Stock market investors often argue that India’s biggest companies have become ‘too big’ and thus justify their tendency to look at mid-sized or smaller companies for investment.
If we look at the top 100 Indian companies by market value (market capitalisation), one can observe this trend.
For instance, Mukesh Ambani-led Reliance Industries Ltd (RIL) is valued at $210 billion in a market where the combined market value is about $3.4 trillion. So, a single company accounts for 6 per cent of the total value.
If we add m-caps of all the top 100 companies, the combined market value will be $1.9 trillion i.e. 3/4th of the entire Indian market.
Have Indian large-cap stocks become too big? The answer is an emphatic NO, if one looks at their global peers.
Here are infographics to prove this point and one nifty quiz at the end to test your knowledge. Read on.
How big are we
Ask any seasoned Indian equity investor about the biggest firms in the country, one will tell youabout Reliance Industries, TCS (Tata Consultancy Services), HDFC Bank, Infosys, ICICI Bank, Hindustan Unilever, State Bank of India (SBI), Bharti Airtel, HDFC and ITC.
With ₹4-17 lakh crore individual market value, these are undoubtedly the giants of Indian listed stock universe. But, India’s giants have barely scratched the surface if one looks at the anticipated economic growth and the size of global companies in their respective segments.
Take the example of India’s IT companies which have pioneered the global delivery model in the offshoring space like Tata-owned TCS, followed closely by Infosys, HCL Technologies (controlled by billionaire Shiv Nadar) and Wipro (controlled by Azim Premji).
At $141 billion market value, TCS is not even 10 per cent of the leader of tech stocks: Apple ($2.5 trillion). One can argue that TCS is not a product company and Apple is one. Even by that standards, TCS at $141 billion is about $40 billion away from Accenture, a tech-oriented consulting giant.
TCS is not alone. In e-commerce, we have FSN E-commerce (Nykaa) at around $6 billion but the global leader, Amazon is sitting pretty with over $1 trillion in market value. In the case of banks, HDFC Bank ($114 billion) is roughly one-third of JPMorgan Chase (JPM)‘s $370 billion valuation.
Use the interactive infographic below to see how India’s biggest firms fare against peers in markets such as the US, China, Japan and Germany. You can click on a sector or country to expand the infographic. All numbers as on October 30, 2022.
Sector-wise analysis
Except sectors such as ports (Adani Ports and SEZ), tech/IT services (TCS) and restaurants (Jubilant Foodworks), most of the Indian companies are yet to reach a market value/size that can rival global leader.
The firms aforementioned are ranked within top-10 in their respective segments.
With the growth in economy, the giants of Indian listed universe have to grow 5-180 times to attain the market value of the leaders in their categories.
For instance, compared to Maruti Suzuki India, China’s BYD is over two times larger at $90 billion m-cap, while Tesla of the US is 20 times bigger at over $700 billion.
Similarly, Sun Pharma has to multiply its current m-cap by a factor of 15 to attain the size of Johnson & Johnson. Likewise, Delhivery has to grow its m-cap by 48 times to reach the size of United Parcel Service (UPS).
Below is a table on how big are China and America listed companies vis a vis India’s biggest large-caps operating in a given segment.
Origins of biggies
If one looks at the origins of top 100 listed companies globally, the US tops the list with around 65 entries.
Apple, Microsoft, Alphabet (Google’s parent), Amazon, Tesla, Berkshire, UnitedHealth, Exxon Mobil., etc.—the list is endless.
China comes next with 9 companies with the likes of Kweichow Moutai, Tencent, ICBC, Alibaba, etc., while India has only 3 entries so far—RIL, TCS and HDFC Bank.
Saudi Arabia is home to the 2nd biggest company by m-cap: Aramco, but that’s its only claim to fame in this list.
Look at the infographic below to find out where the top-100 biggest listed firms are strewn across the globe. Move your cursor/finger over the places highlighted on the map to see how many giants are from each nation.
Wealth creation journey
One thing is for sure. As Indian companies are getting bigger and bigger, they have created wealth for their promoters.
Here is a look at how India’s top-10 richest stack up. Gautam Adani of Adani Enterprises tops the list, followed by Mukesh Ambani (RIL) , Radhakishan Damani (Avenue Supermarts), Shiv Nadar, Savitri Jindal (JSW Steel), Dilip Shanghvi (Sun Pharma), Hinduja brothers (IndusInd Bank), Kumar Birla (Ultratech), Bajaj family (Bajaj Auto), and Sunil Mittal (Bharti Airtel).
Below is an interactive infographic on the details related to India’s top 10 richest.
Take the quiz
If you think you have gained some knowledge about the who’s who of biggest listed firms in the world and India, take the quiz below to test your knowledge. All the best!