HAL Emerged 'Best All-Round Wealth Creator' In Last Five Years, Says Motilal Oswal Report

Hindustan Aeronautics Ltd. has soared to the top as the "best all-round wealth creator" during the five-year period from 2020-2025, according to a report released by Motilal Oswal.

HAL emerged at the top performer, based on a combined assessment of size, speed, and consistency, according to the brokerage's Annual Wealth Creation Study.

In a departure from previous trends, four out of the top ten all-round wealth creators are PSUs, spotlighting a broad-based resurgence for state-owned enterprises.

HAL was specifically highlighted as the "Most Consistent Wealth Creator" over the five-year period (2020-2025). The stock successfully outperformed the Nifty Total Return Index in all five years.

Additionally, it delivered the highest total return CAGR of 75% among the companies studied. According to Motilal Oswal, consistent wealth creators are defined by the number of years a stock has outperformed the Nifty TRI in the last five years, with CAGR deciding ties. Only 13 out of the top 100 companies achieved this level of consistent outperformance.

The note indicates that PSUs are definitively on the comeback trail, marking a substantial improvement in their wealth creation performance compared to the last three studies.

About 26 PSUs collectively accounted for a significant 25% of the total wealth created between 2020 and 2025. The comeback was driven by several factors, including profitability and valuations.

Around seven of the 26 PSUs clocked a profit turnaround, with six of these being in the banking and finance sector, causing the aggregate sectoral net profit to surge about 274 times.

Zooming in on attractive calculations in the sector, the analyst noted that in 2020, many PSUs were trading at extremely attractive valuations. Out of these, six were trading at a trailing price-to-earnings or P/E ratio of less than five times.

The report suggests that PSUs, particularly in sectors like defence and utilities, are well-positioned to sustain their share of wealth creation.

Despite clocking a robust PAT CAGR of 35% over the 2020-2025 period, the aggregate P/E ratio for PSU stocks stood at an attractive 10x as of March 2025.

This is in stark contrast to the private sector, where a comparable 37% PAT CAGR resulted in a P/E going from 20x to 30x. This lower valuation base is expected to help PSUs "at least sustain their current 25% share of Wealth Created," according to the report.