The ‘compound annual growth rate’ (CAGR) is the rate of return that would be required for an investment to grow from its beginning amount to its ending amount, assuming the profits to be reinvested at the end of each period during the life span of the investment.
In this article, we will list 2 Large-cap companies with 5-year stock CAGR, i.e., compounded returns the company’s stock has generated in a period of 5 years, of more than 25 percent.
Bajaj Finance Limited
Operating in India, Bajaj Finance Limited is a company serving its customers by providing solutions for asset acquisition through financing. The company conducts business under a single reportable segment which is ‘Financing’ and it generates all of its revenues from domestic operations within the country itself. The company has a market capitalization of Rs 411,934 crores and is currently trading at a price of Rs 6,805.
In a period of 5 years, the company’s stock showed a movement from Rs 2,150 to the current levels delivering mutibagger returns of around 217 percent. It means if someone would have invested Rs 1 Lakh in the stock, it would have converted to Rs 3.17 Lakhs within the above-mentioned period.
The above stock price shift showcases a 5-year CAGR of 25.92 percent keeping the re-investment assumptions constant.
Having a look at the financials, the revenues have been increasing consistently from Rs 18,487 crores during FY18-19 to Rs 41,397 crores in the latest FY22-23. Moreover, the net profits shifted from Rs 3,995 crores during FY18-19 and are currently reported at Rs 11,508 crores.
SRF Limited
Headquartered in Gurgaon, Haryana, SRF Limited is a manufacturer of intermediate chemicals offering tyre cord fabrics, technical textiles, coated fabrics, fluorochemicals, specialty chemicals, etc. The company markets its products under various brand names such as Petlar, Tufbet, Floron, etc. The company has a market capitalization of Rs 75,366 crores and its stock price closed at a price of Rs 2,542.
In a period of 5 years, the company’s stock showed a movement from Rs 385 to the current price levels delivering mutibagger returns of around 560 percent. It means if someone would have invested Rs 1 Lakh in the stock, it would have converted to Rs 6.6 Lakhs within the above-mentioned period.
The above stock price shift showcases a 5-year CAGR of 45.86 percent keeping the re-investment assumptions constant.
Having a glance at the financials, the revenues have been increasing consistently from Rs 7,100 crores during FY18-19 to Rs 14,870 crores in the latest FY22-23. Moreover, the net profits have been on the rise shifting from Rs 592 crores during FY18-19 and are currently reported at Rs 2,162 crores.
Written by Amit Madnani
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