Top 5 Companies Anticipating Over 15% Revenue Growth

The Indian share markets have been at their volatile best since the beginning of the year, seeing extreme highs and lows.

A large part of this comes in the back of elevated valuations in the small and midcap segments that have prompted some profit-taking sessions amidst concerns regarding the global economy.

But none of this has dampened investor spirits as most macro indicators, including inflation and GST collection show encouraging signs.

For investors seeking buying opportunities, the spotlight is on companies forecasting double-digit growth in the near term.

Bearing this in mind, we explore the top five companies anticipating over 15% revenue growth in the near term.

#1 PI Industries

First on the list is PI Industries.

PI Industries is a prominent player in the manufacturing of insecticides, fungicides, herbicides and speciality products. These are widely utilized in agricultural settings globally.

It enjoys a rich five decades of experience in the agrochemical sector, emerging as a leading producer of generic molecules within India.

The company operates in more than 30 countries worldwide and boasts an extensive distribution network comprising 10,000 active dealers/distributors and over 100,000 retailers nationwide.

The company aims to meet the rising demand for agrochemicals by expanding into new market segments and introducing new products.

To achieve this, it is scaling up the capacities of existing products. In the nine months ended December 2023, the company invested over Rs 1 bn and expects an annual capex of Rs 6-8 bn for organic growth going forward.

These strategic initiatives position PI Industries for enhanced financial performance in the future.

PI Industries Financial Snapshot (2019-23)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	24.47%	17.40%	37.67%	14.87%	23.15%
Operating Profit Margin (%)	21.15%	21.73%	23.81%	22.60%	25.25%
Net Profit Margin (%)	13.60%	12.91%	15.38%	15.29%	18.22%
Return on Capital Employed(%)	25.10%	23.13%	22.09%	17.40%	21.84%
Return on Equity (%)	19.57%	18.63%	18.52%	14.71%	18.45%

Data Source: Ace Equity

Between 2019-23, the company's sales and net profit have grown at a 5-year compounded annual growth rate (CAGR) of 23.2% and 27.3%, respectively. The returns have been strong, with the RoE and RoCE averaging over 17.8% and 21.9%.

Despite facing a challenging macroeconomic backdrop, PI Industries is poised to meet its FY 2024 revenue growth target of 18-20% in the export side of the business.

However, domestic business will continue to remain subdued, but is expected to recover soon.

The stock price has fallen over the past few months, despite delivering strong performance in the first nine months of fiscal 2024.

The dip in share value is attributed to concerns surrounding product concentration risk, particularly regarding pyroxasulfone.

However, it's worth noting that generic competition for pyroxasulfone in the US market is not anticipated until 2026.

Looking ahead, PI Industries' recent foray into the pharmaceutical Contract Development and Manufacturing Organization (CDMO) sector offers promising prospects for diversification in the long term.

To know more about the company, check out its financial factsheet and latest financial results.

#2 Rategain Travel Tech

Next on our list is Rategain Travel Tech.

Rategain is a software solutions provider to the entire tourism industry, leading the market.

The company plays a crucial role in helping the hospitality industry with dynamic pricing, a strategy that involves varying the price for a product or service to reflect changing market conditions.

It specialises in Software-as-a-Service (SaaS), operating discreetly within the shadows of the hospitality industry.

Rategain uses its AI-powered tech platform to help clients like hotels, airlines and online travel sites attract guests, provide services, and boost engagement. The aim is to increase their share of customer spending.

While an airline will know your travel preferences or food choices during flights, or a hotel may be aware of your room preferences and late-night cravings, this information isn't made available to everyone in the industry.

Rategain addresses the information gap by gathering data about travellers, including their behavioural patterns, and packaging it into user-friendly software to share across the industry.

It is the sole provider of such services, a direct outcome of its recent spree of acquisitions. With a track record of successful integration, the company has acquired more than five different firms in the last five years.

This strategic move has solidified its dominance in the business, serving 23 of the top 30 hotel chains, 25 of the top 30 online travel agencies (OTAs), along with all major car rental companies and cruise lines.

