Stock markets appear to be in a relentless recovery with many stocks turning to multiple indexes in a marathon since their March 2020 lows. While focusing on them at their lows was never easy amid the agony of the time, identifying multiple signs is not It’s easy to do over longer periods of time, too, BL Portfolio analysis shows. Over the past decade, 351 stocks listed on the UK stock market have seen returns multiplied by at least 10 times.
In this, a deep dive into the top 50 multi-brand sites (with current market value of at least Rs 20,000 crore) reveals that it has been difficult not only to identify but also to hold for periods of up to 10 years. Aside from having no clear patterns to help identify, these stocks have also suffered from large drawdowns and long periods of stagnant returns.
Signs of hindsight
While four of the 50 largest stocks analyzed were indeed large caps in 2011, the remaining stocks were either medium bets (22) or small caps (24) that made their way into large/midsize groups.
Was there anything that could foretell the prospects for these 50 stocks? Their cheap ratings could have been indicative, based on the fact that five of the top ten on this list were trading single-digit private stocks at the time.
However, as many as 17 of today’s top 50 multi-brand sites, with valuations above the Nifty 50, traded in 2011. For example, while Nifty’s consolidated price-to-earnings (PE) hovered around 16 times in 2011 (according to For Bloomberg), Britannia has traded in PE more than 44 times. The stock has risen 16-fold in the past decade. PI Industries, which gained 3,137 percent, traded in 24 times PE at the time.
Were there sectors that stood out? Sectors such as chemicals, IT and pharmaceuticals saw more than five names in each segment pop up on the list. But the 50 biggest multi-brand workers of the past decade have been scattered across other sectors as well.
Not for the faint of heart
Even if you’re lucky to spot some of these stocks, you’ll likely have exited in overlapping corrections. Multibagger shares go through several periods of decline before rewarding its shareholders with such superior returns. For example, Bajaj Finance’s 10-year journey that ended with returns of over 190 times, was not at all linear. The stock has gone through at least 8 pullbacks (corrections of more than 15 percent since previous highs) — some as sharp as the 60 percent drop seen during the March-May 2020 period.
While most of these pullbacks were driven by the broader market, some stocks also saw corrections due to volatility in business fundamentals. Whether it is holding on to such stocks or making corrective exits would put investors in a bind. For example, Mindtree’s stock fell by 31 per cent in October-November 2018 to ₹804 per piece from its previous peak of ₹1,162.
This was on the heels of a poor comment on the outlook from management, on the September 2018 earnings call. The stock took another hit from L&T’s hostile takeover that ended in July 2019 and fell to INR 667. However, the stock, now trading at $4,693, has risen more than 50 times since 2011. Regardless, for many multiple brands, much of the rally has been accumulating in shorter periods, such as the recent market massacre in March. 2020. Continuing Systems, for example, delivered 3.3 times returns from October 2011 to March 2020. However, since its March 2020 lows, the stock has risen more than 7.6 times to $4,207 apiece now.
JSW Steel and Tata Elxsi also saw a similar range in returns. So, as effective as it may sound, it is not easy to time your entry and exit based on broader market movements either. Thus, if you are pushing yourself to miss the gems of the last decade, remember that hindsight is always 20/20.