Vijay Kedia gives away his own secret formula to Stop Multibaggers
Vijay Kedia is credited for having spotted many multibaggers in his three-decade-old career in FY21 alone. Seven of his portfolio stocks -- Neuland Laboratories (up 650 per cent), Ramco Systems (575 per cent), Vaibhav Global (422 per cent) and Tejas Networks (409 per cent) – turned money-minting machines to ensure multibagger return on his portfolio.
“In a cricket match, if you want to hit a sixer, you don’t wait for the ball to drop in front of you and then take a call whether you want to go for a six or a single. You look at the bowler’s action and then decide,” Kedia explains by drawing parallels between cricket action and multibagger hunt on Dalal Street.
Kedia waited patiently for 5-6 years observing all the news, announcements, product developments and financial statements of a company without even buying a single share.
For example, he had been tracking Ramco Systems since 2015-16 but became a shareholder only last year. “I bought Vaibhav Global also like this: followed it for four years and then one day the management said its strategy has started working and green shoots are visible. I waited for 1-2 quarters and then jumped the gun,” the market veteran recalls.
"If the product is good and the management is good, I quietly wait for a turnaround. When you are buying during a turnaround, you might think it is expensive, but you will have to buy the stock keeping in mind the future value. Buy when you can see the trailer of a ‘hit’ product. The product should have been accepted in the market and reached the growth stage. You have to make a prediction based on this and then buy the stock,” Kedia says, explaining his own ‘funda’ of finding a multibagger.
In market parlance, that means buying companies when they are at an inflexion point. “If everything can be seen on the balance sheet, then you won't be able to multiply money, because the news is already out,” says Kedia.
Asked which valuation metric he used to do the math, the midcap maverick who made a fortune after moving from Kolkata to Mumbai empty-handed in 1989, said: “One size doesn’t fit all.”
"The most important thing I look at is the growth outlook; whether the company's market is growing or not, and whether it is able to maintain its market share or not. And then come the valuation ratios like PE, PB and so on and so forth. If a company is in a turnaround phase, you can't look at its PE ratio. Some of them may even be making losses because they are busy developing their products,” says he.
According to Trendlyne data, Kedia held 14 stocks with a net worth of over Rs 551.7 crore as on March 31, 2021.