Thematic Study
19 December 2008
Great
Good
Gruesome
13TH ANNUAL WEALTH CREATION STUDY (2003 - 2008)
HIGHLIGHTS
Understanding of Great, Good and Gruesome companies is critical to investment success.
Great time to buy Great companies (perpetual bonds) at reasonable prices, as interest rates are
likely to remain low for quite some time.
Gruesome companies are best avoided.
Market is likely to see a sector churn - dominance of commodities will probably give way to users
of commodities.
Corporate profit boom of last five years is unlikely to continue. However, we have probably seen
the market bottom at Sensex levels of 7,700.
WEALTH CREAT
TOP 10 WEALTH CREATORS (2003 - 2008)
THE BIGGEST
Rank Company
1
2
3
4
5
6
7
8
9
10
Reliance Industries
ONGC
Bharti Airtel
NMDC
MMTC
BHEL
Larsen & Toubro
SAIL
State Bank of India
ITC
Wealth
Created
(Rs b)
3,077
1,593
1,505
1,356
1,084
952
813
727
701
617
THE FASTEST
Company
5-Y
5-Year
Price
CAGR (%)
284
216
187
177
173
160
158
155
152
150
THE MOST CONSISTENT
Company
Infosys
Hero Honda
Ranbaxy Labs
Sun Pharma
Reliance Industries
HDFC
Cipla
Satyam Computer
Piramal Healthcare
ITC
Appeared
in WC
Study (x)
10
10
10
9
9
9
9
9
9
9
10-Y
10-Year
Price
CAGR (%)
25.7
16.5
8.7
46.0
40.5
40.2
21.8
19.2
16.6
13.9
Unitech
Jai Corp
MMTC
Financial Technologies
BF Utilities
Aban Offshore
NMDC
Godrej Industries
Sesa Goa
REI Agro
Raamdeo Agrawal
(
Raamdeo@MotilalOswal.com
) /
Shrinath Mithanthaya (ShrinathM@MotilalOswal.com)
We thank Mr Dhruv Mehta (dhruvlmehta@gmail.com), Investment Consultant, for his invaluable contribution to this report.
 Market Research | Indian Economy | Corporate Sectors | Equity Investment Ideas - MotilalOswal.com
Wealth Creation Study 2003-2008
Contents
Objective, Concept and Methodology
Wealth Creation Study 2003-2008: Findings
Theme 2009: The Great, the Good and the Gruesome
Market Outlook
Appendix I: MOSL 100 – Biggest Wealth Creators
Appendix II: MOSL 100 – Fastest Wealth Creators
Appendix III: MOSL 100 – Wealth Creators (alphabetical)
3
4-18
20-33
34-37
39-40
41-42
43-44
Abbreviations and Terms used in this report
ABBREVIATION / TERM
DESCRIPTION
2003, 2008, etc
Avg
CAGR
L to P / P to L
Price CAGR
RS B
WC
Wealth Created
Reference to years for India are financial year ending March, unless otherwise stated
Average
Compound Annual Growth Rate; All CAGR calculations are for 2003 to 2008
unless otherwise stated
Loss to Profit / Profit to Loss. In such cases, calculation of PAT CAGR is not possible
In the case of aggregates, Price CAGR refers to Market Cap CAGR
Indian Rupees in billion
Wealth Creation / Wealth Created
Increase in Market Capitalization over the last 5 years, duly adjusted for corporate
events such as fresh equity issuance, mergers, demergers, share buybacks, etc.
19 December 2008
2
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Wealth Creation Study 2003-2008
Objective, Concept and Methodology
Objective
The foundation of Wealth Creation is in buying businesses at a price substantially lower
than their “intrinsic value” or “expected value”. The lower the market value is compared
to the intrinsic value, the higher is the margin of safety. In this year’ study, we continue
s
our endeavor to cull out the characteristics of businesses, which create value for their
shareholders.
As Phil Fisher says, “It
seems logical that even before thinking of buying any common
stock, the first step is to see how money has been most successfully made in the
past.”
Our Wealth Creation studies are attempts to study the past as a guide to the future
and gain insights into How to Value a Business.
Concept
Wealth Creation is the process by which a company enhances the market value of the
capital entrusted to it by its shareholders. It is a basic measure of success for any commercial
venture. Wealth Creation is achieved by the rational actions of a company in a sustained
manner.
Methodology
For the purpose of our study*, we have identified the top 100 Wealth Creators in the Indian
stock market for the period 2003-2008. These companies have the distinction of having
added at least Rs1b to their market capitalization over this period of five years, after
adjusting for dilution. We have termed the group of Wealth Creators as the ‘
MOSL - 100’
.
The biggest and fastest Wealth Creators have been listed in Appendix I and II on page 39
and 41, respectively. Ranks have been accorded on the basis of Size and Speed of Wealth
Creation (speed is price CAGR during the period under study).
On the cover page, we have presented the top 10 companies in terms of Size of Wealth
Creation (called THE BIGGEST), the top 10 companies in terms of Speed of Wealth
Creation (called THE FASTEST), and the top 10 companies in terms of their frequency of
appearance as wealth creators in our Wealth Creation studies (called THE MOST
CONSISTENT).
Theme 2009
Our Theme for 2009 is
The Great, the Good and the Gruesome,
discussion on
which starts from page 20.
* Capitaline database has been used for this study
19 December 2008
3
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Wealth Creation Study 2003-2008
Findings
Wealth Creation
2003-2008
The 13
TH
Annual Study
Findings
19 December 2008
4
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Wealth Creation Study 2003-2008
Findings
Wealth Creation
2003-2008
The Biggest Wealth Creators
Reliance Industries is No.1
Reliance is the biggest Wealth Creator for the second
year in a row. The company has steadily climbed
its way up the list of Motilal Oswal Biggest Wealth
Creators. It was ranked 4
th
in 2004, 3
rd
in 2005, 2
nd
in 2006 (behind ONGC) and 1
st
in 2007.
Wider participation in wealth creation
In 2003-08, top 10 wealth creating companies
accounted for 49% of wealth created compared to
76% during 1998-2003. The strong bull run in the
market has led to wider participation in the wealth
creation process.
TOP 10 BIGGEST WEALTH CREATORS
RANK COMPANY
NET WEALTH CREATED
RS B
% SHARE
PRICE
CAGR (%)
PAT
CAGR (%)
FY08
P/E (X)
FY03
1
2
3
4
5
6
7
8
9
10
Reliance Inds.
ONGC
Bharti Airtel
NMDC
MMTC
BHEL
Larsen & Toubro
SAIL
State Bank of India
ITC
3,077
1,593
1,505
1,356
1,084
952
813
727
701
617
12.1
6.3
5.9
5.3
4.3
3.7
3.2
2.9
2.8
2.4
58.7
32.8
96.4
158.3
186.8
79.1
100.9
83.8
44.4
37.5
36.5
9.7
L to P
59.8
51.6
45.1
38.1
L to P
16.7
17.9
16.9
12.6
24.5
42.1
543.6
35.2
40.7
10.1
15.0
24.9
9.4
4.8
L to P
3.8
22.4
12.3
10.6
L to P
4.6
11.4
DISTRIBUTION OF WEALTH CREATION BY RANK (%)
76
2008
2003
49
16
Key Finding
Commodities led by Oil & Gas had been the front
runners in 2003-08. But change of leadership is
almost certain going forward.
19 December 2008
5
11
10
4
7
3
5 2
41-50
4 2
51-60
3 1
61-70
2 1
71-80
2 0
81-90
2 0
91-100
1-10
11-20
21-30
31-40
 Market Research | Indian Economy | Corporate Sectors | Equity Investment Ideas - MotilalOswal.com
Wealth Creation Study 2003-2008
Findings
Wealth Creation
2003-2008
The Fastest Wealth Creators
Unitech is No.1
Unitech is the Fastest Wealth Creator during 2003-
08, with a 5-year stock price CAGR of a whopping
284%. This is the highest ever in our 13 Wealth
Creation studies so far.
MMTC and NMDC enjoy the rare privilege of
featuring in both the biggest and fastest wealth
creators list.
Two dominant themes
(1) Real estate / Embedded value (Unitech, B F
Utilities, Godrej Industries, Jai Corp, Financial
Technologies) and (2) Commodities (MMTC,
NMDC, Sesa Goa and REI Agro).
Key Finding
At times, Fad Investing (e.g. Real estate) and
Momentum Investing (e.g. Commodities) can make
serious money in the stock markets over reasonably
long periods.
Nothing is more profitable than investing in an early
stage bubble.
19 December 2008
6
TOP 10 FASTEST WEALTH CREATORS
RANK COMPANY
PRICE
APPREN. (X)
PRICE
CAGR (%)
PAT
CAGR (%)
MCAP (RS B)
FY08
FY03
1
2
3
4
5
6
7
8
9
10
Unitech
Jai Corp
MMTC
Financial Tech.
BF Utilities
Aban Offshore
NMDC Ltd
Godrej Indus.
