5 stocks that turned ₹5 lakh to ₹5 crore in 10 years

Market


Thefather of value investing, Benjamin Graham, once said,

‘In the short run, the market is a voting machine. In the long run, it is a weighing machine’.

Putting it in simple words, in the short run, the market is governed by sentiments and current dynamics.

But, in the long term, it is governed by more concrete factors like the company’s fundamentals among other factors.

All the people who have become millionaires or even billionaires have believed in the concept of compounding andinvesting for the long term.

They know the secret toidentify a multibagger stock is to slowly build a position in afundamentally strong stock and hold it for the long term.

And we do not mean three or five years but a longer horizon, possibly a decade.

In the last decade, the world has experienced the most unexpected things, from the advancement of technology to bitter days of a pandemic.

Don’t even get us started on themegatrends like EV opportunity, drone technology,semiconductor boom, etc happening in front of us.

All these factors have made many sectors do extraordinarily well while some just ran out of business and became penny stocks.

In today’s article, we bring to you the five stocks which have turned out to be thebiggest multibaggers over the past 10 years.

These companies have turned 5 lakh of initial investment into more than 5 crore in the last 10 years.

#1Paushak

First on our list is a strategic supplier of phosgene and its derivative Paushak.

Paushak is India’s largest phosgene-basedspecialty chemical company serving pharma, agrochemical, and performance industries.

It is part of the Alembic group of companies situated in Gujarat, India. Alembic is the oldest pharma company in India founded in 1907.

The journey of Paushak has been a rags to riches kind of story.

In August 2012, Paushak’s share price was at 50 per share. Skip forward to present, the stock is currently trading at 10,065.

This results to an astonishing 19,792% returns in the last 10 years.

If one had invested 5 lakh in Paushak ten years ago, he/she would have become a crorepati today with over 10 cr in wealth.

One of the secrets to its success has been the expansion of its customer base beyond the pharmaceutical industry.

Even after years of facing raw material price volatility, the company’s margins have not fluctuated significantly because it is aided by strong operating efficiency.

Another advantage for Paushak is its established market position in the industry. The company is present in the industry for over four decades.

This is an example of how afundamentally strong stock stands tall even in critical times.

Let’s have a look at the company’s share price performance in the last 10 years.

Paushak Share Price Performance in 10 Years

Data Source: Ace Equity

View Full Image

Data Source: Ace Equity

The company is one of the few companies having regulatory permission to manufacture phosgene gas.

The prospects look strong for Paushak as the company has completed the capital expansion for upstream and downstream capacities. This is expected to improve revenue growth and operating margins in the ongoing financial year.

Despite a halt in production for more than a month due to an oxygen shortage in the most recent quarter, the company delivered healthy operational performance.

#2 NGL Fine-Chem

Second on the list is NGL Fine Chem, a manufacturing company of pharmaceuticals and intermediates.

In August 2012, NGL Fine-Chem’s share price was at 10.61 per share. Currently, the stock is trading at 1,794.75.

The company has delivered returns of 16,816% in the last 10 years.

If one had invested 5 lakh in it ten years ago, that initial investment today would be worth a little over 8 cr.

In financial year 2021-22, thecompany’s total revenue from operations jumped 69.7% to 2,581 m.

The profit after tax zoomed out by 432.7% to 553 m.

The company generates 70% of revenues from exports.

The company’s veterinary/animal Active Pharmaceutical Ingredients (API) products dominate the business. It contributes 83% of total revenues.

NGL Fine Chem’s strategy to enter intohigh-profit margin products has significantly benefitted in increasing its profitability.

In 2019, NGL Fine Chem acquired Macrotech Polychem Private Limited (MPPL).

Through constant focus on cost efficiencies and shrewd product selection, NGL has maintained consistently higher margins than the industry.

NGL has moved from an agent driven model around 6-7 years ago to selling directly to customers.

