Which Indian stocks gave the highest returns in last 10 years? You will get a list of such stocks in this blog post.

But for stock enthusiasts, I will try to provide a **little more**. What more? I will try to link the performance of stocks with its business fundamentals.

What is the idea? The idea is to find a possible **correlation** between “stock price growth” and its underlying fundamentals.

Which fundamentals I’m talking about?

- “Net Worth” growth.
- “Operating Profit” growth.
- “Reported Net Profit (PAT)” growth.
- “Earning Per Share (EPS)” growth.
- “RoCE” growth.
- “ROE” growth

What will be the utility of this comparison? We will try to identify, which business fundamental closely resembles the “stock price growth”.

What we will do with this resemblance? At the end of this report, we will try to pick **top 3 fundamentals** which has most **influence** in stock’s price growth in long term.

## Indian Stocks which generated highest returns in last 10 years

These are the stocks which I picked from Nifty 500 index. Top 5 stocks which gave 70%+ returns (CAGR) in last 10 years is listed above.

Before digging into their fundamentals, let’s do a small fun exercise. We will try to **see in perspective**, what it means by 70%+ CAGR in 10 years.

Suppose you have invested Rs.100,000 in one of the above companies in year 2008. You happened to hold on to this stock till today. The returns that your investment is yielding is 70% p.a. How much your investment is worth as on today?

- Initial Investment:
**Rs.1.0 Lakhs**. - Annualised Return: 70% p.a.
- Holding Time: 10 Years.
- Appreciated investment Value:
**Rs.2.0 Crores**.

@70% p.a. returns, your investment will grow by **200 times** in 10 years.

What is the point? **70% p.a. yield is a big thing**. It has powers to make a common man become a crorepati in just 10 years.

Hence, it is worth evaluating that which stock fundamentals matched the growth rate shown by the above stocks.

This way we can *use the same metrics* to find **potential growth-stocks** for the next coming 10 years time horizon.

So lets try to establish the correlation between the business fundamentals and price growth rate shown by the above listed stocks…

### #1. Bajaj Finance

The above chart is showing the price trend of Bajaj Finance in last 10 years.

Let’s see how the business fundamentals of Bajaj Finance grew during the same time period.

SL | Fundamentals | FGR | PGR / FGR |

1 | Net Worth | 31.25% | 2.55 |

2 | Operating Profit | 44.69% | 1.78 |

3 | Reported Net Profit | 54.61% | 1.46 |

4 | Earning Per Share (Rs) | 17.32% | 4.60 |

5 | RoCE | 3.35% | 23.76 |

6 | ROE | 17.80% | 4.48 |

- FGR = Fundamentals Growth rate.
- PGR = Price Growth Rate.
- PGR/FGR = Ratio of PGR and FGR.

The business fundamental which is closest to the price growth rate shown by Bajaj Finance is **Net Profit (PAT) @54.61%**. The next most dominant factor is **operating profit growth @44.69%**.

The ratio between Price Growth Rate (PGR) of Bajaj Finance and its FGR’s are as below:

- PGR/FGR (PAT):
**1.46**, - PGR/FGR (OP.PROFIT):
**1.78**,

Hence we can conclude that, price growth of Bajaj Finance has been triggered most by the PAT & Operating profit’s trend.

### #2. Caplin Point Lab.

In last 10 years, price growth rate (PGR) of Caplin Point Lab has been **79.14% p.a**.

Lets see how the business fundamentals of Caplin Point grew during the same time period.

SL | Fundamentals | FGR | PGR / FGR |

1 | Net Worth | 30.82% | 2.57 |

2 | Operating Profit | 39.28% | 2.01 |

3 | Reported Net Profit | 46.61% | 1.70 |

4 | Earning Per Share (Rs) | 24.85% | 3.18 |

5 | RoCE | 10.30% | 7.68 |

6 | ROE | 12.07% | 6.56 |

- FGR = Fundamentals Growth rate.
- PGR = Price Growth Rate.
- PGR/FGR = Ratio of PGR and FGR.

The business fundamental which is closest to the price growth rate shown by Caplin Point is **Net Profit (PAT) @46.61%**. The next most dominant factor is **operating profit growth @39.28%**.

The ratio between Price Growth Rate (PGR) of Caplin Point Lab and its FGR’s are as below:

- PGR/FGR (PAT):
**1.70**, - PGR/FGR (OP.PROFIT):
**2.01**,

Hence we can conclude that, price growth of Caplin Point has been triggered most by the PAT & Operating profit’s trend.

