Are you searching for blue-chip companies to invest in Nepal? Well, it is a pleasure to inform you that we have written a detailed article regarding blue-chip companies and the advantages of investing in 9 blue-chip companies in Nepal. Investing only through IPOs won’t be sufficient to increase your funds. Furthermore, this article will help you choose the blue-chip companies in Nepal to invest in as we have listed top 9 blue-chip companies in Nepal in 2023 based on statistical research, financial analysis, company performance, and other factors. Investing in your early ages in these bluechip companies of Nepal may help you to build your wealth in future. You will definitely enjoy this article.
Concept of Blue-Chip Companies
Large, well-established businesses known for their stability and impressive financial performance are known as “blue chip” companies. These businesses are frequently industry leaders and are regarded as some of the most dependable and trustworthy investments. Typically, blue chip companies are listed on significant stock exchanges like the Nepal Stock Exchange (Nepse). They frequently have a long operational history and a solid track record of financial performance, with consistent long-term growth in revenue and profits.
Blue chip businesses typically have strong balance sheets, little debt, and a stable financial situation. They frequently have numerous sources of income and offer a wide variety of goods and services, which helps to lower the risk associated with relying on a single source of revenue.
Investors looking for steady, long-term returns may find investing in blue-chip companies a wise choice. These businesses frequently distribute dividends to shareholders, which can offer a reliable source of income. Additionally, they are typically less volatile than smaller, less well-known businesses, which can reduce the risk of investing in them.
Blue chip companies are not risk-free. It is important to remember that the value of their shares can change depending on the market’s state and the business’s operation. As a result, before investing in a blue chip company, investors should research and weigh the risks.
What do you mean by Blue-chip companies of Nepal?
Large, well-established businesses in Nepal, renowned for their stability and impressive financial performance, are called “blue chip” companies. These businesses are among Nepal’s most dependable and trustworthy investments because they are frequently market leaders in their respective industries.
Investing in blue-chip companies in Nepal may be a good choice for investors looking for steady, long-term returns. These businesses frequently distribute dividends to shareholders, which can offer a reliable source of income. Additionally, they are typically less volatile than smaller, less well-known businesses, which can reduce the risk of investing in them.
(Also read: Common terms used in the stock market)
Nepal’s blue-chip companies include the nation’s largest and most financially secure corporations, such as Nepal Telecom*, Nepal Bank Limited*, Nepal Electricity Authority*, etc. Blue-chip companies are not risk-free, it should be noted, as the value of their shares can change depending on the state of the market and the company’s performance. As a result, before investing in a blue chip company in Nepal, investors should perform their due diligence and weigh the risks.
How are blue-chip companies selected?
There are several ways in which blue-chip companies can be selected, including:
a. Stock exchanges: There are designated lists of blue chip companies on many stock exchanges. The largest and most financially stable companies are usually included on these lists, which are typically based on the size and financial performance of the companies.
b. Industry analysts: Based on their financial results and position as leaders in their respective industries, industry analysts and research companies may also identify blue chip companies. These businesses are frequently regarded as some of the most dependable and trustworthy investments in their respective industries.
c. Mutual fund managers: According to their financial performance and stability, mutual fund managers and other investment experts may also recognize blue chip companies. Typically, these businesses are incorporated into mutual fund portfolios to diversify risk and offer steady, long-term returns.
d. Economists: When choosing blue chip companies, economists may consider several factors. Financial performance, market capitalization, statistics, and industry leadership are a few examples of these standards. When choosing blue chip companies, economists consider the company’s financial performance. This could include figures for sales, earnings, and earnings per share. Strong financial performance is typically associated with more stable and reliable businesses that make good investments.
When economists choose blue chip companies, the total value of a company’s outstanding shares, or market capitalization, may also be considered. Large market capitalizations are frequently associated with more established and financially secure companies. When choosing blue chip companies, economists consider a company’s status as a leader in its sector. Leaders in their respective industries are typically regarded as more trustworthy and reliable investments. To list stocks as blue chip companies, they also use several statistical tools to analyze their characteristics.
