The top 100 wealth creating stocks delivered Rs 44.9 lakh crore of wealth during 2013-18, the highest ever quantum of wealth created. Also the growth rate of the wealth of the top 100 wealth creators is twice that of the overall market, shows the Motilal Oswal 23rd Annual Wealth Creation Study. This is a growth of 23% over the wealth created during 2012-2017. During 2013-18, the Sensex delivered a CAGR of only 12%.
Biggest Wealth Creators
After consistently hugging the second and third rank for the last six studies, HDFC Bank has finally broken through to emerge the biggest Wealth Creator over 2013-18. Its wealth created amounts to Rs 3.2 lakh crore. Reliance Industries is a close No.2 with Rs 3 lakh crore of wealth created.
Fastest wealth creators
Indiabulls Ventures has emerged as the fastest wealth creator over 2013-18 with stock return at an impressive 97% CAGR. Eicher Motors is among the top 10 fastest wealth creators in the last 7 studies, and Bajaj Finance in the last 5. Bajaj Finance has the unique distinction of being in the top 10 biggest as well as fastest wealth creators.
Most Consistent Wealth Creator
Titan Company has emerged the Most Consistent Wealth Creator by virtue of appearing among top 100 wealth creators in each of the last 10 studies; and recording the highest price CAGR of 33% over the 10-year period 2008 to 2018, fractionally ahead of Godrej Consumer.
Other key takeaways
The total wealth destroyed during 2013-18 is Rs 4.9 lakh crore. The broader theme of wealth destruction is banking crisis led by PSU banks and cyclical downturn led by metals/mining sector.
Financials has emerged as India’s biggest wealth creating sector during 2013-18. The surge in wealth creation in the sector has been led by private banks and NBFCs. The financials sector has the unusual distinction of being the biggest wealth creator (thanks to private banks and NBFCs) and the biggest wealth destroyer (thanks to state-owned banks).
The number of PSUs in the top 100 wealth creators is only 11, and wealth created by these 11 PSUs is only 9% of the total. However this is higher than 2-4% in the recent previous studies, suggesting early signs of potential revival in PSU fortunes.
Every study invariably suggests that the highest return is generated when payback ratio is less than 1x. Payback is a proprietary ratio of Motilal Oswal, defined as current market cap divided by estimated profits over the next five years. For 2013, we calculate this ratio based on the actual profits reported over the next five years.) PEG (P/E to Growth Ratio) less than 1x