Multibagger stocks in Indian stock market
Multibagger stocks in Indian stock market are the gems which every investor is looking at. However the fact is it’s not easy to find them out of thousands of stocks available. What we can do is to study about the corporates, their future plans, their past performance, efficiency of their Management, current order book, industry outlook, outside factors, future plans and corporate flexibility to adapt the latest changes and the capacity to do something better than others. If you do all your study and find stocks which are looking good with the above criterion, you are just bang on the target, but still all your expected stocks will not turn out to be multibagger stocks but even if some of them gives multibagger return that means that you have done a great job.
What are Multibagger stocks
Multibagger stocks are those stocks which gives a return of more than 100% to investors. Indian stock market has produced many multibagger stocks which have turned out to be 10 bagger, 100 bagger, 1000 bagger or even more than that. The return which Indian stocks has given over the years is exceptional and now anybody can assume that if a company is having good fundamentals and has the potential to enjoy a sustainable growth, the stock price is tend to give awesome return to investors.
Stocks which multiply may have some of these underlying characteristics:
- Growth at attractive price GAAP: Consistently strong earnings growing company available at an attractive valuation. E.g. Market situation in 2003, 2009, 2013.
- Mispriced opportunities: Business is grossly undervalued due to investor ignorance or being out of flavour. Ex. Some of the consumer stocks in 2007
- Change in Investor Communication: Company which did not communicate regularly has focussed on transparency in last few quarters/years. e.g many of the mid cap stocks
- A chance to participate in a large market potential opportunity at an early stage: In a large market opportunity, the company has a first-mover advantage in a new business which is extremely scalable. Ex. housing finance.
- Balance sheet transition: Companies executing high to low leverage transformation, working capital cycle reduction, lowering capital intensity in a business.
- Turnarounds/Cyclical opportunities: Company has undergone severe strain before completing business/financial restructuring and now looking to realign business & balance sheet correctly. Most investors dislike a company which has gone through a rough patch. Risk perception being high such stocks are ignored and available at unassuming valuations
- A market opportunity whose time has come: Company’ business opportunity becomes ripe for building scale.
- Capability to expand free cash generation: Most important feature of sustainable multi bagger stocks has been the ability to generate free cash flows consistently and the ability to grow them. Ex. IT, Pharma, Cement, Capital goods, consumer product companies which have demonstrated a steady increase in a free cash flow generation have become large cap stocks.
- One of its kind: One of its kind business with strong entry barriers, could lead to unprecedented scarcity premium.
- Change in Management/Focus: Promoters remaining status-quo, next-gen induction could bring in fresh thinking & positive changes in business strategy & investor perception.
- High ROE/ROI: A business which can demonstrate high ROE/ROI for extended periods is available at attractive valuation due to negative business/promoter intent perception.
- Rising trend in ROE/ROI: A cyclical business changes its characteristics to become a secular business due to changing business dynamics and starts to expand its ROE/ROI to healthy levels and sustains it.
Most important question is when do you seek such opportunities? Interestingly, most multi-bagger stocks have provided an adequate margin of safety for investors at early stages. The highest margin of safety in multi-baggers is in over pessimistic situations. These stocks gives enough time to investors to have proper understanding of their businesses as no multibagger stock become so in one or two month, it takes a long time and requires a continuous performance by the the underlying company. Share holders are also one of the stake holder for the companies and if company grows, shares holders are also benefited like other stake holders.
For the benefits of Investors, I am sharing herein below a list of potential ‘multibagger stocks in Indian stock market’. This list is not exclusive and stocks are identified based on the fundamentals of these companies. If there is any change in the fundamentals of these companies the list will be updated accordingly.
List of future Multibagger stocks in Indian stock market:
|S. No.||Stock name||Current price|
|6||HIMADRI SPECIALITY CHEMICAL||157.40|
|7||Prestige Estates Projects||328.10|
|9||Indraprastha Gas Ltd.||306.15|
|11||All Cargo logistics||179.15|
|14||L&T Finance Holdings||162.50|
|18||JK Lakshmi Cement||431.60|
|19||JK Tyres & Industries||153.30|
These stocks have already witnessed an excellent phase in the recent rally of stock market. Some of the above stocks have already give multibagger return in past one year and they still have lots of potential to perform better in coming days.
Above list is just to suggest some good stock available in Indian stock market which can turn out to be Multibagger stocks in Indian stock market. We understand that the valuation of few of above stocks are looking over priced to some extent but long term investors should not have any problem while considering these stocks because the future outlook of these stocks is still looking bright. Market is still looking under consolidation phase and downside of 5-6% in the index cannot be ruled out. All we need to do is let them correct to some extent so that they comes to your comfortable zone and if everything looks fine then only explore any buying opportunity.
For more multibagger stocks and and to understand their deep insight, please keep on following this blog and continue to support. If any of you need any additional information about any of these stocks please comment and let me know. You may also drop an e-mail to me, I’ll try to revert at the best possible time.