Finding 10 baggers in India

I sometimes write my articles toooo.

Finding a 10 bagger per peter lynch is always a difficult proposition. When peter lynch says finding a 10 bagger, he meant about the stock price.

Here when I say a 10 bagger, I am talking about sales and profits increasing 10 times in 10 years. This will force me to think more about the business than the price of the stocks. Obviously finding a business where I do not need to a premium for that. As per Graham, If I am concentrating on business sales/profits, the stock price will take care of it.

As Per Charlie, I need to reverse my logic – Rather than finding characteristics of successful company, I need to start thinking about how companies get extinct.

As I know how companies become extinct and their typical characteristics. I need to find companies which do not have these characteristics. Obviously some of these characteristics are interlinked. I am trying to find a check list for this.

1. Excess leverage
2. Having no moat
3. Depends on a few customers
4. Unable to rise prices if there is an inflation
5. Return on capital is too low
6. Having lower margins
7. Cannot be a commodity company as we cannot forecast the price of commodities.
8. Excess Competition or Competition from China / other developing countries
9. Technology Obsolescence
10. Govt. Interference / Sanctions
11. Price Caps from govt.
12. Potential Future Liabilities like pharma/cigarettes/environment
13. Cannot be a serial acquisition
14. Bad Management / Excess Compensation / Greed
15. Depends on only a few key individuals / suppliers


This will automatically eliminate 90% of the companies in my universe list because of my circle of competence. Finally I also have a test for essentiality. The reason I use this test is if something drastic happens in economy, people need to still use these products/services. It should not be luxury products/services as people may not buy these things are bad.

Well this will eliminate banks, investment banking companies, commodity companies, technology companies, IT Outsourcing companies and a lot of manufacturing companies. One sector where it is relatively easy to find this is FMCG (Fast Moving Consumer Goods).

Here is list of companies in FMCG sector with min 100 crores market cap. In my next article I will discuss about a few select companies from this list how they fit into this check list