Mukesh Ambani created the most wealth for shareholders in last 5 years with his Reliance Industries Ltd topping the largest wealth creator list for the third consecutive year. Oil-to-telecom behemoth RIL created a whopping Rs 9.7 lakh crores in the last five years through 2016-21, by far the highest ever, said Motilal Oswal in its 26th Annual Wealth Creation Study 2021. Earlier, the company had added Rs 5.6 lakh crores in five years through 2014-19.
Meanwhile, two of the Adani group companies emerged as the fastest and most consistent wealth creators this year. Gautam Adani-headed Adani Transmission was the fastest wealth creator with price CAGR of 93% while Adani Enterprises remained the most consistent wealth creator as it outperformed in all the last 5 years, and has the highest price CAGR of 86%.
Highest ever quantum of wealth created, during 2016-21
The top 100 wealth creators created Rs 71 lakh crores wealth, highest ever quantum of wealth created in the last 26 five-year periods, during 2016-21, according to the brokerage firm study. “During the same period, Sensex CAGR was somewhat muted at 14%, but the pace of Wealth Creation was healthy at 24% CAGR, which reinforced the point that wealth creation happens in all kinds of market conditions. So, investors are better off focusing on which stocks to invest in, rather than timing the markets,” Motilal Oswal noted. Rs 10 lakh invested equally in 2016 among the top 10 fastest Wealth Creators would have grown to Rs 1.7 crore in 2021; return CAGR of 77% v/s just 14% for the Sensex.
Wealth creation classification by Industry
The Financial sector regained its top spot in Wealth Creation, after briefly losing it in the previous study period to the Consumer & Retail sector.
Wealth creation by ownership
PSUs’ (public sector undertakings) wealth creation performance during 2016-21 was the worst ever with PSUs in the top 100 Wealth Creators being just Gujarat Gas and Indraprastha Gas. Wealth created by these 2 PSUs is less than 1% of total.
On the flipside, the total wealth destroyed during 2016-21 stood at Rs 11 lakh crores, 15% of the total wealth created by top 100 companies. Five of the top 10 wealth destroying companies are PSUs. The Financial sector emerged as both the top wealth creating sector thanks to the private sector banks, NBFCs, and the top Wealth Destroying sector mainly thanks to public sector banks.
The study analyzes the top 100 wealth creating companies during the period 2016-21. Wealth created is calculated as change in the market cap of companies between 2016 and 2021 (March ending), duly adjusted for corporate events such as mergers, de-mergers, fresh issuance of capital, buyback, etc. It identifies the fastest, largest and most consistent wealth creators. Further, it analyzes key trends in wealth creation, provides insights into winning companies and distills strategies for successful equity investing.
Eqwires Research Analyst
Call: +91 9624421555 / +91 9624461555