Top Growth Stocks in India: Have you ever wondered what are the things that you could achieve if you had made the correct decisions or a correct course of action at the right time? And what is the opportunity cost for these foregone decisions?
We commonly hear people talking about “I wish I had invested so and so money in so and so stock at that time I could’ve been a crorepati by now” but in reality, they ignore the stocks which have even more potential right now!!
Stock selections in investing may seem customary decisions at first. But these decisions have transformed the wealth of numerous individuals and have catapulted them amongst the A-listers of the investing society.
In this article, we are going to focus on the top growth stocks in India which hold the potential to turn your investment into a highly lucrative return in the future.
What are growth stocks?
The theory of innovation says that the companies or entrepreneurs who will keep innovating will keep leading the market and these companies have a significant impact on our life in the present and are going to shape our future by providing an aura of ease and convenience.
The growth companies are more focused on the long-run growth and profitability rather than keeping the shareholders happy with dividends.
Considering these factors makes them a favourite amongst the investor as these have the potential to outperform the overall market average by their performance.
We are going to list out these top growth stocks in India showing these characteristics.
Every sector or company has its relevance in different points in time but some are the exception to this idea and they always adapt and amend themselves to the changes. These companies keep investing in themselves to be better as per the market demands.
Top Growth Stocks in India
Let us look at the top growth stocks in India having high prospects.
Growth Stocks in India #1 – KEI Industries
At No. 1 of the top growth stocks in India, we have KEI Industries a company from the manufacturing sector. The government has provided the essential boost to manufacturing with the Production Linked Industries (PLI) scheme and focusing on capital infusion has made these companies even more flattering from growth and investing standpoint.
KEI Industries is considered one of the favourite stocks in the manufacturing sector as given 2X returns in FY21-22. KEI Industries Formerly known as Krishna Electrical Industries is based in Pune India.
The products they manufacture a diverse range of products that includes Extra high voltage power cable, high voltage power cable, medium voltage power cable, low voltage power cable, house wire, solar cable, and stainless-steel wires, manufacture house wiring rubber cable.
KEI Industries supply their products to various sectors like automobile, refinery, steel and cement industry, and so on. KEI industries have a global presence and supply products to more than 45 countries around the world.
It also provides engineering procurement construction (EPC) solutions in the area of GIS and AIS.
|Revenue||₹ 2628.46||₹ 3465.50||₹ 4230.98||₹ 4887.80||₹ 4181.54|
|Net Profit||₹ 93.65||₹ 144.76||₹ 180.86||₹ 256.30||₹ 273.31|
Just a glance over the past 5 years’ financials gives you an idea about the exponential growth. The KEI Industries as the profits have almost tripled over the period and revenue has been gradually picking up the pace.
Like every other manufacturing company, KEI industries faced headwinds due to the Covid 19 disruptions in production and deliveries but was able to successfully navigate through them and now fully recovered from them.
|Face value (₹): 2||Net profit margin: 6.54|
|Market cap (Cr.): ₹ 9834||Current ratio: 2.13|
|Promoter’s Holdings (%) 38.02||Debt to equity: 0.17|
|Stock P/E:28.15||ROE (%) 16.76|
|EPS (₹): 39||Dividend yield (%) 0.18|
KEI Industries continue its stellar performance in Q3 FY22 by generating Rs. 1,563cr. in revenues and Rs.101 in profits. Being in the manufacturing business KEI Industries has a low debt to equity with increasing net profit margins.
The company has managed a low PE compared to its peers in the industry promises a fair valuation despite the meteoric rise.
We can see from the above chart the stock prices were up trending high initially but were encountered with the Covid 19 disruptions hampering the stock prices and productivity. Later in FY 21-22 was able to recover from this temporary challenge and came up good once again.
- Reduction in custom and import duties taxes on the raw materials and Capex investment push by Government in the budget 2022. This creates a habitat for the growth of manufacturing industries.
