The most special feature of MOSt Research is the Wealth Creation Report. It is work of the foremost value investor in India and the joint MD and promoter– Mr. Raamdeo Agrawal. An equity research stalwart, Mr. Agrawal analyses the most consistent, the fastest and the biggest value creators in the Indian equity universe every year. Though the study is done every year, the report is timeless in its use. The report is unveiled at a special annual function, where the best are felicitated. The Wealth Creation Report is available on request as soft copy or printed format.

1. 10TH
ANNUALWEALTHCREATION STUDY
2000-2005

2. OBJECTIVE
Wealth Creation studies are attempts to
study the past as a guide to the future and
gain insights into How to Value a Business.

3. CONCEPT
Wealth Creation is the process by which a
company enhances the market value of the
capital entrusted to it by its shareholders.

4. METHODOLOGY
We have identified the top-100 Wealth Creators for the period 2000
2005 in the Indian stock market. These companies have the distinction
of having added at least Rs1b to their market capitalization over this
period of five years.
Wealth Creation
Study
No. of Companies
creating >1b net wealth
2000-05 383
1999-04 294
1998-03 83
1997-02 85
1996-01 71
1995-00 130
1994-99 102
1993-98 124
1992-97 45
1991-96 112

5. TOP 10 WEALTH CREATORS (2000 - 2005)
RANK COMPANY
NET WEALTH
CREATED
(RS B)
APPRECIATION
(X)
1 O N G C 1065.3 6.5
2 Indian Oil 365.5 3.5
3 Reliance Inds. 348.6 1.7
4 St Bk of India 239.9 3.3
5 S A I L 227.4 8.0
6 T I S C O 179.3 5.2
7 B H E L 157.2 6.1
8 ITC 150.8 1.8
9 ICICI Bank 140.9 1.5
10 H D F C 134.8 3.8
THE BIGGEST

6. TOP 10 WEALTH CREATORS (2000 - 2005)
RANK COMPANY
ADJ. PRICE
CAGR (%)
APPRECIATION
(X)
1 Matrix Labs. 167.2 136
2 Aban Loyd Chiles 146.2 90
3 Guj. NRE Coke 140.2 80
4 Sterling Biotech 120.0 52
5 Jubilant Organ. 103.6 35
6 Pantaloon Retail 95.4 28
7 Amtek Auto 95.4 28
8 Sesa Goa 86.1 22
9 Hind.Zinc 80.8 19
10 Bharat Earth Movers 75.7 17
THE FASTEST

7. TOP 10 MOST CONSISTENT WEALTH
CREATORS (1991 - 2005)
RANK COMPANY
APPEARED
IN WC
STUDY (X)
PRICE CAGR
WITH DIV.
REINVEST
(%)
No of
times
(X)
1 Hero Honda Motor 10 40.8 120
2 Ranbaxy Labs. 10 34.7 65
3 Wipro 9 57.1 552
4 Dr Reddy's Labs. 9 43.5 156
5 H D F C 9 41.8 133
6 Cipla 9 39.6 106
7 Nicholas Piramal 8 33.7 59
8 ITC 8 29.5 37
9 GSK Pharma 8 21.6 15
10 Asian Paints 8 21.4 15

8. WEALTH CREATORS COMPARATIVE
PERFORMANCE V/S BSE SENSEX
(31.3.00 TO 31.3.05)
(%)

9. WEALTH CREATORS COMPARATIVE
PERFORMANCE V/S BSE SENSEX
GROWTH : SENSEX v/s WEALTH CREATORS
YEAR Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05
BSE SENSEX 5,001 3,604 3,469 3,049 5,591 6,493
y-o-y performance (%) - (27.9) (3.7) (12.1) 83.4 16.1
Wealth Creators Index 100 86 102 113 262 319
y-o-y performance (%) - (13.7) 18.3 10.9 131.4 21.6
Sensex PE (x) 29.0 13.5 13.7 9.4 12.6 11.7
Wealth Creators PE (x) 13.2 9.7 10.6 6.8 12.1 11.2
5Year CAGR (%) Sensex Index 5.4
5Year Earnings CAGR (%) Sensex 26.3
5Year CAGR (%) Wealth Creators Index 26.1
5Year Earnings CAGR (%) Wealth Creators 30.0

