Can this real estate stock be a potential 10-bagger?
technical analysis, I often seek stock insights from my technical analyst friends. I like to know which stocks they’re bullish on and then apply my fundamental filters to them. Recently, one of my technical analyst friends expressed strong bullish sentiments about Shriram Properties, going so far as to predict it could become a potential 10-bagger.
Yes, you read that right. He believes Shriram Properties could increase tenfold over the next few years from its current levels. This bold prediction, especially coming from a technical analyst, piqued my interest.
Typically, I expect technical analysts to forecast potential upsides of 50-100%, or perhaps even 200% over a few months. But a 10x prediction? That was unprecedented. I’m not sure which tools my friend used to arrive at this forecast, but it certainly intrigued me enough to take a deeper look at the fundamentals of Shriram Properties.
The big question: Are the fundamentals of Shriram Properties strong enough to justify a 10x return in the coming years? Can I arrive at a similar conclusion with the same conviction as my friend? To be honest, when I first examined the company's historical performance, I wasn’t impressed. Between March 2019 and March 2024, the company's topline and bottomline growth was modest, at 6% and 9% respectively. These figures are far from the kind of growth you would expect from a potential 10-bagger, which typically requires profit growth of at least 25% annually.
Shriram Properties fell well short of this over the past five years. However, when you zoom in on the more recent period between FY22 and FY24, there’s a glimmer of hope. The company managed to double its topline and grow its bottomline by 4x (though from a lower base).
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