Family-owned businesses lose Rs 22 trillion in m-cap in FY20

The combined market capitalisation of the top 873 family-owned companies was down 26.3 per cent year-on-year (YoY) to Rs 61.8 trillion at the end of trading on Tuesday. It had grown 6 per cent in FY19 and nearly 20 per cent in FY18. 

The sell-off in the stock market because of likely losses resulting from the lockdown imposed in light of the spread of the coronavirus disease (Covid-19) has taken a toll on India’s family-owned businesses. 

These firms together took a Rs 22 trillion hit on market capitalisation in financial year 2019-20 (FY20) as investors sold shares fearing sharp decline in earnings in FY21. 

The combined market capitalisation of the top 873 family-owned companies was down 26.3 per cent year-on-year (YoY) to Rs 61.8 trillion at the end of trading on Tuesday. It had grown 6 per cent in FY19 and nearly 20 per cent in FY18. 

The biggest hit was borne by business groups with large exposure to financial services, followed by metals & mining and automobile sectors. Groups with large plays in consumer business, especially fast-moving consumer goods (FMCG) and IT services, outperformed peers. 

For example, Avenue Supermart, which runs D-Mart, saw a 56 per cent YoY jump in market capitalisation to Rs 1.42 trillion. Similarly, Asian Paints ended FY21 with gains of 11.3 per cent. 

Bharti group was, however, a surprise winner with 42 per cent YoY rise. The group flagship Bharti Airtel’s market capitalisation was up 82 per cent in FY20, compensating for 49 per cent YoY decline in Bharti Infratel. 

Hinduja Group was the worst performer with 72 per cent YoY decline in group market capitalisation, at around Rs 39,000 crore, down from Rs 1.56 trillion a year ago. The group flagship IndusInd Bank’s market capitalisation was down 78 per cent over the period. 

It was followed by Vedanta group, which saw combined market capitalisation decline 52.4 per cent YoY to Rs 92,268 crore. Other big losers in FY21 were the Mahindras (down 48 per cent YoY)), AV Birla group (down 41.4 per cent YoY), and Rahul Bajaj group (down 31 per cent). 

This was the first annual decline in market capitalisation for Bajaj group since the 2008 global financial crisis. Bajaj Finserv market capitalisation was down 35 per cent in the past 12 months, while its subsidiary Bajaj Finance was down 24 per cent. 

The country’s top two business groups -- Tata & Mukesh Ambani --  however retained their dominance and outperformed peers in FY20. 

Tata group companies’ combined market capitalisation was down 16 per cent YoY in FY20 because of a relatively good show by Tata Consultancy Services and Titan -- the group’s most valuable firms.

The Mukesh Ambani group's combined market capitalisation was down 19 per cent YoY in FY20 with investors remaining optimistic about its mobile and retail businesses.

Adani group companies also performed better than peers thanks to a 4x jump in the m-cap of Adani Green and a small 13 per cent YoY decline in Adani Transmission’s m-cap.