For nearly three decades, market veteran Raamdeo Agrawal has published his annual Wealth Creation Study, a project that began in 1996 as a simple 25-slide statistical review that happened to spotlight Hero MotoCorp. In its early years, it was largely a data-gathering exercise with a few market observations. But by the mid-2000s, the study had evolved into a thematic exploration, shaped by the investment books Agrawal was immersed in at the time. Each year, one influential book—from Value Migration to Quality Investing—became the study’s anchor, tested rigorously against Indian market data.
Agrawal, chairman and co-founder of Motilal Oswal Financial Services, broke down the highlights of this year’s study, shared his outlook on India for the next few years and explained why he’s convinced the country is only getting wealthier hereon.
Last year’s theme, Bruised Blue Chips, brought Asian Paints into focus. This year, IndiGo stands out—it is “broken” and has fallen significantly. The ace investor said, “I think it’s a good opportunity… It’s just dealing with some issues that are tough to manage right now.”
Edited excerpts from an interview with Agrawal:
Mint: What is the book you’ve read this year, on which the latest wealth creation study is based?
The primary inspiration for this study comes from two books by Professor John Edmunds of Babson College—The Wealthy World (2001) and Brave New Wealth World (2003). Hence, the key takeaways from this year’s Wealth Creation Study are clear: the world is getting steadily wealthier, and India is getting wealthier even faster.
There’s virtually no ceiling on how much financial wealth can be created. The financial system, and particularly global stock markets, have become the new invisible hand. As discretionary consumption, savings and investments hit their tipping point, we’re set for an explosive expansion. Large-caps are likely to take the lead in the years ahead, and the coming multi-trillion-dollar (MTD) era could produce some truly exciting compounders.
How did his book inspire you?
I read this book last year, and it completely changed the way I think about wealth. It shows how the idea of wealth has shifted over the last 300 years—from land, gold and palaces to what is essentially paper wealth. Today, people aren’t wealthy because they own vast estates; they’re wealthy because their companies are valued at billions. Elon Musk doesn’t need gold or land—his wealth sits in the market cap (of Tesla).
The book basically argues that there’s no real limit to how much financial wealth can be created. Securitization has made it possible to “have your cake and eat it too”—you can own an asset, sell a part of it and keep expanding. That’s how the US has compounded wealth for over a century.
This also challenges the old Buffett notion that market-cap-to-GDP should top out at 1x. Edmunds says there’s no such ceiling—profits, tax structures and valuations can push it far higher. And he was early to spot this: he projected global financial wealth would hit around $600 trillion by 2020. According to McKinsey, we reached that number only about five years later.
Amid wars and global chaos, his larger point still holds—financial wealth keeps rising unless the economic machine itself breaks down. That perspective shapes my approach to this Wealth Creation Study: understanding how this “paper wealth engine” actually works and why it keeps growing.
You mentioned war, and history shows what investors often focus on is the rebound that follows. After World War-II, countries such as Germany and Japan saw massive investment, rapid industrialization and extraordinary progress…
For me, the real story isn’t about individual businesses; it’s about the scale of wealth being created. The first big conclusion is that the world is getting wealthier, and India is getting wealthier even faster. The world is growing at around 7%, but we are growing at about 14%, which means we’re doubling every five years. From a $5 trillion market cap today, India could easily reach $10 trillion by 2030.
What these books make clear is that the financial system, especially stock markets, has become the new invisible hand. It decides who gets capital and how much. And the most significant insight is that there is no upper limit to the amount of financial wealth that can be created; the only question is how well you play the game.
But this wealth creation benefits only about 5% of Indians, people like us who invest in equities. If someone has ₹10 crore in assets and those assets grow to ₹20 crore, their wealth doubles. The remaining 95% depend entirely on GDP-linked incomes from jobs, farms or small businesses. So, the link between financial wealth and broader income flows comes through the wealth effect.
