Adapt or perish ⚡
Jio unstoppable, GM pissed, and Musk saving the planet.
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Let’s go ahead and get started:
Market summary: 📊
Sensex briefly kissed 50K, only to fall back like a rock carrying this tease into another week. US markets ended down too, but had a phenomenal week overall.
US:
S&P 500 - down 0.30%
Nasdaq 100 - down 0.29%
India:
Nifty 50 - down 1.50%
Sensex - down 1.50%
What’s brewing hot? ☕
✅ General Motors say WTF?—been a couple of years since car maker General Motors (owners of the brand Chevrolet) quit India, because nobody would buy their cars around here. But the Govt. of Maharashtra doesn’t want them gone, and heeding to worker protest, the state flat out rejected GM’s application to cease operations.
GM is pissed—“it sends a concerning message to any potential future investors who want to bring jobs and investment to the state”, says the company.
✅ Jio makes a killing—5.2 million new subscribers opened accounts with Jio in the last 3 months. Revenues grew 5% while profits surged 15%. After offering loads of freebies to lure subs, Reliance is slowly raising prices which helped revenue per user (ARPU) grow for like the 5th straight quarter. If the pandemic led economic carnage couldn’t dampen momentum, we don’t think anything else will.
BTW—Reliance Retail claims shopping foot traffic is now at ~75% levels compared to before COVID, giving some color on how recovery is looking. 👏
✅ Finally, $100 million for the planet—and in a regular Friday update, Elon Musk is writing a massive $100 million check to anyone with plans of saving the planet with industrial scale carbon capture technology deployments.
Reinvention club 💰
Tis’ the season of earnings, and Bajaj Finance reported a pretty meh quarter— but investors didn’t seem to mind much, because company’s management pulled a “trump card”.
The juice: Bajaj Finance wants to go all ballistic and capitalize on the fintech craze gripping India, building a digital payments business, taking the fight right to the doorstep of startups.
Here’s how Bajaj anticipates the the plan to work out:
Over the next quarter or so, they roll out Bajaj Pay, basically offering payments via UPI, credit cards and and ALL other means in a unified interface
Then roll a payment solution for merchants too—target 100,000 retail points in first go
Launch 5 marketplace like platforms—for insurance, investments, brokerage etc.
Basic ideas: bring consumers under the umbrella of an end-to-end payment platform, and leverage the engagement funnel + the data advantage it offers to deliver more financial products and services
Basically, these guys are taking on PhonePe, Google Pay, PayTM, and all the other pays, as well as PayTM Money (investing), Policybazaar (insurance) and other platforms in one stroke. Audacious and borderline crazy, but points for thinking big.
Old school giants, in new skin—at this point, Bajaj Fin management is probably wondering that if Reliance can transform itself into a telco giant, now making a lateral entry into digital services, and Tata is spending big money on becoming an ecommerce company, then probably the moment is ripe for their move too.
Bajaj does have certain things in their favor—first, distribution to tens of millions of consumers who would lap up any “digital” features that enhances experience. They have healthy cash flows to pay for their crusade, unlike startups relying on VC money. And finally, they operate from a solid regulatory understanding + a talent pool of seasoned managers.
Bottomline: old school giants daring to dream, and in many cases successfully pulling off transitions, will heat up the ecosystem. Scaling digital services is no joke, but Bajaj’s commitment looks absolute and they could even go out and buy a low flying startup with a solid product. Moreover, playing from a cash rich position here is definitely a powerful advantage.
Aight that’s it for today, and a quick look at the hottest stuff this week… ☕
🌈 First insurance unicorn—fintech startup Digit raised ₹135 crore from a bunch of big name investors, with valuation doubling to $1.9 billion. The company basically sells an end-to-end portfolio of insurance products from health to motor to property to fire, and has so far managed to scale to over 15 million users. Revenues are growing at 30%+ rates consistently, with premiums closing in on $200 million each year.
🚇 IRFC IPO 3.5 times oversubscribed—IRFC, which acts like a financing platform between private lenders and the Indian Railways, opened its IPO bid to decent reception from retail investors. The IPO will raise about ₹4.6K crores in capital, diluting the government’s ownership in the business to about 86%, and kicking cash over to the Railways to finance more assets. So far looking good.
💰 Microsoft buys into autonomy—self-driving company Cruise, one of the leaders of the autonomy revolution, raised a splashy $2 billion round on a $30 billion valuation. Microsoft was one of the biggest checks in. Satya Nadella basically ensured that as the autonomous infrastructure arena heats up, Microsoft’s cloud platform gets a front row ticket to the show. General Motors finds comfort in the idea that they can fall back on Microsoft’s limitless technical resources and AI chops, if needed.
🏦 Banks report a good pulse—global banks gave investors a better picture of how the global economy, and the average joe is getting by in these tumultuous times. US banks like Citi, JP Morgan etc. showed interests are being paid on time, while savings are at an all time high, and that revenues from trading are soaring (Stonks and Stimulus FTW 📈). Indian banks like HDFC agree, with bad loan losses under control, and profits better than imagined. In all, no 2008-like fiasco looming.
🖥️ IT acquisition spree continues—Cognizant acquired another smaller competitor called Magenic, it’s 12th purchase in the past 1 year. Between INFY, TCS, Cognizant, and Wipro the total acquisitions have easily surpassed 25. They’re lapping up everything that’s shining, desperate for some growth, and the trend is not expected to slow down through 2021.
🛒 SEBI says no problemo—the $3.4 billion acquisition of Future Group’s assets by Reliance Retail got a nod from the securities regulator. Amazon is quickly running out of options here, but the matter will still be pending with the Delhi High Court, and the National Company Law Tribunal, which will ultimately decide the fate of the deal.
📈 Asian Paints had a good quarter—the legendary Indian paints company reported better revenues, solid profits, and improving margins, surprising the markets. Pretty much all their categories—industrial, decorative, home improvement showed decent momentum. Company’s management sounded pretty upbeat about demand trend continuing, and investors excited by the print, poured big into the Indigo Paints’ IPO.
🙌 Trump out, Biden In—the circus left the White House this week, with Joe Biden assuming office as No. 46. Right off the bat Biden signed multiple executive orders including bringing the US back to the Paris Climate Accord, and then relaxing the borders to end Trump’s draconian Muslim travel ban. Meanwhile, Kamala Harris is making history as the first colored, and the first woman Veep.
Aight, that’s it peeps — enjoy the weekend!
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