The recent market chill notwithstanding, the bull market’s children - the list of billion-dollar companies spawned since optimism gripped the market
MUMBAI: The recent market chill notwithstanding, the bull market’s children - the list of billion-dollar companies spawned since optimism gripped the market over five years ago - have only grown bigger, wider and more representative.
As of May 15, 2008, there were 172 Indian companies with a market capitalisation of over a billion dollars each. Together, they accounted for $1.11 trillion or 84% of the total market capitalisation of all stocks listed on the Bombay Stock Exchange and the National Stock Exchange.
That’s more than 15 times the cumulative value of $71 billion commanded by 28 billion-dollar enterprises as of April 2003, when this bull run is said to have begun.
Have you heard of REI Agro, a Delhi-based basmati rice processing and marketing company that’s worth $1.9 billion?
Or BF Utilities, the Pune-based wind energy division of Bharat Forge, worth $1.8 billion?
There are many more such instances, of companies in sectors probably unheard of five years ago, which have suddenly found favour with investors and become billion-dollar babies.
No surprises on the No. 1 and No. 2 companies by value. Reliance Industries, with a
market cap of $89.3 billion, is the most valuable company in the country today, with Oil & Natural Gas Corporation (ONGC) following at a distant second with $47.6 billion.
Even in April 2003, these two were right on top, though the positions have reversed since then. Back then, ONGC had a market capitalisation of $10.7 billion and Reliance Industries $8.1 billion.
Also, pertinently, ONGC was the only company to have a market capitalisation of over $10 billion in April 2003. Now, there are 29 of them.
State Bank of India and Infosys Technologies are the only other companies to have continued to figure in the list of Top 10 companies by market capitalisation since then.
Arun Kejriwal, director, Kejriwal Research and Investment Services explains, “In 2003, people were still recovering from the fallout of the 2000-01 IT meltdown. And they were looking at brick and mortar companies. But today, anybody who’s somebody is selling a product or a service.”
That should explain the presence of companies such as Bharti Airtel, Reliance Communication and Larsen & Toubro in the list of the most valuable companies.
Besides, with commodity prices shooting through the roof, people have started taking note of government-owned MMTC and NMDC, which are into mining and trading of minerals.
Power major NTPC is the other state-owned entity in the top 10 list.
Interestingly, the billion-dollar list, which now features 172 companies, would have been much longer in December 2007, with as many as 237 players in the ring. The market meltdown that began in January 2008 saw fortunes tumbling.
Among the worst-affected in the meltdown have been those in construction and real estate. In the run-up to the fall, investors had been aggressively entering the newly discovered sector, what with a majority of the current breed of players having entered the markets less than two years ago. As a result, these stocks were trading at very steep multiples.
Another sector that got battered was banking, with many in the space falling out of the billion-dollar club between December 2007 and May 2008. Stocks in the sector got hammered as apprehensions over banks’ exposure to complex credit derivatives took hold of investors.
IT was yet another sector, which saw a number of constituents fall flat on account of the appreciating rupee.
sanat_vallikappen@dnaindia.net & k_kishor@dnaindia.net
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