Five out of 10 top wealth destroyers in last 5 years are PSUs: study1 min read . Updated: 12 Dec 2014, 05:00 PM IST
The study by brokerage firm Motilal Securities shows the number of state-owned companies in the top 100 wealth creators is only five
Mumbai: Five of the top 10 firms that saw a decline in market captalization between 2008-09 and 2013-14 are state-owned—MMTC Ltd, NTPC Ltd, Bharat Heavy Electricals Ltd, Steel Authority of India Ltd (SAIL) and NMDC Ltd—brokerage firm Motilal Oswal Securities Ltd said in its annual wealth creation study on Friday.
Wealth creation or destruction refers to an increase or decrease in market capitalization over the past five years, adjusted for fresh equity issuance, mergers, demergers and share buybacks.
The number of state-owned companies in the top 100 wealth creators is at an all-time low of only five, and the wealth created by these five is also at an all-time low of just 2% of the total, from as high as 51% over 2000-05, signalling value migration to the private sector, the brokerage said in the report.
“Most of the Wealth Destroying companies and sectors are deeply cyclical and/or those affected by policy paralysis during UPA-2 (United Progressive Alliance’s second term) regime," Motilal Oswal said in the report.
“With a new government at the helm, major policy reforms coupled with economic recovery could be hugely positive for many of these wealth destroyers."
Tata Consultancy Services Ltd (TCS) emerged the biggest wealth creator between 2008-09 and 2013-14, retaining the top spot it held even for the period between 2007-08 and 2012-13, Motilal Oswal said in the study.
The performance in the latest period is better than in the previous one with wealth created at ₹ 3.6 trillion compared with ₹ 2.3 trillion earlier. It is the highest ever wealth created in any five-year period in Indian stock market’s history, the brokerage said.
The technology sector created ₹ 7.1 trillion in wealth in the five year, the highest ever by any sector.