Indian arms of MNCs find place in the sun

Core Insights - Indian subsidiaries of multinational corporations (MNCs) are significantly contributing to their parent companies' revenues, with ITC accounting for over 25% of BAT Plc's revenue, Hindustan Unilever contributing 10-11% to Unilever's turnover, Whirlpool of India around 5% to Whirlpool Corp, and Colgate India 4-5% to its parent's global revenue [1][2] Group 1: Market Performance and Valuation - Indian arms of consumer MNCs command higher valuations compared to their parents, with price-to-earnings (PE) ratios at a premium of 2 to 4 times [2] - The market capitalizations of Indian subsidiaries as a percentage of their parents are also higher, indicating strong investor expectations [2][22] - Stock performance of Indian subsidiaries has outpaced that of their parent companies over a 10-year period, reflecting superior shareholder returns [5] Group 2: Growth Drivers in India - India's growth in the consumer products sector is driven by a youthful working-age population, rising real incomes, and rapid urbanization [8] - Real disposable income per capita is projected to rise by around 6%, positioning India for the highest per capita income growth among leading consumer product markets in the next five years [10] - The emergence of digital channels, including quick commerce and e-commerce, has significantly accelerated growth for consumer MNCs in India, with Q-commerce platforms accounting for approximately 35% of FMCG e-commerce sales [21] Group 3: Structural Changes and Opportunities - Progressive liberalization and reforms have made it easier for global companies to operate in India, enhancing the ease of doing business [16][17] - The introduction of simplified tax structures and improved infrastructure has allowed MNCs to adapt their products and pricing strategies more effectively to the local market [18] - Despite rapid growth, India remains an underpenetrated market in many sectors, with significant opportunities for premiumization and deeper category penetration [24][25]