Between 2020 and 2025, the stock market created nearly ₹330 trillion of wealth, which is roughly one year’s GDP, but it sits largely with the top 5%. This money is now being spent on homes, premium consumption, travel, weddings, and lifestyle upgrades. As that spending trickles through the economy, others benefit indirectly. In the US, this cycle has been running for a century; in India, it’s just beginning.
This is also why economists keep underestimating GDP growth. That unaccounted bit, the wealth effect, is often something their models don’t fully measure. Globally, people are estimated to spend 1-5% of their accumulated financial wealth. If someone builds a ₹100 crore portfolio, they may spend ₹4-5 crore of it, even if they dislike selling shares. That’s how wealth quietly powers growth.
Where will the wealth effect come through, and how?
So, the basic needs today are roti, kapda, makaan (food, clothing and shelter) aur entertainment… Roti, kapda toh sab logon ke paas hai, lekin makaan mein bohot zyada kharcha hoga, aur phir gaadi… Gaadi sabke paas hai hi nahi; pehle entry-level hogi, phir discretionary level” (everyone has food and clothing, but housing is very expensive, and then there’s the car… Everyone does not have a car—at first, there will be an entry-level car and then one at the discretionary-level).
In 2008, China produced 4 million cars; today it produces 25 million. A similar pattern will play out in India: first a car boom, then a luxury car boom. Five-star hotels are also already packed, and some of the world’s most expensive five-star hotels are in India; though, ironically, labour here is among the cheapest.
There is a flip-side to this whole euphoria. As you know, people will chase because of low float and all that, so the valuation appears huge…
The market is essentially saying: you’re going to make a lot of money. Whether that turns out to be right or wrong, only time will tell. But that’s the message the market is sending today.
Isn’t paper wealth notional?
It is. Nobody is forcing anyone to price things the way they have. People are buying and selling; buyers beware. It’s not manipulation; these are professionals, and some will make a lot of money. This is exactly where securitization helps.
When something sits in your pocket, like a pen, it feels like a ₹100 pen. But the moment you say it has some “atomic system”, its value becomes whatever the market believes. It’s the same with companies. When a company is unlisted, it’s your baby, completely unsecuritized. Once it gets securitized, the market gets the right to judge its value, whether it will make money or not.
And you can’t really argue with the market’s view. The market’s thinking in India is increasingly global. And honestly, who can say definitively what’s right or wrong?
Then why isn’t any of this showing up in the behaviour of other foreign investors?
They’re global investors with endless options. They can deploy money across 70-plus markets. Their home market, the US, is doing exceptionally well, so there’s little incentive to move out of it. For them, it’s a simple split between DMs and EMs, and they’re not even exiting DMs right now. Even when they look at EMs, China still commands a share, though many have burnt their fingers there. EM allocation itself is low, and within that, India appears expensive. So, from a US investor’s perspective, the choices and the lens are entirely different. When the US hits a rough patch, dollars flow out in a big way, it is all just global capital rotation.
Why are you saying large caps are going to perform better?
During 2020-25, the top 100 wealth-creating companies generated ₹148 trillion of wealth. But if you look at the share of the top 10, it has dropped to 31%—earlier it used to be 40–50%. Four big companies didn’t make the cut this time. Essentially, the weight has flipped: 69% is mid-cap and only 31% is large-cap, which is unusual. Kuch zyada hi mid-cap rally kar gaya (mid-caps rallied a bit too much). So, a correction and rotation are natural.
That’s why we’re seeing the market fall 2%, while mid- and small-caps drop 5%—it reflects this imbalance. This data strongly suggests that the cycle is likely turning back in favour of large-caps.
But what about small-caps?
At times, PE multiples shoot up to 50-70 for small-caps, where you don’t even know the registered office—that is wrong. And when fresh money pours into small-cap funds, what do they do? They just keep buying the same stocks every day. These are tiny companies, so large inflows push prices up sharply.
It becomes a cycle—prices rise, the NAV looks great, the fund becomes a “best performer,” more money flows in, and small-caps rise even further. This is what led to overvaluations, creating a bubble-like situation.
