The growth in the market value of a company’s share indicates the wealth it has created for shareholders. Market capitalization (M-cap) helps measure this market value. It is a multiple of the current market price and the total shares floated by a company.
In the period of five years to 2014, the top 100 stocks in the market created wealth worth Rs 29.4 lakh crore, according to a report by Motilal Oswal, a brokerage firm. Almost half of that wealth was created by 10 large companies. Hence, if you invested in these 10 companies in 2009, you are sitting on solid profits.
Here is a look at the top 10 wealth-creators in the past five years:
1) TCS <https://in.finance.yahoo.com/q?s=TCS&ql=1> : M-cap surged the most for Tata Consultancy Services (TCS), the biggest software services company over five years to 2014. It has emerged the biggest wealth creator for the period 2009-14. This was because the stock gave a return of 51% per year between 2009 and 2014. This has been on the back of a 29% annual growth in its net profits in the period. In the period between 2009 and 2014, the stock created wealth worth Rs 3.6 lakh crore, according to the report. This is the highest ever wealth created in any 5-year period in India’s stock market history. In the 2008-2013 period, the stock market created wealth worth Rs 2.3 lakh crore. It single-handedly contributed 12% to the total wealth created by the top 100 companies.
2) ITC <https://in.finance.yahoo.com/q?s=ITC&ql=1> : Consumer goods major ITC comes in the second place, creating wealth worth Rs 2 lakh crore. This has been on the back of a 31% yearly return and a 22% annual growth in net profits in the five-year period. The stock contributed to 7% of the total wealth created by the top 100 companies. It has retained its number two position from last year.
3) HDFC Bank <https://in.finance.yahoo.com/q?s=HDFCBANK6.BO&ql=0> : At the third position is the largest private bank HDFC Bank. It made its investors wealthier by Rs 1.3 lakh crore – 4% of the wealth created by the top 100 companies. Its stock too gave an annual return of 31% in the last five years like ITC. However, its net profit grew faster on a yearly basis at 31%.
4) Infosys <https://in.finance.yahoo.com/q?s=INFY.BO> : The second largest IT services exporter may have been plagued with a slowing profit growth, but it still created Rs 1.12 lakh crore wealth for its investors. Its stock price grew 20% on an annual basis in the 2009-14 period while its net profits rose 12%. Like ITC, HDFC Bank and Infosys too have retained their respective ranks from the previous year.
5) ICICI Bank <https://in.finance.yahoo.com/q?s=ICICIBANK.NS&ql=0> : The second-largest private bank by market capitalization is a new entrant in the top 10 wealth creators list, trumping oil and gas major ONGC. It made its investors wealthier by Rs 1 lakh crore after its stock price grew an average 30% every year in between 2009 and 2014. This is on the back of a 28% annual growth in profits.
6) Wipro <https://in.finance.yahoo.com/q?s=WIPRO.NS&ql=0> : In the 2009-14 period, technology companies were the largest wealth-creating sector. In continuation of the trend, Wipro stood in the 6th place, creating wealth worth Rs 99,300 crore. Its share price grew 30% while net profits rose 16% on an average every year between 2009 and 2014.
7) Sun Pharma <https://in.finance.yahoo.com/q?s=SUNPHARMA.NS&ql=0> : Apart from IT, pharma companies benefitted the most from the rupee’s depreciation and economic recovery in the US. This helped Sun Pharma post an average 16% yearly growth in net profits in the five-year period ending 2014. As a result, its stock grew 39% annually, leading to the creation of wealth worth Rs 95,800 crore.
8 )Tata Motors <https://in.finance.yahoo.com/q?s=TATAMOTORS.BO&ql=0> : The auto-maker’s acquisition of the UK-based Jaguar & Land Rover has paid rich dividends. Success of JLR across the world, especially in China, helped Tata Motors post profit growth even when its Indian auto division slowed. As a result, its share price grew 62% annually on an average in the past five years. This resulted in wealth creation of Rs 94,500 crore. In fact, it is the only automotive company in the top 10 list.
9 )HDFC <https://in.finance.yahoo.com/q?s=HDFC&ql=1> : The home loan lender stands in the 9th position. An annual growth of 26% in share prices helped the lender create wealth worth Rs 93,400 crore in the five years to 2014. Its profit grew at a slightly faster pace of 29% on a yearly basis in between 2009 and 2014.
10) HCL Tech <https://in.finance.yahoo.com/q?s=HCLTECH.NS&ql=0> : The IT company is the other new comer in the list. It is also one of the fastest wealth creators making its investors wealthier by Rs 89,800 crore. This has been on the back of a whopping 69% annual growth in share prices. Its yearly profits grew at the fast pace of 38% compared to others in the top 10 list.
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