Reliance, Adani, Lloyds Metals, Capri Global top wealth creators: study

Reliance Industries Ltd has emerged as India’s top wealth creator for a fifth consecutive time this year, brokerage Motilal Oswal said in a report.

Wealth created is calculated as change in market capitalization of companies, adjusted for mergers, de-mergers, fresh issuance of capital, and buybacks.

In the five years to 2023, the top 100 Indian firms created wealth to the tune of ₹70.5 trillion at a compound annual growth rate (CAGR) of 21%, against the 12% CAGR of the BSE Sensex, the brokerage said.

Motilal Oswal’s study identifies the fastest, biggest, most consistent and all-round wealth creators.

The brokerage counts Lloyds Metals, a relatively low-profile company, as the fastest wealth creator with a CAGR of 79%.

“₹1 million invested in 2018 in the top 10 fastest wealth creators would be worth ₹10 million in 2023, a return of 59% against 12% for the BSE Sensex,” the Motilal Oswal report said.

The brokerage ranks Capri Global, another relatively low-profile firm, as the most consistent wealth creator. Capri Global outperformed the BSE Sensex in all the past five years, and has the highest price CAGR of 50%, it said.

Adani Enterprises has emerged as the best all-round wealth creator for the second year in a row, Motilal Oswal said.

“We define all-round wealth creators based on the summation of ranks, under each of the three categories – biggest, fastest and consistent. Where the scores are tied, the stock price CAGR decides the all-round rank,” it said.

The technology sector has emerged as the largest wealth creator for the second year in a row, ahead of consumer and retail, and financials, while public sector units (PSUs) shone through with seven PSUs accounting for 6% of overall wealth created.

The turnaround by two banks–State Bank of India and Bank of Maharashtra–and growth in the defense sector (particularly of Bharat Dynamics, Bharat Electronics and Hindustan Aeronautics) are two factors that Motilal Oswal identifies as the key factors that have driven wealth creation in the PSU sector.

The study put the total wealth destroyed during the five-year period at ₹17 trillion, or 25% of the total wealth created by the top 100 companies, with six of the top 10 “wealth-destroying” companies being from the financial sector, including insurance.

To be sure, financials is the top wealth-destroying sector, and the third largest wealth-creating sector at the same time, it added.

Mid and small caps are favourably placed to deliver “hockey-stick returns”, or significant and sustained growth in stock prices, while after two decades of sustained decline, PSU stocks are on a comeback, the Motilal Oswal study added.