Best Fundamentally Strong Stocks in January 2025: Bharat Electronics, ICICI Bank, SBI and More- 5 Year CAGR Basis

Fundamentally strong companies are built on solid business models, making them more resilient even in challenging market conditions. While many stocks may struggle during a market downturn, the shares of these strong companies often hold up much better.

Before investing in any stock, it’s important to do thorough research. Start by examining the company’s financial statements, such as the balance sheet, income statement, and cash flow statement. Also, look at the company’s position within its industry by analysing its competition. Finally, check if the stock is fairly valued to ensure it’s a good investment.

In this article, we’ve highlighted some of the best fundamentally strong stocks in January 2025 based on 5-year CAGR.

Best Fundamentally Strong Stocks List In India In January 2025 – 5-Year CAGR Basis

Note: The best fundamentally strong stocks list in January 2025 provided here is as of December 30, 2024. The stock selection for fundamentally strong stocks is sorted as per the 5-year CAGR and conducted with these criteria:

• Stock Universe: Nifty 50 Index.
• Net Income: Filtered for positive net income (minimum value set to 0).
• Return on Equity (ROE): Prioritised stocks with high ROE.
• Debt-to-Equity Ratio: Selected stocks with a low debt-to-equity ratio.

Overview of Best Fundamentally Strong Stocks

1.Bharat Electronics Ltd (NSE: BEL)

Founded in 1954, Bharat Electronics Ltd focuses on designing and supplying advanced electronic systems and equipment primarily for the defence industry, while also catering to a smaller civilian market.

For the ongoing financial year, BEL’s total orders have reached ₹8,194 crore. In its Q2 FY25 financial results, the company posted a revenue of ₹4,583.41 crore, an increase from ₹4,198.77 crore reported in Q1 FY24 (June 2024). Net profit for the quarter also grew significantly to ₹1,091.27 crore, up from ₹776.14 crore in the previous quarter.

Key metrics: 

• Earning per share (EPS): ₹6.22
• Return on equity (ROE): 26.12%

2. ICICI Bank

ICICI Bank, India’s second-largest private sector bank, offers a wide range of financial products and services to individuals, small businesses, and corporates.

In its Q2 FY25 results, ICICI Bank reported a revenue of ₹40,537.38 crore, up from ₹38,995.78 crore in the June 2024 quarter. The net profit for the quarter rose to ₹11,745.88 crore, compared to ₹11,059.11 crore in the previous quarter.

Key metrics: 

• EPS: ₹62.14
• ROE: 16.87%

3. State Bank of India (SBI)

State Bank of India (SBI), a Fortune 500 company, is India’s largest and oldest bank, with a legacy spanning over two centuries. Headquartered in Mumbai, SBI is a prominent Indian multinational and public sector bank.

In FY25, SBI successfully raised ₹50,000 crore through domestic bonds. For Q2 FY25, the bank reported a revenue of ₹1,13,870.56 crore, an increase from ₹1,11,525.98 crore in Q1 FY25 (June 2024). Net profit for the quarter rose to ₹18,331.44 crore, up from ₹17,035.16 crore in the previous quarter.

Key metrics: 

• EPS: ₹73.09
• ROE: 15.55%

4. ITC Limited

ITC Limited, based in Kolkata, is a diversified Indian conglomerate with operations in six segments: FMCG, hotels, agribusiness, IT, paper products, and packaging. A significant portion of its revenue comes from tobacco products.

In September 2024, ITC Limited reported a revenue of ₹20,537.35 crore, reflecting an increase from ₹18,219.74 crore in June 2024. Net profit for September 2024 reached ₹5,078.34 crore, showing an improvement compared to ₹4,917.45 crore in June 2024.

Key metrics: 

• EPS: ₹16.46
• ROE: 28.22%

5. Maruti Suzuki

Maruti Suzuki is a dominant force in India’s passenger vehicle market and the largest subsidiary of Suzuki Motor Corporation (SMC), which holds a 56.28% equity stake.

In Q2 FY25, Maruti Suzuki reported revenue of ₹37,202.80 crore, an increase from ₹35,531.40 crore in Q1 FY25 (June 2024). However, its net profit for the quarter declined to ₹3,069.20 crore from ₹3,649.90 crore in the previous quarter.

Key metrics: 

• EPS: ₹436.60
• ROE: 15.72%

Things to Keep in Mind When Investing in Fundamentally Strong Stocks

When selecting fundamentally strong stocks, it’s essential to evaluate key factors that influence their long-term performance:

• Financial Strength: Examine balance sheets, income statements, and cash flow statements to identify low debt levels, steady revenue growth, and positive cash flows.
• Profitability Ratios: Metrics like ROE, ROA, and net profit margin reveal how effectively a company generates profits.
• Earnings Growth: Assess historical earnings trends and future projections to gauge growth potential.
• Valuation Metrics: Focus on P/E, P/B, and P/S ratios to spot undervalued opportunities.
• Management Quality: Strong leadership and governance are vital for sustained success.
• Competitive Advantage: A company’s unique strengths, such as brand value or proprietary technology, ensure long-term profitability.

By conducting thorough research and aligning investments with your financial objectives, you can make more informed decisions. Consulting a financial advisor can further enhance your investment strategy.

Conclusion

Investing in fundamentally strong stocks is a strategic way to achieve stability and growth in your portfolio. Companies with sound financial health, skilled management, and promising growth potential can offer consistent returns, even in volatile markets. For long-term investors, risk-averse individuals, or those seeking reliable dividend income, these stocks provide a solid foundation for building wealth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities market are subject to market risks, read all the related documents carefully before investing.