Highest Return Stocks in India in Last 10 years [2022]

I’ve written an algorithm that filters the highest return stocks in the Indian stock market. It is not difficult to find stocks with high returns, so why write an algorithm for it? It is essential because relying only on past return numbers may lead to problems. How? 

List of High Return Stock in India

(Updated: 16-Sep-2022)

SLNamePrice (Rs.)Return (3M) %Return (1Y) %Return (5Y) %Return (10Y) %GMR Score
1MK Exim India93.4519.81277.07106.3141.1766.48
2Systematix Corp.299-35-7.8675.1529.3164.85
3DHP India1,615.1053.12162.7929.7848.5364.59
4JAGSNPHARM385.0530.35140.8161.9639.0564.34
5GALLANTT61.85-19.41-14.8775.5937.4562.94
6PONDYOXIDE1,208.10115.24169.0622.5148.4162.88
7Kaiser Corp.78.154.69087.2243.2162.43
8TANFACIND85171.4322.2461.1149.7162.05
9MINDAIND54623.1354.3630.6556.7561.72
10NAVINFLUOR4,614.8028.3914.8647.954.4961.39
Stock Engine - Analyze Stock Here

Let me give you an example. There is a company called Sejal Glass listed in BSE in Year-2008. For the last 10-Years, its stock price was in the single digits. It was a penny stock.

Till twelve months back its share price was Rs.3.64, today the price is at Rs.425 levels. It has a CAGR growth rate of 11,597%. Rupees one lakhs invested in this share would have become more than a Crore in 12 months. 

Highest Return Stocks in India - Sejal Glass Example CAGR

But my algorithm gives this share a Score of Zero. Why? Opening the financial report of this company will tell the reasons. 

Highest Return Stocks in India - Sejal Glass Fundamentals
Reasons
  • The company has reported only losses in the last 5-Years. 
  • Its net worth is negative because all of its retained earnings are exhausted. 
  • The company is living dangerously in high debt. Neither its equity base nor earnings nor cash flow can support its debt load. 
  • The current ratio of the company is dangerously low. May lead to bankruptcy. 
  • The company’s cash flow is falling. 
  • The net sales have grown at 15% per annum but it is not sufficient to justify the exorbitant rise in share price. 

So the question is, shall we buy such a poor-fundamental stock just because its share price is rising? A long-term investor like Warren Buffett would never do it. 

Company Fundamentals Are More Important 

People who are successful in the stock market are investors, not speculators. Who are investors? They are people who buy stocks of fundamentally strong companies and hold on to them for a very long time. Extended holding time helps them to take advantage of the power of compounding. So buying stocks and holding on to them for 10-15 years is the first trick. The second trick is to invest only in fundamentally strong companies.

But how to know if a stock is of a fundamentally strong company? It can be known through fundamental analysis. If you are interested in knowing how the analysis is done, I’ll request you to read my series of articles on fundamental analysis. For now, we’ll stay on the topic of highest return stocks. 

As we saw in the example of Sejal Glass, the company’s fundamentals were weak, but still, its share price went up the roof. How? The promoter’s holdings in Sejal Glass has increased from 50% to 99% between Dec’21 and Feb’22. So the demand for the share was pumped up, hence the price rise.

Sejal Glass Shareholding Pattern Feb-2022

To know more about how the stock price is determined, please read this article. It will give you a fair idea of the factors causing the share price to move up and down

In the case of Sejal Glass, the price jump is caused by an increase in demand for its shares from the promoter’s side. Nevertheless, the fundamentals of the company remained weak. I’ve checked their last few quarters (till Dec’21) numbers. It was not encouraging.

Sejal Glass Loss in Recent Quarters & Buyback

The point is, it is important to further investigate shares that gave high returns in the past. Why? Because not all high-return shares have a profitable underlying business. We must avoid investing in loss-making or even less profitable companies.

How to Judge High Return Stocks?

In my stock screener, there is a list of stocks that gave the highest return in the last 10 years. But what is more interesting about this list is the consistency of returns yielded by these stocks. How to measure it? It is also the topic of discussion in this article. 

Let me give you an example to highlight the utility of my stock screener and its scoring method. Suppose you were researching a stock XYZ for its past returns. You found its numbers as presented below. 

