Auto, Pharma Top Wealth Creators In 4 Years

16
TIMES BUSINESS
THE TIMES OF INDIA, KOLKATA
THURSDAY, JANUARY 1, 2015
Auto, Pharma Top Wealth Creators In 4 Years
Realty, infra cos saw biggest value erosion
EICHER VROOMS, MMTC GOES OFF TRACK
since the 2010 highs as the economy went
OF THE CHARTS
BEST SECTORS
through a turmoil and the markets stagnated TOP
COMPANY
PRICE (`)
MKT CAP (`CR)
NO. OF TIMES
CAGR (%)
APPRECIATION
Nov 5,
Nov 5,
Nov 5,
Nov 5,
before rebounding to new peaks in 2014
IN PRICE
Partha Sinha & Shubham Mukherjee | TNN
(Sundaram Finance and Bajaj Finance), a
cement company (Shree Cement), a capital
goods company (Havells India), and a Logisust over four years ago, the Indian
tics company (Blue Dart Express).
economy was cruising at a near 9%
Rajat Rajgarhia, MD, institutional equiannual rate of growth and on Dities, Motilal Oswal Securities, puts the findwali day in 2010, the sensex scaled
ings of the study in perspective. “Any time
a new high, closing above the
is the right time to buy stocks; the art lies
21,000 mark for the first time ever.
in stock-picking. Even during the last four
However, since then as inflation rates
years, when the market indices have gone
spiked and interest rates spiralled, the
nowhere, numerous stocks have multiplied
government entered a phase of proseveral times. On the flip side, hordes of
longed policy paralysis with the growth
stocks are now available at small fractions
nearly halving to about 4.5% within two
of their value four years ago,” he said.
years. Rupee depreciation and widening
In contrast to the stocks that have grown
current account deficit added to the
investors’ wealth multiple times, some of
negativity and it has since been a phase
the worst performers have lost up to 95%
of almost flat GDP growth with muted
of their value during this period, while a
corporate performance.
large number have witnessed around 75%
But a focused group of companies
value erosion (See ‘Bottom Of The Pile’
braved the headwinds and posted handtable). All the stocks in the list of top-20
some returns for anyone who had invested
wealth destroyers have erased at
in them, reveals a TOI-commissioned study done by Motilal HIGH-GROWTH least 75% of their market capitalization during the four-year period.
Oswal Securities (See ‘Top Of RIDE
Some of the top laggards are
The Charts’ table). Significantfrom sectors which have been in a
ly, most of these companies are
secular downturn for the past few
not even leaders in the respecyears like power, real estate, infrative industries they operate in.
structure and sugar. Companies
Incidentally, the sectors that
like Shree Renuka Sugars, Bajaj Hindustan,
created wealth such as healthcare, conJP Power Ventures, etc belong to this group.
sumer, automobiles, private sector banks
Metal companies like MMTC, Monnet Ispat
and retail are all consumer-facing.
and Hindustan Copper are in a cyclical
Topping the list of these outliers is Eichdownturn. There’s a third group, consisting
er Motors, makers of Royal Enfield bikes,
of companies which got into major controwith an eye-popping stock rise of about nine
versies and faced regulatory scrutiny. DB
times in just four years. The stock rose from
Realty, Financial Technologies and Bhusan
Rs 1,410 in early November 2010 to Rs 12,849
Steel belong to the third group.
on this Diwali day. On the flip side, the bigEight sectors outperformed the CNX
gest loser is MMTC with a current market
Nifty over the four-year period: healthcare,
capitalization of just about 5% of the value
consumer, automobiles, cement, technolofour years ago. So if you had invested Rs 100
gy, private sector banks, retail, and textiles
in MMTC four years ago, you would be left
(see ‘Best Sectors’ table). All other sectors
with just Rs 5.
– chemicals & fertilizers, NBFCs, telecom,
When contacted by TOI, Siddhartha Lal,
oil & gas, capital goods, media, public sector
MD & CEO, Eicher Motors, credited his
banks, utilities, metals, real estate, and misperformance to a differentiated product ofcellaneous – underperformed. A total of 12
fering, providing a seamless chain between
sectors – healthcare, consumer, automoproduction to retail and an unrelenting
biles, cement, technology, private sector
focus on the two product lines – motorcycles
banks, retail, textiles, chemicals & fertilizand commercial vehicles. “We are commiters, NBFCs, telecom, and oil & gas delivered
ted to the investor community and our longpositive returns. Seven sectors – capital
term focus may have added to this (performgoods, media, public sector banks, utilities,
ance),” he said.
