Best High CAGR Stocks in NSE India from Nifty 500

Last Updated on Dec 18, 2024 by Aishika Banerjee

In the world of investing, understanding growth metrics is crucial to identifying potential winners in the stock market. One of the most essential metrics to assess the long-term performance of a stock is the Compound Annual Growth Rate (CAGR). Investors often seek stocks that have delivered high CAGR over the years, as these stocks often signify consistent growth and stability. This article delves into the importance of CAGR, how to calculate it, and how to spot high CAGR stocks in India with Tickertape Stock Screener.

Best Largecap CAGR Stocks

Note: The list of the top 10 CAGR stocks in India is derived from Tickertape Stock Screener as of 18th December 2024 and filtered using the following parameters

• Stock universe – Nifty 500
• Market Cap – Large cap
• 5Y CAGR – High (Sort from Highest to Lowest)
• 5Y Avg Net Profit Margin 

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Best Largecap High CAGR Stocks: An Overview

CG Power and Industrial Solutions Ltd

CG Power and Industrial Solutions Ltd is a leading Indian manufacturer of electrical equipment specialising in power transmission and distribution, industrial automation, and motors. Established in 1937, the company offers many products, including transformers, switchgear, control gear, and automation solutions. 

As of 18th December 2024, the company had a market capitalisation of Rs. 117,820.87 cr., and its share price closed at Rs. 770.80. Furthermore, CG Power and Industrial Solutions had a PE ratio of 82.56 and a 5-yr CAGR of 131.27%, making it top our list of high CAGR largecap stocks. The company also had a 5-yr average net profit margin of 8.99%.

Dixon Technologies (India) Ltd

Dixon Technologies (India) Ltd is a contract manufacturer and electronic products provider in India. Founded in 1993, the company specialises in manufacturing consumer electronics, home appliances, lighting products, and mobile handsets for global brands.

As of 18th December 2024, the company had a market capitalisation of Rs. 113,775.80 cr., and its share price closed at Rs. 18,940.15. Furthermore, Dixon Technologies (India) had a PE ratio of 309.38 and a 5-yr CAGR of 92.87%. The company also had a 5-yr average net profit margin of 2.23%.

Persistent Systems Ltd

Persistent Systems Ltd is a global technology services company providing software development and IT solutions. Founded in 1990, Persistent specialises in digital transformation, cloud computing, artificial intelligence, and software engineering for various industries, including healthcare, banking, and manufacturing. 

As of 18th December 2024, the company had a market capitalisation of Rs. 100,367.80 cr., and its share price closed at Rs. 6,549.35. Furthermore, Persistent Systems had a PE ratio of 91.79 and a 5-yr CAGR of 81.06%. The company also had a 5-yr average net profit margin of 10.68%.

Trent Ltd

Trent Ltd, part of the Tata Group, is a leading retailer in India, primarily known for its fashion and lifestyle stores. Established in 1998, Trent operates brands like Westside (fashion and lifestyle retail), Zudio (value fashion), and Landmark (books and music retail). The company has a strong retail presence across India, focusing on providing quality products at affordable prices. 

As of 18th December 2024, the company had a market capitalisation of Rs. 246,766.95 cr., and its share price closed at Rs. 6,941.65. Furthermore, Trent had a PE ratio of 165.97 and a 5-yr CAGR of 68.16%. The company also had a 5-yr average net profit margin of 3.34%.

Hindustan Aeronautics Ltd

Hindustan Aeronautics Ltd (HAL) is a state-owned aerospace and defense company in India, founded in 1940. HAL designs, manufactures, and maintains aircraft, helicopters, and associated systems for the Indian armed forces. 

As of 18th December 2024, the company had a market capitalisation of Rs. 309,147.93 cr., and its share price closed at Rs. 4,622.60. Furthermore, HAL had a PE ratio of 40.57 and a 5-yr CAGR of 65.35%. The company also had a 5-yr average net profit margin of 18.19%.

