Best performing stocks since last election year

As the nation is engrossed in election discussions, it's an opportune moment to reflect on how the stock market has fared since the previous election.

Over the past five years, benchmark stock market indices, Nifty 50 and Sensex, have seen impressive gains exceeding 90%.

This growth has been buoyed by various developmental initiatives, including 'Aatmanirbhar Bharat', 'Make in India', 'Namo Bharat', and 'Bharat Mala'.

Despite the indices achieving substantial double-digit growth, numerous stocks have surged by more than 1,000%, showcasing their potential under favourable conditions.

Today, we will highlight five stocks that have turned numerous investors into millionaires.

#1 Adani Green Energy

Topping the list is Adani Green Energy, a result that may not surprise many, given the stellar performance of Adani Group stocks over the last five years.

Shares of Adani Green Energy have skyrocketed by over 4,100% in this period.

An investment of ₹10,000 in this stock on the day of the 2019 election results would now be valued at ₹424,518.

This remarkable rally is attributable to the company's focus on generating power through renewable sources, boasting an installed capacity of 8.4 gigawatts (GW) across solar and wind energy, among the country's largest.

With projects totaling more than 11 GW in the pipeline and a goal to expand its capacity to 45 GW by 2030 to align with the government's renewable energy objectives, the company has significantly increased its installed capacity from 2 GW to 8.4 GW in the last five years.

Supplying power to sovereign companies and agencies, Adani Green Energy's revenue and net profit have shown robust growth, with revenue increasing at a compound annual growth rate (CAGR) of 33.4%, and net profit reaching ₹9.7 billion in the financial year 2023, a turnaround from a net loss of ₹4.7 billion five years earlier.

The company's return on equity (RoE) and return on capital employed (RoCE) have also consistently improved, underscoring its potential for continued growth in the coming years, especially with ongoing government support for the renewable energy sector.

#2 JBM Auto

Second on the list is JBM Auto.

The company is an auto ancillary company and is engaged in manufacturing steel metal components, tools, dies and moulds, and buses.

The primary reason for this rally is that the company ventured into e-bus manufacturing.

With the electric vehicle (EV) revolution picking up pace, the company secured several orders from government and private entities at a very fast pace.

At present over 5,000 e-buses of JBM Auto are on the Indian roads and the company has orders for over 4,500 buses to be executed in the next three years.

From almost 0% share in revenue, the e-bus segment grew to 12% in just four years and expects to reach 30% share by the end of 2024.

While the e-bus segment played a major role in the company's growth, its established presence in the components business has also contributed to this growth.

In the last five years, the company started supplying components to two-wheeler companies apart from commercial and passenger vehicle manufacturers.

The high-margin tooling business, which accounts for 7% of the revenue, is also helping the company grow its profits at a rapid pace.

In the last five years, the revenue and net profit have grown by a CAGR of 11.7% and 5.4% respectively.

The RoE and RoCE have also seen consistent growth post-Covid and currently stand at 12.2% and 17.8%, respectively.

In the last five years, the shares of the company have given over 1900% return. Had you invested ₹10,000 back in 2019, it would be worth ₹202,000 today.

The government policies to support the auto industry and electric vehicles adaption in the last five years have also helped JBM Auto’s growth.

The government's target is to become net-zero, and its focus on 'Make-in-India' will further fuel the growth of JBM Auto in the next few years.

#3 Jupiter Wagons

Third on the list is Jupiter Wagons.

This was a surprise for many, considering the company is not from the high-growth emerging sectors like renewable energy and electric vehicles.

Jupiter Wagons manufactures railway wagons, wagon components, and load bodies for commercial vehicles.

It majorly supplies the India Railways but also caters to commercial vehicle companies like Tata Motors, Mahindra and Mahindra, and VE Commercial Vehicles.

In the last five years, the shares of the company soared over 1800%, taking an investment of ₹10,000 to ₹193,900.

What caused this rally?

The primary reason behind this is the government’s push towards infrastructure.

In the last few years, the government has been allocating a significant portion of its budget towards infrastructure, and a majority of this was secured by the railways.

