EXCLUSIVE | How to spot the next Multibagger? Vijay Kedia breaks down his formula

What separates an ordinary stock from one that goes on to multiply investors’ wealth several times over? For market veteran Vijay Kedia, the answer lies in a disciplined blend of experience, ambition, and market potential. Sharing insights from his investing journey, Kedia explains how his SMILE framework, focusing on small-sized companies led by seasoned and driven management teams operating in large, expanding markets, helps him identify businesses that can grow far ahead of their peers.

"I simply apply one formula, the acronym is called SMILE. So S stands for small in size, MI stands for medium in experience, L stands for large in aspiration, and E stands for extra large market potential. So usually I like to invest in a company which is the smallest or maybe the small company in its sector, obviously, I do invest in small-cap and midcaps only," he said.

Kedia further added, that it has to be the small company in that sector but management should have a clean track record and should be have 15-20 years of experience, "so that it they have seen all the ups and downs in this market as it goes up and down in the economy related to their companies that they have gone through all those phases of life and then L stands for large in aspiration...the management should be very ambitious"

If the management doesn't have the fire in the belly, then obviously a 5,000 crore company cannot become a 50,000 crore company, Kedia said, noting that large aspiration is very important, and besides all, very important is the extra-large market potential.

"So the market size of the company should be so big that the company always remains small. All these things put together, I identify the company, and it's obviously a bottom-up approach. So this is what I'm doing for myself, and luckily, it has done reasonably well," he said.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)