Best Midcap CAGR Stocks

Note: The list of high CAGR mid cap stocks is derived from Tickertape Stock Screener as of 18th December 2024 and filtered using the following parameters

• Stock universe – Nifty 500
• Market Cap – Mid cap
• 5Y CAGR – High (Sort from Highest to Lowest)
• 5Y Avg Net Profit Margin 

Best Smallcap CAGR Stocks  

Note: The list of best CAGR stocks is derived from Tickertape Stock Screener as of 18th December 2024 and filtered using the following parameters

• Stock universe – Nifty 500
• Market Cap – Small cap
• 5Y CAGR – High (Sort from Highest to Lowest)
• 5Y Avg Net Profit Margin

Understanding the 5-Year CAGR

CAGR (Compound Annual Growth Rate) is a widely used metric to measure a stock’s return over a specific period. In simple terms, CAGR is the average annual growth rate of an investment over a given time frame. Investors use the 5-year CAGR to understand how a stock has grown year-on-year over the last five years.

For example, if you invested Rs. 1,00,000 in a stock five years ago and today that investment is worth Rs. 2,50,000, the 5-year CAGR would help you understand the annual growth rate of that investment, even if the growth wasn’t linear.

For example, the highest CAGR stocks in the last 10 years in India, like Tata Elxsi and Divi’s Laboratories, have consistently displayed high CAGR. When investors analyse stock CAGR returns, they can better understand long-term performance, smoothing out annual volatility.

How to Calculate 5Y CAGR?

The formula for calculating the 5-year CAGR is:

CAGR=(Final ValueInitial Value)15−1CAGR = \left( \frac{Final\ Value}{Initial\ Value} \right)^{\frac{1}{5}} – 1CAGR=(Initial ValueFinal Value​)51​−1

Here’s how it works:

• Initial Value: The stock price five years ago or your initial investment.
• Final Value: The stock price today or the current value of your investment.
• 5: The number of years over which you’re calculating the CAGR.

For example, if the stock price of a company was Rs. 500 five years ago, and today it is Rs. 1,500, the CAGR would be:

CAGR=(1500500)15−1≈0.245 or 24.5%CAGR = \left( \frac{1500}{500} \right)^{\frac{1}{5}} – 1 \approx 0.245 \text{ or } 24.5\%CAGR=(5001500​)51​−1≈0.245 or 24.5%

This means the stock grew at an average of 24.5% per year over the last five years.

How to Identify High CAGR Stocks?

Identifying high CAGR shares requires careful analysis and screening. Some tools, like a CAGR stock screener, can help identify stocks that have performed well over a specific period.

To spot top CAGR stocks in India, particularly in the Nifty 500, focus on:

1. Historical Performance: Look at how the stock has performed in the last 5, 10, or 20 years. Stocks with the highest CAGR in the last 10 years in India or the highest CAGR stocks in the last 20 years in India often show consistent growth.
2. Sector Trends: Some sectors naturally have higher growth rates due to favourable industry conditions. Stocks in these sectors are more likely to be high CAGR stocks.
3. Financial Health: Ensure the company has a strong balance sheet with increasing revenue and profits, low debt, and efficient management.

Using these strategies, you can find some of the top CAGR stocks in the last 10 years against a market index that may continue to perform well in the future.

Which Sectors in India Reflect High CAGR?

Certain sectors in India have exhibited high CAGR over the last decade due to the country’s economic growth, technological advancements, and favourable policy changes. Here are a few sectors where investors have seen high CAGR shares:

1. Technology and IT Services: The technology sector, including IT services, software, and digital transformation companies, has consistently delivered some of the highest CAGR stocks in India. IT stocks like TCS and Infosys have shown steady growth over the years, making them attractive for long-term investors.
2. Pharmaceuticals and Healthcare: India’s pharmaceutical industry has been booming, driven by increasing healthcare demand, exports, and innovation. Several high CAGR large-cap stocks and high mid cap stocks in this sector have performed exceptionally well over the years.
3. Consumer Goods and FMCG: Fast-moving consumer goods (FMCG) companies have shown consistent growth, with many top CAGR stocks in India coming from this sector. The sector’s resilience and steady demand make FMCG stocks a favourite among investors.
4. Banking and Financial Services: The financial services sector, particularly private banks and NBFCs, has seen robust growth. These companies often feature among the best CAGR stocks due to their ability to expand operations and increase profitability.
5. Renewable Energy and Infrastructure: With the government’s push towards green energy and infrastructure development, stocks in this space are emerging as future high-growth players. These could potentially be among the best CAGR stocks for the next 10 years.

