How The Club Of India’s 100 Most Valued Firms Changed In 20 Years
More than half the companies that were among India’s 100 most valued firms two decades ago no longer belong to the club.
Fifty-four percent of the constituents among the 100 biggest companies by market value have been replaced in the last 20 years, according to Edelweiss Securities, which analysed 4,800 firms for which data was available between 2000 and 2019. The research firm classified the top 100 as large caps, the next 150 as mid caps and the rest as small caps.
On average, the composition of top 100 changed 11 percent every year—3 percent led by fresh listing and 8 percent due to the change in market capitalisation, Edelweiss said in the report. “The highest contribution to this churn has come from banking financial services insurance (14 of 54 stocks), followed by consumer-oriented (nine stocks).”
Stocks that have maintained their top 20 position for the past two decades are Reliance Industries, Housing Development Finance Corporation Ltd., State Bank of India, ITC Ltd., Infosys and Oil & Natural Gas Corporation Ltd., the report said. Tata Consultancy Services Ltd. debuted in 2004 and since then it has been among the top 20 companies in terms of market capitalisation.
The Market-Cap Migration
On an average, every year, around 23 companies move from small cap to mid cap, the report said. But migration of companies from mid caps to large caps has slowed over the past few years. After the rally of 2004-07, neither of the subsequent bull markets has seen a high churn of companies shifting the market capitalisation profile, it said.
While the average churn rate of companies migrating from mid to large caps was around 10 percent between 2004 and 2007, the rate has slowed to 5 percent since 2010, it said.