Big business houses hit hardest by stock market collapse

This month when I got this message on my 'Samsung' mobile I was beyond happy.

I decided it was time to take a much-needed break. So, I reached out for my 'HP' laptop and booked myself a weekend at the lavish 'Raddison-Blu' resort in Udaipur.

And for dinner, I picked up some takeout from 'McDonald’s' and celebrated those three words with 'Netflix' and chill.

But just as I was about to hit the bed, I realised that most of the transactions that day were with some foreign companies. Multinational companies (MNCs) have become an inevitable part of our life.

Big foreign business houses are a small part of our houses, which is the effect of the economic reforms of 1991 – liberalisation, privatisation, and globalisation.

Liberalisation, privatisation, and globalisation have changed the way businesses are functioning around the world. Resultantly, we have created business behemoths.

But all these business houses, Indian or foreign, are facing the headwinds of the volatile market. The marketcap of many business houses is washed away by the floods of volatility this year. The top 100 companies in India went through a difficult time.

But are the biggest Indian business houses an exception to this? Or they have suffered the fate like others?

Read on to find out how the top 5 business houses in India are impacted by the volatile markets in 2022.

#1 Adani Group

Taking off the ground with Adani Enterprise, Adani Group is now flying with six other companies. 

Gautam Adani, the founder of Adani Enterprises, is among the five richest men in the world. His net worth surpasses the net worth of Warren Buffett.

After being put through a lot of difficulties and tests, Adani group's seven listed companies are galloping fast.

How did it perform in 2022?

In 2022, most companies' marketcap reduced, but Adani Group stood tall and kept foraying into new sectors, and went big on mergers and acquisitions. The group's total marketcap as on 31 December 2021 was ₹9,623.2 bn.

Its total marketcap on 30 June 2022, including that of Adani Wilmar, was ₹14,126.9 bn, which was 42% higher compared to 31 December 2022.

Only one company, Adani Ports’ marketcap stands corrected by 5% on a YTD basis. All the other six companies’ marketcap has surged on a YTD basis.

Adani Wilmar was listed on the bourses on 8 February 2022. From 8 February 2022 to 30 June 2022, Adani Wilmar’s marketcap has increased by 119%.

Recent news

In May 2022, Adani acquired Swiss cement major - Holcim's stake in Ambuja Cements and its subsidiary ACC for ₹813.6 bn.

It was the largest ever acquisition done by the group and the largest ever merger and acquisition transaction in the infrastructure and materials space. This merger is a big win for Adani group. 

Adani group has put its best foot forward in the cement sector. It has emerged as India’s second-largest cement manufacturer.

Adani group’s stellar performance in volatile markets is proof of its deep pockets and big brains. It has always kept its goal and missions in alignment with the government’s goal which has helped the group grow stronger over the years.

Today, the group has some of India’s top renewable energy companies, India’s top green hydrogen companies and more…

#2 Aditya Birla Group

Most of us do not know that the founder of Aditya Birla Group is not Aditya Birla.

The gigantic group's small seeds were sown in a small town of Rajasthan called Pilani. Seth Shiv Narayan Birla was a cotton trader. And that is how with cotton trading, a soon-to-be billionaire empire started.

This trade was taken a step further and developed by his grandson Ghanshyam Das Birla. He was a close confidante of Gandhiji and had established many industries like textile, aluminium, cement, etc. He is the founding father of the Aditya Birla Group.

These industries were progressing well all over India. But the man behind the name decided he wanted to take India to the world map.

Hence in 1969, he started Indo-Thai Synthetic – India’s first international company. Thus, Aditya Birla Group is the first Indian MNC.

What started as cotton is now a fully grown conglomerate of 9 listed companies.

Aditya Birla Group's marketcap has taken the worst hit among the top 5 business houses of India.

On 31 December 2021, the group's total marketcap was ₹5,486.9 bn, but on 30 June 2022 the figure stood corrected to ₹4,079.1 bn, which is a huge fall of 26%.

All nine listed companies faced the volatile markets of 2022 and bled on the bourses. The biggest marketcap loser is none other than… (yeah, you guessed it right) - Vodafone Idea.

Vodafone-Idea was already in a bad position after the entry of Jio and the levy of AGR dues. The volatile markets have only added an insult to the injury.

