Motilal Oswal Financial Services

November 2024

India Strategy

BSE Sensex: 79,486

India listed market size

India market cap (USD t)

5.4

Nifty-50: 24,148

Embracing India’s Magnitude

1.2

0.3

An uncommon blend of size, growth, and diversity



Traditionally recognized for the secular growth potential, Indian equities are now

evolving, bringing fresh dimensions to the investment landscape with their

impressive size, diversity, and depth. India’s market capitalization has soared to an

impressive USD5.4t from USD1.2t in Mar’14, positioning it as the fifth-largest

market globally. Notably, smaller companies and emerging industry segments are

making substantial contributions across various sectors. Although the market is

currently experiencing a tactical breather – evidenced by a ~8% dip in the Nifty

index from its all-time high – we remain optimistic that the Indian equities will

deliver a healthy long-term compounding given the strength of corporate India’s

balance sheet and prospects of secular profitable growth.

In this report, we delve into a comprehensive analysis of the market capitalization of

Indian stocks over time, unveiling some noteworthy insights.

India’s investible universe enhances and offers wider choices to investors



India market cap growth

Listed market cap (INR t)

455

For a major portion of the 2010s, a primary concern among several large investors

was the limited investible universe of Indian equities, characterized by fewer

investible sectors, lower absolute size of companies, narrow sector breadth, and a

relatively smaller number of large-sized stocks with good depth. However, the last

five years have seen a remarkable transformation. The blazing growth in India’s

market capitalization, along with wider participation of multiple sectors and

smaller companies, as well as a wave of new issuances across sectors, has

effectively quelled many of these concerns. This evolution has paved the way for

diverse opportunities for investment across the market-cap curve and sub-sectors.

To illustrate, at present, India has

11 mega-sized companies

(~INR5t+ market

capitalization) vs. zero in 2014, with

5 companies having USD100b+

market

capitalization. The number of mid-sized companies (with market capitalization

between INR250b-INR1t) has more than quadrupled in 10 years from 50 to 209,

while the number of small-sized companies (with market cap between INR50b-

250b) stands at 466 vs. 128 in 2014. The

100

company (Lupin Ltd) and the 500

company (Symphony Ltd)

on the list today are

~8x and ~12x

bigger than the 100

company and the 500

company in 2014, respectively.

India's growing economic stature indicates a probable structural shift in global

capital allocation toward the country. As already listed Indian companies continue

to grow and new companies get listed, a sustainable cycle of discovery and value

appreciation is likely to unfold. Some of India’s mega-cap stocks (such as Reliance

Industries, HDFC Bank, and TCS) have been included in various

MSCI World

Indices.

We believe this list will expand over time, attracting interest and investments from

large, globally focused active funds. This influx should gradually enhance free float,

deepen market dynamics, and boost liquidity, paving the way for a more vibrant

Indian equity landscape.

Size does matter



151

Research Analyst: Gautam Duggad

(Gautam.Duggad@MotilalOswal.com) |

Abhishek Saraf

(Abhishek.saraf@MotilalOswal.com)

Research Analyst: Deven Mistry

(Deven@MotilalOswal.com) |

Aanshul Agarawal

(Aanshul.Agarawal@Motilaloswal.com)

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Investors are advised to refer through important disclosures made at the last page of the Research Report.

India Strategy | Embracing India’s Magnitude

Key ingredients in place for structural growth in the economy and markets



The foundation for high-quality secular growth in India is being laid through several

key factors: 1) robust development of physical and digital infrastructure; 2) the

continuation of investor- and business-friendly policies; 3) a thriving

entrepreneurial ecosystem; 4) the expansion of profit pools for smaller companies;

5) a sustained increase in domestic flows towards equities; 6) stable macro

indicators, as evidenced by better growth visibility, controlled inflation, and stable

twin balances, etc. This growth is further supported by various external tailwinds in

the form of a geopolitical shift in India’s favor, India emerging as a key alternative

in the China+1 imperative, a less volatile crude price regime, etc.

We reckon this combination of Size, Growth, and Diversity is relatively uncommon

in most global markets. Therefore, it should enable India to maintain its status as a

structurally significant market for an extended period.