Sesa Goa
REI Agro
837
316
194
164
152
118
115
108
102
99
284
216
187
177
173
160
158
155
152
150
150
50
52
226
45
77
60
27
160
66
448
92
1090
74
40
114
1367
83
123
71
0.5
0.3
5.6
0.4
0.3
0.9
11.9
0.7
1.2
0.4
2003-08 PRICE APPRECIATION (X): UNITECH - FASTEST EVER WEALTH CREATOR
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
837 Unitech
665 B F Utilities
182 Matrix Labs
136 Matrix Labs
75 Matrix Labs
50 e-Serve
69 Wipro
66 Infosys
223 SSI
75
Satyam Computer
23
Satyam Computer
7
Cipla
30
Dr Reddy's Labs
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Wealth Creation Study 2003-2008
Findings
Wealth Creation
2003-2008
Most Consistent Wealth Creators
TOP 10 CONSISTENT WEALTH CREATORS
Infosys is Most Consistent
Infosys, Hero Honda and Ranbaxy have all appeared
in all of the last 10 studies. Infosys is ranked as the
most consistent by virtue of its higher price CAGR.
Indian IT, which is truly global and stable in
character, is a new source of consistent wealth
creation.
RANK COMPANY
APPEARED IN LAST
10 WC STUDIES (X)
10-YR PRICE
CAGR (%)
PAT
CAGR (%)
P/E (X)
2008
2003
1
2
3
4
5
6
7
8
9
10
Infosys Tech.
Hero Honda Motor
Ranbaxy Labs.
Sun Pharma.
Reliance Inds.
HDFC
Cipla
Satyam Computer
Piramal Healthcare
ITC
10
10
10
9
9
9
9
9
9
9
25.7
16.5
8.7
46.0
40.5
40.2
21.8
19.2
16.6
13.9
36.1
10.8
-0.2
34.4
36.5
28.7
23.1
41.0
20.6
17.9
18.3
14.2
26.5
25.2
16.9
27.8
24.4
15.4
21.0
24.9
27.9
6.5
18.6
10.9
9.4
11.7
17.3
18.1
6.6
11.4
CONSUMER COMPANIES SCORE HIGH ON CONSISTENT WEALTH CREATION
Consistent Wealth Creators - 2005, 2006, 2007 & 2008
Consumer Facing
Pharma
?
Cipla
?
Dr Reddy's Lab
?
Piramal Healthcare
?
Piramal Healthcare
?
Ranbaxy Lab
?
Sun Pharma
FMCG
?
Asian Paints
?
ITC
Non-Consumer Facing
Others
?
Hero Honda
?
HDFC
IT
?
Infosys
?
Wipro
?
Satyam
?
Reliance Industries
Key Finding
FMCG, Pharma and IT companies dominate the list
of consistent wealth creators. Thus, non-cyclicality
of business is a key driver of consistent wealth
creation.
19 December 2008
7
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Wealth Creation Study 2003-2008
Findings
Wealth Creators (Wealthex)
Comparative Performance
v/s BSE Sensex
Superior performance on all fronts
We have compared the performance of Wealthex
(top 100 Wealth Creators index) with the BSE
Sensex on three parameters – (1) market
performance, (2) earnings growth, and (3)
valuation. The Wealthex is superior to the Sensex
in all the three.
Market performance:
The Wealthex significantly
beat the Sensex in FY04, FY05 and FY08, and
matched it in FY06 and FY07. Over the five-year
period FY03-08, the Wealthex outperformed the
Sensex by 241%.
Earnings growth:
Five-year EPS CAGR for the
Wealthex is 26%, compared to 25% for the Sensex.
Valuation:
In spite of superior earnings
performance, the Wealthex traded cheaper than the
Sensex in each of the last six years.
Key Finding
Wealth creating companies were available in 2003
at superior valuation to Sensex, which led to their
outperformance.
19 December 2008
8
WEALTH CREATORS’ INDEX V/S BSE SENSEX (31.3.03 TO 31.3.08)
Wealthex - Rebased
32,000
Sensex
241% Outperformance
24,000
16,000
8,000
0
SENSEX V/S WEALTH CREATORS: HIGHER EARNINGS GROWTH, LOWER VALUATION
MAR-03 MAR-04 MAR-05 MAR-06 MAR-07 MAR-08
5-YEAR
CAGR (%)
BSE Sensex
YoY Performance (%)
Wealth Creators - based to Sensex
YoY Performance (%)
Sensex EPS
YoY Performance (%)
Sensex P/E (x)
Wealth Creators EPS
YoY Performance (%)
Wealth Creators P/E (x)
3,049
3,049
272
11.2
386
7.9
5,591
83.4
6,470
112.2
348
27.9
16.1
487
26.3
13.3
6,493
16.1
8,019
23.9
450
29.3
14.4
641
31.6
12.5
11,280
73.7
13,724
71.1
523
16.2
21.6
719
12.2
19.1
13,072
15.9
15,680
14.2
718
37.4
18.2
977
35.9
16.0
15,644
19.7
22,987
46.6
833
16.0
18.8
1228
25.7
18.7
38.7
49.8
25.1
26.1
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Wealth Creation Study 2003-2008
Findings
(RS B)
PRICE
CAGR
(%)
PAT
CAGR
(%)
P/E (X)
2008
2003
Wealth Creators
Classification By
Industry
Size: The commodity factor
Oil & Gas (led by Reliance and ONGC) and Metals/
Mining (led by NMDC, MMTC and SAIL) dominate
the wealth created, with a combined share of 40%.
In 2003, their share was half this figure. In contrast,
IT which enjoyed 43% share in 2003, has a share
of only 5% in 2008.
Speed: The fad factor
Real estate and Retail emerged the fastest wealth
creators, as they were the “flavor-of-the-season”
sectors for investors in the Indian markets.
Metals/Mining, Engineering, Telecom: Best
of both worlds
Metals/Mining, Engineering and Telecom enjoyed
the best combination of size and speed.
Key Finding
Engineering and Telecom are the sectors to watch
out for in terms of huge wealth creation at a rapid
pace. Oil & Gas and Metals/Mining may lose out as
they are hit by the global slowdown, and collapse in
commodity prices.
19 December 2008
9
W E A L T H C R E A T ORS: C L A S S I F I C A T I O N B Y I N D U S T R Y
WEALTH
INDUSTRY
CREATED
(RS B)
SHARE OF WEALTH
CREATED (%)
2008
2003
Oil & Gas (8)
5,826
Metals/Mining (13)
4,416
Banking & Finance (15)
3,282
Engineering (10)
2,603
Telecom (2)
1,636
IT (5)
1,234
FMCG (6)
1,180
Pharma (8)
733
Auto (7)
680
Ultility (4)
635
Cement (4)
527
Construction/Real Estate (2) 491
Media (2)
147
Retail (2)
96
Others (12)
1,903
Total
25,390
22.9
17.4
12.9
10.3
6.4
4.9
4.6
2.9
2.7
2.5
2.1
1.9
0.6
0.4
7.5
100.0
17.0
2.0
12.0
2.0
0.0
43.0
2.0
15.0
2.0
0.0
1.0
0.0
0.0
0.0
4.0
100.0
41.5
83.3
54.1
78.3
87.8
24.4
25.9
35.1
45.2
52.5
50.7
253.4
42.4
107.8
91.3
49.8
15.9
62.7
21.5
40.2
63.4
35.6
12.5
24.2
32.7
10.7
49.6
116.5
28.4
73.4
33.5
26.2
14.2
16.8
16.3
34.0
25.6
17.7
27.6
23.1
16.1
25.9
11.2
40.4
47.1
41.2
35.4
18.7
5.2
9.2
5.0
10.2
12.8
27.3
15.8
15.2
10.3
5.2
10.8
3.5
28.1
16.7
5.9
7.9
NEW ECONOMY PERFORMANCE IN THE TOP 100 WEALTH CREATORS
No of Companies
% Wealth Created
10
5
1
2000-05
2001-06
20
11.9
10
10
1
2002-07
2003-08
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
MNCs v/s Indian Companies
MNCs have underperformed Indian
companies
During the study period, MNCs sharply
underperformed Indian companies both in terms of
earnings CAGR and price CAGR. However, Indian
markets still believe in the long-term potential of
MNCs as indicated by their higher P/Es.
MNC dominance on the wane
The last 10 wealth creation studies clearly indicate
the waning dominance of MNCs in India. Over the
last 10 years, MNCs have lost significant share both
in terms of number of companies and amount of
wealth created.
Within MNCs, engineering and capital goods
companies like ABB, Siemens, Bosch and Cummins
are increasing their share of wealth created, relative
to consumer goods companies like Hindustan
Unilever and Colgate.
Key Finding
New Indian businesses and entrepreneurs have
eclipsed old MNC clout in wealth creation. New
MNCs like Nokia and Samsung do not seem keen
on listing themselves in India.
19 December 2008
10
WEALTH CREATORS: MNCs V/S INDIAN COMPANIES
2003-2008
MNC
INDIAN
Number of Wealth Creators
% Wealth Created
5-year Earnings CAGR (%)
5-year Price CAGR (%)
P/E (x) at the Beginning of Study Period
P/E (x) at the End of Study Period
10
6.8
20.1
31.4
15.5
24.3
90
93.2
26.6
52.2
7.3
18.4
MNCs ARE WANING IN WEALTH CREATION
80
50
60
43
40
20
0
15
21
Top Wealth Creating MNCs
30
23
3
16
10
8
2
Share of Wealth Created (%)
60.0
40.0
7
11
10
12
7
10
7
10
20.0
0.0
-20.0
19
1994-99 1995-00 1996-01 1997-02 1998-03 1999-04 2000-05 2001-06 2002-07 2003-08
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
Ownership: State v/s Private
WEALTH CREATORS: STATE-OWNED V/S PRIVATELY-OWNED
During the study period, PSUs in aggregate
underperformed the Indian companies in terms of
earnings CAGR. However, led by commodity
companies such as ONGC, NMDC, MMTC and
SAIL, PSUs matched their private sector
counterparts in terms of price CAGR.
