Hey, I don’t have much experience like others. But for me multibagger is mix of 2 things only.
Everyone say FCF and all but I believe if management is good and has vision then Balance Sheets things can be easily taken care of.
The 2 things are Power of Execution and ROIIC i.e. Return on Incremental Invested Capital and how company execute them.
Look at most popular multibagger stock Deepak Nitrate.
Company has Fixed Asset of 580cr in FY17 and they done big capex which is shown in CWIP 350cr.
Company is made roughly 100cr on Sales of 1370cr in FY17 and they done 350cr Capex. This shows vision of the Promoter.
And in FY18, they done Capex of 955cr again. And thereafter company has never looked back. Promoter has executed Capex well.
Many companies do capex but they not able to generate sales as the Deepak Nitrite did.
From FY17 to FY22, PAT has been increased from 96cr to 1067cr
PAT Margins has been increased from 7% to 15.7%
Share Price has gone to 3000 from 135rs in 5 years i.e. 86% CAGR growth or 22 times.
Then why mostly people fail to hold stocks like this ?
Answer is easy.
- They do over analysis on the company.
- They don’t have patience to hold company.
- They listen to everyone rather then company management.
That’s all from my side. I may be wrong also. Please correct if I’m wrong at any place.
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