Top 5 companies anticipating over 15% revenue growth

Investors on the lookout for opportunities are focusing on companies predicted to experience double-digit growth in the near term. (Image: Pixabay)
Investors on the lookout for opportunities are focusing on companies predicted to experience double-digit growth in the near term. (Image: Pixabay)

Summary

  • Worried about the market swings? These five stocks with ambitious growth plans can help outpace the market.

The Indian share markets have experienced notable volatility since the year began, characterized by significant fluctuations. This volatility largely stems from high valuations in the small and mid-cap segments, triggering profit-taking sessions amid global economic concerns.

Despite these fluctuations, investor optimism remains strong, buoyed by positive macroeconomic indicators like inflation and GST collections.

Investors on the lookout for opportunities are focusing on companies predicted to experience double-digit growth in the near term.

With this context, we delve into the top five companies expected to see over 15% revenue growth shortly.

#1 PI Industries

Topping our list is PI Industries, a leader in the agrochemical sector, known for its extensive range of insecticides, fungicides, herbicides, and specialty products used globally in agriculture.

With over five decades of experience, PI Industries stands out as a premier producer of generic molecules in India and operates across more than 30 countries. Its vast network includes 10,000 dealers/distributors and over 100,000 retailers nationwide.

The company is expanding its product range and entering new markets to meet the growing demand for agrochemicals. This expansion includes significant investment in existing products, with over 1 billion spent in the nine months ending December 2023 and an expected annual capex of 6-8 billion aimed at organic growth.

These strategic efforts are set to boost PI Industries' financial outcomes in the future.

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From 2019 to 2023, PI Industries enjoyed a 5-year CAGR of 23.2% in sales and 27.3% in net profit, with average RoE and RoCE exceeding 17.8% and 21.9%, respectively.

Despite economic challenges, the company is on track to achieve an 18-20% revenue growth target in its export business for FY24, with expectations for a rebound in domestic operations.

However, the company's stock price has recently dropped, despite strong fiscal performance in 2024, attributed to concerns over product concentration risk, especially concerning pyroxasulfone. It's important to note that generic competition for pyroxasulfone in the US is not expected until 2026.

Looking forward, PI Industries' venture into the pharmaceutical Contract Development and Manufacturing Organization (CDMO) sector suggests promising diversification opportunities.

#2 Rategain Travel Tech

Next is Rategain Travel Tech, a leading provider of software solutions for the tourism industry, playing a key role in assisting the hospitality sector with dynamic pricing strategies through its Software-as-a-Service (SaaS) platform.

Using AI technology, Rategain enhances customer engagement for clients such as hotels, airlines, and online travel agencies by optimizing pricing and service offerings.

The company uniquely bridges the information gap in the industry by compiling and analyzing traveler data to improve industry-wide service delivery.

Rategain's dominance is further cemented by a series of successful acquisitions, now serving major hotel chains, online travel agencies, car rental companies, and cruise lines.

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Between 2019 and 2023, Rategain reported a 5-year CAGR of 9% in sales and 8% in net profit, demonstrating strong returns with an average RoE and RoCE of over 12% and 13.3%, respectively.

After a challenging period due to COVID-19, Rategain has shown remarkable recovery, turning a profit in FY22, driven by demand recovery and new client acquisitions.

The company has set ambitious goals to double its revenue in the next three years, targeting a mix of organic and inorganic growth strategies, including a projected organic growth rate of 20% to 25% over the next three years, all while maintaining a debt-free balance sheet.

#3 CMS Infosystems

CMS Infosystems ranks third, offering logistical and technological services to financial institutions, focusing on ATM-managed services, technology solutions, and cash logistics.

The company boasts a presence in 97% of Indian districts and has maintained a debt-free status for five years through strategic investments in technology automation, enhancing cost efficiency and self-sustainability.

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From 2019 to 2023, CMS Infosystems achieved a 5-year CAGR of 14.3% in sales and 27.3% in net profit, with impressive average returns on equity and capital.

