Different growth drivers to look for in a company

Multiple growth levers often indicates sustainable compounding potential.

🔑 Growth Drivers Explained

1. Margin Expansion

   • Signals improving efficiency or better product mix.

   • Often a result of cost optimization, backward integration, or better pricing realization.

2. New Products

   • Indicates innovation, potential new addressable markets.

   • Especially powerful in sectors like pharma, auto ancillaries, electronics, etc.

3. Capacity Expansion

   • Shows management confidence in future demand.

   • Watch for capex timelines, asset turns, and whether it’s brownfield or greenfield.

4. Industry Growth > GDP

   • Macro tailwinds are vital. Think EVs, renewable energy, data centers, diagnostics.

   • Growing pie means even mediocre players can do well.

5. Operating Leverage

   • Fixed costs spread over larger sales volumes = sharp jump in profits.

   • Especially important in manufacturing-heavy or asset-heavy models.

6. Market Share Gain

   • Indicates disruption or superior execution.

   • Can come from product differentiation, distribution muscle, or price competitiveness.

7. Pricing Power

   • A moat indicator. Ability to raise prices without losing volume is rare.

   • Often seen in B2C brands, specialty chemicals, or niche B2B players.

🧠 Bonus Tip:

When a company ticks 4–5 of these drivers together, and especially when operating leverage is just kicking in, it often leads to earnings upgrades → rerating → stock outperforming.