Multibagger Stocks

The Word Multibagger is so known in the stock market that everyone thinks that they have found the gold mine. But actually, multi-bagger stocks are the one which gives return a several times of their cost. In this post, we will discuss 5 multibagger stocks.

Multibagger stocks are essential stocks that are currently undervalued and have great potential for growth in the coming years. These stocks have strong fundamentals and good business prospects in the future.

As an investor, you must have good research ability to find multibagger stocks. If as an investor you fail to identify the right stock at the right time, you may miss the opportunity to earn great returns.

How to Find Multibagger Stocks?

Well, there are multiple factors that as an investor you need to check to find the future multibagger stocks. Most of the time we fall for the cheap/penny stocks thinking that they are available at a low price and can give higher returns in the future.

Most of the time, such penny stocks are not the real multibagger stocks and we end up buying junk. I have written a detailed article on how to select multibagger stocks? you can check it for the details. On the broader view, you have to check the below-mentioned points to find out multibagger stocks.

The vision of the company, good management
Sustainable Competitive Advantage, The Moat
Identify undervalued stocks, Currently available at a cheap price
Future business potential
Long-term perspective growth
EPS growth
Good performance history

Steps for finding multibagger stocks

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Now that you have understood the process for finding the future multibagger stocks, let’s discuss 5 such stocks which have the potential of turning multibagger stocks for 2019.

Mahanagar Gas Limited

Mahanagar Gas Limited was incorporated in the year 1995. It is one of the largest city gas distribution company in India. The company has more than 20 years of experience in supplying natural gas in Mumbai. It is the sole distributor for Compressed Natural Gas(CNG) and Piped Natural Gas (PNG) in Mumbai. Thus the company enjoys the monopoly business in the Mumbai city.

The market cap of the company is Rs. 8871 Cr. it is a mid-cap company. For the quarter ended on 30th September 2018, the company has reported a sales of Rs. 697 Cr. which is 12% up as compared to the previous quarter of Rs. 619 Cr. The sales have been up by 30.49% as compared to the last year same quarter.

The company has reported a net profit after tax for Rs. 136 Cr. in the quarter ended in Sep’18. The company is paying regular tax at around 35%. Which is a healthy sign.

Current Price : 898.10
Stock PE: 17.98
EPS: 49.95
Book Value: 225.78
ROE: 24.29
Price to book value : 3.84
Debt to Equity : Debt Free

Shareholding Pattern

The stock has been held by 21 mutual funds schemes including:

Aditya Birla Sun Life Equity Fund-Direct -(G)
Mirae Asset India Equity – Direct (G)
BNP Paribas mid-cap fund (G)
Mirae Emerging Blue Chip Fund (G)

So overall its a good company based on the fundamentals and future prospects. The company is virtually debt free. The company has been maintaining a healthy dividend payout of 45.76%

Target : 1040 Stop Loss: 800

Aurobindo Pharma Ltd

Aurobindo Pharma was incorporated in the year 1986. Company’s key product is a therapeutic segment like SSPs, cephalosporins, antivirals, CNS, gastroenterology, cardiovascular etc. The company is the market leader in the semi-synthetic penicillin drugs.

Aurobindo Pharma is the large-cap company with market capital of 43026 Cr. The company is operating into the pharmaceuticals and healthcare sector. The company has reported a sales of Rs. 4751 Cr. for the quarter ended on 30 Sep. 2018 against 4250 Cr. for the quarter ended on June 2018.

Operating profit has also increased from 711 to 986 i.e. 17% to 21% QoQ. Net profit has increased from 456 to 611 for the last two quarters. The Company has a good return on equity: Last 3 years ROE: 27%

The company has reported a net profit of Rs. 611 for the latest quarter. The company has recently acquired a commercial operation and 3 manufacturing units of Sandoz ( a Novartis Division) This acquisition is the largest pharma deal ever. The company has done this acquisition in full cash.

Since 2015, the pharma sector is in a bear phase. Regulatory approval and drug price pressure play a vital role in the pharma sector. In the last 6 months, the situation has started improving. USFDA providing approvals for new products which are a good sign for the investor to look for this sector as an investment opportunity.

Current Price : 734.35
Stock PE: 19.46
EPS: 37.40
Book Value: 221.43
ROE: 23.13
Price to book value : 3.32
Debt to Equity : 0.41

Shareholding Pattern

The stock has been held by 39 mutual funds schemes, which includes:

HDFC Balance Advantage Direct (G)
Aditya Birla Sunline Frontline Equity Direct (G)
SBI Magnum Multicap Direct (G)
Reliance Pharma Direct (G)

Pharma sector is about to bounce back. So Aurobindo Pharma is a good bet for 2019. The company’s dividend yield is 0.47% having good sales growth and OPM. This stock is going to be multibagger stocks for 2019.

