India's Stellar Corporate ROE: A Decade of Outperformance

India is ranked second globally for companies achieving over 20% ROE for over a decade, highlighting the strength of its businesses and stock market. A report by DSP Mutual Funds attributes this to sound financial health and growth in book value, showcasing resilience and strong management.

India is the second-leading nation after the United States in terms of companies achieving a return on equity (ROE) exceeding 20% consistently for over a decade, according to a DSP Mutual Funds report. This trend underscores the vigor of Indian businesses and the robust underpinning of its stock market's remarkable performance.

The report emphasizes that India's stellar stock market success is significantly driven by its impressive ROE results. Contrary to market sentiment often swayed by popular narratives, the report asserts that the true catalyst behind this growth is the strong financial health and operational efficiency of Indian companies. "This strong performance in ROE is the true engine behind India's superior stock market results," the report states, underscoring the importance of underlying financial fundamentals over market buzz.

Further insights from the report point to the consistent rise in the book value of Indian companies as a crucial success factor. A steady increase in book value indicates a company's competence in generating long-term shareholder value while maintaining fiscal stability and efficient management. The report reveals that more than three-fourths of Indian companies have experienced positive book value growth over the years, showcasing their resilience, even amid economic challenges.

The report also highlights that seven out of 39 companies have managed to maintain uninterrupted book value growth over two decades. Remarkably, these firms have withstood global economic upheavals, such as the 2008 Global Financial Crisis and the COVID-19 pandemic, proving their adaptability and robustness.

The findings underscore the strength of India's corporate sector and its pivotal role in the nation's stock market success. The report concludes that this consistent performance lays a strong groundwork for long-term economic growth, reinforcing India's status as a significant force in the global financial arena.

(With inputs from agencies.)