Top Fastest Growing Stocks in India: How to Identify, Benefits, Risks, And More

Last Updated on Dec 26, 2024 by Vanessa Sequeira

Identifying growth stocks is much like looking for the next promising startup before it becomes a household name. Think of the foresight it took to invest in tech giants like Infosys or TCS decades ago when they were just emerging players. For seasoned investors, the allure lies in recognising potential early, backed by sharp financial insights and disciplined analysis. Investing in growth stocks can be an effective way to enhance your portfolio, particularly if you are aiming for long-term capital appreciation. When you look at growth stocks in India, you are likely seeking companies that show significant potential for future expansion. In this article, we will delve into what growth stocks are, the features of high growth stocks, and the factors you might consider when selecting the fastest growing stocks in India.

What are Growth Stocks?

Growth stocks are shares in companies that are expected to grow at an above-average rate compared to other companies in the market. These companies typically reinvest their earnings into business expansion, research, and development rather than paying out dividends. For those interested in the best growth stocks in India, the market offers a wide array of opportunities in various sectors.

Top Fastest Growing Stocks in India – Updated December 2024

Note: The list of best growing shares in India is taken from a pre-built screen, ‘Growth Bargains’ from the Tickertape Stock Screener. The data is of 19th December 2024.

Please note that these stock selection criteria and the stocks are provided for informational purposes only; it is essential to conduct your own research.

🚀 Pro Tip: Use Tickertape’s Portfolio Analysis to assess your investment portfolio’s diversification and performance.

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Overview of the 5 Best Growth Companies in India 

Ahluwalia Contracts (India) Ltd

Known for its expertise in construction and infrastructure development, Ahluwalia Contracts stands out with exceptional financial discipline. Over the last five years, it has maintained a debt-to-equity ratio of 7.11%, significantly below the industry average of 170.51%, reflecting its conservative leverage strategy. Its current ratio of 177.4%, against the industry average of 113.84%, highlights robust liquidity management, making it a resilient player in its sector.

Sharda Motor Industries Ltd

A key name in the automotive component industry, Sharda Motor Industries boasts strong financial metrics. Its debt-to-equity ratio over the past five years has been a mere 2.7%, compared to the industry average of 68.19%, demonstrating prudent financial management. With a current ratio of 171.21%, far above the industry average of 107.71%, and a net profit margin of 10.32%, it is considered one of the fastest growing companies in India. For those exploring stocks with low value and high growth prospects, Sharda Motor is an appealing choice.

Man Infraconstruction Ltd

Specialising in real estate and infrastructure development, Man Infraconstruction exhibits strong financial health. Its debt-to-equity ratio of 42.48% over the last five years is well below the industry average of 170.51%, signalling effective debt management. The company’s current ratio stands impressively at 308.93%, compared to the industry average of 113.84%, showcasing excellent liquidity. With a net profit margin of 21.78%, it ranks among the best growth stocks in India.

GMM Pfaudler Ltd

A leader in the glass-lined equipment market, GMM Pfaudler has shown consistent performance with an expected return of 28.33% from the current price level, surpassing its three-year CAGR of 0.20%. Over the last five years, its current ratio has been 173.43%, higher than the industry average of 164.69%. While its net profit margin of 5.16% is modest, its strong liquidity and market potential make it a prominent player among growing companies in India to invest. For long-term investors, it is one of the top 10 high growth stocks in India.

Jindal Stainless Ltd

One of India’s largest stainless steel manufacturers, Jindal Stainless displays balanced financial management. Over the last five years, it has maintained a debt-to-equity ratio of 71.8%, below the industry average of 92.42%, indicating controlled leverage. Its current ratio of 121.73% surpasses the industry benchmark of 97%, reflecting adequate liquidity. As one of the fastest growing companies in India, it offers considerable potential for those seeking companies with strong fundamentals.

How to Identify the Best Growth Stocks for the Next 10 Years in India?

Identifying the best growth stocks in India requires careful analysis and understanding of various factors. Here are some steps to help identify stocks with low value and high growth prospects:

1. Research Industry Trends: Looking into the industries that are expected to grow significantly over the next decade can be a good start. Sectors such as technology, healthcare, and renewable energy are currently showing strong growth potential.
2. Evaluate Company Financials: Analyse financial statements for insights into a company’s growth prospects. You can focus on revenue growth, profit margins, and historical performance to identify companies with strong fundamentals.
3. Assess Market Potential: Companies with large addressable markets and innovative solutions often rank as top 10 high growth stocks in India. Their market potential translates into better long-term investment opportunities.
4. Review Management Quality: The quality and track record of a company’s management team can significantly impact its growth trajectory. Strong leadership can drive successful growth strategies and execution.
5. Use Analytical Tools: Utilising Tickertape Stock Screener can help you filter and identify stocks based on specific growth criteria. These tools help investors pinpoint stocks with low value and high growth prospects while analysing key financial metrics. Try it out now!

