What are the future multibaggers in the Indian stock market?

Written on Oct 13 2017

The term multibagger implies that the stock is able to move 5X, 10X, 20X, 50X or 100X over various time periods. Keeping that in mind, most large caps are out of the question, as they are more about providing stable & consistent returns - something like a 12% - 18% CAGR - never can they be multibaggers. Some of them have done well like, Maruti, Bajaj Finance, Bajaj Finserv etc. The S&P BSE Sensex rallied 25 percent, while the S&P Smallcap index nearly doubled in the last three years.
In the last 6 - 8 months, I had written answers and blogs, highlighting stocks like Uniply Industries, Meghmani Organics, DHFL, Centrum Capital, Phillips Carbon, Shakti Pumps, Goa Carbon, Graphite India, HEG, Rain Industries, Himadri Chemicals, Prakash Industries, Sunflag Iron & Steel, Bajaj Finance and many more stocks. Most of these stocks have atleast doubled, some have given more than 5X returns in this year itself. U can check my previous answers where I have outlined the possible reasons on why these stocks will out perform.
Hence small and midcaps along with micro caps are the most common categories which give such multibagger returns. For list of stocks with excellent returns in 2017 itself, read this: Gopal Kavalireddi's answer to What are the top mid cap and small cap stocks in 2017?
Investors who were not scared to take some risk ended up making up to 6,000 percent return in the same period.
As much as 30 stocks[1] gave over 1,000 percent returns in the last three years, while 428 stocks in the S&P BSE Smallcap index more than doubled investor wealth over the same period.
So, coming now to the list of stocks with a good probability of giving multibagger returns over the next 3 years are given below and if you read the answers, you will know the reasons. I don’t just like to give the names of stocks without proper research.
  • Chemicals: Fineotex[2], Meghmani[3], Himadri Specialty, Bodal Chem.
  • Financials: Yes Bank[4], Centrum Capital[5] , South Indian Bank, Edelweiss[6] , L&T Financial Holdings, DHFL, Bajaj Finance[7]
  • Consumer related: Tata Global Beverages[8] Future Consumer[9]
  • Pharma: Granules India[10], SMS Pharma, Marksans Pharma[11]
  • Cement: Rain Industries[12] , India Cements
  • Metals: Prakash Industries[13] , Nalco, Sunflag Iron
  • Defence related: BEL, BEML
  • Petro Chemicals: Goa Carbon[14] , HEG
  • Automotive: Ashok Leyland[15]
Like this, I can give you a long list of stocks which have good potential to be multibaggers over the next 2 -3 years. Do remember, that there are more than 118 sectors under which all the 7110 stocks are listed on the BSE, and it is difficult for anyone to invest in all. So choose the ones on which you have good conviction, after a little bit of your own research and start investing slowly, little by little.
Don’t wait for a great correction or an absolute bottom. It never works that way. Put in 15% of your investment now and for every 150 point change in the Nifty or 7.5% decrease in the stock price, invest another 15%, till you are completely invested by Mar 2018.
All you need to do after that, is to have patience for the next 3 years, while reviewing the performance every quarter, analyzing the financials and making any course correction, if necessary.
This would be the best approach going forward.
Image credits: moneycontrol website with info from Capitaline.
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