Big, Bold, Boundless!

Key indices market cap (INR t)

Nifty50

Nifty Midcap 100

Nifty Smallcap100

196

Nov'24

Mar-14

Mar-19

Key observations from our study:



The Indian equity market achieved a significant milestone of USD5t in market

capitalization in May’24, with the latest print at

USD5.4t (INR455t) as of Nov’24.

India’s share in global market capitalization jumped to

4.3%

in Nov’24 from the

low of 1.6% in 2013, making it

the second highest among emerging markets.

Further, India’s rank in global market capitalization scaled up to 5th from 17th in

2004, and 10th in 2014.

India’s market capitalization has now reached levels

comparable to those of the US market in the early 1990s, China in 2014, Japan

in 2015, and Hong Kong in 2017.

Additionally, India’s weightage in the MSCI EM

Index had briefly surpassed that of China in Sep'24, rising to ~22% from ~7% in

2014. Although, after the recent rally, China has again assumed its leadership

position, while India has slipped a bit post its recent correction.



India has remained one of the fastest-growing equity markets during the past

decade.

Its market capitalization surged ~3x/6x/15x/38x

in the past 5/10/15/

20 years and achieved a remarkable size of USD5.4t (INR455t) in Nov’24.



The degree of expansion of the Indian markets can be gauged from the following:



The current market capitalization of the

largest Indian publicly listed company,

Reliance Industries, is ~INR18t, which is more than the total market

capitalization of the entire Indian equity market in 2005.



The

100

company

(Lupin) in the list today, with a market capitalization of

INR1t, is ~8x bigger than the 100

company in 2014. The

500

company

present, with a market capitalization of INR112b, is ~12x the size of its

counterparts in 2014.



The current market capitalization of ICICI Bank, the second-largest bank,

exceeds that of all private banks in 2016 and the entire banking sector in 2014.



The

top 10 companies,

valued at INR98t now (accounting for 22% of India’s

market capitalization), are larger than the entire market capitalization of India in

2016.



The

top 50 companies,

valued at INR214t now (accounting for ~47% of India’s

market capitalization), are more than the entire market capitalization of India in

2021 and ~3x bigger than India’s market capitalization in 2014.

November 2024

India Strategy | Embracing India’s Magnitude





Cumulative DII flows outpace FIIs

Net FII (USDb)

160

121



CY07-20

*As of 6

Nov 2024

CY21-24YTD



The

top 100 companies,

valued at INR277t now (accounting for ~61% of India’s

market capitalization), are larger than the entire market capitalization of India in

2022 and ~4x that of India’s market capitalization in 2013-14.

The

key benchmark Indian indices

have witnessed a remarkable rally. The

market capitalization of the Nifty-50 /Nifty Midcap100/Nifty Smallcap100/ Nifty-

500 indices jumped 4.3x/5.4x/8.1x/5.8x to INR196t/INR64t/INR22t/INR404t/ in

the past 10 years (at a CAGR of 15%/17%/22%/18%).

Snowballing into giants:

In its journey to a market capitalization of USD5.4t, the

Indian equity market has seen the ascent of several giants. India now has 11

mega-sized companies with a market capitalization of over INR5t each (vs. none

in 2014), 87 large-sized companies with market capitalization between INR1t

and INR5t (vs. 16 companies in 2014), 209 mid-sized companies with a market

capitalization of INR250b-1t (vs. 50 in 2014), and 466 small-sized companies

with a market capitalization in the range of INR50b-250b (vs. 128 in 2014).

Private companies continue to dominate:

The market capitalization of private

listed companies jumped 6.4x to INR384t, whereas that of PSUs surged 5x to

INR72t in the last 10 years. While private companies have continued to lead,

PSUs have seen a strong revival between CY22 and CY24YTD, with their market

contribution improving to 16% in 2024 from 10% in 2021-22.

Broad-based expansion in market capitalization:

Banks (Pvt+PSBs) topped with

the highest market capitalization of ~INR51t, followed by Technology (INR44t).

Among the other largest market-cap sectors, Capital Goods, NBFCs, Consumer,

Oil & Gas, Automobile and Healthcare sectors jumped 6-10x to ~INR30-37t each

as of Nov’24, collectively accounting for 43% of India’s market capitalization (vs.

