Welcome to the part three of our wealth creator stocks (WC-stocks) series. In the first and second parts, released in the past two weeks, we discussed the top-10 multi-bagger stocks and analysed the sectors and companies that made highest returns in the past decade. We also discussed the market-cap movements. If you have missed previous two parts, you can read
part 1 and
part 2 here. In the previous part, we concluded that multi-baggers are generally found among small-caps and mid-caps due to their small size and growth opportunity. In this part, we analyse the top-100 wealth creators from the list of top-500. Most of these top-100 companies were: micro-cap (60), small-cap (34) and mid-cap (6) in size, in 2014.
We first run a broader analysis of sectoral composition in the list of top-500 stocks. In top-500, the largest number of stocks was from a sector we describe as engineering-electronics-electricals (54); then came: chemicals (31), pharma (29), software & information technology (IT) services (27), steel products (24), industrial intermediates (24),financial services (23) auto-components (20), textiles (16), foods & beverages (16) and lifestyle & leisure (16).
These 11 sectors formed more than 50% (280) of companies in the top-500 list. We also take a look at the bottom sectors with only one stock each in the list (in terms of number of stocks), to have a broader understanding. The bottom sectors, with only a single stock each in the top-500 list, were from shipping, footwear, business services, office equipment, green energy, home finance, trading and investment services, ecommerce, asset management, refineries and telecom services. Also, we must take a look at some of the trending or buzzing sectors in the past year and see where they stand in the WC-stocks list. These were: financial services (23), auto-components (20), software & IT services (27), real estate (14), railways (5), wire, ropes & cables (8) and defence (5) in the top-500 stocks list.
High price volatility is an intrinsic characteristic of small-cap and micro-cap stocks and, therefore, they are not easy to hold for a longer period. Steep declines (due to any number of factors) force unseasoned investors to panic and sell. Sometimes, stocks also underperform the broader market for years (like in 2018 and 2019) which leads to anxiety among investors who begin to doubt their investments.
Also, during any macro crisis (like defaults, wars and pandemic), small stocks are the first to be affected due to their small size. This, again, affects investor sentiment. Facing these waves and sailing through such storms is surely a difficult task. And not everyone has the patience that comes from knowledge, wisdom and experience, to act mindfully. Such patient investors would have bagged huge returns in 2023 and 2024.
When we move to the top-100 and exclude bottom-400 from the list of 500 stocks, we see interesting changes. Engineering-electronics–electricals stocks were at the top, with 10 stocks in top-100, they were at the same position in the top-500 list of this year. In 2023, this top position was acquired by software & IT services stocks with eight companies. This may be due to marked higher demand from energy sector and overall infrastructure investment related demand. The top-5 stocks in this sector have delivered more than 43% compounded annual growth rate (CAGR) over the past 10 years, including Shilchar Technologies, Shivalik Bimetal Controls, Axtel Industries, Rajoo Engineers, Transformers & Rectifiers (India). At the second position was the chemicals sector with seven stocks among the top-100. These include: Refex Industries, Sadhana Nitro Chem, Tanfac Industries, Thirumalai Chemicals, Alufluoride, Pondy Oxides & Chemicals and PCBL Chemical. In 2023, specialty chemicals sector, with seven stocks, was at the second position.
We will discuss a few stocks which have performed extremely well over the past decade. These were already part of our WC-stocks list in the past few years. Despite having increased investors’ wealth manifold, these companies continued to do well because they were addressing a large market and, of course, executed their businesses well.
Multi-baggers with Further Steam
Even if a stock has grown several-fold within a short span, there is no way to tell whether it will rise further, stagnate or reverse gear. The same conundrum characterises our list of wealth creators as well. The list presents stocks that have grown the most in the span of a decade; but it does not mean that these are not worth investing in anymore. Here are some stocks from our previous years’ list of wealth creators that have performed consistently over the past decade.
Refex Industries
Established in 2002, Refex focuses on the trading of eco-friendly HFC (hydro-fluorocarbon) refrigerant gases and offers solutions for responsible coal procurement and ash disposal. It also trades in eco-friendly refrigerant gases and offers solutions for responsible coal procurement and ash disposal. The company has its own brand, called Refex Cans, with installed capacity of 3,000MT (metric tonnes). It has a wide reach with more than 450 dealers and distributors. Its major customers include: Carrier, Voltas, Cars 24, Snowman, etc. It ventured into power trading in 2022 and commenced green mobility operations in 2023 in Bengaluru with more than 590 owned/leased vehicles. In terms of revenue share, the company gets 69% of its revenue from ash and coal handling business, 20.5% from power trading, 5.3% from refrigerant, 4% from sale of service and the remaining from others.
With a category-I licence for interstate power trading, Refex is capable of trading significant volumes of electricity across India. Refex Green Mobility focuses on electric vehicle (EV) solutions. The company owns and operates a fleet of 4-wheeler (4W) EVs, catering to employee transport and rental requirements. Refex also taps into demand-generating channels, such as aggregator platforms, to expand its reach in the growing electric mobility market.
