Investing

Looking for upcoming multibagger stocks? 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 potential multibagger stock and is 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 potential multibagger stock and 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. 

Also Read: Penny Stocks | Top Gainers | Top Losers

FAQs on Multibagger Stocks

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.

Managing investments effectively can be overwhelming, especially when navigating the complexities of financial markets. Enter Portfolio Management Services (PMS) — a professional solution tailored for investors seeking expertise and precision in managing their wealth. 

In India, PMS has emerged as a significant investment avenue, managing over ₹15 lakh crore in assets as of 2023, reflecting its growing popularity and business potential. 

With an increasing number of high-net-worth individuals (HNIs) and affluent investors, the PMS market is expected to grow at a CAGR of 10-15% over the next five years, making it a lucrative industry for wealth managers and financial advisors.

This guide will help you understand PMS, its working mechanism, eligibility, advantages, limitations, and tips for choosing the right service provider. Whether you are a novice investor or a seasoned player looking for personalized financial strategies, PMS could be your gateway to optimizing your portfolio. (Source: SEBI, consulting firms such as PwC, EY, and Deloitte, and market research entities like CRISIL and McKinsey.)

What is Portfolio Management Services (PMS)?

PMS is a specialized investment service where professional portfolio managers handle your investments based on your financial goals and risk tolerance. Unlike mutual funds that pool money from multiple investors, PMS accounts are managed individually, ensuring a tailored approach. The service covers investments in equities, fixed-income instruments, and other financial products, aiming to achieve specific returns while managing risks effectively.

In essence, PMS provides:

• Personalized financial strategies to suit individual investor profiles.
• Direct ownership of securities instead of pooled units like in mutual funds.
• Proactive portfolio management, adapting to market dynamics and investor preferences.

How Does PMS Work?

When you opt for PMS, the process typically unfolds as follows:

Step 1: Initial Assessment

Your financial goals, risk appetite, and investment horizon are evaluated to create a strategy tailored to your needs. This step ensures that the portfolio aligns with your aspirations, including wealth creation, preservation, or specific milestones like retirement planning.

Step 2: Portfolio Customization

Based on the assessment, the portfolio manager crafts a bespoke mix of assets, including equities, bonds, and other securities.

Step 3: Execution of Investments

Once the plan is finalized, the portfolio manager executes trades on your behalf, leveraging their expertise to capitalize on market opportunities.

Step 4: Ongoing Monitoring and Adjustments

The portfolio undergoes continuous monitoring, adjusting to market trends or changes in your financial situation.

Step 5: Transparent Reporting

Regular performance updates and detailed reports inform you about your portfolio’s progress, ensuring clarity and trust.

Types of PMS

1. Discretionary PMS

The portfolio manager makes all investment decisions independently, ensuring quick execution without client intervention.

2. Non-Discretionary PMS

The manager provides investment recommendations, but the client can approve or reject trades.

3. Advisory PMS

The manager acts as a consultant, offering advice while the client manages and executes the investments.

Eligibility Criteria for Subscribing to PMS

Minimum Investment Requirement

As per SEBI guidelines, a minimum investment of ₹50 lakh is mandatory, making PMS suitable primarily for HNIs and affluent investors.

Documentation

Clients must provide standard Know Your Customer (KYC) documents, including PAN, Aadhaar, proof of address, and bank statements.

Regulatory Compliance

The PMS provider ensures adherence to SEBI’s regulatory framework, offering a safe and transparent investment environment.

Advantages of PMS

1. Professional Expertise

PMS clients benefit from the knowledge and experience of seasoned portfolio managers who use in-depth research and advanced tools to optimize investments.

2. Tailored Investment Strategies

Portfolios are customized to align with individual goals, ensuring a personalized approach to wealth management.

3. Diversification Benefits

Investments are spread across sectors and asset classes, reducing risks while enhancing returns.

4. Transparency and Control

Regular reports offer insights into portfolio performance, ensuring investors remain informed and confident in their investment decisions.

Benefits of PMS

Feature	Benefit
Customization	Aligns with personal financial goals
Active Management	Adapts quickly to market changes
Direct Ownership	Full control over securities
Expert Insights	Leverages professional expertise
Transparency	Provides detailed performance reports

Disadvantages of PMS

1. High Costs

Management fees, including fixed and performance-linked fees, can significantly impact returns.

2. Accessibility Limitations

The high minimum investment threshold restricts access for smaller investors.

