None of India’s top corporates has created wealth this year as equities tracked the worst global selloff in more than a decade after the novel coronavirus outbreak.
S&P BSE Sensex and the NSE Nifty 50 have tumbled about 29 percent each from Jan. 31 till March 31, with 90 percent of the stocks in the benchmark recording losses. So deep is the rout that, according to BloombergQuint’s calculations, the nation’s 18 largest conglomerates wiped off Rs 19.6 lakh crore in investor wealth during the period.
HDFC Group, Tata Group, Mukesh Ambani Group and Bajaj Group contributed the most to this erosion in market capitalisation. Wadia Group, the owner of Britannia Industries Ltd., was the best performer.
The Covid-19 pandemic has stalled business and the International Monetary Fund has already declared a recession. In India, it disrupted an economy that was growing at the slowest pace in more than a decade. The shock is expected to impact earnings in the next two fiscals even though the central bank infused record liquidity and cut rates to their lowest since 2004, and the government announced a Rs 1.7-lakh-crore stimulus.
Among the 18 largest groups analysed by BloombergQuint, shares of four have fallen less than the benchmark. The rest are underperformers.
Here’s how India’s biggest conglomerates have fared on the bourses so far this year:
Wadia Group
The Wadia Goup has seen the least decline in its market cap in the first three months of calendar year 2020. Bombay Dyeing & Manufacturing Co. Ltd., engaged primarily in the business of textiles, has reported the biggest decline in its wealth in percentage terms. In absolute terms, the flagship company—Britannia Industries Ltd.—fell the most.
Tata Group
The Tata Group’s market valuation decreased by more than Rs 2.5 lakh crore so far this year, as shares of its flagships Tata Consultancy Services Ltd., Tata Motors Ltd. and Tata Steel Ltd. slid.
Of the 27 listed Tata companies, shares of only 12 declined less than the benchmark; while the remaining declined between 38 percent and 62 percent.
The decline in TCS came despite the depreciation in the rupee—a weaker home currency benefits IT firms as they bill most of their overseas clients in U.S. dollars—as the Covid-19 outbreak is expected to result in weaker revenue and margin. Shares of Tata Motors and Tata Steel were impacted by lower demand for Jaguar Land Rover vehicles and falling demand and prices of steel.
Mukesh Ambani
The Mukesh Ambani-led Reliance Industries group’s market decreased by over Rs 2.57 lakh crore, led by its flagship Reliance Industries Ltd. The decline in RIL’s share price was largely triggered by lower margins in its mainstay energy business, slowdown in telecom business, possible delay in deleveraging and unfriendly tax proposals.
Godrej Group
Among the Godrej group companies, shares of Astec Lifesciences Ltd. fell the least, while that of their flagship companies Godrej Consumer Products Ltd. and Godrej Properties Ltd. lost most due to a slowdown in their respective businesses.
HDFC Group
All the HDFC group companies fell in the first three months of 2020, taking the group’s market capitalisation down by close to Rs 4.2 lakh crore. HDFC Asset Management Co. Ltd.'s share price declined the most on the back of uncertainty in mutual fund inflows. HDFC Bank Ltd.’s market cap declined the most on the back of expectations of slower revenue growth, weaker fee income growth and a slowdown in consumption which is expected to have a direct bearing on earnings.
L&T Group
The L&T group lost more than Rs 90,500 crore in market led by Larsen & Toubro Ltd. and its non-bank lending arm L&T Finance Holdings Ltd.
For L&T, the fall in share price was largely due to a slowdown in orders, while for L&T Finance it was due to loan growth slowdown, net interest margin contraction, higher credit costs and high share of real estate and infrastructure loans.
Mindtree Ltd. was the only L&T group firm to generate positive returns amid the turbulence in the markets.
Murugappa Group
The Murugappa Group’s performance was impacted by a decline in share prices of its non-bank lending arm, Cholamandalam Investment and Finance Co. Ltd. The company contributed nearly 63 percent to the group’s Rs 18,400-crore erosion in market in the first three months of 2020.
The decline was on the back of expectations of higher slippages due to higher exposure to vulnerable segments—small and medium enterprises, automobiles, commercial vehicles and tractors.
