Multibagger Stocks : How to Find the Next Multibagger Stocks

multibagger stocks for 2022

Everyone invests in the stock market to gain as much as possible. The amount of returns that you can churn out from the equity market depends on how well-skilled you are, and how brilliantly you have used your knowledge to scan and pick out top quality stocks that can double, triple, or increase your capital ten-folds. Such stocks are known as multibagger stocks. 

We all take a voyage on that quest but not everyone is fortunate enough to identify and earn substantially higher returns from multibagger stocks. So to help you out, we have compiled a guideline using which you can also pick the best multibagger Indian stocks and enshrine your name as a top investor.

Multibagger Stocks: What are They?

Breaking down the name, we can understand that multibagger stocks are the ones that can bag you multiple times returns. Although there is no particular definition for multibagger stocks, they are defined on the basis of how many times the initial invested capital has been multiplied. For example, if a stock multiplies your capital by two times, it will be called two-bagger, for ten times, it will become ten-bagger, and so on. Hence, all such stocks are known as multibagger stocks.

Multibagger stocks are usually the ones that are undervalued but have robust fundamentals. This means that they carry the potential to substantially increase in value in the future. Although strong fundamentals are not a sure shot confirmation for a stock to be multibagger stock, it helps to narrow down the list and increases the chances to find such stocks. 

Multibagger Stocks: Why Should You Invest in These?

It is not necessarily that your entire holding should be composed of multibagger stocks, and that’s not feasible as well. You should prioritize maintaining a balance between return and risk and build a portfolio that gives you a steady return in the long run. Having said this, finding out about multibagger stocks can help you to increase your returns substantially. And if you wish to earn the most from the stock market, you have to identify and invest in future multibagger stocks. 

Multibagger Stocks offer substantial returns

Multibagger stocks, by their definition only, are the ones that can multiply your investments substantially. You can do some research to scan the best multibagger stocks for 2022 and get higher returns in the future. However, stocks are not multibagger by default, instead, they become multibagger. Hence, you have to gain a fair bit of knowledge on how to analyze stocks based on their fundamentals. 

Multibagger Stocks can be high quality growth companies

Many multibagger stocks are of startups that are performing and growing commendably well. In your quest of finding the next multibagger stocks of 2022, you will get a chance to explore and invest in startups that have high growth potential. As the business grows, the stock pieces will also increase, and subsequently your returns. Apart from giving you higher returns, it will also give you the knowledge and confidence to identify more multibagger stocks in the future. 

All good, and obviously, who does not want to invest in multibagger stocks? But as said, the entire thing comes around finding those stocks at first. How can you do so? Don’t worry! We have prepared a guide for you that will help you find the multibagger stocks to buy today.


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Future Multibagger Stocks in India: How to Find These?

Look at the Company’s Size

Multibagger stocks are the ones of companies that have fairly low market capitalization. This means that there is an opportunity for higher growth. The stocks of established companies are likely to grow further but they cannot offer multibagger returns. The market they operate in is either already diluted or the companies themselves have reached a saturation level. Hence, you have to find companies that are still small in size but have the required potential to grow big in the near future.

Study the Market

The product or service provided by the company should have a differentiating factor if the industry in which it operates already has fierce competition and well-established giants. Without something unique or a better solution, a company cannot succeed in competing with its bigger counterparts. This gives us two cases- either the company has a better product than its competitors or the company has a solution to some problem and can create a new market. Companies from either of these categories have a higher chance to become successful.

Study the Fundamentals

Fundamentals speak for themselves, therefore, you should do a fundamental analysis of the stocks apart from the company’s product. Check the company’s revenue and profit growth over the last few years, and how it managed to cope during tough times. The important thing to evaluate is whether there is any existing debt or not, if yes then how much, and how much then whether the same has been decreasing gradually or not. All these are extremely crucial parameters in the financial analysis of stocks. If your research goes well, you will be successful in making a list of multibagger stocks to invest in 2022.

High Margins

The margin of the company’s profit to its ratio should be high. This shows how well the company is doing its finances and strategizing the business. Moreover, a company can only increase its profit to margin ratio either by innovating some unique and cost-effective solution to existing products or because the industry does not have any strong competition yet. Both the cases are favourable for the company’s growth and can also help it offer multibagger returns to the shareholders.

Growth Expectation

There are companies that are doing great with a small-sized business but find it difficult to scale after a certain threshold. Hence, gauging companies based only on their current performance won’t be sufficient enough. You also have to check how the company can grow in the near future and whether the business is scalable or not. 

Whether they Are Undervalued

There are a number of companies whose stocks are extremely undervalued despite the fact that the company has already shown all signs of success. You can scan out these stocks by using filters of PE and PB ratio and compare the same to the industry average. Such stocks are less in number but they do keep on floating until being picked up by a great investor.

Now we will move to the most exciting part- top multibagger stocks based on the last 5-year return?

Top Multibagger Indian Stocks in the Last 5 Years

StocksMarket CapClosing Price5-year CAGR (stock price)
Flomic Global Logistics LtdRs 73.73 CrRs 104.40234.31%
Sel Manufacturing Company LtdRs 33.30 CrRs 1,004.85218.83%
Saraswati Commercial (India) LtdRs 278.08 CrRs 2,700.00218.48%
Sportking India LtdRs 1,073.41 CrRs 811.30192.49%
Equippp Social Impact Technologies LtdRs 558.78 CrRs 51.50158.06%
Xtglobal Infotech LtdRs 86.40 CrRs 1,000.00146.45%
Dhanvarsha Finvest LtdRs 545.84 CrRs 40.25142.50%
Lesha Industries LtdRs 767.48 CrRs 63.80141.29%
Ritesh Properties and IndustriesRs 928.83 CrRs 361.00129.99%

(Data as of June 22, 2022)

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns

So there are the top multibagger stocks in India on the basis of the return they offered in the last 5 years. You can use the explained tips and employ the same to find out such stocks or multibagger penny stocks for 2025. Keep in mind that scanning multibagger stocks is not a guess-game, instead, it requires knowledge and research, a fair risk appetite, and confidence in investing.

Important things to remember:

1. Do Not Blindly Follow Hot Tips

No matter how credible the source is, never follow a stock marketing tip blindly without conducting thorough research personally. Always select the stocks after doing proper research and analysis on the performance as well as the companies. While some tips can work out to give you huge benefits, the wrong ones can push you down under the risk pretty quickly. 

2. Eliminate Loser Stocks from Portfolio 

There is absolutely no guarantee that a stock will rise after a great fall. Know that it is extremely important to be practical about what is possible and what's impossible in the stock market. So, upon realizing that a stock is performing poorly in your portfolio, accept your mistake and sell it immediately to prevent further losses. 

3. Don't Exceed Your Investment Budget Abruptly 

While it's true that long-term investments are way better than other forms of investment, you shouldn't exceed your investment budget in a haste. Instead, decide on a fixed amount and invest it across various good stocks. Rather than investing in only one stock, divide your budget evenly across multiple good-performing stocks and shares.

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns

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