Value migration to the private sector has been
reversed in 2003-08. However, we believe this is
temporary as it is mainly led by commodity price
hikes, which have since corrected sharply.
2003-2008
STATE-OWNED
PRIVATE
No. of Wealth Creators in Top 100
Share of Wealth Created (%)
5-year Earnings CAGR (%)
5-year Price CAGR (%)
P/E (x) at the Beginning of Study Period
P/E (x) at the End of Study Period
25
34.6
17.0
49.9
4.6
15.9
75
65.4
35.7
49.7
12.6
20.6
DEREGULATION DIMINISHES ROLE OF STATE-OWNED COMPANIES IN WEALTH CREATED
48.5
50.6
35.9
No of PSUs
% Wealth Created
34.6
24.8
18.0
25.0
Key Finding
PSUs sometimes tend to be the handmaidens of
the government (eg. Gujarat state government has
mandated that all Gujarat state PSUs set aside 30%
of their PBT towards corporate social responsibility).
Hence, it is advisable to have a large weight for the
private sector in any portfolio. However, select PSUs
like SBI, BHEL and ONGC, which are dominant in
their respective sectors cannot be ignored.
19 December 2008
11
28.0
30.0
26.0
1999-2004
2000-2005
2001-2006
2002-2007
2003-2008
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
Age Group
WEALTH CREATORS: CLASSIFICATION BY AGE-GROUP
Old companies for size, young for speed
The older companies tend to contribute higher share
of wealth created, while the newer companies have
speed in their favor, given their low base.
During 2003-08, companies in the age range of 21-
50 have contributed to 52% of the wealth created.
Companies less than 10 years old have recorded a
price CAGR of almost 150% over five years. The
price performance of all other age groups has been
closer to the average price CAGR of 50%.
NO. OF YEARS
NO. OF COS.
WEALTH CREATED (RS B)
% SHARE OF WC
PAT CAGR (%)
0-10
11-20
21-30
31-40
41-50
51-60
61-70
71-80
81-90
>90
Total
2
17
19
7
15
14
9
6
3
8
100
150
5,449
2,982
2,384
7,936
1,945
1,915
805
337
1,487
25,390
0.6
21.5
11.7
9.4
31.3
7.7
7.5
3.2
1.3
5.9
100.0
85.9
23.1
26.6
76.9
27.6
17.4
37.2
19.6
18.7
21.0
26.2
WEALTH CREATORS: PRICE CAGR BY AGE RANGE
Key Finding
Catch them young. Companies less than 10 years
old tend to report much higher PAT growth, given
their low base. High earnings growth leads to high
P/Es, which explains their outperformance to older
peers.
Example:
The 0-10 year-old high fliers in our study
are BF Utilities and United Spirits.
19 December 2008
12
149
81
52
45
57
49
39
Avg Price CAGR: 50%
50
25
43
0-10
11-20
21-30
31-40
41-50
51-60
Age Range (Years)
61-70
71-80
81-90
>90
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
Size
Data indicates an inverse relationship between
MCap and speed of returns i.e. smaller the market
cap, larger the returns. Stocks which had less than
Rs2b MCap in 2003 have delivered a price CAGR
of 165%. On the other hand, large caps offered
33% returns, much lower than the average of 50%.
Rapidly growing and deregulating Indian economy
will produce many young and fast-growing
enterprises.
WEALTH CREATORS: BASE YEAR MARKET CAP
2003 MARKET CAP
RANGE (RS B)
NO. OF
COMPANIES
WEALTH CREATED SHARE OF WC
(RS B)
(%)
2008
MCAP (RS B)
2003
<2
2-5
5-10
10-20
20-50
50-100
100-200
>200
Total
17
13
14
14
24
9
4
5
100
1,707
1,222
2,956
2,572
5,068
4,467
1,705
5,694
25,390
7
5
12
10
20
18
7
22
100
1,878
1,307
3,266
2,787
6,126
5,493
2,482
7,335
30,675
15
38
106
177
793
574
595
1,772
4,068
WEALTH CREATORS: PRICE CAGR BY MARKET CAP RANGE IN 2003
165
Key Finding
Small- and mid-size companies with a large
business opportunity and ambitious, aggressive
management can prove to be kickers for superior
returns in any portfolio.
Example:
Some of the sub-Rs2b companies in our
2003-08 study include Unitech, Pantaloon, Aban
Offshore, Sesa Goa, Voltas and United Spirits.
19 December 2008
13
103
99
74
51
57
33
33
Avg Price CAGR: 50%
<2
2-5
5-10
10-20
20-50
50-100
2003 Market Cap Range (Rs b)
100-200
>200
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
Sales and Earnings Growth
Sales growth: Higher the better
This is saying the obvious, but still saying it is
important. Typically, one would expect high sales
growth to be accompanied by high valuation
multiples. However, occasionally, the market throws
in bargains e.g. companies whose 2003-08 sales
CAGR was in the range of 40-50% were available
at a PE of 5x in FY03.
In the adjacent table, 40-50% sales growth
companies include cylicals such as Sterlite, Jindal
Steel and Hindustan Zinc. The >50% range includes
sunrise companies like Bharti Airtel, Financial
Technologies, Pantaloon Retail and TV18.
WEALTH CREATORS: CLASSIFICATION BY SALES GROWTH
SALES GR.
RANGE
(%)
NO. OF
COS.
SHARE
OF WC
(%)
PRICE
CAGR
(%)
PAT
CAGR
(%)
2008
2003
2008
2003
ROE (%)
P/E (X)
0-10
10-20
20-30
30-40
40-50
>50
Total
15
25
26
19
5
10
100
9.3
22.6
31.1
22.2
4.7
10.1
100.0
33.2
40.1
57.5
50.9
114.4
109.3
49.8
10.9
17.6
34.8
42.7
66.1
L to P
26.2
15.0
22.5
20.5
23.7
24.0
29.1
21.3
18.0
25.2
15.2
15.2
15.7
-1.6
19.4
19.4
12.3
20.6
27.8
17.8
24.2
18.7
7.7
5.1
9.5
21.0
5.0
N.A.
7.9
WEALTH CREATORS: PRICE CAGR BY 2003-08 EARNINGS GROWTH RANGE
108
98
Key Finding
Sunrise businesses (such as telecom, retail, media,
insurance) should continue to do well in the
foreseeable future. At the same time, the growing
Indian economy has resulted in a new dawn for many
traditional businesses such as engineering,
construction and financial services.
19 December 2008
14
Avg Price CAGR: 50%
49
43
27
45
67
0-10
10-20
20-30
30-40
40-50
Earnings Growth Range (%)
50-70
>70
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
RoE
WEALTH CREATORS: PRICE CAGR BY ROE
Bargains are found when markets are blind to
change
When profitability of companies is good (i.e. high
RoE), it is tough to find them cheap. This causes a
paradox – companies which already have high RoE
do not tend to deliver high stock price returns.
Bargains are available when changing dynamics of
a company’ business is not known to the market
s
i.e. when current RoEs are low. However, such
investments also have attendant risks.
One way of balancing risk and return is to invest in
companies with moderate RoEs (10-20%), and
potential for growth.
92
Bargains
77
Risk-return balance
56
61
39
36
32
15
Avg Price CAGR: 50%
<5
5-10
10-15
15-20
20-25
25-30
30-40
>40
2003 RoE Range (%)
Key Finding
Anticipating change in profitability ahead of the
crowd is rewarded very well in the markets.
19 December 2008
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
Valuation Parameters
WEALTH CREATORS: CLASSIFICATION BY VALUATION PARAMETERS (MARCH 2003)
Margin of safety in single digit PE
Two-thirds of wealth created, and two-thirds of the
top wealth creators had a PE of less than 10x in
2003. This suggests high margin of safety in single
digit PE multiples.
Price/Book of less than 1x works best!
47 out of the top 100 wealth creators were available
in 2003 at Price/Book of less than 1x. Their price
CAGR at 67% is significantly higher than the
average 50%.
NO. OF COS
% WEALTH CREATED
PRICE CAGR %
P/E (x)
<5
5-10
10-15
15-20
>20
Total
Price/Book (x)
<1
1-2
>2
Total
Price/Sales (x)
<0.25
0.25-0.50
0.50-1.00
1-2
>2
Total
36
27
18
7
12
100
41
26
18
5
11
100
55
57
59
25
37
50
47
32
21
100
34
49
17
100
67
54
30
50
Watch out for Price/Sales of 1x or less
66 of the top 100 wealth creators had Price/Sales
of 1x or less in 2003.
19
19
28
14
20
100
15
13
37
18
17
100
66
63
62
47
30
50
19 December 2008
16
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Wealth Creation Study 2003-2008
Findings
Wealth Creators
Classification By
Valuation Parameters
(contd.)
WEALTH CREATORS: CLASSIFICATION BY VALUATION PARAMETERS (MARCH 2003)
Payback of less than 1x guarantees high
returns
Payback is the ratio of current market cap divided
by expected profits of the next five years.
