Indian Subsidiaries Command Premium Valuations Over Global Parents

Several Indian arms of multinational corporations are attracting significantly richer valuations compared to their global parent companies, reflecting investor confidence in India’s fast-paced economic growth and market potential. This trend persists even when the Indian subsidiaries have smaller revenues than their global counterparts.

 

Key Aspects Highlighted

 

For example, LG Electronics India trades at a price-to-earnings ratio (P/E) of around 38, much higher than the parent at 14, despite smaller revenue size.

 

Maruti Suzuki India and Schaeffler India even surpass their global parents' market capitalizations, underscoring strong domestic investor faith.

 

Consumer staples like Hindustan Unilever and Nestle India enjoy P/E multiples far exceeding their parent companies, signaling sustained growth expectations.

 

Capital goods firms ABB India and Cummins India also command superior valuations tied to expanding domestic demand and operational efficiencies.

 

Investment Implications

This divergence highlights India’s rising stature as a vibrant growth market, where subsidiaries benefit from favorable demographics, consumption patterns, and reform-driven business environments relative to global peers.

 

Source: Economic Times