Metals rally makes Jindal group, Anil Agarwal’s Vedanta biggest wealth creator of FY17

By: | Updated: April 1, 2017 3:46 AM

While Jindal Stainless and JSW Steel swung from a loss to a profit in the three months to December 2016, Jindal Steel & Power witnessed a contraction in losses during the quarter.

shares of commodity, Om Prakash Jindal group, Vedanta, Jindal Stainless, JSW, EBITDA, NIFTY stocks, Bajaj FinanceWhile Jindal Stainless and JSW Steel swung from a loss to a profit in the three months to December 2016, Jindal Steel & Power witnessed a contraction in losses during the quarter. (Source: Reuters)

With the rebound in prices across the board fueling the rally in the shares of commodity-linked companies, the Om Prakash Jindal group and Anil Agarwal-led Vedanta emerge as the wealth creators of FY17. Investors’ inclination towards these stocks also weighed on the better numbers posted by some of the companies in the group. While Jindal Stainless and JSW Steel swung from a loss to a profit in the three months to December 2016, Jindal Steel & Power witnessed a contraction in losses during the quarter.

The flagship companies of the group – Jindal Steel, Jindal Saw and Jindal Stainless – all rallied two- to five fold in the fiscal 2016-2017, helping the group post a 153% growth in combined market capitalization.The market value of another group company, Jindal Stainless (Hisar), rose five fold to `3,357 crore during the same period. Anil Agarwal-led Vedanta group, the other commodity player, also witnessed a surge in investors’ wealth. While the market capitalisation of Vedanta tripled to `81,440 crore, Cairn India saw its market capitalisation swelling by `28,342 crore to `57280 crore.

“Global commodity price reflation benefited earnings in FY17 and we expect the trend to persist in FY18 as EBITDA/ton for key commodities (steel, aluminum etc.) continues to rebound. Among NIFTY stocks, Tata Steel alone is expected to account for nearly half of the earnings growth of >40% expected from the materials sector,” Citi Research said in a recent note. The Bloomberg Commodity Index of 22 raw materials—from oil to metals—rose 8% in FY17. At the same time, the benchmark Sensex gained 16.9% to close at 29620.50.

The Tata Group, India’s biggest conglomerate, which now boasts a total market value close to `10 lakh crore, gave moderate returns in FY17. The group saw a boardroom battle following the ouster of Cyrus Mistry from the post of chairman of the group resulted in group companies’ market value increasing by a mere 10.5%. The decline in the value of the country’s largest software firm, Tata Consultancy Services, also contributed to the muted returns generated by the group. The TCS stock slid 3.4% in the financial year.

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The market value of the country’s second-largest conglomerate, the Mukesh Ambani-led Reliance group, increased 25.6% to `4.4 lakh crore, led by flagship company Reliance Industries. Shares of the refinery major rallied 26.6% during the year on the prospects of future cash flows accruing from the company’s freshly launched telecom business. The increase in the wealth of the Bajaj Group was predominantly led by its financial services arms, Bajaj Finserv and Bajaj Finance, which together added close to `65,200 crore, or three-fourths of the total market value addition to the group.

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