It’s not just unlisted start-ups that have lost valuation power in recent times. The broader market correction and sharp fall in rupee against dollar since October 2021 peak have shaved off over $660 billion market value in listed stocks, with 60 companies such as Dilip Buildcon, Indiabulls Housing, HEG, Vaibhav Global, Manappuram, Nazara and RBL Bank losing the coveted billion-dollar market capitalisation (m-cap) status. Up to 70 per cent correction in individual stock prices and the rupee falling to 79 from 75 levels versus the greenback have led to a double whammy effect.
On the other hand, a handful like Sundaram Clayton, Shree Renuka and GNFC have entered the billion-dollar club braving the inclement weather in the equity markets.
Elite club
When the BSE Sensex hit its lifetime high of 62,245.43 points on October 19, 2021, a listed company required a market capitalisation of ₹7,512 crore to enter the league of billion-dollar companies based on prevailing USD-INR rate of 75.12.
There were about 400 companies, headed by the likes of RIL, TCS, HDFC Bank, Infosys and HUL that had the billion-dollar m-cap status.
Eight months on, the situation has changed. The Sensex has lost 15 per cent from its peak, and individual stock prices have seen much bigger declines. Thanks to the incessant selling of Indian equities by overseas investors, the rupee has plumbed to 79 levels against dollar. As on July 1, a listed player needs to muster ₹7,895 crore to make it to the same billion-dollar m-cap club. Naturally, the billion-dollar club has shrunk to about 340 today.
The combined m-cap of billion dollar companies has dropped by to $2,665 billion now from $3,329 billion in October 2021. A dozen giant companies including Wipro, Bajaj Finance, Bajaj Finserv, HDFC and Avenue Supermart, each lost $10 billion in m-cap during this period. On the other hand, five Adani group stocks — Adani Power, Adani Transmission, Adani Ent, Adani Total Gas and Adani Green — added $6-15 billion in m-cap during this period, thanks to 40-110 per cent spurt in stock prices.
While the giant companies can lose a few billion here and there and still remain in the list, it is the relatively smaller players that face the music. Add to that, the ongoing correction at individual stock prices has been brutal for many.
Exits and entries
While the Sensex has dropped by 15 per cent, the companies that lost the billion-dollar status have witnessed an average 35 per cent price plunge. For instance, gold loan NBFC Manappuram had a m-cap of $2.25 billion in Oct ‘21 peak, but a sharp stock price drop has meant a 58 per cent erosion.
The stock is out of the billion-dollar club today. This story has played in numerous instances such as Welspun India, HEG, Nazara, Zensar, RBL Bank, Lux Industries and Dilip Buildcon — where the m-cap has plunged 50-70 per cent. The BFSI and the IT sectors account for the largest chunks, followed by chemicals, pharma, textiles and equipment.
The task of gaining m-cap is a difficult one when equity prices are falling. For instance, of the 1,100-odd stocks in the BSE Allcap index, three out of four stocks have lost value since the Oct’21 market peak. So, the number of entrants into the billion-dollar club is low.
These include Sundaram Clayton, GNFC, Shree Renuka, Borosil Renew, Elgi Equipments, Easy Trip and RHI Magnesita, thanks to 20-70 per cent jump in stock prices in this period.