Indian companies listed on the London Stock Exchange (LSE) continue to outperform both the AIM 100 and AIM all-share despite the tough economic climate according to India Watch, a quarterly review by the leading business and financial adviser Grant Thornton. India Watch tracks the collective performance of Indian listings on the London markets and gives an update on the Indian economy. Its latest figures indicate that the Indian Index has outperformed the AIM 100 and the AIM all-share by 22% and 23% respectively since 1 January 2007.

In Q4 2008, Elephant Capital Plc, Eredene Capital Plc and Evolvence India Holdings Plc outperformed the AIM all-share with a comparatively modest drop in their share prices (closing at -2.6%, -4.9% and -10.1% respectively). Having been the top performers of the last 12 months, Elephant Capital ended the year with a market capitalisation of £47.75 million, Eredene Capital's was £35.49 million, while Evolvence India Holdings boasted a market capitalisation of £49.4 million.

"These results are increasingly positive given the current economic backdrop. Indian companies are not merely generating economic growth; they are also proving to be companies that are well-worth investing in, and are clearly starting to take on some of the world’s leading companies," says Anuj Chande, Head of Grant Thornton's South Asia Group.

Fiona Owen, a Partner at Grant Thornton who heads South Asia Group Capital Markets, adds: "It is not all doom and gloom on the stock market, there are quite a few notable encouraging trends as well. The prices of food and oil have fallen, inflation continues to decline towards comfortable levels and interest rates have softened. Factors such as these may serve to provide the necessary support in 2009, making the overall outlook more positive for Indian companies."

IPOs of Indian firms still to pick up

Despite the positive signs, London saw no new initial public offerings (IPO) issued by Indian companies in the quarter to December 2008. Therefore AIM-listed KSK Emerging India Energy Fund (KEF) continued to be the largest IPO by an Indian firm on a British exchange in 2008, raising US$200 million in June. Grant Thornton UK LLP acted as nominated adviser.

"There is a backlog of more than 25 Indian firms waiting to float in London when the market picks up," says Owen, who thinks some may list later this year or in early 2010.

Owen adds that these are seeking to raise between $50 million and $500 million and come from a range of sectors including Infrastructure, infrastructure services, media, technology, manufacturing, pharmaceuticals and telecommunications.