The current mood of the market is aptly reflected in the latest edition of the BT 500 study, as the combined valuation of the top 500 companies on the list has risen. But the gains have not been as spectacular as 2022, mirroring the sentiment of investors.
October has been the worst month in CY2023 with the Sensex shedding nearly 3 per cent. The Indian stock markets were witnessing a confluence of sentiments—persistent conviction in the long-term growth story and heightened volatility in the short-term leading to increasing uncertainty amongst the investing community.
That, in a nutshell, also sums up the latest edition of the BT500 study—an exhaustive analysis that Business Today has done every year since 1992.
The cumulative growth in the valuations of the 500 biggest companies by market capitalisation has been subdued this year compared to last year, even though there have been more instances of firms registering a rise in their respective market capitalisations when compared to those whose valuations have shrunk.
Some of the biggest companies on the BT500 list have seen their valuations erode even as their top line and bottom line rose, reflecting the jittery sentiments of investors.
The rankings are based on the average market capitalisation for the 12-month period from October 1, 2022, to September 30, 2023. On an aggregate basis, the combined average market capitalisation of the BT500 companies this year was pegged at Rs 261.53 lakh crore, registering a growth of 4 per cent when compared to the previous year’s figure of Rs 251.33 lakh crore. More importantly, it is significantly lower than last year’s rise of 26 per cent in the combined average market capitalisation of the Top 500 companies.
There has been no change in the Top 3 occupants on the BT500 list with Reliance Industries Ltd (RIL) topping it, followed by Tata Consultancy Services (TCS) and HDFC Bank. The private sector lender registered a 19.4 per cent rise in its average market capitalisation during the period under review, while the other two saw their valuations dip.
This year’s BT500 list includes 47 companies that saw their profit after tax (PAT) more than double in FY23 when compared to the previous financial year. This was, however, lower than last year’s study that had 77 such instances.
Some of the prominent names that saw their PAT more than double in FY23 include Adani Enterprises, Bata India, Ceat, Sun Pharmaceutical, Just Dial, VIP Industries. On the other hand, companies like SAIL, BPCL, Tata Steel and JSW Steel saw a significant fall in their PAT in FY23 when compared to FY22. Figures are in Rs Crore; Figures in brackets indicate YoY change Source: Ace Equity
The cumulative debt of the BT500 firms (ex-BFSI) in FY23 was pegged at Rs 33.34 lakh crore, against cash and bank balance of nearly Rs 8 lakh crore. Some of the companies that saw the maximum jump in their absolute debt levels include Sun Pharma, TV18 Broadcast, Hindustan Zinc, Biocon and JSW Energy. Entities like DLF, Mangalore Refinery & Petrochemicals, Indus Towers, Adani Power lowered their absolute debt in FY23.
With important metrics being captured in the BT500 study every year, it also provides insights on the companies that are bleeding badly. One97 Communications—the parent entity of Paytm—registered a net loss of Rs 1,777 crore in FY23 though it is lower than the previous fiscal’s Rs 2,396 crore. Delhivery, Zomato, and PB Fintech (Policybazaar) are also among the top loss-making companies in the BT500 list though the quantum of losses in FY23 has been brought down by each of the digital majors.
On an overall basis, however, there are only 30 loss-making companies in the BT500 list that clearly shows that both the study and India Inc. have fundamentally strong and robust companies for investors to choose from.
“Emerging market flows will stay iffy, and India may continue to see outflows. But [the] medium-term looks very good to us, and after perhaps more than a decade, the US Fed is armed with 550 basis points of loosening capability as inflation cools, and that augurs well for global liquidity, and hence rates and growth,” said R Venkataraman, Chairman, IIFL Securites.
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