Companies that increased their Profits by 20%+ CAGR over the last 10 years!
Growing profits at 20% CAGR is not an easy task, that too for 10 long years.
What does 20% CAGR over 10 years mean? If you were making Re.1 ten years ago, now you are making Rs. 6.1. What I know about general businesses (or shops/offices — with self-employed owners) is that they are usually unhappy with their profits. Because they have seen a higher profit in a particular year and they want to achieve that target.
1. Banks (HDFC and Kotak):
HDFC Bank was trading at around 200 in 2010 and it recently topped at 1305. CMP: 915.
Profit Growth CAGR: 25% (9.31x)
Returns CAGR: 16% (4.41x)
Kotak Bank was trading at 200 in 2010, Topped recently at 1700 and CMP at 1100.
Profit Growth CAGR: 27% (10.92x)
Returns CAGR: 20% (6.19x)
There are many factors around how did you utilize the profits and how much of it added to the company’s intrinsic value. But had you invested Rs. 10000 in HDFC in 2010, it would have become Rs. 44000. And Kotak could turn Rs. 10000 into 61900 in the same period.
2. HCL Technologies
HCL was trading below Rs. 100 and it recently topped Rs. 624 with current price being Rs. 527.
Profit Growth CAGR: 26.49% (10.48x)
Returns CAGR: 17.94% (5.21x)
Rs. 10000 invested 10 years ago would now have become Rs. 52000.
3. Bajaj — BajFinance, BajFinserve, Auto
Bajaj proved that it’s got strong management. Market loved Bajaj Finance and its stock price return shows that. Bajaj Auto, even having a CAGR profit growth of ~25% over 10 years, saw 9% CAGR returns over 10 years.
Bajaj Finance:
Profit Growth CAGR: 60.69% (114.79x)
Returns CAGR: 45.37% (42.15x)
Bajaj Finserv:
Profit Growth CAGR: 46.37% (45.14x)
Returns CAGR: 24.06% (8.64x)
Bajaj Auto:
Profit Growth CAGR: 21.90% (7.24x)
Returns CAGR: 8.92% (2.35x)
Had you invested in Bajaj Auto 10 years back, you would have underperformed Bank’s savings account. But if you had chosen Bajaj Finance instead, it could make your Rs. 10000 investment in 2010 into Rs. 421000.
4. Titan
Titan has delivered profit growth of 23% CAGR over 10 years and its stock price also moved with the same CAGR (more or less).
Rs. 10000 invested 10 years could now be Rs. 720000. Not bad!
5. Avanti Feeds
This is one of the most talked companies by Fundamental Investors. Though I personally don’t like the business it operates into, the company has given extraordinary returns.
How much extraordinary?
Had you invested Rs. 10000 ten years ago, it would have become Rs. 23 Lakhs (I double-checked this).
Profit Growth CAGR: 44.26% (39.04x)
Returns CAGR: 72.39% (231.8x)
Conclusion
Apart from Profit growth, there are many factors that accounted for these returns. viz. ROE, Sales Growth, CFO, Capex, Leverage to name a few.
Also, I just picked 10 years CAGR, so companies like Bajaj Auto may look attractive whereas it was not. Its 10Y CAGR profit growth is 21.9% but its 3Y CAGR profit growth has been only ~4%.
Disclaimer
Please be noted that it’s not a stock recommendation post. It’s a part of my financial notes where I quick-study some companies on screener. No due diligence was done on any of them.
These are their past returns, no company is guaranteed to grow forever.
Source: Screener
