For the first quarter of 2022, India was the fastest-growing economy in the world, with a growth rate of over 14%. The world has recognized the importance of the Indian economy on a global scale and this observation has been taken quite seriously by foreign companies listed in India.
As we are still recognized as a developing country, there is a lot of room for growth, compared to established and developed economies.
In this blog, we’re going to take a look at all the multinational companies that have not only established operations in India but have also found their way to Dalal Street.
Before getting into the companies, let’s understand why MNCs see huge potential in India.
Why Do Foreign Companies List In India?
The potential for growth and development in India, where skilled labour and natural resources are still quite underdeveloped, is seen as an opportunity for businesses, both foreign and domestic.
State governments openly welcome investments as it provides employment, improved infrastructure, and a much-needed boost to the economy.
According to Invest India, India saw the highest-ever inflow of FDI ( Foreign Direct Investments) in FY 2021-22. Well, over $83 billion dollars.
Another advantage is the younger workforce, which is the highest in the world. According to the United Nations Population Fund, India has one of the highest adolescent and youth populations in the world. It will continue to hold this title till 2030.
How many foreign companies are listed in India?
Here Is A List Of The Top Foreign Companies Listed In India:
|S. No.||Company Name||Market Cap (Rs. In Cr.)||Industry||Current Market Price|
|1||A B B||67726.99||Electric Equipment||3196.05|
|2||Abbott India||41027.38||Pharmaceuticals & Drugs||19307|
|3||Astrazeneca Pharma India||3538.4||Pharmaceuticals & Drugs||8846.01|
|4||Bata India||1774.85||Footwear Retail||22811.73|
|10||Honeywell Automation India||33548.66||Consumer Electronics||37951|
|11||Maruti Suzuki India||275587.56||Automobiles||9123|
|13||Oracle Financial Services Software||26173.11||IT Software||3030|
|14||P & G Hygiene & Health Care||45058.57||FMCG||13880.95|
Top 5 Foreign Companies Listed In India
By market capitalization, here are the 5 biggest foreign MNCs listed in India.
1. Hindustan Unilever
About The Company
HUL is the Indian subsidiary of the parent company Unilever. The company produces and sells fast-moving consumer goods (FMCG) products such as foods, personal care products, beverages, and water purifiers.
Despite being a foreign subsidiary, it is one of the largest FMCG companies in India. They employ over 21,000 people and their business is divided into three divisions – Home care, beauty & personal care, and foods & refreshments.
Financials Of HUL
|CMP||2,527||Market Cap (Cr.)||₹ 593,742 Cr.|
|EPS||₹ 41.1||Stock P/E||61.3|
|ROCE||24.3 %||ROE||18.4 %|
|Face Value||₹ 1.00||Book Value||₹ 211|
|Promoter Holding||61.9 %||Price to Book Value||12|
|Debt to Equity||0.02||Dividend Yield||1.36 %|
|Net Profit Margin||17.0 %||Operating Profit Margin||23.8 %|
At the top of our list of foreign companies listed in India is Hindustan Unilever. They have a huge market capitalization of ₹593,742 crores. This makes HUL a large-cap FMCG company.
They have a high promoter holding of almost 62%, but promoters have trimmed a sizable 5.28% of their holding since March 2020.
For the financial year ending 2022, HUL reported sales of ₹52,446 crores, which is quite an improvement from their ₹35,545 crores sales in 2018.
But for two years, (2019 & 2020), HUL reported almost the same sales of around 39,000 crores, indicating stagnation in growth for the same period. Profits on the other hand have moved upwards from ₹5,227 crores (FY-2018) to ₹8,892 crores (FY-2022).
The company has an excellent ROE of 18.4% and its 3-year ROE is quite impressive – 28.4%. ROCE too is quite high at 24.3%, which benefits shareholders in the long term.
Their D/E ratio is virtually zero, showing that HUL has maintained a healthy debt position. Finally, coming to the stock P/E is almost on par with that of the industry at 61.