Top 10 reasons to invest in blue-chip companies of Nepal
These are the major reasons why we should invest in blue-chip companies in Nepal:
- Strong financial performance: Bluechip firms in Nepal are well known for their solid financial standing, with long-term increases in revenue and profits. They may therefore be attractive investments for those seeking stable, long-term returns.
- Low risk: Bluechip companies typically have strong balance sheets, little debt, and a stable financial situation. Compared to smaller, less established companies, this may make them less risky investments.
- Diverse revenue streams: Bluechip companies frequently have various products or services and revenue streams, which can help lower the risk of relying on a single source of income.
- Industry leadership: With a significant market presence and a reputation for providing high-quality goods or services, blue chip companies are frequently leaders in their respective industries.
- Stable dividends: Many blue-chip companies distribute dividends to shareholders, giving investors a consistent source of income.
- Brand recognition: Bluechip companies frequently have a strong reputation and brand recognition, which can boost investor trust in the business.
- Strong management: Bluechip companies typically have strong and capable executive teams. This may contribute to the company’s long-term success.
- Good investment track record: Blue-chip businesses frequently have a strong track record, consistent revenue, and profit growth over time. Long-term investors may find them to be attractive investments because of this.
- Strong investor support: Bluechip companies typically have many shareholders, a high level of liquidity, and strong investor support. Investors may find it simpler to purchase and sell company shares.
- Potential for capital appreciation: Bluechip companies frequently have the possibility of capital appreciation because their share prices can rise over time due to the company’s strong financial performance and expansion.
List of Blue-Chip Companies in Nepal
Here we have compiled a list of blue-chip companies in Nepal to help you break down the tiresome research and help you invest in the Nepalese stock market.
1. Nabil Bank Limited (NABIL)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum of Bonus Shares% | 244.6 |
| Mean (Average) | 24.46 |
| Median | 27.5 |
| Mode | 30, appeared 3 times |
| Highest Bonus Share | 33.6 |
| Lowest Bonus Share | 12 |
| Range | 21.6 |
| Geometric Mean | 22.94696258 |
| Standard Deviation | 7.896480229 |
| Variance | 62.3544 |
| Sample Standard Deviation | 8.323621007 |
| Sample Variance | 69.28266667 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 431.1 |
| Mean (Average) | 43.11 |
| Median | 37.42 |
| Mode | 34, 65, each appeared 2 times |
| Highest total Dividend | 65 |
| Lowest total Dividend | 30 |
| Range | 35 |
| Geometric Mean | 41.626942 |
| Standard Deviation | 12.04463449 |
| Variance | 145.07322 |
| Sample Standard Deviation | 12.69615952 |
| Sample Variance | 161.1924667 |
2. Chhimek Laghubitta Bittiya Sanstha Limited (CBBL)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 287.24 |
| Mean (Average) | 28.724 |
| Median | 27.06 |
| Mode | 40, appeared 2 times |
| Highest Bonus Share | 40 |
| Lowest Bonus Share | 18 |
| Range | 22 |
| Geometric Mean | 27.72452917 |
| Standard Deviation | 7.560804455 |
| Variance | 57.165764 |
| Sample Standard Deviation | 7.969787673 |
| Sample Variance | 63.51751556 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 429.08 |
| Mean (Average) | 42.908 |
| Median | 44.67 |
| Mode | 45, 52.7, each appeared 2 times |
| Highest total Dividend | 52.7 |
| Lowest total Dividend | 29 |
| Range | 23.7 |
| Geometric Mean | 42.13202851 |
| Standard Deviation | 7.74619881 |
