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You can't use StretchDraw function for this, because this function will return icon with original size. But you may solve this problem by using DrawIconEx function.

procedure TForm1.Button1Click(Sender: TObject);
begin
  DrawIconEx(
    Canvas.Handle,
    5,
    5,
    Application.Icon.Handle,
    50,
    50,
    1,
    0,
    DI_NORMAL);
end;