IF GROWTH is a constant, then the decade-long saga of The Next 500 would be the adrenaline-pumping chronicle of India Inc.’s unstoppable surge and an ode to the indefatigable spirit of India’s growth story which has hit a crescendo in 2024.

The Next 500, the definitive list of those poised to blitz into the hallowed ranks of the marquee Fortune 500 India, has throttled past a new milestone, with this year’s collective total income nearly doubling (1.9x jump) from the ₹5.63 lakh crore in its inaugural year, 2015, to ₹10.62 lakh crore, this year. But the real deal is the quadrupling of cumulative profit to a massive ₹60,653 crore (See: It’s a perfect 10).

Pertinently, the growth of India Inc.’s emerging giants has largely mirrored the near doubling (1.9x) of India’s GDP from $1.7 trillion in FY14 to $3.3 trillion by FY23. Over the same period, the growth shown by the larger companies in the Fortune 500 India universe is similar with cumulative revenue surging 2.1x from ₹69.36 lakh crore to ₹145 lakh crore and cumulative profit rising more than doubling (2.52x) from ₹4.33 lakh crore to ₹10.94 lakh crore.

There are 63 debutants in the list this year, commanding a cumulative total income of ₹1.25 lakh crore and profit of ₹8,639 crore. The performance has also to be measured against a turbulent landscape punctuated by the pandemic, geopolitical skirmishes, and rising interest rates. Not to mention, India-specific developments of demonetisation and the introduction of GST. Not surprising that the average GDP growth over the past decade (FY15-FY24) was lower at 5.9% over an average 6.8% seen over the decade of FY05-FY14.

Amid such a challenging macro, the strong performance shown by smaller and mid-sized companies has had a rub-off effect on the Street. In CY23, while the benchmark Nifty created a record by ending the eighth consecutive year with a positive return of 20%, it was the Nifty Midcap 100 (+47% YoY) and Nifty Smallcap 100 (+56% YoY) that stole the show by outperforming the benchmark by a wide margin of 27 and 36 percentage points, respectively (See: Small is beautiful). “The recovery of underperforming sectors from the past decade (such as real estate, capital goods, PSUs, industrials, defence, among others), despite not being a major contributor to large-cap indices, led the rally in the broader markets, mentions Gautam Duggad, head of research, institutional equities, Motilal Oswal Financial Services.

The exuberance around emerging firms is reflective in the way the total income cut-off has been on the rise since the exercise began in 2015. For instance, in the first year of listing, the top ranker in the list had a total income of ₹1,690 crore. That topline number decisively passed the ₹2,000 crore mark in 2019 with Himadri Speciality Chemical topping the chart. In the ensuing five years, though the cut-off came below the ₹2,000 crore threshold in 2021 and 2022, it has crossed the ₹3,000 crore hurdle this year with Landmark Cars taking the crown. Similarly, the cut-off for the 500th name on the list, too, has kept rising from ₹725 crore in 2014 to ₹1,239 crore this year. This year’s list has more than 65 companies with total income of over ₹3,000 crore, accounting for a cumulative topline of ₹2.09 lakh crore. But the bulwark of the club is the 197 companies that have a total income of over ₹2,000 crore but less than ₹3,000 crore. They form the core of the list with a cumulative revenue of ₹4.79 lakh crore. The remaining 238 companies make up for companies in the ₹1,000-2,000 crore band, accounting for ₹3.73 lakh crore. Talking about raising the bar higher, it’s noteworthy that for the first time The Next 500 list comprises companies upwards of ₹1,000 crore, with Chalet Hotels making it as the 500th company with a total income of ₹1,239 crore.

That just goes on to show that breaking out of The Next 500 league into Fortune 500 India is not an easy affair. In fact, the cumulative topline and profit of this year’s The Next 500 club is just a fraction of — less than 10% — of that of the Fortune 500 India universe!

As Jack Welch says, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” And we are seeing more and more companies struggling to keep pace with this change. Around 216 companies in The Next 500 list have not been able to migrate to the marquee Fortune 500 India list in the past eight years.

From the maiden list of companies in 2015, around 160 companies have made the cut into the top league of Fortune 500 India over the subsequent nine years. But they have not been able to consistently feature in the marquee list, which means they have either fallen back into The Next 500 or would not have made the cut if the results were not available on the date of listing. Only seven companies have managed to successfully migrate into the Fortune 500 India universe and have since consistently featured in the rankings over the subsequent nine years.

The seven names represent diversified sectors such as banks (Ratnakar Bank), IT services (Sonata Software), consumer durables (KEI Industries), FMCG (Avanti Feeds), trading (Redington), auto ancillaries (Minda) and consumer durables (V Guard). But what is heartening is that the club of seven has expanded by an additional eight members over a five-year time frame (2019-2023), taking the total to 15 companies which have since migrated to the Fortune 500 India club. These eight companies are: chemicals (Deepak Nitrite), auto ancillaries (Schaeffler India), mining & minerals (Solar Industries), diversified (NBFC) (Kirloskar Industries), real estate (Brigade Enterprises), metals (Ratnamani Metals), pharma (Granules India) and textiles (Filatex). Interestingly, Schaeffler India, Brigade, Ratnamani Metals, and Filatex had fallen off the Fortune 500 India list back into The Next 500, though in a five-year period, they did hold on to the Fortune 500 India membership. Similarly, in the 10-year block, the companies that had earlier featured in the Fortune 500 India list, that is prior to 2015, were Sonata Software, KEI Industries, and Minda Corp.

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