| Variance | 60.003596 |
| Sample Standard Deviation | 8.165210482 |
| Sample Variance | 66.67066222 |
3. Sanakisan Bikas Laghubitta Bittiya Sanstha Limited (SKBBL)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 218.25 |
| Mean (Average) | 21.825 |
| Median | 25 |
| Mode | 25.00, appeared 6 times |
| Highest Bonus Share | 27.25 |
| Lowest Bonus Share | 0 |
| Range | 27.25 |
| Geometric Mean | 0 |
| Standard Deviation | 7.938867992 |
| Variance | 63.025625 |
| Sample Standard Deviation | 8.368301633 |
| Sample Variance | 70.02847222 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 256.04 |
| Mean (Average) | 25.604 |
| Median | 26.32 |
| Mode | 26.32, appeared 4 times |
| Highest total Dividend | 28.68 |
| Lowest total Dividend | 15.78 |
| Range | 12.9 |
| Geometric Mean | 25.31900898 |
| Standard Deviation | 3.356150175 |
| Variance | 11.263744 |
| Sample Standard Deviation | 3.537692908 |
| Sample Variance | 12.51527111 |
4. Nirdhan Utthan Laghubitta Bittiya Sanstha Limited (NUBL)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 301.98 |
| Mean (Average) | 30.198 |
| Median | 22.5 |
| Mode | 20.00, appeared 2 times |
| Highest Bonus Share | 66.67 |
| Lowest Bonus Share | 13 |
| Range | 53.67 |
| Geometric Mean | 26.77964539 |
| Standard Deviation | 15.91654158 |
| Variance | 253.336296 |
| Sample Standard Deviation | 16.77750796 |
| Sample Variance | 281.4847733 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 405.78 |
| Mean (Average) | 40.578 |
| Median | 36.055 |
| Mode | 31.58, appeared 2 times |
| Highest total Dividend | 80.71 |
| Lowest total Dividend | 13.68 |
| Range | 67.03 |
| Geometric Mean | 36.14169625 |
| Standard Deviation | 19.00762731 |
| Variance | 361.289896 |
| Sample Standard Deviation | 20.03579841 |
| Sample Variance | 401.4332178 |
5. Butwal Power Company Limited (BPCL)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 52 |
| Mean (Average) | 5.2 |
| Median | 6 |
| Mode | 0.00, 10.00, each appeared 4 times |
| Highest Bonus Share | 10 |
| Lowest Bonus Share | 0 |
| Range | 10 |
| Geometric Mean | 0 |
| Standard Deviation | 4.512205669 |
| Variance | 20.36 |
| Sample Standard Deviation | 4.756282395 |
| Sample Variance | 22.62222222 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 213.5 |
| Mean (Average) | 21.35 |
| Median | 20 |
| Mode | 20.00, appeared 3 times |
| Highest total Dividend | 28 |
| Lowest total Dividend | 12.5 |
| Range | 15.5 |
| Geometric Mean | 20.67751573 |
| Standard Deviation | 5.186761996 |
| Variance | 26.9025 |
| Sample Standard Deviation | 5.467327196 |
| Sample Variance | 29.89166667 |
6. Salt Trading Corporation (STC)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 170 |
| Mean (Average) | 17 |
| Median | 17.5 |
| Mode | 10.00, appeared 4 times |
| Highest Bonus Share | 25 |
| Lowest Bonus Share | 10 |
| Range | 15 |
| Geometric Mean | 15.74697462 |
| Standard Deviation | 6.403124237 |
| Variance | 41 |
| Sample Standard Deviation | 6.749485577 |
| Sample Variance | 45.55555556 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 170 |
| Mean (Average) | 17 |
| Median | 17.5 |
| Mode | 10.00, appeared 4 times |
| Highest Bonus Share | 25 |
| Lowest Bonus Share | 10 |
| Range | 15 |
| Geometric Mean | 15.74697462 |
| Standard Deviation | 6.403124237 |
| Variance | 41 |
| Sample Standard Deviation | 6.749485577 |
| Sample Variance | 45.55555556 |
7. Citizen Investment Trust (CIT)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 250.8 |
| Mean (Average) | 25.08 |
| Median | 22.03 |
| Mode | 22.00, appeared 2 times |
| Highest Bonus Share | 50 |
| Lowest Bonus Share | 0 |
| Range | 50 |
| Geometric Mean | 0 |
| Standard Deviation | 13.63977346 |
| Variance | 186.04342 |
| Sample Standard Deviation | 14.37758363 |
| Sample Variance | 206.7149111 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 270.58 |