When companies are in high growth phase, it is
difficult to value them using conventional measures.
Payback is based on empirical wisdom that markets
try and seek visibility of five years.
A high 82 of the top 100 wealth creators presented
a payback opportunity of less than 1x in 2003.
NO. OF COS
% WEALTH CREATED
PRICE CAGR %
Payback Ratio (x)
<0.25
0.25-0.50
0.50-1.00
1-2
>2
Total
22
28
32
9
9
100
18
19
48
10
6
100
116
59
50
38
22
50
MEDIAN VALUATIONS (X)
2003
SENSEX
WEALTH CREATORS
SENSEX
2008
WEALTH CREATORS
Median P/E
Median Price/Book
Median Price/Sales
13.1
1.9
1.3
6.7
1.0
0.7
20.4
4.1
3.6
22.1
4.6
3.5
Key Finding
The median valuations in 2003 clearly spell out the
sure shot formulas for multi-baggers –
?
PE of less than 10x
?
?
?
Price/Book of less than 1x
Price/Sales of 1x or less
Payback ratio of 1x or less
17
19 December 2008
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Wealth Creation Study 2003-2008
Findings
Wealth Destroyers
TOP-10 WEALTH DESTROYERS (2003-2008)
COMPANY
RS B
WEALTH DESTROYED
% SHARE
PRICE
CAGR (%)
Wealth destroyed is 0.2% of wealth created
The stock market boom in 2003-08 is so widespread
that total wealth destroyed is only Rs59b. This is
barely 0.2% of the Rs25,390b wealth created by
the top 100 companies alone.
Among the top wealth destroyers, HPCL and TVS
Motor are the only prominent names.
HPCL
Vaibhav Gems
Media Matrix
Pan India Corporation
Rashel Agrotech
T. Spiritual
JIK Industries
Netvision Web
Ramco Systems
TVS Motor
Gufic BioScience
Total of above
Total Wealth Destroyed
WEALTH DESTRUCTION BY INDUSTRY
13
4
3
2
2
2
2
2
1
1
1
33
59
22
7
5
4
3
3
3
3
2
2
2
56
100
-3
25
-33
17
-59
-47
-54
-43
-19
-3
-16
Trading
Autos
Textiles
7%
6%
7%
Pharma
6%
Chemicals
4%
Finance
4%
Key Finding
Oil & Gas and Finance figure among top wealth
creating industries as well as top wealth destroying
industries. This suggests that wealth creation is
more dependent on company-specific – rather than
industry-level – factors.
19 December 2008
18
Others
17%
Media
7%
Oil & Gas
23%
IT
19%
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Wealth Creation Study 2003-2008
THIS PAGE IS INTENTIONALLY LEFT BLANK
19 December 2008
19
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Wealth Creation Study 2003-2008
Theme 2009
Wealth Creation
2003-2008
The 13
TH
Annual Study
Theme 2009
19 December 2008
20
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Wealth Creation Study 2003-2008
Theme 2009
The Great, the Good and the Gruesome
Introduction
Every year, legendary investor Warren Buffett personally writes the Chairman’ annual
s
letter to shareholders of his diversified company, Berkshire Hathaway Inc.
His 2007 letter has a section on “Businesses – The Great, the Good and the Gruesome”,
where he discusses what kind of companies Berkshire likes and what it wishes to avoid.
We believe this section is a worthwhile “back-to-basics” exercise. We have applied our
understanding of the same to the Indian corporate sector.
Defining Great, Good and Gruesome companies
Buffett equates the Great, the Good and the Gruesome companies to three types of bank
savings accounts, where the interest rate is RoE (return on equity). He says, “Think of
three types of savings accounts. The Great one pays an extraordinarily high interest rate
that will rise as the years pass. The Good one pays an attractive rate of interest that will be
earned also on deposits that are added. Finally, the Gruesome account both pays an
inadequate interest rate and requires you to keep adding money at those disappointing
returns.”
Graphically, the Great, Good and Gruesome companies can be depicted as under.
DEFINING THE GREAT, THE GOOD, THE GRUESOME
High
Great Companies
Good Companies
Attractive
Gruesome Companies
Low/
Negative
Time/Equity Capital Employed
Source: MOSL
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
Understanding Great, Good, Gruesome companies
Great companies
Firstly, it must be mentioned that any country will have only a few Great companies. A
truly Great company
must
have an “enduring moat” (i.e. long-term competitive advantage)
that protects excellent returns on invested capital. This is possible only in either of two
cases –
1. It must be either a low-cost producer, or
2. It possesses powerful brand(s).
Great companies tend to grow slower than their Good and Gruesome counterparts. But
the key aspect of this growth is that it is achieved by consuming very little additional
capital. Over time, given the power of compounding, Great companies become significant
cash machines with high and steadily rising RoE, and high dividend payouts. Investors can
deploy these payouts to earn returns in other avenues.
To quote Buffett, “Long-term competitive advantage in a stable industry is what we seek
in a business.
If that comes with rapid organic growth, great. But even without
organic growth, such a business is rewarding.
We will simply take the lush earnings
of the business and use them to buy similar businesses elsewhere.”
Good companies
Good companies grow at healthy rates, but need large increases in capital to sustain growth.
Like Great companies, they too enjoy competitive advantage and make healthy profits.
However, they need to reinvest a significant proportion of these profits for growth.
Buffett calls this the “put-up-more-to-earn-more” phenomenon, which is true of most
companies across countries. Compared to great companies, return ratios will tend to be
much lower, as will dividend payouts.
Gruesome companies
Paradoxically, Gruesome companies tend to enjoy very high growth rates, which turns out
to be a trap. These companies require significant capital for such growth, and then earn
little or no money.
Buffett says, “Think airlines. Here a durable competitive advantage has proven elusive
since the days of the Wright brothers … The airline industry’ demand for capital ever
s
since that first flight has been insatiable. Investors have poured money into a bottomless
pit, attracted by growth when they should have been repelled by it.”
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
Characteristics of Great, Good and Gruesome companies
Return on equity is the financial differentiator of Great, Good and Gruesome companies.
However, numbers are lag indicators, and are the outcome of several qualitative
characteristics of the businesses. We summarize them below (for a fuller description of
the characteristics, see Annexure 1, page 28).
IDENTIFYING THE GREAT, THE GOOD AND THE GRUESOME
CRITERIA
GREAT
GOOD
GRUESOME
Nature of
Business
Competitive
Advantage
?
Stable business i.e. no
rapid or continuous change
High and rising long-term
competitive advantage from
brand / lowest-cost production
High pricing power
Low dependence on greatness
of management
Typically moderate growth;
high growth rates a rarity
Low capital intensity; high level
of intangible assets
Very high and rising RoE
Typically, high dividend
payout
Hero Honda, Nestle,
GSK Pharma, Infosys
?
Subject to moderate change
?
Business likely to have
rapid changes
Low or no competitive
advantage
?
?
Steady competitive advantage
?
Pricing Power
Management
?
?
?
?
Moderate pricing power
Management, key success
factor
Moderate-to-high growth rate
?
?
Pricing power absent
High dependence on
management
Typically high growth
rates
Very high capital
intensity
Low / falling RoE
Low or zero dividend
payout
Tata Tele, Jet Airways,
Arvind
Source: MOSL
Growth
?
?
?
Capital Intensity
?
?
Moderate-to-high capital
intensity
Stable and attractive RoE
Reasonable dividend payout
?
RoE
Dividend Payout
?
?
?
?
?
?
Examples
?
?
HDFC Bank, Larsen & Toubro,
BHEL, Tata Steel
?
The financial profile of a typical Great, Good and Gruesome company is as tabled below.
GREAT, GOOD AND GRUESOME: TYPICAL FINANCIAL PROFILE
NESTLE
(GREAT)
HDFC BANK
(GOOD)
TATA TELE (MAH)
(GRUESOME)
10-year CAGR (%)
Sales
PAT
Capital Employed
RoE (%)
Latest
10-years Ago
10-year Incremental RoE
In last 10 years
Cumulative PAT (Rs b)
Total Dividend (Rs b)
Average Payout (%)
22.3
18.2
81.0
58.7
12.0
21.0
-26.7
0.0
0.0
Source: MOSL
19 December 2008
102.5
36.4
230.0
17.7
26.4
14.0
Net Worth eroded
-10.3
Not calculable
10.0
19.0
-3.0
44.0
39.0
46.0
101.0
Loss to Loss
15.0
23
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Wealth Creation Study 2003-2008
Theme 2009
Key takeaways:
?
Greatness is not dependent on growth.
Nestle has grown much slower than HDFC
Bank both in terms of sales and profit. Its cumulative PAT in the last 10 years too is
less than 40% of HDFC Bank. However, Nestle’ total dividend paid out is 1.5x that
s
of HDFC Bank.
?
Great companies are invariably asset light.
This means that they enjoy high and
rising RoE. In the last 10 years, Nestle’ capital employed actually declined 3% annually.
s
Its RoE was 36% 10 years ago, and its latest RoE is over 100%. Incremental RoE is
a high 230%.
?
Great companies are fountains of dividends.
Nestle’ average payout ratio is a
s
high 81%.
?
Good companies are fountains of earnings.
HDFC Bank has delivered high profits
at high growth rates.
?
Gruesome companies are bottomless pits of capital consumption.
Tata
Teleservices capital employed has grown at a compounded 15% for the last 10 years.
