4 fast-growing stocks to watch after their big correction

Summary: These four fast-growing stocks have corrected sharply. Find out whether they deserve your attention or not.

For much of the past decade, the market was forgiving. If a company could tell a credible growth story, investors were willing to pay up. Easy liquidity, low interest rates and abundant optimism allowed valuations to run ahead of earnings. That regime is over.

Over the past two years, tighter liquidity, global uncertainty, and rising risk aversion have forced a reset. Valuations across sectors have cooled sharply. In several cases, price-to-earnings multiples have fallen by more than half—even as the underlying businesses continue to grow at a healthy pace.

At first glance, this looks like an opportunity. Stocks that once looked outrageously expensive now appear reasonable. But cheaper does not automatically mean rewarding.

A falling P/E may feel comforting. A stock that traded at 80 times earnings and now trades at 40 seems far more attractive. Yet valuation compression, by itself, does not create returns. When valuations stop expanding, earnings growth must carry the full burden.

And that is where the challenge lies. As companies grow larger, sustaining high growth becomes harder. Over time, both growth rates and valuations tend to moderate. When that happens, only businesses that can compound earnings strongly and consistently continue to deliver attractive long-term returns.

So the real question is not whether a fast-growing stock has become cheaper. It is whether the business can grow enough—even as valuations compress further—to still reward long-term investors.

This analysis sets out to answer that question.

The test: stripping away valuation comfort

We began by identifying companies where:

• P/E multiples have fallen by more than 50 per cent from their peak
• Revenues and profits have grown at roughly 25 per cent annually over the past three years
• Stock prices have delivered negative returns over the past year, reflecting lingering investor scepticism

From this universe, we excluded businesses heavily dependent on government spending cycles, as well as stocks that look optically cheap despite unusually high growth—often a sign that current numbers may not be sustainable.

What remained were four companies. Their strong growth and sharp valuation correction make them appear more attractive than before. But instead of assuming valuations will stabilise or recover, we took a deliberately conservative view.

We asked a simple but demanding question: If valuations continue to compress as these businesses scale and mature over the next decade, how fast must their earnings grow to still deliver 15 per cent annual returns, and can they realistically deliver that growth?

We assess the four companies though this lens below:

1) Trent: Growth is strong but the base is getting heavy

Trent’s story is well known. Over the past five years, revenues have grown at over 30 per cent annually, driven largely by Zudio’s rapid expansion. With more than 800 stores and a sharp focus on tier-2 and tier-3 markets, the runway remains long.

The expansion strategy taps into a large, underpenetrated consumer base where organised fashion remains a small part of total spending. As long as store productivity holds up, Zudio can continue to scale rapidly.

So if you bought Trent today at its current P/E of 89 times, its earnings will have to grow in the low-to-mid 20s to get healthy long-term returns, assuming its valuation will compress with time. That is still demanding for the giant.

As its revenue crosses Rs 15,000 crore, maintaining high growth will be much harder. It will depend less on store additions and more on same-store sales growth, margin stability and capital efficiency. Any slowdown in throughput or margins would test the growth assumption quickly.

2) Bajaj Housing Finance: Growth without returns is incomplete

Bajaj Housing Finance has grown its loan book at over 25 per cent annually, backed by strong parentage and conservative underwriting. On the surface, the growth looks reassuring.

But as the business scales up, moderation in growth as well as valuation will naturally follow, which means earnings must do far more work to protect investor returns. In a decade, the more the valuation sobers up, the higher its earnings will have to grow to deliver 15 per cent annual returns.

The challenge remains capital efficiency. Its return on equity (ROE) remains in the low-to-mid teens, well below the pace of growth. This gap matters because growth without sufficient profitability often leads to repeated capital raising, quietly diluting shareholder returns.

Management knows this. Small improvements in operating costs or return on assets could materially lift returns. But until that happens, growth alone will not be enough.

3) Triveni Turbine: Dominance helps, cycles still matter

Triveni Turbine operates in a specialised segment of industrial steam turbines. Over time, it has built a dominant position, supported by an installed base of over 6,000 turbines across more than 70 countries.

Since FY21, revenues and profits have grown at over 30 per cent annually. A growing aftermarket services business, which now contributes roughly a quarter of revenues, has helped smooth cyclicality and improve margins.

Sector tailwinds are real. Industries are investing in captive power, and waste heat recovery to reduce energy costs and improve efficiency. Triveni is also exploring adjacencies such as API turbines and industrial decarbonisation solutions, which could expand its addressable market.

If you bought the stock at its current P/E of 48.6 times, its earnings need to grow between 21–26 per cent, as valuation compresses over time, to deliver 15 per cent annually. That is achievable, but not easy.

This still remains a project-driven business. Order inflows can be uneven, working capital discipline is critical, and execution matters more as revenue scale increases. Maintaining momentum will require consistent execution rather than just favourable industry conditions.

4) Olectra Greentech: a long runway, a tougher road

Electric buses make up less than 5 per cent of India’s fleet, pointing to a structural opportunity. Olectra has benefited early, with a strong order book and rapid revenue growth. But the future will not be linear.

Competition is intensifying, bidding is becoming aggressive, and public procurement brings its own uncertainties—from tender delays to policy shifts. Margins that look healthy today may not remain so.

The takeaway

In a market no longer willing to pay up for promise, only businesses that can compound earnings cleanly and consistently will deliver strong long-term returns. The comfort of lower P/Es fades quickly if growth slips. For investors, the real opportunity lies not in what looks cheaper—but in what can still grow fast enough when valuations no longer help.

Where real compounding still exists

Identifying such businesses early—and knowing when growth is truly durable—requires more than screens or headline valuations. At Value Research Stock Advisor, our analysts go deeper, tracking not just growth rates, but return ratios, balance-sheet strength, competitive durability, and execution quality through cycles.

For investors looking to build long-term wealth, Stock Advisor helps separate companies that merely look cheaper today from those that can still compound meaningfully when valuations no longer provide a cushion.

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Also read: A rare chance?: Quality stocks on sale

This article was originally published on December 20, 2025.