15 promoter groups’ m-cap up Rs 80K crores

M&M, Adani, OP Jindal, Bajaj & Reliance ADAG see wealth zoom on post election euphoria

IN JUST over a month since the general election results on May 16, 15 promoter groups in India saw their combined wealth on the bourses increase Rs 80,000 crore, in terms of market capitalisation. This is more than 1.5% of the country's GDP, a SundayET analysis shows.

According to the analysis, wealth of promoters of the Anand Mahindra-led Mahindra & Mahindra group grew at the highest rate. The promoters' wealth appreciated by 58% to Rs 11,643 crore. According to Hitesh Agrawal, head of research at Angel Broking, the wealth creation is mainly due to the fact that Mahindra & Mahindra, which is the flagship company of the group, has performed well on the back of improving condition of the auto sector. Also, it fetched high premium due to its strategic presence in different sectors through several group companies.

Adani Group, Om Prakash Jindal Group, Bajaj Group and Anil Dhirubhai Ambani Group (ADAG) are among the other groups, where promoters witnessed a major growth in their wealth in terms of appreciation in the market capitalisation of the group companies. The wealth of promoters of all these groups grew by more than 35%.

The wealth of promoters of Reliance ADAG, has seen a sharp growth of around 37% to Rs 108,699 cr. According to Mr Agrawal, the major appreciation has happened in the last few days. Reliance Natural Resources and Reliance Power appreciated sharply on the favorable decision of the court on the gassharing dispute between Reliance Natural Resources and Reliance Industries.

The KP Singh-led DLF group, which lost most of its market capitalization in the last bear phase, has also appreciated substantially. The wealth of the promoters went up by 25%, thanks to the easy availability of funds and improving demand in the real estate segment.

Among the laggards are Azim Premji led Wipro, Bharti Group of Sunil Bharti Mittal and Mukesh Ambani led Reliance Group. The promoters' wealth of Wipro remained flat. Wealth of promoters of Bharti Group appreciated by less than 1%.

According to Waqar Naqvi, CEO at Taurus Asset Management Company, the reason behind underperformance of the Bharti Group, is the fact that companies that performed last year, have not performed well in the last couple of months. Bharti Airtel was one of the outperformers last year. "Moreover we are not very bullish on the telecom sector as we do not see any major upside in the near term," said Naqvi.

In case of the Mukesh Ambani led Reliance group, promoters' wealth grew only by 4.13% to Rs 196,847 cr. Company wise, promoters' wealth in Reliance Industries grew by merely 4%, whereas, in Reliance Petroleum, wealth appreciated by 4.4%. According to Mr Naqvi, the underperformance was mainly due to over leveraging. Also, the base is much higher.

According to a research by rating agency CARE in May 2009, the major performing business groups of FY09 were Munjal Group, Bharti Group and Mukesh Ambani led Reliance Group. Interestingly, promoters of only reliance ADAG found their place in the top five groups where wealth of promoters grew most in the last one month.

In order to arrive at the net promoters' holding, we have deducted the holdings of government and financial institutions & banks from the total promoters' holdings. Also, for the analysis, only listed companies have been considered.