Example - Highest Return Stock correction in last 3 months

XYZ had phenomenal periods in the last 1, 5, and 10-Years (in terms of share price rise). There is also a price correction of 26% in the last 3-months. Currently, its P/E ratio is also very low at 1.54 levels. What do you think, just by looking at these numbers, the stock looks ready to buy, right? But our stock screener gave it a “GMR score” of 15 out of 100. The low score points towards weak business.

What is a GMR Score? For this screener theme, it is an algorithm that rates stocks based on the past returns it has generated for its investors. The higher are the past returns, the better. Moreover, instead of focusing on absolute return numbers, we give scores based on the return trend.

Along with the past returns, the screener also looks at the host of other stock data. A few prominent ones are listed below:

#1. Return on Capital Employed (ROCE)

XYZ posted negative ROCE numbers in the last 3, 5, and 10-Years. Read more about ROCE Formula. The algorithm includes the RoCE (Return on Capital Employed) numbers to calculate the GMR score. A positive and growing RoCE is an indicator of strong underlying fundamentals.

#2. Earning Per Share Growth (EPSG)

In the last 3, 5, and 10-Year periods, XYZ’s EPS growth is negative. In fact, in the last couple of years, its revenue is negligible. The algorithm considers the historical EPS growth numbers. Why use EPS Growth? There are some stocks whose price grows irrespective of falling profits (EPS). Factoring in EPS trends will filter out such companies.

#3. Price To Earnings Ratio (P/E)

No matter how high are the past returns posted by a stock, if currently it’s overvalued, it is not useful. How to judge if a stock is overvalued or undervalued? The easiest is through the PE ratio. Our algorithm gives low scores to stocks that trade at high PE multiples. Learn more about the PEG ratio which combines EPSG and PE to value stocks.

#4. Debt To Equity Ratio (D/E)  

It is safe to invest in companies with low debt. How to quantify the debt level of a company? It can be done using the D/E ratio. To score a high return stock, our algorithm gives low scores to companies that have a D/E ratio above two. Extremely debt-ridden companies are altogether not scored no matter how high are their past returns. Why do we do so? Because high debt companies can become immediately risky when their business is not doing well. Know more about debt-free companies

#5. Current Ratio  

Even the best companies can fail due to insufficient cash. How do companies generate cash? Through their current assets. What is the use of current assets? Repayment of current liability and creating a surplus to manage future expenses (working capital). A company that can do this is called a reasonably liquid company. How to measure a company’s liquidity? The easiest way to do it is through the current ratio. Our algorithm gives low scores to companies whose current ratio is low. 

To understand the concept of solvency and liquidity of a company, you can please read the articles provided in the link: working capital management, working capital use, and financial ratio analysis.

So, the GMR Score displayed in our stock screener for high return stocks is an amalgamation of the following parameters:

  • Past returns, 
  • EPS growth, 
  • RoCE,
  • P/E ratio,
  • D/E ratio, and
  • Current Ratio.

Conclusion

highest return stocks - FLowchart

As an investor, we must also realize the most basic factors that make a business profitable. A profitable business, as a result, will grow fast and will yield higher returns. The most fundamental thing about any business is its business model and its management team. Once these two factors are in place, the next-essential thing about the company is capital.

These three ingredients are the basics of any company. Together it gives quality to a business. Two fundamental indicators highlighting the quality of a company are its profitability and growth numbers.

All factors that include the business model, management’s quality, capital structure, profitability, and growth ensure future price appreciation of a stock.

So, in our endeavor to find a high return share, looking only at the price is insufficient. Why? Because business fundamentals drive a stock price high or low.

I hope you’ve liked reading this article.

Have a happy investing

Handpicked Articles:

MANI

MANI

Hi. I’m Mani, I’m an Engineering graduate who in pursuit of financial independence, has converted into a full time blogger. After working in the corporate world for almost 16+ years, I bid it adieu....read more

40 Responses

  1. Every single stock that you have mentioned in this article has risen only after April 2020, before that each of them was lying dormant. Isn’t something fishy here?

  2. Hi,
    Sir, I am Veeraragavan, (Male – 46 years Old – from chennai.)
    I want to invest 1 lakh for 15 years. Pls suggest me, which stock will give good return for me.
    Pls Suggest me.
    Mobile No:9543664207

    1. You will definitely investment in mutual fund quant mutual direct growth it’s my opinion

  3. This calculation is flawed. The share price calculation does not include share splits, bonus and dividends. TCS had 2-3 1:1 bonus in last 10 years and dividends are good too, which is not kept in mind while calculating returns.

