From Caterpillar to USV, here're top 30 unlisted companies in India

Indian investors have a fancy for domestically-listed subsidiaries of foreign multinational corporations (MNCs), which enjoy premium valuations owing to their superior earnings profile and nearly debt-free balance sheets. This makes them safe havens for investors looking to de-risk their portfolios from uncertainty in the broader markets. A similar trend would have played out in the unlisted space as well, if Indian investors were allowed to purchase stocks of these companies.

The list of India’s best unlisted companies is dominated by the subsidiaries of US, European and Japanese MNCs. The MNCs that top the charts of unlisted companies differ from those that lead the bourses. The majority in the listed space are in the consumer goods space; in the unlisted space the majority are from the capital goods industry or the technology sector.

Caterpillar India, a leading manufacturer of construction and mining equipment and heavy diesel engines and power packs, is the best unlisted company for the second consecutive year. The capital goods major topped the charts with 43 per cent year-on-year (YoY) growth in revenues and 82 per cent YoY growth in net profit in FY19 — the latest year for which its finances are available.

The company was nearly debt-free, with gross debt to equity ratio of 0.1x and reported return on equity of 37.7 per cent in FY19 — one of the best among manufacturing companies.

It is followed by JCB India, the country’s top manufacturer of construction and earth moving equipment. Its revenues were up nearly 29 per cent YoY in FY19, while net profit was up 28 per cent and its balance sheet remains nearly debt-free.

These two companies are followed by Pernod Ricard India, John Deere India and ATC Telecom Infrastructure.

Only one Indian-owned company features in the top ten this year — the Odisha government-owned Odisha Mining Corporation. There are seven domestic firms in the top 30 list.

Short-listing the best

We started with the top 300 unlisted companies in terms of their latest annual revenues. The companies were ranked first by size of revenues and profits, next by revenue and profit growth in the latest financial year, and finally, by return on net worth and gross debt to equity ratio. Profit margins were not considered this year, since experts say that margins are industry-specific. The final ranking is based on each company’s composite rank on all these parameters.

The companies that topped the list offer the best combination of scale, faster revenue and profit growth, lower balance sheet leverage and superior return on equity.

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