Motilal Oswal Financial Services Ltd. announced the findings of its 29th Annual Wealth Creation Study, a landmark event in its nearly three-decade journey of analyzing wealth creation trends in India. Spearheaded by Mr. Raamdeo Agrawal, Chairman of the Motilal Oswal Group, the study delivers critical insights on wealth creation trends for the five-year period from 2019 to 2024, with a thematic focus on “Creating Wealth Through Bruised Blue Chips.”
Key Highlights: Wealth Creation (2019–2024)
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Highest Wealth Creation Ever: Wealth created during 2019–2024 reached a record-breaking ₹138 trillion, while wealth destruction was among the lowest in history.
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Top Performers:
- Biggest Wealth Creator: Reliance Industries for the 6th consecutive time.
- Fastest Wealth Creator: Adani Green, with a price CAGR of 118%.
- Most Consistent Wealth Creator: Linde India, outperforming the Nifty Total Return Index in all five years with a price CAGR of 68%.
- All-Round Wealth Creator: Adani Enterprises, topping the rankings for the third consecutive time.
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Sectoral Trends:
- Financials emerged as the largest wealth-creating sector, followed by Technology and Utilities.
- PSUs regained prominence, accounting for 17% of the wealth created.
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Wealth Destruction: Despite its wealth creation, the Financials sector also led in wealth destruction, responsible for 5 of the top 10 wealth-destroying companies.
Thematic Study: "Creating Wealth Through Bruised Blue Chips"
The study delves into the opportunities presented by “Bruised Blue Chips”—stocks of high-quality companies whose prices have seen significant declines due to temporary setbacks.
Key Insights:
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What Are Bruised Blue Chips?
- Large, reputable companies with reliable profitability, occasionally experiencing a sharp fall in stock prices.
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Reasons for Bruising:
- Stock Market Factors: General market downturns causing disproportionate price declines.
- Company-Specific Factors:
- External: Economic downturns, adverse regulations, or sector headwinds.
- Internal: Leadership challenges, unsuccessful acquisitions, or governance issues.
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Triggers for Recovery:
- Market rebounds and sector tailwinds.
- Internal improvements like leadership changes, restructuring, and strategic initiatives.
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Investment Strategy for Bruised Blue Chips:
- Create a watchlist of promising bruised blue-chip stocks.
- Assess the reasons for their decline.
- Await recovery triggers such as sector improvements or favorable management changes.
- Buy at attractive valuations, ideally when Price/Book is less than 2x.
Study Methodology
The wealth creation analysis ranks the top 100 wealth-creating companies based on market cap growth from 2019 to 2024, adjusted for corporate actions. It identifies the Biggest, Fastest, Most Consistent, and All-Round wealth creators while offering actionable strategies for equity investing.
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