How To Find The Best Growth Stocks Easily?

Alternatively, you can use a pre-built screen to find fastest growing company in India quickly!

With a pre-built screen, you can conduct a thorough analysis within minutes. For instance, to get high growth stocks India, Tickertape gives you a pre-built screen called ‘Growth Bargains’. With one click, you will get a comprehensive list of high growth stocks based on following filters:

• Market Cap: The market cap of companies allows you to focus on companies of a certain size, whether you’re looking for established large-cap companies or emerging small-cap opportunities.
• 5-Year Average Return on Equity (ROE): A company’s 5-yr average ROE identifies companies that consistently generate impressive returns on their shareholders’ equity. It also highlights high return stocks in India, which have a track record of efficiently utilising their capital to generate profits.
• 5-Year Historical Revenue Growth: The historical revenue growth identifies companies that have experienced consistent revenue expansion, indicating their ability to capture market share and drive top-line growth.
• 5-Year Historical EPS Growth: A company’s 5-yr historical EPS growth is an essential metric that is used to identify top growing companies in India that have consistently increased their profitability over time.
• 5-Year Historical Operating Cash Flow Growth: Cash flow is a crucial indicator of a company’s financial health. The 5-yr historical growth in operating cash flow helps you identify high growth stocks India that have been successful in generating cash from their operations.
• PE Premium vs. Sector: This filter compares a company’s PE ratio to its sector’s average PE ratio. It enables you to identify fast growing stocks in India that are trading at a discount relative to their peers in the same industry, potentially indicating undervaluation.

Now that you have understood the pre-built screen in detail, let’s look at how you can get it within a minute.

Step 1: Go to Tickertape Stock Screener.

Step 2: Click on ‘All Screens’ and then click on ‘See All’ under ‘Premium’.

Step 3: Click on ‘Growth Bargains’ and click on ‘Load’.

That’s it! Your list of high-growth stocks is ready! Try the pre-built screen now!

Features of High Growth Stocks

High growth stocks are characterised by several features that distinguish them from other types of investments. Here are some key characteristics:

1. High Revenue Growth: These companies usually exhibit rapid increases in revenue. You can look at their quarterly and annual revenue reports to gauge this growth.
2. Innovative Business Models: Fast growing shares often belong to companies with unique and innovative business models. This innovation can drive significant growth over time.
3. Strong Market Position: Top growing companies in India that are leaders in their respective sectors are more likely to be high growth stocks. Their strong market position can be a good indicator of sustained growth.
4. High Price-to-Earnings (P/E) Ratio: High growth stocks India often have high P/E ratios compared to the market average, reflecting investors’ expectations of future earnings growth.
5. Reinvestment Strategy: Growth companies typically reinvest a significant portion of their earnings back into the business to fuel further growth. This reinvestment can support long-term expansion.

Factors to Consider When Choosing High Growth Stocks

Selecting the right high growth stocks requires careful consideration of various factors. Here are some points you may want to keep in mind:

1. Industry Trends: You might want to consider the overall trends in the industry. Industries experiencing rapid technological advancements or shifts in consumer demand are fertile ground for identifying growth shares and high CAGR stocks.
2. Company Financials: Analysing revenue growth, profit margins, and historical performance can guide you toward selecting high return shares that align with your investment goals.
3. Management Team: The competence and track record of a company’s management team can significantly influence its growth trajectory. Strong leadership often drives successful growth strategies.
4. Market Potential: Evaluate the market potential for a company’s products or services. Companies operating in expanding markets are more likely to have fastest growing shares with strong long-term prospects.
5. Risk Factors: It’s essential to consider the risks associated with high growth stocks. Balancing these risks can help you invest in growth shares with confidence.
6. Valuation: While high growth stocks typically have higher valuations, you should ensure that the stock’s price aligns with its growth potential. Overvalued stocks may not offer the best returns in the long run.

High Growth Sectors in India

Identifying the right sectors can be crucial when looking to invest in high growth stocks in India. Here are some of the high growth sectors you might want to consider:

1. Technology and IT Services: This sector has been expanding rapidly, driven by advancements in IT services, software development, and digital innovation. Companies in this sector often show strong growth prospects due to high demand for technology solutions.
2. Healthcare and Pharmaceuticals: The healthcare and pharmaceutical sectors have experienced substantial growth, especially due to the COVID-19 pandemic. The increasing focus on healthcare infrastructure, medical research, and pharmaceutical manufacturing makes this sector a promising area for high return shares.
3. E-commerce and Retail: With the rise of digital literacy and increased internet penetration, the e-commerce sector in India is booming. Growing companies involved in online retail, logistics, and digital payment solutions are poised for significant growth.
4. Renewable Energy: India’s commitment to renewable energy and sustainability is driving growth in this sector. Companies focusing on solar, wind, and other clean energy sources are expected to benefit from government initiatives and increasing environmental awareness.
5. Financial Services: The financial services sector, including fintech, banking, and insurance, is expanding rapidly. The adoption of digital financial solutions and increased financial inclusion efforts are contributing to this sector’s growth.