- India, being an emerging economy urbanization and industrialization hold key to the development. This is turning out to be a boon for the manufacturing industries like KEI Industries.
Economy of scales
- Being comparatively new to the industry KEI industries is capitalizing on the economies of scale in their favor and is expected to continue in future
Growth Stocks in India #2 – Mindtree
The companies involved in artificial intelligence, machine learning, and providing technical solution has been on the cards of many observant investors.
As it turns out to be in FY21-22 a very successful trade for numerous IT investors. Mindtree is one of these resurgent companies which rose from the trough levels and to reach the heights to be one of the top growth stocks of India.
Since its inception in 1999, Mindtree has taken the head start having the technological advancement and capitalizing over an era of Information and technology domination over its course.
Mindtree has been actively involved in cloud services, data and business intelligence, IT automation, IT consulting, and IT security solutions.
With the surge of digital penetration overall IT industry has been amongst the favourite picks of the investors. This is due to the emergence of technologies like big data, artificial intelligence, machine learning cyber security which have benefitted the profitability and growth of this sector.
|Revenue||₹ 5236.40||₹ 5462.80||₹ 7021.50||₹ 7764.30||₹ 7967.80|
|Net Profit||₹ 418.60||₹ 570.10||₹ 754.10||₹ 630.90||₹ 1110.50|
The past 5 years paint a positive picture for Mindtree as the revenue and the profits were constantly rising except in FY 2020 due to the Covid 19. But later, the company bounced back netting 176% of profit for 2021.
|Face value (₹): 10||Net profit margin: 13.94|
|Market cap (Cr.): ₹ 63816||Current ratio: 2.87|
|Promoter’s Holdings (%) 61||Debt to equity: 0|
|Stock P/E: 42.63||ROE (%) 29.79|
|EPS (₹): 91||Dividend yield (%) 0.65|
In Q3 of FY21-22 Mindtree, profits rise 34% to Rs. 437 Cr. and revenue 36% to Rs.2750 Cr. due to the large end-to-end digital transformation and aggressive customer mining the company was able to reach these figures.
High promoter stake and zero debt to equity ratio solidify its position in the top growth stocks in India. With every other grow company stock PE is on the higher side but when we compare it with the earnings, it seems fairly valued.
We can see from the above chart the stock prices have more than doubled over one year. Currently, the stock is going through a consolidation stage but we can expect a positive run in the future.
- Unlike manufacturing IT companies have a low cost of operations on the global scale as well
- Make in India and other government initiatives have greatly supported the IT sector
- India is one the country abundance of technically skilled laborers which are key to the development of this sector
- Amalgamation of technology in every major sector like banking, licensing, etc.
Growth Stocks in India #3 – Bajaj Finance
At no.3 of the top growth stocks in India features the Bajaj finance. A leading company from the NBFC sector has been delivering promising results from time to time.
As the role of banking has changed a lot in the past few years with the creation of ease of access with the development of digital infrastructure has intertwined the whole financial ecosystem.
In the common understanding, NBFC (Non-Banking Financial Company) are the companies involved with borrowing and lending business as they borrow from the bank and lend it to their customer and earn the interest differentials their income.
Bajaj Finance is primarily a subsidiary of Bajaj Finserv based in Pune. Bajaj Finance is involved with personal finance, SME and commercial lending, and wealth management targeting the consumer lending space.
Being a leading NBFC, Bajaj Finance has a strong customer base with 294 consumer branches and 494 in the rural areas showing the penetration across India.
|Revenue||₹ 9966.71||₹ 12785.86||₹ 18487.14||₹ 26373.77||₹ 26689.57|
|Net Profit||₹ 1836.38||₹ 2496.37||₹ 3994.99||₹ 5263.75||₹ 4419.82|
Digitalization has proved to be a boon for Bajaj finance as it has provided customer convenience and broaden the customer base beyond physical banking.