But it has not made profits even in a single year in the last 10 years.
See’ Candy v/s Nestle India: An interesting parallel
s
Warren Buffett cites the example of See’ Candy (owned by Berkshire Hathaway) as an
s
example of a great business.
SEE’ CANDY’ GREAT PERFORMANCE (US$ M)
S
S
1972
2007
CAGR %
Sales
PBT
PBT Margin (%)
PAT
Capital Employed (CE)
PAT / CE (%)
Incremental PAT / CE (%)
Cumulative PBT (35 Years)
Incremental Capital Deployed
Purchase Price
P/E (x)
Post-tax Earnings Yield (%)
Total return (Earnings Yield + PAT CAGR) *
30.0
5.0
16.7
3.4
8.0
41.9
383.0
82.0
21.4
54.9
40.0
137.4
161.2
1,350
32.0
7.5
8.3
8.3
4.7
25.0
7.5
13.4
21.7
* Over the long-term, expected return on stocks is equal to dividend yield + growth rates
The key points of the See’ case are as follows –
s
?
Berkshire acquired See’ in 1972 for US$25m.
s
?
PAT at the time of acquisition was ~US$3.4m, and the capital employed was US$8m,
i.e. PAT/CE of 42%.
?
In 35 years, candy volumes grew only 2% annually (16m pounds in 1972 to 31m
pounds in 2007), sales grew 7.5% and PBT grew 8.3%.
?
In 2007, See’ reported a PAT of ~US$55m, on capital employed of US$40m. Thus,
s
PAT/CE zoomed to 137%.
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
?
Over the 35 years, See’ delivered cumulative pre-tax profit of US$1.35b. This is 42
s
times the incremental investment of US$32m, and 54 times Berkshire’ investment
s
value of US$25m.
The Nestle parallel
We compare the See’ case with the last 15 years data of Nestle India. Like See’ Nestle
s
s,
has deployed very little capital employed relative to incremental earnings. As a result,
incremental PAT/CE is very high.
NESTLE INDIA'S RETURN IS THE SAME AS SEE’ CANDY (RS B)
S
1993
2007
CAGR %
Sales
PBT
PBT Margin (%)
PAT
Capital Employed (CE)
PAT / CE (%)
Incremental PAT / CE (%)
Cumulative PBT (15 Years)
Incremental Capital Deployed
Purchase Price (Mcap)
P/E (x)
Post-tax Earnings Yield (%)
Total Return (Earnings Yield + PAT CAGR)
5.4
0.5
9.8
0.4
2.6
13.3
35.0
6.3
17.9
4.1
4.2
98.3
239.9
37.6
1.6
14.3
19.3
19.3
3.4
16.6
47.3
2.1
21.4
At 21.4%, Nestle’ return is exactly comparable with 21.7% of See’ However, there is
s
s.
one key difference: In Nestle, much of the return is by way of earnings growth, whereas
in See’ it is by way of earnings yield (ie, higher margin of safety, discussed below).
s
Great companies need not be great investments
Great investments are the result of huge margin of safety at the time of purchase.
Margin of safety:
Given below are key quotes by Benjamin Graham on the concept of
margin of safety:
1. “The margin of safety is always dependent on the price paid.”
2. “It is a favorable difference between price [paid] on the one hand, and indicated or
appraised value on the other.”
3. “Margin of safety is available for absorbing the effect of miscalculations or worse
than average luck.”
4. “The function of margin of safety is, in essence, that of rendering unnecessary an
accurate estimate of the future.”
5. “In the ordinary common stock, bought for investment under normal conditions, the
margin of safety lies in an expected earning power considerably above the going rate
for bonds.”
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Wealth Creation Study 2003-2008
Theme 2009
Point 5 refers to comparing earnings yield of a stock to the risk-free treasury bond yield.
Higher the gap between the two, higher is the margin of safety. Obviously, if margin of
safety is high the price is great, if it is moderate then the price is good, and if it is low, then
the price is gruesome.
We present below the investment pay-off matrix for the various company-price
combinations.
GREAT, GOOD AND GRUESOME: INVESTMENT PAY-OFF MATRIX
Return:
Return:
High
Return:
Very High
Capital Safety:
High
Great
(High MoS*)
Speculative
Capital Safety:
Moderate
Capital Safety:
High
Return:
Return:
Moderate
Capital Safety:
Moderate
Return:
Moderate-to-High
Capital Safety:
High
Good
(Fair MoS*)
Low-to-Negative
Capital Safety:
Low
Return:
Negative
Return:
Low-to-Negative
Capital Safety:
Risk of Loss of
Capital
Return:
Low
Capital Safety:
High
Gruesome
(Low MoS*)
Capital Safety:
Permanent Loss
of Capital
Gruesome
Good
Company
Great
Great Option; but very rare
* MoS: Margin of Safety
Best Available Option
Avoid
Source: MOSL
Key takeaways
On Great companies:
?
Great companies do not necessarily mean great investments. If bought at gruesome
price, returns will be very low.
?
Great companies at great price are extremely rewarding, but extremely rare as well.
?
Over the long term, Great companies offer high safety of capital.
On Good companies:
?
In buying good companies, margin of safety needs to be higher than when buying
great companies.
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
On Gruesome companies:
?
Gruesome companies grow rapidly, require significant capital to engender the growth,
and then
earn little or no money.
Hence, such companies are best avoided at all
price levels, unless there is high possibility of turnarounds, corporate restructuring, etc.
Best investment strategy:
?
Buying good companies at great (bargain) price or buying great companies at
good (reasonable) price are the two options for investors at large.
Investment examples
Great company at good price: Hero Honda
?
Long-term competitive advantage: (1) 60% market share of Indian motorcycle market;
and (2) strong brand equity including a tie-up with Honda, the world’ leading two-
s
wheeler brand.
?
Reasonably large size of opportunity – motorcycle penetration of only 25% of Indian
households
?
High level of profitability – working on negative capital employed
?
Sensible price tag – TTM P/E of 14x for an expected earnings CAGR of 15-20%.
Good company at great price: State Bank of India
?
India’ largest banking franchise with 25% market share
s
?
High share of low-cost deposits due to large network of branches across India
?
Technology benefits and cost control to significantly expand profits
?
Embedded value of SBI Life, third biggest insurer in India
?
Sensible price tag – stock available at Price/Book of 1x.
Gruesome company that has turned around: Idea Cellular
?
Fourth largest GSM player in India with first mover advantage in many telecom circles
?
Mobility is the natural state of communication; India’ mobile penetration to increase
s
from 25% to 60% by 2012
?
Fastest growing among major wireless operators due to (1) entry into new circles
(Mumbai, Bihar, Tamil Nadu, Orissa, etc) and (2) acquisition of Spice Telecom (Punjab
and Karnataka)
?
Well-funded with equity placement to Telekom Malaysia International and stake sale
of tower subsidiary to private equity fund, Providence
?
Sensible price tag – stock available at P/E of 17x FY09.
In the final analysis, Century Management’ Arnold Van Dan Berg’ words are gospel for
s
s
investors: “There is absolutely no substitute for paying the right price. In the bible, it says
that love covers a multitude of sins. Well, in the investing field, price covers a multitude of
mistakes. For human beings, there is no substitute for love. For investing, there is no
substitute for paying the right price – absolutely none.”
(Outstanding
Investors Digest, April 2004).
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Wealth Creation Study 2003-2008
Theme 2009
Annexure 1: Characteristics of Great, Good and Gruesome companies
Great companies
We describe below the typical characteristics of Great businesses.
Stable business:
Companies with businesses that are prone to rapid and continuous
change rarely qualify as Great. “Creative destruction” in unstable businesses could lead to
redundancy of capital invested, adversely affecting cash flows and return on capital.
High and rising long-term competitive advantage:
There are only two sources of an
“enduring moat” (Buffettology for long-term competitive advantage) –
1. Low cost production; and
2. Powerful brand.
The enduring moat of Great companies is more likely to widen as the years pass by. For
instance, branded products (e.g. Colgate) are habit-forming with customers, and switching
costs are high. Such formidable entry barriers allow great companies to:
?
Enjoy pricing power; and
?
Maintain high return on invested capital.
Low dependence on greatness of management:
Buffett’ own words describe this
s
the best: “If a business
requires
a superstar to produce great results, the business itself
cannot be deemed great. A medical partnership led by your area’ premier brain surgeon
s
may enjoy outsized and growing earnings, but that tells little about its future. The partnership’
s
moat will go when the surgeon goes. You can count, though, on the moat of the Mayo
Clinic to endure, even though you can’ name its CEO.”
t
Modest growth rates:
Great companies seem to enjoy modest but stable growth. High
growth rates are a rarity because their businesses are stable, and have typically reached
mature phase.
Low capital intensity, very high RoE, high dividend payout:
For great companies, all
the financial attributes go hand-in-hand. Great companies require very little incremental
capital for growth (e.g. most FMCG and pharma companies outsource their production).
This leads to very high RoE. Free cash flow is also high which enables huge dividend
payouts. For instance, Colgate payout is 100%, Castrol ~95% and Nestle ~90%.
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
Good companies
We describe below the typical characteristics of Good companies.
Subject to moderate change:
Unlike Great companies, the businesses of Good companies
may be subject to moderate level of changes. For instance, banks have to deal with RBI
measures on CRR, repo rates, etc. Likewise, metals sector too is faced with volatility in
product prices.