46% in Mar’14). Conversely, other sectors, such as Chemicals, Telecom, Retail ,

Insurance, Cement, and Real Estate surged 5-18x to reach INR10-13t each as of

Nov’24, collectively accounting for 13% of the total listed market capitalization

(vs. 10% in Mar’14).

Upsurge of new-age businesses:

The number of new-age and e-

commerce/Platform listed companies has grown to 29 in CY24 from just five in

2014, signifying a healthy business environment for startups in India. Their

combined market capitalization is up from ~INR178b in Mar’14 to ~INR4.8t in

Nov’24. This vibrant ecosystem of startups should be a supply pool of future

listed companies, thereby helping India’s investible universe to expand.

Mid- and small-sized companies leading from the front:

Over the past 10 years

(Oct’14-Oct’24), the Nifty-50 clocked a 11% CAGR, the midcap index posted an

17% CAGR, and the smallcap index reported a 14% CAGR. Notably, the

market

capitalization of these indices

clocked a CAGR of 15%/17%/22%. Increased

retail participation and rising SIP flows in mid- and smallcap mutual funds in the

last 2-3 years have resulted in these indices outperforming largecaps by a wide

margin. The Nifty-50/Midcap100/Smallcap100 indices clocked a CAGR of

16%/28%/27% in the past five years, while their market capitalization clocked a

CAGR of 17%/28%/30%.

Domestic flows driving markets to new highs:

Cumulative DII inflows into Indian

equities are ~16x higher than FII flows during CY21-CY24YTD. Net DII investment

during CY21-24YTD is 2.6x the amount invested during CY07-20 (14 years).

Buoyant capital markets and retail participation also attracted a flurry of new

listings, which further added to the size of the India market. Notably, the

November 2024

India Strategy | Embracing India’s Magnitude

number of large IPOs between FY15-25YTD jumped to ~1,450 (vs. ~500 between

FY05 and FY14). Total funds raised (IPO+FPO+ OFS+QIP) during FY2015-25YTD

stand at INR12t (vs. ~INR4t between FY05-14), while funds raised during FY20-

25YTD accounted for over ~68% of total funds mobilized during the past 10

years.

Strong business environment and corporate earnings propel growth



Growth in the Indian equity market has been backed by

resilient and strong macro

and microeconomic

performances.

The decade (2014-2024) started with a sluggish business environment, a policy

paralysis, a weak banking sector, a tough phase of the PSU earnings cycle, and

multiple regulatory shocks but also benefited from lower inflation, strong trends of

formalization and digitization, political stability, the government’s infrastructure

and capex push, a cleaner corporate balance sheet, improved governance,

margin tailwinds for commodities, and burgeoning order books.

India’s nominal GDP grew at a ~CAGR of 10% during 2014-24 and stood at INR295t

(i.e., USD3.6t) in FY24, while the corporate earnings of listed companies grew at a

CAGR of 14% and stood at INR15t (USD178b) in FY24.

View:

India is one of the fastest-growing economies and set to become the

third-largest economy in the next few years. In addition, it is also the fastest-

growing equity market post-Covid. Its considerably large size and diverse

sectoral offerings place India among the key equity markets globally.

While the equity markets continue to reach new highs, so do the underlying

corporate earnings. Over the past 1/3/5/10 years, the Nifty-50 clocked a CAGR

of 27%/11%/15%/11%, while its earnings remained equally impressive, clocking

a CAGR of 26%/ 25%/18%/12% to reach INR7.9t in FY24. In addition, the NSE-

500 delivered a profit CAGR of 20%/21%/16%/11% to INR14.1t in FY24. Notably,

the NSE-500 profit-to-GDP ratio climbed up to a 15-year high of 4.8% in FY24.

We expect the earnings trajectory to remain largely intact, albeit the magnitude

of its growth is expected to moderate to 12-14% CAGR over FY24-26 with some

interim but short lived slowdown as currently witnessed in 2QFY25. In addition,

the Nifty P/E remains marginally above its 10-year average, which is likely to

maintain this level going forward (as emphasized in our recent note on

Nifty P/E

dissection).

