Consumption patterns and corporate strategy in India have changed significantly in response to the pandemic, and keen-eyed investors have noticed. Widespread smartphone usage, combined with lockdowns, have accelerated the advent of e-commerce and digital banking. India’s young population are early digital adopters, and the country’s advanced tech ecosystem is first-class. Data is cheaper than anywhere, and per-capita usage is the highest globally; 99% of all online activity happens on smartphones.
Similarly, India’s next generation of vehicle buyers will not be wedded to the merits of combustion engines and will willingly “go electric”, since most will be first-timers. An open-minded society combined with a vast population of consumers (50% of which are under 25) suggests that vehicle manufacturers will see India, not Europe or China, as the real market of the future.
Another side-effect of the pandemic has been the urgency with which multinational corporations are diversifying supply-chain risk away from China owing to mounting political tensions with Western countries. This bodes well for India, a winner in sectors such as electrical equipment, speciality chemicals and pharmaceutical production. This is largely due to an English-speaking workforce, lower labour costs (now one third of China’s) and ongoing deregulation fostering enterprise.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Affle: the boom in digital advertising
Affle (Mumbai: AFFLE) is a digital-advertising technology agency that operates only via smartphone. It stands to profit from an increase in post-Covid-19 digital spending. It adopts a targeted advertising approach, and is rewarded only when customers are converted to a service or product. It uses artificial-intelligence (AI) algorithms to create a virtuous circle whereby the more data is applied the more conversions occur, which in turn encourages more advertising through its platform. Affle is expected to grow sales by an annual 47% over the next three years. Profits should grow at a similar pace.
Sona Blw: exporting Tesla parts to China
Equally affected by consumers’ changing habits is Sona Blw (Mumbai: SONACOMS), an automotive-component manufacturer; specialisms include starter motors. It is a direct beneficiary of electric-vehicle (EV) adoption globally, as its precision-engineered parts are critical to an EV’s high-torque requirements. As the sole supplier to Tesla’s China plant (as well as to other car manufacturers globally), Sona is a recent example of Indian companies exporting to China. Profits are set to grow handsomely as EV sales ramp up globally.
Dixon Technologies: a leader in outsourcing
A low-cost producer of electrical equipment such as LED lighting, washing machines, TVs and smartphones, Dixon Technologies (Mumbai: DIXON) benefits from the government’s policies aimed at reducing Chinese imports.
As well as being an outsourcing solution for the global branded manufacturers needing to reduce manufacturing costs, it also provides a supply-side alternative to China, and enables these companies to penetrate India’s huge consumer market. We expect Dixon to generate annual sales growth of more than 45% over the next three years while maintaining its industry-leading return on capital of over 30%.
-
House prices are falling in London but how does it compare to the rest of the UK?Advice The capital remains the most expensive part of the UK to buy a property, but it isn’t being as badly hit by the housing market slump. Where are London house prices heading?
-
Will a Santa Rally provide festive cheer for investors this year?
News Equities often get a seasonal boost during December - will there be a Santa Rally in 2023?
-
Crypto is “Monopoly money”
FTX won't be the last crypto scandal, because cryptocurrencies mirror the worst aspects of the finance industry.
-
OpenAI – corporate drama unleashed
OpenAI, the firm behind ChatGPT, was in uproar as its boss was booted out, briefly snapped up by Microsoft and then brought back again.
-
Can Lidiane Jones be Bumble's perfect match?
Dating app Bumble is taking on Lidiane Jones, a well-regarded leader in tech, as its new boss. Can she work her magic in a new arena?
-
Are corporate bonds a good bet?
Corporate bonds pay a slightly higher yield than governments, but spreads aren’t generous by past standards.
-
SoftBank’s shares slump on quarterly loss
Japanese investment group SoftBank’s technology funds have struggled, not least because of an investment in WeWork.
-
M&S shares shift from frumpy to fabulous as pre-tax profits are up by 56%
M&S is performing strongly and has announced it will pay a dividend for the first time since the pandemic.
-
The rise and fall of Sam Bankman-Fried – the “boy wonder of crypto”
Why the fate of Sam Bankman-Fried reminds us to be wary of digital tokens and unregulated financial intermediaries.
-
Three defence stocks set to flourish in an era of instability
A professional investor tells MoneyWeek where he’d put his money. Tom Bailey highlights three defence stocks that look promising.
