Potential Multibagger Stocks [How to find it]

Potential Multibagger Stocks for 2021-22 and how to find it before it’s too late. In the last year, the stock market has been a roller coaster ride. Due to the Covid-19, the BSE Sensex had plunged to 25k level in the month of March 2020. But only within 6 months, the marker had shown a quick bounce back. In the month of February 2021, the Sensex had touched the lifetime high of 52k. These days there are many companies that have given multifold returns.

Today, in this article, we will check the ready-made list of multibagger stocks for 2021-22. We will do an in-depth analysis to check why these stocks have the potential to become multibagger stocks for 2021-22.

What is Multibagger Stock?

The term multi-bagger was first coined by Peter Lynch in his book “One Up on Wall Street”. Multibagger means the price of the stock has increased many folds. For example, Adani Green’s stock price was ₹ 129 on 18th March 2020. Just before the Corona Virus outbreak and lockdown had happened. The price of this stock is ₹ 1185 as of 10th March 2021. So in just one year, the stock price has gone up by 819%. This is called multibagger stock which has given more than 100% return in the last 1 year.

Basically, multibagger stocks are one of the companies that have high growth potential, trustworthy management, strong product demand, good market presence, and scalability. There are certain criteria through which the multibagger stocks are defined.

List of multibagger stocks for 2021-22

SBI: [381.10] State Bank of India is the biggest public sector bank in India. It has billions of money as a reserve and the highest customer base. The bank has more than 1.63 lakhs branches across the country. The stock is fundamentally strong and is corrected at the moment. It will surely go up in the coming years. But for the year 2021 also there are good chances that the stock performs at its best. Let’s check the fundamentals of the stock.

Market Cap340117 Cr.
Interest Coverage1.16
Price to book value1.35
Earning Per Share (EPS)₹ 26
Promoter’s Holding57.6%
Quick Ratio3.21

SBI Share : Pros & Cons

Good Market PresenceNot paying dividends
Biggest PSU Bank in IndiaLow-interest coverage ratio
Great Fundamentals
Low PE ratio

Tata Power: [113] Tata Power is one of the best power sector company in India. It is from the home of Tatas so fundamentally you don’t have to look beyond the brand name. The future in India is going to be an electric vehicles so demand of Tata Power will go up. Let’s check the fundamentals of Tata Power.

Market Cap36187 Cr.
Interest Coverage1.44
Price to book value1.66
Earning Per Share (EPS)₹ 3.90
Promoter’s Holding46.8%
Quick Ratio0.52

Tata Power Share : Pros & Cons

The future of electric vehicle is brightEarning includes other incomes
Healthy dividend payout of 23.58%Low-interest coverage ratio
Great Fundamentals
Low PE ratio

Tata Motors: [317.45] Again this one is from the Tatas. In the recent past, the stock price was very low and reached the bottom of ₹. 63.5. The net worth of the company is much bigger than this price so the price reversal was inevitable. That’s the reason we are seeing the bounce back in the stock price of Tata Motors.

The future of electric vehicles in India is bright and Tata motors have already its plan in place. The company has already started the production of electric vehicles and promoting them in the market. Recently Mr. Rakesh Junjunwala had bought a 4 lakhs share of Tata Motors as he has seen the value in the stock.

Market Cap112367 Cr.
Interest Coverage-0.13
Price to book value2.08
Earning Per Share (EPS)₹ -51.0
Promoter’s Holding46.4%
Quick Ratio0.54

Tata Motors Share : Pros & Cons

The future of electric vehicle is brightLow-interest coverage ratio
Promoters Holding has increased by 4% in last quarter
Great Fundamentals
Improved Domestic Vehicles like Nexon, Altroz, Harrier, Safari.
Better EV production infrastructure as compared to its peers

General Guideline for investing in multibagger stocks

Invest in the futuristic company: You must understand the basic trend in the economy. For this, you need not have any special degree. Just understand the current Indian economy and what are the major changes that will take place in the near future in the economy. It will help you to make an informed decision on your investment.

Market Timing: Timing in the market is very important. Identifying good companies based on the certain criteria is one thing but investing into those company when the price (PE ratio) is lowest is the thing which can turn your investment into multibagger.

Patience: This is the essential element for every investor who is investing in the equity market. As an investor, you need to hold the stock for the longest time to give you desired results. Hold good stocks for the long term and then sell them when you earn a sizeable profit.

Extrinsic valuation: Look for a ratio of companies current market to the potential market. Lower the ratio better the chance of multi-bagger. (Market capitalisation/opportunity size < 0.2 has high chance of multi-bagger)

Price to Sales Ratio: I personally check the price to sales ratio before picking up the stock. A low price to Sales ratio is preferred. It must be less than 1.

Technical analysis can go wrong: Investing in the stock based on the technical analysis is not a wise decision. Though they are important indicators in picking up the stocks, they can go wrong at times. So you should not completely be dependent on the technical analysis. I have seen PE/PB ratios are failed many times and can prove lethal sometimes for your investment decision.

List of potential Multibagger stocks for 2021-22

Here are few more companies that has a potential to become multibagger.

  • Bajaj finance
  • Tata Chemical
  • Bajaj finance
  • Affle India
  • Reliance Ind. (if it goes below 1800)
  • Dixon
  • Motherson Sumi
  • HDFC Bank
  • Torrent Power
  • ICICI Bank
  • IEX (Indian Energy Exchange)

Disclaimer: All information provided by me is intended to be used and must be used for informational and educational purposes only. You should do your own analysis before making any investment based on your own personal circumstances.

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