Other stocks outpace A peers in value creation

In 2005, share of stocks traded under B1, B, S, TS, T and Z has gone up from 17% to 24%

The non-A group stocks are no longer the minnows on the equity market turf. They command almost one-fourth of market capitalisation (m-cap) of Indian bourses.

Since the beginning of the calendar year 2005, the share of stocks traded under the B1, B, S, TS, T and Z groups in m-cap has gone up from 17 per cent to 24 per cent.

These stocks accounted for 14 per cent market share in January 2004. The share of the A group stocks in total market cap of India Inc was 90 per cent in 2003.

Moreover, as many as 321 non-A group stocks now have higher m-cap than the A group stocks. In January this year, there were 292 such stocks. The number of the non-A group stocks with a market cap over Rs 1,000 more than doubled from 36 in January to 88 now.

"This is a clear indication that the recent market rally is broad-based. The trend is expected to continue," said a fund manager with a foreign brokerage.

As many as 1,118 stocks traded under the non-A group appreciated over 100 per cent in the first eight months of the calendar year 2005. In contrast, only six of the 190 A group stocks have witnessed similar appreciation. They are Bharat Earth Movers, Crompton Greaves, Reliance Capital, Rolta, Sterlite Biotech and Titan Industries.

The minnows are also commanding high market valuations and trading at a price-to-earnings multiple (P/E) of almost 16 times. They were trading at a P/E of 11.58 times in January 2005 and 9.22 times in January 2004.

The market valuations of the A group stocks have not kept pace with the non-A group stocks as their P/E moved up from 11.77 times at the same time last year to 13.01 times in January 2005 and 14.79 times now.

Since the start of the year 2005, the non-A group stocks have raised value at a scorching space. The aggregate m-cap of the non-A group stocks in the first eight months increased 67 per cent compared to just 19 per cent rise in the case of the A group stocks.

The total wealth of the non-A group stocks holders moved up Rs 196,627 crore to Rs 490,971 crore now from Rs 294,345 crore in January 2005.

During the same period, the combined market value of the A group stocks appreciated Rs 281,309 crore to Rs 17,46, 550 crore now.