6.26Finding companies with consistent revenue growth
1What is it?
Look for revenue that rises steadily year after year, ideally faster than inflation plus GDP growth (say 10%+ a year), across 5–10 years.
2Why does it exist?
Steady growth shows lasting customer demand. One great year means little.
3Diagram
FY22
₹8,000
FY23
₹9,000
FY24
₹10,100
FY25
₹11,300
FY26
₹12,600
4Calculation
CAGR = (End ÷ Start)^(1/years) − 1
- Start ₹8,000 cr, end ₹12,600 cr over 4 years.
- (12,600 ÷ 8,000)^(1/4) − 1 ≈ 12%.
Revenue CAGR ≈ 12%.
5Quick revision
- Check 5–10 years.
- Look for consistency, not spikes.
- Use CAGR to summarise growth.
6Knowledge check
Q1. What does CAGR stand for?Show answer
Compound Annual Growth Rate.
Q2. Revenue ₹100 cr → ₹200 cr in 5 years. Approx. CAGR?Show answer
≈ 14.9%.
Q3. Why prefer consistency over one big year?Show answer
It shows lasting demand.
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