Take a look at how India’s elite 100 bask in wealth as the economic revival accelerates nationwide.
In the past year, India’s wealthiest business families have witnessed remarkable gains in their wealth, and the positive momentum shows no signs of abating. With the gradual normalization of demand and spending and a sustained economic revival on the horizon, these influential families are reaping the rewards.
The Forbes India Rich List 2021 reflects the soaring stock markets, which have propelled the combined wealth of business families to an unprecedented $775 billion. This staggering figure represents a staggering 50 percent surge from the previous year’s $518 billion.
This upward trajectory can be attributed to the Indian economy’s recovery from two pandemic waves, the first occurring in September of the previous year and the second hitting in May. Thanks to an effective and extensive vaccination drive that has reached 1 billion Indians, the severity of COVID-19 cases has significantly decreased. As a result, state governments have lifted restrictions on business and trade, leading to a normalization of demand and spending.
Analyzing the 2021 Rich List data reveals that the top five gainers, in absolute terms, are Gautam Adani, Radhakishan Damani of Avenue Supermarts DMart, Savitri Jindal of the OP Jindal Group, Shiv Nadar of HCL Technologies, and Lakshmi Mittal of ArcelorMittal.
Gautam Adani’s wealth surged by an astounding $49.6 billion, fueled by the substantial rise in shares of his six listed companies, which saw increases ranging from 73 to 600 percent over the past year.
Radhakishan Damani’s wealth grew by $14 billion as his supermarket chain, DMart, continued its expansion with the addition of 22 new stores in the financial year. Savitri Jindal experienced a wealth increase of $11.4 billion, propelled by significant gains in her group companies, including JSW Steel, led by her son Sajjan Jindal, and Jindal Steel & Power, headed by Naveen Jindal.
Another notable addition to the top five is Cyrus Poonawalla, the founder of Serum Institute of India, which broke into the ranks with the launch of the Covishield COVID-19 vaccine, developed in collaboration with AstraZeneca and Oxford University in the UK.
In addition to pharmaceutical, healthcare, and diagnostic laboratory businesses, the remaining billionaires on the list witnessed a surge in their wealth. The IT and technology-enabled sectors, exemplified by HCL Technologies and Wipro, experienced rapid growth, both in business and fortunes.
The specialty chemicals industry has also boomed, resulting in the inclusion of three newcomers: Ashok Boob of Clean Science and Technology, Deepak Mehta of Deepak Nitrite, and Yogesh Kothari of Alkyl Amines Chemicals. This trend is likely to continue as Indian businesses plan to enhance their manufacturing capacity to capitalize on the challenges faced by Chinese manufacturers due to stringent local environmental laws. While specialty chemical valuations remain high, growth is expected to persist, particularly if earnings growth follows suit.
Industries such as construction, building materials, real estate, and export-oriented businesses are poised for expansion in the coming months. As demand continues to improve, inventory levels in housing, which currently sit at their lowest, and sluggish prices are anticipated to undergo a transformation. The need for larger and second homes has become a priority for many families in the pandemic-stricken world.
The information technology and IT-enabled services (ITeS) sectors, dominated by the “big four” firms TCS, Infosys, HCL, and Wipro, continue to thrive. These companies have already implemented aggressive hiring plans for the current fiscal year, having collectively recruited over 1 lakh employees in the first six months of FY22. The surge in orders and high attrition rates are driving this demand, making it challenging for IT companies to keep up.
The banking and financial services segment also shows promise, with increased collection efficiency, heightened disbursement activity in loans, and stable asset quality. Analysts believe that asset quality is unlikely to deteriorate significantly from current levels.
As India’s management of a possible third wave improves, consumer discretionary demand is beginning to rebound and is expected to continue its upward trajectory in the coming quarters. Additionally, the government’s ongoing fiscal spending on key infrastructure projects, coupled with public and private infrastructure spending, is set to average 6.6 percent of the annual GDP. The acceleration of government spending, both at the central and state levels, reached a six-year high in August 2021.
Despite concerns over stretched valuations, market crashes are unlikely to occur solely due to extreme valuation multiples. However, corrections cannot be ruled out, especially with external factors such as the US Federal Reserve’s tapering or interest rate hikes, China’s debt concerns, or local inflation worries. The real concern lies in the eventual peak of the rate cycle and the subsequent down cycle, which experts believe is still a few years away.
India’s fundamentals are aligning to create a positive outlook. With a focus on cost efficiency, less leveraged balance sheets, and improving cash flows, corporations are in a stronger position to invest in capital expenditure. This trend is expected to drive productivity growth and corporate profitability, similar to the period witnessed from 2003 to 2007.
Furthermore, the government’s commitment to fiscal spending on critical infrastructure projects alongside the private sector is poised to bolster India’s economic recovery. With government spending reaching a six-year high and public and private infrastructure spending projected to contribute significantly to the annual GDP, the path toward a self-sustaining recovery is becoming clearer.
In conclusion, India’s wealthiest business families are reaping the benefits of a thriving economy and soaring stock markets. As the country embraces a gradual return to normalcy, the demand for specialty chemicals, robust IT sectors, expanding industries, and increased consumer discretionary spending are set to propel their wealth even further. With promising fundamentals and government support, India’s economic revival shows no signs of slowing down.