10. WEALTH CREATORS: NATURE OF BUSINESS
Industry
Speed
CAGR
(%)
No. of
Cos.
Contr. To
Wealth
Created
Net Profit
CAGR (%)
Sales
CAGR (%)
Oil & Gas 17.1 11 30.3 22.9 14.5
Banks 32.6 15 15.8 16.5 8.6
Metals 34.6 10 12.6 - 19.4
Engineering 32.9 10 7.3 22.1 12.0
Auto 27.3 10 6.8 31.5 16.6
Petrochem 18.9 3 6.6 26.8 31.1
Pharma 21.2 8 4.8 30.8 18.3
Ultility 41.2 4 3.5 23.0 14.5
FMCG 13.6 4 3.4 21.1 12.4
Cement 26.3 5 3.0 26.1 10.0
Textiles 45.3 5 1.4 - 4.1
IT 0.7 1 0.2 45.4 50.7
Others 42.8 14 4.2 35.8 12.1
Total 22.2 100 100.0 30.0 15.4

11. WEALTH CREATORS CLASSIFICATION BY
MARKET CAP – SPEED VS SIZE

12. WEALTH CREATORS:
BUSINESS ACTIVITY
WEALTH CREATION STUDY FOCUSED (%) DIVERSIFIED (%)
2000-05 97 3
1999-04 96 4
1998-03 98 2
1997-02 96 4
1996-01 100 0
1995-00 95 5
1994-99 96 4
1993-98 93 7

13. WEALTH CREATORS CLASSIFICATION BY PRODUCT ATTRIBUTE
2000-05
WEALTH
CREATED
(RS B)
WEALTH
CREATED
(%)
Brands 1,830 30.1
Commodity 3,981 65.6
Technology 261 4.3
Total 6,072 100.0

14. WEALTH CREATORS OWNERSHIP:
STATE V/S PRIVATE
WEALTH CREATORS: STATE OWNED V/S PRIVATELY OWNED
2000-2005
STATE-OWNED PRIVATE
Number of Wealth Creators 30 70
5-year Earnings CAGR (%) 27 34
5-year Market Cap CAGR (%) 37 20
P/E at the beginning of study period (x) 6.0 24.2
P/E at the end of study period (x) 8.6 14.3
Wealth Created (%) 50.6 49.4

15. WEALTH CREATORS:
NEW V/S OLD ECONOMY
2000-2005
OLD NEW
Number of Wealth Creators 99 1
5-year Earnings CAGR (%) 29.7 45.4
5-year Market Cap CAGR (%) 29.7 0.7
P/E (x) at the beginning of study period 10.7 200.7
P/E (x) at the end of study period 10.7 32.0
% Wealth Created 99.8 0.2

16. WEALTH CREATORS VALUATIONS

17. WEALTH CREATORS VALUATIONS
2000 2005
Sensex
Wealth
Creators Sensex
Wealth
Creators
Median
Price/Book Value 1.93 0.82 3.24 3.09
Median
Price/Sales 1.86 0.50 2.54 1.90
Median
Price/Earnings 12.71 6.84 15.36 14.66

18. WEALTH DESTROYERS
Industry
No. of
Cos.
Net Wealth
Created
Share in Wealth
Destroyed
IT 42 -1,466 56.7
Media 8 -404 15.6
Telecom 10 -335 13.0
FMCG 6 -294 11.4
Consumer Durables 5 -14 0.6
Finance 5 -8 0.3
Others 24 -64 2.5
Total 100 -2,586 100.0
WEALTH DESTROYERS CLASSIFICATION BY INDUSTRY
(2000-2005) (RS B)

