Number of companies with market cap of over ₹1 lakh crore surged 40 times in two decades: NSE

The number of companies with a market capitalisation of ₹1 lakh crore or more has surged more than 40 times over the last two decades, according to a report by the National Stock Exchange (NSE). The growth was driven by strong fundamentals of the Indian economy, implementation of financial reforms and heightened investor participation, pushing the share of total market capitalisation on the NSE from 18% to over 60%, NSE said.

According to NSE’s Market Pulse report, in FY04, only one company had a market cap of ₹1 lakh crore. By FY2010, the number had increased to 14, with a combined valuation of ₹21.2 lakh crore. The global financial crisis of 2008 temporarily impacted market capitalisation, but liquidity infusion, relaxed FDI norms, fuel price deregulation, economic recovery and improved political stability spurred market recovery. This led to a rise in the number of ₹1 lakh crore companies to 22 in FY15, with a total market cap of ₹43.8 lakh crore.

By FY19, 30 companies crossed the ₹1 lakh crore market cap threshold, hitting a cumulative valuation of ₹73 lakh crore and adding 48.8% of the NSE’s total market cap, NSE noted.

“The COVID-19 pandemic caused a temporary slump, bringing the number down to 20 companies with a total market cap of ₹51.8 lakh crore. However, a post-pandemic rebound, aided by fiscal and monetary policy measures, drove a sharp recovery. By FY24, the number of companies with at least ₹1 lakh crore market cap had surged to 81, with a total valuation of ₹234 lakh crore—over 60% of NSE’s total market cap,” NSE said.

Market cap of top 10 companies jumps 28 times

The NSE report highlighted that the market cap of the top 10 companies saw a 28-fold increase in the last two decades. In FY2004, the combined market cap of the top 10 companies was ₹3 lakh crore. The number figure climbed more than seven times to ₹22 lakh crore by FY14 and then surged four times to ₹89 lakh crore by FY24. The surge was driven by continued market reforms, a strong economic growth trajectory and growing investor confidence in the Indian stock market.

Among the top 10 companies, RIL retained its leadership from FY04 to FY24, showcasing over 26 times surge in market cap from ₹75,132 crore to ₹20 lakh crore. The tremendous growth translated into an annualised return of over 17%, surpassing the NIFTY50 Index’s annualised return of 13.5% over the same period. Meanwhile, in FY2004, the top 10 companies accounted for nearly 50% of the total NSE market cap, but by FY2024, their share had fallen to around 23% because of a surge in mid- and small-cap companies hitting the bourses.

Churn in the top 10 list

As per the NSE, the composition of the top 10 companies has seen major changes over the last 20 years. Five companies from the top 10 list in FY04 did not make it to the FY14 rankings, though two of them re-entered in FY24. Companies such as Tata Consultancy Services (TCS), Oil and Natural Gas Corporation (ONGC), Coal India, Housing Development and Finance Corporation Limited (HDFC), and HDFC Bank made their way into the top 10 list by market cap in FY2014.

However, by FY24, ONGC and Coal India were no longer part of ₹1 lakh crore market cap club.

The number of state-owned companies among the top 10 has also seen a decline, falling from two in FY04 to just one in FY24. Meanwhile, Reliance Industries, Infosys, State Bank of India (SBI), ITC and ICICI Bank have consistently remained in the top 10 over the years.

Profitability growth of top 10 companies

The profitability of the top 10 companies has witnessed a strong expansion over the years. Their net profit increased from ₹20,643 crore in FY04 to ₹3.6 lakh crore in FY24, reflecting an annualised compounded annual growth rate (CAGR) of 15.4%. However, market capitalisation growth outpaced profitability growth, expanding at an annualised rate of 18.2%, according to the NSE report.

The Mukesh Ambani-backed RIL not only had the highest market cap in FY04 and FY24 but also earned the highest profit in both years. The top 10 companies’ price-to-earnings (P/E) ratio jumped from 15.2 in FY04 to 24.7 in FY24, indicating value expanding over the years, NSE said.

Revenue and asset expansion

The revenue of the top 10 companies has grown at a compounded annual growth rate (CAGR) of 15.5%, surging from ₹1.8 lakh crore in FY04 to nearly ₹32 lakh crore in FY24. Furthermore, the total assets of these companies expanded from ₹8.2 lakh crore in FY04 to ₹162 lakh crore in FY24, growing at a CAGR of 16.1%, NSE noted.

The rapid expansion came on the back of India’s robust economic growth and technological advancements over the last two decades. Among the top 10 companies, Reliance Industries stood out with a revenue CAGR of 15.4% and total asset growth at a CAGR of 17.4%.