How to Invest in the Best Growth Stocks in India?

Investing in the best growth stocks in India involves a strategic approach. Here are some steps you might follow:

1. Research and Analysis: Begin by researching potential growth stocks and analysing their financials, industry trends, and market potential. You can use Tickertape Stock Screener to filter stocks based on growth parameters.
2. Use Pre-built Screens: Tickertape offers pre-built screens such as “Growth Bargains,” which can help you identify undervalued growth stocks with strong potential. These screens use predefined criteria to filter out the best stocks with low value and high growth prospects.
3. Diversify Your Portfolio: Diversification is key to managing risk. You might want to spread your investments across different sectors and companies to mitigate the impact of market volatility.
4. Monitor and Review: Continuously monitoring your investments and reviewing their performance can help you make informed decisions and adjust your portfolio as needed.

Benefits of Investing in the Best Growing Shares

Investing in the best growing shares can offer several benefits, including:

1. Potential for High Returns: High growth stocks can provide substantial returns over the long term. The best growing company in India that expands rapidly can see significant increases in their share prices, potentially leading to large profits for investors.
2. Capital Appreciation: Investing in high return stocks in India can lead to capital appreciation as the company’s market value increases. This can enhance your overall portfolio value, contributing to your long-term wealth accumulation.
3. Innovation and Market Leadership: Growth companies often lead their industries in innovation and market share. Investing in such companies can give you exposure to the latest advancements and trends, positioning your portfolio to benefit from cutting-edge developments.
4. Economic Growth: High growth stocks are typically tied to sectors driving economic growth. By investing in these stocks, you can benefit from the overall economic expansion, as these companies often thrive in growing economies.
5. Diversification: Adding high growth stocks to your investment portfolio can provide diversification. These stocks for future growth can balance other types of investments, potentially reducing overall portfolio risk.

Risks Associated with Growth Stocks

While the best growing stocks in India can offer attractive returns, they also come with certain risks that you might consider:

1. Market Volatility: Future growth stocks can be more volatile than established, blue-chip stocks. Their prices can fluctuate significantly based on market conditions and investor sentiment, leading to potential short-term losses.
2. High Valuations: These stocks often trade at high valuations, which can lead to increased risk if the company does not meet growth expectations. Overvalued stocks may experience sharp declines in price, impacting your investment.
3. Execution Risk: Companies pursuing aggressive growth strategies may face execution risks. Failure to implement their plans effectively can negatively impact their performance, leading to potential losses for investors.
4. Sector-Specific Risks: Fast growing shares in specific sectors may be subject to unique risks, such as regulatory changes, technological disruptions, or shifts in consumer preferences. These factors can affect the company’s growth prospects and stock performance.
5. Limited Dividends: Growth companies usually reinvest their earnings into the business rather than paying out dividends. As an investor, you may not receive regular income from these stocks, relying primarily on capital gains for returns.
6. Economic Downturns: During economic downturns, growth stocks may suffer more than other types of stocks. Their high growth rates may be harder to sustain in a slow economy, leading to potential declines in their stock prices.

Who Should Explore Fastest Growing Stocks in India?

Investing in the fastest growing stocks in India may suit various types of investors. Here are a few personas who might consider these investments:

1. Young Investors: Young individuals who have a longer investment horizon can benefit from the potential high returns of growth stocks. They can afford to take on more risk and ride out market volatility.
2. Risk-Tolerant Investors: If you are comfortable with taking on more risk for the possibility of higher returns, the highest growth stocks might be suitable for you. These investors are often willing to accept short-term losses for long-term gains.
3. Tech-Savvy Investors: Individuals with a keen interest in technology and innovation might find the top growing stocks appealing. They can leverage their knowledge to identify promising companies within tech sectors.
4. Long-Term Investors: Investors with a long-term perspective who are willing to hold onto their investments for an extended period might find growth stocks rewarding. The compounding effect of growth over time can lead to substantial returns.
5. Diversified Portfolio Seekers: If you are looking to diversify your investment portfolio, adding growth stocks can balance your holdings. This diversification can help mitigate overall risk.

To Conclude

Investing in the highest growth stocks in India can be a viable strategy for those seeking high returns and capital appreciation over the long term. By understanding the sectors with the most potential, evaluating company financials, and using Tickertape Stock Screener, you can make informed investment decisions. While growth stocks come with certain risks, the benefits of investing in the best growing shares can significantly enhance your portfolio. Remember, it is always worthwhile to consult a financial advisor before investing.

FAQs About Growth Stocks in India

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Anjali Chourasiya

I am a finance enthusiast who loves exploring the world of money through my lens. I’ve been dedicated to building systems that work and curating content that helps people learn.

As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!

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