FMCGs best wealth creators

Since that fearsome mid-September day in 2008, when Lehman Brothers collapsed bringing down Wall Street with it, there have been some companies that created great wealth for their investors.

Most of them come from the consumer goods and automotive space, followed by information technology.

From among the top 100 companies listed on the Bombay Stock Exchange in terms of market capitalisation, IndusInd Bank grew its market capitalisation the most – nearly 677% — from September 15, 2008, till September 14, 2012.

A large discount, however, needs to be given to its low investor base.

Therefore, Godrej Consumer is the most broadbased wealth creator of them all, with a market cap growth of almost 622% in the last four years.

In absolute terms (not percentage growth), it was Tata Group’s flagship software company TCS which came out Numero Uno, with a growth in market cap of Rs2 lakh crore, followed by ITC with Rs1.38 lakh crore.

“The ability of Godrej Consumer or for that matter the the entire consumer goods group is that they keep churning their portfolio based on which one’s doing well or not. Godrej has exited from low-performing products and stuck to its core competence instead of diversifying into unrelated sectors,” said Arvind Singhal, chairman, Technopak, a retail advisory firm.

True to form, the Godrej Consumer share price has risen 448% from Rs120.25 to Rs659.15.

In the list of top ten wealth creators in percentage terms, watchmaker Titan Industries, too, came out well at No.8, with a market cap growth of 318%.

While Asian Paints, Colgate-Palmolive, ITC and Dabur didn’t make it to the top ten list in percentage growth, they were pretty much among the top performers in the last four years with 223%, 215%, 193% and 185% growth, respectively. Nestle India was not too far behind either.

Singhal said Titan and Asian Paints are the best examples of good management and good governance, and this factor has always helped these companies post robust growth.

Automakers Bajaj Auto, Tata Motors and M&M are also among the top ten wealth creators in the last four years.

While Bajaj with 470% growth in market capitalisation stood at No 4, Tata Motors, with 329% growth, is at No.7 and Mahindra & Mahindra with 261% at No.10.

In fact, in absolute terms, Tata Motors edged out Bajaj Auto by increasing its wealth by almost Rs66,137 crore in the last four years, while Bajaj Auto added Rs41,603 crore to its investors.Turn to Page 13

The companies stand at 5 and 9, respectively, in the list of absolute growth in market capitalisation.

“Tata Motors has been really lucky to have the backing of the State Bank of India with timely funds during the acquisition of JLR when no institution was ready to support it due to the global economic downturn,” said an analyst with a domestic brokerage.

He added that this was one thing that helped the company immensely and eventually led to the turnaround of the loss-making iconic brand, and growth in the company market share.

In the case of Bajaj Auto, he said, the company has actually lost market share in the last four years, but that was offset through exports gains, he said. And they maintained margins in spite of tough macros and intense competition.

The wealth destroyers were mostly infrastructure and real estate companies such as Suzlon Energy, Reliance Infra, Unitech, HDIL, DLF and GMR Infra.

Their investors lost between 90% and 50% of wealth.

The Anil Ambani-controlled ADAG group saw all its four companies – Reliance Communications (-86%), Reliance Capital (-64%), Reliance Infra (-37%) and Reliance Power (-38%) - performed badly.

Elder brother Mukesh Ambani’s Reliance Industries, too, was among the poor performers but with a marginal degrowth of a few basis points in market capitalisation over the last four years.