NEW DELHI: In the last few years, the stock market has experienced multiple corrections, but there are a few companies that managed to beat the Dalal Street blues and create big wealth on a consistent basis and at a fast pace.
India’s leading private lender, HDFC Bank, was named the biggest wealth creator over 2013-18, having created wealth of close to Rs 3.2 lakh crore, according to the Motilal Oswal 23rd Annual Wealth Creation Study 2018. The lender dethroned two giants, Reliance Industries and TCS, who were listed second and third, respectively, in the list.
HDFC Bank was also a key beneficiary of value migration from PSUs to private players. Among the companies which created wealth of over Rs 1 lakh crore in the last five years were Indian Oil, Kotak Mahindra Bank, HUL, L&T, and Maruti Suzuki, said the study.
Bajaj Finance was the only big company that featured in the top 10 of both biggest and fastest wealth creators. Stockbroking firm Indiabulls Ventures emerged as the fastest wealth creator, with a 2013-18 stock price multiplier of 30x (97 per cent CAGR).
Indiabulls is followed by Dalmia Bharat, TVS Motor, HEG, Sterlite Technologies and Bajaj Finance, which delivered 73-81 per cent CAGR over the same period.“Rs 1 lakh invested equally in 2013 in top 10 fastest wealth creators would have grown to almost Rs 17 lakh in 2018, delivering a return CAGR of 75 per cent. Over the same period, Rs 1 lakh invested in the Sensex would have grown to only Rs 1.75 lakh (12 per cent return CAGR),” the study said.
The study added that despite muted markets, wealth creation had been robust in all these periods, reinforcing our pet take on market timing, “Forget markets, think stocks.”Advising on investment in these fast-paced companies, the study observed, “Most of the fastest wealth creators have seen massive valuation re-rating. In some cases, their P/Es may have even reached unsustainable levels, leaving no margin of safety. In such situations of over-valuation, selling the stock(s) is the best way to lock in the supernormal returns. Overstaying in these winners runs the risk of eroding much of the gains.”
However, there are companies that are consistent when it comes to wealth creation. Watch and jewellery maker Titan Company has been the most consistent wealth creator, with the highest price CAGR of 33 per cent from 2008 to 2018, followed by Godrej Consumer, Shree Cement and Pidilite, with CAGRs of 30 to 33 per cent. All the top 10 consistent wealth creators are consumer-facing companies.
On sector-wise growth, financials emerged as India’s biggest wealth creating sector for the second consecutive year. In terms of share of wealth created, IT is the biggest loser over the last five years, and Auto is the biggest gainer. Expect financials to rule the roost in wealth creation for the next few years at least, the study said.Meanwhile, public sector undertakings’ wealth creation performance remained weak.The number of PSUs in the top 100 wealth creators is only 11.
