Brokerage house Motilal Oswal in its 27th Annual Wealth Creation Study said that 'consistency' and 'volatility' are the two key patterns majorly dominating the entire corporate sector, and the “two dimensions” are likely to be the theme for 2023 as well.
The brokerage said that it dug extensively into the histories of sectors and companies. Instead of identifying cycles, it discovered 'consistency' and 'volatility' were the two significant trends that covered the whole corporate sector.
“Consistency is the source of outperformance; Volatility is the source of underperformance,” it said.
‘Forget markets, think stocks’
The top 100 wealth creators of India Inc generated a record-breaking ₹92.2 lakh crore in wealth between 2017 and 2022, according to Motilal Oswal.
With a 28 percent CAGR, wealth creation moved at its fastest rate in the previous eight years. The BSE Sensex gained 15 percent during the same time period.
According to the brokerage house, benchmark indexes have provided muted returns ranging from 5 percent to 15 percent for the past 8 consecutive study periods. However, the top wealth creators have continued to outperform the benchmark by 10 percent to 15 percent.
"This reinforces our pet take on market timing, Forget markets, think stocks," said the brokerage.
As per brokerage, for the fourth time in a row, Reliance Industries has emerged the largest wealth creator over 2017-22.
"This takes Reliance’s overall no 1 tally to 9 in the last 16 five-year study periods, and as in recent studies, TCS, Infosys and HDFC Bank remain among the top 5 Wealth Creators," said the brokerage firm.
Adani Transmission has emerged the fastest wealth creator with a 2017-22 price CAGR of 106 percent, for the second consecutive time, as per the report.
“Like last year, this year too yet another Adani Group company, Adani Enterprises, features among the top 10 Fastest Wealth Creators. 1 million rupees invested in 2017 in these top 10 companies equally would be worth 21 million rupees in 2022, a return CAGR of 84% v/s 15% for the BSE Sensex,” added the brokerage house.
The brokerage firm bases its definition of ‘consistent wealth creators’ on how many of the past five years the stock has outperformed. The rank is determined by the stock price CAGR while the number of years remains constant.
Based on this, over 2017-22, Adani Enterprises has emerged as the most consistent wealth Creator, according to the report.
"It has outperformed the BSE Sensex in all the last 5 years, and has the highest price CAGR of 97%. Consistent Wealth Creation is a challenge – only 13 of the 100 Wealth Creators have outperformed in each of the 5 years," said the brokerage house.