Top 5 Momentum Stocks to Watch for Potential Multibagger Returns in 2025

Over the past half-decade, the financial landscape has been significantly influenced by inflation trends. Inflation, which was below 2% in early 2019, surged to over 7% by mid-2022, and as of now, it hovers just below 4%. These fluctuations have impacted asset values and shaped investor sentiment across the globe.

For those with exposure to the stock market, these years have yielded considerable returns. The BSE Sensex surged by 119% over the last five years, while the BSE Midcap index saw a 248% appreciation, and the BSE Smallcap index skyrocketed by 333%. Investors reaped benefits simply by investing in indices, with fiscal and monetary policies fueling inflation and driving asset prices higher.

As we approach 2025, a growing debate revolves around whether these trends will persist or if a market correction looms. The Federal Reserve’s anticipated rate cuts may lower the cost of money, possibly sustaining the upward trend. In such an environment, momentum stocks could emerge as strong performers.

Momentum investing operates on the premise that stocks exhibiting upward price trends tend to continue rising. With this in mind, we present five momentum stocks that have the potential to deliver outstanding returns in 2025.

1. Godfrey Philips: A Tobacco Giant with Consistent Growth

Godfrey Philips, an associate of the KK Modi Group and Philip Morris Global Brands Inc., is a leader in the cigarette market. With brands like Four Square, Red & White, and Marlboro, the company has been a prominent player in India’s cigarette industry for over eight decades. Additionally, it has diversified into segments such as mouth fresheners and paan masala.

In 2024, the company’s stock has rallied by more than 270%, fueled by increased market share for Marlboro, the launch of Marlboro Compact at Rs 10 per unit, and strong sales growth in its cigarette segment.

Financial Performance (FY20-FY24):

• Net Sales: Rs 28,766 m to Rs 44,196 m

• Operating Profit: Rs 6,985 m to Rs 11,064 m

• Net Profit: Rs 3,849 m to Rs 8,830 m

• ROE: 18.2% to 22.7%

• Dividend: Rs 24 per share to Rs 56 per share

With a solid balance sheet, zero debt, and consistent dividend payouts, Godfrey Philips is positioned to deliver continued growth in 2025, driven by its robust presence in India’s growing cigarette market.

2. Marksans Pharma: A Rising Star in Generic Pharma

Marksans Pharma, a spin-off from Glenmark Pharma, specializes in research, manufacturing, and marketing of generic drugs. With over 90% of its revenue derived from regulated markets like the US, Europe, Australia, and Canada, the company’s shares have soared over 80% in 2024.

The company’s impressive performance is attributed to strong demand for its generics and OTC products, successful new drug launches, and expansion into regulated markets.

Financial Performance (FY20-FY24):

• Net Sales: Rs 11,342 m to Rs 21,774 m

• Operating Profit: Rs 1,926 m to Rs 5,090 m

• Net Profit: Rs 1,170 m to Rs 3,137 m

• ROE: 20.5% to 16.5%

Looking ahead, Marksans Pharma's debt-free status and expansion into regulated markets position it well for further growth, making it a stock to watch in 2025.

3. Shilchar Technologies: Powering the Renewable Energy Sector

Shilchar Technologies, a manufacturer of power and distribution transformers, has established itself as a key player in India’s renewable energy sector, particularly in solar and wind energy. Its stock price has surged by 119% in 2024, driven by strong demand for transformers and a growing order book from large-scale renewable energy projects.

The company’s exports, which grew 37% YoY in FY24, contribute significantly to its revenue, with key markets including the US, Canada, and several African countries.

Financial Performance (FY20-FY24):

• Net Sales: Rs 713 m to Rs 3,969 m

• Operating Profit: Rs 60 m to Rs 1,261 m

• Net Profit: Rs 15 m to Rs 919 m

• ROE: 2.5% to 55.5%

With plans to expand capacity and meet growing demand, Shilchar Technologies is well-positioned to benefit from the global shift toward renewable energy, making it a top momentum stock for 2025.

4. Dixon Technologies: Dominating India’s Contract Manufacturing Market

Dixon Technologies is India’s largest home-grown contract manufacturer, producing LED TVs, lighting products, washing machines, mobile phones, and IT hardware. The company has been a major beneficiary of India’s Production Linked Incentive (PLI) scheme, which has boosted its mobile phone manufacturing business.

Dixon's stock has risen by 114% in 2024, driven by its growing order book, expansion into new segments, and participation in the PLI scheme. With a robust order book and plans for significant capital expenditure, Dixon is set for continued growth.

Financial Performance (FY20-FY24):

• Net Sales: Rs 44,001 m to Rs 176,909 m

• Operating Profit: Rs 2,327 m to Rs 7,264 m

• Net Profit: Rs 1,205 m to Rs 3,678 m

• ROE: 26.4% to 25.5%

With plans to ramp up production and diversify into new product categories, Dixon Technologies is well-positioned to benefit from India’s growing demand for electronics manufacturing.

5. Trent: A Retail Giant on the Rise

Trent, part of the Tata Group, operates over 875 stores across 170 cities, with brands such as Westside, Zudio, and Star. In 2024, Trent’s share price has surged by nearly 150%, driven by the rapid expansion of its Zudio brand and strong growth in footfalls across its stores.

With ambitious plans to expand its store network and enter international markets, Trent is poised for continued success in 2025.

Financial Performance (FY20-FY24):

• Net Sales: Rs 34,860 m to Rs 123,751 m

• Operating Profit: Rs 7,060 m to Rs 22,600 m

• Net Profit: Rs 1,229 m to Rs 14,868 m

• ROE: 5.3% to 44.4%

Trent’s focus on private labels and its expansion into new markets, including Dubai, positions the company for significant growth in the coming years.

Conclusion: The Momentum Strategy for 2025

Momentum investing, although often viewed as counterintuitive, is a proven strategy where strong-performing stocks tend to keep rising. As we approach 2025, these five stocks—Godfrey Philips, Marksans Pharma, Shilchar Technologies, Dixon Technologies, and Trent—exhibit strong momentum and financial growth, making them prime candidates for investors seeking multibagger returns.

By tracking these stocks and staying ahead of market trends, investors can potentially benefit from the continued growth in these companies’ share prices.