First-time entrepreneurs making a mark on the market: Raamdeo Agrawal

India is entering a multi-decade wealth creation cycle, says Raamdeo Agrawal, who believes rising financialisation and equity participation will keep Sensex returns structurally strong

India is entering an era of extraordinary long-term wealth creation, and the financial sector is likely to be its biggest beneficiary, says Raamdeo Agrawal, chairman and cofounder, Motilal Oswal Financial Services. Speaking to Samie Modak in Mumbai ahead of the release of his 30th Wealth Creation Study, Agrawal argues that a 12–15 per cent annualised Sensex return remains structurally sustainable, supported by rising household participation and a powerful wealth effect. Edited excerpts: 

What is the theme of the latest Wealth Creation Study? 

Over the past few centuries, the very nature of wealth has undergone a dramatic shift. For most of human history, wealth meant physical assets — land, metals, palaces and armies. That changed with the advent of the joint stock company about 150–200 years ago, and gradually, financial assets began to dominate. Until 1990, global physical and financial wealth were almost equal. Today, almost all billionaire wealth is financial; physical assets are negligible. The surge is staggering: global financial wealth rose from $13 trillion in 1980 to $88 trillion by 2000 and to nearly $600 trillion in 2025. This explosion shows that financial wealth has virtually no ceiling, with several countries — most notably the US — running market capitalisations far ahead of gross domestic product (GDP). India is following the same path — market cap-to-GDP has climbed from 40 per cent to 140 per cent in two decades, while retail and institutional participation in equities is rising at unprecedented speed. 

This expanding ‘Wealth Effect’ will increasingly shape consumption, savings, and corporate earnings — and investors must prepare for this transition. 

How fast is India’s wealth growing relative to GDP? 

Globally, GDP grows around 5 per cent while financial wealth grows about 7 per cent. In India, the gap is wider — GDP expands around 9 per cent in dollar terms, but financial wealth grows 12–13 per cent. This difference compounds meaningfully and explains the sharp rise in market cap-to-GDP over the past two decades. Between 2025 and 2047, India’s GDP could grow 6.6× — from $4 trillion to $26 trillion — adding $22 trillion of economic output. Rising per capita incomes, from $2,600 to over $14,000, will trigger consumption boom across discretionary products, autos, appliances, travel, financial services and wealth management. 

Who are the biggest and fastest wealth creators, according to the latest study?

 

Bharti Airtel tops the list, adding ₹7.9 trillion in market value between 2020 and 2025, underpinned by industry consolidation and stronger unit economics. ICICI Bank, with ₹7.4 trillion, follows closely. On the returns side, BSE delivered the fastest shareholder gains — a 124 per cent compound annual growth rate (CAGR) between 2020 and 2025. Hindustan Aeronautics is a standout consistent performer, outperforming the Nifty for five straight years and compounding at 75 per cent annually. This is showcasing the power of long-duration earnings visibility and strong order books.

 

How does one identify high-quality long-term compounders?

 

That’s very rare. Since we started this study, there have been only a few true long-term compounders when judged by price CAGR, profit CAGR, and minimum return on equity (ROE) thresholds. The message is simple — when you find a real compounder, hold on to it. Don’t trade it away. Most investors cannot see beyond quarters. Compounding works like magic — but it needs time.

 

The Sensex completes 40 years. How has the index evolved and has it been able to capture the market breadth?

 

The Sensex and the domestic capital markets as a whole reflect the underlying economy. Earlier, industrial groups like Tata and Birla dominated benchmark indices. Today, new-age tech and e-commerce firms are taking over. Also, promoter holdings used to be 70–80 per cent. Now, you see companies where founders own 2–5 per cent. It’s a new generation — simple, first-time entrepreneurs are building giant businesses at incredible speed and making their mark on the market.

 

The Sensex has generated long-term market returns of 15 per cent annually? Can this continue?

 

Yes, Around 12–15 per cent CAGR is sustainable. If you buy during crashes, returns get even higher. If you buy at peaks, expect around 10 per cent. Over long periods, the average settles at 12–14 per cent. That is already a good return.

 

What has worked most for the domestic markets over the past four decades?

 

I think Indian entrepreneurship. Until 1991, licensing killed entrepreneurial dreams. After 1991, barriers were removed and capital became available. Post-2000, risk capital — venture and private equity — supercharged entrepreneurship. This combination is what brought India to where it is today. 

Next: UR Bhat, Co-founder and Director, Alphaniti Fintech