Given the expected pace of high-teen earnings growth and sustained valuation

multiples, we expect India’s market capitalization to double over the next five-

six years to reach ~USD10t.

We remain constructive on the Indian markets and currently prefer largecap

stocks, as the valuations of mid- and smallcap indices are trading at a premium

of 46% and 14% to Nifty-50, respectively. We remain positive on the BFSI, IT,

Healthcare, and Real Estate sectors and remain underweight on Auto, Energy

and Metals within our

model portfolio.

MOFSL top ideas: Largecaps

– ICICI Bank, HDFC Bank, SBI, Bharti Airtel, HUL,

HCL Tech, L&T, M&M, Power Grid, Titan, and Mankind Pharma;

Midcaps and

Smallcaps:

Indian Hotels, Persistent Systems, Dixon Tech, Cummins India,

Godrej Properties, Metro Brands, Global Health, Angel One, PNB Housing, Cello

World, and Coforge.

Ascent to the big league



Note:

We have defined large-,

mid- and small-sized

companies based on the

market cap as of that year and

not as per the SEBI

classification. Defined market

cap range of large-sized

companies: above INR1t; mid-

sized: INR250b-1t; and small-

sized: INR50-250b.

November 2024



India Strategy | Embracing India’s Magnitude

Exhibit 1:

India’s market capitalization scaled USD5t in May’24 and stood at USD5.4t in Nov’24

USD 5.4t

USD 5t

USD 4t

USD 3t

USD 2t

USD 1t

417

455

335

219

130

Jul-17

64.5

May-21

73.0

Nov-23

83.3

May-24

83.3

Nov-24

84.3

May-07

USD : INR

40.2

Exhibit 2: Key parameters underscoring this astounding growth

Real GDP

Nominal GDP rank

Forex

India market cap

Global market cap rank

No. of DMAT account (million)

Average cash volumes

Average F&O volumes

FII/DII flows (annual)

Average Monthly SIPs (INR b)

India market cap (INR t)

Top-500 (INR t)

Contribution (%)

Top-100 (INR t)

Contribution (%)

Top-50 (INR t)

Contribution (%)

Top-10 (INR t)

Contribution (%)

Economy

Market and flows

Market caps

2014

6.4% (INR98t)

10th

USD304b

USD1.2t

10th

22m

INR133b

INR2t

USD16.2b/-USD4.9b

12b

96%

77%

63%

30%

2024

8.2% (INR174t) in FY24

5th

USD685b

USD5.4t

5th

180m

INR1.4t (FY25YTD)

INR458t (FY25YTD)

USD-0.6b/USD54bYTD

220b+

455

412

90%

277

61%

214

47%

22%

Exhibit 3: Midcaps and smallcaps witnessed faster market cap gains than largecaps in the last five years (INR t)

Mar-14

Mar-19

Nov'24

404

196

Nifty50

141

Nifty Midcap 100

Nifty Smallcap100

Nifty 500

November 2024

India Strategy | Embracing India’s Magnitude

Snowballing into giants!



In its journey to a market capitalization of USD5.4t, the Indian equity market has

seen the ascent of several giants.

Emergence of mega-sized (above INR5t):

The number of companies with

market capitalization of over INR5t was 11 in Nov’24 vs. zero 10 years ago. The

total market capitalization of these companies rose to INR100t vs. nil in Mar’14.

Large-sized (INR1t-INR5t) on a roll:

The number of companies in the market

capitalization range of INR1t to INR5t has jumped ~5x to 87 from 16 during the

same period. Financials (Pvt. Banks and NBFCs), Capital Goods, Healthcare,

Utilities, and Automobile witnessed the maximum rise in the INR1t market-cap

companies in the past decade. The total market capitalization of these

companies surged ~6x to INR190t in Nov’24 from INR30t in Mar’14.

Mid-sized (INR250b-1tn) rise sharply:

The number of companies in the market

capitalization range of INR250b-INR1t surged ~4x to 209 in Nov’24 from 50 in

2014. Financials (NBFCs), Healthcare, Automobiles, Chemicals, and Capital

Goods witnessed the highest increase in the number of mid-sized companies.