Data Source: Ace Equity

View Full Image

Data Source: Ace Equity

The company believes in dealing with developing countries, which may lack long term contracts but high possibility for spot business in future. Moreover, the pharmaceutical intermediate market is expected to grow at CAGR of 4.3% through 2030.

 

#3 Caplin Point Laboratories

Third on the list is Caplin Point Laboratories, a rapidly expanding, completely functional pharmaceutical company.

In August 2012,Caplin Point Laboratories’ share price was at 6.10 per share. Currently, the stock is trading at 844.85.

The company has delivered returns of 13,750% in the last 10 years.

If one had invested 5 lakh in it ten years ago, he/she would have become a crorepati today with over 6.9 crore in wealth.

The company has a strong presence in Latin America, Francophone Africa, and a growing presence in regulated markets such as the United States and the European Union.

The company has successfully managed to outperform its peers with improving supply chain & distribution and product mix.

Over the next five years, the global generic drug market is expected to grow at a CAGR of 9.8%.

It is expected to grow from US$ 210 bn in 2020 to US$ 369 bn in 2024.

 

Data Source: Ace Equity

View Full Image

Data Source: Ace Equity

#4 Vidhi Specialty Food Ingredients Ltd

Fourth on our list is Vidhi Speciality Food Ingredients.

In August 2012,Vidhi Specialty Food Ingredients’share price was at 3.60 per share and currently, the stock is trading at 400.30.

The company has delivered returns of 11,019% in the last 10 years.

If one had invested 5 lakh in it ten years ago, he/she would have become a crorepati today with over 6.9 crore in wealth.

Vidhi Specialty Food Ingredients manufactures, wholesales, and exports a diverse range of basic food colours, food ingredients, lake food colours, and D&C food colours.

The company’s significant focus on the diversification of new products with the help of in-house R&D department has positively affected its growth for decades.

The company has beenpaying dividends consistently for the past nine years.

So along with capital gains, investors in the company would have received dividend payouts.

The company is reinvesting heavily in its business at a high rate of return. This has resulted in impressive earnings growth.

Data Source: Ace Equity

View Full Image

Data Source: Ace Equity

The industry of speciality food industry is expected to grow by a CAGR of 8.6% and will be worth US$ 292 bn globally. This lays out good growth prospects for the company.

#5 Indo Count Industries

Last on the list is Indo Count Industries.

In August 2012,Indo Count Industries’share price was at 1.4 per share and currently, the stock is trading at 143.

The company has delivered returns of 9,869% in the last 10 years.

If one had invested 5 lakh in it ten years ago, he/she would have become a crorepati today with over 5.1 crore in wealth.

Indo Count Industries is a manufacturer of 100% grey combed cotton yarn and knitted fabric.

The company’s decisive, agile and flexible decision-making process is the reason for its success in the last decade.

Plant capacity has increased from 12,096 spindles in 1991 to 56,448 spindles today, as well as diversification into Dyed Yarns, Corespun Yarns, and Knitted Fabrics.

The company’s customer base has grown significantly. It now has a brand presence in major markets, likeUnited Kingdom, Italy, Germany, Switzerland, Japan, and South Korea.

Data Source: Ace Equity

View Full Image

Data Source: Ace Equity

 

 

 

Investment Takeaway

After reading about these amazing wealth creating stories, you would also be thinking about how to identifymultibagger stocks for the next 10 years.

The approach should be to invest in a fundamentally strong stock that has thepotential to become a future multibagger.

For a company to turn into a multibagger, many things are involved.

The company should belong to a sector that has good future prospects. If we observe in this article, 3 out of 5 companies belong to the chemical sector.

So, investors who could envision a bright future in this sector a decade ago, are today enjoying multibagger returns.

Another factors to consider are a decent balance sheet, good management team, consistent growth, and the ability to survive the test of time.

Never compromise on quality and fundamentals. Only the fundamentally strongest stocks will createwealth over the long term.

Happy Investing.

Disclaimer:This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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