The award for the biggest, the fastest and the most consistent wealth creators were bagged by Reliance Industries, BF Utilities and Wipro respectively in this year’s annual wealth creation awards from Motilal Oswal Financial Services.
Announcing the results of their study on the top 100 wealth creators for 2002-07 and the winners, Ramdeo Agrawal, non-Executive Director, MOFS said, “1,100 wealth creators were identified this year. Out of this, the top 100 wealth creators accounted for 80 per cent of all the wealth created.
“This is by far the best period in our stock markets. Three years back we were not able to get even 100 companies,” Agrawal said. He believes 2008-09 would be a year of modest performance as Indian markets are at the top end of valuation currently.
The companies that added at least Rs 100 crore to their market capitalisation over the period of five years qualify as the top wealth creators. Reliance, in the biggest category, created Rs 1,85,600 crore in five years, and the fastest BF Utilities returned compounded annual growth rate of 267 per cent and in the most consistent category Wipro has shown a CAGR of 47 per cent in 15 years. “Large, unpopular (even loss-making) companies are potential multi-baggers with high margin of safety,” says the report quoting Bharti and SAIL as the examples. Also, best of returns has been created when stocks are bought when they are below 10 P/E (price to earnings ratio).
The top three among the fastest are infrastructure and realty companies. BF Utilities, the infrastructure company floated by Bharat Forge has given the highest ever returns in the 12-year history of MOFS wealth creation study.
“It is a hyper wealth creator,” said Agrawal. The key finding in this category is that “real estate sector as a wealth creator in the stock market is the latest phenomenon. The future will see this sector growing bigger and faster than many others.” Five among the top 10 consistent performers are pharma companies. “Non-cyclicality of business is a key driver of consistent wealth creation,” says the study. Hindustan Unilever tops the chart as the top value destructor. But FMCG stocks are worth exploring as they have underperformed the market over the last few years, said Agrawal, the author of the wealth creation study.