Total market capitalization of these companies jumped ~5x to INR104t in Nov’24

from INR22t in Mar’14.

Small-sized (INR50b-250b) pool expands:

The number of companies with a

market capitalization range of INR50-250b jumped ~4x to 466 in Nov’24 vs. 128

in 2014. Capital Goods, Financials (NBFCs), Healthcare, Chemicals, and

Technology experienced the highest addition in small-sized companies. The total

market capitalization of these companies surged ~4x to INR54t in Nov’24 from

INR13t in Mar’14.

Exhibit 5:

Market cap of the top 500 companies surged to

INR412t in 2024 from INR72t in 2014 (INR t)

Top 500 market cap(INR t)

412

Exhibit 4:

The number of companies with market cap range

>5t/1-5t/500b-1t jumped to 11/87/89 in 2024 (INR t)

FY14

FY19

Nov'24

144

Above INR5t

Between INR 1-5t

Between INR500b-1t

FY14

FY19

Nov'24

November 2024

India Strategy | Embracing India’s Magnitude

Insightful trends

Exhibit 6:

While, Financials, Technology, Capital Goods, and Automobile topped in overall market cap; E-com, Retail,

Chemicals, Cons. Durables, and Real Estate witnessed the highest jump in market cap over the past decade (INR t)

Sector wise listed market caps (INR t)

Mar'14

Mar'19

Nov'24

012 111

Exhibit 7:

NBFCs (Financials) and Consumer experienced the maximum rise in the number of companies above INR1t market

cap

Number of companies with market cap above INR1t

Mar'14

Mar'19

Nov'24

1 1

0 0

1 1 1

0 0

Exhibit 8:

NBFCs, Healthcare, and Automobiles witnessed the maximum rise in mid-sized companies (market cap of INR250b

to INR1t)

Number of companies with market cap above INR250b and below INR1t

Mar'14

Mar'19

Nov'24

2 3

0 2

1 2

3 3

9 11

5 4 7

0 2

1 1

0 1

2 0 4 4 4 4 1 3 4 3 2 4 0 0 3 0 0 2

November 2024

India Strategy | Embracing India’s Magnitude

Exhibit 9:

Capital Goods and NBFCs topped within small-sized companies (INR50-250b); Utilities and O&G remained flat

Number of companies with market cap above INR50b and below INR250b

Mar'14

Mar'19

Nov'24

9 11

8 10 8

6 8

3 4 4 213

Midcap and smallcap companies expanding



While large caps grew faster during the CY14-19 period,

midcaps and smallcaps

led from the front and grew faster than the largecaps during CY19-CY24YTD.

Rising retail participation, a smaller base effect, and earnings revival led to a

significant broad-basing of the market, with a rally in mid- and smallcap stocks and

driving a sharp reduction in the market cap contribution for the large caps.

The market capitalization of the

top 10 companies

has increased 4.4x to INR98t,

while their contribution has dropped to 22% from 30% in 2014. Similarly, the

market capitalization of the

top 50 companies

has grown 4.5x to INR214t in the

past decade; however, their contribution to the overall listed universe has fallen

to 47% from 63% in 2014. The market capitalization of the

top 500 companies

grew 6x to ~INR412t in Nov’24 (vs. INR72t in Mar’14), while its share in total

market capitalization reduced to ~90% in Nov’24 (vs. ~96% in Mar’14) – implying a

greater share of the smaller companies.

Notably, the

101 to 1,000

companies by market capitalization surged ~10x in

market capitalization to INR165t (vs. INR16t in Mar’14), with their contribution in

total market capitalization increasing to ~35% in Nov’24 from ~21% in Mar’14,

highlighting an impressive broad basing.

Exhibit 11:

…while their contribution contracted to 61% and

expanded to 36%, respectively

Contribution (%)

165

Top 100

101 to 1000th

Exhibit 10:

Market cap of top 100 jumped ~5x, and 101 to

1,000

companies surged ~10x in the past 10 years…

Market cap (INR t)

Top 100

101 to 1000th

277

108

Mar'14

Mar'19

Nov'24

Mar'14

Mar'19

Nov'24

November 2024

India Strategy | Embracing India’s Magnitude

Private companies dominate, while PSUs make a strong comeback



Private firms continue to dominate the Indian equity markets:

During the last 10

years, the market capitalization of private listed companies jumped 6.4x to

INR384t, whereas that of PSUs rose 5x to INR72t (however, down from Oct’24

highs of ~INR80t).