19. WEALTH DESTROYERS
No Company
Price
CAGR
(%)
No of
Times
Price
Adjusted
Net
Wealth
Created
PE
FY00
(x)
Profit
CAGR
1 Wipro Ltd -18 0.4 -796.1 507.0 43.2
2 Zee Telefilms Ltd -33 0.1 -364.2 507.7 14.6
3 Hindustan Lever Ltd -12 0.5 -247.8 41.0 -1.8
4 Himachal Futuristic Comm. Ltd -60 0.01 -128.5 141.1 -214.6
5 Satyam Computer Services Ltd -14 0.5 -126.8 191.6 42.0
6 Videsh Sanchar Nigam Ltd -21 0.3 -121.5 20.8 -2.1
7 GTL Ltd -46 0.04 -93.9 41.9 -14.3
8 Mahanagar Telephone Nigam Ltd -13 0.5 -75.7 13.6 -2.7
9 NIIT Ltd -38 0.1 -70.1 35.4 -41.0
10 SSI Ltd -62 0.01 -62.5 99.8 -194.7
TOP 10 WEALTH DESTROYERS (2000-2005) (RS B)

20. “There is absolutely no substitute for paying right price.
In the Bible, it says that love covers a multitude of sins.
Well, in the investing field, price covers a multitude of mistakes.
For human beings, there is no substitute for love.
For investing there is no substitute for paying right price
– absolutely none.”
(Van Dan Berg, OID, April 2004)

21. MARKET OUTLOOK

22. MARKET OUTLOOK
To form our opinion on the markets, we have looked at
the following parameters:
1. Corporate earnings
2. Interest rates
3. Valuations

23. INDIA: CORPORATE PROFIT TO GDP (%)
EXPECT SUSTAINABLE EARNINGS
GROWTH OF 14%

24. INDIA: 10-YEAR G-SEC YIELD (%)
MARKET OUTLOOK

25. EARNINGS YIELD/G-SEC YIELD
DESPITE THE RUN-UP, INDIAN EQUITIES ARE STILL
REASONABLY VALUED
Median 0.48

26. SENSEX & P/E
DESPITE THE RUN-UP, INDIAN EQUITIES ARE STILL
REASONABLY VALUED
Median PE 15.8

27. Theme 2006:
CONSISTENT WEALTH CREATORS-
THE CORNERSTONE OF A SOLID PORTFOLIO

28. 15 YEARS – A DEFINING PERIOD
1991 2005
Growth
(X)
14 Year
CAGR (%)
GDP (Rs B) 5,110 28,305 6 13
Corporate Profits (Rs B) 74 1,404 19 23
Corporate Profits/ GDP (%) 1.5 5.0
SENSEX 1,168 6,493 6 13
Market Cap (Rs B) 852 17,047 20 24
Market Cap/ GDP (%) 16.7 60.2
Risk Free Interest Rate (%) 10.8 6.7

29. TOP 10 CONSISTENT WEALTH CREATORS
Company Industry
No of Times
appeared in
WC study
Price CAGR
(%) with
dividend
reinvestment
Net Wealth
Created
(RSB)
Hero Honda Motor Automobiles 10 40.8 10,829
Ranbaxy Labs. Pharmaceuticals 10 34.7 17,689
Wipro Technology 9 57.1 46,178
Dr Reddy's Labs. Pharmaceuticals 9 43.5 4,175
H D F C Bank 9 41.8 17,241
Cipla Pharmaceuticals 9 39.6 7,521
Nicholas Piramal Pharmaceuticals 8 33.7 3,944
ITC FMCG 8 29.5 31,507
GSK Pharma Pharmaceuticals 8 21.6 4,704
Asian Paints FMCG 8 21.4 3,420

30. TOP 10 CONSISTENT WEALTH CREATORS
Characteristics:
• 9 out of top 10 companies are consumer companies.
• 5 out of 10 are pharmaceutical companies
• All these businesses are non cyclical in character.
• All the companies are leaders in their respective
business segments.
• The companies are highly profitable in terms of return
on networth.

31. ABSOLUTE PERFORMANCE (5-YEAR
ROLLING) OF TOP 10 CONSISTENT
WEALTH CREATORS
Company
Negative
Returns
Returns from
0-25%
Returns from
25-50%
Returns
>50%
1 Hero Honda 0 4 3 3
2 Ranbaxy 1 5 3 1
3 Wipro 1 2 0 7
4 DR REDDYS 1 2 5 2
5 HDFC 1 6 2 1
6 CIPLA 0 3 4 3
7 Nicholas Piramal 2 7 0 1
8 ITC 2 5 3 0
9 GSK Pharma 2 4 3 0
10 Asian Paints 0 9 1 0
Total 10 47 24 18
Average absolute return 29%.

