Boosted By Bombay - Indian LSE Stocks Triple In 2009

Thursday, January 21, 2010 | Posted by: Grant Summers
Categories: | Tags: India Watch, South Asia Group, India Price Index, Fiona Owen, Capital Markets, Indian Economy, London Stock Exchange, India Hospitality Corp, Alternative Investment Market

Grant Thornton’s latest India Watch Index reveals that Indian companies listed on the London Stock Exchange (LSE) dramatically outperformed both the AIM All-Share and the FTSE 100 in 2009.  The India Watch index soared by 212% in 2009, following a 23% rise in the final quarter of 2009. In comparison, the AIM All-Share only recorded gains of 66% in 2009, while the FTSE 100 saw a modest 22% rise in the last twelve months.

The India Watch tracker focuses on the performance of the Main Market and AIM versus listed Indian firms since 1 January 2007.

The India Watch tracker shows that companies with significant operations in India were better placed to withstand the downturn of the global economy and emerged as strong performers during 2009. Indian stocks have soared leading our India Watch Index to end the year more than 3 times higher than it was at the start of 2009. This interest in London-listed Indian stocks parallels the enthusiasm for the Bombay Stock Exchange, where the Sensex gained 81% in 2009. While the Sensex benefited from US$18 billion of capital inflows by foreign funds, London-listed Indian stocks have been boosted by their Bombay-listed sector peers.

The Index has also outperformed other indices in previous years: Since its inception in 2007, the India Watch price Index gained 57%. By contrast, the AIM All-Share lost 40% over the last two years, while the FTSE 100 recorded a 13% loss.

Investor enthusiasm for Indian companies is further fanned by the country’s unrivalled growth of Gross Domestic Product (GDP), which is likely to amount to around 7% for 2009/2010 in spite of the global economic downturn.

The best performing India Watch stocks in 2009 were OPG Power Ventures, Vedanta Resources and Naya Bharat Property with price increases of 338%, 327% and 251% respectively. The best performers vary dramatically in size: Vedanta Resources is the largest firm in India Watch with a market capitalization of £7.1 billion at the closing price of 2611 pence per share at the end of the year. OPG Power Ventures is in the mid range with a value of £258 million at the closing price of 90 pence per share, while Naya Bharat Property is at the lower end of the spectrum with a closing price of 24 pence per share translating to a market capitalisation of £21.4 million.

Vedanta Resources was also one of the top performers in the last quarter of 2009, along with India Hospitality Corporation and Symphony International Holdings Ltd with price increases of 37%, 250% and 37% respectively.  Grant Thornton UK LLP was recently appointed as Nominated Adviser to India Hospitality Corporation.

It is remarkable that Indian companies quoted in London and Bombay are performing so well across the board. They have been less affected by the negative headlines of the financial tsunami witnessed over the past year, with Indian related indices outperforming the blue chip indices. The impact of last year’s financial downturn on Indian companies, if comparatively milder, was also cushioned by India’s strong GDP growth, domestic M&A activity and the federal government’s economic stimulus package.

Performance of Indian companies on the London Stock Exchange since January 2007*

Top performing companies in 2009 (01/01/09 - 31/12/09)

Top performing companies over the last quarter

Top performing companies in 2009 (01/01/09 - 31/12/09)

Sector Analysis

Fiona Owen
Partner and Head of South Asia Group Capital Markets
For Grant Thornton UK LLP

*The India Watch index consists of 30 Indian companies listed on AIM or the Main Market (excluding GDRs). We only consider companies to be Indian if they are domiciled in India and/or foreign companies holding Indian assets or Investment companies with Indian promoters. The index has been created via Datastream, a Thomson Reuters product and is weighted by Market Value.

AIM = Alternative Investment Market
AIM is the London Stock Exchange’s international market for smaller growing companies. A wide range of businesses including early stage, venture capital backed as well as more established companies join AIM seeking access to growth capital.

MM = Main Market:
The London Stock Exchange’s Main Market is the world’s most international market for the listing and trading of equity, debt and other securities. Its location at the heart of the world’s leading financial centre makes it the ideal home to over 1,600 companies from 60 countries, including many of the world’s largest, most successful and most dynamic companies.