metals, real estate, and miscellaneous – deSix of the top-20 wealth creators – Eicher
livered negative returns. The performance
Motors, Motherson Sumi, TVS Motor, MRF,
of the technology and healthcare sectors
Wabco India and Apollo Tyres – belong to
has been favourably impacted by a weakenautomobiles. Consumer (Berger Paints, Bata
ing rupee. Most of the sectors that destroyed
India and Britannia), healthcare (Aurobindo
wealth including real estate, metals, utiliPharma, Sun Pharma and Torrent Pharma),
ties, infrastructure, public sector banks,
and technology (Mindtree, HCL Technoloand capital goods – are deeply cyclical and
gies and Tech Mahindra) have contributed
were affected by policy paralysis during the
three companies each to the top-20 wealth
UPA-2 regime.
creators’ list. Besides, there are two NBFCs
J
2010
Eicher Motors
Motherson Sumi
Blue Dart
Mindtree
Sundaram Fin
Shree Cement
HCL Tech
Aurobindo Pharma
Sun Pharma
Berger Paints
2014
2010
2014
1,410 12,849 3,779 34,822
84
426 7,320 37,587
1,109 5,333 2,632 12,655
261 1,079 2,076
9,027
336 1,348 3,737 14,976
2,297 9,068 8,004 31,593
414 1,603 28,275 1,12,447
261 1,002 7,594 29,202
227
870 47,112 1,80,122
102
384 3,516 13,304
73.8
50.1
48.1
42.6
41.5
41.0
40.3
40.0
39.8
39.4
Return On Equity (%)
Britannia
41.9
Tech Mahindra
39.9
39.8
39.0
36.7
34.1
30.5
28.7
25.8
Torrent Pharma
HCL Tech
Motherson Sumi
Aurobindo Pharma
Sun Pharma
Mindtree
Havells India
Bata India
9.1
5.1
4.8
4.1
4.0
3.9
3.9
3.8
3.8
3.8
58.3
PRICE (`)
Nov 5,
2010
MMTC
GTL Infra
Sh Global Trad
Opto Circuits
Guj NRE Coke
Lanco Infratech
IVRCL
Monnet Ispat
DB Realty
Gitanjali Gems
1,320
46
231
233
64
64
157
623
424
346
NO RETURN
ON EQUITY
Nov 5,
2010
Nov 5,
2014
71 1,32,025 7,140
3
4,417
646
23 4,750
513
23
5,559
560
7
3,467
521
8 15,422 1,835
20
4,188
603
86
3,256
566
70 10,308 1,704
59
2,912
576
NO. OF TIMES
APPRECIATION
IN PRICE
-51.8
-50.4
-44.1
-43.9
-41.8
-41.3
-40.5
-39.1
-36.2
-35.8
0.05
0.06
0.10
0.10
0.11
0.12
0.13
0.14
0.17
0.17
GTL Infra
SpiceJet
Guj NRE Coke
Sh Renuka Sugar
Lanco Infratech
Bajaj Hindusthan
IVRCL
Hindustan Oil
Financial Tech
Triven Engg
CEMENT
12
TECH
31
Nov 5, 2,92,703
MKT CAP 2010
(`CR) Nov 5,
6,19,341
2014
MKT CAP
20.6
CAGR (%)
NO. OF TIMES
2.12
APPRECIATION
3,42,453
4,33,070
7,16,434
9,00,673 1,94,807 11,52,695
38
99,544 6,23,774
20.3
20.1
18.3
16.6
2.09
2.08
1.96
1.85
Note: In BSE 500, around 20 cos have since been replaced
Real GDP Growth (%)
SLOWING DOWN
8.91
6.69
GAINERS
PRICE CAGR (%)
CONSUMER
22
BIGGEST
MKT CAP (`CR)
Nov 5,
2014
AUTO
30
8.59
BOTTOM OF THE PACK
COMPANY
HEALTHCARE
NO OF
COMPANIES
4.47
FY10
FY11
IN 4 YEARS SINCE
NOV 5, 2010…
FY12
FY13
4.74
FY14
METHODOLOGY
Eicher Motors grew from a
$854m market-cap company to
a $5.7bn enterprise
The objective of the study
was to identify the sectors that
created or destroyed wealth
during the four-year period (Nov
5, 2010 to Nov 5, 2014)
8 sectors outperformed the
Nifty | Healthcare, consumer,
automobiles, cement,
technology, private sector
banks, retail, and textiles
Nov 5, 2010 was chosen as the
starting date for our analysis, as
on this day the sensex scaled its
last closing peak before going
into a nearly 3-year hiatus
12 sectors gave positive
returns | Healthcare, consumer,
automobiles, cement,
technology, private
sector banks, retail, textiles,
chemicals & fertilizers,
NBFCs, telecom, and oil & gas
To arrive at our top-20
lists, within the BSE-500, we
restricted our choice to the
companies that had a minimum
market capitalization of Rs 2,000
crore as of Nov 2010 and Rs 500
crore as of November 2014.
Tech and healthcare gained
majorly from a weakening
rupee against the dollar
Capitaline database was used
for the study
Source: Motilal Oswal Securities

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