32. The Glut
Hero Honda: Rolling return considering dividend
reinvestment
Year &
Month
Invested Sum
(RS lakhs)
PE
Earnings
Growth
RoE
ROLLING GROWTH
1 YEAR
5
YEAR
10
YEAR
14
YEAR
199103 1 7 79
199203 4 28 -4 47 269
199303 2 12 3 35 -57
199403 5 35 -1 27 193
199503 4 23 26 28 -15
199603 5 22 35 31 30 39
199703 5 12 91 43 5 8
199803 16 23 52 44 193 58
199903 32 29 58 48 101 47
200003 36 20 58 51 12 55
200103 26 11 29 46 -27 38 39
200203 63 14 88 70 140 63 33
200303 39 6 25 75 -38 19 37
200403 104 13 25 65 170 27 36
200503 120 14 11 62 16 28 41 41
Mean 18.0 50.1
Median 14.4 46.6

33. The Glut
Ranbaxy: Rolling return considering dividend
reinvestment
Year &
Month
Invested Sum
(RS in lakhs)
PE
Earnings
Growth
RoE
ROLLING GROWTH
1
YEAR
5
YEAR
10
YEAR
14
YEAR
199103 1 11 27
199203 6 46 36 29 491
199303 4 20 115 38 -34
199403 12 37 80 39 211
199503 11 25 74 22 -6
199603 13 24 22 19 13 67
199703 12 20 14 16 -10 15
199803 13 20 21 16 12 27
199812 10 20 -16 12 -31 -4
199912 35 54 26 14 247 27
200012 26 43 -7 12 -26 16 40
200112 27 32 38 14 4 19 17
200212 37 18 147 36 39 25 26
200312 70 26 27 38 88 47 20
200412 81 44 -34 22 15 18 22 38
Mean 29.3 23.4
Median 24.8 21.9

34. ABSOLUTE PERFORMANCE OF TOP 10
CONSISTENT WEALTH CREATORS (5-YEAR
ROLLING)
Absolute Performance
Negative 0-25% 25-50% >50%
Grand
Total
Deviati
on
from
median
P/E
< -50% 0 1 3 9 13
-25 to -50% 0 2 6 2 10
0 to -25% 0 10 5 3 18
0 to 25% 1 10 5 2 18
25 to 50% 2 9 0 1 12
> 50% 7 15 5 1 28
Grand Total 10 47 24 18 99
100% chance of positive return if bought below median.
Average absolute return 45.7% if bought below median.

35. IF YOU WANT, on a 5 Year basis:
No chance of absolute loss
Out performance to SENSEX of 35%
Absolute performance of 45.7%
The ONLY thing you need to do is:
Buy the Consistent Wealth Creators below the
median valuation.

36. WILL HISTORY REPEAT ITSELF???
Company TTM PE Median PE
1 3M India 31.5 71.3
2 Aventis Pharma 24.4 39.0
3 Merck 12.0 18.6
4 Nestle India 29.3 38.3
5 GSK Pharma 31.1 40.3
6 Castrol India 21.0 25.7
7 Monsanto India 18.0 20.9
8 Pfizer 34.1 38.4
9 Britannia Inds. 24.8 27.2
10 Hind. Lever 33.3 36.4
11 Hindalco Inds. 12.4 13.4
12 Tata Elxsi 22.0 21.9
13 Glaxo C H L 23.3 22.9
14 M I C O 24.0 22.8
15 Wipro 37.7 35.1

37. CONCLUSION
• Fad investing in 2000 at exorbitant prices was the single biggest
source of wealth destruction.
• Commodity companies have gained further importance as a
source of wealth creation.
• At parity, Earnings/Bond Yield is far above the historical median
of about 0.5, signifying limited downside and a potential upside in
the markets.
• Consistent wealth creators can create significant wealth at
respectable pace, with limited risk to the capital, if purchased
below long-term average valuations

38. Thank you