How to spot multibaggers like Abakkus' Sunil Singhania

In our previous story, we explored Abakkus Asset Manager founder Sunil Singhania's playbook for identifying multibaggers, touching on strategies like management changes, consistent earnings growth and business restructuring. We further explore additional indicators that Singhania believes can help investors identify multibaggers. The benefit of fixed costs A key signal when looking for multibaggers is operating leverage, according to Singhania. He puts it simply: "Fixed costs remain fixed. When revenue increases without a corresponding rise in fixed costs, you see a huge jump in operating profits and EBITDA margins." This concept underpins the idea that once a company's fixed costs are covered, any additional revenue could lead to a disproportionate rise in profits. Singhania points to ABB, which struggled between 2016 and 2019. Its revenue saw no increase, while employee costs remained unchanged. Margins remained low as employee costs ate into operating profits. However, once the pandemic eased and revenues began to rise, these fixed costs didn't scale up at the same rate. In fact, as a percentage of revenue, employee costs fell from 9.8 to 7.4 per cent. The re

This article was originally published on March 24, 2025.