A few days back, Amazon founder Jeff Bezos was going down the memory lane and recalling the time when Amazon got listed on the stock market 25 years ago. (Amazon was listed as AMZN on Nasdaq in May 1997.) As he celebrated 25 years of growth on Twitter and spoke about his "far from smooth" journey to success, his followers wished him and asked him questions.
A Twitter user asked Bezos one question: What was the price of the Amazon stocks at the time of the IPO in 1997? Want to take a guess?
$1.50— Jeff Bezos (@JeffBezos) May 16, 2022
The stock which cost $1.5 (Rs 116 as per today's rate) about 25 years back, currently trades at $2,142 (about Rs 166,430). That is a growth of 123,729% over 25 years, which means almost 5000% growth every year!
What on earth grows at that speed? Well, that got me thinking..
Wouldn't it be nice to have bought those shares at a price like that?
Also, wouldn't it be awesome if my dad had invested in companies like Amazon back then? (We would have probably become a millionaire by now had that been the case)
But, what companies should he have put money in to make solid returns today? Also, do we have companies that grow like Amazon in India?
You might think that investing in stocks is so unconventional and risky, simply because all you hear around you is people talking about investing in mutual funds, putting money in SIPs and stuff like that. So, maybe you have doubts around investing in specific stocks.
But here is the thing: Though investing in mutual funds is safer because it offers diversification of risk, investing in stocks needs some attention.
If you trust a company's growth model, if the company's financial figures are good, it is led by a good management and it has received good reviews by experts, you can invest in its stock. Afterall, mutual funds invest in the best stocks too, right?
But can you get a great return just by investing in stocks?
Yes, if you know which ones to invest in. Since this 'know-how' doesn't come magically to us and involves timely, heavy research, awareness of a company's growth and knowledge of the development of the industry, it is usually better to give our money to mutual fund managers, who can do this well and get us good returns.
So, I looked around and researched some companies that are doing great today. I looked at how these companies have grown (in terms of share price) over the years. These companies are the ones that have grown the most over their lifetime, and in the last 10 and 20 years.
So, if you had to talk to your dad about the kind of sasta-wala shares he should have invested in then, here are the companies you can talk about:
1. 20+ year old companies with the most growth over their lifetime
|Price per share at IPO about 20 years ago||Price per share as on May 19, 2022||Growth %|
|3||Eicher Motors Ltd.||4||2,699||67373%|
|8||Pidilite Industries Ltd.||8||2,101||26163%|
2. The companies with the most growth in the last 20 years
|Sr No||Top Companies||Price per share as on May 19, 2022||Price per share as on May 19, 2002||Growth in % over 20 years|
|4||Eicher Motors Ltd.||2,699||6||44882%|
|6||Pidilite Industries Ltd.||2,101||10||20910%|
|9||State Bank of India||447||20||2052%|
3. The companies with the most growth in the last 10 years
|Sr No||Top Companies||Price per share as on May 19, 2022||Price per share as on May 19, 2012||Growth in % over 10 years|
|4||Pidilite Industries Ltd.||2,101||173||1114%|
|5||Eicher Motors Ltd.||2,699||210||1185%|
|12||Abbott India Ltd.||18,024||1,467||1129%|
SO WHY ARE THESE COMPANIES STRONG?
When I was a kid I wanted Sachin's MRF bat ?Now I just want MRF shares ??— Parth Patel ⚡? (@ppm__143) May 17, 2022
MRF(Madras Rubber Factory) is one of the largest tire manufacturers in the country and has one of the highest priced shares in Indian stock markets. At Rs 73,739/ share, MRF shares are covetted because of one unique feature that separates it from the rest of shares in the market. Its shares are never split.
When a company wants to raise more funds, it usually gives a bonus share or splits its existing shares into a ratio say 5:1. Though this increases the number of shares, it also reduces the price of existing shares. A lot of companies follow this way of raising new funds. But not MRF.
MRF has never split its shares. Thus there is a limit on the number of shares available for trade which has shot its price through the roof. This has limited public investment and has also reduced unnecessary speculation in the MRF share price, since not everyone can afford MRF shares.
If you are not an automobile industry fanatic, Motherson Sumi is one hell of a trusted brand and is one of the world’s largest manufacturers of automobile components. Its products are used in cars like Audi, BMW and Mercedes and it operates in the B2B segment. It makes products like electrical cables and wires that are used in cars. It also manufactures interior and exterior components like door panels, airbag boxes, door handles, head lamps, and rearview mirror systems.
Its diverse business segments in the auto industry, presence in more than 41 countries, diverse customer base and great management makes it a covetted company. It is backed with good financials and also has plans to expand in non automation sectors like health and logistics, thus making it a company that covers its risks at all levels.
When was the last time you wanted a glue stick to stick a bunch of papers together and you did not use Fevicol or a Fevistick? The brand Fevicol is synonymous to adhesives since time immemorial and has an obvious monopoly in the industry. Its presence is not only visible in crafts and adhesives industry, but also in construction and water-proofing businesses.
You might also remember how hilarious and memorable Fevicol ads have always been, thus increasing brand remembrance with loyalty which makes it a company with loyal, repeating customers. Its extensive channel of distribution across the country helps it become a company with strong cashflows.
Shree Cement is one of the biggest cement makers in northern India and has been cementing its position in the market using a multi-brand strategy. You might remember one of its brands - Bangur Cement because of its ads. Shree Cement has three cement brands- Shree Ultra Jung Rodhak Cement, Bangur Cement and Tuff Cemento which helps it enjoy the largest market share in high value markets of Rajasthan, Delhi and Haryana.
Its earnings per share and profit margins have been consistently growing since the last 3 years, and its short-term financial assets are stronger and more than its liabilities.
Eicher Motors was a company that once imported tractors from abroad and sold it in India. Over time, it expanded into 15 business segments like footwear, garments etc. But after it purchased 60% stake in Royal Enfield, a company that was already successful in India in 1993, it sold off or shut down 13 of its business segments and focussed on the remaining two segments - ie bike manufacturing and truck manufacturing.
The motor bike industry has three segments ie low segment (bikes with 0-250 cc), mid segment (bikes with 250-800 cc) and high segment (bikes above 800 cc). Eicher Motors expanded the motor industry by entering the mid segment as it recognised that there were barely any manufacturers in this segment and gained 95% market share.