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Mint
04-08-2025
- Business
- Mint
Eight quarters. 20% growth. These compounding stocks are beating the market. Do you own any?
Stock prices are slaves to earnings growth, but without consistency, that growth doesn't mean much. If profits rise for a quarter or two and then stumble, it signals a volatile financial story. What matters is consistent growth in both profit and revenue. Over time, that's what quietly compounds shareholder wealth. As an investor, you know how rare that kind of stability is. Most companies might post a strong quarter or two. A few manage to string together a year of momentum. But only a handful can deliver 20%+ growth in both revenue and profit, every single quarter, for two straight years. That's eight clean quarters of execution, without missing a beat. It's a matter because consistent topline and bottom-line growth usually reflects more than just favourable conditions. It signals strong demand, operational strength, and disciplined capital allocation. This consistency becomes its own kind of moat, which becomes the recipe for multibagger returns. In this piece, we look at four companies that have quietly done just that. Persistent System: new leadership, AI-led surge Persistent specializes in software products, services, and technological innovations, and provides full product lifecycle services. Its strategy centres on AI-driven and platform-led services that aim to 'Re(AI)magine the world" by applying artificial intelligence to solve clients' most critical business challenges. It focuses on high-growth sub-verticals with customized AI offerings, such as intelligent insurance operations, AI-powered payment platforms in banking, financial services & insurance, and personalized member experiences in healthcare & life sciences. Persistent's revenue and profit have grown at over 15% year-on-year (YoY) in every quarter from Q2FY24 to Q1FY26. During this period, revenue rose from ₹2,412 crores to ₹3,334 crores, while profit increased from ₹263 crores to ₹425 crores. That's eight straight quarters of consistent top and bottom-line growth. It has also delivered 20 consecutive quarters of revenue growth. Its strategic focus on AI, digital engineering excellence, strong client relationships, and targeted acquisitions has contributed to this sustained financial performance. As a result, its stock price has given a 10 times return as against a 100% return by the Nifty IT index in the last five years. It has outperformed even as the broader IT sector faced significant headwinds. A key turning point was the leadership change. A 16-year veteran of HCL Tech, Sandeep Kalra joined Persistent in 2019 and is credited with transforming the company into what it is today. The company is now aspiring to reach $2 billion in annualised revenue over the next few years. It has built strong collaborations with major technology companies, gaining a first-mover advantage in emerging AI products and roadmaps. Key partnerships include Google Cloud, AWS, Microsoft, Salesforce, and Snowflake. It also leverages its own AI platforms, SASVA, and iAURA, to deepen capabilities. Also Read: Persistent's goals seem ambitious post Q1 blip Kaynes builds scale on industry tailwinds Kaynes is a leading company in integrated electronics manufacturing and electronics system design and manufacturing (ESDM) solutions. Its business is well-diversified, with a portfolio spanning multiple industry verticals—a key differentiator. Kaynes' revenue is highly concentrated, with the industrial segment contributing 59% in Q1FY26. This is followed by automotive (27%), railways (7%), internet of things (5%), and medical and aerospace (1% each). These are low-volume, high-value segments that help the company maintain both higher margins and sustained growth. Its operating margin stands at 16.8%. Geographically, India remains the dominant market, contributing 91% of revenue, followed by North America at 5%. Customer concentration remains relatively low, with the top client accounting for 16%, the top five for 46%, and the top ten for 67%. Kaynes revenue and net profit have grown consistently at over 30% YoY in every quarter from Q1FY24 to Q1FY26. Revenue nearly doubled from ₹297 crore to ₹673 crore during this period, while net profit increased from ₹25 crore to ₹75 crore. As a result, its share has returned 753% return in about 2.9 years. The growth has been propelled by industry tailwinds, aided by supportive government policies. Initiatives such as Make in India, production-linked incentive (PLI) schemes, and the China+1 manufacturing strategy have all contributed to its strong growth. This is evident from rising investments, reflecting its intent to scale capacity to meet demand. Kaynes gross block has jumped more than four times, from ₹181 crore in FY23 to ₹789 crore by March 2025. It boasts an asset turnover ratio of 3.5x, though this has moderated from 5.2x in Q1FY25. Its order book stands at ₹7,401 crore, providing strong revenue visibility for the next three years. The company's strategic goal is to become a $1 billion revenue company by FY28. Toward this, it is