On 31 December 2021, Vodafone-Idea’s total marketcap was ₹441.7 bn. By half-year, it lost 39% of its marketcap.

Up next on the list is its flagship company – Hindalco Industries. By half-year, Hindalco has lost 29% of its marketcap.

Recent news

Following the news of Adani’s acquisition of a stake in ACC and Ambuja, Birla Group decided to boost the cement manufacturing capacity of its own cement company.

In June 2022, the board of UltraTech decided they would invest ₹122.9 bn towards capacity building. The investment would be spread over the following years to increase the manufacturing capacity to 159 metric tonnes per annum (MTPA).

UltraTech Cement will now be the third-largest cement company in the world.

However, by half-year UltraTech company has lost 26% of its marketcap. Most of cement stocks are falling and UltraTech was no exception.

#3 Bajaj Group

Bajaj Group was formed at the behest of Mahatma Gandhi.

Little did Gandhi know when he was insisting his close confidante Jamanlal Bajaj open a sugar factory in Kheri, Uttar Pradesh, he was indirectly insisting that he lay the founding stone for a big business empire.

Jamanlal Bajaj sowed the seeds of the Bajaj Group, and his son Kamalnayan Bajaj and Ramkrishna Bajaj watered the seeds with their efforts and intelligence and sent all the factories of the group into a growth stage.

Then his son Rahul Bajaj changed the way people looked at the Bajaj brand. Bajaj’s progress was unstoppable. Even after 32 years of the ad, people recognise the Bajaj group as “Hamara Bajaj"

From the group companies, Bajaj Auto is the world’s third-largest two-wheeler manufacturer and the second-largest in India. Bajaj Hindustan Sugar is a sugar producer in India, Asia's #1 and world's #4 integrated sugar company.

Thus, Bajaj has a strong presence in all fields where it is present.

2022 was the worst year for share markets after the recession of 2008. Bajaj group’s marketcap also saw an impact.

On 31 December 2022, the group's marketcap was ₹8,626.4 bn. By half-year, the market cap has fallen by 21% to ₹6,811.2 bn.

The worst impact of volatility was on Bajaj Finserv. Bajaj Finserv’s market cap was ₹2,608.3 bn on 31 December 2021. Till 30 June 2022, the market cap has fallen by 33%.

Next in line is Bajaj Consumer Care. The total marketcap of Bajaj Consumer Care on 31 December 2021 was ₹29.2 bn. It fell by 30% to ₹20.5 bn till 30 June 2022.

Recent news

Bajaj Finserv recently shook hands with Worldlines, a global leader in payment services, to develop point-of-sales (POS) payments acquiring solutions for its merchant network.

This move will strengthen its position and relationship with its consumers. It aims at providing facilities like EMI cards, credit cards, etc. with the help of this partnership.

However, it is noteworthy the companies which once had common ownership are under divided ownership now. Most of Bajaj group companies are running independently.

#4 Mahindra Group

Mahindra group is a money maker, magnanimous, and meritorious group.  

The first company of the mammoth Mahindra group is M&M. M&M stands for Mahindra and Mahindra. However, initially, it was Mahindra and Muhammed.

M&M was established as a steel company in 1945 in Ludhiana by Kailash Chandra Mahindra, Jagdish Chandra Mahindra, and Malik Ghulam Muhammad.

But after the partition, Muhammed migrated to Pakistan, and hence, the company became Mahindra and Mahindra.

Mahindra group started with a steel factory. It has now become a leading player in many fields like automobiles, information technology, finance, farm equipment, and so many more.

When we talk about Indian SUVs, it is impossible not to mention Scorpio – Mahindra’s best SUV. Scorpio is internationally popular. Mahindra is also the world's largest manufacturer of tractors.

The vision of the founders was turned into reality by Keshub Mahindra, and Anand Mahindra turned the business house into a business empire.

On 31 December 2021, the total marketcap of Mahindra group was ₹3,109.8 bn. By half-year, this had fallen 13% to ₹2,711.4 bn.

Following the global downfall of IT companies and the great resignation phase, Tech Mahindra lost 44% of its marketcap in the first six months of 2022. 44% for a bluechip stock…that’s massive!

Next in the line of losing companies is Mahindra Logistics. On 31 December 2021, Mahindra Logistics’ marketcap was ₹48.1 bn. However, by half-year, it fell 31%, and the market cap stood at ₹33.9 bn.