3. Dependence on Manager Expertise

The portfolio’s success heavily depends on the manager’s skills and market knowledge.

Who Should Opt for PMS?

PMS is ideal for:

• HNIs and Affluent Investors: Those with significant investable surplus seeking professional management.
• Investors with Limited Time or Expertise: Individuals prefer outsourcing investment decisions.
• Long-Term Goal Seekers: Those targeting wealth creation or capital appreciation over extended periods.

Key Features to Consider When Choosing PMS

1. Manager’s Track Record

Assess the portfolio manager’s historical performance, focusing on their ability to navigate diverse market conditions. A consistent track record often indicates reliable expertise and risk management skills.

2. Fee Structure

Analyze the fee structure, which typically includes management fees and performance-linked charges. Ensure the costs are justified by the value delivered, as high fees can erode returns over time.

3. Investment Philosophy

Understand the manager’s approach to investing, including their focus on growth, value, or balanced strategies. Ensure their philosophy aligns with your risk tolerance and financial goals.

4. Reporting and Transparency

Choose providers that offer detailed and regular reports, including performance metrics, asset allocation, and risk analysis. Transparent communication builds trust and helps you stay informed.

5. SEBI Registration

Always prefer SEBI-registered PMS providers over unregistered ones. SEBI registration ensures:

• Regulatory Compliance: SEBI-regulated PMS providers must adhere to strict operational and reporting norms, safeguarding investor interests.
• Transparency: Registered providers follow standardized disclosure practices, ensuring clarity about fees, performance, and risks.
• Investor Protection: SEBI’s oversight minimizes the risk of fraud or malpractice, offering peace of mind.

On the other hand, Unregistered PMS providers operate without regulatory checks, posing significant risks such as lack of transparency, hidden charges, and potential mismanagement of funds. Always verify the provider’s SEBI registration credentials before investing.

Is PMS Right for You?

Portfolio Management Services provide a tailored approach to wealth management, blending expertise with customization. While the high entry barrier and costs may deter some, the benefits of personalized strategies and professional oversight often outweigh these drawbacks. As PMS continues to evolve in India’s burgeoning wealth management landscape, it presents a compelling option for investors seeking to achieve their financial aspirations efficiently.

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.

FAQs

Introduction:

When learning about Indian stock markets, it is seen that many global factors affect the primary Indian indices, NIFTY and SENSEX. The stock markets worldwide are interconnected like a web where an activity in one can affect another. This is why it is important not just to dissect the different types of share markets but also to decode the functioning of broader markets like the Asian stock market. What is the Asian equity market? What are the major indices in the Asian stock market? Let’s understand.

History Of The Asian Stock Market

The Asian stock market is a highly diversified market, with different regions offering unique investment opportunities. It started in 1875, when the continent’s first stock exchange opened in Mumbai, India. Not far behind, Japan launched the Tokyo Stock Exchange in 1878. Even earlier, in 1730, Japan pioneered the concept of futures trading, which laid the groundwork for modern stock markets and tools like the famous candlestick chart.

Later, China entered the stock market list with the Shanghai stock market in 1891 and the Shenzhen markets a lot later than this in 1990. Other countries started establishing their stock markets too. Hong Kong set up its exchange in 1891, Indonesia in 1912, and the Philippines in 1927. South Korea’s post-war exchange and Thailand’s revived market in 1975 showed how resilient Asia’s financial systems were. 

Today, the Asian stock market encompasses major stock exchanges, including the Shanghai Stock Exchange (China), Tokyo Stock Exchange (Japan), Bombay Stock Exchange (India), and Hong Kong Stock Exchange, as well as others in countries such as South Korea, Thailand, Singapore, and Malaysia.  

Major Stock Exchanges Of Asian Stock Market:

Tokyo Stock Exchange (TSE)

The Tokyo Stock Exchange is one of the largest stock exchanges in the world. It hosts over 3,900 companies, including Toyota, Sony, and Nintendo. As of November 2024, its market capitalization stood at $6.28 trillion (966 trillion Japanese Yen). TSE has the most listed companies globally, grouped into three market segments. The Nikkei 225 Index and the TOPIX are key indices tracking its performance, making it a vital player in global markets.

