Mutibaggers in making: 14 stocks for 100% returns in 3 years

DAM Capital has come out with a list of 14 stocks that it calls 'DOUBLER stocks', as the brokerage believes they offer upside and meet the profit after tax CAGR required to double in three years. DAM Capital said its analysts used their judgement to select high-conviction ideas across market cap after adjusting for any re/ de-rating. The list include Glenmark Pharma Ltd, Sharda Cropchem Ltd, Strides Pharma Science Ltd, Entero Healthcare, Greenlam Industries Ltd, Radico Khaitan and Ramkrishna Forgings Ltd. M&M Financial Ltd, TVS Motor Ltd and PNB Housing, PCBL and JSPL are some other stocks seen doubling over the next three years. 

"At this uncertain juncture, SMidcaps are generally most vulnerable. Yet, as one needs a shortlist of what’s long term intrinsically sustainable, we identified stocks that can double in 3 years (across market caps) based on their intrinsic growth. Separately we provide our best large cap buys on a 1-year timeframe," DAM Capital said.

In the case of Glenmark Pharma, DAM Capital said the company has decisively corrected its leverage issues with the Rs 5,650 crore Glenmark Life Sciences stake divestment.  "Glenmark’s R&D subsidiary, IGI, has shared a very promising initial data for its investigational oncology drug ISB 2001. In our view, this creates significant possibility of out-licensing of ISB 2001 over the next few quarters - could be a value unlocking event for the stock if this comes through," it said.

On Sharda Cropchem, DAM Capital said the company has already built a critical mass in EU and is strengthening its presence across other regions. "Sharda is well-placed to leverage the lower-priced supplies emanating from China unlike other Indian peers which rely on domestic manufacturing," it said.

In the case of Greenlam Industries, while the company is seen dominating the laminates space, its foray into the high-growth category of particle board sets a platform for robust earnings growth from FY26 onwards, DAM Capital said.

"Although near-term margins/RoCE will remain under pressure, new capacity ramp-up (esp. particle board equals higher margin profile) and subsequent debt reduction (low capex intensity in upcoming years) should drive 3 times EPS CAGR over FY25E-27E," it said.

Radico Khaitan's continued thrust on building a luxury and premium portfolio, through brands such as Rampur and Sangam in whisky and Jaisalmer in Gin, would enable improvement in realisation per case and robust growth in the P&A category. 

The scalability potential from the recently acquired subsidiaries is expected to make a significant contribution to Ramkrishna Forgings' top and the bottomlines over the next 2-3 years.

"Given the higher contribution from the 125cc+ segment, increased exports and improved average selling price (ASP), we believe that Ebitda margins would expand by over 100bps from current levels over the next two years, which would be a key
trigger for a re-rating of the stock," DAM Capital said on TVS Motor.

TVS Motor is eligible for PLI incentives but has not accrued the benefit compared to its peers. Upon accrual, this amount would further support margin expansion and net profitability, it said.

On PNB Housing Finance, the brokearge said the company may clock 17-18 per cent growth CAGR with RoAs of 2.3-2.5 per cent over FY25-FY27E. "We believe that the stock is currently trading at an attractive valuation of 1 time. With visible improvement in the company’s performance, we expect the multiple to re-rate to ~1.5-1.6 times on sustained execution," it said.

On PCBL, DAM Capital anticipates generating Rs 9,500-10,000 crore over the next five years, with cash flows increasing annually due to higher capacity and sales volumes. This cash will support growth initiatives and debt reduction, it said. 

Mahindra & Mahindra Financial is expected to see 27 per cent growth in earnings  over FY25-27E with an uptick in RoAs to 2 per cent (from 1.7 per cent in FY24).

"The steady scale-up in OCF, combined with limited organic capex requirements, will lead to meaningful free cash flow generation (expect FCF of Rs15.4bn exSoft Gel between FY25E and FY27E). Over this period, we expect the company’s net debt position to improve from ~Rs22bn in FY24 to Rs10.5bn in FY27E, after
accounting for the Rs2.8bn pushdown to OneSource as part of the Soft Gel business,' it said on Strides Pharma Science Ltd.