14th Motilal Oswal Wealth Creation Study : Winner Categories & Category Winners
The 14th Motilal Oswal Wealth Creation Study was held on 17th Dec -2009. Mr. Raamdeo Agrawal, Managing Director of Motilal Oswal Group, commissions an Annual Wealth Creation Study every consecutive year. The Motilal Oswal 14th Annual Wealth Creation Study (2004-09) is divided into three parts i.e. Wealth Creation Theme: Winner Categories + Category Winners = Formula for Wealth Creation in the NTD Era, The Wealth Creation Study Findings & Market Outlook.
Wealth Creation Study findings analyzes the top 100 wealth creating companies during the period 2004-09. Wealth created is calculated as change in the market cap of companies between 2003 and 2009, duly adjusted for corporate events such as mergers, de-mergers, fresh issuance of capital, buyback, etc.
Five companies - HDFC, Sun Pharma, Reliance Inds, Hero Honda and Infosys - featured among the top 100 wealth creators in each of the last 10 years. HDFC was ranked as the most consistent by virtue of its 10-year price CAGR being the highest. Unitech was the Fastest Wealth Creator in FY09, for the second time in a row. Its 5-year stock price CAGR is a staggering 122%. Reliance Industries emerged as the biggest wealth creator for the third time in a row. It created 1514 billion RS worth of wealth contributing 15.6% of total wealth created in FY09.
The theme for this year's wealth creation study was A Winning Formula For Wealth Creation.
A blend of Categories benefiting from India's Next Trillion Dollar GDP opportunity & their Scalability was the formula for Winner Categories. The formula used for the winning investments was the combination of the category winners & the respective reasonable valuation. The formula for category winners was the combination of the winner categories, the entry barriers & the great management. A combination of the Winner Categories & the Category Winners was the most important recipe for the Wealth Creation Study.
Winner Categories: India's NTD Era will see a huge boom in consumption and savings/investment, which will throw up several Winner Categories i.e. those which grow at over 1.5x GDP growth rate, and are consolidated in nature. The study identifies 21 Winner Categories which are Alcoholic beverages, Auto - 2 - wheelers, Auto - Cars & SUVs , Auto - Tractors, Capital Goods - Power equipment, Construction, Engineering - Turnkey, Finance -Banks & Private sector, Finance - Banks & Public sector, Finance - Brokerages, Finance - Credit rating, Finance - Housing, FMCG - Personal Care, FMCG - Processed Food, Gas distribution, Infrastructure, Insurance, Media - Entertainment , Real Estate, Retailing , Telecom.
Category Winners: These are companies from Winner Categories, which possess high Entry Barriers and great managements. Being able to do what rivals cannot is the definition of competitive advantage. Entry Barriers is a simpler term for sustainable competitive advantage - The existence of barriers to entry means that incumbent firms are able to do what potential rivals cannot. Great management is one which successfully defends or even increases Entry Barriers and manages growth at least in line with category.
Winning investments: Significant wealth was created over the long term by Category Winners bought at reasonable (not necessarily cheap) valuation. The model portfolio constructed in this study for the NTD Era was based on the above principles & it would have outperformed the markets if purchased any time during the last five years. The category winner in Auto (2 wheelers) was Hero Honda, Auto (Cars & SUVs) was Maruti Suzuki, Auto (Cars & UVs/tractors) was Mahindra & Mahindra, Capital Goods (Power equipment) was BHEL.
The category winner in Infrastructure was Mundra Port, Media (Entertainment) was Sun TV, Retailing was Pantaloon Retail & Telecom was Bharti Airtel, Engineering (Turnkey) was Larsen and Toubro, Finance (Banks & Private Sector) was HDFC Bank, Finance (Banks & Public Sector) was SBI, Finance (Credit rating) was CRISIL, Finance (Housing) was HDFC, FMCG (Personal Care) was Dabur India, FMCG (Processed food) was Nestle India.