While private companies continue to lead, PSUs have posted a strong revival,

especially during FY22-24, with their market cap contribution growing from 11% in

2021-22 to 16% in 2024 (down from Oct’24 highs of 18%).

In the listed universe, only 110 companies are traded PSUs. Due to the cyclical

nature of most of the PSU businesses, they command lower valuations and hence

have a relatively lower market capitalization vs. private peers.

Exhibit 13:

PSUs’ market cap contribution witnessed

improvement over the last five years

Market cap contribution (%)

20%

15%

PSUs

Pvt.+MNC

16%

Exhibit 12:

PSU/Pvt+MNC listed market cap jumped 5x/6.4x

over the past decade

PSUs

Pvt.+MNC

Market cap (INR t)

384

Mar'14

130

Mar'19

Nov'24

80%

85%

84%

Mar'14

Mar'19

Nov'24

Dominance of domestic flows continues to intensify



During CY07-20, FIIs invested about USD160b in Indian markets, while DIIs invested

USD47b. Hence, FII flows were ~3x higher than DII flows during the 14-year period.

The barometer to assess the health of Indian equity markets through FII flows has

seen a significant shift in recent years. Rising awareness about equity investing, the

financialization of savings, and digitization have attracted domestic investors to

equity investing. The continuous rise in retail participation, as visible in demat

account additions, and expanding SIP flows have resulted in strong DII flows into

Indian equities. The number of demat accounts has touched ~180m vs. just 22m a

decade ago. Monthly SIP flows have now more than INR240b vs. INR10b a decade

ago.

Notably, during CY21-CY24YTD, DII flows into Indian equities have been 16x higher

than FII flows. DII investment during CY21-24YTD is twice that of the amount

invested during CY07-20 (over a 14-year period). DII flows have hit an all-time high

of USSD54.8b in CY24YTD (as of 6

Nov’24), led by buoyant retail participation,

while FII participation has remained flat after the record selling in Oct’24.

November 2024

India Strategy | Embracing India’s Magnitude

Exhibit 14:

FII flows were volatile in the past three years…

Net FII (USD b)

-1

-12

USD 160b

Exhibit 15:

…while DII flows remained strong and resilient

Net DII (USD b)

USD 47b

-5

14 16

-5

54.8

USD 8b

-0.6

-5

-17

USD 121b

-11 -13

Reducing impact of primary market to overall market cap size



Buoyant capital markets

have allowed several large corporates to explore fund

raising through primary/secondary markets, leading to further additions in

market capitalization over the past three years. Total fund raised (IPO+FPO+

OFS+QIP) during FY15-25YTD stood at INR12t (vs. ~INR4t between FY05 and

FY14), whereas fund raising during FY20-25YTD accounted for over ~68% of total

fund mobilized during the past 10 years. Notably, the number of IPOs between

FY15-25YTD jumped to ~1,450 (vs. ~500 between FY05 and FY14).

Though the market capitalization continues to hit new highs, the contribution of

new listings has continued to moderate in the past three years. Notably, the

number of new listings (IPOs) between USD1t and USD2t market capitalization

was 592, whereas that between USD4t and USD5t market capitalization was just

~250. Going by the ongoing trends, we can expect every incremental trillion

addition to be achieved by fewer listings.

Exhibit 16:

Contribution of new listings to the total listed market cap has moderated from the FY22 highs, however witnesses

an uptick in Oct’24

India Mkt Cap (INR t)

4.1

2.0

1.1

0.2

0.1

0.6

1.0

2.7

2.0

Contribution through new listing (%)

1.6

1.8

FY14

102

FY15

FY16

122

FY17

144

FY18

152

FY19

114

FY20

205

FY21

265

FY22

260

FY23

389

FY24

455

Current

November 2024

India Strategy | Embracing India’s Magnitude

Valuations for the broader market at a significant premium



The market cap-to-GDP ratio stands at a multi-year high of 139%, at a significant

premium to its average of 85%. A consistent rally in equities has pushed the

valuations to an elevated level in certain pockets, especially in the mid- and

smallcap categories.