The Indian government is concentrating on improving its railway network across the country to cater to the growing demand for travel and logistics.

Jupiter Wagons jumped at this opportunity and acquired Commercial Engineers & Body Builders Co Ltd (CEBBCO) through a stressed asset sale to increase its wagon manufacturing capacity.

At present, Jupiter Wagons is one of the largest wagon manufacturers in India, with a capacity of 9,600 wagons per annum.

Over the last five years, it has secured a large number of orders from government and private entities, which helped the company grow its revenue tenfold.

The revenue and net profit grew by a CAGR of 57.1% and 6.1% respectively. Its RoE and RoCE also improved consistently and currently stand at 15% and 27.9% respectively.

At the end of December 2023, the company’s order book stands at ₹700 million, providing enough revenue visibility over the medium term.

Moreover, the company is investing in increasing its production capacity to 12,000 by June 2024, which will increase the company's order execution speed.

Going forward, if the company continues to keep up its momentum in order execution, we can expect the revenue and profit growth to remain high in the medium term.

#4 Jindal Stainless

Next on the list is Jindal Stainless.

The company is the largest manufacturer of stainless steel flat products in India.

With its diversified range of products, the company caters to automobile, construction, railways, and consumer goods industries.

With growth across all its user industries, Jindal Stainless has also witnessed high growth across all its product categories.

This is the reason why the company's shares soared over 1650% in the last five years. If you had invested ₹10,000 in this company on 23 May 2019, it would have been worth ₹179,500 today.

The company has a 30 million tonnes of melting capacity, 0.72 million tonnes of hot strip mill capacity, 1.4 million tonnes and 1.1 million tonnes of hot rolled and cold rolled annealing pickling capacity.

Over the years, the company has undertaken greenfield and brownfield capex to expand its manufacturing capacity across all product categories.

This helped the company ramp up its production and capacity utilisation levels, which resulted in high sales volumes for the company.

In the last five years, Jindal Stainless' revenue and net profit have grown by a CAGR of 21.4% and 70.4%, respectively.

The RoE and RoCE at the end of the financial year 2023 stood at 17.5% and 21.5%, respectively.

The company is experiencing strong demand from railways, process industries, automobiles, infrastructure, and pipes and tubes industries.

Going forward, the government's continued support of all its user industries will help the company grow its revenue and profits in the medium term.

#5 Tanla Platforms

Last on the list is Tanla Platforms.

It is a technology company that offers cloud communications services to help its clients communicate effectively with their customers.

Tanla offers cloud communication solutions through messaging and application-to-peer (A2P) messaging services.

The company makes use of artificial intelligence (AI), machine learning (ML), and more to ensure encrypted and reliable communication channels.

So why is a tech company on this list?

Tanla Platforms is an almost monopoly in the OTP (one-time password) business. It is also the world's largest communications platform-as-a-service (CPaaS) players, and processes more than 800 bn interactions annually.

About 70% of India's A2P SMS traffic is processed through its distributed ledger platform, Trubloq, which makes it the world's largest Blockchain use case.

Its customers are all reputed businesses such as Airtel, Meta, LinkedIn, HDFC Bank, and Department of Telecommunications.

All this led to strong earnings for the company. In the last five years, the revenue and net profit have grown by a CAGR of 27.2% and 71.9% respectively.

As a result, the RoE and RoCE also improved consistently and currently stand at 30% and 38.2%, respectively.

A strong financial performance drove the stock’s performance on the bourses.

In the last five years, the shares of the zoomed over 1,600%. So, ₹10,000 invested five years ago would be ₹176,900 today.

With the growth in digital interactions and UPI transactions, the need for innovative solutions for multichannel communication is high.

Hence, Tanla Platforms is focusing on the CPaaS sector to capitalise on this growth.

Going forward, the company’s revenue and net profit growth will be driven by the addition of new communication channels and potential price hikes.

Conclusion

In conclusion, the remarkable performance of these companies over the past five years can be attributed to favourable government policies, strong market demand, and solid financial fundamentals.

However, investors should conduct comprehensive research and focus on fundamentally strong stocks for long-term benefits, as past performance does not guarantee future results.

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