Eventful 2020 saw a six-fold rise in stocks whose returns doubled

Compared to just four stocks in 2019, none in 2018, as many as 24 have delivered over 100 per cent returns this Calendar year

The number of stocks whose prices have more than doubled in the past one year has gone up six-fold. Compared to just four stocks in 2019 and none in 2018, as many as 24 stocks have delivered over 100 per cent returns in 2020.

To ensure that penny or illiquid counters are kept out, among key criteria considered for this study is a minimum current market capitalisation of Rs 1,000 crore. Also, the company should be tracked by at least five analysts.

The benchmark Nifty-50 Index touched an all-time high of 12,431 in January before crashing to 7,511 in March following the outbreak of Covid-19 and the subsequent lockdown. Notwithstanding, the uncertainty on the economic front and a second wave of the virus in the US and Europe, the markets have continued to move higher since then, surpassing its pre-Covid January highs.

“In a nutshell, 2020 has been a rollercoaster of a year when we had a once-in-a-century kind of an event -- (the markets) went down by 40 per cent in just 40 days before recovering at an equally fast pace led by very strong liquidity support by global central banks,” said Amit Khurana, head of equities at Dolat Capital.

The expectation of an economic revival, persistent buying by foreign portfolio investors (FPIs), easing coronavirus cases, and hopes of a vaccine have added to the optimism on Dalal Street, with benchmark indices rallying around 15 per cent on a year-to-date basis.

The October IIP data released earlier this month showed the factory output expanded the most since February. The healthy recovery in manufacturing was reflected in strong improvement in capital goods, which recorded positive growth for the first time in 21 months during that period, indicating signs of an economic rebound.

FPIs are on track for a third successive month of positive inflows and have bought Indian equities in excess of Rs 1 trillion. With 7,397 cases per million, India’s Covid-19 cases per million population are well below the global average of 10,149.

"Governments moved fast with stimuli, even as stocks fell 30-90 per cent. However, in times of such crises, smart investors look past lost earnings and many stocks appeared relatively cheap to their historical averages. The CY20 rise of 12-20 per cent (in indices) is just the beginning and 2021 could be a year of transformation," says Chakri Lokapriya, MD & CIO, TCG Advisory Services.

Here are some stocks that stand out in terms of returns, and why.

THE TOPPERS

Laurus Labs: Besides continuous improvement in financial performance, the pharmaceuticals company is evolving as a strong vertically integrated player with a robust order book visibility, improving margin profile, strengthening return ratios, and healthy free-cash-flow generation, says ICICI Securities.

Dixon Technologies: Huge growth potential in the electronic manufacturing services market (expected to grow at 47 per cent CAGR over 5 years), expansive product mix, and strong play on indigenisation (Make in India), along with upside from the PLI scheme, are the key drivers.

IndiaMart InterMesh: High growth in digitisation among SMEs, market leadership in the B2B classified space, robust business, and strong balance sheet are seen as the key growth drivers.

Granules India: Sustained growth momentum in formulations business, new product launches, entry into the European and LatAm markets are the key positives, according to analysts at Anand Rathi. Higher promoter pledging (9 per cent) and any adverse currency movement are major risks.

Mastek: Strong earnings growth, sustained deal momentum, and relatively cheap valuations among IT players are important triggers, say analysts.

OTHER OUTPERFORMERS

Divi's Laboratories: Continued traction in the active pharmaceuticals ingredients (API) business, margin expansion owing to increased in-house manufacturing of intermediates, and additional revenue visibility from new capex were positive, according to Motilal Oswal Securities.

Tata Communications: Consistent improvement in the data segment (83 per cent of revenue), margin expansion, and possibilities of deleveraging bode well for the firm, say experts.

Deepak Nitrite: Large growth potential in the high-margin fine & specialty chemicals and phenolics business, diversified product portfolio, and focus on expansion-led growth have aided the share price rally.