It’s quite striking that Reliance Industries, with the heaviest weight in the index—doesn’t feature among the top 10 wealth creators. Even TCS, Infosys and HDFC Bank are missing. What explains this?
The criteria is simple: if a stock hasn’t outperformed the market over the past five years, it doesn’t make it to the list. If it’s underperforming, investors would have been better off just buying the index. That’s why even big names like these haven’t appeared; their wealth creation hasn’t outpaced the broader market.
Interestingly, Bharti Airtel tops the list this time because it had been underperforming for a while. That means other companies could feature in the list for next year or the year-after as they catch up?
All these companies can return to the list. When a company drops out, it simply means it couldn’t keep pace with the market. But I expect Reliance Industries to make a comeback. Since this cycle covers 2020-25, the covid-hit base in 2020 made it harder for large companies to bounce back as sharply as others.
And even Adanis have not made it?
No. So Adani Power and Adani Enterprises rank at 8th and 9th position in the top 10 fastest wealth creators.
Which is at the top of this list?
BSE.
When you look at these companies, it reminds me of how you once said you’d missed buying Asian Paints two or three times. Do you see any similar opportunities in this list today?
Yes, that was one example. The idea is to study the theme for the year. At that time, the theme was Bruised Blue Chips. Similarly, now you can see companies like IndiGo—it is ‘broken’, it has fallen a lot.
So just like Asian Paints was ‘broken’ last year, this year it’s IndiGo, right?
I think it’s a good opportunity. It’s an excellent company. It’s just dealing with some issues that are tough to manage right now.
And why is it that Indian corporates are not investing in capex?
Demand leke aao na (bring on the demand). The issue isn’t supply, it is demand. In India, whenever there’s demand, the private sector delivers. Even in aviation, despite flying 140-150 million passengers, everyone still got tickets. Prices may go up, but availability is never an issue. That’s how the private sector works here.
The government’s real job is to create healthy demand. GST 2.0 will help with that. Demand also depends on income—if your income is at one level, you can’t demand beyond it. As incomes rise 5-8% and goods get cheaper, people naturally start spending.
The first big spend is always housing. A house is a big-ticket item, far larger than a car and drives everything else: ACs, fridges, carpets, furniture. Housing is the centre of economic activity because once people buy a home, the entire consumption cycle follows.
Among today’s entrepreneurs, people such as Sunil Mittal, Dilip Shanghvi and others have been real wealth creators. Do you see anyone on the horizon following that path?
Look at Bengaluru—Lenskart, Groww—both heading for ₹1 trillion listings. And their companies are just 30-35 years old, with decades ahead of them. Another thing is that these companies are already global: Lenskart is in 15-17 countries. India’s digital strength is a new kind of power: young, hungry, innovative. And with deep capital markets, there’s plenty of risk capital. Give a founder ₹100 crore today, and they aim to create billions.
What worries you or keeps you awake about India?
Nothing. Because I don’t speculate. I’ve spent 45 years in this market. I’ve seen the Sensex at 100. I bought my first stock when the index was at 100; today it’s at 85,000.
Which was that first stock?
That was Cemindia Projects, now ITD Cementation. I bought it at ₹15 and sold it at ₹50 back in 1980. That was my start, though it wasn’t even my own money—it was my brother’s. What I’m saying is: this country has consistently created wealth. If the past 45 years were so rewarding, the next 45 will be just as exciting, if not more.
But you need to understand the rhythm of this game. The rhythm of value-creation and the rhythm of stock price movement are not the same. And they rarely move in sync.
Mera 20 takka earnings badha toh 20 takka bhav badhna chahiye. Aisa nahi hota. (My earnings rose 20%, so the stock price should also go up 20%. It doesn’t play like that)
Often, prices run ahead—stocks can double before earnings catch up. Then, for two or three years, nothing happens to the stock even though earnings keep growing. In a single quarter, a stock can jump 2-3x. That’s the rhythm of the market, totally different from the rhythm of fundamentals.
