MNC Stocks

ABB India, Hindustan Unilever, and SKF India have excelled well in recent months with ABB and SKF India gradually ralling to all-time highs

Since valuations are higher in this space, a 7-yr horizon with 10% capital outlay can be looked at

Family-owned units rank second, while public sector firms remain laggards

The outperformance of MNCs has seen 19 such stocks grab a spot in the top 100 list of companies by m-cap, compared to 14 firms as on Jan 20, 2020, when the benchmark indices hit their all-time high.

The SBI Cards' IPO closed on March 5, and since then the market has come off 11%

SKF India, Abbott India, Britannia Industries, and Castrol India, from the Nifty MNC index were up in the range of 3 per cent to 5 per cent on the NSE.

With half the listed MNC stocks trading near their all-time high valuations, experts say it's time for investors to cherry pick from the lot

Returns of MNC funds too have tanked over the past year

There has been a steady decline in the valuation of listed multinational companies (MNCs) in the last two years even as the broader market has become expensive. A typical MNC is now trading at 47.5x its trailing 12 month net profit, down from 51x at the end of 2014-15. In the same period, the price to earnings multiple of the broader market, excluding financial companies and government-owned oil companies, is up from 27x to 30x.Listed MNCs in India continue to be traded at a large premium to their global parents but the premium has shrunk in the last two years as valuations in the global market have grown faster than in India. In the last two years, the price to earnings multiple of global MNCs in our sample is nearly 350 basis points higher. (see chart)Analysts attribute this to the slowdown in India, which has made it tougher for MNC subsidiaries to beat their parents. Maruti Suzuki is an exception that continues to do well despite a tough external environment. "Corporate earnings ..