As per Motilal Oswal Financial Services’ annual wealth creation study, Infosys clocked a robust price compound annual growth rate (CAGR) of 30 percent to emerge as the fastest wealth creator between 1995 and 2020.
IT major Infosys has emerged as the fasted wealth creator in the last 25 years. As per Motilal Oswal Financial Services’ annual wealth creation study, Infosys clocked a robust price compound annual growth rate (CAGR) of 30 percent to emerge as the fastest wealth creator between 1995 and 2020. This was backed by a 25-year PAT CAGR of 33 percent, it added.
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Meanwhile, Reliance Industries was the biggest wealth creator in this period, creating wealth worth Rs 6.3 lakh crore in 25 years, the report noted. However, the study added that most of the gains came in the last five years. Between 2015 and 2020, the firm added Rs 4.4 lakh crore in wealth.
It also observed that RIL is significantly ahead of the second-biggest wealth creator HUL, which accounted for Rs 4.9 lakh crore wealth.
Infosys and Bajaj Finance were also on the list for both the fastest and biggest wealth creators.
The MOSL report also stated that the average market cap of the top 25 fastest wealth creators was Rs 400 crore in 1995, which stood at over Rs 75,000 crore in 2020. Rs 10 lakh invested equally in these 25 stocks in 1995 would have grown to Rs 16.2 crore in 2020, delivering a 25-year CAGR of 23 percent.
“Over 1995 to 2020, the Sensex rose from 3,200 levels in March 1995 to 29,500 by March 2020 i.e. a compound annual growth rate (CAGR) of 9.2 percent. Coincidentally, exactly 100 companies delivered returns higher than 9.2 percent. We call these 100 the Fastest Wealth Creators,” it said.
As per the report, the top twenty of the fastest wealth creators all gave the equivalent of 20 percent returns every year.
Moreover, Kotak Mahindra Bank has emerged as the most consistent wealth creator between 1995 and 2020, the study stated. In the 23-year rolling periods between 1995 and 2020, Kotak Mahindra has outperformed the corresponding benchmark in 21 of those periods. This is closely followed by Berger Paints and HDFC with 20 periods of outperformance, it further noted.
Six of the top 10 consistent wealth creators are also among the top 10 fastest wealth creators – Berger Paints, Pidilite, Shree Cement, Honeywell Automation, Motherson Sumi and Sun Pharma.
The biggest wealth creators' list has names including HDFC, Kotak Bank, ITC, Asian Paints, and Nestle India.
Among sectors, consumer companies accounted for the majority of wealth creation over the last 25 years, worth Rs 12 lakh crore. 63 of the 100 wealth creators are from consumer-facing businesses, accounting for 68 percent of total wealth created, added the report.
The second best was the oil and gas segment which accounted for Rs 6.9 lakh crore.