BrandZ™ India Top 75 portfolio recovers faster than Sensex
Strong, valuable brands deliver superior shareholder returns
Strong brands provide stock market resilience during periods of volatility, providing a reliable, positive return on the money invested to build valuable brands. When turbulence drives markets down, strong brands decline more slowly, and when markets recover, strong brands rebound more quickly.
That is the premise for investing in strong brands. And this year’s unprecedented COVID-19 stock market swings provided extreme conditions to test it.
Globally, during the five weeks from February 14 to March 20, when the MSCI World Index dropped 75 percent and the S&P 500 dropped 51 percent, the BrandZ™ Strong Brands Portfolio dipped just 42 percent, and the BrandZ™ Powerful Brands Top 10 Portfolio dipped only 37 percent.
Since just prior to the Global Recession, during the period between April 2006 and August 2020, the BrandZ™ Strong Brands Portfolio has increased by 229.5 percent. Over the same period, the MSCI World Index increased just 65 percent, and the S&P has increased by 140 percent.
In concrete terms, this means that $100 invested in 2006 would be worth $165 today based on the MSCI World Index growth rate, and $240 based on the S&P 500 growth rate. That $100 invested in the BrandZ™ Strong Brands Portfolio would have more than tripled in value to $329. These results demonstrate the investment reliability of strong brands and the way that they deliver superior returns to shareholders.
The data in India tells a similar story: Recovery during a pandemic occurs much faster for strong brands. In March 2020, both the BrandZ™ India Top 75 Portfolio and the Sensex India index declined to levels well below a baseline set at August 2014 (the inaugural year of BrandZ™ India). Just three months later, however, their performance had already begun to diverge: While the BrandZ™ India Top 75 Portfolio rose to a value 21.1 above its baseline, Sensex India had surpassed its August 2014 valuation by only 3.5 percent.
Top 75 brands shrink by 6 percent
At a time of near-unprecedented economic challenges, the total value of the BrandZ™ India Top 75 fell by 6 percent in 2020, shedding $13 billion in value for a total brand value of $215.608 billion.
Though significant, these changes represent a lower de-growth rate than that seen among top brands in the UK, Australia, and South Africa. Individual brands performance in the India Top 75 remained highly variable. While 43 returning brands declined in value in 2020, 23 returning brands actually gained in value from their 2019 performance.
Top 75 Portfolio beats Sensex
The stock portfolio of the BrandZ™ India Top 75 has recovered more of its pre-pandemic value, at a faster rate, than India’s SENSEX. Especially in difficult times, valuable brands deliver superior shareholder returns.
HDFC retains top ranking
HDFC Bank remained the top-ranked brand in India with a total brand value of more than $20.2 billion - though that figure declined 11 percent from the year prior. HFDC Bank’s share of the total value of the BrandZ™ Top 75 remained largely unchanged, falling from 9.95 percent in 2019 to 9.3 percent this year.
Five Newcomers enter the list
Five brands made their debut on the 2020 rankings. Among these are two Personal Care brands, Dove and Closeup; they are joined by Energy brand Indraprastha Gas, Home Appliances brand Crompton, and Telecom Provider BSNL. Dove was the top-ranked Newcomer at number 61.
Top risers led by digital, retail, food brands
In addition to strong financial performance, this year’s 10-strong group of Top Risers averages well above the rest of the Top 75 on measures of Meaningful Difference. This year’s Top Risers group includes food brands such as Maggi, Nestlé, and Horlicks, as well as digital platforms and providers like Naukri.com, Flipkart, PayTM, Airtel and Zomato.
Reliance Retail adds the most value
With a 102 percent year-on-year increase in value, the fast-expanding Reliance Retail chain led this year’s crop of Top Risers - one year after its sister brand Jio claimed the number one spot. In 2020, Reliance Retail’s core grocery offerings, as well as its integrations with other Reliance Group partners, have become agile assets for its parent company during the COVID-19 lockdown.
Banks lead in total category value
Banking and finance brands make up the largest share of the BrandZ™ India Top 75 in 2020, though they declined in value by 21 percent from 2019. Today, brands in the Banks category make up 20 percent of the total brand value in the BrandZ™ India rankings.
Retail, Personal Care and Telecom among fastest-growing categories
Rapidly growing categories in this year’s BrandZ™ India Top 75 include Retail, which grew 33 percent in part on the strength of newcomer Reliance Retail. Personal Care, which grew by 32 percent, was another strong category performer. Telecom rose 25 percent this year thanks to strong performance from both Airtel and Jio. It is now the second-largest brand category in the India Top 75, up from fourth in 2019.
Any brand can win with Meaningful Difference
There was no correlation between the size of a brand’s valuation in 2019 and its performance on the BrandZ™ Top 75 in 2020. Instead, the biggest driver of brand value change in the India Top 75 was Meaningful difference – which is something that brands can achieve at any size.