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Fortune500 Indian firms prove their mantle! Offered up to 300% in five years

Data compiled by database AceEquity suggested five of these stocks managed to offer a compound annual growth rate (CAGR) in excess of 9.5 per cent, higher than prevailing 5-year fixed deposit rates.

Aprajita Sharma  New Delhi     Last Updated: July 23, 2016  | 11:44 IST
Fortune500 Indian firms prove their mantle! Offered up to 300% in five years
Photo: Reuters

Seven Indian companies have made it to the Fortune magazine's list of 500 world's biggest corporations in terms of revenues, but did they manage to reward investors on Dalal Street?

Data compiled by database AceEquity suggested five of these stocks offered a compound annual growth rate (CAGR) in excess of 9.5 per cent, higher than prevailing 5-year fixed deposit rates. The seven companies together reported Rs 16.65 lakh crore revenue in the financial year 2015-16.

Data showed Rajesh Exports, which lost mere 6.11 per cent in the past one year, has actually soared 298 per cent in the past five years. This translates into a massive 31.82 per cent Compound Annual Growth Rate (CAGR) for the period. Rajesh Exports has been ranked 423rd in the Fortune's list of companies globally with highest revenue.

Riding on  deregulation of fuel prices and non under recoveries, share prices of two oil marketing companies (OMCs) BPCL and HPCL have surged 250 per cent and 191 per cent, respectively, in the past five years, at a CAGR of 28.67 per cent and 23.86 per cent. Indian Oil (IOC) too managed to offer investors returns at a CAGR of 9.75 per cent.

While IOC ranked 161st, top among the Indian firms, in the Fortune's list, BPCL and HPCL ranked 358th and 367th respectively.

Shares of Tata Motors, lifted by a series of launches of its luxury car brand Jaguar & Land Rover, and its rising demand in China and European markets, clocked  a CAGR of 20.51 per cent, just double the then prevailing FD rates. But Reliance Industries (RIL) stock, due to the refiner's massive investment in telecom sector, failed to reward investors. The stock has risen only 17 per cent in the past five years. On Friday, it stood at Rs 1,006.70 on BSE against Rs 860.75 on July 21, 2011, offering a CAGR of mere 3.18 per cent during the years. RIL ranked 158th in the Fortune's list.

For SBI, the matter is worse. The stock is trading 8 per cent (1.65 per cent CAGR) lower than what it was trading at five years ago. Experts believe while Reliance Industries could soon see a re-rating after the launch of Reliance Jio, SBI will have to wait more to come out of woods.

Rohit  Gadia, Founder & CEO, Capitalvia Global Research said highly volatile oil prices and external factors like recent shock in Europe with Britain's decision to exit from European union may have impacted the respective stocks.

For RIL, apart from global factors which brought down oil & gas prices, its massive investments in telecom sector also contributed to relatively poor performance, said G Chokkalingam, founder and CEO, Equninomics.

Mustafa Nadeem, CEO, Epic Research believes State bank of India stands at the higher side of valuation.

"RBI's increased focus on NPA and cleaning up of books has made the SBI to keep aside more funds for provisions. Merging of small public sector banks with SBI is another event which is being cautiously eyed by the investors. SBI and other PSBs are also facing competition from likes of HDFC and other private banks when it comes to offer digital services," said Nadeem.

For oil marketing companies, the expert believes IOC, HPCL and BPCL have increased spending to improve infrastructure, the impact of which will be visible on the margin front in the longer term.

 

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