As many as 23 companies have been added to the billion-dollar valuation list so far in 2012 as the markets received tailwind from improving sentiment and macros.
As many as 23 companies have been added to the billion-dollar valuation list so far in 2012 as the markets received tailwind from improving sentiment and macros.
At the close of trading on Friday, 168 companies had a market capitalisation in excess of $1 billion, or Rs5,358 crore, up from 145 at the end of 2011.
Major indices have risen more than a fifth over this period, with the BSE Sensex logging a 20.51% gain. It closed Friday at 18625.34.
Of the 23 additions, eight are first-timers, while 15 have regained their position on the list.
The new entrants include three companies from the financial services space (ING Vysya Bank, J&K Bank and Bajaj Finance), a miner (Gujarat Mineral Development Corporation), a shoemaker (Bata India), a food retailer (Jubilant FoodWorks which operates Domino’s Pizza and Dunkin’ Donuts chains), a pharmaceutical maker (Ipca Laboratories) and a motorcycle maker (Eicher Motors, which manufactures and markets the iconic Royal Enfield).
Bajaj Finance was the biggest gainer amongst the new billionaire companies. It rose 144.12% from end-December, adding $600 million to its market capitalisation over the course of 10 months.
Six of the seven other companies gained over 50% during the same period, with GMDC being the only exception, though it, too, outperformed the market with a 31.05% rise.
Jubilant FoodWorks, Bata India and J&K Bank were all up 68-69%.
Fifteen others, including Wockhardt, Corporation Bank and Motherson Sumi Systems, have regained billion-dollar valuations after having fallen below the mark at the end of 2011.
At the head of the billion dollar club is Reliance Industries, worth $48.25 billion, followed closely by Tata Consultancy Services with $47.98 billion. Oil and Natural Gas Corporation, ITC and Coal India have all logged market capitalisation in excess of $40 billion.
The increase in the number of billion-dollar companies is closely linked to how the economy is expected to fare, said B Gopkumar, executive vice-president & head broking, Kotak Securities.
“When the market is doing well, one generally finds that the BFSI (banking, financial services and insurance) space does well as these companies benefit due to their close link to the economy,” he said.
Indeed, among the billion-dollar players already on the list, the notable valuation gainers have been ITC (up $13 billion at $42 billion), HDFC Bank (up more than $9 billion at $28.08 billion) and ICICI Bank (up $8 billion at $23.20 billion), which gain as consumption improves.
The list is unlikely to change much from here in the remaining months of this calendar, feel experts.
Gopkumar, for one, sees the market remaining range-bound for the rest of the year.
“We expect that the market will remain range-bound at 5450-5900 on the Nifty for the next three months. While there are some stocks that may outperform, the broader market is unlikely to see large outperformance,” he said.
David Pezarkar, head – equity, Daiwa Asset Management (India), however, feels certain stocks in the capital goods space could see some upside in the days to come. “There could be a gradual upside in the engineering and capital goods space as people begin to view them more positively with an improvement in investment outlook,” he said.
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