balanced financial structure, reducing financial risk and enhancing sustainability.

An Altman Z Score above 3 helps assess bankruptcy risk, providing added confidence in a company's financial stability and reducing the likelihood of future financial distress.

Yes, stocks under Rs. 500 can provide good returns if chosen carefully based on strong financial health, growth potential, and favourable ownership and debt metrics.