Target : 850 Stop Loss: 700

Torrent Power Limited

Torrent Power Limited is an Ahmedabad based electricity distribution company. It has experience in power generation, transmission and distribution power. It is a most experienced private sector player in Gujarat. The company is known for its unparalleled efficiency in generation, transmission, and distribution.

The company is aiming for uninterrupted power supply to its customers in Ahmedabad, Surat, Gandhinagar, Agra, and Bhiwandi. The company is having a distribution license in Ahmedabad, Surat, Gandhinagar and it’s operating on a franchise model in Agra and Bhiwandi.

The company is having 3600MW generation capacity across its various plants. It is catering to over 3 million customers in 6 cities. The company is known for its lowest Transmission and Distribution Loss (T & D Loss) 6.15%

The company has reported net profit of Rs. 414 Cr. in the quarter ended on 30 Sep. 2018. It is reporting profit quarter on quarter and giving consistent performance. The company enjoys the monopoly in its distribution business in Ahmedabad, Surat and Gandhinagar city.

The stock price has reached 52 weeks high at 304 and is certainly go beyond this price, setting for a new benchmark in the coming month. The company has been maintaining a healthy dividend payout of 24.73%

Current Price : 264.70
Stock PE: 11.99
EPS: 22.05
Book Value: 181.36
ROE: 12.26
Price to book value : 1.46
Debt to Equity : 1.20

Shareholding Pattern

The stock is held by around 10 mutual fund house including:

Axis Mutual Fund
UTI Mutual fund
Reliance Mutual Fund
IDFC Mutual Fund
Aditya Birla Sun Life Mutual Fund
Tata Mutual Fund
Kotak Mahindra Mutual Fund

The stock is a good bet for 1 year. Stable company with consistence performance. The management of the company is good and has a vision for growth.

Target : 360 Stop Loss: 200

Titan Company Limited

The company was incorporated in 1984. It is the fifth largest integrated own brand watch manufacturer in the world. It has two most recognized and loved brands Titan and Tanishq. Titan is the largest jewelry retailer in India with over 160 brand stores across India.

The company is a large-cap company having a market cap of Rs. 82.276 Cr. The company has reported sales of Rs. 4567 for the quarter ended on 30th Sep. 2018. This is 2.62% higher as compared to the previous quarter.

The company is maintaining a consistency profit quarter over quarter. The company is paying a tax of around 26% quarterly. The stock price is high as on date, you can wait for some time for the price to come down. It is a good buy at around 800, 820.

Current Price : 926.75
Stock PE: 66.12
EPS: 13.78
Book Value: 60.67
ROE: 24.53%
Price to book value : 15.28
Debt to Equity : 0.33

Shareholding Pattern

The stock is held in 45 mutual funds schemes including:

Motilal Oswal Multicap 35 Fund Direct (G)
Mirae Asset India Equity Fund-Direct (G)
SBI Bluechip Direct (G)
ICICI Prudential Balance Advantage Direct (G)

Target : 1100 Stop Loss: 760

Hawkins Cookers Limited

The company has been incorporated in the year 1959. The company is selling its product under its own brand Hawkins and Futura. It is a market leader in cooker market in India. The company is doing exports since 1974 in various countries.

It is a small cap company having its market cap of Rs. 1544 Cr. The company is operating in the consumer durable market. The company has reported a standalone sales of Rs. 172.68 Cr. for the quarter ended 30 Sep. 2018 as compared to 120.64 Cr. in the previous quarter. Up by 43% QoQ basis.

The company has reported a net profit of Rs. 17.59 Cr. for the quarter ended Sep 2018. The company is paying a regular tax of around 35% which is a good sign. The company has a good return on equity (ROE) for 3 years i.e. 55.18%. The company is maintaining a healthy dividend payout of 77.61%

Current Price : 2918
Stock PE: 28.81
EPS: 101.35
Book Value: 176.77
ROE: 44.97%
Price to book value : 16.51
Debt to Equity : 0.23

Shareholding Pattern

The stock is held in 6 mutual funds schemes including:

SBI Focused Equity Direct (G)
Kotak Emerging Equity Direct (G)
Kotak Small Cap Direct (G)
SBI Consumption Opportunity Direct (G)

Hawkins is the good company on the basis of the financial and quality of the management. The company is having a very low debt ratio of 0.23.

Target : 3500 Stop Loss: 2780

Disclaimer: The above stocks are best as per my knowledge, This should not be taken as a piece of investment advice by any means. Please consult your financial advisor before investing.