Hunting multibaggers? D-Street experts swear by these themes

Hunting multibaggers on Dalal Street is not an easy task but if you go by experts, then there is no shortage of such stocks.

Market analysts believe that there are select pockets where investors can look for the stocks that might deliver multibagger returns over the years.

Dipan Mehta, Director, Elixir Equities, is bullish on new-age internet companies, which were beaten down and have seen a sharp correction in the last one year. Mehta suggests putting a small allocation of the portfolio in such stocks.

Multibaggers will come from stocks like Nazara, Zomato, Nykaa, PB Fintech and Paytm but it is not definite which one, he said.

"These are all concept businesses which can scale up really well with high ROIs and once the break-even point is achieved, then the kind of profits that these new-age digital businesses can generate is unimaginable," Mehta added.

It will be best to have about 10-15 per cent of your portfolio in these concept stocks, and if you were lucky and get a winner, it will make all the difference to the returns we generate in the 2020s right up to 2030, he said.

Global brokerage Credit Suisse has maintained an outperform rating on Zomato with a target price of Rs 90. Zomato can turn EBITDA breakeven as guided, it said.

"Current estimates could drive a valuation shift to EV/EBITDA. Zomato already has a positive model in the top 120 cities. The global investment bank sees a substantial scope for increased take rates in smaller cities," it said.

JM Financial is positive on FSN E-Commerce Ventures, the parent company of Nykaa, and has a target price of Rs 1,780, suggesting more than 31 per cent upside in the stock.

"The festive season having kicked off in earnest, we continue to believe that Nykaa is well positioned to capitalize on the growth of the Indian BPC and Fashion market on the back of its new initiatives, omnichannel strategy and the house of brands approach," it said.

Prabhudas Lilladher, in a September report, recommended a buy on Nazara Technologies with a target price of Rs 1,031 as it believes Nazara’s portfolio approach to gaming not only diversified unforeseen risks but also created additional growth levers via inorganic route.

In its reports released in August 2022, ICICI Securities had a buy rating on One97 Communications (Paytm) and PB Fintech (PolicyBazaar) with target prices of Rs 1,285 and Rs 700, respectively.

Stocks like Paytm, PB Fintech, Nazara Technologies, Nykaa and Zomato have been trading up to 70 per cent below their lifetime peaks. The majority of the stocks were listed in the last one year and barring Nykaa, all are below their issue price.

In a recent interview with ET Now, Sudip Bandyopadhyay, Group Chairman, Inditrade Capital, said that he has been holding a number of smallcap MNC stocks, including Castrol and Elantas Beck, which have given multibagger returns. I got good returns from some of the tried and tested names like ITC, he said.

Market experts suggested that buying beaten-down stocks having strong fundamentals can deliver multibagger returns over the years.

"There are multiple stories and sometimes we get worried about the multiples and things like that but some of these stocks are really great businesses," he said. "When they correct, for an investor who wishes to take a little bit of risk, these are great buys," he added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)