Amidst reports of increasing monopolisation among sectors following the IndiGo airlines crisis, analysts at HSBC believe that corporate structures in India are better than its peers in the continent. File
Indian stock markets are expensive and the beneficial characteristics in comparison to its Asian peers justify the valuations, according to a report by HSBC released on Wednesday (December 10, 2025).
The report cited distribution networks of companies, simpler corporate structures and the Indian retail investor boom reasons to justify the overvalued stocks.
The existing diversity of Indian market geography, the wide distribution network of companies like Hindustan Unilever “having a distribution channel with such a wide reach that caters to different types of consumers is difficult to establish and acts as a major entry barriers,” Herald van der Linde, the Head of Equity Strategy, Asia Pacific at HSBC said in the report, adding that India’s Return on Equity can go as high as 50% to 100%, among the highest in the world.
A second reason is the mere corporate structure of India in comparison with Asia Pacific. Amidst reports of increasing monopolisation among sectors following the IndiGo airlines crisis, analysts at HSBC believe that corporate structures in India are better than its peers in the continent.
“A shareholding chart of some of these companies looks like a bowl of noodles; these business groups have complex cross holdings between their member companies, which is not an effective use of capital and lowers their return on capital. India does not have these structures on the scale seen in North Asia,” the report read. Cross-holdings are the reason why Korean stocks are undervalued, the report added.
The third reason is the increase in retail investor participation keeping the valuations elevated.
The observations in the HSBC report comes amidst Nifty 50 price to earnings ratio, used to measure the price of a stock in relation to its earnings, standing at 22.5 which is among the highest in the world.
While FPIs have sold about ₹1.5 Lakh crore of Indian equities, analysts stated overvalued stocks as one the major reasons for their sell off. Research analysts in other house views still maintain that earnings need to trim to reflect the tepid earnings of corporate India or the latter should grow up to justify the valuations.
Published – December 10, 2025 11:01 pm IST
