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Spotting a stock early before a change in business dynamics can help you earn multibagger returns on Dalal Street.
Investors who got their thesis right must have been able to pick at least a couple of the 45 stocks from the BSE500 index, which have rallied over 1,000 per cent between September 2013 and this month.
This means each of these stocks multiplied investor wealth by over 10 times in five years.
The list included stocks like Indiabulls Ventures which has surged 6,600 per cent to Rs 729.10 as of September 17, 2018 from Rs 10.90 on September 17, 2013.
An investment of Rs 10,000 on this stock in 2013 would have become over Rs 6 lakh today.
It was followed by a cable firm KEI Industries (up 5,019 per cent) and pharma company Caplin Point Laboratories (up 4,096 per cent).
Supported by growth in cables business, KEI’s Q1 FY19 performance was broadly in line with analysts’ estimates.
Brokerage firm Anand Rathi Financial Services said it expects the company to clock 18 per cent, 25 per cent and 31 per cent growth (CAGR) in revenue, Ebitda and PAT, respectively, over FY18-20 owing to a strong EPC order book, rising revenue share of EHV cables and retail sales.
Further re-rating of the stock would depend on free-cash flow generation, it said.
The brokerage retained a ‘buy’ rating on KEI with a revised target price of Rs 510.
Shares of the company traded at Rs 377 on September 18.
Among others, Minda Industries, Phillips Carbon Black, Avanti Feeds, HEG, Bajaj Finance, IFB Industries, Dalmia Bharat and Navin Fluorine International also gained between 2,000 per cent and 4,000 per cent during this period.
Global brokerage Macquarie recently initiated coverage of Minda Industries with an ‘outperform’ rating and set a target price of Rs 550.
The company is a leading supplier of automotive switches, lamps and horns.
In recent years, Minda acquired global players in lamps and horns, which enhanced its market position and technological capabilities.
Firstcall Research is ‘overweight’ on IFB Industries, a company is engaged in engineering and manufacturing of diverse and accessories for motor vehicles.
It is also engaged in the business of manufacturing and trading of home appliances, and manufacturing of fine blanking components.
Meghmani Organics, Aarti Industries, Tata Metaliks, Nilkamal, Sundram Fasteners, Sterlite Technologies, Bombay Burmah Trading Corporation, TVS Motor Company, Aegis Logistics, KNR Construction, Johnson Controls – Hitachi Air Conditioning India, Tata Elxsi were among the other stocks that rallied over 1,500 per cent in last five years.
IDFC Securities has an ‘outperformer’ rating on Aarti Industries (AIL) with a target price of Rs 1,572.
Aarti Industries is a leading player in benzene-based intermediate products, and an integral part of value chain for several global chemical majors.
The company’s backward/forward-integrated and diversified business model, which involves the supply of around 125 products to 700-800 customers across geographies, underpins its competitiveness.
“Despite significant forex and crude volatility, AIL posted 15 per cent and 20 per cent Ebitda and PAT CAGR over FY14-18 with 21.6 per cent RoE in FY18, which reflects its robust business model.
We anticipate a step-up in growth with steady 12-15 per cent volume growth in core benzene segment and diversification into toluene compounds, after the company recently signed two long-term contracts worth Rs 14,000 crore.
We estimate 22 per cent and 24 per cent revenue and PAT CAGR, respectively, over FY18-21E, with potential upside from new contract wins,” IDFC Securities said.
Dolat Capital has a ‘buy’ rating on KNR Construction with a target price of Rs 418, indicating an upside of more than 100 per cent from the current market price of Rs 199.
KNR maintains its market position by continuously focusing on engineering excellence, improving and sharpening competencies, adapting latest construction technologies, deployment of sophisticated construction equipment and timely delivery.
“We expect KNR to witness healthy revenue growth over FY18-20E, supported by healthy margins and return ratios coupled with well-managed balance sheet, comfortable working capital and low debt-to-equity ratio,” Dolat Capital said.
Shares of KRBL, Sonata Software, Indo Count Industries, Sudarshan Chemical, TVS Srichakra, Jamna Auto, Graphite India, CanFin Homes, V-Mart, Vinati Organics, Sundaram-Clayton, SRF, Nocil, Ceat, Welspun India, Eveready Industries, Deepak Nitrite, Relaxo Footware, Bajaj Finserv, VIP Industries and KPR Mills have advanced between 1,000 per cent and 1,500 per cent in these five years.
Macquarie Research on September 4 gave an ‘outperform’ rating to Graphite India with a target price of Rs 1,410.
“The management does not see needle-coke supply easing.
The company is confident that it can pass on cost pressures, and is not worried about a drop in price in China.
We expect a gradual re-rating for the stock with rising comfort on the longevity of the current upcycle and prudent capital allocation,” Macquarie said.
Citi Research is bullish on Ceat with a target price of Rs 1,690.
“Our positive stance is predicated on our expectations of strong 12 per cent earnings CAGR over FY18-21, vs -1 per cent over last three years (FY15-18),” Citi said.
