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Last Updated : Nov 14, 2019 12:03 PM IST | Source:

'MNCs are still a market favorite; these 45 firms generated more than 15% ROE'

“Good Governance” - one of the key parameters that MNC’s own with highest priority given.

Moneycontrol Contributor @moneycontrolcom
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Rudra Shares and Stock Brokers

Investors are excessively cautious when investing in Indian firms, while their multinational counterparts inspire little to no speculation. Amongst business, management, growth, we believe “management” to be the most important factor for any stock selection. However, Back to back hit on Indian companies due to weak governance has directly impacted their valuation and reputation. It has also shaken the confidence of some small investors, who are parting the stock in the face of volatility,

Talking about corporate governance, it is about ensuring that the company management is acting in the larger interests of shareholders. But, unfortunately for the past 1-2 year, various scandals, including willful defaulters & financial disasters have raised questions over the management of Indian companies.


Generally, investors are looking for CAGR, future growth prospects, valuations and other fundamentals, but, sometimes they fail to ascertain whether or not the selective company holds good governance. Thus, various stocks tear down in a short span of time. Companies like Manpasand, Yes Bank, PC Jeweller, Fortis etc. were all part of this.

As most of the top-level appointments in Indian companies is from the family members itself, thus governance becomes the least priority. Most of them pledge their shares, not just for business expansions but for themselves.

While the opposite is the case with MNC’s. “Good Governance” - one of the key parameters that MNC’s own is given the highest priority. It is always prudent to invest in companies where management quality is up to the mark. Thus, even in bad times, where the market did not perform, MNC’s did not face much trouble. In fact, despite higher valuation, most of the MNC’s like Bata, HUL, Colgate, Nestle & Whirlpool etc. had given higher returns. Even today, they are still valuable as they are debt-free and generating more than 15 percent ROE.


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First Published on Nov 14, 2019 11:56 am
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