Mercury EV-Tech and Titagarh Rail System reshape fortunes with branding changes!

In a surprising revelation, Aequitas Investments, a portfolio management service (PMS) with a significant Rs 4,000 crore worth of Assets Under Management (AUM), shared a note shedding light on the financial impact of companies changing their names to align with current market trends. According to the PMS, 94 listed firms that underwent name changes in 2023 to reflect contemporary buzzwords witnessed an astonishing average annualized return of 124%.

The note, titled "The Madness of Markets-New New, New Me?," highlighted several cases where companies significantly benefited from creating a new identity by associating with trending terms such as defense, electric vehicles (EV), renewables, and AI Tech.

Mercury Metals - Now Mercury EV-Tech, reported a staggering return of 754.9%.

Titagarh Wagons - Rebranded as Titagarh Rail System, with an impressive return of 230.6%.

Sundaram Clayton - Now TVS Holdings, experienced a notable return of 200.2%.

Shradha Industries - Transformed into Shradha Ai Technologies, showcasing a return of 185.1%.

Amara Raja Batteries - Currently Amara Raja Energy & Mobility, reported a return of 181.1%.

The report also highlighted a captivating case study of BSEL Algo AI, a company that has changed its name twice before aligning with the latest buzzwords. In 1998, during the IT boom, it renamed itself BSEL Information Systems from Bell South Enterprises, and in 2003, at the peak of the realty boom, it became BSEL Infrastructure Realty. Recently, in the era of the AI boom, it adopted the name BSEL Algo AI. The note intriguingly questioned whether this would be the last name change for the company.

On a related note, Samir Arora, the founder of Helios Capital, drew attention to a tweet made on October 18, where he mentioned a tile-maker company's name change to include AI. Dhyaani Tile and Marblez officially changed its name to Dhyaanii Artificial Intelligence Ltd or Dhyyaani Artificial Intelligence Ltd.

The phenomenon of companies changing names is not novel, as highlighted by Aequitas's note. During the dot-com boom, 183 companies added ".com" to their names, experiencing a share price surge of 74% on average. Conversely, after the bust, 67 companies removed ".com" from their names, resulting in a 42% average drop in stock prices.

In 2008, 106 Indian listed companies changed their names to include buzzwords like realty and infrastructure. Notable examples include Anna Finance becoming Anna Infrastructure, Anmol Trading Co transforming into Shaily Engineering Plastics, and Genus Overseas changing to Genus Power Infrastructure.

In 2016, Bharati Shipyard witnessed a 25% stock gain after being renamed Bharati Defence and Infra, while Vakharia Power Infra became IND Renewable Energy, and Hydro S&S Industries became Kingfa Science & Technology.

This revelation by Aequitas Investments underscores the intriguing correlation between a company's name change and its subsequent stock performance, emphasizing the influence of market trends and investor sentiments.