Shanghai Stock Exchange (SSE)

As of November 2024, the Shanghai Stock Exchange lists 2,277 companies with a market capitalization exceeding $7.28 trillion (53,027 billion RMB). It operates two boards: the mainboard and the STAR Market, launched in 2019 as a NASDAQ-style platform for high-tech start-ups. Known for its state-owned enterprises, the SSE is a cornerstone of China’s financial ecosystem.

Hong Kong Stock Exchange (HKEX)

With over 2,624 listed companies and a total market capitalization of $4.51 trillion, the Hong Kong Stock Exchange is closely tied to the Chinese market. It attracts investors for regional exposure, strengthening its role as a prominent financial hub.

Korea Exchange (KRX)

The Korea Exchange lists over 2,730 companies with a market capitalization of $1.7 trillion. It is home to globally recognized firms like Samsung Electronics, Hyundai Motor, and LG. The KOSPI index is a key benchmark for South Korea’s export-driven economy, which thrives on technological innovation.

Taiwan Stock Exchange (TWSE)

The Taiwan Stock Exchange specializes in electronics and semiconductors, with TSMC as its flagship company. As of October 2024, its market capitalization was $2.24 trillion, driven by rising global demand for semiconductor technology, a key driver of Taiwan’s economy.

Indian Stock Exchanges

• Bombay Stock Exchange (BSE):

The BSE, Asia’s oldest stock exchange, lists over 5,500 companies. As of December 2024, its market capitalization was $5.4 trillion (Rs.459 lakh crore). It plays a crucial role in India’s economy, with top firms like Reliance Industries and TCS listed on it.

• National Stock Exchange (NSE):

Established in 1992, the NSE revolutionized trading in India by introducing electronic systems. The Nifty 50, its benchmark index, tracks 50 leading companies like Infosys and HDFC Bank. In January 2024, NSE crossed a market capitalization of $4 trillion, highlighting its growing prominence.

Major Indices Of The Asian Equity Market:

Sr. No	Index	Price Level	52-Week High	52-Week Low	1-year Returns (%)
1	NIFTY	24,715.00	25,424.00	21,037.50	22.88
2	Nikkei 225	39,468.00	42,426.77	31,156.12	19.75
3	Straits Times	3,819.01	3,842.71	3,092.40	23.02
4	Hang Seng	19,856.91	23,241.74	14,794.16	22
5	Taiwan Weighted	23,015.69	24,045.73	17,151.58	31.55
6	KOSPI	2,488.77	2,872.25	2,360.51	-1.00
7	SET Composite	1,421.09	1,506.82	1,273.17	4.54
8	Jakarta Composite	7,269.63	7,910.56	6,698.85	2.70
9	Shanghai Composite	3,395.11	3,674.40	2,635.09	14.36

Overview Of Main Asian Stock Market Indices:

NIFTY 50 (India)

Launched in 1996, NIFTY 50 represents 50 of the largest and most traded companies across 14 sectors on the National Stock Exchange. It serves as a benchmark for India’s stock market performance.

Nikkei 225 (Japan)

Introduced in 1950, the Nikkei 225 is a price-weighted index representing 225 companies listed on the Tokyo Stock Exchange. A price-weighted index means the stocks are weighted based on their share price rather than market capitalization. The Nikkei index is a key indicator of Japan’s stock market and economic trends.

Straits Times Index (Singapore)

Established in 1966, the Straits Times Index tracks 30 top-performing companies listed on the Singapore Exchange. It focuses on the finance, real estate, and telecommunications sectors.

Hang Seng Index (Hong Kong)

Launched in 1969, the Hang Seng Index tracks 50 of the biggest companies listed on the Hong Kong Stock Exchange, reflecting the region’s economic and market performance.

Taiwan Weighted Index (Taiwan)

The Taiwan Weighted Index, introduced in 1967, covers all the listed companies on the TSE. The electronics and semiconductor sectors heavily influence it.

KOSPI (South Korea)

The Korea Composite Stock Price Index (KOSPI), launched in 1983, represents the overall performance of companies listed on the Korea Exchange. It is a comprehensive indicator of South Korea’s economy.

SET Composite Index (Thailand)

Introduced in 1975, the SET Composite Index tracks all listed companies on the Thailand Stock Exchange and captures the performance of key industries in the country.

Jakarta Composite Index (Indonesia)

Launched in 1983, the Jakarta Composite Index measures the performance of all listed companies on the Indonesia Stock Exchange, providing a broad view of Indonesia’s economy.

