One would have expected the bubbly to be uncorked when the benchmark Sensex recently hit a new high of 22,853, a good six years after the 2008 high of 21,206. But the zing seems to be missing on the Street, even though foreign investors have pumped in close to $4 billion this calendar year. The reason is not hard to fathom: more than anything fundamental, the rally is fuelled by expectations of a clean sweep by the BJP-led National Democratic Alliance at the hustings. In other words, a hung verdict could well mean that these gains could evaporate overnight. While the majority believes that a strong saffron combine will be the right antidote to cure the country’s economic ills, the task for the new government is far too complicated. While for a day trader, feeding on the frenzy — either on the up or downside — makes sense, a buy-and-hold devout is better off chasing some real numbers.
That’s what the current issue is all about: companies that are not only growing fast, but also profitably. In its third year, Outlook Business’ Fastest Growing Companies special issue is a compilation of companies that have managed 25% compound annual growth rate in the past five years with robust profits and strong return ratios. And that’s where the challenge for most companies lies: managing topline growth of over 25%, albeit profitably. In the 2012 maiden listing, there were 40 companies; in the subsequent year the number shrunk to 30 and in the current issue, only 17 companies made the cut. That’s a telling commentary on how tough the business environment is turning out to be.
It’s not surprising to note that consumer companies continue to dominate the list, though their count has come down drastically from 2012. And, as expected, there are no companies from the beleaguered infrastructure space, barring a couple of quasi sector plays.
Yet, we have for you an interesting medley of names — including some new listings — and a detailed narrative on five such companies. Although a couple of names that were part of the maiden list continue to figure in this year’s round-up as well, the momentum is clearly slowing down for others, with five companies taking a hit on their bottomline in the nine months of FY14. So, is the worst yet to come or will the tide turn? Watch this space to find out.