Hi, we all know that risk and return go hand in hand.
And we keep finding such hidden gems which will give us multi-bagger returns in the future.
Somewhere or the other, the market offers opportunities where some stocks show high growth potential in terms of sales and profits.
But the price of many high-growth stocks goes up very quickly and they become expensive for a common investor.
Similarly, today we will talk about 5 such high-growth companies whose current market value is less than Rs 500.
We have selected only those stocks whose:
We have selected 5 stocks that have passed these filters and have the highest 5-year average ROE.
We have considered the trading prices in the market as of 14 September 2022.
The company which has the highest 5-year average ROE, we will cover that company last.
So let's start today's video.
So the first company is Dolat Algotech Ltd.
Dolat Algotech is a Trading cum Clearing Member of NSE India as well as in the business of Securities Broking and Trading.
The company has recorded an average ROE of 41% in the last 5 years.
The company does its business using Algo trading.
That is, they execute their trade strategy through computers without any human intervention, and earn profit from it.
The company's biggest strength is its nearly 40 years of experience held by its promoters.
Dolat Algotech has many successful trading strategies through which these people know how to profit from it.
The company has been earning pretty good profit for some time now which we can see in their recent numbers.
The biggest challenge faced by Dolat Algotech is to constantly innovate its trading strategies.
Due to the increasing competition, the company's competitive edge may come under threat.
And as you go, the trading business is inherently risky.
Many factors are not within the control of the company such as market volatility or macroeconomic conditions.
Due to these factors, the algorithm of the company may fail and they may suffer losses.
Let's now look at some of the company's key financial and technical ratios.
We have also included the prices of 2 technical indicators so that you can see the stocks from a technical perspective.
We have used 2 indicators- 200 DMA and RSI (14).
If a company's stock price is trading above the 200 DMA, the stock can be considered bullish.
And if the price is trading below the 200 DMA then the stock can be said to be bearish.
In terms of RSI, RSI values below 30 are generally considered oversold, and as such a trend reversal i.e, a downtrend can lead to an uptrend.
Similarly, an RSI value above 70 is considered overbought, and a trend reversal is likely.
The next company on our list is Bhansali Engineering Polymers Ltd.
Bhansali Engineering Polymers is a Mumbai-based company that manufactures ABS i.e. Acrylo-Nitrile Butadiene Styrene and SAN i.e. Styrene Acrylo-Nitrile Resins.
ABS and SAN polymers are used in various industries.
For example, ABS polymer occurs in industries such as automotive, electronics, packaging, and healthcare.
Whereas SAN Polymer is used in applications such as stationery items and cosmetic packaging.
The company has recorded an average ROE of 41% in the last 5 years.
The company has 2 manufacturing facilities - Satnoor, Madhya Pradesh, and Abu Road in Rajasthan.
The company's clients are from sectors such as Automobiles, Home Appliances, Electronics, Healthcare, and Kitchenware.
The company is one of the leading suppliers of premium polymers in India and has a capacity of 137 kilo-tonne per annum in ABS manufacturing.
In addition, the company has also announced a joint venture with Nippon A&L Inc.
The joint venture will enable the company to deploy additional manpower and support the development of new recipes.
The company imports its major raw materials and thereby exposes itself to the risk of foreign exchange fluctuations.
The company's profits are falling quarter by quarter. And, the non-core income of the company has also increased, which can be a red flag.
Let's talk about the company's technical and financial metrics.
Next on our list is Easy Trip Planners Limited, also known as EaseMyTrip.
Easy Trip Planners is an online travel company that helps you book flight tickets, hotel bookings, and holiday packages for your customers.
Their operations are not only in India but also in other countries like Dubai, and Singapore.
The travel business was badly hit by the Covid first and second wave, but the company has seen a good comeback.
In Q1 of FY23, the company is showing good growth in all segments. The company has recorded an average RoE of 44% in the last 5 years.
In FY22, the company's flight bookings grew by 57%, hotel bookings almost tripled and other bookings more than doubled.
The result of booking growth was also seen in the company's revenue and profit.
In FY22, the Company's Adjusted Revenue doubled, EBITDA grew by 67% and PAT grew by 72%.
Being an asset-light business model, MyTrip has been able to generate very healthy ROE (Return on Equity) and ROCE (Return on Capital Employed).
As you can see, both the metrics are showing improvement and are moving towards pre-covid levels.
RoE shows that in comparison to its equity, how much profit the company earns and
ROCE shows how much profit the company earned from the money it had put into its business including equity and debt.
The higher this ratio, the better it is considered. But EaseMyTrip has been facing intense competition in the online travel business.
Their competitors, backed by deep-pocketed private equity and venture capital funds, can easily take the market share of MyTrip by paying a discount.
Recently Cleartrip, which is a major competitor of EaseMyTrip, was acquired by Flipkart.
The revival of ClearTrip negatively impacts EaseMyTrip's market share and margins.
Let us now look at some of the key financial and technical indicators of Easy Trip Planners Ltd.
Supriya Lifescience Limited is the next company on our list.
Supriya Lifesciences is the manufacturing company of Active Pharmaceutical Ingredients (APIs).
An API is an ingredient that plays a biologically active role in drugs used to prevent, diagnose or treat diseases in humans or animals.
The company has recorded an average RoE of 44% in the last 5 years.
It is the largest exporter of APIs like Chlorpheniramine Maleate (~45-50% MKT share), Ketamine Hydrochloride (60-65% MKT share), and Salbutamol Sulfate (30-40% MKT share) in India.
The company has a competitive advantage, and a strong R&D team capable of developing new products.
Apart from this, the company's revenue mix is ​​very diversified geographically. 76% of the company's total revenue comes from sales.
44% of Supriya Lifescience's revenues come from the top 10 customers, making the company's customer concentration risk very high.
And if the company is not able to negotiate better with the customer, then the company's revenue can drop a lot.
Let's take a look at some of the key financial and technical ratios of the company.
The company we are going to talk about is Indian Energy Exchange Limited (IEX).
Indian Energy Exchange is India's first and largest energy exchange which is an automated trading platform.
The platform facilitates the physical delivery of electricity, renewable and certificates.
The company has recorded an average RoE of 47% in the last 5 years.
The biggest strength of the company is its immense growth potential.
As every household becomes electrified under the urbanization and the Saubhagya scheme of the government, the electricity market in India will be seen growing rapidly.
And as the demand for this electricity increases, the volume on the trading platform of IEX will increase.
As you see, only 6% of the power exchanges in India are traded. But in developed countries, this number remains between 30%-80%.
This is a big positive for IEX. The company has a high growth potential even after growing at 33% CAGR since its inception.
Along with this, the company's subsidiary Indian Gas Exchange is also growing very fast.
But the biggest challenge before IEX is government regulations. Power exchanges are highly regulated.
Unfavorable policies on the part of the government can dent market dominance.
IEX's monopoly position is also threatened by the rise of competitors like PTC India in the market.
As you can see on your screen, we have shown some key financial and technical ratios of this company.
So these are some 5 high-growth companies whose current market price is less than Rs 500.
We remind you that this video is for educational purposes only and there is no direct buy or sell recommendation of any kind.
We will also tell you that we post similar educational and investment videos in Tamil, Telugu, Kannada, and Malayalam.
So if you like to watch videos in any language, then you must subscribe to our channel as well. The links to the channels have been given in the description.
Don't forget to subscribe to the Groww channel for the latest updates related to the share market and market. Goodbye and happy investing.