Foreign investors remain net sellers of Indian stocks this year, but global companies are rushing to list local units in one of the world’s busiest IPO markets, lured by valuation premiums. Coca-Cola’s Indian bottling division is reportedly weighing a $1 billion float next year. The Indian arm of South Korea’s CJ Darcl Logistics has already submitted a draft, and analysts expect more global companies to bring Indian operations to the market. “Right now, multinationals are going through all the valuation upgrade stages,” said Akshay Gupta of Prime Securities, pointing to German multinational Siemens, which listed its energy unit in March 2025 and split its India operations into two. While parent company Siemens Energy has performed impressively since last year, with a P/E ratio of over 60 times, Siemens Energy India has a P/E ratio of 117 times. “Indian companies today have capital markets departments within the Ministry of Finance to ensure value creation,” Mr. Gupta said, adding that global companies want to take advantage of “valuation arbitrage”. As an example, recently listed LG Electronics India has a market capitalization of 1.13 trillion rupees ($12.6 billion). By comparison, South Korean parent company LG Electronics is valued at 14.89 trillion Korean won ($10.1 billion), according to LSEG data. LG Electronics will own 85% of the shares in the Indian unit after the IPO. Even though its net profit is about one-tenth that of its parent company, the Indian unit’s forward price-to-earnings ratio (P/E) is 58 times compared to 9 times that of LG Electronics. Dheeraj Agrawal, managing director at Ambit Investment Managers, attributed this gap to the local division’s faster revenue growth (in the low to high double digits) compared to its global parent, which is typically in the low single digits. He said the Indian market, and to some extent the US market too, “tends to overpay for high growth” and said loft valuations for local units are a “short-term bubble” that will eventually correct. Multinational companies are also sought after for investment opportunities because of their “corporate governance structures,” Mr. Gupta said. Experts say the reason for this high demand is tied to India’s strong liquidity base, supported by the growth of mutual funds that pump money into equities, and which commands premium valuations for many multinational companies. “While Indian equities have enjoyed a valuation premium over most global parent markets for years, and this is true across the consumer and industrial sectors, the key change is the growing maturity of India’s capital markets,” said Hari Shamsunder, vice president and senior institutional portfolio manager, Indian equities, Templeton Global Investments. Shamsunder said the popularity of Systematic Investment Plans (SIPs), which invest a fixed amount on a regular basis, and the rapid increase in individual participants have led to the accumulation of abundant liquidity in the country. The Reserve Bank of India said in August that retail investors are increasingly preferring equity investments, primarily through mutual funds, over traditional savings vehicles. The central bank said the share of mutual funds in the household sector’s total financial savings rose from 0.9% in 2011-12 to 6% in 2022-23. In mutual funds, the central bank highlighted that the growth in new SIP accounts from smaller cities is higher compared to the top 30 cities, and the participation of women is also increasing. Experts say this strong liquidity base will enable larger IPOs. Two large IPOs, Tata Capital and LG Electronics, worth a total of about $3 billion, opened in quick succession during a five-day period in October and were fully subscribed. Experts say this will make it easier for multinational companies to list their Indian operations and monetize some of their stakes for big profits. Bhavesh Shah, MD and Head of Investment Banking, Equilus Capital, said, “Listing in India will successfully unlock the value of the Indian business and will also help support the parent company’s share price.” According to him, many companies continue to be highly valued by Indian investors even after listing, and the partial total valuation of their parent companies has also improved. Both Hyundai Motor India and LG Electronics made their debuts through offers to sell existing shares rather than issuing new shares, raising little new capital. After a slow start, Hyundai Motor India’s market capitalization has increased from $17 billion to more than $21 billion, according to LSEG data. More than two-thirds of IPO funds raised in India in 2025 were cashed out by existing investors, according to Mumbai-based Prime Database. Although critics see the sale offer as multinationals transferring risk to domestic investors, multinationals continue to hold close to 75% of their Indian subsidiary after listing, said Pranav Haldea, managing director at Prime Database Group. Although the sale of some parent company shares will reduce net foreign investment at the time of execution, Templeton’s Shamsunder said, “This exit strategy and value creation potential could help attract (foreign direct investment) in the long term.” “These listings demonstrate the depth and liquidity of India’s financial markets on a global scale.”