Rategain Travel Tech Financial Snapshot (2019-23)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)		67.81%	-42.29%	45.07%	52.71%
Operating Profit Margin (%)	12.96%	8.72%	8.20%	13.26%	18.85%
Net Profit Margin (%)	4.22%	-5.04%	-11.39%	2.30%	12.10%
Return on Capital Employed(%)	8.15%	-3.76%	-5.02%	3.61%	10.65%
Return on Equity (%)	7.65%	-14.60%	-16.90%	2.09%	10.54%

Data Source: Ace Equity

Between 2019-23, the company's sales and net profit have grown at a 5-year CAGR of 9% and 8%, respectively. The returns have been strong, with the RoE and RoCE averaging over 12% and 13.3%.

The business has been recovering well since it was hit by covid. While the total revenue has been growing steadily, the company has managed to turn the business around, reporting a profit in FY 2022.

The margins have improved backed by a recovery in demand and client additions, resulting in enhanced operating leverage.

Rategain has been reporting steady growth in booking volumes on the back of healthy travel demand while driving the Return on Advertising Spend (RoAS) via its integrated digital marketing products.

In the December 2023 quarter, the company achieved yet another record-breaking performance in terms of new contract wins.

These wins have surged to 2.3 times the figures reported at the same period last year, marking a substantial leap.

Looking ahead, the management aims to double the revenue in the next three years, which implies a CAGR of 26%.

This growth strategy entails a combination of organic and inorganic initiatives.

Organically, the company anticipates achieving a growth rate of 20% to 25% over the next three years.

Despite the acquisitions, the company boasts a healthy balance sheet with no debt on its books.

To know more about the company, check out its financial factsheet and latest financial results.

#3 CMS Infosystems

Third on our list is CMS Info Systems.

CMS Info Systems provides logistic and technological services to financial institutions, including banks, with a strong focus on ATM-managed services, technology solutions and cash logistics.

The company is renowned for its expertise in cash logistics, ATM (Automated Teller Machine) software solutions and AIoT (Artificial Intelligence of Things) remote monitoring.

CMS Info Systems has established a presence in 97% of Indian districts.

The company has strategically invested in technology automation to drive cost efficiencies, maintaining a debt-free status for the past five years.

These savings have been reinvested to fund further advancements, enabling self-sustainability over the past decade without the need for additional equity infusion.

CMS Infosystem Financial Snapshot (2019-23)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	14.60%	19.75%	-3.98%	21.87%	21.67%
Operating Profit Margin (%)	18.42%	18.72%	23.69%	25.65%	28.85%
Net Profit Margin (%)	8.39%	9.74%	12.90%	14.09%	15.52%
Return on Capital Employed(%)	23.68%	25.36%	26.81%	28.19%	29.85%
Return on Equity (%)	15.16%	17.73%	19.20%	20.68%	21.64%

Data Source: Ace Equity

Between 2019-23, the company's sales and net profit have grown at a 5-year CAGR of 14.3% and 27.3%, respectively. The returns have been strong, with the RoE and RoCE averaging over 18.8% and 26.8%.

The company is currently on track to deliver revenue in the current FY year of Rs 22.5 to 23 bn, reflecting a growth rate of 17% to 19%.

Looking forward, the management expresses confidence in its mid-term outlook for FY 2025, aspiring to achieve revenue in the upper half of the range, with a target of Rs 25-27 bn.

Between 2019-2023, the 5-year CAGR net profit stood at 20.1%. The 5-year average return on equity (RoE) stood at 18.6%.

To know more about the company, check out its financial factsheet and latest financial results.

#4 Bajaj Finance

Fourth on our list is Bajaj Finance.

Bajaj Finance stands as India's leading NBFC (non-banking financial company), boasting an impressive AUM (assets under management) surpassing Rs 2 trillion (tn).

The bulk of its portfolio is dedicated to retail and consumer/mortgage finance, constituting more than 80% of its AUM.

Competing head-to-head with both banks and NBFCs, Bajaj Finance targets traditional retail markets, especially in personal/consumer loans and mortgages, alongside select non-retail lending products.

Unlike retail banks, which primarily cater to high net worth individuals, Bajaj Finance focuses on serving a relatively lower income group.

The company has witnessed robust growth, with its advances surging by over 2.4 times in the past five years.

Remarkably, its net non-performing assets (NPAs) have maintained stability, hovering between 0.30% to 0.4% since the financial year 2018 - marking the lowest figures in the industry.

This commendable performance underscores the company's adeptness at mitigating risks while scaling its operations.