expanding its ESDM services and entering new areas such as outsourced semiconductor assembly and test (OSAT) and PCB manufacturing. Also Read: Aditya Infotech IPO: Dixon was allotted shares at ₹340 apiece. Should you pay double? Tips Music rides YouTube and streaming wave Tips Music is a leading entertainment company focused on the digital content business, which includes the creation and acquisition of audio-visual music content. It owns a vast and diverse library of over 34,000 songs across all genres in 25 languages. Tips monetizes this content library digitally through licensing across multiple platforms. It has a wide presence on major global digital platforms, including YouTube, Spotify, Apple Music, and Amazon Prime. As of March 2025, Tips' official YouTube channels had 117.1 million subscribers and 228.3 billion views. It ranks among the top five music companies in terms of YouTube subscribers and video views. Digital platforms account for around 72% of Tips Music's revenue. Its revenue and profit both have grown at over 19% YoY, from Q1FY24 to Q4FY25. Revenue grew from ₹53 crore to ₹78 crore during the period, while profit rose from ₹27 crore to ₹31 crore. A significant rise in engagement on YouTube has been a key driver of this performance. Annual YouTube views have doubled from 113 billion (FY23) to 228 billion in FY25. Views also rose 6x from 38.5 billion in FY21. Growing subscriptions, rising listenership, and an expanding content base have further contributed to its growth. Looking ahead, despite a high base, Tips is aiming for 30% growth in both revenue and profit in FY26. To support this, it plans to invest 25–28% of its revenue in new content acquisition during the year. However, the company will reduce the number of new song releases. But it aims to improve content success rates to around 50%, aiming to drive more revenue through quality output. Although shorts are not a significant contributor, the company expects to tap into shorts content from the inclusion of Instagram in its licensing deal with Warner. In addition, Tips' partnership with Sony Music will be a major source of revenue growth. Tips is well-positioned to benefit from the ongoing rise in digital advertising, which is expected to dominate overall media spending. In 2024, digital ad spending made up 49% of total advertising expenditure and is projected to rise to 55% in 2025 and 61% in 2026. It also expects the Indian music industry to more than double from about ₹4,000 crore currently to ₹10,000 crore over the next four-five years. Also Read: It's a bitter time for sugar stocks, but these two are only getting sweeter PG Electroplast rides EMS tailwinds PG Electroplast is a dominant player in the electronic manufacturing services (EMS) space, a sector currently benefiting from strong structural tailwinds. The company operates across four business segments. Product manufacturing, which includes room ACs, washing machines, and air coolers, accounted for 71% of its FY25 revenue of ₹4,870 crore. The balance came from plastic and others (20%), electronics (7%), and moulds (2%). Every quarter, PG has delivered consistent revenue and profit growth of over 16% YoY from Q1FY24 to Q4FY25. That marks eight straight quarters of growth. During this period, revenue rose nearly threefold from ₹678 crores to ₹1,910 crores, while net profit jumped more than four times from ₹34 crores to ₹145 crores. Similar to Kaynes, PG is a key beneficiary of the China+1 manufacturing shift and the government's Make in India push. This is reflected in its product segment revenue, which almost tripled, from ₹1,347 crores in FY23 to ₹3,526 crores in FY25. Large capacity expansions have supported this growth. Fixed assets have also doubled from ₹578 crore (FY23) to ₹1,139 crore in FY25. This shows PG has constantly increased its capacity to meet the demand. Looking ahead, PG is well-positioned to benefit from a structural long-term tailwind in the EMS space. Rapid urbanization, government reforms, low penetration of consumer durables, and the China+1 theme are all expected to sustain growth momentum. The company expects revenue to rise 30% to ₹6,345 crores in FY26, with 75% coming from the product business. Net profit is also expected to rise 39% to ₹405 crores. To support this growth, PG is also expanding its manufacturing footprint. It is setting up a washing machine facility in Greater Noida, a refrigerator plant in the south, and an AC capacity in Supa, Maharashtra. Conclusion Consistent growth at over 20% is rare, especially across multiple quarters. But companies like Kaynes, Tips Music, and PG Electroplast are showing how it's possible. They benefited from structural industry tailwinds, focused on execution, and expanded aggressively to meet demand. They have already delivered multibagger returns, but the growth is not slowing down. For more such analysis, read Profit Pulse. Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments. The writer does not hold the stocks discussed in this article. The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
Mint
25-06-2025
- Business
- Mint
IT slowdown? These five stocks haven't heard of it.
