The 100-bagger stocks that survived the test of time and market cycles over 20 years

• PI Industries, KEI Industries and Bajaj Finance are top 100-bagger stocks that gave over 100-fold returns in 20 years.
• The list includes companies from sectors like industrials, consumer discretionary, pharma etc and more.
• Most of these stocks have a focussed business approach, prudent capital allocation and generated more cash than it consumed.
  

While multibagger stocks are those that gave 100% returns in one year — 100 bagger stocks are those which gave 100 fold returns over 20 years. These stocks with focused business models, sharp growth strategies and good valuations have delivered millionaire-making returns to investors over time.

The stock that gave spectacular returns in the last 20 years is PI Industries. The stock has delivered a massive 6,845 returns – compounding at a rate of 55% over the years. Next in the list is KEI Industries that too compounded at a rate of 50% to give 3,315 times the returns. The third stock which compounded over 1,000 times is Bajaj Finance and gave 1,336x returns over 20 years.

Over four stocks gave over 500x returns, with over 25 stocks that gave over 100x returns — over the years ahead of two economic cycles.

The last 20 years saw two cycles — an upcycle from 2003 to 2010. After seven years of good luck, the downcycle that started in 2011 lasted till 2020. These stocks compounded by a minimum of 25% over 20 years.

“Business models that flourish during economic upcycles and preserve value during downturns can be labelled as ‘through-the-cycle’ (TTC) compounders.,” said ICICI Securities.

Most of the stocks that constitute this list hail from traditional manufacturing – commodities like chemicals and cement, building materials, home appliances, capital goods, engineering, discretionary consumption, staples, pharma, etc. A few of them are from the services sector such as financials and rating agencies.

Here is the list of top 100-baggers and their returns


Source: I-Sec

The success secrets of 100-baggers

The report also analyzed what made these stocks provide consistent returns over the years – and the answer lies in a focussed business model.

“None of the stocks had a diversified business approach while there was a sharp focus on core business. This factor also speaks volumes about the quality of the management and the sharp focus they bring to the business strategy,” the report said.

The second success secret is focus on value creating growth with good return on equity. “This is again a virtue of the management quality and indicates prudent capital allocation decisions while the tailwinds of economic cycles propelled earnings growth,” said I-Sec.

The third is generating more cash than it consumes. These 100-bagger stocks’ cumulative operating cash flow (OCF) exceeded cumulative capex over the past two decades for most of the stocks. The only exceptions being one-off acquisitions.