| Mean (Average) | 27.058 |
| Median | 23.19 |
| Mode | 23.16, appeared 2 times |
| Highest total Dividend | 52.63 |
| Lowest total Dividend | 0 |
| Range | 52.63 |
| Geometric Mean | 0 |
| Standard Deviation | 13.4459472 |
| Variance | 180.793496 |
| Sample Standard Deviation | 14.17327281 |
| Sample Variance | 200.8816622 |
8. Himalayan Distillery (HDL)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 295 |
| Mean (Average) | 29.5 |
| Median | 25 |
| Mode | 0.00, appeared 5 times |
| Highest Bonus Share | 75 |
| Lowest Bonus Share | 0 |
| Range | 75 |
| Geometric Mean | 0 |
| Standard Deviation | 30.20347662 |
| Variance | 912.25 |
| Sample Standard Deviation | 31.83725979 |
| Sample Variance | 1013.611111 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 535.25 |
| Mean (Average) | 53.525 |
| Median | 45.525 |
| Mode | 70.00, 100.00, 21.05, 20.00, each appeared 2 times |
| Highest total Dividend | 102.63 |
| Lowest total Dividend | 10.52 |
| Range | 92.11 |
| Geometric Mean | 39.555332 |
| Standard Deviation | 36.71584951 |
| Variance | 1348.053605 |
| Sample Standard Deviation | 38.70190356 |
| Sample Variance | 1497.837339 |
9. Shikhar Insurance Company Limited (SICL)
Dividend History
Calculations on the basis of Bonus Shares only
| Number of Years | 10 |
| Sum | 233.53 |
| Mean (Average) | 23.353 |
| Median | 25.88 |
| Mode | 0, 29.00, each appeared 2 times |
| Highest Bonus Share | 60 |
| Lowest Bonus Share | 0 |
| Range | 60 |
| Geometric Mean | 0 |
| Standard Deviation | 16.13122565 |
| Variance | 260.216441 |
| Sample Standard Deviation | 17.00380484 |
| Sample Variance | 289.1293789 |
Calculations on the basis of Cash Dividend plus Bonus Shares (Total Dividend)
| Number of Years | 10 |
| Sum | 244.29 |
| Mean (Average) | 24.429 |
| Median | 27.13 |
| Mode | 0.00, appeared 2 times |
| Highest total Dividend | 63.16 |
| Lowest total Dividend | 0 |
| Range | 63.16 |
| Geometric Mean | 0 |
| Standard Deviation | 16.93358524 |
| Variance | 286.746309 |
| Sample Standard Deviation | 17.8495661 |
| Sample Variance | 318.60701 |
What tools and statistics have been used to select these blue-chip companies in Nepal?
Some econometric tools and statistical tools that have been used to select the lists mentioned above of blue-chip companies in Nepal include:
- Financial ratios: Financial ratios have been used to assess a company’s financial performance and stability, such as the price-to-earnings ratio (P/E ratio) and the debt-to-equity ratio (D/E ratio). Strong financial ratios are typically associated with more stable and reliable businesses that make good investments.
- Correlation analysis: The relationship between a company’s stock price and other factors, such as economic indicators or industry trends, has been investigated using correlation analysis. Strong correlations between companies may indicate more reliable investments.
- Time series analysis: The financial performance of the companies over time, including trends in revenue, profits, and share price, has also been examined using time series analysis. Businesses with a proven track record of financial success may be considered safer investments.
- Regression analysis: The relationship between a company’s stock price and other factors, such as economic indicators or industry trends, was also examined using regression analysis. Strong correlations between a company’s performance and these factors may indicate more reliable investments.
“It is necessary to remember that these statistical and econometric tools only represent a portion of the evaluation of a company’s potential as an investment. Before choosing to invest in NEPSE, investors should also consider other factors, such as the company’s management, its products or services, and the industry outlook.”