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Infosys fastest wealth creator in 25 years, Reliance biggest: Motilal Oswal

Infosys has given outstanding returns to long terms investors, offering a robust price compound annual growth rate (CAGR) of 30 per cent to emerge as the fastest wealth creator between 1995 and 2020

Chitranjan Kumar | December 23, 2020 | Updated 22:54 IST
Infosys fastest wealth creator in 25 years, Reliance biggest: Motilal Oswal
Infosys was also the fastest wealth multiplier, increasing wealth of the stockholder by 688 times

Infosys, the country's second largest software exporter, has emerged as the fastest wealth creator in the last 25 years. Mukesh Ambani's Reliance Industries turned out to be the biggest wealth creator in this period, according to a report by Motilal Oswal Financial Services.  

IT major Infosys has given outstanding returns to long-term investors, offering a robust compound annual growth rate (CAGR) of 30 per cent to emerge as the fastest wealth creator between 1995 and 2020. It was also the fastest wealth multiplier, increasing stockholders' wealth by 688 times. The market cap of the Bengaluru-based company rose sharply from Rs 300 crore in 1995 to Rs 2.73 lakh crore in 2020. 

Infosys shares clocked profit after tax (PAT) CAGR of 33 per cent in 25 years. For instance, Infosys' 1995 PAT was Rs 13 crore, which is now at Rs 16,400 crore, delivering a 33 per cent CAGR or 1,256 times in 25 years.

In contrast, the Indian benchmark index BSE Sensex clocked a CAGR of just 9.2 per cent during the period under review. Sensex rose from 3,200 levels in March 1995 to 29,500 by March 2020, registering a CAGR of 9.2 per cent.  

As per the report, billionaire Mukesh Ambani-led Reliance Industries (RIL) was the biggest wealth creator over the last 25 years. Between 1995 and 2020, RIL created wealth of Rs 6.3 lakh crore, which was much ahead of the second-ranked Hindustan Unilever with wealth of Rs 4.9 lakh crore. The report noted that RIL created most of the wealth (Rs 4.4 lakh crore) in the last five years (between 2015 and 2020).  

Private lender Kotak Mahindra Bank was the most consistent wealth creator between 1995 and 2020. Apart from being the most consistent wealth creator, the Uday Kotak-led bank also emerged as the best all-round wealth creator, which was derived by combining the ranks of fastest, biggest and consistent wealth creators.

"In the 23-year rolling periods between 1995 and 2020, Kotak Mahindra [Bank] has outperformed the corresponding benchmark in 21 of those periods," the report noted.  

Kotak Mahindra Bank was closely followed by Berger Paints and HDFC with 20 periods of outperformance, it added.

Meanwhile, six of the top 10 consistent wealth creators were also among the top 10 fastest wealth creators - Berger Paints, Pidilite, Shree Cement, Honeywell Automation, Motherson Sumi and Sun Pharma.

On the sectoral front, stocks of consumer-facing companies, especially retail, were the biggest wealth creating sector, ahead of oil and gas and non-banking financial companies (NBFCs). Consumer sector created wealth worth Rs 12 lakh crore during 1995 and 2020.

"63 of the 100 wealth creators are from consumer-facing businesses, accounting for 68 per cent of total wealth created," the report said.

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