Mumbai, Dec. 12: ITC has emerged as the biggest wealth creator in the country, according to a study by Motilal Oswal Financial Services, beating Reliance Industries, which held the tag for five years.
The cigarettes-to-hotel conglomerate broke the stranglehold of oil and gas companies as India’s biggest wealth creators. ONGC topped the list for three years before RIL.
ITC has not only posted robust financial numbers, its stock withstood the environment of slowdown and gave positive returns to its shareholders.
According to the 17th Wealth Creation Study (2007-12) by Motilal Oswal Financial Services, the consumer sector bounced back with ITC emerging as the largest wealth creator, TTK Prestige the fastest and Hindustan Unilever back in the top 10. The financial segment has emerged as the largest wealth creating sector for the second time in a row.
The financial services firm said the leading consumer companies had an “Economic Moat” and were likely to remain fountainheads of wealth creation.
The study views wealth creation as the difference in market capitalisation over the period of five years, after adjusting for equity dilution.
Earlier, the firm ranked the top 100 wealth creators in descending order of absolute wealth created. This year, it introduced a condition that the company’s stock price should outperform the benchmark index (the BSE Sensex) during the study period.
Both RIL and ONGC underperformed the Sensex by posting relatively lower compounded annual growth rate.
Kotak Mahindra Bank retained its place as the most consistent wealth creator. However, the telecom sector moved from a leading wealth creating sector four years back to the top wealth destroyer in 2012. Reliance Communications led the list of wealth destroyers during the period.
Given the tough competition faced by various companies, the firm said having an “Economic Moat” would be significant. Motilal Oswal Financial Services said an Economic Moat protects a company’s profits from being attacked by a combination of multiple business forces.