The valuations of Indian companies have grown at a faster pace than their foreign parent.

To illustrate: in 2017, fast moving consumer goods (FMCG) major Hindustan Unilever’s market capitalisation (m-cap) was just 28 per cent of its Anglo-Dutch parent Unilever. Cut to 2022, HUL’s m-cap of $70 billion is 71 per cent of Unilever($101 billion).

A reason for the higher share in m-cap is that Indian companies command a much higher premium than their multinational corporation (MNC) parent. HUL has a price-to-earnings (P/E) multiple of 67 times even as the parent trades at just 20 times.

Other domestically-listed MNCs such as Colgate-Palmolive, 3M India, ABB India, and Siemens India fare similarly—although not to the extent of HUL. Besides valuation differential, the Indian market is considered to be one of the key markets for most of these MNCs.