Export-driven stocks ride on weak rupee, emerge as top Sensex performers

Dec 27 2013, 11:39 IST
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TCS is the only Indian company, which boasts a market cap of more than Rs 4 lakh crore. TCS is the only Indian company, which boasts a market cap of more than Rs 4 lakh crore.
SummaryFive of nine bluechips have earned more than 70% of their revenues outside India.

The year 2013 was underlined with a deteriorating economic profile of India. Export-oriented companies that were riding high on the falling value of the rupee emerged as the top performers in the equity market in 2013.

Unlike the previous two years, when consumer goods and banking stocks crowded the list, five of the nine bluechips that have outdone the benchmark returns of 8.5% in 2013 so far, earned more than 70% of their revenues outside India in 2012-13. These frontrunners from the Sensex universe include leading IT, Pharma and some auto companies that have benefited from a depreciating rupee and faster delta of growth recovery in the developed markets. The rupee not only plunged to lowest level of 68.82 against the dollar this year but is also set to end the year with a 13% decline.

Although the general market participation remained low, with retail investors still shying away from fresh investments, FIIs also focused their portfolios towards the top bluechip companies. As a result, even as only nine largecaps beat the market returns, six of them reported more than three-fold rise than Sensex. This is a stark contrast to 2012 when the number of outperformers (15) remained high but the maximum gain provided by a single stock was capped at three times that of the Sensex. The market polarisation towards quality names pushed eight of these nine stocks to their all-time high during the year.

The list of outperformers is led by Tata Consultancy Services (TCS), the only Indian company which boasts a market cap of more than Rs 4 lakh crore. The IT major sustained its ability to correctly reflect the recovery in the global economy as its US dollar revenue growth managed to beat the street expectations in each of the last four quarters. During the year, TCS not only affirmed its position as the number one IT service provider of India but also strengthened its valuation premium to Infosys. On average it traded a 22% premium to the price to earnings multiple of Infosys and is likely to close the year with a 68% gain, an eight-fold return to that of the Sensex.

After following a downward trend for nearly two and a half years in which failure to meet quarterly numbers and forward guidance provided a lot of volatility, the Infosys stock is on a firm footing since May

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