India has more consistent compounders than China: Report

NEW DELHI: Marcellus Investment Managers said on Friday that among emerging markets, both India and China have produced a significant number of consistent compounders — companies that have consistently achieved 10% YoY revenue growth and 10% RoCE over a decade.

However, India not only surpassed China in the number of consistent compounders but also outperformed by delivering more than double the shareholder returns as against its Chinese counterparts.

India has 162 compounders as against 126 in China. This is despite the fact that the Chinese economy and its capital market are much bigger than India.

The finding stated that over the long term, India’s equity market (Nifty50) has given superior returns as against any other market in the world. In the last 20 years, Nifty50 has given an annual return of 11.6%. The US market (S&P 500) comes next at 9.9%. China’s Shanghai Composite has had an annual rerun of 5.9% in the past 20 years.

Marcellus said as global businesses look to diversify their supply chains away from China, India is poised to benefit. Key sectors like smartphones, active pharmaceutical ingredients (APIs), and medical devices are expected to drive this growth, potentially contributing an additional $300 billion to India’s economy, it added.

The report said 5,000 companies that sit below the 800 most profitable companies in India are growing at a faster pace. It also stated that the share of the top 20 companies in overall PAT of India Inc (listed players) reached its peak during Covid but fell sharply after that.