Saurabh Mukherjea, chief executive of Institutional Equities at consulting firm Ambit, has come out with a report on five laggard companies that he believes have the prospect to make it big one more time. “Whilst the average probability of a sector laggard becoming a sector leader five years later is 34 percent, the average probability of a sector leader remaining a sector leader is only 17 percent,” his report says, adding that leaders often becomes laggards too.
Bharti Airtel, Ashok Leyland, Bajaj Electricals, Britannia and Wipro are the five laggard companies he feels will come back on the growth path. The overall list comprises 99 companies but he has discussed these five in great detail. They have three common elements for a successful turnaround: A change in the top management, a focussed turnaround plan and cash flow conservation.
Mukherjea, 38, came into the spotlight when his report on why Indian companies self destruct was released last year. He mentioned that over 80 percent of the companies slide towards mediocrity in a short span. The report said hubris and arrogance become the undoing of CEOs of successful companies and that is when the bad times begin. The research sparked discussion in the corporate world. Fund managers are taking Mukherjea’s work seriously and the five stocks he mentioned are already on their radar.
Mukherjea’s research has also been noticed by publishers; he has already signed up with a big publisher but doesn’t reveal more apart from saying that his new book is about successful Indian fund managers.
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(This story appears in the 07 March, 2014 issue of Forbes India. To visit our Archives, click here.)