Shareholders Value Creation in Indian Corporate Sector: Evidence from Banking, FMCG, Pharmaceutical and Automobile Industries

This study offers broad-based empirical evidence examining the dynamics of shareholder value creation across India's four principal corporate sectors over a ten-year period spanning 2016 to 2025. The results establish that profitability and the efficient deployment of assets serve as pivotal determinants of both economic and market-oriented shareholder wealth. A particularly noteworthy observation is that the firms leading in EVA and MVA within any given sector frequently differ from one another, highlighting the fundamental distinction between internally measured economic performance and the external perception of value reflected in market behavior. Among the sectors studied, FMCG emerges as the dominant wealth creator in market valuation terms, propelled by the strength of consumer brands, consistently stable demand patterns, and sustained investor confidence in essential consumer goods. In the Banking sector, value creation is increasingly shaped by the superior asset quality and ongoing digital transformation initiatives of private sector institutions. The Pharmaceutical sector exhibits a distinctive value creation dynamic, one that is governed less by conventional profitability indicators and more by the strength of innovation pipelines and the outcomes of international regulatory processes. Within the Automobile sector, wealth creation is predominantly led by two-wheeler manufacturers, a reflection of resilient domestic demand and the relatively capital-efficient nature of that segment. The study ultimately concludes that organizations committed to value-based management principles — encompassing EVA-oriented decision making, deliberate optimization of capital structures, and transparent market communication — are inherently better equipped to sustain long-term shareholder wealth creation. The alignment between strong ROA and elevated MVA, as empirically validated through regression analysis, provides a clear and actionable strategic direction for corporate financial management.

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