Here are the top 10 wealth creating sectors during 2014-19

SUMMARY

Shares of financial services companies were the biggest wealth creators for the third consecutive year, led by private banks and NBFCs. The total wealth created by all the sectors this year stood at Rs 49,048 billion. After merging all the sectors, P/E and RoE of all the sectors saw de-growth. P/E in 2019 stood at 25x compared to 18x in 2014, while RoE came in at 15 percent compared to 16 percent in 2014.

By Mousumi Paul Dec 19, 2019 2:58:02 PM IST (Updated)

With the share of Wealth Creating (WC) rising to 32 percent in 2019 from 19 percent in 2014, the financial sector led the pack (Rs 15,899 billion). The sector's price-to-equity (P/E) stood at 28x in FY19, compared to 15x in 2014. Return on equity (RoE) in 2019 declined to 12 percent from 17 percent in 2014.

The retail sector (Rs 8,813 billion) stood second-in-line, with WC share declining to 18 percent in 2019 from 20 percent in 2014. The sector's P/E jumped to 53x in 2019 from 36x in 2014. However, RoE declined to 29 percent from 33 percent in the last five years.

With only 6 oil and gas companies (Rs 7,800 billion) included in the study, the sector saw a stark jump in share of WC to 16 percent from 1 percent in 2014. The RoE of the sector also improved to 13 percent from 11 percent in 2014. Valuations rose to 16x in 2019 compared to 13x in 2014.

Technology (Rs 5,715 billion) was the 4th sector to report a decline in the share of WC to 12 percent from 24 percent in 2014. The sector's P/E rose marginally higher to 22x from 20x in 2014 while the RoE came in at 29 percent v/s 30 percent in 2014.

The highly affected sector this year was automobiles (Rs 3,216 billion). The share of WC slipped to 7 percent against 11 percent in 2014. The sector saw a rise in both P/E and RoE this year, to 28x from 25x in 2014, and 15 percent from 13 percent in 2014, respectively.

Healthcare sector (Rs 1,607 billion) also underperformed this year. The share of WC came down to 3 percent from 9 percent in 2014. The P/E rose to 31x compared to 23x in 2014. The sector's RoE in the last five years remained constant at 12 percent.

Metals/mining (Rs 1,083 billion) delivered a constant share of WC of 2 percent in 2019 as well as 2014. The P/E of the sector also remained constant at 12x while RoE saw an increase to 22 percent from 11 percent in 2014.

Cement sector (Rs 1,074 billion) saw a decline in WC share to 2 percent from 4 percent in 2014. In the last five years, the sector saw a rise in P/E to 48x from 29x, and RoE declining to 9 percent from 12 percent.

The telecom sector (Rs 88 billion) remained the worst sector this year. The space saw 0 wealth creation this year compared to 2 percent in 2014. The same was in the case of P/E and RoE, which saw no movement this year.