33 returns & counting! Prasenjit Paul locks the stock market with Multibagger Investing

The stock market is full of fascinating stories like how a Rs 10,000 investment in Wipro turned into Rs 800 crore, or how a 1 Lac investment in HDFC Bank in 1995 is now worth 80 crores! However, it is rare to find investors who have actually made such huge returns from the stock market. Investor Prasenjit Paul from Kolkata is one such example. Holding data on the BSE India website shows that he has earned more than 33 times the return on his investment from Chemcrux Enterprises and still holds the stock. BSE block trade data confirms that his first investment in Chemcrux dates back to March 30, 2017, and since then the share price has risen more than 33 times as of August 2022. Chemcrux is no exception, Prasenjit Paul has earned up to 10-12x multiples over time from Lancer Container, Can Fin Homes, Caplin Point Lab, Ajanta Pharma and many others.

In this interview, Prasenjit shares insights from his investing journey.

Q1: Can you walk us through the first few days of your investment journey?

I started investing in the stock market when I was 19 when I was in college. I come from a middle-class Bangladeshi family where job security takes precedence over the stock market or running a business. However, the book “Rich Dad Poor Dad” by Robert Kiyosaki was a big influence on me, and I was determined to do something big in the stock market. I am a self-taught investor with no formal education in economics or financial markets. Bestsellers by Peter Lynch, Benjamin Graham, Pat Dorsey and others have shaped my investment philosophy, but I had a lot of difficulty reading these books because they are based on the US stock market and are written in very complex English. So, in 2015, I published my book, How to Avoid Losses and Continue Profits in the Stock Market, in plain language, focusing on the Indian market. The book was an instant hit and has mostly been the #1 bestseller in its corresponding category on Amazon India since 2015, and there has been no turning back since then.

Q2: What are the main parameters you follow when investing in multiple potential stocks?

There are only two triggers behind multiple returns, earnings and P/E expansion. If any of your portfolio stocks experience EPS and P/E expansion over the long term, that stock must generate multiple returns. It’s not just sales growth, it’s profit margin growth that determines EPS and P/E expansion. The strength of the balance sheet is critical. When looking for multiple potential stocks among the thousands of small cap and microcap names, I completely ditched companies with high debt, low ROE, and poor cash flow. After that, I would discard companies with low promoter holdings or with promoters promising to hold any shares. In the end, I prefer companies with non-cyclical businesses that have some kind of competitive advantage and the potential to improve margins while continuing to grow. So, my framework is more of what not to do than what to do.

Q3: Great, share some stocks that you’ve managed to get multiple returns on.

there are many! In the first few years, my investments in Can Fin Homes, Caplin Point Lab, Ajanta Pharma, Atul Auto, SNL Bearing, etc. generated multiple returns. Despite the small amount invested, the overall portfolio has grown by more than 10 times during those years. Beginning in 2017, I began to invest heavily in stocks such as Chemcrux Enterprises, Lancer Container, KP Energy, Sirca Paints, etc., further expanding my wealth. I have also lost large sums of money from many stocks like MRSS, Focus Suites, Sysco Industries, Sintex Industries, Bhushan Steel, but at the overall portfolio level, profits are always better than overall losses.

Q: Tell me about some future multiple potential stocks you’ve recently invested in.

Well, I’m going to share a name, but before that, investors need to understand that investing in small companies always comes with high risk. If you invest blindly, without proper research and analysis, and without a proper exit plan, you are bound to lose money. Stocks like Lancer Container have given me 9x returns, but I know of investors who have lost money from the same stock. So it’s not just the name of the stock, it’s the timing of the right entry and exit that determines multiple returns. Also, one of my recent multi-bets is Prevest DenPro. My first investment was in November 2021, and then I made several repeat purchases in 2022. The company manufactures dental products and aspires to become a globally recognized brand. Expansion plans, pricing power, clean balance sheet, seasoned management is all in place, but don’t take my word for it. Even the best company in the world will lose if you don’t have a proper in and out plan. I’ve been sharing my investing process and the ins and outs of multiple potential stocks, here’s a reference if you’re interested.

Q: What advice do you have for new investors looking for multiple returns?

A: Never seek any shortcuts, always remember that every quick money-making option is actually an opportunity to lose money. Not just how to make money, you first need to learn how not to lose money. If you don’t have a high risk appetite, stick with high-cap mid-cap or large-cap stocks, small-cap polycap potential stocks are always high risk. For a more conservative approach, stick to index funds. I have spent over 10 years creating meaningful wealth from multiple bags. So be patient, be a lifelong learner and stay humble.


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