Last Updated on Jan 2, 2024 by Harshit Singh
Compounding, according to Warren Buffett, is the key to his investment success. Finding consistent compounding stocks that exhibit steady growth in revenue and profitability over time, with sound financials and competitive advantages, is an art that Warren Buffett perfected over the years. In this blog, we are going to replicate Warren Buffet’s investment success with the help of Tickertape Stock Screener and find out the best-compounding stocks in India.
Before we step ahead, let’s divulge ourselves into learning –
Table of Contents
What are compounding stocks?
Compounding stocks, also known as consistent compounders, exhibit steady growth in revenue and profitability over time with sound financials and competitive advantages. As a result, these stocks are a low-risk means of generating long-term wealth with the power of compounding.
Investing in compounding stocks is a long-term strategy that requires patience and a willingness to hold onto the stock for an extended period, allowing the power of compounding to work its magic.
(Note: Compounding in the stock market refers to the phenomenon of a company’s stock price growing exponentially over time as the market rewards it for its consistent performance.)
5 Most Traded Consistent Compounding Stocks In India
| Stock Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | 1M Average Volume | Return on Equity (%) | Debt to Equity (%) | 1Y Historical Revenue Growth (%) | 1Y Historical EPS Growth (%) | 1Y Return vs Nifty (%) | PE Ratio (%) |
| Bharat Electronics Ltd | Electronic Equipments | 135,194.36 | 184.95 | 27,598,213.48 | 22.80 | 0.44 | 15.48 | 24.41 | 64.40 | 45.30 |
| ITC Ltd | FMCG – Tobacco | 583,920.86 | 468.05 | 12,572,792.71 | 29.00 | 0.44 | 16.82 | 25.30 | 20.53 | 30.43 |
| Engineers India Ltd | Construction & Engineering | 10,215.12 | 181.75 | 11,159,197.90 | 18.56 | 0.96 | 14.85 | 148.17 | 107.67 | 29.50 |
| Indian Railway Catering and Tourism Corporation Ltd | Online Services | 71,348.00 | 891.85 | 10,206,863.33 | 46.26 | 3.40 | 86.54 | 52.51 | 18.76 | 70.93 |
| Bls International Services Ltd | Outsourced services | 13,408.73 | 326.50 | 6,982,482.00 | 28.54 | 0.78 | 77.77 | 140.33 | 69.35 | 66.79 |
| Hindustan Aeronautics Ltd | Aerospace & Defense Equipments | 189,019.22 | 2,826.35 | 2,107,988.57 | 27.17 | 0.22 | 11.70 | 14.72 | 102.42 | 32.43 |
| Praj Industries Ltd | Construction & Engineering | 10,230.12 | 556.55 | 2,097,358.24 | 24.05 | 3.91 | 50.20 | 59.41 | 35.40 | 42.66 |
| Mazagon Dock Shipbuilders Ltd | Shipbuilding | 46,181.97 | 2,289.75 | 1,818,078.48 | 25.97 | 0.13 | 38.58 | 83.20 | 170.44 | 41.27 |
| United Spirits Ltd | Alcoholic Beverages | 80,532.29 | 1,107.20 | 1,088,358.81 | 20.90 | 3.06 | 13.47 | 37.07 | 7.22 | 70.87 |
| Jyothy Labs Ltd | FMCG – Household Products | 17,719.65 | 482.55 | 940,078.14 | 16.23 | 3.00 | 14.33 | 48.02 | 115.88 | 73.91 |
Note: The data is from 2nd January 2024 and filtered using Tickertape Stock Screener. The following parameters are derived from pre-defined basic screen ‘Quality Drifters’ which will provide high growth quality companies exhibiting price momentum.
The pre-defined basic screen consists of parameters such as –
- Stock Universe – Nifty 500
- Return on Equity
- Debt to Equity Ratio
- 1Y Historical Revenue Growth
- 1Y Historical EPS Growth
- 1Y Return vs Nifty
- 1M Trade Volume (Additional parameter applied to extract the most traded stocks in last one month)
Overview of best compounding stocks in India
Bharat Electronics Ltd
Bharat Electronics Ltd is a large-cap company that designs, manufactures and supplies electronics products/systems for defense as well as for nondefense markets. The stock has a 86% analyst rating and scores 7.6 for profitability on the ‘Scorecard,’ indicating good signs of profitability and efficiency. Its expected revenue growth for the next year is 13.53%, higher than the last 3 years’ CAGR revenue growth of 11.30%, which is a good sign for a company.