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Shanghai Composite Index (China)

Introduced in 1991, the Shanghai Composite Index tracks all A-shares and B-shares listed on the Shanghai Stock Exchange. Here, A-shares are stocks of Chinese companies listed on the Shanghai Stock Exchange denominated in Chinese Yuan (CNY) and primarily available for trading by mainland Chinese investors. On the other hand, B-shares are stocks of Chinese companies listed on the SSE but are denominated in foreign currencies (usually USD) and available for trading by foreign investors.

Bottomline

The Asian market is a powerhouse in the global economy, driven by its massive consumer base and rapid growth. It is also home to cutting-edge industries, leading the way in technology, artificial intelligence, robotics, and e-commerce. If you plan to invest in the Asian stock market, leveraging stock advisory services and utilizing stock screeners can be essential tools for navigating this dynamic market and identifying profitable opportunities for your portfolio.

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.

FAQ

In FY24, Coal India paid out ₹15,098 crore as dividends alone, more than Zomato’s total income of ₹12,961 crore. Interestingly, both companies have comparable market capitalization.  

Both Zomato and Coal India are popular among investors, showing how different ways businesses can create value for investors. While Zomato focuses on reinvesting for growth, Coal India is returning wealth to shareholders through dividends. 

In this article, we will explore what are high dividend stocks for 2025 and what investors should look for to identify companies with both stable income streams and long-term growth potential.

What are High Dividend Stocks?

High dividend stocks are referred to stocks of those companies, which distribute a significant portion of their earnings to shareholders as dividends consistently. 

Such stocks are preferred by investors looking for a regular income stream and long term wealth creation. Companies that pay steady and high dividends to shareholders mostly operate in mature industries with stable cash flows. 

Why Invest in High Dividend Stocks?

Generally, high dividend stocks offer the following benefits to investors:

Steady Income: Offer steady and regular income on investments and generate greater returns, which tend to improve over the long term.

Lower Volatility: High dividend stocks belong to stable and mature companies with strong cash flows. Stocks of such companies often display lower volatility in the stock market and are preferred by investors during challenging market conditions. 

Reinvestment Benefits: Investing in high dividend stocks allows you to reinvest the dividends in other high growth stocks or the stock itself to generate higher returns and get the benefits of compounding. 

What are the Factors to Consider While Investing High Dividend Stocks for 2025?

The following metrics should be considered while investing in high dividend stocks for 2025:

Dividend Yield: The dividend yield shows how much a company pays dividend to shareholders compared to share price. For example, if the stock is trading at ₹100 and pays an annual dividend of ₹5, then dividend yield will be 5%. 

However, if the stock price falls, the dividend yield will rise, which sometimes can be misleading to investors.

Dividend Payout Ratio: Compared to dividend yield, dividend payout ratio is considered a better metric. It shows how much of the company’s earnings are being paid out as dividends. For example, Coal India had a dividend payout ratio of 42% in FY24, which means, Coal India paid 42% of its earnings as dividend to shareholders. 

A steady payout ratio suggests the company is balancing shareholder returns with growth opportunities, which is good in the long term.

Dividend Growth: The company should have a history of consistent dividend payments and increase, which indicate financial strength and focus on returning wealth to shareholders. 

Earning Stability: The company should showcase consistent growth in earnings to support reliable dividend payments. 

Top 5 High Dividend Stocks for 2025

• Infosys
• ITC
• Asian Paints
• IRCTC
• CDSL

The stocks selected are large cap stocks with dividend payout ratio of more than 40% and Return on Capital Employed (ROCE) of more than 30%. 

Infosys

Infosys is India’s second-largest IT solutions provider and exporter in terms of revenue that enables clients to execute strategies for their digital transformation and next generation IT solutions. 

In the last three financial years, Infosys announced a dividend per share of ₹31, ₹34, and ₹46 respectively, indicating consistent increase in dividend payments. 

CMP (27th December 2024)	₹1,917
3 year Compounded Sales Growth	15%
3 year Compounded Profit Growth	10%
Return on Capital Employed (FY24)	42%
Dividend Payout Ratio (FY24)	80%

ITC

ITC is India’s largest diversified conglomerate that operates in five business segments including- FMCG- Others, FMCG- Cigarettes, Hotels, Paperboards, Paper and Packaging, and Agri Business. 

In the last three financial years, ITC announced a dividend per share of ₹11.50, ₹15.50, and ₹13.75 respectively.

