Identifying the next multibagger stock is not easy, for any retail investor. It requires a lot of research, strategic foresight, and patience.
However, there are a few similar characteristics shared by every multibagger stocks currently trading in the market, including Bajaj Finance, Trent, Titan, NBCC, and Zomato, that have helped them become multibagger stocks.
In this article, we will check- what are multibagger stocks, steps to identify multibagger stocks, and potential multibagger stocks of 2025. Let’s dive in.
What are Multibagger Stocks?
Multibagger stocks are referred to the stocks of fundamentally strong companies that have multiplied its value by several times over the long term. Typically, a stock is considered multibagger if it has gained by a minimum 100% in the past one year.
For example, if a stock price increases from ₹100 to ₹1000 in the next 2 years, it will be called a 10-bagger or multibagger stock.
The term “multibagger” was coined by Peter Lynch is his 1988 book “One Up on Wall Street”. Identifying and investing in a multibagger stock is important for wealth creation and will help you to significantly outperform the broader market.
What are the Characteristics of Multibagger Stocks?
The following are the characteristics of top multibagger stocks:
Strong Fundamentals: The companies have consistently high earnings growth, low debt levels, and strong free cash flows.
Competitive Advantage: The business of such companies have unique moat, such as proprietary technology, strong brand value, first mover advantage, or a monopolistic position.
Growth Potential: The company should operate in a sector that offers high growth potential and the market is not saturated. For example, stocks of companies in the coal mining business have less chances of becoming multibagger because of limited upside growth potential because of transition to green energy solutions.
Strong Leadership: The leadership of the companies should be strong and determined to execute the vision and scale the business to new highs.
Undervalued Stock Price: The stock should have a valuation (P/E and P/B Ratio) less than the industry peers.
If you look at all the multibaggers of the last five years- like Trent, Bajaj Finance, Titan, all have the above mentioned characteristics and were available at lower valuations at the beginning.
Top Multibagger Stocks for 2025
To identify potential multibagger stocks for 2025, we have applied the following parameters:
- It should be a mid-cap stock
- Have shown 3-year Revenue CAGR of more than 15%
- Have shown 3-year PAT CAGR of more than 15%
- Debt-to-equity Ratio should be less than 0.5
- Return on Capital Employed (ROCE) should be greater than 20% and has shown consistent improvement
- And, the Price-to-equity (PE) ratio is less than Industry PE
After applying the filters, we have shortlisted the following potential multibagger stocks for 2025:
- Natco Pharma
- Action Construction Equipment
- Banco Products
- ITD Cementation
- Gulf Oil Lubricants India Ltd.
Natco Pharma
Natco Pharma is a multinational pharmaceutical company with presence in over 50+ countries. It is a vertically integrated company engaged in the development, manufacturing, and marketing of complex generic medicines, particularly in the fields of oncology, cardiology, and diabetology and active pharmaceutical ingredients (API).
The company is known for its high-quality and affordable medication and recently diversified to agrichemical space.
| CMP (27th December 2024) | ₹1,392 |
| Market Cap | ₹24,932 crores |
| 3 year Compounded Sales Growth | 25% |
| 3 year Compounded Profit Growth | 49% |
| Return on Capital Employed (FY24) | 26% |
Action Construction Equipment (ACE)
Established in 1995 in Faridabad, Haryana- Action Construction Equipment or ACE is a major player in the manufacturing of hydraulic mobile cranes, mobile tower cranes, material handling equipment like forklifts, road construction equipment, and agriculture equipment.
It is a major supplier of cranes to all leading private and government sector companies, and is likely to benefit from Indian increased capex on infrastructure.
| CMP (27th December 2024) | ₹1,446 |
| Market Cap | ₹17,222 crores |
| 3 year Compounded Sales Growth | 33% |
| 3 year Compounded Profit Growth | 63% |
| Return on Capital Employed (FY24) | 36.99% |
Banco Products
Incorporated in 1961, Banco Products is a leader in the business of engine cooling and sealing systems both for industrial and automotive applications. Over the years, it has emerged as a top choice of OEM both in India and abroad, most sought in aftermarket, and exports.
| CMP (27th December 2024) | ₹1,056 |
| Market Cap | ₹7,553 crores |
| 3 year Compounded Sales Growth | 22% |
| 3 year Compounded Profit Growth | 34% |
| Return on Capital Employed (FY24) | 39.75% |
ITD Cementation
The company established its operations in 1931 in India as a branch of TD Cementation Company Ltd., UK. It is in the business of offering design, engineering, procurement, and construction (EPC) services for infrastructure projects in India.
Clientele of the company include PSA Group, Adani, RVNL, NHAI, ArcelorMittal, Central Public Works Department, IRCON, Airport Authority of India and many more.
| CMP (27th December 2024) | ₹532 |
| Market Cap | ₹9,131 crores |
| 3 year Compounded Sales Growth | 41% |
| 3 year Compounded Profit Growth | 170% |
| Return on Capital Employed (FY24) | 27.42% |
Gulf Oil Lubricants India Ltd.
Gulf Oil is a part of Hinduja Group and is engaged in the manufacturing, marketing, and trading of automotive and non-automotive lubricants. It is among top three lubricant companies in India among private players.
| CMP (27th December 2024) | ₹1,209 |
| Market Cap | ₹5,955 crores |
| 3 year Compounded Sales Growth | 26% |
| 3 year Compounded Profit Growth | 15% |
| Return on Capital Employed (FY24) | 26.83% |
Future Trends and Sectors to Watch For
Analysing the future trends can also help you in identifying potential multibagger stocks.
For example, in 2024, Renewable Energy and Clean Technology was a strong investment theme and companies associated with the theme witnessed strong gains.
Stocks of Suzlon, Inox Winds, NHPC, Waree Renewables, SJVN, went on to become multibagger stocks in 2024.
Similarly, EV and charging infrastructure, AI and machine learning, Healthcare and biotech innovations, digital transformation and SaaS are the emerging global trends and stocks associated with these trends are witnessing strong investor attraction.
Investments in potential multibagger stocks of 2025 requires long term patience that may often take years to deliver exponential returns.
Also, diversification is important. Don’t put all your money in one stock, even if it seems promising. Choosing the right multibagger stocks can significantly impact your wealth creation in 2025 and beyond.
FAQs
How do multibagger stocks differ from regular stocks?
Multibagger stocks significantly outperform the market, offering exponential returns, while regular stocks typically provide moderate growth aligned with market performance. Multibagger stocks belong to a rising or emerging sector that has strong growth tailwinds.
How to identify potential multibagger stocks?
Stocks of companies with strong fundamentals, high growth potential, innovative business models, undervalued stock prices, and favorable industry trends have the highest chances of becoming multibagger stocks.
Are multibagger stocks a safe investment?
Multibagger stocks can provide exponential returns but are inherently risky due to their dependence on high growth expectations and market sentiment.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
