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Sometimes it seems like a fortune that investment in stocks gives you a tremendous return more than your imagination. The sum invested in this kind of stock is quite very low. Apart from this, the investment which we made takes a long-term run to provide these returns.
As it is always considered that investment in equities will provide a return in long term. But there is always a question that arises how we can select is good value investing stock that can give better returns in the long term.
Every investor desires to have a good return from his investments. But for that, they often do a lot of study or research work to get desired results.
It is not that easy to identify multibagger stocks as there are more than 5000+ companies listed on the exchange in the Indian Stock Market, an investor must be selective with the sector of investment alongside all the other factors related to that sector's growth, future outlook, etc.
A great saying by Mr. Warren Buffett
“Our eyes are placed in front because it is more important to look ahead than look back”
This statement means whatever we decide to do today will have an impact in the future, so if we invest Rs 1000 today it may be Rs. 100000 Or Rs. 1 crore anything can happen.
Method to identify multibagger stocks.
1) Identify Companies Management:
Management plays a vital role in the growth of companies business. As it said no business succeeds without a capable management team. The sustained growth & success of every business is a strong & capable management team.
One can look at other multiple aspects like governance practices, board, diversion of funds, pledging of shares, discipline, and most important financial matters, etc. to determine the strength of the company’s management team.
2) Competitiveness:
The best way to identify multi-bagger stocks in India is to understand the ability of companies to be competitive. A company can remain in the competition by offering the best quality services and products as it grows ahead. To understand whether a company has a competitive advantage, just see how innovative they are.
3) Promoters Holding in the Company:
One of the most important factors is to know that the holding of promoters remains the same for a long tenure as they are the ones who started that business and their commitments show how honestly they are focusing on the growth of the company. The longer the promoter is associated with the company the more reliable they are.
4) Earnings Growth:
A shareholder receives when the company makes profits. When you analyze the earnings of a multi-bagger stock, you will find a high growth in the earnings of the company due to its various growth models like revenue growth, profitability, and also its allocation towards the capital.
5) Allocation of Funds:
Companies use their internal funds (Profit after tax) to expand the business or launch some new products for the expansion. This helps companies to have a lower debt against their equity and helps them to generate free cash flow This cash can be used to pay future expansion expenses or dividends.
6) Future Growth:
A company might not be able to make money and survive if it doesn’t have a versatile range of products or services as the markets are very dynamic in nature & the current scenario the world over is looking for change and advancement. The major characteristics of a multibagger stock are that the management is very clear about its vision and can take the necessary steps to achieve the same.
Our Country is the largest supplier of generic medicines across the world. The pharmaceutical industry supplies 50% of global demand,& 40% of generic medicines in the US, and 25% of other medicines in the UK. India ranks 3rd position in terms of pharmaceutical products in terms of volume and stands 14th in terms of value.
The domestic Pharma industry includes 3,000 drug manufacturing companies and 10,500 units for manufacturing. India has an important position in the global pharmaceutical supply. The country holds a large number of scientists and engineers with high potential to take the industry ahead.
As per the Indian Economic Survey in 2021, the Domestic market is expected to grow nearly 3 times in the next decade. Our domestic market is estimated at around US$ 41 billion by 2021 and may reach US$ 65 billion by 2024. The biotechnology industry in India was valued earlier in 2019 at US$ 64 billion which is expected to reach up to US$ 150 billion by 2025. Our exports of drugs & pharmaceuticals stood at US$ 22.15 billion in FY21.
With the slogan of PM Mr. Narendra Modi “Self Dependent India” and to achieve self-reliance and reduce dependency on imports for essential bulk drugs, the Department of Pharmaceuticals has initiated a PLI scheme in this union budget to promote domestic manufacturing.
Under this Union Budget 2021-22, the Ministry of Health and Family Welfare has allocated a sum of Rs. 73,932 cr. and the Department of Health Research has been allocated with Rs. 2,663 cr.Indian government allocates Rs. 37,130 cr for the 'National Health Mission’. Prime Minister Atma Nirbhar Swasth Bharat Yojana got an allocation of Rs. 64,180 cr.
The Ministry of AYUSH gets allocation Rs. 2,970 cr. With all such developments and growths, India is moving ahead to be the Pharmaceutical Giant in the upcoming decade. The best example is Covaxin & Covishield which India exports to other countries. That shows India is emerging as a Major Pharmaceutical supplier.
