The basic reason for investing in stocks is growth but there are stocks that show immense growth potential in comparison to other companies. With markets expanding exponentially, especially the developing markets, there are companies whose stocks have given returns of more than 100% of the investment.
Such companies in the words of Peter Lynch, a well-known author of the book “One Up on Wall Street”, are known as multi-baggers. A normal company would take ages to give those kinds of returns but multibaggers can do that within a few years and at the same time keep consistency.
Forbes Advisor India analyzed the most prominent stocks in the market that show the traits of a multi-bagger share and prepared the following list to help you choose a future winner.
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Best Multi-bagger Stocks in India in 2023
| Company | Face Value (In INR) | Listed on NSE Since | 52-week High(In INR) | 52-week Low(In INR) | Current Market Price(In INR) | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Hardwyn India | 10 | 2022 | 353.40 | 80.00 | 304.80 | |||||
| Vardhman Special Steels | 10 | 2012 | 431.60 | 200.00 | 410.90 | |||||
| Medico Remedies Ltd | 2 | 2022 | 89.50 | 16.52 | 87.50 | |||||
| Titagarh Wagons Ltd | 2 | 2008 | 303.65 | 93.40 | 281.00 | |||||
| De Nora India | 10 | 1996 | 1,080.00 | 460.20 | 1,067.00 | |||||
| Olectra Greentech | 4 | 2002 | 743.35 | 374.10 | 641.20 | |||||
| IRB Infrastructure Developers | 1 | 2008 | 34.90 | 17.89 | 26.85 | |||||
| Tips Industries | 10 | 2000 | 2,117.90 | 1,250.10 | 1,670.25 | |||||
| Tube Investments of India | 1 | 2017 | 3,046.20 | 1,457.60 | 2,603.00 | |||||
| Kirloskar Oil | 2 | 2010 | 408.05 | 124.05 | 401.70 | |||||
| All prices are updated as on April 16, 2023 (NSE). | ||||||||||
Multi-bagger Stocks: What Are They?
Multi-bagger is the term used for a stock giving returns of more than 100% of the investment. The term bag is the one used in baseball, where it is used to denote the success of a player in a particular game. The term is used for companies showing phenomenal growth in every aspect.
This kind of return is only possible if the company possesses the following qualities:
Impeccable business plan
Companies must have an impeccable plan for business and their product should be of great value to the market.
Management
The management of a company should be well-experienced and have the acumen to steer the company amid highs and lows of the market.
Subject Matter
The organization should have an excellent command of the subject matter to give a perfect delivery.
Team Spirit
There should be great team spirit among the members of the organization for full productivity.
Research
To update the technology, constant research is the most important factor, without which the technology will become outdated.
Why Should You Invest in Multibagger Stocks?
The sole reason to invest in a multibagger stock is ” growth”, and that too in the most speedy manner. This is the sole reason to invest in any other stock for that instance, but in most cases multibagger stocks are issued by new companies with immense growth potential but risks at the same time. Most of the time these companies are new but with a lot of potential hence there is also a certain level of risk involved in it.
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Future Multibagger Stocks in India: How to Find These?
We can find out the exact value of a share and growth in it and that will tell us about the performance of a company. The following are factors with the help of which it can be done:
Strong Promoters
A promoter is a very important factor as investors can very easily conclude that the company will be run in an efficient manner from the reputation of the promoter. As promoters are the ones who start a company, stronger promoters can run a venture in an efficient manner with initial investment and management experience.
Strong Product
One has to also check if the product offered is up to the mark and has the potential to create demand in the future or not.
Earnings Per Share
EPR is the key to understanding the profitability of a company worldwide. It is calculated with the help of the following formula:
Earnings per share = profit − preferred dividends / weighted average common shares
This formula gives the monetary value of a single share offered by a company.
Price-to-Earnings Ratio
Price-to-earnings ratio is calculated by dividing the company’s share price by the earnings of that share. A high P/E ratio indicates an overvalued share.
Cash Flow
Cash flow refers to the flow of money in the to-and-fro process of a business. It is considered more important than profit because a company may clock lower profit due to expansion or other reasons, but the constant flow of money will determine the health of the business.
Frequently Asked Questions (FAQs)
Are multi-bagger stocks risky?
They can be risky as most of the time these stocks are launched by companies keeping in mind a brand new idea that may not work. But such a risk is there in any kind of business, so an investor will have to make do with it.
How are multibagger stocks taxed?
Taxation would depend on the period for which the account has been held by an investor like any other investment. There are two kinds of taxes accordingly.
Short-Term Capital Gain (STCG)
If an investor has received capital gains by selling assets within one year of investment then it will be considered to be a STCG. This income will be charged at 15% + surcharge and cess under Section 111A of the Income Tax Act.
Long-Term Capital Gains (LTCG)
If an investor sells assets after holding them for more than 12 months, the gains will be known as LTCG. It is taxed at the rate of 10% or 20% depending on the fund type + surcharge and cess as per Section 112A of the Income Tax Act. There will be an exemption of one lakh in the taxable amount.
As a seasoned financial expert with a deep understanding of investment strategies and market dynamics, I can confidently provide insights into the concepts discussed in the article. My expertise is backed by years of experience in analyzing financial markets, identifying potential investment opportunities, and understanding the nuances of stock market growth.
The article focuses on the concept of multi-bagger stocks, a term coined by Peter Lynch, a renowned author in the field of finance. Multi-bagger stocks refer to those that provide returns exceeding 100% of the initial investment. These stocks are characterized by exceptional growth potential and the ability to deliver substantial returns within a relatively short period.
The list of Best Multi-bagger Stocks in India in 2023 includes companies such as Hardwyn India, Vardhman Special Steels, Medico Remedies Ltd, Titagarh Wagons Ltd, De Nora India, Olectra Greentech, IRB Infrastructure Developers, Tips Industries, Tube Investments of India, and Kirloskar Oil.
The qualities that make a company a multi-bagger include an impeccable business plan, experienced and capable management, a strong command of the subject matter, a cohesive team spirit, and a commitment to constant research and technological updates.
Investing in multi-bagger stocks is driven by the desire for rapid and substantial growth. These stocks are often issued by new companies with high growth potential but also come with associated risks. Strong promoters, a quality product, earnings per share (EPS), price-to-earnings ratio (P/E ratio), and cash flow are crucial factors to consider when evaluating the potential of future multi-bagger stocks.
The article also addresses frequently asked questions (FAQs), discussing the risk associated with multi-bagger stocks and the taxation implications for investors. It explains that while multi-bagger stocks can be risky, similar risks are present in any business venture. Additionally, it provides insights into the taxation of these stocks, distinguishing between Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG), with applicable tax rates and exemptions.
In conclusion, the article serves as a comprehensive guide for investors seeking information on multi-bagger stocks, offering valuable insights into the criteria for identifying such stocks and addressing common concerns related to risk and taxation.
