In May 2012, when Dilip Shanghvi announced he was relinquishing his job as chairman of Sun Pharmaceuticals to make way for Israel Makov, former CEO of Teva Pharmaceuticals, everyone wondered why the 58-year-old low-profile Shanghvi, who built Sun Pharma from the ground to one of the world's most profitable makers of generic drugs, gave up the top position.
Shanghvi has surprised all in other ways, too. The year 2012-13, which draws to a close on Sunday, has seen the now managing director of the pharma giant leading the company to the league table of India's top-10 business groups by market value. It was 12th in 2011-12.
Sun Pharma is now India's eighth-most-valuable business house, ahead of older and more diversified business houses, such as the Bajaj, OP Jindal, Anil Ambani, UB, Godrej and Hinduja. (CHANGING PECKING ORDER)
Sun Pharma was the best performer among large-cap stocks, rising 45 per cent in FY13, compared with eight per cent appreciation in the BSE Sensex during the period.
Mahindra Group was another big gainer, adding 32 per cent and jumping four notches to emerge the seventh-most-valuable business house at the end of March 2013. It was 11th in FY12. The group's flagship Mahindra & Mahindra was up 24 per cent year-on-year, accounting for nearly half the rise in the group's market value last financial year.
For shareholders, however, the best performer was Mahindra Satyam, with a 60 per cent rise in stock price, followed by M&M Financial Services (up 59 per cent).
If Sun Pharma and Mahindras gained the most, on the losing side was the Anil Ambani group, down seven places and out of the list. It slipped to the 15th position, behind Asian Paints. The group's market value declined Rs 30,600 crore, or 40 per cent, with all six group companies witnessing fall in stock prices. The biggest loser were the group's power and infra firms, followed by telecom. Reliance Power was down 47.3 per cent, Reliance Infra by 44.7 per cent and Reliance Communication 34.3 per cent.
The Adani group also went out, losing 20 per cent of aggregate market value following a decline in share prices of Adani Power (down 34.7 per cent) and Adani Enterprises (down 33.6 per cent). The double-digit drop in their market value more than negated the 7.5 per cent rise in Adani Ports' market capitalisation; and the group lost nearly Rs 15,000 crore in market value.
The change in the league table seems to be part of a shift in market preference for companies with stable and predictable earnings growth and superior balance sheets.
This has led investors to preferring quality over growth and turned the table in favour of companies in pharma, consumer goods, retail finance and IT services businesses. Among traditional biggies, Tata Group again beat the broader market, with 14 per cent rise in market value, helping Bombay House maintain its top slot and increase the lead. This was largely due to TCS (its stock went up 35 per cent), which became India's most valuable company with a market capitalisation of Rs 3.07 lakh crore. The incremental growth in TCS' market value more than made up for the decline in those of other key Tata companies.
Aditya Birla Group companies kept pace with the broader market, with 7.2 per cent rise in the group's aggregate market value. While Ultratech Cement and Idea Cellular beat the market, the gains were largely negated by a poor show by Hindalco, which lost 19.3 per cent of its market value. At the aggregate level, the group maintained its fourth rank behind the Vedanta group. Though its performance was nothing to write home about, Mukesh Ambani's Reliance group remained India's second-most-valuable business house.