Steady competitive advantage:
Good companies enjoy steady competitive advantage,
which typically arises from economies of scale (eg, State Bank of India in banking, L&T
in engineering).
Management, a key success factor:
Good companies have relatively weaker moats.
Hence, efficient execution of all major processes becomes a key success factor. Thus,
unlike great companies, good companies will tend to depend on their management’ character
s
and competence.
Moderate-to-high growth rates:
Good companies tend to enjoy growth rates higher
than great businesses. However, such growth requires additional capital, whether own or
from outside.
Moderate-to-high capital intensity, healthy RoE, reasonable dividend payout:
Businesses such as banking, steel and engineering need to plough back a sizeable proportion
of their earnings for fixed- and/or working capital requirements. As a result, though the
businesses are profitable, RoEs tend to be in the 15-25% band and dividend payout 20-
30%.
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
Gruesome companies
We describe below the typical characteristics of Gruesome companies.
Business most likely to have rapid changes:
The best example of this is the dotcom
boom and bust. Companies raised huge amounts of money to fund business models which
were subject to rapid and continuous change.
Low or no long-term competitive advantage:
Gruesome companies do not have an
established track record of long-term competitive advantage. This is mainly because the
business is either nascent and dynamic or extremely competitive (eg, the airlines sector
has been vitiated by the entry of several no-frill airlines).
Businesses with rapid growth due to huge size of opportunity:
Paradoxically,
gruesome companies enjoy great growth rates. This is because such businesses have a
huge size opportunity. For instance, Tata Teleservices sales growth in the last 10 years is
a high 101%. Yet it has not yet reported a profit in any single year.
High dependence on management:
Gruesome companies will be found to be led by
one of two kinds of management: (1) extremely passive and laid-back (eg chemicals) or
(2) extremely aggressive and ambitious (eg airlines, retailing).
Passive managements will be content with carrying on existing low-profit operations,
ploughing back a significant proportion of earnings. On the other hand, if current earnings
are inadequate for the growth plans, an aggressive and ambitious management is the only
hope of raising external funds for Gruesome companies. This typically leads to further
value destruction.
Very high capital intensity, low RoE/losses, low dividend payout:
The universal
example of a gruesome business is airlines. It is very highly capital intensive, leading to
losses in the worst case and low RoE in the best case, implying zero-to-low dividend
payout.
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
Annexure 2 – A mathematical framework for Great, Good and Gruesome
Mathematically, RoE is the starting point to differentiate between Great, Good and Gruesome
businesses. To assess the core operating RoE, the reported RoE can be adjusted to account
for surplus cash, if any, in the balance sheet.
For the purposes of our study, we used Adjusted RoE to shortlist the companies as follows:
Common steps:
1. Universe: Top Wealth Creators (100 companies)
2. Shortlist companies with a 10-year track record (95 companies)
3. Compute Adjusted RoEs for companies whose cash is in excess of debt:
(a) Deduct 7% of cash equivalents from PAT to get Adjusted PAT;
(b) Deduct excess cash from Net Worth to get Adjusted Net Worth;
(c) Compute Adjusted RoE as Adjusted PAT ÷ Adjusted Net Worth.
Classification criteria:
4. Great companies:
(a) 10-year average Adjusted RoE > 25%;
(b) Adjusted RoE not less than 15% in any of the last 10 years; and
(c) rising trend of RoEs (going by Warren Buffett’ definition of great companies).
s
5. Gruesome companies: 10-year average Adjusted RoE of less than 10%
6. Good companies: Companies which are neither Great nor Gruesome
Note:
The above methodology serves as a good first screen of companies. Beyond that
some element of subjectivity will need to be applied to finally decide whether a company
is Great, Good or Gruesome.
19 December 2008
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Wealth Creation Study 2003-2008
Theme 2009
MOSL 100
Top Wealth Creators classified as Great, Good and Gruesome
(Note: All calculations based on consolidated financials wherever applicable)
GREAT COMPANIES
COMPANY
10-YR AVG.
ADJ. ROE %
ROE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROE
ROCE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROCE
DIVIDEND
PAYOUT (%)
Hero Honda Motor
Hind. Unilever
GlaxoSmith Pharma
NMDC Ltd
Nestle India
Infosys Tech.
Satyam Computer
Wipro
Dabur India
Container Corpn
Sun Pharma.
ITC
Asian Paints
394.0
158.5
105.0
101.9
85.1
67.6
53.8
41.5
37.4
36.5
34.2
32.6
32.2
32.4
127.0
39.7
39.2
98.9
33.8
23.3
28.1
54.1
23.2
29.8
25.8
41.7
40.4
47.6
26.8
16.9
31.2
23.5
43.6
27.3
19.2
30.0
22.2
28.8
25.2
31.5
Very high
43.6
41.7
230.2
34.2
22.8
28.1
79.7
22.0
30.2
25.2
49.0
45.3
145.8
58.3
59.7
149.4
38.9
26.0
24.1
55.6
29.0
30.2
37.5
50.0
46.0
57.3
37.6
20.7
31.6
27.6
25.0
21.4
15.1
37.6
19.0
33.5
23.6
45.2
Very high*
65.2
64.0
Very high*
39.4
26.1
24.3
192.2
27.2
31.1
39.0
67.4
45.7
73.9
49.8
18.8
78.6
31.7
16.6
26.1
40.9
21.6
16.2
34.5
45.1
* Very high because incremental capital employed is actually negative
GRUESOME COMPANIES
COMPANY
10-YR AVG.
ADJ. ROE %
ROE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROE
ROCE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROCE
DIVIDEND
PAYOUT (%)
Hind.Copper
HMT
Essar Oil
Aditya Birla Nuvo
Zee Entertainment
Pantaloon Retail
Jai Corp
IDBI Bank
TV 18 India
Reliance Infra
-135.9
-44.0
-0.3
2.6
6.8
6.9
7.8
8.8
8.8
9.4
27.4
-11.8
-1.2
1.5
13.4
-0.5
5.5
10.6
1.1
7.9
-45.5
N.M.
1.2
7.5
31.9
11.9
10.8
13.7
4.1
13.2
52.8
-2.0
-3.3
0.5
12.1
-0.7
5.1
24.8
1.0
7.0
32.6
2.2
-0.3
3.7
18.8
4.5
5.9
7.0
7.7
7.8
-7.8
11.6
0.6
11.2
35.8
16.6
13.2
11.3
11.8
14.4
78.4
-9.0
-0.8
2.7
17.4
4.4
5.4
2.4
7.6
6.6
0.0
0.0
0.0
32.3
18.9
19.9
2.5
20.2
31.4
15.5
GOOD COMPANIES
COMPANY
10-YR AVG.
ADJ. ROE %
ROE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROE
ROCE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROCE
DIVIDEND
PAYOUT (%)
Siemens
Bharat Electronics
Sesa Goa
Financial Tech
Hind.Zinc
Thermax
Unitech
Bosch
HCL Technologies
ABB
Glenmark Pharma
Tata Steel
Voltas
Ambuja Cements
GE Shipping
Jindal Steel
BHEL
SAIL
Natl. Aluminium
Indian Overseas
19 December 2008
82.7
75.7
75.0
69.6
60.5
46.8
46.1
40.1
39.7
36.0
35.6
32.5
29.3
28.7
27.8
26.7
26.5
25.8
24.9
24.9
37.9
25.1
52.4
57.9
37.1
38.3
46.0
23.8
25.2
30.5
41.6
42.4
35.9
38.0
33.7
33.3
26.5
32.6
18.4
25.5
-76.2
12.2
13.8
0.2
7.8
11.0
10.7
17.0
47.0
8.4
36.0
6.8
8.4
14.3
10.4
17.6
17.7
-22.5
8.8
10.2
42.7
27.0
55.7
58.1
39.7
61.2
47.1
25.1
24.0
39.1
41.8
48.5
45.9
44.5
42.8
34.5
30.1
56.3
22.9
27.4
53.9
35.6
78.4
61.5
50.7
59.9
16.8
30.6
28.3
48.0
31.2
23.6
48.5
55.1
23.6
16.9
41.1
43.6
28.5
7.3
0.0
25.1
12.6
3.5
15.5
15.1
12.2
26.0
50.0
12.6
40.7
7.4
16.4
14.4
9.9
18.5
29.7
1.4
10.4
7.9
68.9
37.8
88.2
61.7
54.2
101.1
16.9
31.6
27.1
62.5
31.0
25.5
83.6
79.6
29.5
16.8
46.0
Very high*
40.2
7.1
15.5
20.0
17.8
15.1
6.6
37.2
3.7
10.3
56.9
16.4
5.7
17.0
22.8
29.7
21.0
7.3
21.8
23.4
27.7
18.1
32
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Wealth Creation Study 2003-2008
Theme 2009
GOOD COMPANIES (CONTD.)
COMPANY
10-YR AVG.
ADJ. ROE %
ROE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROE
ROCE (%)
LATEST
10 YRS AGO
INCREMENTAL
ROCE
DIVIDEND
PAYOUT (%)
Jubilant Organosys
Titan Inds.
ONGC
Cipla
Piramal Health
Sterlite Inds.
Cummins India
ACC
M&M
GAIL
Ranbaxy Labs.
Grasim Inds
IOC
Shriram Trans.
