Over the past decade, India has cemented its position as the world’s best-performing capital market, delivering an average annual total shareholder return (TSR) of 15.2%—the highest among the major economies. Unlike other Asia-Pacific markets where shrinking margins or valuation pressures have offset growth, India’s outperformance has been structurally healthier, driven by simultaneous gains in revenue growth, profitability, and valuation multiples. This reflects a market where capital is efficiently deployed and investor confidence runs deep.
The Forces Behind India’s Outperformance
Three structural forces have powered this decade of leadership.
New High-Performing Sectors. Capital-intensive or innovation-led sectors—such as industrials, technology, metals and mining, and health care—have become India’s most consistent sources of value creation, surpassing retail, consumer nondurables, and financial institutions in TSR performance. The high-performing industries have benefited from policy tailwinds in India, such as the government’s Production-Linked Incentive schemes and broader manufacturing and infrastructure goals.
Family-Owned Companies. These firms have emerged as consistent outperformers, delivering an average annual TSR that is 6.4 percentage points higher than that of their nonfamily-owned counterparts. Family-owned companies’ long-term investment mindset and strategic diversification appetite have made them the compounding value creators of India’s economy.
IPO Market Transformation. India’s IPO market has transformed from a platform for liquidity to a pathway for sustainable value creation. Recent listings have outperformed relative to IPOs a decade ago, reflecting stronger governance, preparation, and postlisting maturity.
Lessons from India’s Top 50 Value Creators
BCG’s analysis of India’s top 50 value creators—drawn from more than 550 publicly listed companies representing approximately 95% of the country’s total public market capitalization—reveals five imperatives for leadership teams seeking to expand India’s value creation edge:
- Streamline portfolios and simplify corporate structures to unlock trapped value and strengthen investor confidence.
- Pursue profitable growth, not just scale. Top TSR performers deliver both revenue growth and margin expansion.
- Put balance sheets to work by deploying capital strategically rather than hoarding cash. Maintain optimal debt levels considering your long-term ambitions.
- Elevate governance as a differentiator, with mature leadership models and transparent capital-allocation priorities.
- Institutionalize investor strategy, ensuring clear equity stories and proactive capital markets engagement.
The Next Frontier: Making AI Count
Looking ahead, companies’ ability to apply AI and digital technologies will be a key differentiator. Investors are moving beyond enthusiasm for AI pilots and demanding measurable impact on cost structure, revenue, margins, and operating leverage. Companies that embed AI into their operating models—and, in due course, demonstrate returns—will define the next decade of capital markets leadership.
India’s capital markets are entering a new chapter. The challenge for Indian companies is no longer to prove their ability to deliver high returns—it is to scale sustainably and profitably, with clear capital-allocation guardrails, disciplined growth, professionalized governance, and conviction in long-term planning. As global investors turn increasingly toward India, the companies that align business, financial, and investor strategies around driving long-term TSR will widen the gap between India and the rest of the world.
