Operating assets growth of 60 firms faster than GDP

The average annual operating asset growth of companies such as Britannia, Timken, Ashok Leyland, Minda Industries, Avanti Feeds and MRF have been between 15 per cent and 40 per cent in five years.

There are about 60 companies of the 265 listed non-financial companies, which have been able to beat the dismal private investment trend to grow faster the GDP in the last five years.
 
An ET report, citing a study by ICICISecurities, said these companies belong mostly from pharma, IT and select industrial firms sectors.
 
The average annual operating asset growth of companies such as Britannia, Timken, Ashok Leyland, Minda Industries, Avanti Feeds and MRF have been between 15 per cent and 40 per cent in five years.
 
Ajanta Pharma's and Natco Pharma’s operating assets saw operating growth of 24 per cent and 28 per cent respectively during this period.
 
“If the company puts itself in a situation that capital deployment results in widening of existing moats (expansion of return on operating assets), then it results in faster growth and lower risk resulting in valuation re-rating and high performance” Vinod Karki, vice-president – equity strategy, ICICISecurities was quoted as saying.
 
As per him, new investments are expected to accelerate growth, but they also bring additional risks such as lower return from new investments, increase in financial leverage risk, currency risk, regulatory risk, which can nullify the expected return from new investment.
 
Source: ET

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