Bharat Forge
Union Bank
Larsen & Toubro
Shipping Corpn.
Areva T&D
Reliance Inds.
Canara Bank
Adani Enterprises
BPCL
Punjab Natl Bank
Tata Motors
Welspun Guj.Stahl
Bank of India
Exide Inds
HDFC
Crompton Greaves
Tata Comm
HDFC Bank
Axis Bank
Hindalco Inds.
St Bk of India
Tata Chemicals
GMDC
Bank of Baroda
Neyveli Lignite
Godrej Inds
IVRCL Infra.
EIH
MRPL
Indian Hotels
Tata Power Co.
Reliance Capital
Essar Shipping
Aban Offshore
Kotak Mah. Bank
ICICI Bank
MMTC
Century Textiles
24.7
24.7
24.7
24.1
23.9
23.9
23.6
23.5
22.8
21.9
21.5
21.4
21.0
20.7
20.6
20.4
20.0
19.9
19.5
19.4
19.4
19.1
18.3
18.2
17.9
17.4
17.2
16.7
16.6
16.3
16.2
16.0
15.9
15.8
15.6
14.4
13.8
13.8
13.7
13.5
12.9
12.9
12.5
12.1
11.8
11.5
11.5
11.2
11.1
10.9
10.8
10.6
31.9
33.1
25.5
18.7
30.5
19.7
26.3
34.3
25.5
20.5
27.8
31.7
18.1
22.0
18.2
24.7
20.4
14.5
39.5
23.6
21.1
17.5
13.7
19.1
25.0
23.0
22.0
20.5
12.8
31.5
0.2
13.7
12.1
13.9
14.6
25.8
24.9
13.6
12.2
12.4
11.5
21.9
33.7
15.8
12.7
15.3
9.6
7.4
11.3
7.6
22.1
21.7
18.4
10.8
11.4
25.5
14.2
12.4
17.9
5.5
15.4
25.6
8.4
6.3
18.0
8.3
9.1
14.0
12.9
11.1
-6.7
18.2
9.9
24.2
23.2
23.8
2.6
-3.2
9.2
15.6
16.9
4.2
24.4
24.3
15.1
17.4
9.9
10.8
19.1
14.5
13.4
-12.9
22.3
13.8
1.1
13.4
10.0
8.0
4.8
5.9
3.7
20.5
2.9
-10.9
33.4
45.4
31.8
17.8
37.0
20.2
30.7
43.7
28.8
18.3
47.6
41.9
18.2
22.3
21.2
27.4
24.3
16.0
55.7
24.3
25.1
16.5
10.8
18.4
42.2
25.4
26.2
22.8
12.4
51.9
489.5
13.4
12.0
13.0
15.6
38.0
29.0
13.3
11.1
17.7
11.4
40.1
50.2
17.3
13.4
16.8
12.2
7.9
11.6
7.5
44.6
83.1
14.6
34.1
33.4
19.8
25.3
26.6
36.8
43.0
16.8
24.5
16.3
31.5
16.9
11.5
17.1
7.2
16.8
13.6
54.9
17.5
7.8
9.8
12.5
6.6
19.6
16.1
6.5
36.7
9.8
32.4
3.8
6.2
5.9
9.4
6.8
15.3
27.7
6.1
12.1
14.0
11.8
23.3
32.2
14.0
11.4
10.2
8.1
6.3
9.2
7.4
10.6
17.1
14.8
12.9
13.6
32.8
19.9
11.0
25.4
9.2
14.6
21.7
10.2
9.2
17.7
14.9
10.5
7.5
11.4
10.9
-0.4
12.1
7.6
18.5
24.6
7.9
7.4
1.0
7.1
14.9
13.9
9.6
35.3
9.0
9.2
20.2
7.7
12.5
32.0
8.0
13.5
5.6
21.5
12.5
7.5
16.6
12.2
8.9
5.4
14.2
13.3
7.9
4.3
4.8
14.6
236.0
44.0
18.1
27.0
28.0
42.8
81.2
17.2
26.1
18.5
41.8
16.7
11.4
19.1
7.1
19.0
16.5
75.3
18.5
7.8
9.2
10.3
6.2
26.1
17.5
6.2
63.3
9.2
63.9
-50.9
6.1
5.8
8.5
6.6
17.0
26.3
5.4
11.0
17.3
11.6
33.8
Very high*
13.5
11.3
10.5
9.4
6.2
9.1
7.4
12.3
405.3
9.5
23.9
36.0
22.4
33.0
6.1
38.4
28.0
20.7
31.1
48.3
14.5
25.9
29.0
27.3
19.0
25.8
27.7
22.2
12.4
16.5
6.2
23.5
13.8
31.2
7.2
16.8
27.1
34.5
22.9
67.3
20.0
20.7
11.1
12.7
35.8
18.3
19.8
26.3
32.6
9.1
33.4
30.4
32.8
23.0
17.1
0.0
24.8
6.1
33.6
26.2
20.7
* Very high because incremental capital employed is actually negative
19 December 2008
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Wealth Creation Study 2003-2008
Wealth Creation
2003-2008
The 13
TH
Annual Study
Market Outlook
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Wealth Creation Study 2003-2008
Market Outlook
Market Outlook
India’ corporate profit to GDP is headed lower
s
In the last five years, India’ GDP grew 14% annually. Against this backdrop, corporate
s
profit CAGR was a robust 32%. As a result, corporate profit to GDP moved up from 3.1%
in FY03 to a high of 6.4% in FY08. Following the global slowdown, corporate profit to
GDP is likely to revert to 4.5-5% over the next three years.
Likewise, FY03-08 Sensex EPS CAGR is 25%, which is much higher than the long-term
CAGR of 15-17%. Overall, we are skeptical of profit growth over the medium term.
INDIA’ CORPORATE PROFIT TO GDP (%)
S
7.5
6.1
6.0
4.5
3.0
1.5
0.0
1.3
1.6 1.6
2.2
4.4
3.5
3.3
2.4 2.3
1.8
Mean: 3.3x
2.3
1.9 2.1
3.1
5.5
4.9
6.4
6.0
Source: MOSL
FY93 TO FY08 - SENSEX EPS PERFORMANCE (RS)
900
833
675
450
291
225
81
0
FY98-03: -1% C
AGR
272
Source: MOSL
19 December 2008
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Wealth Creation Study 2003-2008
Market Outlook
Interest rates are headed down
Interest rates in India are clearly headed down in line with the global trend (eg, US 10-
year treasury yields are at an all-time low of 2.7%).
INTEREST RATES IN INDIA AND ELSEWHERE IN THE WORLD ARE FALLING
16.0
14.0
12.5
9.0
Diff of 840 bp
5.5
5.6
2.0
2.7
Diff of 390bp
6.6
10-Year India G-Sec Yield (%)
10 Year US G-Sec Yield (%)
Source: MOSL
Market is expecting earnings slowdown
Despite low interest rates, the BSE Sensex is currently trading at a trailing 12-month P/E
of 11x, close to its historic lows of March 2003 (the beginning of a five-year rally). Low
market P/E clearly suggests that the market currently anticipates a sharp fall in corporate
profits across the board.
MARKET P/E (TRAILING 12 MONTHS) IS CLOSE TO ALL-TIME LOWS
Sensex P/E ( LHS)
40
30
Sensex ( RHS )
21,700
16,700
15 Year Median P/E: 15.6x
20
10
11.0
0
1,700
11,700
6,700
Source: MOSL
Reasonable margin of safety at current levels
India’ market cap to GDP has corrected sharply from a high of 109% to 55% currently.
s
This is much closer to the long-term mean of 46%.
19 December 2008
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Wealth Creation Study 2003-2008
Market Outlook
INDIA’ MARKET CAP TO GDP (%) HAS CORRECTED SHARPLY
S
120
109
90
60
30
19
0
24
54
44
43
43
34
37
28
26
26
23
51
54
43
M e an: 46
55
85
85
Source: MOSL
Most importantly, thanks to falling interest rates, earnings yield to bond yield is currently at
a comfortable 1.4x, close to its all-time high of 1.6x.
EARNINGS YIELD (TRAILING) TO BOND YIELD (X): COMFORTABLY HIGH
1.7
1.6
1.4
1.4
1.2
15 Year Avg is 0.73x
0.7
0.2
Source: MOSL
Moderate market cap to GDP and high earnings yield to bond yield suggest reasonable
margin of safety at current levels.
Conclusions
?
We have probably seen the market bottom at Sensex levels of 7,700.
?
We expect unprecedented reduction in interest rates.
?
We see distinct possibility of earnings decline over the next two years, contrary to
consensus estimates.
?
Earnings to bond yield is currently at 1.4x, which is an attractive zone. This sets the
stage for a sharp 30-40% recovery in the markets.
?
Sustenance of this recovery will be dependent on stability in corporate profit and its
subsequent revival.
19 December 2008
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Wealth Creation Study 2003-2008
Wealth Creation
2003-2008
The 13
TH
Annual Study
Appendix
19 December 2008
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Wealth Creation Study 2003-2008
MOSL 100
Biggest Wealth Creators
RANKED ACCORDING TO THE BIGGEST WEALTH CREATORS
RANK COMPANY
NO.
NAME
WEALTH CREATED
RS B
% SHARE
PRICE
CAGR (%)
PAT
SALES
ROE (%)
FY08
FY03
Appendix I
P/E (X)
FY08
FY03
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Reliance Inds.
