BSE500 stocks that grew Rs 1 lakh investment into Rs 1 cr in 10 years
Top brokerages say there is more steam left in these stocks.
The stock has delivered nearly 270 times return to investors in these 10 years, growing at a compounded annual growth rate (CAGR) of 75 per cent.
“The stock changed life for many investors and liberated them early. I was fortunate to be one of them,” says Soumya Malani, a young Kolkata-based investor, who made 71 times return on the stock.
Last year, the company faced double whammy of a spike in input cost and softening output prices, which squeezed margins.
“Things seem to have stabilised now and better numbers are expected from here on. It is a phenomenal company with one of the best pedigrees in place,” Malani said.
There are many stocks like Avanti Feeds that have delivered multibagger returns to investors even when the market navigated many headwinds amid intermittent bull runs.
NBFC major Bajaj Finance is another such stock. Had you invested Rs 1,00,000 on this counter in June 12, 2009, it would have become Rs 2.33 crore today, growing at a CAGR of 72 per cent annually. A similar investment in cooler maker Symphony would have become Rs 2.11 crore.
While past performance does not guarantee future returns on Dalal Street, brokerages say there is more steam left in these stocks.
Edelweiss Professional Investor Research is bullish on Avanti Feeds with a price target of Rs 480. The scrip traded at Rs 335 on Tuesday. The company saw substantial improvement in bottomline during FY2009-2018 and posted Rs 465.40 crore profit for FY2018 against a net loss of Rs 7 crore in FY2009. In FY19, the profit figure swelled to Rs 306 crore, but it was down 34 per cent YoY.
“Avanti reported weak numbers for FY19 mainly because of a crash in global shrimp prices and farm gate prices, as farmers moved away from aquaculture, impacting demand for feed. However, the processing business is doing well and seeing healthy growth,” Edelweiss said in a report.
Bajaj Finance is among the alpha pick of Indiabulls Ventures with a price target of Rs 4,000. A subsidiary of Bajaj Finserv, Bajaj Finance has transformed itself from a captive auto loan provider for Bajaj Auto to one of the most successful and diversified NBFCs.
It had leadership position in the consumer durables segment with a large customer franchise of 34.48 million and loan cross-sell franchise of 20.67 million as on FY19.
“Bajaj Finance has constantly grown its market share even in challenging times. It has a track record of maintaining healthy financials and sound returns ratio. We believe the company will be able to grow at a CAGR of 40 per cent on the bottom-line over next two years,” Indiabulls Ventures said in a report.
Symphony is one of the largest players in the air cooler market with an organised market share of around 48 per cent. In order to explore new opportunities in the industrial and residential cooling segment, the company has made acquisitions in different geographies including Mexico, China and Australia.
At present, India business contributes around 57 per cent to the topline while the rest of the world brings in 43 per cent. ICICIdirect.com is bullish on Symphony with a price target of Rs 1,530. “With rising temperature in a major parts of the country coupled with low dealer-level inventory, Symphony is likely to record robust performance in the FY20E. With a lower base and revival in air cooler demand, we model standalone volume CAGR of around 18 per cent in FY19-21E and topline growth of 20 per cent during this period,” the brokerage said.
Two other companies that turned investors millionaires are Relaxo Footwear and plastic products maker Astral Poly Technik. Both stocks rallied over 1,000 per cent in last 10 years.
Relaxo Footwears surged to Rs 825.80 as of June 14, 2019 from Rs 5.10 on June 12, 2009. Astral Poly Technik has risen to Rs 1,350 from Rs 11.40.
Brokerage Anand Rathi Financial Services likes Astral for its consistent focus on growth and profitability, supported by innovative product launches, vigorous brand-building and successful product diversification.
With over 50 times rally, La Opala RG, Ajanta Pharma, Vinati Organics, Atul Ltd, Eicher Motors, TTK Prestige and Cera Sanitaryware have been some of the other top wealth creators from the BSE500 index in last 10 years.
Domestic equity benchmark Sensex has rallied over 150 per cent since June 2009.
The pecking order will surely change for next 10 years and Dalal Street will throw up a new set of wealth creators.
Malani says what can possibly help spot potential wealth creators early are a combination of visionary management and a business with scalability, pricing power, tailwinds, high growth, higher incremental ROCE, low equity, under ownership and leadership in a niche areas.
On its 10th birthday this Monday, business news channel ETNOW invited 10 renowned stock pickers from Dalal Street – including Basant Maheshwari, Porinju Veliyath, Vijay Kedia, Sandip Sabharwal and Manish Sonthalia – to build a Power Portfolio of 10 stocks for next 10 years. They picked Titan, Britannia, Tata Global Beverages, Repro India, Britannia and DCB Bank, Edelweiss Financial Services, HDFC Life and Syngene, among others.