With markets consistently hitting record highs, a number of stocks that were under pressure has started showing promise. Brokerage firm Prabhudas Lilladher in a report identifies multi-baggers of the past from the mid, small and microcap universe that have corrected significantly from their 10-year high but are now bouncing back with strong fundamentals intact.
The brokerage has named 30 such stocks including Balkrishna Industries, MindTree, Motilal Oswal Financial Services, Natco Pharma, Hexaware Technologies, Shriram City Union Finance, Ajanta Pharma, Can Fin Homes, Tata Elxsi, and IIFL Finance, among others.
"Our sole purpose is to provide powerful insights into Indian equity markets to enable investors to identify opportunities that can otherwise be overlooked. The research output is based on comprehensive frameworks and methodologies where we analyse various quantitative parameters as required for a particular research theme ranging from fundamental, technical, derivatives, consensus, market and price data to global comparatives and broader macro trends," it said in its report.
Balkrishna Industries rose around 2,400 percent from Rs 59 in 2010 to hit its record high of Rs 1,467 in August 2018. Since then it has fallen 36 percent.
IT firm MindTree surged 704 percent, from Rs 147 in 2010 to hit its fresh high of Rs 1,182 on September 18, 2018. Since then, it has fallen 33 percent since then.
Methodology
The brokerage has included micro, small and midcap companies trading at attractive valuations relative to their large-cap peers, post the flight to safety driven large-cap rally.
It has ensured that the stocks have been listed on the bourses for a minimum of 10 years ensuring evaluation of long term performance track record and business characteristics.
The list includes stocks whose market capitalisation has grown 5x or returned 400 percent in the last 10 years to identify stocks that have been multi-baggers in the previous cycle but have corrected due to reduced risk appetite or macro factors not related to long term fundamentals of the company. The stocks in the list are trading at least 35 percent below their all-time high price achieved in the last five years.
Other criteria included current share pledge less than 20 percent and promoter holding more than 35 percent.
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