Business Today

BT 500: India's most valuable companies

Improving business prospects are reflected in an upswing in value creation, although everyone is not out of the woods.

Rajiv Bhuva        Print Edition: Nov 14, 2010

The buzz is back - and the upswing in valuations is the best indicator of the turnaround in not just sentiment on the street but also of fortunes of corporate India. As the economy leaves most of the world behind and gets set to clock 8.5 per cent growth in the current financial year, India Inc. is riding a boom in increased domestic consumption even as it slowly but surely conquers new markets overseas.

Investors, primarily of the foreign institutional variety, have sensed the upside. The overseas moneybags have pumped all of $23.5 billion into Indian equities in 2010. That is reflected in the growth in market capitalisation in the first half of the current financial year - which is what Business Today considers for its rankings.

The overall market value of the BT 500 companies is up smartly by 42 per cent; the 500 to 1,000 pack has made investors richer by 74 per cent, and the 50 companies in the public sector undertaking listing are more valuable by 23 per cent than a year ago. That's a smart recovery from the downturn of the previous study in 2009, when the top 500 lost 7.32 per cent in value and the second half of the list had 30 per cent of their wealth eroded.

 In numbers

Leading that resurgence are good old blue chips like Tata Steel, Tata Motors, Hindalco and Sterlite, which have benefited from robust growth in sales (of autos, for instance), and an upturn in prices of commodities like steel, aluminium and copper. Hindalco and Tata Steel also gained because investors are once again seeing brighter prospects for the big-ticket acquisitions made a few years ago - of Novelis in Canada and Corus, now renamed Tata Steel Europe, respectively. Tata Motors is also reaping the benefits of a pretty sensational turnaround in the performance of Jaguar and Land Rover, the two brands it had acquired from Ford Motor. Lower down the charts, relatively new-age sectors like aviation and organised retailing have kept investors busy, with SpiceJet and Shopper's Stop returning to the black.

The disappointments? Perhaps the biggest one is at the top of the heap: Mukesh Ambani's Reliance Industries, which has traditionally been an investor favourite, has underperformed as investors are not confident about its ambitious expansion plans. Ditto with the companies in Anil Ambani's stable, which have to convince the street that they can execute mega-projects . The telecom pack, too, has come under pressure after nearly eight years of rahrah growth. That's reflected in another top-level shuffle, where Bharti Airtel has lost 24 per cent in value, and is down two places to No. 4, and the rest of our BT 500 features for more.

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