Infosys, Reliance Industries (RIL) and Kotak Mahindra Bank have been the fastest, the biggest and the most consistent wealth creator, respectively, between 1995 and 2020 while consumer/retail sector has been the largest wealth-creating sector in the same period, said Motilal Oswal Financial Services in its Motilal Oswal 25th Annual Wealth Creation Study, 2020.
Kotak Mahindra Bank has also been the top all-round wealth creator, the brokerage firm said.
The Annual Wealth Creation Study further revealed that Tasty Bite Eatables has been the fastest wealth creator In the last 5 years while Reliance Industries has been the biggest and Pidilite has been the most consistent in the same period.
Besides, Ajanta Pharma, Alembic Pharma, Astral Poly Tech, AU Small Finance and Bajaj Finance are among the 'potential 25 wealth creators for the next 25 years', said the brokerage firm.
The brokerage firm on December 22 announced the Motilal Oswal 25th Annual Wealth Creation Study, 2020.
For the last 25 years, the firm has been releasing a wealth creation study every year. Raamdeo Agrawal, Chairman of Motilal Oswal Group, commissions the study every year.
In this year's study, the brokerage firm attempted to shortlist 25 stocks likely to deliver handsome returns over the next 25 years.
As per the brokerage firm, it made a list of 150 mid-cap companies i.e. companies that are ranked 101 to 250 by current market cap.
It preferred consumer-facing, secular business models and eliminated cyclical businesses like auto ancillaries, capital goods, chemicals, oil & gas and realty which reduced the list of companies from 150 to 114.
To ensure the chosen firms are very profitable, the brokerage firm said it picked companies with last 5-year average RoE greater than 15 percent. This reduced the list from 114 to 63.
Next, it judged the business potential and management potential of the companies, and selected only those which qualified on both counts. This reduced the list from 63 to 28.
After that, the brokerage firm flagged off market leaders from the 28 companies to arrive at a list of 13 companies. Apart from these 13 companies, the brokerage chose 5 such companies from the list of 28 that are beneficiaries of value migration. In situations of value migration, all companies benefit irrespective of market leadership.
Now, the total shortlisted stocks were 18.
The brokerage firm said it chose only large-caps for financials and picked 6 leader names for the portfolio, now taking the total to 24.
At last, it opted for a pure digital play, even if it didn’t meet some of the above filters, taking the total to 25.
"We believe in the very long run, valuations matter less. So we ignored the same in the shortlisting process," said Motilal Oswal.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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