Don’t buy Biz which Give fixed Rate of Return
Before one buys a multi-bagger stock, one has to check out the company’s fundamentals. who are the entrepreneurs, how much capital is needed, is the business scalable, and what is the company’s valuation.
Raamdeo Agrawal, Director, Motilal Oswal Financial Services, said the best way of buying a multi-bagger is to buy it extremely cheap. However, Jhunjhunwala feels besides being cheap one should also see value when one buys. He said one should not buy businesses which gives fixed rate of return.
Sanjoy Bhattacharyya, Partner, Fortuna Capital, agrees with Agrawal and Jhunjhunwala. However, he is quick to add that one should buy businesses that are scalable. “First, you don’t Buy a sector, you buy an individual company. Secondly, I don’t think one year is necessarily the ultimate timeframe because you have no idea 12 months later what the world will look like.”
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