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Thematic Study19 December 2008
Great 
Good  
 
Gruesome 
13TH ANNUAL WEALTH CREATION STUDY (2003 - 2008)
Raamdeo Agrawal
(
Raamdeo@MotilalOswal.com
 ) /
Shrinath Mithanthaya (ShrinathM@MotilalOswal.com)
Understanding of Great, Good and Gruesome companies is critical to investment success.
Great time to buy Great companies (perpetual bonds) at reasonable prices, as interest rates arelikely to remain low for quite some time.
Gruesome companies are best avoided.
Market is likely to see a sector churn - dominance of commodities will probably give way to usersof commodities.
Corporate profit boom of last five years is unlikely to continue. However, we have probably seenthe market bottom at Sensex levels of 7,700.
We thank Mr Dhruv Mehta (dhruvlmehta@gmail.com), Investment Consultant, for his invaluable contribution to this report.
THE BIGGESTTHE BIGGESTTHE BIGGESTTHE BIGGESTTHE BIGGESTTHE FASTESTTHE FASTESTTHE FASTESTTHE FASTESTTHE FASTESTTHE MOST CONSISTENTTHE MOST CONSISTENTTHE MOST CONSISTENTTHE MOST CONSISTENTTHE MOST CONSISTENT
WWWWWealthealthealthealthealth5-5-5-5-5-YYYYYear ear ear ear ear  Appeared Appeared Appeared Appeared Appeared10-10-10-10-10-YYYYYear ear ear ear ear RankRankRankRankRankCompanyCompanyCompanyCompanyCompanyCreatedCreatedCreatedCreatedCreatedCompanyCompanyCompanyCompanyCompanyPricePricePricePricePriceCompanyCompanyCompanyCompanyCompanyin WCin WCin WCin WCin WCPricePricePricePricePrice(Rs b)(Rs b)(Rs b)(Rs b)(Rs b)CAGR (%)CAGR (%)CAGR (%)CAGR (%)CAGR (%)Study (x)Study (x)Study (x)Study (x)Study (x)CAGR (%)CAGR (%)CAGR (%)CAGR (%)CAGR (%)1Reliance Industries3,077Unitech284Infosys1025.72ONGC1,593Jai Corp216Hero Honda1016.53Bharti Airtel1,505MMTC187Ranbaxy Labs108.74NMDC1,356Financial Technologies177Sun Pharma946.05MMTC1,084BF Utilities173Reliance Industries940.56BHEL952Aban Offshore160HDFC940.27Larsen & Toubro813NMDC158Cipla921.88SAIL727Godrej Industries155Satyam Computer919.29State Bank of India701Sesa Goa152Piramal Healthcare916.610ITC617REI Agro150ITC913.9
TTTTTOP 10 WEALOP 10 WEALOP 10 WEALOP 10 WEALOP 10 WEALTH CREA TH CREA TH CREA TH CREA TH CREA TTTTTORS (2003 - 2008)ORS (2003 - 2008)ORS (2003 - 2008)ORS (2003 - 2008)ORS (2003 - 2008)HIGHLIGHTSHIGHLIGHTSHIGHLIGHTSHIGHLIGHTSHIGHLIGHTS
 
Contents
Objective, Concept and Methodology3Wealth Creation Study 2003-2008: Findings4-18Theme 2009: The Great, the Good and the Gruesome20-33Market Outlook34-37Appendix I: MOSL 100 – Biggest Wealth Creators39-40Appendix II: MOSL 100 – Fastest Wealth Creators41-42Appendix III: MOSL 100 – Wealth Creators (alphabetical)43-44
 
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19 December 2008
Wealth Creation Study 2003-2008
Abbreviations and Terms used in this report
ABBREVIATION / TERMDESCRIPTION
2003, 2008, etcReference to years for India are financial year ending March, unless otherwise statedAvgAverageCAGRCompound Annual Growth Rate; All CAGR calculations are for 2003 to 2008unless otherwise statedL to P / P to LLoss to Profit / Profit to Loss. In such cases, calculation of PAT CAGR is not possiblePrice CAGRIn the case of aggregates, Price CAGR refers to Market Cap CAGRRS BIndian Rupees in billionWCWealth Creation / Wealth CreatedWealth CreatedIncrease in Market Capitalization over the last 5 years, duly adjusted for corporateevents such as fresh equity issuance, mergers, demergers, share buybacks, etc.
 
Objective, Concept and Methodology
Objective
The foundation of Wealth Creation is in buying businesses at a price substantially lowerthan their “intrinsic value” or “expected value”. The lower the market value is comparedto the intrinsic value, the higher is the margin of safety. In this year’s study, we continueour endeavor to cull out the characteristics of businesses, which create value for theirshareholders.As Phil Fisher says, “
 It seems logical that even before thinking of buying any commonstock, the first step is to see how money has been most successfully made in the past.
” Our Wealth Creation studies are attempts to study the past as a guide to the futureand gain insights into How to Value a Business.
Concept
Wealth Creation is the process by which a company enhances the market value of thecapital entrusted to it by its shareholders. It is a basic measure of success for any commercialventure. Wealth Creation is achieved by the rational actions of a company in a sustainedmanner.
Methodology
For the purpose of our study*, we have identified the top 100 Wealth Creators in the Indianstock market for the period 2003-2008. These companies have the distinction of havingadded at least Rs1b to their market capitalization over this period of five years, afteradjusting for dilution. We have termed the group of Wealth Creators as the ‘
 MOSL - 100’
.The biggest and fastest Wealth Creators have been listed in Appendix I and II on page 39and 41, respectively. Ranks have been accorded on the basis of Size and Speed of WealthCreation (speed is price CAGR during the period under study).On the cover page, we have presented the top 10 companies in terms of Size of WealthCreation (called THE BIGGEST), the top 10 companies in terms of Speed of WealthCreation (called THE FASTEST), and the top 10 companies in terms of their frequency of appearance as wealth creators in our Wealth Creation studies (called THE MOSTCONSISTENT).
Theme 2009
Our Theme for 2009 is
The Great, the Good and the Gruesome
, discussion onwhich starts from page 20.
* Capitaline database has been used for this study
 
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Wealth Creation Study 2003-2008
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jithmon

Can you please send me a PDF file of this report at vivekcool2004@gmail.com

reply04 / 10 / 2009
joshipramod

The Scribd page did not have download link. Can you please send me PDF file for this report on joshipramod@rediffmail.com

reply01 / 27 / 2009
drrajivkumarsharma9552

Pl send the PDF file of this article to me. Thanks

reply01 / 26 / 2009
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