Think Indian IT is slowing down? Well, think again. While headlines continue to buzz about the challenges that old-age IT companies face, some agile players are far from reaching their peak. Forget the old image you have of IT companies – today's fastest-growing Indian IT firms are capitalising on the exploding demand for AI, cloud computing, cybersecurity, and overall digital transformation. We're not talking about the giants here. A mix ofagile mid-size players and innovative small caps are grabbing market share and growing revenue at breakneck speed. Without further ado, here are the five fastest-growing IT stocks in India. #1 Persistent Systems Persistent Systems is a global technology company that provides a range of software and technology services with a focus on AI-led, platform-driven digital engineering and enterprise modernisation. It leverages innovative platforms like SASVA, its AI-powered platform, to drive productivity and automation across the application development lifecycle. The company grew revenue at a compound annual growth rate (CAGR) of 28% over the past three years and net profit at a CAGR of 28%. The return on equity (ROE) over this period was 25%. The market aptly rewarded the company for this performance. Also read: Israel-Iran ceasefire takes the pressure off crude prices, but not Indian OMCs Looking ahead, Persistent Systems' management is optimistic about sustaining progress to touch $2 billion of annual revenue by FY27. This is an aspiration rather than a firm guidance but the company is well on its way. In terms of profitability and margins, Persistent Systems has an aspirational target of improving its operating margins by 2-3% as it approaches the $2 billion revenue target by FY27. Key levers for margin expansion include maintaining high utilisation that could remain elevated during periods of uncertainty, and pricing levers to gain incremental revenue benefits. Strategically, the company is deeply focused on AI-led transformation. #2 Newgen Software Technologies Newgen Software Technologies provides an enterprise-wide unified low code digital transformation platform, NewgenONE, that's designed to digitise content, automate processes and enhance omnichannel customer engagement. The company's offerings include contextual content services (ECM) with OmniDocs, low code process automation (BPM) with iBPS, and omnichannel customer engagement (CCM) with OmniOMS. Newgen also incorporates artificial intelligence/machine learning for data science and intelligent document processing (IDP Studio) to streamline data-to-insights development and automate information extraction. Recently, Newgen launched genAI-powered AI agents such as LumYn (growth intelligence), Harper (conversion intelligence), and Marvin (productivity), focusing on leveraging AI to boost productivity, decision quality, and employee engagement. The company has delivered a top-line growth of 24% CAGR over the past three years period and net profit growth of 25% CAGR. The ROE averaged 22% over this period. The company expects to maintain its growth momentum in the coming year, aiming to surpass its historical growth rates, which have consistently been around 20%. License revenues, which saw a 41% YoY growth in FY25, are expected to generate further downstream annuity revenues. While the annuity revenue mix temporarily decreased due to delays in large deals, management expects to restore a healthy annuity growth rate by Q3-Q4 of FY26, as these larger projects reach completion and support revenues begin to kick in. In terms of profits and margins, Newgen typically operates in a higher growth mode, front-loading costs, and expects margins to expand if revenue growth surpasses 20%. Conversely, if growth falls below 17-18%, margins might flatten or contract. Management is confident in managing margins and does not foresee a significant challenge unless there is an unexpected dip in revenue. #3 Latent View Analytics Latent View Analytics is focused on providing data and analytics services. In terms of technology and innovation, it has made significant strides in GenAI and Agentic AI, which accounted for 8-10% of its total work in the past year, with expectations that it will rise to 16% of confirmed and open opportunities in the coming year. The company has delivered a top-line growth of 28% CAGR over the past three years and a net profit CAGR of 16%. The ROE has averaged 13%. Also