Bajaj Finance Financial Snapshot (2018-2022)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	44.55%	42.62%	1.21%	18.51%	30.83%
Operating Profit Margin (%)	`	65.31%	59.34%	62.40%	69.36%
Net Profit Margin (%)	21.61%	19.96%	16.56%	22.21%	27.80%
Return on Capital Employed(%)	12.67%	11.95%	9.38%	10.26%	11.76%

Data Source: Ace Equity

The company has also increased its profitability. Between 2019-2023, the 5-year CAGR net profit stood at 20.1%. The 5-Yr average RoCE stood 11.2%.

Bajaj Finance's forte has been the use of data analytics. The company uses artificial intelligence in its financing scheme. This has allowed the business to expand while retaining its credit quality.

However, the stock has underperformed the markets in the past few months, simply because investors and analysts expected a better quarterly update from the company.

But this doesn't take away from the fact that the business is intact and well-poised to grow over the long term.

Bajaj Finance's long-term target is to continue growing its AUM at 25% while maintaining sturdy return ratios.

The growth will come from existing verticals in tandem with new ones, such as microfinance, commercial vehicle loans and tractor loans.

To know more about the company, check out its financial factsheet and latest financial results.

#5 Larsen & Toubro (L&T)

Last on our list is the country's best infrastructure play, Larsen and Toubro.

The company is a highly esteemed multinational conglomerate operating across 50 countries, renowned for its expertise in various sectors such as construction, engineering, technology, and manufacturing.

Originally focused solely on engineering, the company has diversified into numerous industries over time, including infrastructure, power, hydrocarbon, metal and minerals, defense, aerospace, information technology (IT), finance and real estate.

Now, it's venturing into new-age sectors like green hydrogen, semiconductors and data centers with the same level of excellence.

L&T is at the forefront of India's green revolution, particularly in the green hydrogen sector.

Currently producing 45 kg of green hydrogen daily for internal use, the company is expanding its capacity and has formed a joint venture with IOC and ReNew Power.

Collaborating with McPhy, a French company, for electrolyser technology, L&T aims to cater to both electrolyser manufacturing and hydrogen production.

Additionally, L&T's power transmission and distribution business is gearing up to support infrastructure development for the world's largest green hydrogen plant by NEOM Green Hydrogen Company.

With a capital outlay of US$ 2.5 billion (bn) allocated over the next three to four years for green energy initiatives, L&T is well-positioned to capitalize on this expanding sector.

In the data center segment, L&T is constructing state-of-the-art green data centers, having secured multiple orders across Indian states over the past two years.

The company is strategically investing in clean energy, data centers, semiconductors, and other emerging themes to drive its future growth.

L&T has delivered exceptional results in both order inflows and revenue during the nine-month period ending December 2023.

After surpassing the FY24 order inflow guidance, aiming for the higher end of the 12% band, the company has revised its order inflow guidance yet again, to over 20% for the full year.

Similarly, revenue is expected to exceed expectations by around 15%. Looking ahead, the company is confident that the robust order backlog as of December and expected to remain robust as of March '24 also.

Larsen & Toubro Financial Snapshot (2019-23)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	11.76%	8.10%	-5.51%	15.05%	15.70%
Operating Profit Margin (%)	18.42%	18.67%	20.00%	17.18%	16.49%
Net Profit Margin (%)	7.15%	6.99%	3.43%	6.57%	6.89%
Return on Capital Employed(%)	13.29%	12.49%	9.97%	11.61%	12.98%
Return on Equity(%)	16.58%	15.84%	6.58%	13.07%	14.78%

Data Source: Ace Equity

Between 2019-23, the company's sales and net profit have grown at a 5-year CAGR of 9% and 8%, respectively.

The returns have been strong, with the RoE and RoCE averaging over 12% and 13.3%.

L&T has fairly deleveraged its balance sheet in the past five years. The debt-to-equity ratio has fallen from 1.2x in the financial year 2019 to 0.7x in 2023, which can help the company immensely for its next leg of growth.

To know more about the company, check out its factsheet and latest financial results.

In Conclusion

For investors looking for good returns, exploring promising growth stocks holds significant potential.

These companies offer the chance for solid long-term gains, driven by their ability to tap into growing market opportunities and maintain upward growth trends.

However, such companies can be more volatile, testing investor patience during market fluctuations.

While research is crucial, identifying promising growth stocks can be a good starting point for investors. Keep an eye on performance, industry trends and important news for long-term investment success.

By staying aware of market changes and taking advantage of opportunities, investors can make the most of positive trends while protecting their investments from potential risks.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...