Companies with promising future
Alokesh Bhattacharyya September 15, 2011Prediction can be hazardous, but that is exactly what we set out to do in this special package to celebrate Business Today's 20th anniversary. The quest: find companies that are not yet market leaders, but are already big and also among the fastest-growing in their sector. In short, companies that have a credible shot at becoming Tomorrow's Goliaths.
Scale, pace of revenue expansion and editorial judgement were combined to select the companies. We started with revenue (minimum Rs 1,500 crore in 2010/11) and revenue CAGR (compound annual growth rate) data of companies in 16 sectors, culled from Accord Fintech's Ace Equity database. Revenue CAGR was considered for the six years ending 2010/11. Where six-year data was not available, fewer years were taken, with a minimum of three years as the cut-off point. The CAGR of peers was facilitated for a like-to-like comparison.
Fortis | Indigo | Lanco Infratech | Cafe Coffee Day | Glenmark |
Nuclear Power Corp | Axis Bank | iGate
The logic behind the selection was simple: a company with higher revenue - even if the CAGR is lower - has a better chance of emerging a giant in, say, five years. For example, in banking, Yes Bank is growing the fastest with 84.28 per cent six-year revenue CAGR, but Axis Bank is nearly four times its size in income, and growing at 39.31 per cent, faster than all the other top banks. Axis Bank, therefore, made the cut. Four others companies were selected using this logic: Fortis Healthcare , Nuclear Power Corporation, Lanco Infratech, and iGate Corporation.
The sixth, Glenmark Pharma, is neither growing very fast, nor does it have great scale. But it has possibly the best chance among Indian drug makers to launch an original drug, which would take it into a different league.
The remaining companies - Cafe Coffee Day and IndiGo - are unlisted. IndiGo was chosen as it is near the top in terms of passenger numbers and growing fast. Cafe Coffee Day is the biggest in its arena in India, and may be on the path to becoming one of the world's biggest. We have picked some more companies - the cut-off being revenues of Rs 500 crore in 2010/11 - which are growing fast and have reasonable scale.
Time will tell whether our list lives up to its billing, but, for now, happy reading.
Data research by Gautam Aggarwal