INSUBCONTINENT EXCLUSIVE:
If you find a stock where the company enjoys a competitive advantage, has a moat and has been reporting steady earnings growth, lap it
up.
There have been instances of stocks with such traits delivering mouth-watering returns! In one case, an investment of just Rs 10,000
India, an investment of Rs 10,000 in March 2009 has grown to Rs 1.45 crore as of today, delivering a whopping 1,449 times return.
A
Restaurants became its direct subsidiary
The stock climbed to Rs 372 on December 31, 2013 from Rs 0.20 in March 2009
From 2013 onwards, the scrip has traded in the Rs 160-400 range
Progressive Share Brokers is bullish on Westlife Development with a price target of Rs 425.
Bajaj Finance has been another big compounder
Since March 2009, an investment of Rs 10,000 in this stock would have grown to Rs 57 lakh, growing exponentially at 88 per cent annually
A similar investment in leading shrimp feeds manufacturer Avanti Feeds would have made you Rs 33.30 lakh.
Astral PolyTechnik, Ajanta Pharma,
Vinati Organics, LA Opala RG, Mayur Uniquoters, Eicher Motors and Poly Medicure are other such stocks which have grown an investment of Rs
10,000 into Rs 8-33 lakh during this period
The foreign brokerage said structural demand drivers remained intact for the company
However, sales of Royal Enfield (RE) were impacted by large price hikes in the recent past
An investor should devote time to do the research on prospective investment opportunities to increase the chances of spotting such big
compounders.
Some basic traits like good leadership, clean balance sheet, revenue visibility, scalability and sustainability usually are
first signs that differentiate the wheat from the chaff.
The price at which a stock is bought is also important, as are other parameters
such as reasonable to no debt, strong parentage, high return on equity (RoE) or return on capital employed (RoCE) and consistent earnings,
even in a weak macro environment
The operating performance should reflect in valuations
Companies whose share prices have grown over 5,000 per cent in last 10 years include TTK Prestige, Stylam Industries, Balkrishna
Industries, Natco Pharma, Havells India, VIP Industries, Gruh Finance, Supreme Industries, Whirlpool of India, IndusInd Bank, Aarti
Industries, Minda Industries and KPR Mill
ICICIdirect has a hold rating on TTK Prestige with a price target of Rs 8,800
Religare Broking is positive on VIP Industries with a price target of Rs 551.
But the bad apples can erode your wealth even faster
Shares of companies like Educomp Solutions, IVRCL, ABG Shipyard, Punj Lloyd, Videocon Industries, Reliance Industries, Unitech, MMTC,
Religare Enterprises, Bilcare, Shriram EPC and Bombay Royon Fashion have dipped up to 90 per cent in last 10 years.
