Winners and losers of the decade

Out of the 2,709 listed companies in India, which traded on December 31, 2019, 1,942 companies have been trading on the indices for nearly a decade. Out of these, 1,095 companies, or 56.4%, have generated a positive compound annual growth rate (CAGR) in their market capitalisation as of December 31, 2019, as compared to December 31, 2010.

During this period, the lowest positive CAGR of 0.01% was registered by two companies— Glenmark Pharmaceuticals and Shiva Texyarn. Glenmark Pharmaceuticals had a market capitalisation of ₹9,799 crore at the end of 2010, which grew by just ₹6.32 crore (0.06%) to ₹9805.3 crore on December 31, 2019. Shiva Texyarn stayed in the positive zone by a mere ₹13 lakh, as its market capitalisation changed by 0.11% in absolute terms from ₹117.6 crore at the end of 2010 to ₹117.77 crore at the end of 2019.

The outlier was Kerala-based Avanti Feeds, a company engaged in shrimp processing and manufacturing of prawn and fish feeds, which saw its market capitalisation jumping at a CAGR of 75.17% from ₹29.3 crore at the end of 2010 to ₹7,963.6 crore at the end of 2019. In absolute terms, the near 272 times increase in the market value of Avanti Feeds was 27,097.95% or ₹7,934.3 crore. The adjusted closing price of Avanti Feeds grew by 22,732% during these years, from ₹2.56 a share at the end of 2010 to ₹585.5 at the end of 2019, which was an increase of 72.13% in CAGR terms.

New Delhi-headquartered agrochemical company Bharat Rasayan was the second-highest wealth creator with a 72.68% CAGR increase in market capitalisation, from ₹11.3 crore at the end of 2010 to ₹2,667.9 crore at the end of 2019. Bharat Rasayan’s 235.7 times jump in market value is a growth of ₹2,656.6 crore during this period—23,467.9%. Bharat Rasayan’s adjusted closing price during this period grew 7,201.5% from ₹86 to ₹6,279.3, which works out to 53.58% in CAGR terms.

Just like the wealth creators, the period saw some major wealth destroyers. Educomp Solutions, the Gurugram-headquartered integrated education solutions company which had filed for bankruptcy in 2017 following debt pile-up of over ₹3,000 crore, ranks on the top of the wealth destroyers during this period.

Educomp’s stock quoted at ₹1 a share, down 99.81% compared to the adjusted closing price of ₹532.1 a share on December 31, 2010. In CAGR terms, this fall was 46.62%. While its market capitalisation eroded by ₹5,071.4 crore, from ₹5,083.7 crore to ₹12.3 crore at the end of 2019. The 99.76% erosion of market value was a fall of 45.27% in CAGR terms.

Among the other big names, Anil Ambani-owned Reliance Communications, saw a market capitalisation erosion of ₹29,708.4 crore, from ₹29,949 crore at the end of 2010 to ₹240.6 crore at the end of 2019. The 99.2% fall in market value was a 38.27% decline in CAGR terms. Reliance Communications’ adjusted closing price at ₹0.87 a share was a 99.4% decline (-40.05% CAGR) compared to ₹145.1 a share on December 31, 2010. Other Anil Ambani group companies such as Reliance Power, Reliance Capital and Reliance Infrastructure are also in the negative zone with respective CAGRs of -31.7%, -31.51%, and 27.99% over the last decade.

On an aggregate basis, while 96 companies recorded negative CAGR of 25% or more, there were 102 companies which registered 25% or more increase in market capitalisation on a 10-year CAGR basis. Clearly, excessive leverage took a toll on companies in the decade gone by, and it was amplified by companies like Pun Lloyd, Videocon Industries, Jaiprakash Associates, Jaypee Infratech, Unitech, Cox & Kings, and Housing Development & Infrastructure among others.