What is so 'great' about companies we call great? Is it the consistency with which companies grow over a period of time despite multiple challenges or to showcase sustainability and scalability is what defines greatness? For, Saurabh Mukherjea, CEO- Institutional Equities, Ambit Capital, great companies are those which would consistently log at least 10 per cent revenue growth and 15 per cent return on capital employed (ROCE) for years. In his latest book, 'The Unusual Billionaires', Mukherjea has identified seven such companies which met these criteria for every consecutive year over the past decade.
Talking about the stock performance, the shares of these seven companies have risen up to 1732 per cent in the last ten years against just 120 per cent upturn in benchmark index Sensex.
Below is a small dive into these seven 'Unusual Billionaires' which stood out among over 4000 listed companies on Dalal Street:
- Asian Paints: A well-coordinated management despite having multiple promoters, strong grip over nuances of consumer demand, adopting technology in the bud is what made Asian Paints the largest paint company in India. As the company nears its seventy-fifth anniversary in 2017, it is interesting to note that it is the only paint company in the sector which has not seen a change in its controlling shareholders in the past seventy years. The stock of the company has surged 1732 per cent in the last ten years.
- Berger Paints: Berger Paints, India's second largest paint company, has had a remarkable trail of change in ownership. The company got its name from Lewis Berger, a British manufacturer who founded the paint company using his name. Followed by a series of change in owners, at some point, Vijay Mallya also took over the reins. He sold stakes to current owners, The Dhingra brothers - Kuldip Singh and Gurbachan Singh in 1991. Berger Paints made its stock market debut in March 14, 1996 and has advanced 1220 per cent in the last ten years.
- Marico: Marico's journey from a commodities-driven firm to a fast-moving consumer goods major has been fascinating. Parachute and Saffola have remained two of Marico's most popular brands. As 2016 marks the silver jubilee year for the company, Chairman Harsh Mariwala expects the firm to become a Rs10,000 crore emerging markets multinational by 2020. The stock of the company has risen nearly 1000 per cent in the last ten years.
- Page Industries: In 1990, Jockey International (USA) gave the exclusive licence to a Sindhi business family Genomals to launch and expand Jockey's presence in India. Within two decades, the company- Page Industries - became the biggest licensee of Jockey in the world. Their success lies in early recognising the potential at the premium end of the inner-wear market in India. Mukherjea writes that a rupee invested in Page Industries' IPO in March 2007 is worth Rs 34 by April 2016, implying a compounded annual return of 47 per cent.
- Axis Bank: Despite backed by Unit Trust of India (UTI), then India's largest mutual fund and headed by professional bankers from the public sector, Axis Bank saw a rough start when it kicked off operations in 1994. However, under the leaderships of Supriya Gupta, P Jayendra Nayak and Shikha Sharma, the bank has now become the country's third largest private bank. The stock of Axis Bank got listed in markets on November 30, 1998 and has gained 548 per cent in the last ten years.
- HDFC Bank: 'Simplicity is the ultimate sophistication.' These words by Leonardo da Vinci best describes the iconic banking brand HDFC Bank. Mortgage giant HDFC received its banking licence in 1994 and its MD Deepak Parekh roped in Aditya Puri to head the bank since inception. Mukherjea writes HDFC Bank focused on two key principles - building a stable and low-cost liability base, and winning clients by offering unique solutions - to become what it is now i.e. country's largest private sector bank. The stock of the bank has added 550 per cent in the last ten years on Dalal Street.
- Astral Poly: Astral Poly Technik Limited is engaged in manufacturing and trading of pipes, fittings and adhesive solutions. The company's managing director Sandeep Engineer hit rock bottom before building a profitable firm to turn it into India's largest manufacture of Chlorinated polyvinyl chloride (CPVC) - an expensive, but high-quality alternative to GI pipes. The company made its stock market debut on 20th March, 2007 and has returned a stellar 635 per cent since then, adjusted for stock split in September 2014.