Heroes of the bourses: The Top 100 Wealth Creators

The stock market is known to be a barometer of the economy and the health of companies. Often, markets get a sense of how a company is doing well before the broader public gets wind of things. But markets can also be fickle, and sentiment is quite often driven by current developments, fears or, in some cases, rumours. When we at Fortune India began devising our methodology for this maiden issue of India’s Top 100 Wealth Creators, we had to take all these characteristics of the equity markets into account. Market capitalisation—or how a company is valued on the bourses—is a good indicator of the strength of a company, yes, but we were very clear that the fundamental strength of a company would have to be considered to make our rankings as robust as possible.

Hence, our lists editor Rajiv Bhuva got down to ensuring that the ranking stake into account not just the value created by a company over time, but also its revenue and profitability, to ensure that the companies we pick aren’t just market favourites, but solid performers in their businesses as well. Companies which failed to clock a compound annual growth rate (CAGR) of at least 10% over five years on market capitalisation, revenue and profit, therefore, have failed to make the cut. For revenue and profit, we have taken the five-year period FY14 to FY18, and companies that made a loss in even a single year during this period don’t find a place on this list. Even on market capitalisation, we decided to take into account the average annual market capitalisation, rather than simply the market capitalisation figure at the end of March 31, 2019. To ensure we have companies of a significant size, only those with a turnover of ₹300 crore and above have been considered for the purposes of the ranking. The list you will find in this issue is, therefore, a robust set of 100 companies that have performed well on the market as well as on the business front, and done so consistently. These companies are not flashes in the pan, and have managed to reward shareholders by consistently creating value thanks to a robust and sustainable business model.

Our cover story, in fact, is about two companies which epitomise this concept of value creation. Bajaj Finserv and Bajaj Finance, run by Rahul Bajaj’s younger son Sanjiv, have successfully created enormous value for the Bajaj group and their shareholders. Ever since the finance businesses were demerged out of Bajaj Auto and allowed to chart their separate paths, Sanjiv Bajaj, together with key executives like Bajaj Finance managing director Rajeev Jain, managed to set a scorching pace of growth, becoming huge market favourites in the process. And as deputy editor T. Surendar writes, Sanjiv Bajaj is now in the process of taking this success to the next level, aiming to make Finserv India’s best fintech company by mining data, understanding consumers down to the last detail and ensuring lightning-speed digital delivery of financial products.No wonder then that Bajaj Finance figures at No. 4 on our Top 100 Wealth Creators list, and Bajaj Finserv, which also houses the insurance businesses and holds a shade under 55% in Bajaj Finance, is at No. 16.

I would also urge you to read the stories of two other interesting value creators: auto component maker Minda Industries (No. 2) and entertainment company Shemaroo Entertainment (No. 72). While Minda has outperformed the sector, Shemaroo has transformed itself from being a home video company to a new generation entertainment player which delivers nostalgia smartly through an app. Read on.

This was originally published in the June 2019 issue of the magazine.