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Advisory Services

Multibagger Stocks

multibagger stocks

Young companies with the potential to grow exponentially – hand-picked by StockAxis through its deep research, extensive experience and insights.

OBJECTIVE
The objective is to identify growing companies, which have the potential to become future leader. It is our prime goal to enable our clients to appreciate their wealth.

STOCK SELECTION APPROACH
StockAxis’ ‘Multibagger’ team of research analysts have years of experience in spotting potential multibagger stocks using a set of screeners which focuses on fundamental analysis of a company which is not limited to only quantitative analysis but also involves the qualitative analysis. The StockAxis ‘Multibagger’ team looks for businesses with the potential to grow their earnings exponentially within the short-to-medium term. These businesses are spotted through extensive research and analysis which include past performance, track record of the promoters and management, growth stage of the industry the business belongs to, its competitors, etc.

STOCK SELECTION PROCESS
StockAxis follows 4 key stages of screening potential multibaggers:

Step 1: Potential Valuation Outliers
The ‘Multibagger’ team of research analysts uses a number of proprietary screening tools to shortlist stocks (among the largest universe of companies) that meet the parameters of having the highest possibility of becoming multibaggers.

Step 2: Fundamental research
The StockAxis ‘Multibagger’ research team then undertakes rigorous fundamental analysis of the shortlisted potential multibaggers. These potential valuation outliers must meet parameters such as earnings growth, profitability parameters, management experience and competence, return on equity benchmarks, competition analysis, etc.

Step 3: Business & Industry Research
Business also plays an important role like company should have industry tailwinds, product of a niche category, leader in its segment and a favourable business economics. These parameters support a good management to said though rough business times. We look for these things to be present in the company being researched.

Step 4: Stock monitoring and review
Stocks that meet StockAxis’ Multibagger criteria are recommended to our clients. These stocks are actively monitored till the positions are open.

KEY STOCK SELECTION CHARACTERISTICS
  • Meets StockAxis’ proprietary screening tools
  • Strong fundamentals – Quantitative aspects
  • Experienced promoters and management – Qualitative aspects
  • Innovative, world-class products/services
  • Have re-rating and exponential earnings growth potential.
  • High growth trajectory

PHILOSOPHY
StockAxis applies bottom-up fundamental research to uncover midcap stocks that have the potential to become multibaggers as a result of superior and sustainable earnings growth. We look for young companies with strong fundamentals that are well-positioned to grow rapidly over the short-to-medium term. We bring to our customers such companies at attractive valuations to maximise their investment returns.

MULTIBAGGERS - KEY TRAITS
Number of Recommendations over the year
:
8-10 stocks
Holding period
:
1.5 – 2 years
Potential upside
:
80-100% in each recommendation
Value added services
:
  • Direct touch with Fundamental Research Analysts
  • Recommendations via sms, email & app notifications at real time
  • Research reports & updates via email
  • Dedicated relationship manager
  • Full support on your invested portfolio

An Example:
Recommendation: Phillip Carbon Black Ltd
Recommendation Price: Rs 227
Profit Booking: Rs 422.5
Current Market Price: Rs 579

Thesis

Qualitative:
  • Company had industry tailwinds as government had levied dumping duty on Chinese imports and also there were falling crude prices.
  • PCB was the largest players with capacity of 470 KT and larger share was with unorganised players, it was also 7th largest player in the world.
  • Company is a part of RP-sanjeev goenka group, one of the well knows business family.
Quantitative:
  • Carbon Black, a raw material used by company is a crude derivative, of which the price was down by 30-40% and margins were still not reflecting it. At that point of time PCB was making 28% Gross margin, now they making 36% Gross margin.
  • Company had already made CFO of Rs 424 crores due to improvement of working capital and had payed a debt of Rs 200 crores in FY16. Reduction of interest was also a trigger for increase in profits.
  • Anti-dumping duty was levied on Chinese imports which increased their pricing power.
  • Company had 25% of its capacity unutilized, higher utilization can lead to higher operational efficiency.
 
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