How to spot multibagger stocks? Check top market guru Raamdeo Agrawal's easy tips, strategy for 10x return, share market outlook, and more: BT Market Masters
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As stock markets hover near all-time highs, investors are still looking for investment opportunities to create wealth. In an exclusive conversation with Siddharth Zarabi, Managing Editor, BTTV, and Sakshi Batra, Sr. Associate Editor, BTTV, on the show Market Masters, top Market Guru Raamdeo Agrawal, Chairman & Co-Founder, Motilal Oswal Group, shared tips to spot multibagger stocks, investment strategy for 10x returns, and more to create a winning portfolio
Market Guru Raamdeo
Agrawal: BT Exclusive
According to Raamdeo Agrawal, a retail investor needs to identify companies that can deliver a 25% growth in earnings over the next 10 years. He said that an investor has to make sure they understand the business well. If a retail investor is looking for a 10 times jump in a stock price in five years, they would probably have to look at speculative trades, he added
How to spot
multibagger stocks?
Market veteran Raamdeo Agrawal believes one should have clarity on the difference between a speculative trade and investing in a potential multibagger. If a retail investor is looking for a 10 times jump in a stock price in five years, he would probably have to look at speculative trades, he said
Raamdeo Agrawal
Exclusive: Investment
strategy for 10x returns
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On the other hand, a 10 times return in 10 years, as per Raamdeo Agrawal is decent -- 25% return compounded annually, and would be considered a 'multibagger'. To achieve such a return, a retail investor needs to identify companies that can deliver a 25% growth in earnings over the next decade, the ace investor noted
Raamdeo Agrawal
Exclusive: Trick to identify
multibaggers
Raamdeo Agrawal
If the investor got his projections right, he may end up seeing 23-28% returns annually over the decade period, thanks to re-rating on the counter. "If you are conservative in buying price, that is how a portfolio approach works. Out of 10 stocks, you will get 4-5 stock selections right while another 4-5 will deliver mediocre returns. But you will still end up getting 24-25% return annually," said Raamdeo Agrawal in an interview with BTTV
Raamdeo Agrawal on
multibagger returns
According to Raamdeo Agrawal, one has to do homework, focus on the company's earnings, make sure to understand the business of the company well, and do spreadsheets for those companies. "Look at options volumes, look at futures volumes, people don't want to make money tomorrow; they want to make money in the next half-an-hour. I don't come from that school," he said
Raamdeo Agrawal shares
investment strategy
Raamdeo Agrawal, who is hopeful about corporate earnings over the next 12 months, said the market delivered 13-14% return annually over the last 35-40 years and that the future is even brighter. Even if one does not assume optimistic estimates and consider the earnings growth in the next 40 years to be similar to the last 40 years, the market veteran said that 12-15% returns annually are possible in the long-term
Up to 15% returns annually
Raamdeo Agrawal portfolio
Raamdeo Agrawal believes the Indian stock market is reasonably-priced and broadly distributed. He feels stocks are neither depressed nor there is any exuberance in the market, at present, similar to the ones seen in 2000 and 1992. Agrawal said the $3 trillion Indian stock market should be around the $9-10 trillion mark over the next 10 years
'Indian market
reasonably priced'
"Do we have the patience? The market is all about patience," Raamdeo Agrawal said while advising investors to stay put. The market veteran said TCS, Wipro, and Infosys were small companies in 2000 but are giants now. "One has to give time not only to the company to grow but also to the market itself," he said
Raamdeo Agrawal's
advice for investors
According to Ramdeo Agrawal, the domestic stock market may deliver 12-15% return in the long term, if the corporate earnings keep on growing at the ongoing pace. He said the market is erratic and no one can predict short-term movements, suggesting the futility of such an exercise
India share market outlook
If one looks at a 40-year chart, one may think that the stock market has not seen any correction. This is even as the market has seen many 40-50 percentage points corrections from highs during the last four-decade period. "One has to be very careful with the market. Nobody knows the market truly. But my experience tells me that if the corporate earnings are growing at 15%, there is no reason why eventually we should not be making 15-17% return in the market," he said
Raamdeo Agrawal's
market outlook
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