Good that you are looking for PE-rerating stocks. But let me tell you the way I think. There are different kinds of businesses but only certain businesses are fit for larger holding. For example see Atul auto in my pf. It went up actually 60% from my first buying price (I loaded later again). **But the nature of the business doesn’t allow me to hold 20-25% in the portfolio. **
** The point I want to make here is 60% growth on 10% portfolio allocation is equal to 30% growth on 20% portfolio allocation.**
This is the same thing I am discussing with Subash nayak on another thread.
** GRUH finance can grow at 30% with 40% dividend payout. The Loan book growth is around 33%.** There is big scope for operating leverage in GRUH. The cost to income at 19%. There is a big scope for improvement there. And moreover Rural incomes are multiplying. That is the reason why even the Kaveri Seeds and even that VST tillers is running fast. The theme is rural. Rural. Rural.
GRUH, Repco are literally risk-free businesses. I can take them 20-25% portfolio. Yes I want a multibagger but I want a multibagger where I can play a fat pitch in your words. Like that of Page Industries. I made one such in VST industries. And in IndusInd bank. But VSt tillers has moved up 150% or Kaveri moves up 200% or Atul Auto moves up 1000% It does not make me so much money since I cannot play a fit pitch there.
This is the most critical point in portfolio management.
**Most people waste energy unnecessarily to pick a multibagger stock without understanding this “fat pitch” concept. Even I did that. **
Since you are a newbie, your view can change, but it is very tough to stay flexible in investments. Just ponder over it. “All Multibaggers are not MoneyBaggers.”
Next 25 years in India, As ease of business “eases” and consumption increases there will be many many risk free multibagger stocks that can come up. **We must keep our eyes open. **
Keeping the current interest rate environment aside, If GRUH can start growing at 30-35% I think PE will easily cross growth rate in a couple of years. And Repco - I think it is a fat-pitch multibagger. I think the stock should see a four figure price in 2- 2.5 yrs.
After a brief lull I think NBFC’s will make a comeback.
We can have stock by Stock Analysis too. Let’s start with you. Give me a stock you want lets analyse one by one.