While the Nifty-50 trades near its 10-year average valuations, mid- and smallcap

stocks trade at a significant premium to largecaps and their historic averages.

Increased retail participation, supporting underlying earnings growth, and

expected interest rate cuts could keep the valuations high for the near future.

Exhibit 17:

Market capitalization-to-GDP ratio sustains above its long-term average, highlighting the optimism built-in

GFC: Peak of 149%

in Dec’07

Nominal GDP growth in

FY24/FY25E: 9.6%/10.8%

Lowest since

the GFC

132

139

105

103 113

Average of 85% for the period

Exhibit 18:

Large caps’ market cap-to-

GDP at an all-time high

Large caps market cap to GDP (%)

Average 63%

7368

54 51 50555757

Exhibit 19:

Mid caps’ market cap-to-

GDP at an all-time high

Mid caps market cap to GDP (%)

Average 13%

13 13

12 13 13

10 9 9

Exhibit 20:

Small caps’ market cap-to-

GDP at an all-time high

Small caps market cap to GDP (%)

Average 12%

10 8 11 10

1614

17 16

1110

6 7

Exhibit 21:

Contribution of top 100

companies’ (% to total market cap)

86.0

78.0

70.0

62.0

54.0

Exhibit 22:

Contribution of 101-250

companies’ (% to total market cap)

22.0

19.0

16.0

13.0

Exhibit 23:

Contribution of 251 onwards

companies’ (% to total market cap)

22.0

18.5

15.0

11.5

8.0

Market cap contribution (%)

18.9

20.2

60.8

10.0

November 2024

India Strategy | Embracing India’s Magnitude

Exhibit 24:

Nifty-50’s 12-month forward P/E has been trading near its LPA, while Mid and small caps trading at a premium

Nov'14-Nov'24 P/E(x)

Nifty50 avg : 20.5x

Midcap avg : 22.1x

Smallcap avg : 16.0x

Nifty50 PE (x)

Nifty Midcap100 PE (x)

Nifty Smallcap100 PE (x)

Nifty50 trade at a premium

30.1

23.8

20.6

Mid caps trade at a significant premium to large caps; small cap

valuation also outpaced that of large caps in the past one year

ANNEXURE

Exhibit 25:

Market cap of top 10 companies grew faster over FY14-19, while slower over FY19-24 w.r.t. the broader universe

Company

TCS

Reliance Ind.

ITC

ONGC

Infosys

Coal India

HDFC Bank

ICICI Bank

St Bk of India

HDFC

Top-15 total (INR t)

Total listed mar cap (INR t)

Contribution (%)

FY14 Mcap

(INR t)

4.2

3.0

2.8

2.7

1.9

1.8

1.4

Company

Reliance Ind.

TCS

HDFC Bank

Hind. Unilever

ITC

HDFC

Infosys

St Bk of India

ICICI Bank

Kotak Bank

FY19 Mcap

(INR t)

8.6

7.5

6.3

3.7

3.6

3.4

3.2

2.9

2.6

2.5

152

Company

Reliance Industr

TCS

HDFC Bank

Bharti Airtel

ICICI Bank

St Bk of India

Infosys

ITC

Life Insurance

Hind. Unilever

Nov’24 Mcap

(INR t)

17.9

15.0

13.4

9.6

9.2

7.6

6.0

5.9

455

November 2024

India Strategy | Embracing India’s Magnitude

Exhibit 26:

Market cap contribution of top 50 companies to the overall listed universe has witnessed a continuous decline

FY14 Mcap

(INR t)

TCS

4.2

Reliance Industr

3.0

ITC

2.8

ONGC

2.7

Infosys

1.9

Coal India

1.8

HDFC Bank

1.8

ICICI Bank

1.4

St Bk of India

1.4

HDFC

1.4

Wipro

1.3

Hind. Unilever

1.3

Bharti Airtel

1.3

Tata Motors

1.2

Sun Pharma.Inds.