The spending on medicines in India is expected to grow approx. 9 to 12% in coming next five years, which leads India to become the part top 10 countries in terms of spending on medicines
Moving forward, with better growth in terms of domestic sales which also depends on the ability of companies to align their product portfolio towards other chronic therapies for diseases like cardiovascular, anti-diabetes, antidepressants, and anti-cancers, which gradually spikes up in recent days.
The Government of India has taken various steps to reduce the cost and bring down healthcare expenses. A quick introduction of generic drugs in the market has remained in focus and is expected to benefit pharmaceutical companies in India. Along with the focus on rural health development programs & lifesaving drugs and other preventive vaccines also surge well for the companies. To trade in pharmaceutical sector stocks open demat account with us.
With an increase in global demand for metal investors interest shifted towards steel producers. As the global inventory level is coming down.
Even The World Steel Association on April 15 forested that the steel demand will grow up by 5.8% to reach 1.874 billion mt in 2021, even after declining by 0.2% in 2020, as the impact of the COVID-19 pandemic on the sector turns out to be less than it's earlier predicted.
In India, the finished steel consumption grew up to a CAGR of 5.2% during the financial year 2016 to 2020 and reached 100 MT.
The production of crude steel and finished steel in India is increased by 108.5 MT and 101.03 MT in the last financial year, respectively. From April 2020 till January 2021, The cumulative production of finished steel is 76.04 MT in India.
The steel production capacity to be increased by 300MT by the year 2030-31 whereas the production of crude steel is expected to reach 255MT by 2030-31. Whereas the production of finished steel is to reach 230 MT.
The steel demand is going to rise post-Covid-19 as the all the pending projects will resume their working again. The sector like infrastructure and real estate contributes 62% of India’s steel consumption & demand. Growth of this sector 8.6% in 2018. Which slow down to 5.4% in 2019, & Pick up in 2020 & Expected to grow by 7% till 2024.
The contribution in demand for steel in the Railway sector is 3% which is growing at a fast pace. The automobile industry in India is the fourth largest & contributes 9% of steel demand.
Our country is the largest manufacturer of two-wheeler, tractors, and we are the fourth largest in passenger vehicles production, and stand seventh in commercial vehicles. The capital goods sector contributes 15% of steel demand.
It has various sub-segments like machinery and other equipment which are most prominent.
This segment is further divided into construction and earth-moving machinery, plant & heavy electrical machines. The consumer durables sector has a 5% contribution to India’s steel demand.
India is a consumption-driven economy and the sector has witnessed robust growth in the past few years. The Intermediate products sector contributes 6% of steel demand. This segment is closely associated with the auto sector, oil, and gas sector.
Business: The company is the largest integrated steel manufacturer, along with the power generation & infrastructure segment.
Returns during a pandemic: JSPL has given a 208% return from its 52 week low of Rs 62. Made a high of Rs 501
Business: JSW steel is in the business of manufacturing & sale of Iron & steel products
Returns during a pandemic: JSW Steel has given a 267% return from its 52 week low of Rs 132.50. Made a high of Rs 773.
Business: SAIL is a Government-owned company primarily in the business of manufacturing & selling Iron & steel products
Returns during a Pandemic: SAIL has given a 291% return from its 52 week low of Rs 20.15. Made a high of Rs 151.30.
Business: The company engaged in the business of steel manufacturing from mining & processing Iron Ore to production & distribution of Finished products.
Returns during a pandemic: TATA Steel has given a 251% return from its 52 week low of Rs 250.85. Made a high of Rs 1246.85.
Business: Primarily the company is engaged in the business of Aluminium production & products of Aluminium & copper and copper products. It is a company under the flagship of Aditya Birla Group
Returns during a Pandemic: Hindalco has given a 182% return from its 52 week low of Rs 84.90. Made a high of Rs 427.50.
Today, we’ll dive into the concept of low volatility investment—a strategy designed to minimize risk while aiming for steady returns. Low volatility investments are less affected by market fluctuations, making them attractive to conservative investors who prioritize stability. Let’s break down what low volatility investment is, why it’s beneficial, and how it works.
Low volatility investment involves selecting assets or portfolios that exhibit less fluctuation in price compared to the broader market. These investments experience smaller price swings, providing a more stable and predictable return profile.
Low volatility investments offer a strategy for those seeking stability and reduced risk in their portfolios. By focusing on assets with lower price fluctuations, investors can enjoy more predictable returns and better capital preservation. However, it’s important to consider the trade-offs, such as potentially lower returns and inflation risk. Understanding your financial goals and risk tolerance is essential for making updated investment decisions.
