Multibagger stocks are stocks that have the potential to provide returns of multiple times the original investment amount. The term “multibagger” means a stock that can deliver returns of 2x, 3x, 5x, 10x, or even higher multiples of the initial investment. These are typically undervalued stocks with high growth potential found in emerging or high-growth industries.

Multibagger stocks typically require a long-term investment horizon of 3-10 years or more. While some stocks may deliver exceptional returns in shorter periods, the most successful multibagger investments are held for extended periods to allow companies to fully realize their growth potential and compound returns.

It’s recommended to allocate only 10-20% of your total investment portfolio to high-risk, high-reward multibagger stocks. This approach helps balance potential gains with portfolio stability. Never invest money you cannot afford to lose, and always maintain a diversified investment portfolio across different asset classes and sectors.

Investing in multibagger stocks involves significant risks including high volatility and unpredictable price movements. There are business execution risks where companies may fail to achieve their growth plans, management risks, and the impact of economic downturns on growth prospects. Sector-specific regulatory changes can affect entire industries, and liquidity issues may arise especially with smaller companies. The possibility of complete loss exists if companies fail to execute their business plans successfully.