>Wealth Creation Study 2004-2009: Findings (MOTILAL OSWAL)

Objective: The foundation of Wealth Creation is in buying businesses at a price substantially lower than their “intrinsic value” or “expected value”. The lower the market value is compared
to the intrinsic value, the higher is the margin of safety. In this year’s study, we continue
our endeavor to cull out the characteristics of businesses, which create value for their
shareholders. As Phil Fisher says, “It seems logical that even before thinking of buying any common stock, the first step is to see how money has been most successfully made in the past.” Our Wealth Creation studies are attempts to study the past as a guide to the future and gain insights into How to Value a Business.

Concept: Wealth Creation is the process by which a company enhances the market value of the
capital entrusted to it by its shareholders. It is a basic measure of success for any commercial
venture. Wealth Creation is achieved by the rational actions of a company in a sustained
manner.

Methodology: For the purpose of our study*, we have identified the top 100 Wealth Creators in the Indian stock market for the period 2004-2009. These companies have the distinction of having added at least Rs1b to their market capitalization over this period of five years, after adjusting for dilution. We have termed the group of Wealth Creators as the ‘MOSL - 100’.

The biggest and fastest Wealth Creators have been listed in Appendix I and II on page 41 and 43, respectively. Ranks have been accorded on the basis of Size and Speed of Wealth Creation (speed is price CAGR during the period under study). On the cover page, we have presented the top 10 companies in terms of Size of Wealth Creation (called THE BIGGEST), the top 10 companies in terms of Speed of Wealth Creation (called THE FASTEST), and the top 10 companies in terms of their frequency of appearance as wealth creators in our Wealth Creation studies (called THE MOST CONSISTENT).

To read the full report: WEALTH CREATION