  4. need advise on investment in stks and mf worth 2 cr. also SIP in stks 1.2 lacs pm

  5. Hello Sir, I have your analysis sheet and subscription
    Do you think overall returns should be only major criteria for stock selection? we all are interested only in returns , so we should selected stocks only basis of returns ? right ? why so many ratios and other params need to check, this should be only criteria ?
    I created one query on scrnner as below, do you think seleciton should be only on this query from Nifty 100 stocks , i am excluding penny stocks , only Nifty 500 from below query sorted on market cap
    Return over 1month > 3 AND
    Return over 3months > 10 AND
    Return over 6months > 15 AND
    Return over 1year > 20 AND
    Return over 3years >15 AND
    Return over 5years > 10

    1. Returns that we see are past performances. The study of ratios can help us to judge the fundamentals of the business. If the fundamentals are good, the future will also be good.

  6. Thank you for this article as it gives good understanding on returns in multiple companies spread over different sectors.

    I guess however the compounded average returns across year is better metric than simple average of individual returns.

  7. Boss, away some articles. Since yesterday spent time in reading articles with rich info.
    Thanks for the same.
    New to market and this gives some basic idea and confidence to invest and gives some direction.

  8. One error in your calculation. The three month return should be annualized before taking average. Nice post. Thanks

      1. Sir can i go for adani enter ,transmission, and green for long time as i assume them as a multibagger in comng time

  9. Hi Mani, Another nice article. I also suggest that you review the concept of CAGR which i believe is a much better parameter and indeed an essential one. See the below for a quick example :
    year Value Annual % @6.55%
    0 100,000
    1 140,000 40.00 106,548
    2 112,000 -20.00 113,526
    3 120,960 8.00 120,960
    Average Return 9.33
    CAGR 6.55%

    In the example the stock’s average return is 9.33% which seems better than a fixed deposit.
    But in reality, an investor would have been better off investing in a risk free post office TD @6.9% and would have got better returns.

    CAGR considers the annual capital addition on account of returns indirectly and is therefore a better measure to compare the returns as in the above example.

    Regards
    Sid

    1. Yes, I agree with you. CAGR is a much better parameter, especially for long term holders.

      Best,
      Karan

  10. Significance of Overall Return of Vinati.
    This is a nice article. I thought i will replicate your Vinati Example. However your article has no date and which stock prices u have taken cannot be known. Hence your annualized % cannot be determined.
    Can u pl 1) Let me know Vinati stock prices that u had considered for this article or 2) Pl explain how have u calculated annualized return?

  11. Thanks for sharing the post. The way you narrated the post is good and understanding. After reading this post I learned some new things about Indian stocks. Please let me know for the upcoming posts.

  12. Sir,
    Your website is very informative. But changing layout frequently annoy very much. Please do something for this.

  13. I came across your blog and your analysis is really informative.
    I am wondering is there any way to identify such stocks in initial stages like within 3 years time span. anyone who has invested on these stocks around 2011 would have made great money.
    Is there any common characteristics between them in early stages ?

    1. Thanks for your comment.
      Identification of such growth stocks is not easy. There are several limitation with we common men. The biggest is “lack of data base”. What we have, is websites like moneycontrol, Enonomic Times etc which provides with fair-enough info. So what we can do? One way to do it is to keep track of its Profits as explained in this blog post. Potential such stocks with have a low PEG ratio.

      1. Thanks for the reply. Going through all your blogs one by one and appreciate your efforts to explain complex things in such a way that it becomes easy to understand and keeps user’s interest intact.
        Just curious about , what your stock analysis tool is suggesting if we feed 2008 – 2011/2012 data of these stocks. Planning to buy it and bit curious what it has to say for such scenarios.
        Thanks in Advance 🙂

      2. Hello, Thanks for posting your comment. The worksheet tries to estimate the “intrinsic value” of stocks. To know more about it, you can check the product page please.

  14. Hello Sir,

    I have a question. As you have said “Hindustan Unilever Ltd. – 19.27% CAGR-10Y”, is this return as mentioned here do we get each year i.e., 1st year, 2nd till 10th?

    Thank you

Leave a Reply

Your email address will not be published.