Investing in Indian Stocks from the U.S.

The Indian Economy is the second fastest growing major economy of the world, with a GDP growth rate of 9.2% (as of 2nd quarter 2006-2007). When measured in terms of purchasing power parity, it is the third largest economy of the world. When measured using US Dollar exchange-rate terms, it is the tenth largest in the world. Goldman Sachs expects India to overtake France and Italy by 2020.

For a US investor, investing in India becomes more difficult. There are plans for Indian ETFs, and there are some closed end funds, but the selection is not good.

Another way to play the Indian trend (besides investing in an emerging market ETF such as ishares EEM), is to buy Indian companies as American Depository Receipts (ADR).

Indian Banks

1. Icici Bank (IBN) -- Icici Bank has a market cap of 23.5 Billion, and a 5 year estimated growth rate of 24%.

2. HDFC Bank (HDB) -- HDFC has a smaller market capitalization than IBN with a 9.88 Billion market cap and a 5 year estimated growth rate of 29.6%.

Telecom

3. Videsh Sanchar Nigam (VSL) -- VSL is a 3.41 Billion telecom company with a forward PE of 29.70, a 5 year estimated growth rate of 10% for a PEG of around 3.

4. Mahangar Tel (MTE) -- MTE is a 2.52 Billion telecom company providing fixed-line, wireless, and other telecom services. It has a forward PE of 22.91, and a 5 year estimated growth rate of 10% for a PEG of around 2.3.

Business Process Outsourcing (BPO) and Information System Services

5. Infosys Technologies (INFY) -- Company has a market cap of 30 Billion, a forward PE of 22.82, and a 5 year estimated growth rate of 26.5% for a PEG of 0.86.

6. Patni Computer Systems (PTI) -- Company has a market cap of 1.79 Billion, a forward PE of 16.53, 5 year estimated growth rate of 21.4% for a PEG of 0.77.

7. Satyam Computer Services (SAY) -- Company has a market cap of 8.91 Billion, a Forward PE of 19.64, estimated 5 year growth rate of 26.83% for a PEG of 0.73.

8. Wipro (WIT) -- Company has a 22.86 Billion market cap, Forward PE of 22.71, 5 year estimated growth rate of 23.18% for a PEG of about 0.98.

9. WNS Holdings (WNS) -- Company has a 1.16 Billion market cap, a Forward PE of 27.41, 5 year estimated growth rate of 34.25%, for a PEG of 0.80.

Internet

10. Rediff.com (REDF) -- Company has a 626 Million market cap, Forward PE of 47.82, 5 year estimated growth rate of 45%, for a PEG of 1.06.

11. SIFY Limited (SIFY) -- Company has a 402 Million market cap, and a forward PE of 47.30.

Automobiles

12. Tata Motors (TTM) -- Company has a 7.10 Billion Market Cap and a 5 year estimated growth rate of 20%.

Drugs

13. Dr. Reddy's Laboratories (RDY) -- Company has a 2.83 Billion Market Cap and a 5 year estimated growth rate of 15%.


Trends in India, a personal take from two Indians