After a gap of nine years, the IT space has emerged...
After a gap of nine years, the IT space has emerged as the largest wealth-creating sector for the five years ending 2014, shows the 19th wealth creation study by Motilal Oswal Securities.
The annual study, which lists 100 biggest and fastest wealth creators for the latest five years, showed that TCS retained its top spot for a second consecutive year as its market value expanded by R3.64 lakh crore on the back of a 51% CAGR in its price in the period.
The top-four IT companies collectively accounted for more than 22% of the R29.381 lakh crore of market value generated by the top-100 wealth creators in the last five years. The sector added R7.1 lakh crore of wealth.
With companies like HDFC Bank, ICICI Bank and HDFC doing exceedingly well, the banking and financial space emerged as the second prominent contributor to the top-10 list as, collectively, they reported a R3.27-lakh-crore jump in market value in the period under review.
ITC, Sun Pharma and Tata Motors concluded the top-10 list. While, with a more than 90% CAGR price movement, Eicher Motors and Bajaj Finance led the list of the fastest wealth creators, Amara Raja Batteries, Page Industries, IndusInd Bank, Aurobindo Pharma, Havells and Ipca Labs were part of the group too.
At five, the number of PSUs on the list fell to an all-time low. The aggregate wealth creation by these companies (BPCL, Petronet LNG, Bank of Baroda, REC and J&K Bank) also fell to as low as 2% compared to a 51% growth distributed among 30 PSU companies in the five years ended 2005, indicating value migration to the private sector.
“How to turn around the PSU segment is a big challenge for the government,” said Raamdeo Agrawal, joint MD, Motilal Oswal Financial Services, who leads the annual study.
PSUs also dominated the array of top-10 wealth destroyers, with MMTC, NTPC, BHEL, SAIL and NMDC losing R1.57 lakh crore among themselves in the last five years. Reliance Communication featured on the list for the fourth consecutive year as did sister company Reliance Power, for the second year running. Utilities and capital goods, real estate and metals & mining led the list of sectors that accounted for substantial wealth erosion in the last five years of the order of R2.05 lakh crore.
Meanwhile, sharing the market outlook, the report highlighted that subject to global factors, Indian benchmarks may grow 50% over the next two years. The market-cap-to-GDP ratio for FY15 is likely to be about 77% and has a potential of 50% upside over the next two years as the m-cap heads towards a parity with the GDP.
“Acceleration in earnings growth is elusive so far, but is a must from FY16 if the current market up-move is to sustain,” noted the study.