The company is looking to enter 10 additional states in ash and coal handling business and double the capacity for ash handling by fleet expansion. In refrigerant gases, it is looking to enter new geographies and expand capacity. It is also planning to associate with all large OEMs (original equipment manufacturers). In green mobility, it is looking to expand fleet from 590 currently to 5,000 by FY26-27 and enter new cities. Refex has increased its sales by a CAGR of 25% over the past five years and profit by 24%. In the same period, its stock price CAGR was 116%. Its CATSR return over the past 10 years was at 68%.
Lloyds Metals & Energy
Lloyds Metals & Energy Ltd (LMEL) operates as a fully integrated entity with an allocated iron-ore mine. The mine lease is valid up to CY (calendar year) 2057, with substantial reserves of 157mn (million) tonnes of direct shipping ore (DSO) and 70mn tonnes of banded hematite quartzite (BHQ). The company is advancing its forward integration plans aiming for a 12mn tonnes pellet plant and 4.2mn tonnes steelmaking capacity. LMEL is debt-free, with all expansion plans funded internally, and boasts strong financial performance with a return on capital employed (RoCE) of 55% and return on equity (RoE) of 44% for FY23-24. Furthermore, the company benefits from the industrial promotion subsidy (IPS), receiving refunds on state goods and services tax (GST) and royalties for captive ore consumption. The upcoming projects are expected to have a payback period of less than four years.
In H1FY24-25, the company achieved a 26% y-o-y (year-on-year) revenue growth, driven by higher volumes and realisations in sponge iron and iron ore. EBITDA (earnings before interest, taxes, depreciation and amortisation) grew by 37% y-o-y, supported by robust margins across segments. LMEL also incurred capital expenditure (capex) of Rs1,690 crore in FY23-24 and Rs1,7140 crore in H1FY24-25 to support its ambitious growth plans.
LMEL is executing an ambitious capex plan exceeding Rs30,000 crore to support its forward integration and capacity expansion goals. This investment is funded entirely through internal accruals and the recently raised Rs4,200 crore which includes Rs1,200 crore through a qualified institutional placement (QIP) and Rs3,000 crore via preferential capital, with Rs1,000 crore contributed by the promoters. The company aims to enhance its beneficiation process, upgrading banded hematite quartzite (BHQ) ore from 35% to 65% iron content, which will boost output to 25mn tonnes over the next few years.
The capex includes the development of a 4mn tonnes of steel production capacity across two plants—1.2mn tonnes at Chandrapur, expected to be commissioned by September 2026, and the remainder at Gadhchiroli, close to the company’s mines. Additionally, two pellet plants are scheduled to begin operations by the end of this financial year. Plans are also underway for a 3mn tonnes flat products steel plant in Gadhchiroli, designed to be highly sustainable with a 20% lower carbon footprint compared to traditional plants. These initiatives align with India's vision of producing 300mn tonnes of steel, positioning LMEL as a key player in the country's growing steel demand.
LMEL has increased its sales by a CAGR of 28% in the past 10 years which improves drastically to 69% CAGR, if only the past five years are taken into account. Similarly, its profits have shot up at CAGR of 41% in the past 10 years and 129% over the past five years. These superb growth numbers resulted in huge stock price appreciation resulting in 180% stock price CAGR in past five years. The CATSR return for past 10 years was at 67%.
Tanfac Industries
Tanfac Industries Limited (TIL) was incorporated in 1972 as a joint venture (JV) between Tamil Nadu Industrial Development Corporation (TIDCO) and L Narayanan Chettiar. In 1980, the Aditya Birla group (ABG) became a co-promoter by acquiring a 25% stake from Mr Chettiar. Later, in March 2022, Anupam Rasayan India Limited (ARIL) acquired the Birla group's stake, becoming a co-promoter alongside TIDCO. TIL commenced commercial production in 1985, leveraging state-of-the-art facilities spanning 60 acres in the SIPCOT Industrial Estate (Cuddalore), equipped with advanced technology from Switzerland's BUSS Chemtech and Germany's CHENCO.
The company is a leading producer of fluorine-based chemicals, including anhydrous hydrofluoric acid (AHF), sulphuric acid, aluminium fluoride and several other specialised products catering to agro-chemicals, pharmaceuticals and polymer industries. Over the years, TIL has achieved notable milestones, such as being the first Indian fluorine chemical company and fifth globally to secure ISO 9002 certification in 1994, later upgraded to ISO 9001:2000. It also became the first in India to obtain ISO 14001:1996 for fluorine chemical manufacturing. With a strong focus on safety, sustainability and operational excellence, TIL has implemented total productive maintenance (TPM) with the Japanese Institute of Production Management (JIPM) and is a signatory member of Responsible Care in India.
