Long-term wealth creators: 5 stocks that have soared & soared for 20 years
Those who showed patience in domestic equity market became richer over time.
– Warren Buffett
Going by Buffett wisdom, those who showed patience in domestic equity market became richer over time.
Domestic seeds, chemicals and global generic crop protection company UPL has grown by leaps and bounds over the past two decades with net sales rising from Rs 100 crore in FY1997 to Rs 16,312 crore in FY17 and profit expanding from Rs 5.72 crore to Rs 1,733 crore.
This has lifted the stock 51,609 per cent from Rs 1.58 in September, 1997 to Rs 817 on September 4, 2017. This means an investment of Rs 10,000 in the stock 20 years back would have become nearly Rs 52 lakh today.
The company has strong presence in agrochemicals, industrial chemicals, chemical intermediates and specialty chemicals. Brokerage Edelweiss has a ‘buy’ rating on UPL with a target price of Rs 1,026.
The company’s management has maintained the revenue growth guidance for FY18 at 12-15 per cent with a 50-75 basis points margin expansion. “UPL’s high EPS growth at 27 per cent CAGR between FY17 and FY19E compared with 14 per cent during FY11-16 and an improvement in return ratios from 19 per cent in FY11-16 to 27 per cent FY17-19E RoE will continue to trigger rerating,” Edelweiss said in a research note.
Another stock that has delivered a similar performance is Gujarat Fluorochem, whose stock has soared 20,016 per cent from Rs 3.58 to Rs 720.15 in last two decades.
Among others shares of auto ancillary firms Motherson Sumi, Amara Raja Batteries and Banco Products have gained 15,938 per cent, 6,841 per cent and 6,600 per cent, respectively, to Rs 312.75, Rs 787.75 and Rs 216.40 as of September 4, 2017 from Rs 1.95, Rs 11.35 and Rs 3.23, respectively, on the same day in 1997.
Foreign brokerage Macquarie recently initiated coverage of Motherson Sumi with an ‘outperform’ rating and a target price of Rs 400 a share. The stock traded at Rs 312 on September 4, 2017.
According to the global brokerage firm, consolidated revenue of the company could double over the next three years and high RoCE deserves valuation premium.
Amara Raja Batteries is India’s second largest lead-acid battery manufacturer. It has present in the automotive and industrial lead acid batteries segment, with market leadership in the telecom segment.
The company’s revenue for Q1FY18 grew 14 per cent YoY, which was driven largely by the automotive segment (around 60 per cent of the revenue) but the industrial segment has remained subdued. Geojit Financial Services is positive on Amara Raja with a target price of Rs 895.
In the next batch of long-term wealth creators, Sundaram Clayton, MM Forgings, Siemens, Greenply Industries and Sona Koyo have delivered between 3,500 per cent and 6,000 per cent returns in last 20 years.