How to pick portfolio stocks — and the paths to a Rs 1 crore target, Raamdeo Agrawal explains

Raamdeo Agrawal, chairman of Motilal Oswal, laid out a blunt, practical playbook for retail investors wanting to build a ₹1 crore corpus in a recent podcast — mixing mindset, stock-picking rules and clear math on how compounding does the heavy lifting.

Agarwal’s starting point is philosophical: adopt a growth mindset, be disciplined and “never stay in cash.” He urged investors to think long-term, sit through 20–40% drawdowns when the underlying business is sound, and treat compounding as the central engine of wealth creation.

QGLP: the stock-picking compass

Agarwal’s QGLP framework — Quality, Growth, Longevity at a Reasonable Price — forms the core of selection. Quality means high return on equity (ROE) — he prefers ROE comfortably above 15% — and honest, competent, passionate management. Growth means the company can materially expand profits over a decade. Longevity reflects a business’s likely multi-decade profitable life. And reasonable price ensures you don’t pay a valuation that kills compounding.

For direct-stock investors, he recommends depth over breadth: understand three to five businesses deeply rather than owning 20–30 names superficially. “When you start small, commit as many mistakes as you can — that’s how you learn,” Agarwal said. “Focus on knowing a few companies inside out instead of owning too many you don’t understand.”

Mutual funds, he added, remain an excellent choice for most investors: “Pick two or three quality fund managers and stick with them. You don’t need to meet them — their track record will tell you if they’re good.”

Behavioural rules that matter

Key behavioural rules: don’t try to time tops and bottoms, avoid letting market noise derail your conviction, and switch only when you have a genuinely better idea. He also counsels against hoarding cash — compounding works only when money stays invested.

Concrete routes to Rs 1 crore

Agarwal underlines that hitting Rs 1 crore is a function of time, return and discipline. Using standard SIP math (monthly contributions), here are illustrative paths to Rs 1 crore assuming consistent returns:

• At 12% annual (≈1% monthly): you need about Rs 43,471 per month for 10 years; Rs 20,017/month for 15 years; Rs 10,109/month for 20 years.
• At 15% annual (≈1.25% monthly): Rs 36,335/month for 10 years; Rs 14,959/month for 15 years; Rs 6,679/month for 20 years.
• At 18% annual (≈1.5% monthly): Rs 30,185/month for 10 years; Rs 11,042/month for 15 years; Rs 4,331/month for 20 years.

If you prefer a lump-sum strategy, required starting capital falls sharply with higher returns and longer time horizons — e.g., at 12% you’d need about Rs 10.4 lakh today to reach Rs 1 crore in 20 years; at 18% that shrinks to roughly Rs 3.65 lakh.

Practical takeaway

Agarwal’s message is simple: build a compounding “machine” — either via concentrated direct equity positions you understand deeply or via a small set of high-quality mutual funds — and keep feeding it systematically. Aim first for the discipline to get to your first Rs 10–15 lakh; compounding accelerates the journey thereafter. Above all, focus on quality businesses run by honest, passionate managers, bought at reasonable prices, and give them the chance to work. He reminded listeners that patience, discipline, and continuous learning remain the indispensable ingredients of compounding wealth over decades, not short-term speculation, and long-term focus.

“As I always say, compounding is not about brilliance — it’s about patience, discipline, and consistency,” Agarwal said. “If you stay invested, keep learning, and let time do its job, wealth creation becomes inevitable. Don’t chase quick gains; build your machine and let it run.”