India will make it difficult for China to win in the technology race

India will make it difficult for China to win in the technology race
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The country’s companies that went public last year are exceeding the world average

India is poised to be the next big technology investment hit. Foreign portfolio managers who have prospered by backing China’s pioneers will take a close look at the Mumbai IPO listing. Zomato’s successful debut bodes well. The food delivery company’s lack of profits meant it had to sell a larger portion of its $ 1.3 billion offering to large funds. This has not made a dent in enthusiasm. After a 66% rise on its debut, it is valued at 13.3 billion: 50 times annual sales.

It is one of 100 Indian unicorns, together worth $ 240 billion, according to Credit Suisse. The supepp Paytm, online insurance marketplace Policybazaar, educational technology Byju’s, and Sephora-like online beauty retailer Nykaa are among those that could receive an exuberant reception.

They will add fuel to a relatively hot market. Over the past 10 years, the MSCI India Index has traded nearly 17 times future earnings on average, compared to 11 times the MSCI China. In local currency, the Indian index has doubled shareholder returns.

The recent outings also bode well. Indian companies that went public last year are outperforming the global average, according to Dealogic. And there will be more money: a mere 3% of Indians invest directly or through funds, compared to 13% in China, according to the Paytm prospectus.

As in the US and China, there are likely to be a handful of big winners in India. Zomato, for example, operates in a duopoly against Swiggy, backed by SoftBank.

Demand for Zomato was driven by technical factors that will support its inclusion in the major indexes over time. Still, success will be a beacon for issuers of shares and capital. National companies considering listing abroad, such as Walmart’s Flipkart and Oyo Hotels & Homes, might consider staying. And China’s strong regulatory measures will redirect money to India.