Pharma most consistent in wealth creation: Study

Riding high on its recent overseas acquisition spree, the pharmaceutical sector emerged as the nation's most consistent wealth creator by occupying four of the top 10 slots on the index, a study said.

The study, conducted by Motilal Oswal Securities, rated drug-firm Matrix Laboratories as the fastest wealth creator while assessing country's largest pharmaceutical company, Ranbaxy Laboratories, as the most consistent wealth creator in 1991-2006 period.

"Out of the 10 most consistent performers between 1991 and 2006, four are pharmaceutical companies," the survey said. In terms of consistency, Ranbaxy was followed by IT major Wipro, Dr Reddy's Laboratories, Cipla and HDFC, it said.

Public-sector behemoth ONGC emerged as the biggest wealth creator, leaving behind corporate biggies including Reliance Industries Ltd (RIL) and Indian Oil Corporation (IOC).

The study identified Top-100 wealth creators amongst companies that have added at least Rs 100 crore to their market capitalisation during 2000-06.

"Favourable terms of trade are an important characteristic of wealth creating company and they don't change often. Large unpopular companies have been the source of wealth creation," Motilal Oswal Securities Managing Director Raamdeo Agarwal said in a statement.

Matrix Laboratories, which was rated as the fastest wealth creator, has grown at a compounded annual growth rate of 183 per cent, followed by Kirloskar brothers (170 per cent)and Pantaloon retail (169.9 per cent) and Aban Offshore (169 per cent).

Most companies rated as the fastest wealth creators had a market capitalisation of less then Rs 1,000 crore in 2000, the survey said.

ONGC topped the index, in terms of the size of wealth created with market capitalisation worth a whopping Rs 1,67,800 crore with RIL and IOC following a market capitalisation of Rs 1,07,800 crore and Rs 55,500 crore respectively, the survey said.

The top wealth creators also busted a few commonly held beliefs and added crores of rupees to their market cap. In 2001-03 period, these companies posted a 58 per cent increase in their earnings despite a 15 per cent dip in Sensex.

Wealth creation by state-run entities was however down to 36 per cent from the previous 51 per cent, the study said.

The study said sectors such as software, pharmaceuticals, metals, and refining have contributed to the bulk of exports in the past few years and the trend would soon be replicated by the automobile and the engineering sector with various MNCs announcing their focused plans.