With a 3 per cent surge in its share prices on Friday, auto major Maruti Suzuki India overtook IT-bellwether Infosys and upstream oil company ONGC to become the eighth most valued firm in India. Over the last three years, the company’s market capitalisation — at Rs 2,25,079 crore — has jumped nearly four times from Rs 57,939 crore at the end of April 2014.
Other major shifts in the market cap sweepstakes over the last three years have been the rise of HDFC Bank, which is now the third largest Indian company after TCS and Reliance Industries and the rise of consumer goods giant Hindustan Unilever from being the 14th largest company to sixth now. Even HDFC Limited and Kotak Mahindra Bank have gained 5 and 7 spots to become fifth and 13th most valued. Maruti Suzuki emerged as the biggest gainer among Sensex companies during this three-year period and has gained 12 positions since October 2014 when it became the 20th company in India to enter the Rs 1 lakh-crore club.
Experts say that this trend is a reflection of the strong consumption story over the last three years and the biggest gainers during this period have been automobile, FMCG and consumer goods companies along with retail lenders. A look at the top 10 companies at BSE by market cap shows that over the last 10 years, four companies have been edged out of the top 10 list — Bharti Airtel, NTPC, Wipro and ICICI Bank. In fact, ONGC which was the second largest by market cap ten years ago, has now slipped to 10th.
In the auto sector, it is not just MSIL that has witnessed a great run. Eicher Motors has grown even faster and from being a Rs 16,700-crore company in April 2014, its market cap hit Rs 80,981 crore on Friday. While Hero Motocorp and Bajaj Auto have grown by 72 and 50 per cent, respectively, auto ancillary majors such as Motherson Sumi and Bosch have witnessed their market capitalisations grow 188 per cent and 120 per cent, respectively. In fact a look at the top 40 firms by market cap shows that one out of five companies in the list is an auto company now.
At a time when the IT industry faces pressure on account of growth concerns in the United States, including growing visa concerns, and metal and oil exploration companies suffering from a decline in commodity prices, the auto industry has seen a strong growth and the passenger vehicle sales grew from 25.03 lakh units in 2013-14 to 30.46 lakh units in 2016-17 driven primarily by Maruti Suzuki. The company’s market share in the period has grown from 42.09 per cent to 47.6 per cent. Similarly, the two wheeler segment has witnessed the annual domestic sales jump from 1.48 crore in FY14 to 1.75 crore in FY17.
A broader look at sectoral performance also shows how auto index grew faster than several prominent sectors such as IT, metal and oil and gas at the stock market. At the BSE, while the auto index rose 83 per cent between April 30, 2014 and June 9, 2017, the IT index rose 15 per cent and the oil and gas index rose 44 per cent. Even the metal and the healthcare index rose 14 per cent and 32 per cent, respectively. The Sensex in the same period grew 40 per cent.
MSIL’s growth at the stock markets has far outpaced the growth of IT companies and oil exploration companies. While TCS and Infosys have seen their market cap grow by 15 and 19 per cent, respectively, over the three year period, the market cap of ONGC declined 22 per cent in the same period. Even Coal India saw its market capitalisation erode almost 12 per cent during the period.