This is reflected by the continuous increase in the AUM’s and the same is reflected in the earnings. Launching the operations such as mortgage loans, foreign currency programs, and the Loans against Securities (LAS) program has increased the scope of operation of the company
|Face value (₹): 2||Net profit margin: 16.56|
|Market cap (Cr.): ₹ 418330.11||Current ratio: 1.46|
|Promoter’s Holdings (%) 56.03||Debt to equity: 3.60|
|Stock P/E: 70.24||ROE (%) 12.86|
|EPS (₹): 99||Dividend yield (%) 0.14|
In Q3 of FY22, Bajaj Finance added 7.4 million new customers and its AUM saw an increase of 26% YoY and currently stands at Rs.1,81,300 Cr. PAT rose by 85% YoY and stood at Rs. 2,125 Cr. and revenue increased by 28% at Rs. 8532 Cr.
Being in the financial sector fall in the NPA to 0.78 % provides an air of optimism
The stock prices have been in an uptrend except for the Covid 19 disruption. The stock has to deliver astounding returns of 160% in FY21-22.
- NBFCs provide consumer-based service with the help of data analytics they are better understanding the specific needs of the customer. These factors help the NBFCs to develop tailor offerings for their customers
- Advancements in technology has led to higher penetration and ease of access and onboarding of new customers
- RBI’s liquidity risk management framework 2019 ensures the liquidity management for NBFC which is a major concern for NBFC.
Growth Stocks in India #4 – CDSL (Central Depository Services (India) Ltd.)
With the process of automation in the securities markets and there have been transformative changes in trading with technological innovation. Being one of the authorized depositories with the SEBI, CDSL has been at the core of this process of change.
CDSL is responsible for holding financial assets like shares, debt instruments, mutual fund units, and other financial assets. It provides services to all market participants such as Exchanges, clearing corporations, Depository Participants (DP), issuers, investors.
CDSL provides its services via the Depository participant (DP). Depository participants act as an intermediatory just like stockbrokers.
CDSL offers services in De-materialization and re-materialization of securities, pledging of securities, processing delivery, and receipt instructions, and facilitating settlement with the stock exchange.
CDSL offers internet-based facilities like EASI (electronic access to securities information) for the BO (Beneficial Owner) to monitor their accounts, EASIEST (electronic access to securities information & execution of secure transactions), an internet-based facility, allows BOs (Beneficial Owner) to submit debit instructions through the internet, SMS alerts facility via SMART (SMS Alerts Related to Transactions) and also E-voting facility to the ever-increasing investor base.
|Revenue||₹ 146||₹ 187.69||₹ 196.25||₹ 225.11||₹ 343.72|
|Net Profit||₹ 85.78||₹ 103.18||₹ 113.51||₹ 106.16||₹ 200.34|
CDSL has seen strong financial growth with the increase in retail participation as the data shows more than 1.51 Cr. of new investors have opened their Demat account in FY21 and FY22 respectively.
The ease of access to the digital platforms with digital payment, features has boosted this participation which is reflected in the revenue and profit growth.
The company recorded the highest ever Demat registration of 4 crores in July 2021 becoming the first depository to achieve this milestone.
|Face value (₹): 10||Net profit margin: 58.56|
|Market cap (Cr.): ₹ 15,720||Current ratio: 5.06|
|Promoter’s Holdings (%) 20||Debt to equity: 0|
|Stock P/E: 55.11||ROE (%) 25.14|
|EPS (₹): 27||Dividend yield (%) 0.60|
In Q3 FY22 CDSL posted an increase of 55% in the net profit on a YoY basis currently standing at Rs.84 Cr. and revenue at 151 Cr. Presently, CDSL has Rs.37900837 million value of securities in the Demat custody and with a record number of 5,84,97,541 investors accounts reached in Q3 FY22.
From the above chart, we can see the growth in earnings, stock price remained parallel with retail participation. With this factor working in favour, the stock delivered about 300% returns in FY21-22.
- CDSL commands over 70% of the market share with only competitor NSDL.
