Stocks to Buy Under Rs 500

Investing in the stock market presents an excellent opportunity for gradual wealth-building, and sometimes, you don't even need a substantial budget to start. In 2023, you'll find numerous promising stocks priced below Rs 500. In this blog, we'll delve into the top five stocks in this range that you may want to consider adding to your investment portfolio.

• Stocks under Rs. 500 are accessible to new investors, offering a low barrier to entry.
• Focus on continuous sales growth, strong ROE, and high promoter holdings, promotes safe and reliable investments.
• Companies like Bharat Electronics, NMDC, and ITC offer growth across various sectors.

The stock market presents a lucrative opportunity for wealth creation. It does not matter if you are a seasoned investor or just curious about investments, the financial market provides opportunities for all. In 2024, there are numerous stocks under Rs. 500 that attract new investors as the barrier to entry is on the lower end. They can be a great avenue for new investors to start their investing journey.

In this article, we will discuss a few of the popular stocks under Rs. 500 in 2024 that you can invest in for solid returns. We will also elaborate on the major factors that influence the selection of stocks that will suit your portfolio. 

While there may be numerous picks for popular stocks under Rs. 500, chosen a few with significant growth potential after considering price and market trends, fundamental analysis, and speculation.

Also read: Demat account

Bharat Electronics Limited

This firm was established in 1954 and is focused on the manufacture and supply of electronic systems and equipment, primarily for the defence industry. The company’s business is diversified, and it provides a wide range of products to the Indian army. Its expertise includes making radars, missile systems, fire control systems, naval systems, and electro-optics.

The company has robust financials and is close to being free of debt. Besides this, the company has a robust dividend payout of 53%.

NMDC Limited

NMDC was established in 1958 under the Indian Government’s Ministry of Steel. This firm is primarily concerned with exploring and extracting iron ore. It also produces and sells sponge iron and engages in generating and distributing wind energy.

This company is free of debt and has a solid historical performance record. Over the last three years, the company’s ROE has been an impressive 29% and has a dividend payout of 38%.

Gujarat Mineral Development Corporation Limited

This entity operates in the power and mining sectors. Its projects cover Bauxite, Multi-Metal, Lignite, Fluorspar, Power, Solar, and Wind. These projects involve the extraction of metals and minerals and the production of power. With its diverse operations, the company has a presence in several districts of Gujarat, such as Surat, Baroda, Kutch, Jamnagar, and Rajkot, among others.

Their stock under Rs. 500 has an impressive dividend payout of 44% with a CAGR of 78% over the last three years.

Also read: Bid and ask

ITC Limited

ITC was set up in the year 1910 and is currently the biggest manufacturer and seller of cigarettes in India. The company has operations spread out in five sectors: FMCG, hotels, paper and packaging, agri-business, and paperboards.

The company is a well-known name in India and has had a reliable ROE of 28% in the past three years with a dividend payout of 84%.

NTPC Limited

The National Thermal Power Corporation in India is majorly concerned with generating and selling power in bulk to different Indian states. Additionally, the business provides other services like consulting, energy trading, project supervision and management, coal mining, gas and oil exploration, and more.

The company stock currently has a solid dividend payout of 36%, with the CAGR over the last 3 years being 53%.

With a few of the top stocks under Rs. 500 discussed, it would seem very enticing to jump into the stock market immediately and start investing. However, it is important to note the following major considerations when choosing stocks to invest in. These metrics have been the primary considerations in choosing the above-mentioned stocks under Rs. 500 and will also help you make informed decisions in your trading journey.

Continuous sales growth

Having sales growth numbers that are continuously increasing is a sign of robust mechanisms internally and promotes trust among consumers. We have also prioritised entities that have a consistent track record of sales growth.

Robust ROE

A high return on equity is an indicator of better returns for shareholders in the financial market. We have chosen businesses with a strong ROE. Investors in the market should also consider assessing stocks using this metric to make sound decisions.

Ownership of promoters

Stocks under Rs. 500 with a high level of promoter holdings indicate confidence in the business and its offerings. We have also chosen stocks of companies where promoter holdings are a reflection of stakeholder confidence in the firm.

Positive debt-to-equity

Having a favourable number in the debt-to-equity ratio metric is a sign of solid fundamentals. It indicates that the company’s financials are balanced and the financial structure is sustainable.

Also read: IPO allotment status

Assessment of bankruptcy risk

It is also crucial to understand and analyse the potential of bankruptcy of a business before investing in it. In addition to the debt-to-equity ratio, you can rely on the Altman Z score for more in-depth analysis and gain more confidence in your pick of stocks under Rs. 500.

Investing in stocks under Rs. 500 in 2024 offers a promising entry point for new investors. Key considerations such as continuous sales growth, robust ROE, and promoter confidence ensure sound investment decisions. These stocks under Rs. 500 provide substantial growth potential while maintaining a low barrier to entry.