ITC Ltd
ITC Limited markets fast-moving consumer goods and operates in four segments: FMCG, Hotels, Paperboards, Paper and Packaging, and Agri-Business. Its profitability score on Scorecard (a pro feature that highlights the performance, growth, valuation, and growth of stock on the basis of different parameters) is 8.4, indicating good performance and growth potential. In addition, the company’s revenue has grown at a yearly rate of 9.83%, which is higher than the industry’s average.
Engineers India Ltd
Engineers India Ltd is a small-cap engineering consultancy, and engineering, procurement and construction company in the hydrocarbons and petrochemicals industry. Its debt-to-equity ratio for the last five years has been 0.32%, lower than the industry average of 190.25%. In addition, the company’s expected earnings growth for the next year is 20.12%, which is higher than the last 3-yr CAGR earnings growth of -2.79%.
Indian Railway Catering and Tourism Corporation Ltd
IRCTC is a mid-cap company engaged in catering and hospitality. The stock scores 8.5 for profitability on the ‘Scorecard,’ indicating good signs of profitability and efficiency. Also, the stock has no red flags, which is a promising sign.
Bls International Services Ltd
BLS International Services offers outsourcing services for visas, passports, and attestations to governments globally. It has a high-Performance Score of 7.8, indicating good profitability and efficiency with no red flags.
Why should you consider investing in consistent compounding stocks?
Here are four points on why you should consider investing in consistent compounding stocks:
- Long-term wealth creation: Consistent compounding stocks can be a great way to create long-term wealth. These stocks offer consistent growth in earnings and dividends, which are reinvested to increase the value of the investment over time. Over the long term, compounding can lead to significant wealth creation.
- Lower risk: Consistent compounding stocks are often low risk stocks than other types of investments. These stocks tend to be from established, well-managed companies with a track record of success. They also often pay dividends, providing investors with a regular income stream and helping to reduce the risk of the investment.
- Inflation-beating returns: Consistent compounding stocks have the potential to deliver returns that beat inflation. Over the long term, inflation can erode the value of money. However, compounding stocks that offer consistent growth in earnings and dividends can help to protect against inflation and maintain the purchasing power of your investment.
- Diversification: Consistent compounding stocks can be a great way to diversify your investment portfolio. By investing in stocks from different industries and sectors, you can reduce the risk of your portfolio and increase the potential for long-term growth. Diversification can also help to reduce the impact of market volatility on your investment returns.
In summary, investing in consistent compounding stocks can provide you with the potential for long-term wealth creation, lower risk, inflation-beating returns, and diversification for your investment
Patience is key, as compounding interest can create immense wealth. Consider Tickertape’s pre-built screen ‘Quality Drifters‘ to identify consistent compounding stocks easily.
FAQs
What are the benefits of investing in consistent compounding in the stock market?
Investing in consistent compounding stocks provides stability in times of market volatility while ensuring long-term returns. The power of compounding interest allows for immense wealth creation over time. By avoiding the stress of timing the market, investors can achieve financial goals through patient, long-term investing.
Which is the consistent compounders screener in Tickertape?
Under new screens, there are various pre-built screens, both – Basic and Premium, catering to different investment goals. To identify consistent compounder stocks, click ‘Quality Drifters’ under ‘Basic’ screen.
Name 5 mid-cap consistent growth stocks in India.
The 5 mid-cap consistent growth stocks in India are: Mazagon Dock Shipbuilders Ltd, Mphasis Ltd, Coromandel International Ltd, Grindwell Norton Ltd, and 3M India Ltd.
These stocks are based on the following factors:
Apply ‘Quality Drifters’ pre-built screen.
Stocks are sorted (high to low) according to 1M trade volume.
As an investment fanatic, I’ve dabbled in early-stage startups, mutual funds, gold, stocks, smallcases, and real estate to identify which assets generate the highest ROI. At Tickertape, I’m dedicated to presenting my learning and providing insightful suggestions to help my readers make sound investment decision.
- Best Midcap Stocks to Invest In India (2024) - Nov 20, 2024
- Best Investments For Girl Child in India (2024) - Nov 18, 2024
- Best Halal Stocks in India (2024) - Nov 16, 2024