- CDSL has a low-cost business model which requires minimum fixed cost and high operating leverage resulting in higher revenues.
Low Fee structure
- CDSL charges low fees for discount brokers and Depository participants with fewer registration requirements.
Growth Stocks in India #5 – Adani Green Energy Limited
Finally, a company from the most talked-about sector in recent time i.e., renewable energy sector and India’s renewable sector is the 4th most attractive renewable sector in the world.
Adani Green has been one of the largest companies in this space. Based in Ahmedabad, Gujrat, the company is involved with production and power generation through wind and solar projects.
With India switching to more renewable or green energy it has increased the scope of companies like Adani Green in the future.
When all other sectors were facing the brunt of lockdown as a consequence of Covid 19 Adani Energy was specified as an essential service. This exception from restrictions has given the company an advantage over its peers in the industry.
Adani Green has a widespread presence in 11 states across India with solar power capacity production of 2403 MW and wind power production of 247 MW.
|Revenue||₹ 501.65||₹ 1480.28||₹ 2057.98||₹ 2549||₹ 3124|
|Net Profit||₹ (46.67)||₹ (137.52)||₹ (473)||₹ (23)||₹ 210|
Looking at the above comparison we can see a 6X jump in revenue in just 5 years. If we look at the profits company has shown a consistent upsurge it has turned from loss-making to profit-making within 5 years.
The turnaround in profits is just not because of the profitability it is also due to the method of calculating depreciation. Earlier Adani green was using the written down value method now they have adopted the straight-line value method for calculating depreciation.
Adani Green has focused on becoming one of the biggest solar energy companies by 2025 and the biggest renewable energy company by 2030. Adani green has numerous joint ventures major including Total SE. where Total SE invested 3707 crores.
|Face value (₹): 10||Net profit margin: 5.63|
|Market cap (Cr.): ₹ 301,049.29||Current ratio: 0.67|
|Promoter’s Holdings (%) 61.27||Debt to equity: 10.85|
|Stock P/E: 636.47||ROE (%) 21.67|
|EPS (₹):3||Dividend yield (%) 0|
In Q3 of FY 21-22, Adani Green posted a PAT of Rs.48 Cr. 19.5% increase from the previous year, and revenue from operation increased by 8% to Rs.1400 Cr. (QoQ). The company also increased its operational capacity by 83% now stands at 5410 MW.
Ain addition to the above Adani Green has signed a UN Compact committing to develop and operate Renewable Energy Generation Capacity of 25GW by 2025 and 45GW by 2030.
Adani Green has been greatly benefitted from the contract due to the sharing commonality of objectives with the government.
A change in the trajectory is visible as the company focused on more long-term sustainable projects which created an optimistic environment. The company recorded CAGR profits of 13.15 on profit and CAGR sales of 45.27 in FY21-22.
High Debt to equity and high PE raises red flags but is a growth-oriented company with a futuristic vision that provides investment credibility to the company. with these prospects making it one of the top growth stocks in India.
- With global warming and climate change eventually, we’ll need to switch to green and renewable energy and Adani Green has made a place for itself by investing in the future.
Long term agreement
- Adani Green is taking over the sector by signing the agreement of 25 years so Adani Green will be benefitted largely in the long term rather than in short term.
- Every country is going in the direction of reducing emissions and use of renewable resources. Hence the government supports companies from this sector who are involved in the production and infrastructure of resources of green energy.
Disclaimer – All the stocks mentioned above are for educational purposes and should not be taken as investment advice. Please do your own research before investing.
List of growth stocks in India by market cap
|Sl.no||Company name||Market cap (in crores)|
|1||Bajaj Finance||₹ 4,18,330|
|2||Adani Green||₹ 3,01,049|
|5||KEI Industries||₹ 9834|
These were the top growth stocks of India that have given multi-bagger returns and have a promising future ahead. but like in every sector risks are involved so the investor must be vigilant with the selection of the correct stock by comparing the strengths and their viability in the future. Happy Investing !!