Overall, HUL is a healthy FMCG company with positive prospects for growth and long-term investing. 5 year returns of HUL are 95%, just 5% short of doubling investors’ wealth.
2. Maruti Suzuki India
About The Company
While consumers associate Maruti Suzuki as more of a domestic automobile company, it began as a joint venture between the Government of India and Suzuki Corporation in 1982.
The carmaker single-handedly has the highest market share (47.4%) in the Indian automobile industry, with their affordable vehicles and lower cost of maintenance.
Financials Of Maruti Suzuki India
|CMP||₹ 9,121||Market Cap (Cr.)||₹ 275,526 Cr.|
|EPS||₹ 201||Stock P/E||45.4|
|ROCE||8.95 %||ROE||7.25 %|
|Face Value||₹ 5.00||Book Value||₹ 1,893|
|Promoter Holding||56.4 %||Price to Book Value||4.84|
|Debt to Equity||0.01||Dividend Yield||0.66 %|
|Net Profit Margin||4.43 %||Operating Profit Margin||8.15 %|
Maruti Suzuki India is one of the largest automobile manufacturers in the Indian market. They have a market capitalization of ₹275,526 crores.
While the company began as a joint venture with the Government of India, it is now fully under the Suzuki Motor Corporation. Promoters hold slightly more than 56% stake in the company, and there has been no significant movement in shareholding.
Maruti Suzuki India has one of the highest revenues in the automobile industry. They reported sales of ₹88,330 crores for FY 2022, barely 9,000 crores more than FY 2018 (₹79,809 crores).
While revenues have grown at a slower pace, profits have nearly halved during the same period. In FY 2022, they reported net profits of ₹3,880 crores, which is almost half of the 2018 figure of ₹7,881 crores.
Both ROE (7.25%) and ROCE (8.95%) are on the lower end, as the company’s sales and profits have slumped. Coming to the debt position, Maruti Suzuki is virtually debt free with a D/E ratio of just 0.01.
This comes as a positive sign, as the company witnessed consecutive years of lockdowns due to the pandemic which halted operations.
At a current market price of ₹9,121 per share, it has a P/E ratio of 45.4, slightly above the industry P/E ratio of 39.7. The 5-year returns of the company is a disappointing 9.11%.
3. Nestle India
About The Company
Nestle India is a subsidiary of the Swiss FMCG conglomerate – Nestle. The company manufactures and distributes almost every consumer good that comes to mind – Baby formula, chocolates, soya, milk, instant noodles, coffee, pet food, ice cream and so much more.
They also describe itself as the world’s largest food and beverage company. The numbers back up the sheer size of Nestle, which has over 2,000 brands in 186 countries in the world.
Financials Of Nestle India
|CMP||₹ 20,247||Market Cap (Cr.)||₹ 195,209 Cr.|
|EPS||₹ 225||Stock P/E||83.2|
|ROCE||147 %||ROE||113 %|
|Face Value||₹ 10.0||Book Value||₹ 241|
|Promoter Holding||62.8 %||Price to Book Value||83.9|
|Debt to Equity||0.12||Dividend Yield||0.97 %|
|Net Profit Margin||15.8 %||Operating Profit Margin||22.2 %|
Nestle India is one of the FMCG giants in India, with a market capitalization of ₹195,209 crores. Promoters hold a sizable share of the company (62.76%) and there has been no major selloff by them in recent years.
The company reports its annual results at the end of every calendar year, and December 2021 reports reveal that the company posted sales of ₹14,709 crores with a net profit of ₹2,145 crores.
In December 2017 they reported sales of ₹10,010 crores with a net profit of ₹1,225 crores, indicating a very slow growth rate.
ROE and ROCE are the highest we’ve seen on our compilation of foreign companies listed in India at 113% and 147% respectively. Coming to the stock P/E (82.9) is much higher than the industry P/E (61.8).
