A focus on quality together with attractive valuations can help you to spot big gainers on Dalal Street. The criterion is working for a Mumbai-based Nikhil Gangil (29) who has spotted at least 10 multi-baggers in the past five years.

In an interaction with Business Today, the young investor said stocks like Sawaca Business Machines have delivered him 68 times, or 6,700 per cent, return from the average down price so far. It was followed by Meghmani Finechem (15 times), Tata Power (6.5 times), Tata Motors (6.5 times), GNA Axles (5.8 times), Ramco System (5 times), Nava (4.7 times), Marathon Nextgen Realty (4.7 times), Tejas Networks (4.5 times) and Fiem Industries (4 times).

Gangil is still holding Ramco System, Marathon Nextgen Realty, Tejas Networks and Fiem Industries. Before going ahead, here is a disclaimer that stocks mentioned in the article are for information purposes only. One should consult their financial advisors before taking any position.

Investment strategy

While sharing his view on investing strategy, Gangil who also enjoys watching movies, travelling and singing, said, “I prefer wonderful businesses at low valuations. Every business and sector go(es) through ups and down cycles. I try to analyse great businesses and wait for the right prices.”

He has also developed a self-ranking system where he ranks the stocks of a sector by their sales growth, return on capital employed (ROCE) and price-to-book. “Top three stocks become my stocks of choice in that sector,” the investor said who is also an M-Tech postgraduate from IIT Madras.

Apart from the above parameters, he also looks for capex, and corporate action before picking any stock.

Over the years, after some trial and error, he has evolved his investing strategy. “From day 1, I have been a value investor. Earlier, I was a valuation first and quality second kind of investor. However, when I started to filter stocks based on quality and then check for valuation, things started to work out for me. Basically, I understood everything that is cheap is not undervalued,” the investor said.
Source: BusinessToday