read: Why dining tables aren't on Trent's menu LatentView Analytics' management aimed to double revenue from $100 million to $200-220 million in the next three years. For FY26, the company has good visibility for 18-19% revenue growth. Management reported that the current book of confirmed work plus high-probability extensions already exceeds $100 million, which is more than its revenue from the previous financial year, providing a strong base for its FY26 growth projections. LatentView aims to maintain the Ebitda margin at 23% for FY26. The long-term expectation is that once the company hits $200 million of revenue, Ebitda margins should be higher than 25%. #4 Nucleus Software Exports Nucleus Software Exports is a software company that specialises in providing enterprise software. Its core offerings include products for retail lending and transaction banking. The company is developing AI-enabled product innovations across all product lines. It's embedding AI into the day-to-day work of its engineers rather than building it as a separate, out-of-box solution. The company serves financial institutions, including both tier-1 and t-2 banks. It has a strong market presence in the Middle East, where seven of the top 10 banks are its customers. It also operates in Australia. Nucleus Software is strategically focused on North America for a very specific line of business, lending platforms, and is building traction in this market. The company delivered top line growth of 19% CAGR over the past three years and a net profit CAGR of 84%. The ROE averaged 22% over this period. Nucleus Software has a pending order book exceeding ₹60 crore. While the services portion of this order book is not known, 14-15% of its revenue typically comes from services. It's also exploring opportunities in emerging markets. #5 Accelya Solutions India Accelya Solutions India, specialises in providing passenger solutions in the area of settlement services, which revolves around passenger revenue accounting. It also offers audit services and industry services. The company's flagship product for these services is Revera. It offers its solutions through three models: license, hosted, and fully managed or outsourced services. Over the years, there has been a deliberate shift away from the licence model, with the primary focus now on generating recurring revenues from hosted (SaaS model) and outsourced (BPO) services. The company has delivered top line growth of 21% CAGR over the past three years and a net profit CAGR of 40%. The ROE has averaged 18% over this period. Also read: Sunteck Realty readies recipe for a strong FY26 even as shares await a rebound The company's "next big wave" is expected from the airline industry's transformation towards a "one order" model, in which airlines will operate like modern retailers. This shift is expected to create substantial demand for order accounting, which Accelya Solutions India is investing in and developing products for, positioning itself as the back-end fulfillment for these bundled orders. The company is pursuing pilot customers for this order accounting solution. Growth is also directly linked to increases in airline passenger volumes. As a significant portion of the company's revenue from hosted (SaaS) and outsourced (BPO) services is transactional and thus proportional to airline activity. Low-cost carriers (LCCs) are also a potential growth area if they too adopt NDC and order accounting. The company benefits from operating leverage due to its heavy investments in intellectual property (IP) and products, meaning costs do not increase linearly with revenue. This is the reason for its high Ebitda margins, which have been around 43-44% for the past few years. Conclusion India's IT landscape is evolving rapidly and these five high-growth players are at the forefront of that transformation. Whether it's AI-driven platforms, cloud-native solutions or deep analytics capabilities, these firms are not just keeping pace, they're defining the future. But while the growth potential is exciting, remember that such high-growth stocks often come with higher volatility. Therefore, it's important to conduct thorough research on financials and corporate governance before making investment decisions, ensuring they align with your financial goals and risk tolerance. Happy investing! Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. This article is syndicated from
