At the end of financial year 2022, the price-to-book (P/B) ratio for the European consumer products giant Unilever PLC stood at six. The same number for its subsidiary in India, Hindustan Unilever, was twice that, at twelve. This difference is not because the Indian subsidiary is a young or small company — on the contrary, the Indian subsidiary is a 90-year-old company with a market cap of $76 billion. Nor is this an isolated instance.
Does Your Company Have an India Strategy?
Multinationals that don’t have a plan for building subsidiaries in the country risk missing out on one of the most promising market opportunities in the world today.
June 27, 2023, Updated September 26, 2023
Summary.
The price-to-book ratios of Indian subsidiaries of multinationals far exceeds those of their parent companies. That suggests the subsidiaries have better growth prospects, which makes sense given India’s rapidly growing middle class. At this point, any multinational without an India strategy is missing out on a major opportunity for growth and profitability. But tailoring your strategy for India requires customizing your products and services and tapping into the “India stack.”
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