The Indian arm of German engineering giant Siemens and India?s third largest private sector bank, Axis Bank, have outperformed the Nifty for nine years over the last decade, while HDFC and Kotak Mahindra Bank did so in eight years since 2002.
Other star performers include Larsen & Toubro, ACC, State Bank of India, BHEL, Infosys, HDFC Bank and ICICI Bank and Mahindra and Mahindra, which have outperformed the Nifty in seven of the last 10 years. It?s not surprising that so many banking stocks have outperformed as the economy has done reasonably well through the decade barring a couple of years. The growing infrastructure space has seen investors bet on engineering stocks like L&T and BHEL, while companies like M&M have not just excelled at their core business of automobiles, but have also succeeded on other fronts.
Interestingly, with the exception of the public sector BHEL and the Bangalore-based Infosys, all these banks and companies are headquartered in Mumbai. Against an average return of 22% for the Nifty, since 2002, Siemens and Axis have yielded 67.7% and 55%. Index heavyweight RIL consistently exceeded the Nifty returns till 2007, but, since 2008, it has lagged the Nifty returns, partly because it hasn?t offered too much clarity on the use of its huge cash balances. DLF, the large-cap from the realty space, which made a reasonably good debut, hasn?t managed to outperform the Nifty since its listing in July 2007.
The Siemens stock is relatively thinly traded since foreign promoters hold 75% while FIIs own 3.22% as of March, 2012. Axis Bank, erstwhile UTI Bank, debuted on the bourses in November 1998 and made it to the Nifty basket in March 2009. Siemens? revenues and net profits have grown at a compounded 24% and 27%, respectively, between 2001-02 and 2010-11.