'Driving Hidden Value': Why MNCs Race To List Indian Units; Meet The Next Likely D-Street Debutants

An array of major multinational corporations have listed their Indian units in recent years, and the trend is only expected to solidify in the period to come. This Dalal Street listing wave is supported by various technical reasons, but at the foremost is the "significant valuation premiums" that the local arms command, according to a note released by ICICI Securities.

Indian consumer subsidiaries currently trade at "1.7x–4.2x valuation premium" versus their parent companies, the brokerage pointed out. This premium is structurally justified India's "superior growth trajectory" relative to mature developed markets, "large and expanding middle-class consumption base", ability to attract high-quality talent pool, and "premiumisation opportunities" across categories.

Over the last few years, Hyundai, LG, Orkla have debuted in the Indian market. Despite a challenging demand environment over the last two years marked by subdued consumption trends and heightened competitive intensity, Indian subsidiaries of global consumer companies have continued to materially outperform their parent companies in both sales and profit growth, the note pointed out.

From a sum-of-the-parts (SoTP) perspective, Indian units of MNCs are "driving hidden value", ICICI Securities said. The brokerage pointed out how Unilever trades near 20x P/E globally, while Hindustan Unilever Ltd. trades at about 53x. Excluding India operations could reduce Unilever's implied valuation to around 17.5x, demonstrating India's valuation accretion. 

Parent Entities Outperformed

Listed subsidiaries such as HUL, Nestle, United Spirits and United Breweries have outperformed parent companies in sales growth by more than 10% over the last two years, ICICI Securities said.

Even relatively weaker performers like Colgate (India) exceeded parent growth by about 5%, it added.

Kansai Nerolac remains the only exception, largely due to intense competitive pressures within the Indian paints industry. Importantly, all listed Indian subsidiaries have outperformed parents in profit growth, highlighting superior operating leverage and market expansion, the brokerage pointed out.

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While listed entities have shown clear dominance, the performance of unlisted subsidiaries remains more varied. Among these, companies such as Mondelez, Beiersdorf, and Reckitt have marginally underperformed their global parents. In contrast, the Indian operations of L'Oreal, Carlsberg, AB InBev, and Pernod Ricard have meaningfully outpaced their parents' performance.

The Revenue and Profit Advantage

From a long-term perspective—spanning 5 to 10 years—both listed and unlisted Indian subsidiaries have consistently delivered higher sales and earnings growth compared to their global parent companies.

Over a 20-year horizon, the growth trajectory remains even more stark:

• HUL delivered 9% revenue CAGR and 11% profit CAGR, compared to Unilever's 3% and 4% respectively.
• Nestle India saw an 11% revenue CAGR and 12% profit CAGR, while Nestle SA saw 0% and 1% respectively.
• United Breweries led with a 14% revenue CAGR, significantly outperforming Heineken N.V.'s 5%.

The "hidden value" identified by ICICI Securities is most evident when looking at the market cap share versus the actual profit contribution. For many global giants, the Indian unit accounts for a massive portion of their global market valuation despite a relatively smaller share of consolidated earnings.

As shown in the data, the market cap share of Indian subsidiaries consistently towers over their profit share:

• Kansai Nerolac accounts for nearly 80% of its parent's market cap, despite contributing only around 26% of profits.
• HUL represents over 40% of Unilever's market cap, while its profit share is closer to 11%.
• Reckitt Benckiser's Indian operations are estimated to hold about 25% share of the parent's market cap.

Who's Likely Next On D-Street?

Given the sustained outperformance and the massive valuation arbitrage, ICICI Securities believes the "India listing cycle" is a matter of when, not if. Strategic benefits such as accessing deep domestic capital and creating an "acquisition currency" for local consolidation make listing an attractive path for several unlisted giants.

The primary candidates poised to benefit from an Indian listing, as per the report, include:

• Mondelez
• L'Oréal
• Beiersdorf (Nivea)
• Reckitt
• Carlsberg
• Pernod Ricard

As these subsidiaries transition from incremental growth contributors to core value creators, their parents are increasingly likely to seek alignment between geographical growth realities and capital market valuations.

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