The Secret mantra to finding multi-baggers: Lessons from a study that analysed 100-baggers

An ICICI Securities study analysed all 100-bagger stocks from the past twenty years. Here are some common insights that can help us pick the next one.


A look at stocks that fetched over 100x returns in the last 20 years

The recipe for selecting the perfect multi-bagger is hard to master. Recently, a study conducted by ICICI securities on all multi-bagger stocks from the past 20 years revealed important insights that can help us look out for future multi-baggers. 

The study looked at all Indian stocks listed that turned into a multi-bagger over the last 20 years. Some of these stocks include names like Deepak Nitrite, Relaxo Footwear, Titan, among others. Most of the stock in the study gave an average CAGR of above 25% in the last 20 years. 

Also Read: What are multi-bagger stocks? How to find them?


  • The study revealed that most of these multi-bagger stocks belonged to companies dealing in capital goods, commodities (chemicals, cement) engineering, consumption, pharma, etc.

  • Top names on the list include companies like PI Industries (55% CAGR), KEI Industries (price appreciation by 3300 times) , Bajaj Finance (x1336) and Titan (x859).

  • These companies managed to conquer markets and perform unassailability well with their focused business model, strong management and an ability to maintain good profits while reducing debt.

What is common to these 100-bagger stocks?

The study found that most of the stocks had a core, non-diversified, focussed business model: a limited range of products and services offered, allowed for better business management and great returns to be reaped. 

Consistent growth: The stocks that worked a Midas-like magic for investors showed consistent growth in earnings with their Return on Equity (RoE) almost always higher than the cost of equity.

The companies also maintained a solid positive cash flow. Their operating cash flow (cash generated through usual business operations) was greater than their total capital expenditure for over two decades.

Another notable feature of these stocks is their commitment to a good, profitable business model. Contrary to popular stories and narratives spun around new-age stocks with little underlying potential, real multi-baggers are focused on maintaining a strong business model that knows how to work out profits.

One more significant aspect of these stocks, according to ICICI securities, was their commitment to keep their debt minimal while constantly working on reducing current debts.

What investors must know?

According to ICICI Securities, these 100-bagger stocks survived both up and down market cycles and may be termed as "through-the-cycle (TTC) compounders".

It is important to remember that it takes good research and knowledge to find real multi-baggers. While it is important to look at the potential for earnings growth, timing is extremely important. 

Also Read: 6 best Indian cement stocks for 2023

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Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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