Admiration is very subjective in nature. The same person or object may be admired for various reasons. For instance, some admire the legendry investor Warren Buffett for his immense wealth. Others admire him for his extraordinary flair in recognising immensely profitable investment opportunities and create wealth for his investors. There are also those who admire him for being accessible, friendly, down to earth, charming, intelligent, and thrifty.
In fact, it is not Warren Buffett, but the extraordinary qualities in him that his admirers hold in high esteem. The same applies to the credibility and reputation of corporate houses. This was vindicated in the Equitymaster poll that we hosted on our website asking investors to choose their most admired Indian corporate houses and cite the reasons for the same.
The idea behind the survey was to share with you what qualities do the Equitymaster community of long-term, discerning investors, look for while forming their opinion on Indian companies. The survey was taken by nearly 1,000 people and the results paint an interesting picture.
And the most admired Indian corporate is...
The Tata Group, with 34% of the votes.
It is followed by Infosys, which managed to garner 25% votes. The two companies, collectively collecting almost 60% of total votes have left the rest far behind. For instance, the third ranked company, L&T, could garner just around 9% votes. The HDFC Group and the Mukesh Ambani Group completed the top five list with 7% and 5% votes respectively.
What was even more interesting to know is that the two most admired companies - Tata Group and Infosys - are admired for very similar reasons. The prime ones being:
- Transparency and good corporate governance;
- Ethical and professional management;
- Rewarding all stakeholders; and
- World class business practices.
HDFC and L&T, on the other hand, found many admirers for their innovative skills, adaptability to global changes and ability to withstand competition.
But the more interesting part is...
With the memories of fraudsters like Ramalinga Raju and Bernard Madoff fresh in the minds of voters, it was not surprising to see investor seeking better accountability more than anything else (even high returns) from the companies they have invested or wish to invest in.
While it may be wrong to say that admiration for the Tata Group and Infosys have become more pronounced in recent times due to the unraveling of poor corporate governance in some companies in recent times, the same has certainly won priority over high returns more recently.
What else would explain the fact that despite the shares of Tata Group and Infosys generating only 25% and 60% respectively of the returns generated by HDFC Group over the last 10 years, scored higher than the latter in terms of admiration?
While stock market returns will continue to be an important yardstick for judging companies, the fact that investors are getting themselves better educated on the profile of the companies, their management, business practices and long term viability is indeed very heartening. The same goes a long way to show that Indian investors are indeed getting more discerning and are willing to invest in companies that respect and practice business practices that are ethical, transparent, stakeholder-friendly and world class.