SEBI Registered (INH000015455)

"The Goal of a Successful Trader is to make the Best Trades. Money is Secondary"
Youtube X-twitter Whatsapp Instagram
Stock Market India
Login/Register

Screener for Identifying Multi Bagger Stocks in any market

Multibagger stocks are equities that deliver returns multiple times their initial investment, significantly outperforming the broader market over time. These stocks typically belong to companies with strong growth potential, robust financials, and innovative business models. In the Indian stock market, examples of past multibaggers include Titan Company, which grew exponentially due to its dominance in the jewelry and watch segments, and Infosys, which surged as India’s IT sector expanded globally. Other notable examples are Eicher Motors, which benefited from the success of Royal Enfield bikes, and Asian Paints, which capitalized on India’s booming housing and renovation market.

We got featured in “Financial Outlook” as Top-10 Learning Platform on stock trading. Read more

It’s easy to look back and identify the multibaggers, but if you can even catch one amongst 20-25 such potential stocks – your returns would very easily cover for your losers  ! 

Join Our YOUTUBE Channel : For Weekly Market/Stock Analysis

These multi-bagger stocks are often highlighted in bull markets, but only a few sustain long-term growth. To find real wealth creators, focus on four key factors:

1.) Growth & Valuation

Strong profit growth is the foundation for multi-bagger returns. Look for a PEG ratio around 1 for fair valuation.

  • A company growing 15% annually doubles profits in 5 years; at 25%, in 3 years.
  • RoCE (Return on Capital Employed) matters more than margins in capital-intensive sectors.
  • P/E re-rating occurs when high-growth stocks attract more investors, driving prices up.
  • In current scenario, look at the Green Energy and Defense related stocks
2.) Return on Equity (RoE)

A company should generate RoE above 13-15% to be investment-worthy.

  • RoE = Net Profit / Shareholder’s Equity
  • High RoE compounds wealth if profits are reinvested efficiently.
  • Entry price matters—buying at a high P/B ratio lowers effective RoE.
 
Master Trading with our 1 Year Hand Holding Mentorship Program. Know more

Join Our FREE Whatsapp Community for Stock Analysis and Trading Ideas
3.) Cash Flows

Profits must translate into cash; strong Operating Cash Flow (OCF) is crucial.

  • Warning signs: Rising debt, poor collections, excessive expansion.
  • Positive indicators: Steady cash flow, reinvestment, buybacks.
  • Example: MRF (13x returns in 10 years) reinvested cash flow efficiently, while Coal India (negative returns since 2015) lacked growth.

 

4.) Corporate Governance

Trust and transparency prevent financial disasters.

  • Evaluate promoters, board independence, related party transactions.
  • Red flags: Complex ownership, excessive debt, frequent fund-raising.
  • Some companies recover under strong management (e.g., Satyam under Tech Mahindra).
Join our Mentorship and Classroom Trading Program for Beginners. Know more

5.) Other basic checks
  • Promotors themselves should be confident in company prospects and shouldn’t pledge it all to chase growth and profitability.
  • In weak markets, the chances that such companies are trading below it’s market valuations are high, and P/E ratio can be a good Indicator for the same.

Multibagger criteria

Applying the above filter in Indian Market today will give you a list of ~ 35 stocks to further deep dive. You can further reduce the list by eliminating capital intensive sector and focus on sectors of the future such as defense, energy, data centers etc.

Conclusion: The Road Ahead

When identifying potential multibagger stocks, a disciplined approach is essential to maximize returns while managing risks. Investors should focus on companies with strong growth potential, efficient capital allocation, and solid financial health. Beyond revenue expansion, factors like return on capital employed (RoCE), return on equity (RoE), and cash flow sustainability play a crucial role. Additionally, governance standards and periodic re-evaluation of investments are vital to ensuring long-term wealth creation.

Disclaimer: This article is for information purpose only. It is NOT a stock recommendation and should not be treated as such. Read full disclosures here.

Leave a Reply