Till June 2025, the benchmark Sensex has risen by around 4%, reflecting steady but limited market-wide growth. However, several individual stocks have significantly outperformed, delivering multibagger returns to their investors during the same period. And, the real idea of spotting one stock that turns ₹1 lakh into ₹10 lakhs or more is possible in a year comes from picking up multibagger stocks. For those wondering what multibagger stocks are, they are investments that yield returns multiple times over their initial value.
In the year 1998, Peter Lynch first used the word ‘multibagger’ in his best-selling book “One Up on Wall Street”. So, the bagger looks like If you invest ₹100 and it becomes ₹200, that’s a two-bagger. If it grows to ₹300, that’s a three-bagger, and so on.
This exactly happened with Kothari Industrial Corporation, a lesser-known company that surprised the market in 2025 by delivering an impressive 385% return in less than half a year. in just a few months. On January 1, 2025, the stock was trading at ₹84.77, and on June 2, 2025, it was trading at ₹411.45. Most big investors were unaware of Kothari’s spectacular run, but retail investors who were smart enough to get in early were drawn to it. Its spectacular increase serves as a reminder that, even in a difficult market, select multibagger chances exist, but identifying them needs assurance and time.
But here’s the real question: if such stocks exist, why are they so rare in 2025? Let’s dive into the current market conditions to understand why multibaggers are becoming harder to come by.
What’s Changing the Game of Multibagger Stocks
A single reason comes with the Indian market experiencing three major 5–8% market dips in just six months. This kind of turbulence stops many stocks from gaining momentum and stalls the compounding essential for multibagger outcomes. Corrections scare investors into selling too soon. Others are:
1. Massive FPI Outflows
Foreign Portfolio Investors (FPIs) and the Indian equity market have a long history of driving liquidity and valuations. In 2025, however, India has seen a sharp reversal in FPI sentiment from time to time.
- ₹94,000 crore withdrawn from Indian equities in October 2024, the highest-ever monthly outflow.
- ₹22,194 crore pulled out in January 2025 alone.
- ₹85,369 crore total outflows by early February 2025.
These sustained withdrawals have had a direct impact on mid and small-cap stocks, the typical hunting ground for multibaggers. With falling liquidity and increased volatility, risk appetite has dried up.
FPIs often back early-stage, high-growth companies. Their exit has left a vacuum in capital and confidence, stalling the multibagger engine.
2. India’s Slowing Growth
India’s long-term story is intact, but the short-term data show a different picture.
- GDP growth for Q2 FY25 (Jul–Sep 2024) stood at 5.4%, the lowest in 7 quarters.
- The government revised the FY25 GDP forecast to 6.4%, the slowest in 4 years.
While this is still better than many global peers, it’s well below the expectations baked into stock valuations over the last few years. High-growth expectations have been a key reason for India’s elevated Price-to-Earnings (P/E) ratios. With reality under-delivering, multibagger stocks, which thrive on exponential earnings growth, are facing a correction.
3. Valuations Have Run Ahead of Fundamentals
The NSE Smallcap 100 and Midcap 100 indices have delivered phenomenal returns over the past few years. However, that run has also led to frothy valuations, especially in the broader market.
- The Nifty Smallcap 100, after delivering a stellar 24% return in 2024, has seen a sharp correction of over 11% in 2025 YTD. Despite this fall, valuations remain relatively elevated.
- As of early 2025, the index was trading at a P/E of 29.79, which is lower than its 1-year average (30.56) but still above its 2-year (26.34) and 5-year averages (28.15).
This indicates that small-cap valuations, though cooled off slightly, are still not cheap by historical standards. The exuberance of 2024 had pushed many mid-cap and small-cap companies to unjustifiably high earnings multiples, often pricing in flawless execution over the next 3–5 years. Without corresponding earnings growth in 2025, this valuation excess is now under pressure, making it harder for new multibaggers to emerge.
In 2025, this narrative is unwinding. With earnings growth coming under pressure and profit margins squeezed by inflation and demand slowdown, stocks with stretched valuations are being ruthlessly punished. Multibagger hopefuls are now turning into wealth destroyers.
4. Currency and Yield Pressures Making India Less Attractive
The strong U.S. dollar and rising U.S. bond yields are also contributing factors to capital flight and, consequently, the drying up of multibagger chances.
- In early 2025, the yield on the 10-year U.S. Treasury was close to 4.8%, providing investors with a low-risk option.
- The INR depreciated nearly 7% in the last 6 months, pushing FPIs to book profits and exit to avoid currency losses.
These macroeconomic trends have made it more lucrative for global investors to stay in developed markets, rather than risk capital in India’s mid-cap ecosystem.
5. Weak Earnings Outlook: No Fuel for Multibaggers
Multibagger stocks rely on one thing above all: earnings compounding. In 2025, this critical driver is under strain.
- In Q3 FY25, corporate earnings growth for Nifty 50 companies dropped to 6.5% YoY, down from 13%+ in the same period the previous year.
- Margin has been damaged by global trade concerns, rural demand difficulties, and inflation in input costs.
Moreover, profit warnings and missed guidance are becoming increasingly common, particularly in new-age tech, capital goods, and consumer discretionary sectors, once hotbeds of multibagger activity.