The company anticipates revenue of 22.5 to 23 billion in the current fiscal year, reflecting a growth rate of 17% to 19%, and aims for even higher revenue targets in FY25 at 25-27 billion.

Between 2019-2023, the 5-year CAGR net profit stood at 20.1%. The 5-year average return on equity (RoE) stood at 18.6%.

#4 Bajaj Finance

Fourth on our list, Bajaj Finance stands as a leading non-banking financial company (NBFC) in India, with impressive assets under management (AUM) exceeding 2 trillion.

Primarily focusing on retail and consumer/mortgage finance, Bajaj Finance competes directly with banks and other NBFCs, targeting a broad market, especially in personal and consumer loans.

The company has experienced significant growth, doubling its advances in the past five years. Remarkably, its net non-performing assets (NPAs) have maintained stability, hovering between 0.30% to 0.4% since financial year 2018, marking the lowest figures in the industry.

This commendable performance underscores the company's adeptness at mitigating risks while scaling its operations.

The company has also increased its profitability. Between 2019 and 2023, the 5-year CAGR net profit stood at 20.1%. The 5-year average RoCE stood 11.2%.

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Bajaj Finance's success is partly due to its effective use of data analytics and artificial intelligence in financing schemes, ensuring expansion without compromising credit quality.

Despite recent underperformance in the stock market, the company's business model remains robust, aiming for continued AUM growth of 25%.

The growth will come from existing verticals in tandem with new ones, such as microfinance, commercial vehicle loans and tractor loans.

#5 L&T (Larsen & Toubro)

Larsen & Toubro, a multinational conglomerate and a leading player in infrastructure, concludes our list.

With diversified interests across construction, engineering, technology, and manufacturing, L&T is now venturing into new-age sectors like green hydrogen, semiconductors, and data centres.

The company is actively participating in India's green revolution, particularly in the green hydrogen sector, and is investing heavily in green energy initiatives over the next few years.

Currently producing 45 kg of green hydrogen daily for internal use, the company is expanding its capacity and has formed a joint venture with IOC and ReNew Power.

Collaborating with McPhy, a French company, for electrolyser technology, L&T aims to cater to both electrolyser manufacturing and hydrogen production.

Additionally, L&T's power transmission and distribution business is gearing up to support infrastructure development for the world's largest green hydrogen plant by NEOM Green Hydrogen Company.

With a capital outlay of $2.5 billion for the next three to four years for green energy initiatives, L&T is well-positioned to capitalize on this expanding sector.

In the data centre segment, L&T is constructing state-of-the-art green data centres, having secured multiple orders across Indian states over the past two years.

L&T has shown remarkable performance in order inflows and revenue in the nine months ended December 2023. After surpassing the FY24 order inflow guidance, aiming for the higher end of the 12% band, the company has revised its order inflow guidance yet again, to over 20% for the full year.

Similarly, revenue is expected to exceed expectations by around 15%. Looking ahead, the company is confident that the robust order backlog as of December and expected to remain robust as of March 2024 also.

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Between 2019 and 2023, the company’s sales and net profit have grown at a 5-year CAGR of 9% and 8%, respectively.

The returns have been strong, with the RoE and RoCE averaging over 12% and 13.3%.

L&T has fairly deleveraged its balance sheet in the past five years. The debt-to-equity ratio has fallen from 1.2 times in the financial year 2019 to 0.7 times in 2023, which can help the company immensely for its next leg of growth.

The company's strategic investments in emerging themes are poised to drive future growth, supported by a strong order backlog and a deleveraged balance sheet.

In Conclusion

For investors seeking promising returns, these companies represent significant growth opportunities, tapping into expanding market demands and demonstrating strong growth trends.

While such investments come with volatility, thorough research and market awareness can yield substantial long-term benefits, allowing investors to capitalize on trends and mitigate potential risks.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

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