In the twelve months to Monday, investor wealth has risen on an average Rs 1,865 crore per day as the Bombay Stock Exchange Sensex gained 19.85% or 2174 points.
This translates into increase of Rs 4.7 lakh crore in investor wealth, measured in terms of market capitalisation. IPOs of the year were excluded since there is no comparable data.
But less than half of the 2,375 actively traded shares on the BSE — or 47% — created wealth in the 252 trading sessions to March 26, 2007.
But among the 1,122 companies whose share prices rose, nearly three-fourths outperformed the 19.85% growth in Sensex, underscoring the broader nature of the gains.If you had invested in the private sector, you should have made money. The odds were stacked against the public sector investor.
Here’s how: the market capitalisation of 2,300 private companies in the actively traded list rose by Rs 4.36 lakh crore. The rest 75 — all from the public sector — could rustle up only a Rs 10,000 crore growth in value.
Much of the blame for this — for no fault of theirs, though - must go to the six oil marketers who lost Rs 24,900 crore of investor money because their subsidy burden rose with oil prices.
The reasons for the overall gains or losses are quite clear - barring some exceptions, sentiment or expectations overtook reality. Call it the wages of a bull market.
Companies also won or lost depending on their ability to grow on a sustainable basis. Those that didn’t make the cut were brutally cut down.
Coming to private sector enterprises, the Mukesh Ambani-controlled Reliance Industries Ltd (RIL) was the biggest wealth creator in absolute terms. RIL’s capitalisation rose by Rs 81,228 crore (from Rs 1.09 lakh crore on March 24, 2006, to Rs 1.90 lakh crore on March 26, 2007), as the share surged 74.51% from Rs 782.30 to Rs 1,365.20. The company’s mammoth growth plans in oil & gas, retail and the performance of its core businesses were amply rewarded.
Sunil Mittal’s Bharti Airtel was the No. 2 wealth creator. Strong growth in the telecom business, unlocking of value (hive-off of the tower business) and growth plans meant market capitalisation jumped up from Rs 74,631 crore to Rs 1.47 lakh crore. In fact, in shareholder returns terms, Bharti has outdone RIL. The Bharti share has more than doubled (102.77%) from Rs 382.65 to Rs 775.90.
Anil Ambani’s Reliance Communications (RCom) was No. 3 with a Rs 51,697 crore rise in market cap to Rs 87,162 crore.
More or less in line with their earnings growth rates, IT majors Infosys and TCS, which ranked forth and fifth, gained Rs 35,620 crore and Rs 30,789 crore, respectively. In fact, citing improved outlook, these companies reported numbers that were ahead of Street estimates, while Infosys also raised its guidance for 2006-07.
With an upbeat economy, stocks of banking and financial services companies from the private sector were not far behind. ICICI Bank, HDFC Bank, HDFC, Kotak Mahindra Bank and UTI Bank reported good gains. Notably, PSU banking stocks did not figure among the top wealth creators.
The Ramesh Chandra-headed Unitech, the real-estate major, market wealth jumped from a mere Rs 2,726 crore to Rs 31,323 crore, while its share price rose to Rs 385.90 from Rs 33.57-both reflecting a 10-fold rise. Needless to say, the real-estate mania was responsible for this gain.
The list of wealth destroyers was led by Indian Oil Corporation, which saw its market capitalisation decline by Rs 17,982 crore; its share price was down 26.98% to Rs 416.70 during the one-year period.
Contrary to their performance, fast-moving consumer goods (FMCG) majors, too, witnessed a fall. The reasons for their lacklustre share price performance include concerns over taxation issues on cigarettes for ITC and the not-so-exciting performance and premium valuations for Hindustan Lever.
The two companies, ranked No 2 and 3, respectively, in the losers' list. Nestle India's performance, too, has not been exciting, with profit growth of under 2% for the year-ended December 2006.
Suzlon Energy, ranked fourth in the list, saw its market cap erode by Rs 9,899 crore as its share price had a 26% drop. A key reason was its bid for REpower. An aggressive acquisition by Hindalco, too, was the key reason for the poor show on the bourses.
Tata Motors, No. 5 on the wealth destroyer list, saw a market-cap loss of Rs 5,583 crore.
For two-wheeler players like Hero Honda and TVS Motors, their sales numbers have not been encouraging as competitor Bajaj Auto (also in the list of losers) has been gradually increasing its market share. Their share price performance has also been affected by the margin pressures in their business.
Similarly, sugar companies like Bajaj Hindusthan, Balrampur Chini and Shree Renuka Sugar have been victims of the downfall in sugar prices, which have declined from over Rs 20 a kg to Rs 14 a kg currently. No wonder, these three companies are among the worst within the losers category, having seen their share prices and market capitalisation decline by over 60%.
So the verdict is very clear. Companies that managed to grow their businesses profitably and on a sustainable basis are rewarded, as they should be, while the laggards deservingly get lashed. Now, the million-dollar question: What's in store in 2007?