CMP (27th December 2024)	₹479
3 year Compounded Sales Growth	13%
3 year Compounded Profit Growth	16%
Return on Capital Employed (FY24)	37.97%
Dividend Payout Ratio (FY24)	84%

Asian Paints

Asian Paints is Asia’s largest paint company that specializes in manufacturing, selling, and distributing a wide range of paints, coatings, and home decor products. 

In the last three financial years, Asian Paints announced a dividend per share of ₹19.15, ₹25.65, and ₹33.30 respectively.

CMP (27th December 2024)	₹2,271
3 year Compounded Sales Growth	15%
3 year Compounded Profit Growth	10%
Return on Capital Employed (FY24)	41.2%
Dividend Payout Ratio (FY24)	60%

IRCTC

Indian Railways Catering & Tourism Corporation is a state-owned company under the Ministry of Railways that provides online railway tickets, catering services, tourism packages, and packaged drinking water- Rail Neer. 

In the last three financial years, IRCTC announced a dividend per share of ₹3.5, ₹5.5, and ₹6.5 respectively. 

CMP (27th December 2024)	₹779
3 year Compounded Sales Growth	77%
3 year Compounded Profit Growth	94%
Return on Capital Employed (FY24)	46%
Dividend Payout Ratio (FY24)	47%

CDSL

Central Depository Services Limited is an important player of the Indian stock market, which is a Market Infrastructure Institution. It provides services to all market participants including exchanges, clearing corporations, depository participants (DPs), issuers and investors. CDSL is the largest issuer of the demat account in India.  

In the last three financial years, CDSL announced a dividend per share of ₹15, ₹16, and ₹22 respectively. 

CMP (27th December 2024)	₹1,778
3 year Compounded Sales Growth	33%
3 year Compounded Profit Growth	28%
Return on Capital Employed (FY24)	40.22%
Dividend Payout Ratio (FY24)	70.42%

Investing in high dividend stocks for 2025 provides a unique opportunity to balance investment yield with growth potential to maximize returns.  However, before investing in high dividend stocks for 2025, do thorough research, use different financial tools, or consult registered stock market experts, if needed. The stocks discussed above are not recommendations, and do your own research before investing. 

FAQ

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.

Hybrid mutual funds have become an increasingly popular investment option among investors who want a balance of risk and return. These funds combine the features of both equity and debt, offering a diversified portfolio with an optimal mix of risk. Hybrid mutual funds are ideal for investors who want exposure to both stocks and bonds without managing separate investments. 

In this article, we will delve into the different types of hybrid mutual funds, their benefits, and how they can serve as an efficient vehicle for both conservative and moderate investors.

Understanding Hybrid Mutual Funds

Hybrid mutual funds are a blend of different asset classes, such as equities, bonds, and sometimes other securities like gold or real estate. The main objective of these funds is to provide investors with a balanced approach by diversifying their investments across various asset classes. By doing so, hybrid funds reduce the overall risk while still offering the potential for returns.

For example, an investor in a hybrid mutual fund can expect to benefit from the growth potential of stocks, while also having the stability and security offered by debt investments. This asset allocation strategy helps smooth out market volatility by compensating for the potential fluctuations in equities with the steadiness of bonds.

Types of Hybrid Mutual Funds

Hybrid mutual funds can be classified into several types based on their asset allocation strategies. Understanding the different types can help investors make informed decisions based on their financial goals, risk tolerance, and investment horizon.

• Aggressive Hybrid Funds: Aggressive hybrid funds primarily invest in equities, typically around 65-80% of the portfolio. The remaining portion is allocated to debt instruments. These funds aim to deliver high returns, but the higher equity allocation also exposes them to greater risk. They are suitable for investors with a long-term investment horizon and a higher risk appetite. 

For example, the ICICI Prudential Equity & Debt Fund is an aggressive hybrid fund that focuses on capital appreciation through equity exposure.

• Conservative Hybrid Funds: Conservative hybrid funds are designed for risk-averse investors who prefer more stability. These funds usually invest around 25-40% in equities and the remainder in debt securities. While the potential for returns is lower than aggressive hybrids, the risk is reduced due to the larger exposure to debt. 

A classic example of this would be the HDFC Hybrid Equity Fund, which provides a balanced mix of equity and debt to help safeguard investments from market volatility.

