As India’s m-cap nears R100 lakh cr, many mid caps claim large-cap status
The magnificent rally in the market this year has spawned several ‘large cap’ companies, reports Devangi Gandhi in Mumbai. Even as India’s market cap is within touching distance of the R100-lakh-crore milestone, an increasing number of ‘mid caps’ have graduated to become ‘large caps’.
The reverse is also happening — Jaiprakash Associates and Bhushan Steel, which were mid-caps in 2013, are now small caps while Jindal Steel and Power, which was a large-cap stock, has now become a mid-cap stock. Stocks like DLF and Cairn India have also lost value — more than R3,000 crore and R10,000 crore, respectively. Of the BSE 500 universe, as many as 18 stocks have grown to become largecaps in 2014 with the market value of nearly a third of these having doubled.
Even as the market continues to touch new highs this year, the unprecedented rally has spawned many a ‘large-cap’ company. While India’s market cap is now within touching distance of the R100-lakh-crore milestone, an increasing number of ‘mid caps’ have graduated to ‘large caps’.
The reverse is true as well. While Jaiprakash Associates and Bhushan Steel, which were mid caps in 2013, are now small caps, Jindal Steel & Power has turned into a mid-cap stock from being a large cap.
DLF and Cairn India have also lost value — more than R3,000 crore and R10,000 crore, respectively.
In the BSE 500 universe, as many as 18 stocks have grown into large caps in 2014 with the market value of nearly a third of these having doubled. Amid an overall improvement in the m-cap profile of the Indian equity market, the mid-cap and small-cap universes have also expanded with the addition of 46 and 64 companies, respectively. Jaiprakash Associates and Bhushan Steel, which are struggling for one reason or another have lost 41% and 79%, respectively.
For the compilation, we considered stocks with market-cap of more than or equal to R25,000 crore and less than R1 lakh crore as large caps. Stocks with market value of less than R25,000 crore, but greater than or equal to R8,000 crore were grouped as mid caps. The small-cap category included scrips that hold market value anywhere between R2,000 crore and R8,000 crore.
The compilation shows that stocks from auto, financial & banking and pharma space witnessed an improvement in their m-cap profile with a total of 10 companies that turned into large caps belonging to them.
Eicher Motors, Motherson Sumi and Aurobindo Pharma led the list of entrants into the large-cap club with an addition of more than R20,000 crore to their respective market-cap. Eicher Motors, which is expected to see robust earnings growth in two of its business segments over the next two years, saw its market-cap jump three times to R38,897 crore.
Recently, MSCI-included Motnerson Sumi and Sundaram Fastners in its Standard India index and Small-Cap index, respectively. Bharat Forge, Ashok Leyland and TVS Motors were some other auto stocks that saw an upgrade in their profile.
In the banking and financial space, stocks like PNB, IDFC and Power Finance corporation restored their large-cap status while IndusInd Bank and Yes Bank emerged as new entrants, with a two third and 100% gains in its market value to R38,066 crore and R29,107 crore, respectively.
The Street’s distinct preference for private sector banks over their public sector counterparts due to superior asset quality was reasserted by the increase in market value of private sector banks in the bluechip category. While ICICI Bank, HDFC Bank and SBI all surpassed the m-cap milestone of R2 lakh crore, SBI made the maximum addition of R1 lakh crore among any listed company this year. Axis Bank, Maruti Suzuki and HCL Tech touched their highest market values this year as they emerged as the newest blue chips in the BSE 500 universe.
While India is the best performing global equity market this year with the benchmark Sensex yielding 34%, the combined market value of Indian companies has increased by $457 billion to $1.60 trillion. Thanks to a strong revival in investor sentiment, India claimed the ninth spot in the world market-cap ranking, replacing Switzerland in early September 2014.
By Devangi Gandhi