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India’s top 100 companies in terms of market valuation have generated a record Rs 44.9 lakh crore in the last five years with HDFC Bank taking the top spot on the list for the first time ever, according to a study.
According to Motilal Oswal's 23rd Annual Wealth Creation Study, HDFC Bank created Rs 3.2 lakh crore over 2013-18.
HDFC Bank has dethroned TCS, suggesting that it is difficult to sustain the top spot beyond 5-year periods. Reliance Industries has had its 5-year run earlier.
“HDFC Bank has broken TCS’ 5-year run as the biggest wealth creator, but the value migration run continues,” added the study.
Value Migration means that value (i.e. profit and market-cap) moves from outmoded business models to superior ones.
In IT, value has migrated from “Boston to Bangalore” (i.e. developed economies to emerging economies). In banking, the value is relentlessly migrating from state-owned banks to private banks.
HDFC Bank is a key beneficiary of the migration from PSUs to private players.
The oil & gas giant Reliance Industries (RIL) and Tata Consultancy Services (TCS) took the second and the third slot, respectively, as per the study, which looks into top 100 wealth-creating companies during a five-year period.
Bajaj Finance has featured in the top 10 of both biggest and the fastest wealth creators.
Among the companies which created a wealth of over Rs 1 lakh crore in the last five years include names like IOC, Kotak Mahindra Bank, HDFC, HUL, and Maruti Suzuki, said the study.
Fastest Wealth Creators:
Indiabulls Ventures has emerged as the fastest wealth creator with 2013-18 stock price multiplier of 30x (97% CAGR). Eicher Motors has been among the top 10 Fastest Wealth Creators in the last 7 studies, and Bajaj Finance in the last 5.
Almost 8 of the top 10 fastest wealth creators had base 2013 market cap of less than Rs 2,000 crore, and 5 of the 10 stocks were trading at single-digit P/E in 2013, highlighted the study.
The fast and furious run-up seen in these stocks could have turned lakhs into millions in just five years. For example, if investors would have invested Rs 100,000 equally in 2013 in these 10 stocks, the amount would have grown to almost Rs 17 lakh in 2018, delivering a return CAGR of 75 percent.
Over the same period, Rs 100,000 invested in the Sensex would have grown to only Rs 175,000 (12% return CAGR).
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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