SOURCE : DNA MONEY
This translates into increase of Rs 4.7 lakh crore in investor wealth, measured in terms of market capitalisation. IPOs of the year were excluded since there is no comparable data.
But less than half of the 2,375 actively traded shares on the BSE — or 47% — created wealth in the 252 trading sessions to March 26, 2007.
But among the 1,122 companies whose share prices rose, nearly three-fourths outperformed the 19.85% growth in Sensex, underscoring the broader nature of the gains.If you had invested in the private sector, you should have made money. The odds were stacked against the public sector investor.
Here’s how: the market capitalisation of 2,300 private companies in the actively traded list rose by Rs 4.36 lakh crore. The rest 75 — all from the public sector — could rustle up only a Rs 10,000 crore growth in value.
Much of the blame for this — for no fault of theirs, though - must go to the six oil marketers who lost Rs 24,900 crore of investor money because their subsidy burden rose with oil prices.
The reasons for the overall gains or losses are quite clear - barring some exceptions, sentiment or expectations overtook reality. Call it the wages of a bull market.
Companies also won or lost depending on their ability to grow on a sustainable basis. Those that didn’t make the cut were brutally cut down.
Coming to private sector enterprises, the Mukesh Ambani-controlled Reliance Industries Ltd (RIL) was the biggest wealth creator in absolute terms. RIL’s capitalisation rose by Rs 81,228 crore (from Rs 1.09 lakh crore on March 24, 2006, to Rs 1.90 lakh crore on March 26, 2007), as the share surged 74.51% from Rs 782.30 to Rs 1,365.20. The company’s mammoth growth plans in oil & gas, retail and the performance of its core businesses were amply rewarded.
Sunil Mittal’s Bharti Airtel was the No. 2 wealth creator. Strong growth in the telecom business, unlocking of value (hive-off of the tower business) and growth plans meant market capitalisation jumped up from Rs 74,631 crore to Rs 1.47 lakh crore. In fact, in shareholder returns terms, Bharti has outdone RIL. The Bharti share has more than doubled (102.77%) from Rs 382.65 to Rs 775.90.
Anil Ambani’s Reliance Communications (RCom) was No. 3 with a Rs 51,697 crore rise in market cap to Rs 87,162 crore.
More or less in line with their earnings growth rates, IT majors Infosys and TCS, which ranked forth and fifth, gained Rs 35,620 crore and Rs 30,789 crore, respectively. In fact, citing improved outlook, these companies reported numbers that were ahead of Street estimates, while Infosys also raised its guidance for 2006-07.
With an upbeat economy, stocks of banking and financial services companies from the private sector were not far behind. ICICI Bank, HDFC Bank, HDFC, Kotak Mahindra Bank and UTI Bank reported good gains. Notably, PSU banking stocks did not figure among the top wealth creators.
The Ramesh Chandra-headed Unitech, the real-estate major, market wealth jumped from a mere Rs 2,726 crore to Rs 31,323 crore, while its share price rose to Rs 385.90 from Rs 33.57-both reflecting a 10-fold rise. Needless to say, the real-estate mania was responsible for this gain.
The list of wealth destroyers was led by Indian Oil Corporation, which saw its market capitalisation decline by Rs 17,982 crore; its share price was down 26.98% to Rs 416.70 during the one-year period.
Contrary to their performance, fast-moving consumer goods (FMCG) majors, too, witnessed a fall. The reasons for their lacklustre share price performance include concerns over taxation issues on cigarettes for ITC and the not-so-exciting performance and premium valuations for Hindustan Lever.
The two companies, ranked No 2 and 3, respectively, in the losers' list. Nestle India's performance, too, has not been exciting, with profit growth of under 2% for the year-ended December 2006.
Suzlon Energy, ranked fourth in the list, saw its market cap erode by Rs 9,899 crore as its share price had a 26% drop. A key reason was its bid for REpower. An aggressive acquisition by Hindalco, too, was the key reason for the poor show on the bourses.
Tata Motors, No. 5 on the wealth destroyer list, saw a market-cap loss of Rs 5,583 crore.
For two-wheeler players like Hero Honda and TVS Motors, their sales numbers have not been encouraging as competitor Bajaj Auto (also in the list of losers) has been gradually increasing its market share. Their share price performance has also been affected by the margin pressures in their business.
Similarly, sugar companies like Bajaj Hindusthan, Balrampur Chini and Shree Renuka Sugar have been victims of the downfall in sugar prices, which have declined from over Rs 20 a kg to Rs 14 a kg currently. No wonder, these three companies are among the worst within the losers category, having seen their share prices and market capitalisation decline by over 60%.
So the verdict is very clear. Companies that managed to grow their businesses profitably and on a sustainable basis are rewarded, as they should be, while the laggards deservingly get lashed. Now, the million-dollar question: What's in store in 2007?
SOURCE : DNA MONEY
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