The stock is one of the most expensive in the Indian stock market at almost ₹20,000 per share! Nestle India has given a 5-year return of almost 160%!
4. Siemens India
About The Company
Based out of Germany, Siemens is a technology and automation company that traces its roots back to 19th century Germany. Their Indian subsidiary, Siemens India has businesses across various industries –
Smart Infrastructure, Digital Industries, Mobility, Financial Services, and even renewable energy.
Financials of Siemens India
|CMP||₹ 2,928||Market Cap (Cr.)||₹ 104,286 Cr.|
|EPS||₹ 34.0||Stock P/E||86|
|ROCE||14.9 %||ROE||11.0 %|
|Face Value||₹ 2.00||Book Value||₹ 298|
|Promoter Holding||75.0 %||Price to Book Value||9.82|
|Debt to Equity||0.02||Dividend Yield||0.27 %|
|Net Profit Margin||7.98 %||Operating Profit Margin||10.6 %|
Siemens India is a large-cap automation company with a market capitalization of ₹104,286 crores. The parent organization, Siemens AG, holds a majority stake of 75% in the company. They are the single largest shareholder, with no movement in their shareholding.
Annual reports of Siemens India are reported until September of a fiscal year, and FY 2021 report shows their annual sales were ₹13,639 crores with a net profit of ₹1,090 crores.
If we look at the data 5 years prior to this, the figures disappoint as both sales and net profits have moved only fractionally. FY 2017 sales and net profits were ₹11,065 crores and net profits were ₹1,137 crores.
Sales indicate a slump and profits have declined in the 5-year period. The company also has a poor ROE and ROCE of 11% and 14.9% respectively.
Despite low growth in sales and profits, the stock P/E is 83.9, almost 3 times higher than the industry’s P/E of 34.7, hinting at a high overvaluation.
One of the positives of the company’s performance is its low D/E ratio of just 0.02. The 5-year return of Siemens share price is almost 139%, which is adequate and average, given the duration of the investment.
5. ABB India
About The Company
ABB is the 2nd Swiss on our blog of foreign companies listed in India. ABB started off as an electronics equipment manufacturer, before diversifying into other industries such as robotics, automation, and rail transport.
The parent company, ABB is held by Investor AB, under the Wallenberg family.
Financials Of ABB India
|CMP||₹ 3,200||Market Cap (Cr.)||₹ 67,815 Cr.|
|EPS||₹ 38.8||Stock P/E||120|
|ROCE||15.8 %||ROE||11.3 %|
|Face Value||₹ 2.00||Book Value||₹ 210|
|Promoter Holding||75.0 %||Price to Book Value||15.2|
|Debt to Equity||0.01||Dividend Yield||0.17 %|
|Net Profit Margin||6.24 %||Operating Profit Margin||9.22 %|
ABB India has a sizable market capitalization of ₹67,815 crores, making it a large-cap power equipment manufacturer. The promoters of the company, ABB hold the highest stake in the company at 75%.
FY ending December 2021 showed their annual sales at ₹6,934 crores, with a net profit of ₹520 crores. The 5-year overview reveals that both sales and net profits have grown slowly, with marginal differences.
In FY 2017, the company reported sales of ₹6,094 crores with net profits of ₹420 crores.
ABB India’s ROE and ROCE are on the lower end of expectations at 15.8% and 11.3% respectively. The stock is quite overvalued as it has a P/E ratio of 103 whereas the industry P/E is just 34.7.
Despite a slower growth rate, it has managed to stay almost debt free with a D/E ratio of 0.01. The 5-year return of ABB is 145%, giving investors a return of almost 1.5 times their initial investment in the company.
As long as India’s economy opens doors for employment and growth, foreign companies will continue to operate and invest in India. These few foreign companies represent a small percentage of the rapidly growing Indian economy and its role in the global markets. Let us know in the comments if you know which is the next big foreign company that will list in India. Happy Investing!
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