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India's biggest wealth destroyers, Reliance tops

Last updated on: December 19, 2013 18:12 IST

India's biggest wealth destroyers, Reliance tops

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While TCS cheered investors becoming India’s biggest wealth creator, Reliance which was a darling of the markets turned out to be a damp squib. 

Shocking investors Reliance, which was the biggest wealth creator for five consecutive years till as recent as 2011, became the biggest wealth destroyer during the period 2008-13, says a study by Motilal Oswal.

The 2008-13 period saw unprecedented wealth destruction of over Rs 17 lakh crore, almost entirely wiping out the total wealth created by top 100 companies.

Reliance Industries

Rank: 1

Wealth destroyed: Rs 1,12,800 crore (Rs 1,128 billion)

Share of wealth destroyed: 7%

Price (CAGR %): -7

The irony is that the biggest wealth destroyer during this period Reliance Industries was the biggest wealth creator five times consecutive times from 2007 to 2011.

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Image: Mukesh Ambani.
Photographs: Reuters

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Reliance Communication

Rank: 2

Wealth destroyed: Rs 92,100 crore (Rs 921 billion)

Share of wealth destroyed: 5%

Price (CAGR %): -36

One-third of the wealth destroyed can be attributed to three broad ownership groups - Reliance (Mukesh Ambani), Reliance (Anil Ambani) and PSUs.

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Image: Anil Ambani.
Photographs: Reuters

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MMTC

Rank: 3

Wealth destroyed: Rs 89,100 crore (Rs 891 billion)

Share of wealth destroyed: 5%  

Price (CAGR %):-29

The stock market's perception of ineffective management (including capital mis-allocation, consistent failure to deliver on guidance, low dividend payout etc) is a major source of wealth destruction. 

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Photographs: Courtesy, MMTC

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NMDC  

Rank: 4

Wealth destroyed: Rs 82,200 crore (Rs 822 billion)

Share of wealth destroyed: 5%

Price (CAGR %): -17

When the market is disappointed, it does not spare even those stocks which were its darlings till recently, the study explains.

Metals/mining sector lost the worst loser with 124 companies among  wealth destroyers.

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Photographs: Courtesy, NMDC

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DLF

Rank: 5

Wealth destroyed: Rs 70,300 crore (Rs 703 billion)

Share of wealth destroyed: 4%

Price (CAGR %):-18 

The top ten wealth destroyers saw an erosion of Rs 7,07,700 crore (Rs 7,077 billion).

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Photographs: Reuters

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Reliance Power  

Rank: 6

Wealth destroyed: Rs 61,900 crore (Rs 619 billion)

Share of wealth destroyed: 4%

Price (CAGR %):-21

Besides pace of earnings growth, markets also value longevity of earnings.

Thus, companies with above-average earnings power are likely to outperform markets even if their earnings growth is in line with average, says the study.

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Photographs: Reuters

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BHEL  

Rank: 7
      
Wealth destroyed: Rs 57,400 crore (Rs 574 billion)

Share of wealth destroyed: 3%

Price (CAGR %): -16

PSUs have lost out on their erstwhile wealth creating presence in sectors like utilities, metals & mining and capital goods.

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Photographs: Reuters
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SAIL  

Rank: 8

Wealth destroyed: Rs 50,600 crore (Rs 506 billion)

Share of wealth destroyed: 3%

Price (CAGR %):-20

Unlike younger companies, smaller companies (based on market cap of base year) seem to have an edge in faster wealth creation.

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Photographs: Courtesy, SAIL

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Bharti Airtel  

Rank: 9

Wealth destroyed: Rs 46,000 crore (Rs 460 billion)

Share of wealth destroyed: 3%

Price (CAGR %): -7

Bharti Airtel is the only telecommunications company among the top wealth destroyers.

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Photographs: Reuters

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NTPC  

Rank: 10

Wealth destroyed: Rs 45,400 crore (Rs 454 billion)

Share of wealth destroyed: 3%

Price (CAGR %): -6

The number of PSUs in the top 100 Wealth Creators is at an all-time low of only 11.


Photographs: Courtesy, NTPC

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