1.2

Larsen & Toubro

1.2

NTPC

1.0

HCL Technologies

1.0

Axis Bank

0.7

IOCL

0.7

Cairn India

0.6

M&M

0.6

Bajaj Auto

0.6

UltraTech Cem.

0.6

Kotak Mah. Bank

0.6

Maruti Suzuki

0.6

Vedanta

0.6

NMDC

0.6

Power Grid Corpn

0.5

Hindustan Zinc

0.5

Asian Paints

0.5

Nestle India

0.5

BHEL

0.5

GAIL (India)

0.5

Vodafone Idea

0.5

Hero Motocorp

0.5

Dr Reddy's Labs

0.4

Lupin

0.4

Tech Mahindra

0.4

Adani Enterp.

0.4

Adani Ports

0.4

Indus Towers

0.4

United Spirits

0.4

Tata Steel

0.4

Bosch

0.3

BPCL

0.3

DLF

0.3

Dabur India

0.3

Ambuja Cements

0.3

Bank of Baroda

0.3

Top50 (INR t)

Total listed market cap ex-Nifty-50 (INR t)

Contribution (%)

Company

Reliance Industr

TCS

HDFC Bank

Hind. Unilever

ITC

HDFC

Infosys

St Bk of India

ICICI Bank

Kotak Mah. Bank

Maruti Suzuki

ONGC

Axis Bank

Larsen & Toubro

Bajaj Finance

Wipro

IOCL

HCL Technologies

Coal India

Asian Paints

NTPC

Bharti Airtel

Hindustan Zinc

Sun Pharma.Inds.

Bajaj Finserv

UltraTech Cem.

IndusInd Bank

Nestle India

Power Grid Corpn

Titan Company

Avenue Super.

BPCL

Bajaj Auto

M&M

GAIL (India)

Adani Ports

HDFC Life Insur.

Tech Mahindra

Britannia Inds.

Dabur India

JSW Steel

Godrej Consumer

Vedanta

Shree Cement

Yes Bank

Pidilite Inds.

Bandhan Bank

Tata Steel

Indus Towers

SBI Life Insuran

FY19 Mcap

(INR t)

8.6

7.5

6.3

3.7

3.6

3.4

3.2

2.9

2.6

2.5

2.0

1.9

1.7

1.5

1.4

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

152

Company

Reliance Industr

TCS

HDFC Bank

Bharti Airtel

ICICI Bank

St Bk of India

Infosys

ITC

Life Insurance

Hind. Unilever

Larsen & Toubro

HCL Technologies

Sun Pharma.Inds.

Bajaj Finance

NTPC

M&M

Axis Bank

Maruti Suzuki

Adani Enterp.

Kotak Mah. Bank

ONGC

UltraTech Cem.

Tata Motors

Power Grid Corpn

Adani Ports

Wipro

Hind.Aeronautics

Titan Company

Bajaj Auto

Bajaj Finserv

Asian Paints

Adani Green

Coal India

Avenue Super.

Siemens

Trent

JSW Steel

Adani Power

Zomato Ltd

Bharat Electron

Nestle India

Hindustan Zinc

Jio Financial

DLF

IOCL

IRFC

Varun Beverages

Tata Steel

Vedanta

Grasim Inds

Nov’24 Mcap

(INR t)

17.9

15.0

13.4

9.6

9.2

7.6

6.0

5.9

5.0

4.4

4.3

4.0

3.6

3.5

3.4

3.3

3.1

3.0

2.9

2.8

2.7

2.6

2.5

2.4

2.3

2.2

2.1

2.0

1.9

1.8

214

455

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

November 2024

India Strategy | Embracing India’s Magnitude

NOTES

November 2024

India Strategy | Embracing India’s Magnitude

Explanation of Investment Rating

Investment Rating

BUY

SELL

NEUTRAL

UNDER REVIEW

NOT RATED

Expected return (over 12-month)

>=15%

< - 10%

> - 10 % to 15%

Rating may undergo a change

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30 days take

appropriate measures to make the recommendation consistent with the investment rating legend.

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