Find potential multibagger stocks for the next five years using Screener.in

DATE – 16 DEC 2024

To identify potential multibagger stocks for the next five years using Screener.in, follow these step-by-step instructions:

Step 1: Define Your Investment Criteria

Before creating a filter, identify key parameters to screen for companies with high growth potential. These can include:

1. Market Capitalization: Focus on mid-cap or small-cap companies (₹1,000 crore to ₹20,000 crore).
2. Sales Growth: Consistent growth of at least 15-20% over the past 5 years.
3. EPS Growth: Earnings per share should have grown at a similar or higher rate.
4. Debt-to-Equity Ratio: Less than 1 (preferably zero-debt companies).
5. Return on Equity (ROE): Higher than 15%, showing efficient use of shareholder capital.
6. Return on Capital Employed (ROCE): Above 15%, indicating efficient capital use.
7. PEG Ratio: Less than 1, showing reasonable valuation for growth.
8. Promoter Holding: Greater than 50%, to ensure the promoter’s commitment to the business.
9. Free Cash Flow (FCF): Positive free cash flow, indicating operational efficiency and growth.

Step 2: Log in to Screener.in

1. Visit Screener.in.
2. Log in with your account credentials or sign up if you don’t already have an account.

Step 3: Create a Custom Filter

1. Go to Create Filter:
   • Click on the “Create Screen” option in the Screener.in menu.
2. Input Criteria:
   • Enter the following filters (adjust as per your preferences): Market Capitalization > 1000 AND Market Capitalization < 20000 AND Sales growth 5Years > 15 AND Profit growth 5Years > 15 AND EPS growth 5Years > 15 AND Debt to equity < 1 AND ROE > 15 AND ROCE > 15 AND PEG Ratio < 1.5 AND Promoter holding > 50 AND Free cash flow last year > 0

Market Capitalization > 1000 AND
Market Capitalization < 20000 AND
Sales growth 5Years > 15 AND
Profit growth 5Years > 15 AND
EPS growth 5Years > 15 AND
Debt to equity < 1 AND
Return on equity > 15 AND
Return on capital employed > 15 AND
PEG Ratio < 1.5 AND
Promoter holding > 50 AND
Free cash flow last year > 0

1. Use Screener’s query builder to input these criteria.
2. Save the Filter:
   • Name the filter (e.g., “Potential Multibaggers”) and save it for future use.

Step 4: Analyze the Results

1. Review the Shortlisted Companies:
   • The filter will generate a list of companies matching your criteria.
   • Evaluate key parameters like sector trends, competitive position, and historical performance.
2. Study Individual Companies:
   • Click on a company to view detailed data such as financials, annual reports, and ratios.
   • Pay attention to metrics like:
     • Revenue Mix: Check if the company is in a growing sector.
     • Operating Margins: Consistently increasing margins are a good sign.
     • Capex Plans: Companies investing in expansion are likely to grow.

Step 5: Deep Dive into Growth Drivers

1. Sectoral Analysis:
   • Identify the company’s sector and evaluate macroeconomic trends, government policies, and industry tailwinds.
2. Management Quality:
   • Look for companies with experienced, honest, and growth-oriented management.
   • Check for consistent promoter buying and avoid companies with frequent pledging of shares.
3. Earnings Conference Calls:
   • Review recent investor calls for insights into management strategy and business direction.

Step 6: Monitor Valuations

1. Valuation Multiples:
   • Compare the company’s P/E ratio, P/B ratio, and EV/EBITDA with its peers and historical averages.
   • Look for companies with reasonable valuations compared to their growth potential.
2. PEG Ratio:
   • Ensure the PEG ratio is below 1.5 for a balance between price and growth.

Step 7: Add to Watchlist

1. Create a Watchlist:
   • Add shortlisted companies to a watchlist on Screener.in for regular tracking.
2. Monitor Quarterly Results:
   • Check if the company consistently meets or exceeds its guidance and maintains growth.

Step 8: Consult Experts and Diversify

1. Seek Advice:
   • Discuss shortlisted stocks with a financial advisor or expert to validate your choices.
2. Diversify Portfolio:
   • Spread your investment across sectors to mitigate risk.

Step 9: Update Filters Regularly

1. Review Criteria:
   • Update your screener every 6-12 months based on changing market conditions or new insights.
2. Track New Entrants:
   • Look for newly listed companies or companies improving their fundamentals.

By following these steps, you can efficiently identify companies with the potential to become multibaggers over the next five years. Let me know if you need help refining the screener or analyzing specific companies!

RESULTS