Ever since the Banking Amendment Bill was passed in the winter session last year, shares of non-banking finance companies (NBFCs) have been on the surge. This has helped some of the corporate houses with listed NBFCs emerge as the biggest wealth creators in financial year 2012-13.
According to data from Capitaline, while business groups such as Mahindra, Bajaj and Tata saw their respective market capitalisations (m-cap) rise in the financial year, leading business houses like Anil Ambani-led ADAG, OP Jindal, Munjal (Hero), Adani and Vedanta saw an erosion in the value of their listed entities. Interestingly, the percentage decline in market value reported by the five losers is greater than those of the gainers.
Among the top corporate houses, the Mahindra Group ended FY13 as the biggest wealth creator with a rise of 32.6% in total market capitalisation. The biggest contributor to the group?s rise came from M&M Financial Services that gained 59% in FY13. The company is considered to be one of the top contenders for getting RBI approval for a banking licence.
The Mahindra group was also helped by a good show by its software companies ? Satyam Computer and Tech Mahindra – along with its auto arm M&M. All these stocks gained in the range of 24%-60% during FY13.
Mahindra group was followed by Bajaj, which has two NBFCs ? Bajaj Finance and Bajaj Finserve ? under its umbrella. While Bajaj Finance gained 71% in the fiscal, Bajaj Finserve was up nearly 15%. Bajaj Auto, the flagship company of the group, registered a moderate return of 7% compared to the group?s NBFC entities.
The country?s biggest diversified conglomerate Tata Group, which witnessed a change in the leadership in late 2012, managed to clock gains of 14% in its total m-cap during FY13. While Tata Steel lost nearly 33% of its value due to the bearish outlook on the metal sector, Tata Motors and Tata Power also lost around 2%-5% of market value in FY13. However, TCS, Tata Coffee, Tata Global and Titan Industries helped the group register gains during the fiscal.
The other business group that saw a marginal growth in market capitalisation was Birla AV. Although Hindalco saw its m-cap fall by R7,266 crore, the jump in stock prices of UltraTech Cement, Idea Cellular and Aditya Birla Nuvo more than compensated for the fall of the metal major. As a result, the group?s market value went up by 7.2%.
Meanwhile, the biggest loss was witnessed in the case of Anil Ambani-led ADAG group. All the six listed companies of the group lost between 20%-53% of their market value, with Reliance Power and Reliance Infra registering the highest losses. Reliance Communications also lost over 34% during FY13.
Analysts attribute the fall to the huge debt on the books of the telecom entity and also the regulatory overhangs that continue to weigh on the group. ADAG group stocks are also perceived to be high beta stocks that outperform the broader indices in a rising market but fall more steeply in a falling market.
Mukesh Ambani-controlled Reliance group also managed to grow by a modest 2% during the year as the flagship company Reliance Industries – once India?s biggest company by market value – continued its losing streak. While the benchmark Sensex gained 8.2% during FY13, RIL gained less than 2% on account of increasing pressure on the company?s profitability due to declining refining margins and a sharp cut in KG D6 reserves. RIL has been under-performing the benchmark index since FY10.