ONGC
Bharti Airtel
NMDC
MMTC
BHEL
Larsen & Toubro
SAIL
State Bank of India
ITC
HDFC
Infosys Tech.
ICICI Bank
Unitech
Tata Steel
Sterlite Inds.
HDFC Bank
Hind.Copper
Indian Oil
Wipro
Jindal Steel
GAIL
Reliance Capital
Natl. Aluminium
ABB
Essar Oil
Tata Power
Hind.Zinc
Sun Pharma.
Axis Bank
Reliance Infra.
Grasim
Satyam Computer
Siemens
Kotak Mah. Bank
Hind. Unilever
Tata Motors
M&M
Neyveli Lignite
Adani Enterprises
Tata Comm
Ambuja Cements
ACC
MRPL
Sesa Goa
Hindalco Inds.
Cipla
HCL Technologies
Glenmark Pharma
Pun. Natl. Bank
3,077
1,593
1,505
1,356
1,084
952
813
727
701
617
547
525
469
448
401
398
346
342
339
317
314
296
269
245
237
231
226
216
215
213
213
206
203
196
187
181
179
158
157
144
132
131
126
122
122
121
121
120
117
114
12.1
6.3
5.9
5.3
4.3
3.7
3.2
2.9
2.8
2.4
2.2
2.1
1.8
1.8
1.6
1.6
1.4
1.3
1.3
1.2
1.2
1.2
1.1
1.0
0.9
0.9
0.9
0.9
0.8
0.8
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.6
0.6
0.6
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.4
58.7
32.8
96.4
158.3
186.8
79.1
100.9
83.8
44.4
37.5
48.4
23.1
41.9
284.2
54.5
111.6
41.4
53.1
23.5
15.7
130.2
41.5
90.8
44.8
82.8
118.5
59.6
104.6
55.5
81.1
42.2
50.8
34.9
85.3
81.9
9.1
32.0
69.5
35.4
117.6
47.5
41.6
42.9
57.2
152.0
26.8
30.9
27.3
115.5
37.9
37
10
L to P
60
52
45
38
L to P
17
18
29
36
28
150
36
42
33
L to P
3
30
54
10
58
26
38
P to L
10
99
34
41
46
43
41
47
46
2
47
50
-1
29
-17
51
69
L to P
160
37
23
20
64
19
24
12
55
36
33
23
21
19
10
19
24
34
27
64
18
44
38
30
18
34
43
10
35
14
38
14
7
41
32
37
10
17
32
43
70
7
26
25
2
32
-6
27
19
32
55
32
23
40
35
14
25
24
30
39
19
27
23
33
14
26
20
33
9
48
21
7
14
27
17
27
33
20
17
18
31
-1
11
37
24
12
11
27
23
38
8
134
26
25
12
23
5
38
35
34
53
17
19
24
38
19
15
29
-6
19
4
9
12
-12
18
26
23
33
17
8
32
13
17
36
32
24
25
26
8
16
20
2
11
12
34
21
6
12
14
23
8
48
12
9
19
16
14
14
10
-41
5
9
23
14
23
23
17
13
25
42
544
35
41
10
15
25
28
18
21
43
11
53
29
147
8
20
26
14
29
18
51
N.A.
30
5
25
26
27
11
15
35
74
26
12
15
18
47
48
10
11
11
8
7
24
22
31
8
9
5
N.A.
4
22
12
11
N.A.
5
11
12
28
7
5
5
3
17
N.A.
3
35
3
4
6
9
13
7
4
4
11
5
18
8
18
11
21
18
17
8
4
3
3
11
23
N.A.
10
8
17
14
6
3
19 December 2008
39
 Market Research | Indian Economy | Corporate Sectors | Equity Investment Ideas - MotilalOswal.com
Wealth Creation Study 2003-2008
MOSL 100
Biggest Wealth Creators
(contd.)
RANKED ACCORDING TO THE BIGGEST WEALTH CREATORS
RANK COMPANY
NO.
NAME
WEALTH CREATED
RS B
% SHARE
PRICE
CAGR (%)
PAT
SALES
ROE (%)
FY08
FY03
Appendix I
P/E (X)
FY08
FY03
51
52
53
54
55
56
57
58
59
60
61
62
63
85
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
Aban Offshore
United Spirits
Bosch
Zee Entertainment
Bank of India
Hero Honda Motor
Crompton Greaves
Container Corpn.
Aditya Birla Nuvo
Asian Paints
Nestle India
Dabur India
Divi's Lab
GE Shipping
Godrej Industries
Jai Corp
Bharat Electronics
Thermax
Financial Tech.
REI Agro
Century Textiles
Indian Overseas
Indian Hotels
Canara Bank
Bank of Baroda
Essar Shipping
Welspun Guj. Stahl
Areva T&D
Voltas
BPCL
GSK Pharma
Union Bank
Piramal Healthcare
Cummins India
Pantaloon Retail
Exide Inds.
Ranbaxy Labs.
Shriram Transport
EIH
IDBI Bank
Tata Chemicals
Titan Inds.
GMDC
HMT
TV 18 India
Bharat Forge
IVRCL Infra.
Shipping Corpn.
Jubilant Organosys
BF Utilities
111
111
107
103
101
100
100
98
98
94
93
85
79
77
76
71
70
69
68
68
65
64
64
63
63
61
58
58
57
57
56
55
54
53
52
49
49
47
46
45
45
44
44
44
44
43
43
42
41
40
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
159.7
113.9
58.3
31.4
46.2
29.7
106.4
51.6
80.5
40.4
22.9
55.8
95.9
58.0
155.1
216.1
42.5
85.2
177.5
150.5
76.6
53.7
46.2
25.9
27.0
96.1
122.0
132.1
103.0
13.1
29.1
41.2
51.9
43.8
123.6
79.9
7.0
89.1
46.0
40.0
35.7
84.8
80.9
38.0
112.8
41.1
124.7
31.4
76.7
173.1
77
90
35
26
19
11
62
23
18
21
15
30
45
44
27
50
26
42
226
66
32
24
56
9
13
31
196
101
52
5
41
20
21
24
62
37
0
75
70
13
37
89
26
L to L
L to P
28
68
24
52
45
22
26
22
17
16
15
21
18
23
17
13
12
33
22
2
9
10
44
58
30
10
18
25
16
14
10
59
34
21
21
8
17
13
23
63
29
9
72
23
7
22
32
27
1
58
29
53
9
23
19
23
16
24
14
23
32
34
24
7
40
99
60
40
33
10
5
26
38
65
20
22
25
19
19
13
10
24
39
39
14
40
25
30
25
7
25
24
22
20
11
27
34
25
-12
6
19
13
14
28
6
7
5
19
2
25
67
7
25
9
30
70
21
33
18
16
8
26
13
12
23
9
32
5
25
18
6
1
4
16
26
17
27
32
15
6
18
33
33
2
6
12
5
14
-53
-1
57
16
12
34
1
72
47
19
36
7
14
32
15
55
31
35
30
23
4
76
72
10
26
8
65
24
6
21
6
7
26
19
34
28
9
16
5
21
22
53
21
27
17
25
9
7
31
18
N.A.
155
22
25
7
12
321
10
13
9
27
2
6
10
5
4
15
26
12
5
3
2
2
6
7
14
5
6
2
20
3
3
2
130
14
7
5
22
2
7
11
7
5
19
2
53
3
6
34
3
N.A.
N.A.
11
2
5
5
14
19 December 2008
40
 Market Research | Indian Economy | Corporate Sectors | Equity Investment Ideas - MotilalOswal.com
Wealth Creation Study 2003-2008
MOSL 100
Fastest Wealth Creators
RANKED ACCORDING TO THE FASTEST WEALTH CREATORS
RANK COMPANY
NO.
NAME
PRICE
APPRN. (X)
PRICE
CAGR (%)
PAT
SALES
ROE (%)
FY08
FY03
Appendix II
P/E (X)
FY08
FY03
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Unitech
Jai Corp
MMTC
Financial Tech.
BF Utilities
Aban Offshore
NMDC
Godrej Industries
Sesa Goa
REI Agro
Areva T&D
Jindal Steel
IVRCL Infra.
Pantaloon Retail
Welspun Guj. Stahl
Essar Oil
Adani Enterprises
Glenmark Pharma
United Spirits
TV 18 India
Sterlite Inds.
Crompton Greaves
Hind.Zinc
Voltas
Larsen & Toubro
Bharti Airtel
Essar Shipping
Divi's Lab
Reliance Capital
Shriram Transport
Siemens
Thermax
Titan Inds.
SAIL
ABB
Kotak Mah. Bank
Axis Bank
GMDC
Aditya Birla Nuvo
Exide Inds.
BHEL
Jubilant Organosys
Century Textiles
M&M
Tata Power
Reliance Inds.
Bosch
GE Shipping
MRPL
Dabur India
837
316
194
164
152
118
115
108
102
99
67
65
57
56
54
50
49
46
45
44
42
37
36
34
33
29
29
29
25
24
22
22
22
21
20
20
19
19
19
19
18
17
17
14
10
10
10
10
10
9
284
216
187
177
173
160
158
155
152
150
132
130
125
124
122
118
118
115
114
113
112
106
105
103
101
96
96
96
91
89
85
85
85
84
83
82
81
81
81
80
79
77