To conclude, the NTD Era will be marked by sustained boom in discretionary spend, savings and investment. Winner Categories and Category Winners will enjoy exponential growth in profits. Category Winners bought at reasonable valuation will create significant wealth over the long term. - 23200
Wealth Creation Study findings analyzes the top 100 wealth creating companies during the period 2004-09. Wealth created is calculated as change in the market cap of companies between 2003 and 2009, duly adjusted for corporate events such as mergers, de-mergers, fresh issuance of capital, buyback, etc.
Five companies - HDFC, Sun Pharma, Reliance Inds, Hero Honda and Infosys - featured among the top 100 wealth creators in each of the last 10 years. HDFC was ranked as the most consistent by virtue of its 10-year price CAGR being the highest. Unitech was the Fastest Wealth Creator in FY09, for the second time in a row. Its 5-year stock price CAGR is a staggering 122%. Reliance Industries emerged as the biggest wealth creator for the third time in a row. It created 1514 billion RS worth of wealth contributing 15.6% of total wealth created in FY09.
The theme for this year's wealth creation study was A Winning Formula For Wealth Creation.
A blend of Categories benefiting from India's Next Trillion Dollar GDP opportunity & their Scalability was the formula for Winner Categories. The formula used for the winning investments was the combination of the category winners & the respective reasonable valuation. The formula for category winners was the combination of the winner categories, the entry barriers & the great management. A combination of the Winner Categories & the Category Winners was the most important recipe for the Wealth Creation Study.
Winner Categories: India's NTD Era will see a huge boom in consumption and savings/investment, which will throw up several Winner Categories i.e. those which grow at over 1.5x GDP growth rate, and are consolidated in nature. The study identifies 21 Winner Categories which are Alcoholic beverages, Auto - 2 - wheelers, Auto - Cars & SUVs , Auto - Tractors, Capital Goods - Power equipment, Construction, Engineering - Turnkey, Finance -Banks & Private sector, Finance - Banks & Public sector, Finance - Brokerages, Finance - Credit rating, Finance - Housing, FMCG - Personal Care, FMCG - Processed Food, Gas distribution, Infrastructure, Insurance, Media - Entertainment , Real Estate, Retailing , Telecom.
Category Winners: These are companies from Winner Categories, which possess high Entry Barriers and great managements. Being able to do what rivals cannot is the definition of competitive advantage. Entry Barriers is a simpler term for sustainable competitive advantage - The existence of barriers to entry means that incumbent firms are able to do what potential rivals cannot. Great management is one which successfully defends or even increases Entry Barriers and manages growth at least in line with category.
Winning investments: Significant wealth was created over the long term by Category Winners bought at reasonable (not necessarily cheap) valuation. The model portfolio constructed in this study for the NTD Era was based on the above principles & it would have outperformed the markets if purchased any time during the last five years. The category winner in Auto (2 wheelers) was Hero Honda, Auto (Cars & SUVs) was Maruti Suzuki, Auto (Cars & UVs/tractors) was Mahindra & Mahindra, Capital Goods (Power equipment) was BHEL.
The category winner in Infrastructure was Mundra Port, Media (Entertainment) was Sun TV, Retailing was Pantaloon Retail & Telecom was Bharti Airtel, Engineering (Turnkey) was Larsen and Toubro, Finance (Banks & Private Sector) was HDFC Bank, Finance (Banks & Public Sector) was SBI, Finance (Credit rating) was CRISIL, Finance (Housing) was HDFC, FMCG (Personal Care) was Dabur India, FMCG (Processed food) was Nestle India.
To conclude, the NTD Era will be marked by sustained boom in discretionary spend, savings and investment. Winner Categories and Category Winners will enjoy exponential growth in profits. Category Winners bought at reasonable valuation will create significant wealth over the long term. - 23200
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To find out more about Motilal Oswal's 14th Annual Wealth Creation Study, visit the Motilal Oswal website.

