India’s fastest growing Companies

Dalal Street magazine published a useful article on India’s fastest growing Companies. It picked 25 Companies in each of 3 categories (large caps, mid caps and small caps) basing on their sales growth over the past 5 years. These companies constantly reported increase in sales from FY03 to FY08. But many of these companies (especially real estate players) may not maintain same sales growth in FY09. It is not ethical to write about all these companies as the issue is still on stands. But I am listing some of my favourite companies (along with rank) for reference. Please do your own research before investing in them.

India’s fastest growing Companies:

A. Large Companies (sales of more than Rs 2,500 crore):

1. Videocon Industries: Dhoots are making strategic moves. Company paid higher advanced tax in September. When will this sleeping giant wake up in stock markets?

2. Bharti Airtel: Consistent performance but don't expect fireworks.

8. Sesa Goa: Slow down in China is a bad news over short term.

9. Thermax: Good performer.

15. HDFC Bank

20. NMDC Limited


B. Medium Companies (Sales of Rs 600 crore- 2,500 crore): Many of these companies are operating in niche space and strategically diversifying into emerging sectors.


5. ICSA India Limited: Steep correction due to FII selling.

9. Shriram EPC Limited: very good results.

12. Electrotherm: Largest electric vehicle maker.

13. Rohit Ferro-tech:

23. Subhash Projects and Management: Good long term play.


C. Small Companies (Sales less than Rs 600 crore): Many of these small caps have the ability to become mid caps and large caps over the next 3-5 years. Don’t give too much importance to recent price correction. These shares are strictly meant for patient long term investors.

14. MIC Electronics

15. Tanla Solutions

20. Geodesic Information

21. Bartronics India

22. OnMobile Global

Note: These companies were selected by the magazine basing on their sales growth over the past 5 years. But past performance is not a guarantee for future performance. Rising costs, global meltdown and real estate crisis may affect the performance of some of the companies in the list. But it provides good insights over the performance of some of the best Indian companies.

Request to readers: Some readers are mailing me with ordinary requests like “what is stock market?” and innocent questions like “how to invest in stock markets?” etc. It is difficult to answer to these vague questions through blog or mail.

Significant news:

1. RBI cut CRR by 50 basis points to increase liquidity in the system. Although RBI stated it as a temporary measure, it is an aggressive timely measure by Reserve Bank of India. Interest rate sensitive stocks will react positively to this news.

2. SEBI removed restrictions on P-notes. This will have significant impact on the FII investments. Indian markets may react positively to these liquidity and sentiment boosting decisions. These steps may take BSE Sensex to above 13,000 levels if global conditions will not affect Indian markets. But global economic situation is gradually deteriorating from bad to worse.

Must read: Wonderful article on legendary acts of Warren Buffett and J.P. Morgan during extreme financial crisis. Buffett will be remembered forever for his daring acts like Morgan.

Financial note: Derivatives were invented as hedging instruments but many traders are using them as investment vehicles especially by investment banks which led to their downfall. According to some rumors, most of the hedge funds are also in trouble. If that is true, we will see big shocks in global stock markets. Global banks are trying hard to overcome this crisis by infusing liquidity into system (unlike in 1929). Will they succeed?

Image courtesy: Bloomberg.

Worrying sign: Credit crisis is gradually spreading to European markets. Biggest banks of Belgium and Germany were rescued by Governments. You will hear more bankruptcy news from England and Spain banks in the coming days. Unless all major economies and central banks take aggressive coordinated measures, this credit crisis will take the economies of United States and Europe into deep depression. If China will decide to sell its foreign reserves, American economy will go into depression within 1 week of its selloff. That’s the severity of this crisis. You may never experience this range of economic crisis in your life time. After the current turmoil, some positive reforms will happen in the global economy which augur well for long term financial growth.

Effect on India: Indian IT companies will be severely tested in the coming days. According to current situation, Europe will go into deep crisis within 1-2 months. Bailout measures by American and European Governments are not yielding desired results. So diversification by export companies will not help them in these times due to global crisis.

Unbelievable statistic: German car maker Volkswagen shares are trading at 2 decade high. Do you believe it? Strange things always happen in stock markets.

Must read:

1. What happened during the last depression in 1929? 97 years old financial adviser who saw and lived through 1929 depression shared his experiences.

2. Google knol debate on financial crisis

UK in recession: According to British Chambers of Commerce (BCC), United Kingdom (UK) is already in recession fundamentally but not technically (two consecutive quarters of negative economic growth). British Government finalised bailout package to save its ailing banks.

BBC on credit crisis: BBC website created a separate section on “global financial crisis” to give its visitors a complete idea about this worst ever economic crisis. Visit this page to get an idea on what is happening in various European countries and how they are tackling this economic crisis.

Positives from this financial crisis:

1. Financial reforms will occur after the bloodshed which augurs well for future real growth. Good companies with strong fundamentals will bounce back strongly.

2. Investors will stay away from irrational computer based trading habits. They will try to use commonsense and live in real world.

3. Next bubble will take time to occur due to careful lending habits by financial institutions. Investors may hesitate to buy penny stocks. Will they change?

4. Investors will think about valuations and fundamentals instead of supports and resistances. Believe in commonsense, earnings and values but not in graphs and machines.

5. Investors will at least think that long term means 2 years but not 2 days.

6. Gutsy accumulators will become millionaires within 3-4 years. I sincerely believe in this thing. But new sectors will rule the world. You will be rewarded for your patience and strong mentality.

7. Global economic direction will shift from west to east. But these countries need to innovate instead of becoming copycats.

8. Aggressive steps by various Governments will prevent the damage to some extent. But we will know the real impact of these steps only in 2009. Crisis is rapidly deepening and many countries are reacting slowly due to underestimation. Just see the careless statements by Indian Finance Minister!

9. If India invests heavily in agriculture and infrastructure, we will rule the world by 2025, by that time world will face a severe food crisis including China.

10. From mid 2009, we will see a new world economy with more stable money flows. Please wait patiently until that time. Don’t get panic if you are a long term investor.

Note: I can understand the panic situation of investors when even good stocks are correcting by more than 50% in just 10 days. But investors should not sell their holdings unless you need money. Please stay away from companies whose businesses depend on America or whose businesses depend on the consumption of software employees (Real estate and multiplexes etc). They are going to be tested heavily.

Financial quote: "How symbolic that Chinese astronaut takes a spacewalk while the US Treasury Secretary is on his knees." – Professor John Gray.

Advice to long term investors: If you are a long term investor, current crisis will test your patience levels. Please do not take any panic decisions. Things will return to normal after the current turmoil. You will get exceptional returns if you can able to invest in stock markets for 24-30 months. Please be patient but never forget the lessons you learned from this current credit crisis.

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