In recent years, a trend has emerged in Indian equity markets: the listed subsidiaries of multinational corporations (MNCs) operating in India are trading at higher valuations, and in some instances even higher market capitalisations, than their global parent companies. LG Electronics India’s upcoming IPO illustrates this growing trend, with its valuation surpassing that of its Korean parent despite generating far lower revenues.
The pattern is visible across multiple sectors, and while it has been evident for years, its pace is accelerating — extending well beyond the consumer goods space. A report from the Economic Times highlights how capital-goods firms such as ABB India Ltd and Cummins India Ltd enjoy P/E ratios of 59-55× compared with 27× and 15× for their parents.
So what is driving these valuations? Why is the market willing to value the India-based arm of a global business so richly? And what should investors keep in mind? Here’s a closer look.
Factors driving richer valuations
There are a few key reasons why the Indian subsidiaries may have earned higher valuations, beyond the size of the market.
- The India growth story: Many global parent companies operate in mature markets: growth is stagnating or single-digit. In contrast, India’s domestic economy offers opportunities for double-digit growth, rising incomes, expanding middle class, and increasing consumption. An analysis by Allianz Global Investors points out that structural tailwinds in India — favourable demographics, improving productivity and increasing profitability — underpin higher valuation multiples.
- Focused exposure to the Indian market: Another factor may be that the Indian listed subsidiary often offers a cleaner “pure play” exposure to the Indian market and consumer, whereas the parent company may have businesses across geographies, legacy markets, or lower-growth segments. In other words, investors can buy into the “India growth story” without the baggage of global operations. It is also a reflection of the strategic importance of the Indian market to the parent companies.
- Scarcity dynamics: In many cases, the listed Indian subsidiary has a relatively limited public free float (the parent retains majority ownership). That scarcity can support a premium. Additionally, Indian domestic institutional and retail investors may value local brands more highly given their familiarity and growth expectations.
- Local market leadership: Many of these subsidiaries are leaders in their category in India (Maruti Suzuki in auto, Nestle in consumer goods, etc), and benefit from structural tailwinds such as the “Make in India” focus, import substitution, export push, rising domestic consumption. For example, the Indian auto business of a global MNC like Hyundai may capture both rising domestic demand and exports, making its overall growth profile more attractive.
- Leveraging Indian valuations: Some global parents are recognising that their Indian arms are being valued richly, and are taking strategic steps to expand and capture that value. (For example, listing the Indian arm, like LG and Hyundai; spinning off, or raising their stake).
Valuation snapshot
Here’s a quick snapshot of a few Indian subsidiaries that are outshining their parent companies.
| Parent Company | Indian Listed Subsidiary | Valuation Insight | Source |
| Suzuki Motor Corp. (Japan) | Maruti Suzuki India Ltd | Indian arm’s m-cap: US $58 B vs parent: US $29 B. Maruti among global top 10 automakers by valuation. | Business Standard, Sep 2025 |
| ABB Ltd (Switzerland) | ABB India Ltd | P/E of 60× vs parent PE of 27×; India growth premium drives re-rating. | Economic Times, Apr 2024, Simply Wall St |
| Schaeffler AG
(Germany) |
Schaeffler India Ltd | Trades at P/E of 43× vs parent at 10–12×; strong India premium. | Moneycontrol Research Report (PDF), |
| LG Electronics Inc (South Korea) | LG Electronics India Ltd | On listing, Indian arm valued at $13 B vs parent at US $9.4 B, a rare case of the subsidiary > parent. | Business Standard, Oct 2025 |
| Cummins Inc. (USA) | Cummins India Ltd | India arm trades at P/E of 50× vs parent at 16×; reflects high-growth India exposure. | ET Markets, Apr 2024, |
What to watch out for
While the valuations are rich, there are some things to keep in mind for investors and companies.
- Investor strategy: For investors, this “India premium” means that while the parent company may appear inexpensive relative to its Indian unit, the Indian subsidiary may already be fully priced (or even over-priced). It invites selective parent vs subsidiary trade-offs: is it better to buy the global parent (lower multiple, diversified but slower growth) or the Indian arm (higher multiple, pure India play but higher expectations)?
- Corporate strategy: For global MNCs, this trend raises a few questions: Should the parent company raise its stake, delist the Indian arm, spin off further, or redirect more capex into India to capture value? The very fact that the Indian arm is being valued richly implies that strategic focus should shift.
- Market signalling: For Indian markets, this phenomenon signals confidence: global parent companies are effectively being valued on their Indian operations rather than their global footprint. This is a significant indicator of how capital markets view India’s role in global growth. But it’s important to note that premium valuations come with higher expectations: any slowdown in growth, margins, or execution could lead to sharp corrections.
The valuation gap between Indian subsidiaries and their global parents reflects a deeper shift in how investors perceive India’s economic trajectory. For investors, the message is clear: the “India premium” shows strong belief in the country’s long-term growth, but it also calls for caution — not every high-priced stock is a solid bet. For multinational companies, the trend is both an opportunity and a reminder that India is becoming a key driver of their global value. But maintaining a balance is essential in the long term, and may determine whether this is more than just a trend.
Sources
Why do Indian subsidiaries of MNCs command higher valuations? It’s all about the India Story
Moneycontrol Pro Panorama | The premiumisation of the Indian stock market
MNCs cash in on high valuations of HUL, Maruti & others as subsidiaries beat foreign parents