6. SEBI’s Derivatives Curbs Have Spooked Speculators
India’s regulator SEBI introduced stricter rules on the derivatives market in late 2024 to curb excessive speculation. While well-intentioned, the move has led to a sharp decline in trading volumes in index and stock derivatives.
This has hit the momentum and high-beta stocks, often the early-stage multibaggers, particularly hard. Meanwhile, investors are shifting to the U.S. derivatives markets, where flexibility and returns are currently more attractive.
7. Rising Global Risks: Tariffs, Trade Wars & Geopolitics
The global landscape in 2025 is fraught with uncertainty:
- U.S. tariffs: Concerns of a new trade war have been raised by President Donald Trump’s reelection and his proposed 25% tariffs on steel and aluminum.
- Freight costs and commodity prices have remained unstable due to Middle East tensions and China-Taiwan escalations.
Global investors have grown risk apprehensive as a result of these uncertainties, which has affected capital-intensive companies, typically the domain of multibaggers, and decreased inflows into emerging countries like India.
8. China’s Rebound Has Diverted FPI Interest
Interestingly, while India is witnessing outflows, China is beginning to see a rebound in FPI inflows, thanks to aggressive stimulus measures and extremely cheap valuations.
- Based on data from June 2025, the Shanghai Composite Index is now trading at a P/E of around 13.9x, with future projections of about 13x.
- As seen by the Hang Seng Tech Index’s roughly 30% year-to-date rise, the Chinese technology industry has demonstrated robust development in early 2025.
Global money is slowly shifting toward Chinese stocks in pursuit of higher risk-adjusted returns as prices now more closely match earnings potential.
In contrast, Indian equities look expensive, especially in the mid- and small-cap space. Global capital is naturally shifting to where it sees higher upside.
Outlook: When Will the Multibagger Stocks Return?
There’s light at the end of the tunnel, but it’s still distant.
What needs to happen:
- U.S. inflation must cool, allowing the Federal Reserve to cut rates, making emerging markets attractive again.
- The RBI has to keep adding liquidity and stabilize the currency.
- Corporate profits must be surprisingly large, especially in sectors like manufacturing, infrastructure, and digital services.
- Strong retail participation is still essential, and domestic SIPs continue to stabilize the market, with monthly inflows in May 2025 regularly exceeding ₹26,000 crore.
Real Multibaggers in 2025 — What Triggered Their Rally?
Let’s break down real success stories and what actually drove them, so you know what to look for in the next one.
1. RRP Semiconductor Ltd – + 945% YTD
- What changed: Entry into the high-growth semiconductor domain and Strong global and domestic semiconductor tailwinds.
- Stock price: ₹185.40 (Jan 1) → ₹1869.55 (June 24)
- Takeaway: Entered fabless chip design; benefited from PLI scheme, 5G/EV/electronics boom.
2. Elitecon International Ltd – + 504% YTD
- What changed: Elitecon International surged due to robust financial performance, rising institutional confidence, defensive sector appeal, and efficient low-debt operations.
- Stock price: ₹103.20 (Jan 1) → ₹534.95 (June 24)
- Takeaway: Turnaround in profits, high FII interest, and stock split boosted visibility.
3. Colab Platforms Ltd – + 128% in 2025
- What changed: Positioned at the intersection of IT services & sports technology, benefiting from both secular tech growth and niche digital trends.
- Stock price: ₹33.12 (Jan 1) → ₹75.61 (May 25)
- Takeaway: Entered fabless chip design; benefited from PLI scheme, 5G/EV/electronics boom.
4. NACL Industries Ltd – 170% YTD
- What changed: NACL Industries rallied on the back of a strategic takeover by Murugappa’s Coromandel International, strong turnaround potential, sustained momentum, and solid fundamentals.
- Stock price: ₹66.76 (Jan 1) → ₹179.67 (June 24)
- Takeaway: Stake acquisition by Murugappa Group triggered a re-rating and sharp rally.
5. Sika Interplant Systems: 205% YTD
- What changed: Sika Interplant Systems rallied sharply due to a key licensing deal with Collins Aerospace, a strong order pipeline, robust earnings growth, and booming momentum in the defense and MRO sector.
- Stock price: ₹512.25 (Jan 1) → ₹1470.40 (June 26)
- Takeaway: Strategic Collins Aerospace MRO licensing deal, strong order book growth, robust earnings performance, and rising defense sector momentum.
Final Thoughts
Multibagger stocks aren’t dead, they’re dormant. The environment in 2025 is not conducive to explosive stock moves, especially in the broader markets. The drying up of multibaggers is a reflection of tighter liquidity, valuation fatigue, and macroeconomic uncertainty. These cycles, however, are a normal aspect of market progression. The secret for investors is to concentrate on stable companies with transparent profits, sound balance sheets, and fair prices rather than chasing momentum. The next generation of multibaggers will appear when the tide shifts, which it always does. Your best bets till then are caution and patience.
Identifying the best multibagger stocks is no easy feat—finding them is challenging, and holding onto them through market ups and downs can test any investor’s patience. Instead of chasing only multibaggers, build a diversified portfolio that spans multiple industries and sectors. If you’re unsure about selecting the right stocks for long-term growth or crafting a resilient equity portfolio, explore Jarvis Invest for portfolio management services and research-based stock insights.
