Indian Companies very attractive for Foreign Mergers.

>> Monday, November 17, 2008

The India Growth Story is one which is well known all around the world. The current global crisis and stock market meltdown has made good-growth oriented Indian Companies very very cheap with respect to valuations. Some are trading at up to 30-40% discounted share prices in comparison with 2007. 

So is the time come for Mergers and foreign companies dishing out dollars to take good amount of percentage stakes in India Inc. ? Well we have seen the following mergers already:

  1. Ranbaxy Labs
  2. Tata Teleservices. 
More than ever now is right time for cash rich foreign companies to increase the stakes in India. From a ROI perspective the whole  world is sold on the fact that India is the land of opportunity, with an educated work force, a surging middle-class which propels consumer growth, the future is surely bright. 

Also India's companies are well managed, have solid balance-sheets and good products on offer. Today what is hampering growth is lack of liquidity, slow lending by banks, higher interest rates and looming global crisis. Also the lower stock price makes the deal lucrative as the dollar is stronger than the rupee.

To top it all up, selling equity to generate capital is not such a bad idea, look at the deal with DoCoMo and Tata Tele, with the money also comes technical collaboration and experience which all adds value to the company and augurs well for growth. 

Telecom sector, Banking, Airlines can all see some M&A action in the coming days.
Source: -