Role of Value Creation in the Indian Industry
Role of value creation in the Indian Industry V.YUVARANI, II-MBA PAAVAI COLLEGE OF ENGINEERING,Namakkal.
ABSTRACT
Background: The Indian economy is widely believed to have moved into its next phase of sustainable growth rate of 8-10%. The last five years have seen an unprecedented value creation in Indian stock markets.
Aim: This study focuses an analytical valuation perspective of various privileged companies in India.
Methods: The data set for the study was collected from the CMIE prowess database. The five industry sectors were chosen for the study.
Results: While rapid stock market growth is widely ascribed to a global liquidity glut and re-rating of Indian stocks, our analysis shows that outstanding performance in business fundamentals — sales and profit — growth has been the predominant driver of this spectacular value creation in India. Conclusion: These findings have major implications for any preventative or intervention strategies.
INTRODUCTION
To create sustainable, long-term shareholder value, it is important to explicitly establish an appropriate shareholder value target. It can be argued that value creation is the ultimate measure of performance for a manager. Companies must establish priorities based on value creation; gearing planning, performance measurement and incentive compensation systems towards shareholder value and communicating with investors in terms of value creation. The ability to manage value is an essential part of developing sound corporate and business strategies--strategies that create value for shareholders.
A study by (Richard et al., 2000) observed that companies in today's superheated economies are in a race to discover the underlying code of value creation. That is they are trying to find out the greatest amount of assets-tangible and intangible-create
ABSTRACT
Background: The Indian economy is widely believed to have moved into its next phase of sustainable growth rate of 8-10%. The last five years have seen an unprecedented value creation in Indian stock markets.
Aim: This study focuses an analytical valuation perspective of various privileged companies in India.
Methods: The data set for the study was collected from the CMIE prowess database. The five industry sectors were chosen for the study.
Results: While rapid stock market growth is widely ascribed to a global liquidity glut and re-rating of Indian stocks, our analysis shows that outstanding performance in business fundamentals — sales and profit — growth has been the predominant driver of this spectacular value creation in India. Conclusion: These findings have major implications for any preventative or intervention strategies.
INTRODUCTION
To create sustainable, long-term shareholder value, it is important to explicitly establish an appropriate shareholder value target. It can be argued that value creation is the ultimate measure of performance for a manager. Companies must establish priorities based on value creation; gearing planning, performance measurement and incentive compensation systems towards shareholder value and communicating with investors in terms of value creation. The ability to manage value is an essential part of developing sound corporate and business strategies--strategies that create value for shareholders.
A study by (Richard et al., 2000) observed that companies in today's superheated economies are in a race to discover the underlying code of value creation. That is they are trying to find out the greatest amount of assets-tangible and intangible-create