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The Reason Why These 11 Stocks Have 4,500% Growth

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NEW DELHI: Profit from business is primary to stock investing. The stock of a company generating higher profits year after year should be all but a compelling case for investment.
True to this logic, stocks of 96 companies which have been reporting decent bottom line growth year after year since 2010-11 have generated up to 4,500 per cent return since December 2011. Two proved to be exceptions.
Among the 96 companies, 11 have delivered over 50 per cent annualised growth in net profit over the past five years. The list includes FreshtropBSE -2.51 % Fruits, leading exporter of fresh fruits from India to Europe, whose net profit surged from Rs 2 lakh in 2010-11 to Rs 8.05 crore in 2015-16.
Company posted net profit of Rs 54 lakh, Rs 3.54 crore, Rs 5.65 crore and Rs 7.59 crore for FY12, FY13, FY14 and FY15, respectively. This showed an annual profit growth of over 200 per cent (CAGR) in the past five years. Shares of Freshtrop Fruit have surged 476 per cent in the past five years to Rs 92.10 on December 13 from Rs 16 on December 30, 2011.
Among others on the list, Ajanta PharmaBSE -0.64 %, Shilpi CableBSE 0.10 %, Igarashi MotorsBSE 2.26 %, Avanti FeedsBSE 0.98 %, Alembic Pharma and VakrangeeBSE -0.91 % have witnessed profit growth of over 50 per cent on an annualised basis (CAGR) in last five years. Shares of all these companies have soared between 1,500 per cent and 4,500 per cent in last five years.
Then there is Gallantt IspatBSE -0.13 %, whose net profit surged from Rs 3.16 crore in FY11 to Rs 47.95 crore in 2015-16. The company has been clocking decent profit growth year after year for last five years. The share price of the company has surged 628 per cent in last five years till date.
For this analysis, those stocks which have never reported a loss in last five years have been considered.
Shares of DCB Bank, The Byke HospitalityBSE -0.68 % and Syncom FormulationBSE 1.40 % have rallied 84 per cent, 218 per cent and 234 per cent, respectively, in last five years even as their bottom lines grew 55 per cent, 62 per cent and 127 per cent, respectively, on a CAGR basis in these years.
Byke Hospitality operates hotels and resorts, while Syncom Formulations is in the pharma formulations business.
Two companies belied the logic. Reliance PowerBSE -1.18 % (down 40 per cent) and BS (down 50 per cent) stood only laggards in the list of 98 companies despite nearly 12 per cent and 8 per cent annualised increase in bottom line figures in the past five years.

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