BT-India's Most Valuable Companies-2008

Additional Information

Executive Summary:

Last year, around the same time, the mood on the street was bullish, with the bull run showing few signs of petering of, and the Sensex rampaging into 20,000-plus territory. Although the subprime crisis had erupted in the US, few expected it to impact the great India story in the way it has now.

Concern over fundamentals of Indian companies were severe in the last two months (September-October) when the BSE Sensex fell by almost 38 per cent.

The benchmark BSE Sensex now is down by half, real estate is down in the dumps, manufacturers across sectors are cutting jobs and production, and yesterday’s outbound M&A adventurists are scurrying for funds needed to pay up for multi-billion dollar acquisitions made when valuations were near peak levels.

Amidst such gloomy conditions, the BT 500—where the rankings are based on average market capitalisation for the April-October period—serves as a handy barometer of India Inc.’s performance in tough times. Encouragingly, there are quite a few companies who were able to minimise the impact of the global meltdown, and actually show an increase in market value over the previous year’s corresponding period.

For the sixth year in a row, Mukesh Ambani’s Reliance Industries (RIL) grabbed the top slot of India’s most valuable company. Despite the carnage on Dalal Street, its average market cap increased by a handsome Rs 32,400 crore.

The biggest surprise, however, came courtesy the public sector pack, where the overall market cap for the 50 companies in the list increased by almost Rs 1 lakh crore; in percentage terms that works out to a 10 per cent increase.

If 2007 was the year of real estate on Dalal Street—some nine companies got listed on the exchanges in that year—the current year saw these darlings of the stock market falling from grace. The share prices of top real estate players like DLF, Unitech, and Parsvnath Developers fell like ninepins.

There is concern for companies that raised funds through foreign currency convertible bonds and the London Inter-bank offered Rate. Such companies’ market value has already fallen substantially.

The sentiment on the Street is clearly bearish, and analysts feel the market has some way to go before it finds its bottom. In a technical analysis report, Enam Securities expects the Sensex to bottom-out in the region of 7,150-6,150. Now’s the time when the men in the BT 500 will be separated from the boys. This rough patch will provide an opportunity for cash-rich players to consolidate their positions, and result in shakeout of relatively weak players. Expect some big changes in next year’s BT 500…