Robust inflows from domestic investors supported the Indian equity market during this year’s study period (October 2023 to September 2024) of the BT500 list of India’s most valuable companies.
Overall, the average market capitalisation (m-cap) of the BT500 firms rose 39% by Rs 102 lakh crore to Rs 363 lakh crore over the previous study period. Meanwhile, the broader equity markets outpaced large-caps with wider margins. The benchmark BSE Sensex and NSE Nifty 50 index witnessed a 28% and 31% rise, whereas the BSE MidCap and SmallCap indices surged 53% and 52%, respectively, during the same period. The Nifty Midcap 100 and Nifty Smallcap 250 gained 48% and 51%, respectively.
However, while some, like Cochin Shipyard, saw a huge jump in market capitalisation, others, like some Adani Group firms witnessed a significant drop in their valuation.
The latest rankings show that select firms from the shipping, renewable energy, and railways industries witnessed remarkable upswings in their one-year average market capitalisation. On the other hand, firms from the gas transmission, power, fast-moving consumer goods, chemicals, diamond and jewellery industries witnessed a decline in their market valuation.
Leaders
Cochin Shipyard Ltd (CSL), a miniratna company from the shipping sector, emerged as the top gainer in this year’s BT500 list. The one-year average m-cap of the company surged by a whopping 333% to Rs 34,339 crore on September 30, 2024.
Incorporated in 1972 as a public sector company, CSL is one of India’s leading shipbuilding and ship-repair yards and is helmed by CMD Madhu S. Nair. In FY24, the shipbuilding segment contributed around 74% to its total turnover of Rs 3,830 crore while the ship-repair segment contributed the rest.
Commenting on CSL’s performance, Amar Ambani, Executive Director of brokerage YES Securities, says the firm gained traction mainly due to the government’s ‘Make in India’ initiative. “CSL got a shot in the arm from the government’s defence indigenisation drive, amply reflected in the high-value orders of anti-submarine warfare corvettes, new-generation missiles, and aircraft carriers,” he says. “It also bagged marquee international orders for manufacturing a variety of vessels. We see sustained visibility for revenue growth and margins,” Ambani adds.
CSL’s order book stood at Rs 22,587 crore as of June 30, 2024, including Rs 21,587 crore in shipbuilding and Rs 1,000 crore worth of contracts in ship repair.
Ravi Singh, Senior Vice President-Retail Research at Religare Broking, points out that CSL’s diversification into repairs gave it a fillip. “Its diversification into repairs and inland waterways has helped it see a revenue uptrend. The trends look promising, with ongoing government initiatives, capacity expansion, and global demand for shipbuilding,” he says.
Suzlon Energy, led by CMD Vinod Tanti, is the next highest gainer on the list. Over the study period, the company saw a 320% jump in its one-year average m-cap, rising to Rs 66,316 crore from Rs 15,787 crore in the previous year. The company, with a 32% market share in India’s wind turbine sector and a fully integrated operational model, has returned to a net cash position as of FY24, for the first time since FY06. The consolidated debt-to-equity ratio of Suzlon stood at 0.03 times for the fiscal ended March 2024, against 1.73 times a year ago.
According to a report from Ventura Securities, the company has successfully turned around after years of financial distress, supported by asset sales, debt restructuring, and favourable industry tailwinds. Kranthi Bathini, Equity Strategist at Wealth Mills Securities, says that Suzlon has benefitted from the growing demand for renewable energy the world over. “Renewable energy has been the flavour of the market across the globe. Therefore, sectoral tailwind has helped Suzlon Energy to outperform in the last one year,” he says.
Railways-related firms, including Indian Railway Finance Corporation, Rail Vikas Nigam and Jupiter Wagons also witnessed around 302%, 250% and 226% increase, respectively, in their average-market capitalisation.
YES Securities’ Ambani adds that the outperformance of railway-related counters was clearly the offshoot of the governmental commitment and thrust to improve railway infrastructure and modernise the rail network, as is evident from the Budget allocation boost.
Union Railway Minister Ashwini Vaishnaw has already announced plans to add 2,500 new general passenger coaches, 10,000 more coaches and 50 high-speed Amrit Bharat trains. The government intends to upgrade 40,000 standard rail coaches to meet the Vande Bharat benchmark.
“The railway sector is undoubtedly poised for handsome growth going forward. Increased budgetary allocation reflects the government’s intent. Having said that, most rail stocks are rich in valuations and should be reconsidered when there’s better margin of safety,” Ambani says.
The country’s oldest stock exchange, BSE Ltd, emerged as the fourth-biggest gainer on the list, with its one-year average market cap climbing 284% to Rs 33,274 crore as of September 2024 on the back of strategic moves and improvement in financial performance.
Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, says, “Robust expansion in the derivatives market through Sensex Options and smaller-lot contracts have significantly boosted daily trading volumes and transaction revenue. This strategy has led to higher revenue and PAT (profit after tax), enhancing investor appeal and driving stock growth.”
BSE reported 70% year-on-year growth in consolidated gross sales at Rs 1,390 crore for the year ended March 2024. On the other hand, the net profit of the exchange soared 253% YoY to Rs 778 crore during the same period.
With a jump of nearly 268% in average market capitalisation, Housing & Urban Development Corporation secured the fifth spot. According to JM Financial, the domestic residential market performed well in FY24, reaching the highest-ever absorption rate; pan-India absorption rose by around 20.1% YoY, while supply increased by about 11.5% YoY. NBCC (India), another state-owned real estate major, also witnessed 216% rise in market valuation.
Power sector finance company REC (up 228%) and Kalyan Jewellers (up 217%) also secured a place among the Top 10 gainers.
Sharing his views on Kalyan Jewellers, Sheth of SAMCO Securities says that the stock has surged over the past year primarily due to strong revenue growth and operational expansion. The company posted a 32% growth YoY in consolidated revenue in FY24, attributed to rising gold prices and the launch of new showrooms, which boosted customer footfall significantly.
“Their franchise model improved profitability by reducing operational costs, while strategic expansions in India and the Middle East also supported growth. Additionally, a favourable reduction in import duties on gold further enhanced sales,” Sheth says.
Those that dipped
In contrast, three of the Top 5 companies from billionaire Gautam Adani-led Adani Group were among the major losers on the list— Adani Total Gas, Adani Energy Solutions and Adani Wilmar. With a decline of nearly 49% in average m-cap, Adani Total Gas retreated the most during the study period. The average one-year m-cap of the company declined to Rs 96,741 crore from around Rs 1.9 lakh crore during the previous study period.
Sheth of SAMCO Securities explains that the primary reason for Adani Total Gas’s lacklustre performance stems from stagnant financials, with revenue growth averaging only over 3% per quarter over the past year. “This tepid growth has limited the company’s operating leverage, compressing PAT growth below revenue levels. The sequential PAT increase of just over 2% per quarter highlights the company’s struggle to accelerate profitability, which has weighed heavily on investor sentiment and subsequently impacted share performance,” Sheth says.
Other group companies including Adani Energy Solutions and Adani Wilmar also witnessed declines of 34% and 27%, respectively.
On Adani Energy, Sheth says that while the company has demonstrated solid revenue growth of 14% over the last four quarters, the spin-off of the Dahanu plant resulted in a substantial impairment loss of Rs 1,506 crore.
“This impairment effectively erased much of the operational gains made during the year, leading to a notable drag on earnings,” Sheth says.
According to brokerage Shruti Jain, Chief Strategy Officer at Arihant Capital Markets, shareholder structure concerns have impacted Adani Wilmar. “Confusion regarding potential demerger or merger plans, and volatility in palm oil prices have affected earnings,” she says.
Among the other major laggards, the one-year average m-cap of Rajesh Exports, Navin Fluorine International, UPL, Zee Entertainment, One97 Communications, Alkyl Amines Chemicals, and Bajaj Electricals also retreated somewhere between 13% and 48% in the past one year. Meanwhile, UPL reported a consolidated net loss of Rs 1,200 crore in FY24 against a profit of Rs 3,570 crore in FY23. Rajesh Exports also witnessed nearly 77% dip in net profit in FY24. Alkyl Amines, Navin Fluorine International and Bajaj Electricals also saw fall of 35%, 28% and 39%, respectively, in their bottom line during the financial year ending March 2024.
The road ahead
Unabated outflows by foreign institutional investors have dragged down the Indian equity market immediately after the study period. The BSE Sensex declined 5% from September 30, 2024 to November 25, 2024, while the broader indices, the BSE MidCap and the BSE SmallCap, slipped nearly 7% and 6%, respectively. Global investors offloaded more than Rs 1 lakh crore worth of shares during the same period.
According to market watchers, the present situation is one in which they prefer to wait and watch, with market dynamics being favourable for gold, driven by a number of factors including rising geopolitical tensions, lower interest rates, sluggish global economic growth, and strong demand from central banks.
But green shoots are already visible. Jain of Arihant Capital Markets says the agri-consumption and rural consumption themes have the potential to be significant growth drivers over the next two to three years. “The rural economy is experiencing a revival, supported by higher minimum support prices (MSPs) and increased rural spending. This trend, combined with the digitalisation of rural areas, has bridged the information gap, creating new opportunities,” Jain says.
That will perhaps be reflected in next year’s study.
@iamrahuloberoi, @apex_pawan