Sectors, stocks that made investors the most money over the past 5 years

Over the past five years, several businesses have created huge value for shareholders even as the economy sputtered.

ET Wealth studies Motilal Oswal’s 24th Annual Wealth Creation Study to find out what shaped the market.

1. Most wealth was created between 2014-19 than in any 5 year span

Wealth creation only pertains to that exhibited by the top 100 wealth creators. The pace of wealth creation was robust at 22% CAGR vis-à-vis 12% for the BSE Sensex. Valuation re-rating has played a major role in wealth creation.

2. After 7 years, Reliance Industries again emerged the biggest wealth creator

Reliance’s PE re-rating from 15x in 2014 to 22x in 2019 was a key driver behind the 24% stock return CAGR.

3. Wealth created by RIL is the highest ever among previous biggest wealth creators

Reliance’s resurgence may be partly attributed to value migration—expected value unlocking in Reliance Retail (shift from mom-n-pop stores) and Reliance Jio (shift from voice to data).

4. Indiabulls Ventures emerged as the played insignificant role fastest wealth creator again

Six of the top 10 Fastest Wealth Creators had single-digit PE multiple in base year 2014. Bajaj Finance is the only company with a unique distinction of being in the top 10 list of both, biggest and fastest.

5. IndusInd Bank was among the most consistent wealth creators

Studies have shown consumer-facing businesses are less vulnerable to business cycles, and hence offer steady long-term return. However, all investors are greedy to own these stocks, driving up valuations. It may well be time to be fearful in some of them.

6. Financial sector significantly beats its own previous high

Sustaining No.1 position among wealth creators will be a challenge for the financial sector in coming years, with several leading banks and NBFCs witnessing a sharp rise in NPAs and provisions for the same.

7. PSUs played insignificant role

	PSU	Private
Number of wealth creators in top 100	9	91
Share of wealth created (%)	6	94
5-year sales CAGR (%)	3	12
5-year PAT CAGR (%)	22	13
5-year price CAGR (%)	20	23
2014 PE (x)	11	19
2019 PE (x)	10	28
2014 RoE (%)	12	17
2019 RoE (%)	18	15

PSUs have seen a valuation de-rating despite healthy PAT CAGR and rise in RoE. The number of PSUs in the top 100 Wealth Creators is only 9. Wealth created by these 9 PSUs is just 6% of total.