Tata Consultancy Services (TCS) has emerged the biggest wealth creator between 2011 and 2016. TCS created wealth in excess of Rs. 2.6 lakh crore in the last five years. HDFC Bank has inched up to second position after remaining in the third position for three years.
The top-100 wealth creators created Rs 28.4 lakh crore in wealth during 2011-16, the third highest ever, according to the annual wealth creation study of Motilal Oswal Securities, a domestic brokerage firm. PSUs’ (public sector undertakings) wealth creation performance continued to be remain dismal.
The number of PSUs in the top-100 wealth creators is only seven. The wealth created by these PSUs is only 4% of the total. State-owned companies have become marginalised with their share in wealth creation collapsing from 51% in 2005 to 4% in 2016.
Consumer/retail has emerged as India’s biggest wealth creating sector for the second consecutive time, and the third time in the last four years. Deep cyclicals (metals/mining, oil and gas, capital goods) have significantly lost out.
Three of the top-5 wealth creating sectors – financials, technology and healthcare – are beneficiaries of value migration or flow of value from outmoded business designs to new business designs, the study found. “In financials, value is migrating from public sector banks to private banks. In technology and healthcare, value is migrating from developed world to emerging markets,” it said.
Ajanta Pharma has emerged as the fastest wealth creator for the second time in a row registering a CAGR (compounded annual growth rate) of 121% between 2011 and 2016. Eicher Motors is among the top-10 fastest wealth creators in the last five studies.
The total wealth destroyed during 2011-16 stood at Rs 15 lakh crore or 53% of the total wealth created by top-100 companies. In all, seven out of the top-10 wealth destroyers are in the business of global commodities. “The broader theme of wealth destruction is cyclical downturn. Metals and mining is the biggest wealth destroying sector as was the case last year,” the study stated.
This is followed by banking and finance, which mainly includes state-owned banks that are saddled with huge NPAs (non-performing assets). The study analysed the top-100 wealth creating companies during 2011-16. Wealth created is calculated as change in the market capitalisation of companies between 2011 and 2016, duly adjusted for corporate events such as mergers, de-mergers, fresh issuance of capital, and buyback.