RIL is top wealth creator, but tech firms closing in

Reliance Industries Ltd (RIL), India’s most valued firm, has been the biggest wealth creator for its shareholders for the five-year period ending March 31 (FY11), but technology firms TCS and Infosys are hot on its heels, according to a wealth creation study by Motilal Oswal Financial Services.

The Mukesh Ambani-controlled company has added Rs 1,74,200 crore in market capitalization between FY07 and FY11, according to the findings of the study.

This is fifth time in a row RIL has topped the chart of biggest wealth creators in Motilal Oswal’s annual wealth creation study.

However, RIL may not be able to retain its top position as the biggest wealth creator in future, according to the Mumbai-based financial services firm.

“Like HUL in 2001, probably Reliance has also seen its peak performance for the time-being. Tech companies, mainly TCS and Infosys, are hot on its heels, and one of them is likely to claim the top slot going forward,” said Raamdeo Agrawal, joint managing director of Motilal Oswal group, in the report.

HUL had topped Motilal Oswal’s list of biggest wealth creators for four times in a row from 1996 to 1999.

Apart from RIL, TCS, State Bank of India, Infosys, NMDC and HDFC Bank were also among the top wealth creators in the five-year period ending FY11.

For its study, Motilal Oswal analysts analysed the top 100 wealth creating companies during 2006-11.

Wealth created was calculated as change in the market capitalisation of companies between the five-year period ending FY11, adjusted for corporate events such as mergers, de-mergers, fresh issuance of capital and buyback.

These companies have added at least Rs 100 crore to their market capitalisation over this period of five years, according to the study.

Between FY06 and FY11, Sanwaria Agro emerged as a surprise fastest wealth creator, adding Rs 4,300 crore to its market capitalisation at a compounded annual growth rate of 119 per cent per annum, according to the findings of the wealth creation study. Adani Enterprises, Bhushan Steel, Jindal Steel, Sterling International and Shriram Transport were also among the top 10 fastest wealth creators during this five-year period.

Kotak Mahindra Bank topped the chart of most consistent wealth creators in the Motilal Oswal study, followed by Sun Pharmaceuticals, Asian Paints, HDFC and HDFC Bank, among others.

Financial, which emerged as the largest wealth creating sector in the five-year period ending FY11, is expected to maintain its top slot, led by existing and new private banks, and eventual listing of insurance companies, the study says.