Which sector generated more wealth during the period 2003-08? If you thought it was information technology (IT), you are mistaken. It was commodities sector led by Oil & Gas (led by Reliance and ONGC) and Metals/Mining (led by NMDC, MMTC and SAIL) dominatethe wealth created, with a combined share of 40%. In 2003, their share was half this figure.
In contrast, IT which enjoyed 43% share in 2003, has a share of only 5% in 2008, according to Motilal Oswal Securities Ltd in its just released Wealth Creation Study 2003-2008.
Metals/Mining, Engineering and Telecom enjoyed the best combination of size and speed.
Among the biggest wealth creators were Reliance Industries with Rs 3077 bn, ONGC with 1,593 bn, Bharti Airtel with 1,505, NMDC with 1,356, MMTC with 1,084 bn BHEL with 952 bn, L&T Rs 813 bn, SAIL 707 bn, SBI 701 bn, and ITC Rs 617 bn.
Among the fastest wealth generators based on the compound annual growth rate percentage include Unitech (284%), Jai Corporation 216, MMTC 187, Financial Technologies 177, BF Utilities 173, Aban Offshore 160, NMDC 158, Godrej Industries 155, Sesa Goa 152 and REI Agro 150
Motilal Oswal has pointed out that Engineering and Telecom are the sectors to watch out for in terms of huge wealth creation at a rapid pace. Despite the superior performance of Oil, metals-led commodity sector in 2008, Oil & Gas and Metals/Mining may lose out as they are hit by the global slowdown, and collapse in commodity price.During the study period, MNCs sharply underperformed Indian companies both in terms of earnings CAGR and price CAGR. However, Indian markets still believe in the long-term potential of MNCs as indicated by their higher P/Es.
MNC dominance on the wane The last 10 wealth creation studies clearly indicate the waning dominance of MNCs in India. Over the last 10 years, MNCs have lost significant share both in terms of number of companies and amount of
wealth created.
Within MNCs, engineering and capital goods companies like ABB, Siemens, Bosch and Cummins are increasing their share of wealth created, relative to consumer goods companies like Hindustan Unilever and Colgate.
Motilal Oswal sounds a note of caution when it comes to making sweeping generalization of particular industry or sector for investment. Oil & Gas and Finance figure among top wealth creating industries as well as top wealth destroying industries. This suggests that wealth creation is more dependent on company-specific – rather than industry-level – factors.
In contrast, IT which enjoyed 43% share in 2003, has a share of only 5% in 2008, according to Motilal Oswal Securities Ltd in its just released Wealth Creation Study 2003-2008.
Metals/Mining, Engineering and Telecom enjoyed the best combination of size and speed.
Among the biggest wealth creators were Reliance Industries with Rs 3077 bn, ONGC with 1,593 bn, Bharti Airtel with 1,505, NMDC with 1,356, MMTC with 1,084 bn BHEL with 952 bn, L&T Rs 813 bn, SAIL 707 bn, SBI 701 bn, and ITC Rs 617 bn.
Among the fastest wealth generators based on the compound annual growth rate percentage include Unitech (284%), Jai Corporation 216, MMTC 187, Financial Technologies 177, BF Utilities 173, Aban Offshore 160, NMDC 158, Godrej Industries 155, Sesa Goa 152 and REI Agro 150
Motilal Oswal has pointed out that Engineering and Telecom are the sectors to watch out for in terms of huge wealth creation at a rapid pace. Despite the superior performance of Oil, metals-led commodity sector in 2008, Oil & Gas and Metals/Mining may lose out as they are hit by the global slowdown, and collapse in commodity price.During the study period, MNCs sharply underperformed Indian companies both in terms of earnings CAGR and price CAGR. However, Indian markets still believe in the long-term potential of MNCs as indicated by their higher P/Es.
MNC dominance on the wane The last 10 wealth creation studies clearly indicate the waning dominance of MNCs in India. Over the last 10 years, MNCs have lost significant share both in terms of number of companies and amount of
wealth created.
Within MNCs, engineering and capital goods companies like ABB, Siemens, Bosch and Cummins are increasing their share of wealth created, relative to consumer goods companies like Hindustan Unilever and Colgate.
Motilal Oswal sounds a note of caution when it comes to making sweeping generalization of particular industry or sector for investment. Oil & Gas and Finance figure among top wealth creating industries as well as top wealth destroying industries. This suggests that wealth creation is more dependent on company-specific – rather than industry-level – factors.