Investing in a company means entering into an implicit partnership with its management, becoming a part owner of the business and sharing in its triumphs and failures. As a minority owner, it becomes crucial to evaluate the credibility, honesty, and work ethic of the majority owner—the management. Honest and effective management is a key ingredient to look for when making investment decisions, as it greatly impacts the profitability and scalability of the business over time.
The significance of management pedigree in investment analysis cannot be overstated. However, its importance tends to diminish in a bullish market and becomes paramount in a bearish one. During a bull run, few pay attention to management integrity, only to face the consequences later. This recalls the famous quote from the oracle of Omaha, Warren Buffett: “Only when the tide goes out do you learn who has been swimming naked.”
A dubious management team often takes advantage of a bull market, forming alliances with operators and market manipulators to artificially boost stock prices. On the other hand, a business led by managers of integrity would never engage in such activities and would let the stock price find its own level based on the collective wisdom of the market participants.
In this blog, we will focus on one of India’s most celebrated and renowned groups—the Murugappa Group. This group is widely recognized for its honesty, vision, and integrity. Its journey began as a banking enterprise in Burma (Myanmar) before moving to India during the tumultuous war years. The Murugappa Group rapidly expanded its presence, establishing market-leading companies in critical sectors such as agri-solutions, financial services, and engineering.
Today, the Murugappa Group stands as a formidable Rs 547 billion conglomerate, known for its exceptional value creation and high standards of governance. Its success can be attributed to the unwavering commitment of its management to transparency, ethical practices, and long-term growth.
Now, let us delve deeper into the remarkable stock performance of the Murugappa Group in recent years.
Here is the stock performance of the Murugappa group in the last three years
|Stock Name||Gains in %|
CG Power and Industrial Solutions Ltd
The company has two main businesses i.e. the power systems business unit and the industrial systems business unit. The former involves power transmission and distribution equipment as well as system solutions of ultra-high voltage (UHV), high voltage (HV), medium voltage (MV) and low voltage (LV). The industrial systems business builds rotating machines (motors and alternators), automated AC, DC and variable frequency drives, controls, traction electronics, signalling and coach products and integrated solutions for railway transportation.
The company has a market cap of Rs. 51,960.65 cr.
Cholamandalam Investment and Finance Company Ltd
It is comprehensive financial services provider offering services in vehicle finance, home loans, SME loans, consumer & small enterprise loan, loan against property, insurance, home equity loans, secured business & personal loan, wealth management, stock broking, mutual fund distribution among others.
The company has a market cap of Rs. 85,705.88 cr.
Tube Investments of India Ltd
The Company has manufacturing locations across the country and has 3 product segments namely, Engineering, Metal Formed Products and Mobility.
The company has a market cap of Rs. 52,127.32 cr.
Carborundum Universal Ltd
Known by its acronym CUMI, the company is the largest high alumina ceramic manufacturing company in India. CUMI manufactures and sells mostly Abrasives, Ceramics (Industrial Cera mics, Refractories) and Electrominerals. Its comprehensive product range includes Bonded, Coated, Super Abrasives, Ceramics, Electrominerals and Coolants for a wide spectrum of industries. The company has been expanding, with its products receiving an increasing number of certifications and its production levels increasing as well. It has also been expanding its operations abroad, in countries such as Russia and South Africa.
The company has a market cap of Rs. 22781.88 cr.
Shanthi Gears Ltd.
Shanthi Gears (SGL), a gear manufacturing company located in Coimbatore, is currently producing gears for various industries including process, power steel, cement, sugar, and aviation. Their product line ranges from gears used in basic applications like hand-driven jacks to advanced gears designed for supersonic jet aircraft. In 1972, the company established its initial factory and later expanded its offerings by venturing into the production of worm gearboxes.
The company has a market cap of Rs. 3,212.09 cr.
Wendt India Ltd
Wendt (India) specializes in manufacturing high-quality grinding wheels utilizing diamonds and cubic boron nitride. In March 1995, the company successfully installed a wind electric generator in Perungudi, Tamil Nadu. It produces diamond sharpeners called Edgestar as well as reverse plated and infiltrated rolls. It is renowned for its exceptional products in the Granito Tile Industry and is actively pursuing exports to Malaysia and West Asia. Their Software Division, known as Wendtsoft, began marketing its product “CENTRAC” for Central Excise Management in the fiscal year 2001-02.
The company has a market cap of Rs. 1838.23 Cr
Cholamandalam Financial Holdings Ltd
The main business of Cholamandalam Financial Holdings is to offer financial services to individual and corporate customers. The company offers a diverse range of financial products and risk management services to individual and corporate customers through its group companies.Its subsidiaries include Cholamandalam Investment and Finance Company Limited (CIFCL), Cholamandalam Securities Limited (Subsidiary of CIFCL), Cholamandalam Home Finance Limited (Subsidiary of CIFCL), and Cholamandalam MS General Insurance Company Limited (CMSGICL).
The company has a market cap of Rs. 15,645.62 cr.
EID Parry (India) Ltd
The company operates six sugar factories with a daily crushing capacity of 43,300 Tonnes of Cane, generating 140 MW of power, along with five distilleries capable of producing 297 KLPD. EID Parry (India) Limited has diversified its presence into Bio Pesticides and Nutraceuticals sectors as well. The company offers a unique neem extract called Azadirachtins, a product for the bio pesticide markets of developed countries. The company also serves global markets with its organic products. The company is also involved in the farm inputs industry through its subsidiary, Coromandel International Limited.
The company has a market cap of Rs. 8,796.88 cr.
Coromandel International Ltd
Being one of India’s pioneering agri solutions providers, the company has business encompassing two primary segments: Nutrient and Crop Protection. They provide fertilizers, crop protection solutions, biopesticides, special nutrients, and organic fertilizers.It is the second-largest manufacturer and marketer of Phosphatic fertilizers in India. Its rural retail outlets spread across Andhra Pradesh, Telangana, Karnataka, and Maharashtra, reaching over 3 million farmers. The services include crop advisory, soil testing, and farm mechanization, among others.
The company has a market cap of Rs. 27,238.9 Cr.
When it comes to investing, the performance of a company’s stock can speak volumes about its management. In the case of the Murugappa Group, the numbers don’t lie. Take a look at the table above, and it becomes evident that, with the exception of Coromandel International Ltd, all other stocks within the group have delivered staggering multibagger returns. Brace yourself for some mind-blowing figures!
Leading the pack is CG Power and Industrial Solutions Ltd, which has soared an astonishing 5500% in recent years. Yes, you read that right! This stock has skyrocketed to unimaginable heights, showcasing the power of strong and credible management. But that’s not all—Cholamandalam Investment and Finance Company Ltd, another member of the Murugappa Group, has recorded a remarkable gain of over 600% during the same period.
The performance of these stocks leaves no room for doubt: a capable and trustworthy management team can make all the difference in the world. The Murugappa Group’s success story serves as a testament to the profound impact that a strong leadership can have on a company’s growth and investor returns.
It’s clear that the Murugappa Group’s management understands how to navigate the complexities of the market, leveraging their expertise to create substantial value for shareholders. With a track record like theirs, it’s no wonder the group has earned a reputation for being a force to be reckoned with in the business world.
In conclusion, the numbers don’t lie. The Murugappa Group’s stocks have proven that a strong and trustworthy management team can be the driving force behind exceptional returns. So, buckle up and get ready to join the ranks of investors who have reaped the rewards of investing in the Murugappa Group. The power of credible management awaits you.