• Balanced Hybrid Funds: As the name suggests, balanced hybrid funds aim to strike a balance between equity and debt, with a typical allocation of 40-60% in equities and the rest in debt. These funds provide moderate risk and return potential. 

SBI Equity Hybrid Fund is one example where the fund manager invests in a diversified mix of equity stocks and fixed-income securities.

• Dynamic Asset Allocation Funds: These hybrid funds are more flexible in their approach, as the fund manager can dynamically adjust the equity and debt ratio based on market conditions. They aim to maximize returns by adjusting the asset allocation based on the economic outlook. 

An example of a dynamic asset allocation fund is the Mirae Asset Hybrid Equity Fund.

• Multi-Asset Allocation Funds: Multi-asset hybrid funds invest in more than just equities and bonds. They might also invest in commodities, gold, or other alternative assets. These funds provide a higher degree of diversification. 

An example is the Aditya Birla Sun Life Multi-Asset Fund, which invests in a mix of equities, bonds, and gold.

Key Features of a Hybrid Fund

Here’s an overview of the main features of hybrid funds:

a) A Diverse Investment Approach: Hybrid funds combine a variety of asset classes, including both equities and debt instruments, as well as potentially other assets. This allows investors to gain exposure to multiple markets within a single investment.

b) A Balanced Portfolio: These funds maintain a balanced mix of assets, aiming to capture the benefits of each class. By balancing equities and debt, hybrid funds strive to provide better returns with reduced risk, helping you achieve both short-term and long-term financial goals. The equity component is geared towards wealth growth over time, while debt securities offer stability during market volatility.

c) Varying Investment Combinations: The equity-debt ratio can vary across different types of hybrid funds. These funds are designed to meet the diverse financial goals and risk tolerance of various investors, from conservative to aggressive. Whether you’re a cautious or risk-seeking investor, there’s a hybrid fund that can align with your objectives.

d) Long-Term Investment Potential: Hybrid funds are typically suited for investors who can commit to a long-term investment horizon, generally three to five years, to realize the potential benefits of this balanced investment strategy.

e) Suitable for All Risk Profiles: Hybrid funds can cater to different investor profiles. Aggressive funds are ideal for those with a high-risk appetite, while conservative funds are suited for risk-averse investors. The flexibility in the allocation allows investors to choose funds based on their risk tolerance.

How to Choose the Right Hybrid Mutual Fund

Selecting the right hybrid mutual fund depends on several factors, including an investor’s financial goals, risk tolerance, and investment horizon. Here are some pointers for choosing the right fund:

• Risk Tolerance: If you are risk-averse, opt for conservative hybrid funds or balanced funds. For higher returns, aggressive hybrid funds may be a better choice.
• Investment Horizon: Longer-term investors may benefit more from aggressive hybrid funds, while those with a shorter horizon might prefer conservative hybrid funds.
• Fund Manager’s Track Record: Always consider the experience and track record of the fund manager, as their expertise can significantly impact the performance of the fund.

Understanding How a Hybrid Mutual Fund Operates

A hybrid mutual fund aims to provide a well-rounded investment strategy that delivers both consistent income and long-term capital growth for its investors.

The fund manager designs the portfolio in line with the scheme’s investment goals, strategically dividing the assets between equity and debt instruments in different proportions. Additionally, the manager actively adjusts the portfolio by buying or selling assets based on market conditions to optimize returns.

Why Consider Investing in Hybrid Mutual Funds?

Hybrid mutual funds provide a balanced approach to investing, offering a combination of equity and debt securities. Here’s why you should consider investing in them:

Hybrid funds strike a balance between risk and reward, being less volatile than equity funds yet more dynamic than debt funds. This makes them an attractive option for investors seeking higher returns with moderate risk.

For beginners hesitant about diving into the equity markets, hybrid funds offer a safer entry point. The debt portion of the fund provides stability, while the equity exposure allows investors to explore potential growth opportunities.

These funds help investors benefit from the growth potential of equities while also mitigating the impact of market volatility, making them an excellent choice for those looking for a balanced investment strategy.

In conclusion, hybrid mutual funds offer investors a balanced approach to investing, combining the growth potential of equities with the stability of debt instruments. By diversifying across asset classes, these funds reduce the risk while still aiming to deliver attractive returns. Whether you are a conservative investor looking for stability or an aggressive investor seeking higher returns, hybrid mutual funds can provide a tailored investment option to meet your goals. 

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