However, not all companies of Mahindra had lost their market cap in these six months. Mahindra Lifespace Developers’ marketcap has gone up by 67% on a half-year basis, and M&M’s market cap has also increased by 31% in the same period.

M&M’s growth can be attributed to its increased focus on electric vehicles.

Recent news

M&M is awaiting approval for the merger of Mahindra Electric Mobility with itself.

This merger is intended to strengthen the companies’ value chain required for end-to-end EV development, manufacturing, and sales.

Thus, Mahindra group is gearing up to make the most of the opportunity presented by EVs.

#5 Tata Group

The founder of Tata Group – Jamsetji Tata, is known as the father of the Indian industry. Men like Jamsetji Tata are like Halley's comet. They come only once in a very, very long time.

He had four dreams:

1. A steel company,

2. World-class education facility,

3. A magnificent hotel, and

4. A hydroelectric plant. 

Only one of his dreams of a magnificent hotel was fulfilled when he was alive. But today, if you look at the group, you will realise that all these dreams are thriving the success of Tata Group.

Tata Steel, the Indian Institute of Science, The Indian Hotels Company, and Tata Power are the top players in their industry. 

Tata Group was not only founded by a true visionary but also the successors that followed were also one in a kind. Dorabji Tata – the founder of Tata Steel, JRD Tata – the Indian Aviator, and Ratan Tata – one of the most influential business magnates India has ever seen.

All these leaders make Tata Group one of the most successful business empires. Yet it does not keep success to itself. Tata Sons' 66% shares are owned by charitable trusts. Tata family only holds a little stake in Tata Sons.

Tata Group is the largest Indian conglomerate. It is, was, and will be an inspiration for all industrialists.

On 31 December 2021, Tata group's total marketcap was ₹23,194.4 bn. Even Tata Group felt the shocks of volatility in 2022, and hence, by half-year, it lost 13.9% of its marketcap.

The biggest marketcap loser of the group was Tata Teleservices (Maharashtra). On 31 December 2021, the company's market cap was ₹404.6 bn. By half-year, it had fallen to ₹236.74 bn i.e. 41.5%.

The next in line is Tata Communications. The company has lost 37.7% of the market cap in 6 months. It is noteworthy that the IT company of the group – Tata Consultancy Services, has lost only 13.6% of its marketcap when major IT stocks are down a lot more.

Considering the position of IT companies globally and the high attrition rate, the fall is not very big.

There are Tata group companies that have performed well even in turbulent waters. Oriental Hotels and Tejas Network have gained more than 40% on their marketcap in the last six months.

Recent News

Tata Power is another example of Tata group’s foresightedness as it actively works on developing EV charging stations all over the county.

On 25 June 2022, Tata Power Solar – a wholly-owned subsidiary of Tata Power, commissioned India’s largest floating solar power in Kayamkulam, Kerala.

Kayamkulam is a 350-acre water body, backwaters area, having an installed capacity of 101.6 megawatt peak.

Despite various problems of fluctuating water depths, strong sea tides, and serious water salinity concerns faced throughout the project's construction phase, the wholly-owned subsidiary of Tata Power completed the installation within the allotted time.

Then there’s Tata Motors, which is the numero uno when it comes to electric vehicle stocks in India.

Final words…

Looking at all these big business houses and their stellar businesses, it is clear that investing in these companies will not disappoint you.

These business houses truly work hard for the trust you place in them by investing in them. The returns from these companies might be slow, but they give a guarantee. After all, people prefer blue-chip stocks for a reason.

However, we can also see that except for Adani, all the other big houses have suffered the pain of 2022’s volatility.

It’s a prime example of the market’s unpredictable nature. The companies of these groups have sound fundamentals, growing businesses, and deep pockets but despite having all of these, the stocks are falling.

Thus, we can conclude that the biggest force in share markets is the market itself because the market can take the market anywhere.

A smart investor is one who can earn even in difficult times. Like how Warren Buffett’s portfolio was rising in 2008, when everyone else’s money was drowning in recession.

So be a smart investor. Constantly revisit and re-evaluate your investment thesis. Ensure you are willing to change your mind when the information changes.

Controlling emotions in these moments is of utmost important. If you do this, your heart, mind and portfolio will thank you over the long run.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com