### #3. Symphony Ltd.

In last 10 years, price growth rate (PGR) of Symphony Ltd has been **78.63% p.a.**

Let’s see how the business fundamentals of Symphony Ltd. grew during the same time period.

SL | Fundamentals | FGR | PGR / FGR |

1 | Net Worth | 27.95% | 2.81 |

2 | Operating Profit | 19.47% | 4.04 |

3 | Reported Net Profit | 15.51% | 5.07 |

4 | Earning Per Share (Rs) | -8.24% | -9.54 |

5 | RoCE | -6.58% | -11.96 |

6 | ROE | -9.72% | -8.09 |

- FGR = Fundamentals Growth rate.
- PGR = Price Growth Rate.
- PGR/FGR = Ratio of PGR and FGR.

Looking at the above numbers, fundamentals of Symphony doesn’t look good from this point forward. Why? Negative EPS, RoCE and ROE growth rates.

The business fundamental which is closest to the price growth rate shown by Symphony Ltd. is **Net Worth @27.95%**.

The ratio between Price Growth Rate (PGR) of Caplin Point and its Net Worth growth rate (FGR) is **2.81**.

### #4. Relaxo Footwears

In last 10 years, price growth rate (PGR) of Relaxo Footwears has been **75.77% p.a**.

Let’s see how the business fundamentals of Relaxo Footwears grew during the same time period.

SL | Fundamentals | FGR | PGR / FGR |

1 | Net Worth | 26.26% | 2.89 |

2 | Operating Profit | 18.89% | 4.01 |

3 | Reported Net Profit | 27.46% | 2.76 |

4 | Earning Per Share (Rs) | 1.21% | 62.45 |

5 | RoCE | 1.37% | 55.37 |

6 | ROE | 0.96% | 79.29 |

- FGR = Fundamentals Growth rate.
- PGR = Price Growth Rate.
- PGR/FGR = Ratio of PGR and FGR.

The business fundamental which is closest to the price growth rate shown by Relaxo Footwear is **Net Profit (PAT) @27.46%**. The next most dominant factor is **net worth growth @26.26%**.

The ratio between Price Growth Rate (PGR) of Relaxo Footwears and its FGR’s are as below:

- PGR/FGR (PAT):
**2.76**, - PGR/FGR (NET WORTH):
**2.89**,

Hence we can conclude that, price growth of Relaxo Footwears has been triggered most by the PAT & Net Worth trend.

### #5. Avanti Feeds

In last 10 years, price growth rate (PGR) of Avanti Feeds has been **72.56% p.a**.

Let’s see how the business fundamentals of Avanti Feeds grew during the same time period.

SL | Fundamentals | FGR | PGR / FGR |

1 | Net Worth | 29.64% | 2.56 |

2 | Operating Profit | 117.30% | 0.65 |

3 | Reported Net Profit | 61.58% | 1.23 |

4 | Earning Per Share (Rs)* | 35.84% | 2.11 |

5 | RoCE | 74.84% | 1.01 |

6 | ROE | 24.87% | 3.05 |

- FGR = Fundamentals Growth rate.
- PGR = Price Growth Rate.
- PGR/FGR = Ratio of PGR and FGR.

Avanti feeds has reported negative profits in its 9th and 10th year down the line from today (Mar’10 and Mar’09). Hence the above tabulated data has been derived from last 8 years financial data.

There are more than one business fundamentals which are are closest to the price growth rate shown by Avanti Feeds in last 8 years:

**Operating Profit (OP) @117.30%**.**Net Profit (PAT) @61.58%**.**RoCE @74.84%**.

The ratio between Price Growth Rate (PGR) of Avanti Feeds and its FGR’s are as below:

- PGR/FGR (OP.PROFIT):
**0.65**, - PGR/FGR (PAT):
**1.23**, - PGR/FGR (RoCE):
**1.01**,

Hence we can conclude that, price growth of Avanti Feeds has been triggered most by the OP.PROFIT, PAT & RoCE trend.

## Conclusion…

Which are the top 3 fundamentals which has most influence in stock’s price growth in long term.

- Net Profit growth.
- Net Worth growth.
- Operating profit growth.

But apart from the above three, I will also like to pick RoCE growth as another important factor which can influence stocks price. Why?

Because RoCE is a true measure of companies profitability.

Generally, RoCE of companies falls with increase in its size. But there are companies which has improved its RoCE with time. Business of these companies are really profitable.

Read More: Why Warren Buffett Love Pricing Power of Companies?

Nice sir

I think out of the 5 stocks you mentioned, Bajaj and Relaxo both looks good for investment.

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 ?

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.

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 🙂

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.

Nice

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

CAGR is “average” growth rate achieved over a period of 10 years.