Lava Mobile's IPO 🔥

PLI investments, Reliance wants more, and India's Gold Exchange.

Market summary: 📊

Markets around the world continue to stay volatile — India pulled back modestly, while US was hammered over worries of interest rates rising.

US:

  • S&P 500 - down 2.04%

  • Nasdaq - down 2.86%

India:

  • Nifty 50 - down 0.60% 

  • Sensex -  down 0.68% 


What’s brewing hot ☕

Everything is expensive — global crude oil prices are on the rise once again topping $80 a barrel (highest in nearly 5 years) — thanks to the global shipping crisis, hurricanes in the Gulf of Mexico, labor shortages, as well as policy changes that led to less drilling by US shale produces, and increased consumption. Economic growth could be hurt if the trend continues upward, adding to inflation. Meanwhile, energy stocks in India from Indian Oil to Coal India were seen flying high.

Roomba’s big brother — Amazon’s latest gizmo is a $1,000 robot moving around your living room. Called Astro, the 2 feet tall, 20 pound ugly-looking bot has a 10-inch display for a face and a whole bunch of sensors — but no apparent purpose. Equipped with an Alexa, it can play music for ya, listen to commands, map your home, and even carry around 2 pounds of stuff on it. But for $1000 it better know how to cook…


Lava is going public 📱

What happened — India-based mobile phone seller Lava International filed its docs with SEBI for an IPO last night. Not exactly Apple, but a great story of local innovation!

Details are still scant, but Lava will issue about ₹500 crores worth of new stock to the public, while existing shareholders are selling some ~42 million shares. 

How’s the business — Lava makes about ~$1.2 billion in annual revenues (that’s a good chunk), which were hurt about 15% due to COVID. The company’s market share in the smartphone segment is feeling some pressure — hovering at ~5%, as competition from brands like OnePlus, Pixel, and even the iPhone SE intensifies.

But, Lava owns about 20% of the feature phone market in India, mostly driven by demand in the heartland.

Bottomline — consumer electronics is a long game in India. Local brands with deep distribution and brand equity will continue to shine — away from the fist-fight at the top, between the Apples and the Googles of the world!


Who picked dough on the street 💳

Anatha one — buy-now-pay-later platform Capital Float raised $50 million from Lightrock India and a few other notable investors. 

BNPL has been the flavor of the season for months now, with the craze slowly reaching India. Capital Float is backed by Amazon, and is working with some prominent merchants including Boat, SpiceJet, servicing some 2.5 million end customers. Fresh funds will be put to fire up growth.

Bottomline — aggressive estimates suggest India’s BNPL volumes could grow to $100B+ by 2025, helped by an explosive growth in ecommerce and poor penetration of credit cards.

Then 2 other major raises, ☝️

  • Bijnis of wholesaling — B2B wholesale marketplace Bijnis raised $30 Million from Westbridge Capital. The startup’s platform connects manufacturers with retailers primarily in the fashion sector, along with solutions for payments and logistics, which is where the company makes most of its $$. So far 5,000 factories and 100,000 retailers are onboard.

  • Daddy wants more — the next strategic item on Reliance’s digital-agenda includes plonking $300 million on content platform Glance. Glance, which basically offers curated news and entertainment content on the smartphone lock screen, reaches over 130 million users nationwide, with deep distribution into heartland India. We’re guessing Reliance is keen on bringing the company’s tech to the low-cost smartphones it is building in partnership with Google. FYI, Google is also a mega investor in Glance.


Quick look at Daikin’s mega investment in India 🤙

What happened — Japanese AC company Daikin, which also plays in refrigeration, washing machines, and other industrial cooling equipment, is planning on investing ₹1,000 crores to build a new India manufacturing facility.

The facility will primarily make AC units, and will be part of GOI’s AC related PLI schemes. 75 acre of land has already been acquired in Andhra Pradesh, with a plant expected to go live in 2023, capable of churning 1.5 million units a year and 3,000 jobs.

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Closing out SEBI greenlit Gold Exchange 🤝

What’s poppin’ — despite being the 2nd largest global market for Gold, India did not have a spot exchange for gold trading. Last night, SEBI finally approved a framework establishing regulated gold trading in India.

Some hand holding — buying gold at your retail jeweler is simple, but imagine if large institution, ornaments maker, or a bank wants to get a whole ton of gold for themselves — they have to engage in bespoke negotiations with vendors, get the prices and terms they want (basically over-the-counter trading), which is mostly an extremely inefficient process.

Now, instead a “market” with an established pools of buyers and sellers will be kicked off, under supervision. A tokenized contract called EGRs (electronic gold receipts) will be used to indicate exchange of the underlying metal (all electronically, of course) while entities called “Vault Managers” will be created to hold these units (just like how stocks are held in your demat account by an appointed third party). You can buy, hold, or get the bags delivered to your doorstep if you’d like… 😴

How does this help — people and institutions will now have a central place to trade Gold, which brings quality control, transparency,  and middle-men free trading, establishing better market prices. If you’re looking to nerd out, here’s more on the subject


What else are we Snackin’ 🍿

💄 D2C FTW —  MyGlamm is forming a new holding entity, and earmarking ₹750 crores to acquire 4-6 businesses over the next 3-6 months.

💪 Prepping ranks - LIC is currently scouting for a CFO in anticipation of its IPO.


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