Our economy is still recovering from the impact of Covid-19. Our country is going through the 2nd wave of the pandemic and is still trying to overcome the losses that happened due to the serious issue of Covid-19.
Recently the GDP data arrived which shows some relief for us, But still, we are facing the serious issues of Inflation across the necessity items.
One of the major is Crude Oil/ Petroleum the prices in India are crossing the mark of Rs.100/ltr which directly affects the economy. The foremost impact is on the transportation & logistics, which somehow leads to rising in the prices of many essential items & products.
But with the advancement in technologies now we are shifting towards the easiest way of transportation which can work with the help of electricity in the most efficient manner.
The Indian market will soon see a new turnaround in this segment as the market will grow up to USD 47 billion by the end of 2026.
These vehicles are more cost-efficient, will have zero pollution and are more in demand in the USA and other countries. Everyone is looking at Electronic Vehicles as the future and which is soon going to happen.
Even the Government of India has announced a PLI scheme of Rs.57000 Cr for the manufacturing of auto parts which will boost it further.
Here is a list of some important auto-ancillary companies which are benefited:
The company manufactures lead-acid storage batteries from 2.5 ampere-hours to 20,600 ampere-hours. The company manufactures automotive batteries, industrial batteries, and submarine batteries.
The company is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian battery industry.
This company is engaged in manufacturing and selling Tapered Leaf, Parabolic Springs, and Lift Axles. It was the first company to introduce parabolic springs in India.
The company is a leading supplier of lighting systems in an automobile which includes Head & Tail Lamps, Sundry and Auxiliary Lamps & other accessories for two and four wheeler, Buses & trucks, Tractors, and earthmovers.
They are engaged in the manufacturing of auto components which includes auto electrical parts & their relative accessories.
This company is a glass manufacturing company in India which is manufactured laminated windshield, antenna printed back lite, solar control glass, Glass antennas, etc. It also manufactures floating glass-like reflective glass.
The company offers a wide range of ride control products and also enjoys a monopoly position in the market.
The company manufacture completes seating & interior components for the automobile. This includes Two & Four wheeler seating, Mould Carpets, Mainframe for a two-wheeler, & Railways Seats.
The company engaged in the manufacturing of automotive wiring, Harnesses, Mirror for passenger vehicles. Mother-son Sumi is also a leading supplier of plastic components & modules in the industry.
Furthermore, companies which are engaged in Tire manufacturing, Power Generation, and supplying will be beneficial. Moreover, the EV segment will bring a positive change in the automobile segment.
Note: Details shared here are only for educational purposes.
Just think what if you bought Sensex in 1980 and held on to it now? The answer is: you would have multiplied your wealth nearly by 370 times. There are similar cases as well.
For instance, an investment of Rs 10,000 in Wipro in 1980 would be worth Rs 450 crore today. Also, the investment of Rs 1 Lakh in Eicher Motors in 2002 would be 20 crores today.
Still don't understand the concept? The examples that we have explained above are real case studies and many stocks have given huge returns in 2021.
There is a story about the company Infosys. In 1995, the company had launched its SME IPO and the one who invested a little amount of Rs 10,000 in Infosys IPO, is now enjoying a huge profit of $1 million.
In 2009, the share price of Eicher Motors was Rs 597.4, now the share price of the same stock is Rs 2,635.
Now the question arises, why do buy and hold stocks work in Indian equities? Buying an emerging stock and holding it for the long term will give you outstanding stock market trading returns in the future.
There is no set definition for the term buy and hold but yes the meaning of buy and hold is quite straightforward. Needless to say, investments in equities are riskier than other financial securities. Due to inadequate knowledge about the stock market, worst advisory services, many people have lost a huge amount by investing in equity.
In addition, some people invest in equities for a short time and as a result, they suffer from a loss. However, if people concentrate on buy and hold strategies for stocks, they will eventually achieve greater returns in the future.
Buy and hold is a long term passive strategy where investors keep a stable portfolio irrespective of short term fluctuations. As per the statistical data, buy and hold strategy is always a long term bet that will give you attractive returns in the future.
Equities are riskier instruments, but with a longer holding period, it can be turned out to be a fair investment strategy.
In other words, the market goes up more often than it goes down and compounding the returns during the good time of the stock market gives a higher yield than other financial instruments.
Below are the reasons why the buy and hold strategy has always worked for Indian equities:
The crux of the story which we have mentioned above is that the buy and hold strategy still works in India. Many people who invested a long time back in equity stocks, now enjoying a whopping return of $1 million. For better returns, you just need to identify good quality stocks and hold them for a longer-term.
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