TIL’s journey reflects steady financial and operational progress. Noteworthy achievements include becoming debt-free in FY18-19, surpassing previous EBITDA records in 2022, and achieving its highest-ever revenue, EBITDA and PAT (profit after tax) in 2023. In 2024, TIL recorded its highest production volumes, operated at peak capacity utilisation and began expanding AHF production capacity with an investment of Rs102 crore, while remaining debt-free.
In October 2024, it completed 29,700MT brownfield capacity expansion of hydrofluoric (HF) acid at a capex of Rs100 crore. TIL has increased its sales by CAGR of just 12% in the past 10 years. But, in the past three years, sales growth has improved 37% CAGR. Despite the low sales growth in a longer time frame, the company has achieved better profit growth with 34% CAGR in the past 10 years and 43% in the past three years. Its stock has delivered a CATSR return of 62% over the past 10 years.
Dynacons Systems & Solutions
Dynacons is an IT infrastructure company. It provides services like system integration, networking solution, facility management services, security solutions and software services. Incorporated in 1995, it has partnered with prominent IT companies like Apple, Microsoft, Lenovo, Dell, HP, Cisco, etc. Its clientele includes: the Reserve Bank of India (RBI), Facebook India and Google India, among others. It is headquartered in Mumbai and has 11 branch offices across India. It also has a subsidiary in Singapore to handle Asia-Pacific operations.
The company offers a wide range of services, including infrastructure design and consulting, turnkey systems integration and the establishment of large-scale network and data centre infrastructures. Dynacons claims to deliver advanced solutions such as hyper-converged infrastructure (HCI), private and public cloud setups, software-defined networking (SD-WAN), and software-defined storage (SDS) solutions. It also provides network infrastructure services for ISPs (internet service-providers), virtual desktop infrastructure (VDI) solutions and facilities management for multi-location IT infrastructure. Its enterprise services portfolio includes infrastructure managed services, break-fix services, managed print services, cloud computing, systems integration and application development and maintenance.
From a financial perspective, the company has increased its sales by a CAGR of 29% over the past 10 years. Profit growth over the same period was at a phenomenal 56%. The CATSR in the same period is around 61%. Its FY23-24 sales were up by 28% y-o-y on account of consistent orders and new customer addition. Its current market-capitalisation is around Rs1,913 crore. It was at number three in our list last year.
Tips Music
Tips Music (Tips) stands out as the only listed player to expense 100% of its content cost in the quarter of release, with no pending write-offs or capitalisation. Debt-free, with Rs259 crore in cash and investments, Tips boasts a diverse catalogue featuring music in over 25 languages, available globally across multiple platforms. The company derives 75% of its revenue from digital platforms and has over 108mn subscribers on YouTube. Tips employs a dual content acquisition strategy, purchasing rights from producers and producing original music. It focuses on identifying and promoting promising artists, supported by a history of creating chart-topping hits.
The company has a large music library with a collection of over 30,000 songs across various genres and regional languages. It has produced and released around 40 Hindi films in the past 20 years and also sells the theatrical, satellite and various other rights to distributors, broadcasters, etc. Tips has increased its sales at 39% CAGR in the past three years and delivered a profit growth of 43% CAGR in the same period. The stock delivered CATSR return of 61% in the past 10 years.
The Top-100 Wealth Creators of 2014-2024
The top-100 wealth creators are presented below with their CATSR. To see if there is any single sector which has outperformed, we have analysed the sectors of these companies. The five sectors dominating top-100 list were: engineering - electronics – electricals (10), chemicals (7), steel products (6), software & IT services (5) and foods & beverages (5). Together, these sectors form 33% of the stocks in the top-100 list. Interestingly, of the 60 micro-caps in 2014, 13 moved one step up on the ladder to become small-caps in 2024, 40 jumped to mid-cap space and seven outperformed others to become large–cap, while none remained micro-cap.
Similarly, analysing the 34 small-caps of 2014, three moved one step up on the market-cap ladder to become mid-cap, while a majority of them (around 25) jumped to large-cap category in 2024, six outperformed others to enter mega-cap arena and none remained in the small-cap category. There were six mid-cap companies in 2014 in our top-100 list, five of which have now become a mega-cap, while one moved to become large-cap.
Each of the above-mentioned stocks has its own growth story. They have outperformed others to be listed in top-100. It is important to recognise the current stage of their journey. Also, how long the journey will be extended. Are they just starting and are on a multi-decade cycle or their steam is gone and they are going to stagnate for a while. Stock price return is a function of growth. Therefore, investors must carefully check the stage and future earning potential of companies.
All humans admire a heroic story, rising against the odds from humble beginning to eventual success. The stock market keeps throwing up such stories frequently, but it is on investors to act, have patience through turmoil (just like it is now in beginning of 2025), to benefit from such successful stories. The top compounders have not only grown their sales but have also innovated—a factor that is often ignored. But the innovation is in adjacent products and services and not in something totally unrelated or outside the core competency of the management. Unrelated diversification in pursuit of growth has led many to the graveyard.