Adani Group
The Gautam Adani-led group’s market capitalisation declined on the back of higher debt and lower growth concerns. Shares of Adani Gas Ltd., which was recently demerged, fell following the lockdown over fears of lower gas offtake.
The group’s flagship Adani Ports and Special Economic Zone Ltd., declined the most on growth concerns following slowing global economic growth.
Birla Group
The Kumar Mangalam Birla-led group’s market fell by nearly Rs 96,600 crore largely led by Hindalco Industries Ltd., UltraTech Cement Ltd. and its holding company—Grasim Industries Ltd.
Lower demand, falling aluminium prices and concerns around the Novelis-Aleris merger led to the fall in share prices. Similarly, UltraTech Cement’s share prices fell as cement demand and prices are expected to trend lower as construction activity slows down.
Shares of Vodafone Idea Ltd., on the other hand, declined following a higher than expected outgo of dues related to adjusted gross revenue case.
ICICI Group
A fall in share prices of ICICI Bank Ltd. was on the expectations of slower growth, moderation in net interest margin, higher credit costs and asset risk due to exposure to vulnerable segments—impacting the group’s market . The ICICI Group’s market eroded by Rs 1.75 lakh crore, 80 percent was due to ICICI Bank.
Mahindra Group
The Mahindra group’s market declined by nearly 39 percent largely led by a sharp fall in Mahindra & Mahindra Ltd. and Tech Mahindra Ltd. While a slowdown in the Indian automobile sector impacted M&M’s , a higher dependence on discretionary spends weighed on Tech Mahindra. That’s because clients usually cut down on discretionary spends, resulting in lower revenues.
Bajaj Group
The Bajaj group companies lost over Rs 2.5 lakh crore in market led by Sanjiv Bajaj-managed — Bajaj Finance Ltd. and Bajaj Finserv Ltd. The Rajiv Bajaj-managed Bajaj Auto Ltd. lost Rs 33,600 crore on concerns over the worst auto slowdown in India in more than two decades.
The market of Bajaj Finance and its holding company Bajaj Finserv declined on the back of concerns around unsecured consumer finance business models that would become challenging in the current pandemic environment.
Jindal Group
A decline in share prices of Jindal group’s steel companies—JSW Steel Ltd. and Jindal Steel & Power Ltd.—impacted the group’s market . JSW Steel’s market capitalisation fell by nearly Rs 30,000 crore, while that of Jindal Steel & Power dropped by Rs 8,700 crore largely on the back of lower demand and reduced prices of the alloy.
Harsh Goenka Group
The market capitalisation of the Harsh Goenka-led business group declined by more than a third largely led by the power equipment maker KEC International Ltd. and the group’s IT arm, Zensar Technologies Ltd.
Shares of KEC International declined because of slower order translation, worsening working capital, and higher interest cost.
Sanjiv Goenka Group
A sharp fall in market of power producer CESC Ltd. impacted the performance of Sanjiv Goenka’s group. While the group lost nearly Rs 7,000 crore in market , Rs 4,000 crore of it came from CESC alone. The power producer was affected by weak market sentiments amid the Covid-19 outbreak.
Essel Group
Among the Essel group companies, Zee Entertainment Enterprises Ltd. was the major loser, whose market declined by nearly Rs 16,000 crore following a weak business outlook given the slowdown, pending receivables from group companies, news flows related to the investigation conducted by Ministry of Corporate Affairs and the telecom regulator’s proposed tariff changes.
Essel group promoters own a little less than 5 percent stake in the company currently.
Hinduja Group
The Hinduja group companies lost nearly Rs 94,000 crore in market in the first three months of 2020—largely due to fall in share prices of IndusInd Bank Ltd. and Ashok Leyland Ltd. While IndusInd Bank’s scrip declined in the aftermath of the Yes Bank fiasco, that of the group’s commercial vehicle maker fell following the worst automobile slowdown in over two decades and investments in related companies.
Future Group
Concerns around high debt at promoter level and high promoter pledged shareholding eroded nearly 72.5 percent of the Kishore Biyani-led group’s market . The biggest decline in market was in its flagship company Future Retail Ltd. The share prices of all future group companies have declined between 25 percent and 78 percent in the first three months of 2020. ICRA recently downgraded the creditworthiness of the promoter company Future Corporation Resources Pvt. Ltd. citing high levels of debt and pledged shares.
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