Legendary fund manager Peter Lynch’s book ‘One Up on Wall Street’ is a bible for many stock market investors. He has classified stocks into six stock categories — slow growers, stalwarts, fast growers, cyclicals, turnarounds and asset plays.
Fast Growers are the favourite category among most investors. These are small and aggressive companies that grow at an impressive rate of 15 to 25% every year. They grow faster than their competitors however, one should be careful while choosing these stocks. While there is a tremendous upside in the company, there is also a substantial downside. There is a high likelihood that they might take a beating if their growth is not sustainable.
Here are a few fast growers or high-growth stocks to add to your watchlist:
Deepak Nitrite Ltd
Deepak Nitrite manufactures basic chemicals, fine and speciality chemicals, performance products and phenolics. Its products cater to several industries like colourants, petrochemicals, agrochemicals, rubber, pharmaceuticals, paper, textile and detergents.
The company’s revenue grew consistently at a CAGR of 42.46% from ₹1,651.45 Crores in 2018 to ₹ 6,802.19 Crores in 2022. In fact, its net profit grew at an impressive CAGR of 91.68% from ₹ 79.02 crores in 2018 to ₹ 1066.64 Crores in 2022.
In the past five years, the company’s share price also increased from ₹ 249.75 to ₹ 1931.00, giving multibagger returns of 673.17%. With a market capitalization of ₹ 26,314 crores, Deepak Nitrite is a mid-cap company. It has an ideal return on equity of 22.94% and an ideal debt-to-equity ratio of 0.02. It is a high-growth stock and its shares were trading at a price-to-earnings ratio of 30.88, which is higher than the industry average of 16.59.
Affle (India) Ltd
Affle India is a global technology company which offers a consumer intelligence platform that delivers consumer recommendations and conversions through relevant mobile advertising for brands.
The company’s revenue consistently grew at a CAGR of 44.31% from ₹ 249.4 Crores in 2018 to ₹ 1,081.66 Crores in 2022. Moreover, its net profit grew at a CAGR of 44.81% from ₹ 48.82 crores in 2018 to ₹ 214.69 Crores in 2022.
In the past five years, the company’s share price also increased from ₹ 168.61 to ₹ 907.90, giving multibagger returns of 438.46%. With a market capitalization of ₹ 12,106 crores, Affle is a small-cap company. It has an ideal return on equity of 18.51% and an ideal debt-to-equity ratio of 0.07.
SRF Ltd
SRF is a chemical-based multi-business conglomerate that manufactures industries and speciality chemicals. It operates through four business segments: technical textiles, chemicals, packaging films and others.
The company’s revenue grew consistently at a CAGR of 22.13% from ₹ 5,589.04 Crores in 2018 to ₹ 12,433.66 Crores in 2022. In fact, its net profit grew at an impressive CAGR of 42.22% from ₹ 461.71 crores in 2018 to ₹ 1,888.92 Crores in 2022.
In the past five years, the company’s share price also increased from ₹ 384.88 to ₹ 2542.40, giving multibagger returns of 560.57%. With a market capitalization of ₹ 75,629 crores, SRF is a large-cap company. It has an ideal return on equity of 22.89% and an ideal debt-to-equity ratio of 0.43. It is a high-growth stock and its shares were trading at a price-to-earnings ratio of 34.85, which is higher than the industry average of 16.59.
Written by Simran Bafna
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