Benefits of Investing in High CAGR Stocks

Potential for Wealth Acceleration

High CAGR stocks for next 10 years in India can offer an opportunity for rapid wealth growth. Through consistent compounding, these stocks can significantly increase in value, particularly in a dynamic market environment where sectors like technology, consumer goods, and financial services are evolving.

Resilience Against Inflation

Investing in high CAGR stocks helps investors stay ahead of inflation. These stocks tend to grow at a pace that outstrips inflation, ensuring real wealth appreciation over the long term.

Exposure to High-Growth Sectors

High CAGR stocks often belong to fast-growing sectors such as renewable energy, fintech, and pharmaceuticals. By investing in such stocks, Indian investors can gain exposure to industries driving the nation’s economic progress.

Long-Term Capital Appreciation

For those seeking high returns over an extended period, high CAGR stocks are ideal. Over 10–15 years, these investments can compound into substantial wealth, especially if reinvested in promising growth sectors.

Superior Returns in Bull Markets

During bullish market phases, high CAGR stocks can outperform traditional investments. Investors can leverage such periods for exponential returns, especially in India’s equity-friendly climate.

Risks of Investing in High CAGR Stocks

Volatility

High CAGR stocks, especially small-cap and mid-cap companies, often exhibit significant price volatility. This is due to their smaller market capitalisation, lower liquidity, and sensitivity to market sentiments. Investors should be prepared for sharp price swings and ensure their risk appetite aligns with this inherent instability.

Overvaluation Risk

High-growth stocks, including the top 10 best CAGR stocks in India, are frequently priced at a premium due to future growth expectations. However, this can lead to overvaluation, where the stock price significantly exceeds its intrinsic value. In such cases, any slowdown in growth can trigger a sharp correction, eroding investor wealth. Careful analysis of valuation metrics like P/E, PEG, and EV/EBITDA is crucial.

Earnings Sustainability

Companies boasting high CAGR may face challenges in maintaining their growth trajectory over the long term. Factors like increased competition, market saturation, or operational inefficiencies can lead to stagnating earnings, impacting stock performance.

Economic and Market Sensitivity

High CAGR stocks in India are often linked to specific sectors that may be highly sensitive to economic cycles. For instance, companies in sectors like infrastructure or technology are affected by interest rate changes, regulatory decisions, or global economic trends.

Liquidity Risks

Many high CAGR stocks, particularly in the small-cap and micro-cap segments including high CAGR penny stocks, suffer from low liquidity. This can make it difficult for investors to buy or sell significant quantities without impacting the stock price. Such stocks may also be prone to higher bid-ask spreads.

Regulatory and Policy Risks

In the Indian context, high-growth sectors are often subject to dynamic regulatory changes. For example, technology and financial services may face stricter compliance requirements or sudden policy shifts that can impact profitability and growth prospects.

Conclusion

Investing in high CAGR stocks in the Nifty 500 can be a smart strategy for long-term wealth creation. While more than 50 CAGR stocks are rare, identifying companies with consistent growth over time can result in substantial returns. Using CAGR as a tool, investors can streamline their research and focus on companies with a track record of delivering strong returns. With the right analysis, it’s possible to identify the best CAGR stocks in the last 10 years. Whether you’re looking at high CAGR large cap stocks or high CAGR small cap stocks, conducting thorough research will help you make informed investment decisions. Moreover, you can assess high CAGR companies in India using over 200 filters with Tickertape Stock Screener to make a data-backed decision.

Frequently Asked Questions About High CAGR Stocks

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Harshit Singh

Content Strategist at Tickertape

Hey there, I’m Harshit Singh Mahey! With eight years of experience as a Content Strategist, I’ve had the pleasure of working with a Fortune 100 company and building three successful startups from the ground up.

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.

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