What are the 5 blue chip stocks in India, excluding cyclicals, that gave less than 6% annualized return over the last 10 years?

August 20, 2020


First blog about investing which is against the blue-chips. Blue-chips does not mean it is a safe haven for all your equity investments. Question everything! Happy learning!

Caution-THIS ANSWER COULD CHANGE YOUR PERCEPTION TOWARDS INVESTING FOREVER.


Let’s start digging. The companies we will discuss are the pride of India. They do things which we appreciate. But stock performance eh.. Not so much.


LARSEN & TOUBRO- The company makes things only it can make in our country. Has a presence in Defence, Infra, Hydrocarbon too. Got its 3 little dragons (LTFS, LTI, LTTS) also listed.

Past 10 years return= 1.92% CAGR i.e. Rs 100 invested would just Rs 120 after 10 years.


BHARTI AIRTEL- The company was one of the most premium telecom operator since the beginning. I remember them from their OASIS days. Most costly, best ads, widest & best network (questionable these days)

Past 10 years return= - 6.33% CAGR i.e. Rs 100 invested would just be Rs 184 in 10 years.


TATA MOTORS- The vehicle company of one of the most reputed business house in India. Acquired luxury brands like Jaguar & Land Rover. Made the cheapest car in the World- TATA Nano. Operates all around the globe.

Past 10 years return= -4.59% CAGR i.e. Rs 100 invested would just be Rs 62 in 10 years


SBI- The biggest Bank in India via Asset size. Most loved by retail investors in the country. Got even bigger when a few public sector banks were merged into SBI a while back.

Past 10 year returns= -3.5% CAGR. Rs 100 invested would just be Rs 70


ITC- The most talked upon stock in the investor community. People keep on fighting over its performance all over social media. Biggest Cigarette producer in the country. Diversified into Hotels, Paper, FMCG & what not.

Past 10 year return= 6.23% i.e. Rs 100 invested would just be Rs 183.


Do Note...


  • All the above are ex-dividend calculations. Even after including the dividend the performance is not satisfactory. Some would say why you are comparing this just after corona crash?

  • Because I was asked to do so. There are companies which severely outperformed. Covid crash happened for them too.

  • Except SBI have restricted myself to private companies only. In most of the govt. companies situation is even worse.


Possible reasons for the under performance...

  • Heavy capital intensive business with huge gap between investment & payback.

  • Interference from govt & payment delays.

  • Inconsistent free cash flows

  • Structural changes in the business.

  • Sector got out of favour or it is consolidating for years after decades of out performance

  • Inconsistent Revenue & Earnings Growth.


It just happens. Business might be good. Profits are increasing. Everything is great but stock price does not move up.That’s why you always invest in a mixed portfolio of stocks. E.g. Reliance- Zero returns from 2008–2016 or HUL- Zero returns from 2000–2010

Thanks for investing your time in reading my answer! Really appreciated.

Well I have put in my honest work for this answer. If you got to learn anything from here, I can be of your help. I am a full- time investor (& yes I also trade) in the stock markets. I teach the game like nobody else does, I don't like to suggest what to do with your money instead I make you learn how to handle your investments or trading.

Connect with me & my team to learn how we are doing it and you can independently take your decisions.

Knowledge will only make you achieve your goal towards secured financial future. Come and learn from me...


Happy investing !


~MS

Founder MARS EQUITY