Easy day 🍗
China problems, GDP news, and venture deals.
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Market summary: 📊
Release of GDP data weighed on the markets a bit, with investors cutting back on enthusiasm. US investors returned for half a day of trading, taking Nasdaq to monthly highs.
US:
S&P 500 - up 0.24%
Nasdaq 100 - up 0.87%
India:
Nifty 50 - down 0.14%
Sensex - down 0.25%
Two things to close out the week ☕
1️⃣ GDP data is okay—India’s economy contracted 7.5% in the second quarter, although not as bad as the 8.6% YoY decline the RBI was expecting, but the second straight quarter of drop lands us “officially” in recession territory.
The sequential improvement needs appreciation though—from a 24% drop in last quarter, to ~7% levels shows continued underlying recovery in business operations and fundamentals, all with little stimulus from the government.
2️⃣ Govt. caps ride hailing fees—transport ministry has now officially capped “fees” charged by ride-hailing apps at 20% max, with a 1.5x ceiling on surge pricing. A bunch of rules around base pricing have been set as well.
Ride hailers clearly aren’t happy because surge pricing is often where they and the drivers make most of the money. But after letting platforms run wild for too long, the government had to have some sort of regulatory framework to contain price variations to protect drivers and passengers. Lobbying can now begin to revise the ceilings, if at all.
Ipads outta China 👋
Apple has asked its supplier Foxconn to move production of iPads and some Macbooks out of China, and into Vietnam, as western firms actively seek to cut reliance on the Chinese markets in anticipation of worsening trade relations.
Despite changing political rhetoric with Trump out by 2021, odds are US-China relations are not going back to normal any time soon. As far as Apple is considered, its capital investments in the country have probably paid over and double by now. So why carry an overhanging burden into a new decade?
Foxconn has committed some $270 million into Vietnam to fund this expansion. Apple has been prepping other suppliers on similar lines as well, with supplier Pegatron for example eyeing Mexico for a new assembly plant.
Bottomline: India has also been a big beneficiary of this changing wind, with Apple’s investments through the PLI to make iPhones here looking super promising. China’s woes are a great opportunity for other emerging nations to capitalize on. 🙌
From the Venture oven 💰
Omnichannel fashion retailer Nykaa continues its upward trajectory booking a check from investment manager Fidelity. Amount of the investment is undisclosed, but Fidelity rarely plays with pennies or without an IPO on the horizon.
Post round, early investors in the company and employee stock option holders exited, as Nykaa streamlines its cap table a bit—again in anticipation of going public.
Founded in 2012, within no time Nykaa took the centerstage as one of the hottest emerging consumer ecommerce platforms in India, clinching unicorn status on the back of COVID induced digital boom. On an annual basis, the company reports ₹1,860 crores in revenues, with rare EBIDTA profitability of ₹94 crores, and management has set eyes for 40%+ growth rates in the current fiscal year.
With the current tailwinds catapulting online businesses into an entirely different orbit, and with India’s cosmetics and fashion space hot like never before, we wouldn’t expect anything less than a blockbuster IPO if at all. Or perhaps an acquisition looming?
And a quick raise from earlier that’s worth mentioning,
PE giant Investcorp, leading a consortium of investors, plowed nearly $110 million into logistics venture Xpressbees. The startup had received commitment a few months ago, but the close comes just this month.
Xpressbees essentially provides end to end logistics management solutions to ecommerce ventures and other digital enterprises, with over 1,000 customers across the e-commerce, pharmaceutical, consumer goods, retail, etc. relying on them. The check went into their Series E round.
What else are we snackin’ 🍿
🔌 EV infra humming along - MG Motors has partnered with TATA power to introduce the first superfast charging station in Agra, with plans for a follow on installations across the nation. 2020 has seen India’s EV infrastructure supercharge, with traditionalists as well as startups spending heavily to accelerate deployment.
💉 Sputnik it is? - RDIF and Hetero, the Indian Pharma giant have agreed to produce over 100 million doses per year of Sputnik V vaccine in India. The production of the Russian covid vaccine is expected to start in the beginning of 2021. Approvals are still awaited though.
Otherwise, a quiet news day worldwide yesterday, especially with the western world busy celebrating Thanksgiving on Thursday, and burning off all the extra calories on Friday.
Look out for early data on Black Friday retail spending coming out next week, which will help investors capture consumer mood for the rest of 2020.
Hit that 💚 if you liked today’s issue.
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