Life insurance thriving 💪

IBM disappoints, Micromax revived, and weird venture deal.

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Market summary: 📊

Things looking positive for India so far as category leading companies have been reporting optimistic earnings. US markets took a huge dump however as elections are starting to worry investors.

US:

  • S&P 500 - down 1.63%

  • Nasdaq 100 - down 1.84%

India:

  • Nifty 50 - up 0.94%

  • Sensex - up 1.12%


HDFC Life did not disappoint 🙌

HDFC Life, one of the biggest names in the life insurance game in India, posted BLOWOUT second quarter earnings, beating all expectations, as the life insurance industry continues to remain a primary winner of this scary pandemic.

Gross premiums (that’s payments made towards policies) grew a staggering 35% to ₹10,183 crores, with the retail segment reporting a 38% growth. Lots of first time millennial buyers are purchasing policies which are helping these numbers. Net profits grew 6% YoY, as the company used the slump to cut costs and get a bit leaner. Operating expenses were trimmed down to 11% from 14% of the revenue from a year ago.

Although there were tiny hints of weakening profitability around new policy sign ups, investors seemed comfortable with the numbers given that retail and offline insurance sales operations have been hit pretty hard during the pandemic. Here’s a thorough look

Takeaway: in summary, a great report from a great business that breathes another sigh of relief for Indian markets. Finally, as we enter recovery from here on out, these winners will continue to win big, as many have used the slump to streamline their operating positions.

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Global tech earnings kick-off 🖥️

IBM disappointed everyone with its earnings last night. The company barely matched investor expectations as its revenue decline continued unabated into another quarter. Investors were looking for more clarity on the impending spin-off, which surprisingly never came. In all, Wall Street was pretty annoyed and Arvind Krishna isn’t off to a great start. 

Here’s a quick summary of what might interest you:

  • They reported $17.6 billion in revenue, down 2.6%

  • IBM’s cloud computing revenue grew 19% overall (awesome sign)

  • Red Hat revenues were up like 17%

Major takeaway: the most important signal here is the momentum in cloud computing, which is looking solid even this far out into 2020. You can expect Amazon, Microsoft, and Google to come out with awesome numbers as well. 

Lastly, investors and analysts are badly rooting for IBM to succeed, however, bogged by its old “mainframes” business—basically bulky computer servers from the era before you were probably born, continues to hurt the company as they yet don’t have new avenues of business lined up to help make up for that erosion. In case you ever thought tech was easy...


Other notable venture deals 💰

Edtech marches on—Mumbai-based Genius Teacher becomes the latest of the pack to raise a healthy $2 million round. Two institutional investors, Whiteboard Capital and VKG Ventures, and a slew of big name Angels including WhatsApp India CEO Abhijit Bose, Cred CEO Kunal Shah pitched in. 

Founded by Housing’s co-founder Advitiya Sharma, the service delivers an adaptive quizzing based learning experience where users get asked questions on trivial topics—such as food or movies or sports, which is then used to teach math, science and english.  Sounds pretty cool and so far some 70,000 students who have been using the platform seem to agree with us. The company plans on scaling up to 500K consumers over the next year.

Lastly, turning to ecommerce for a bit 

The controversial ecommerce platform Limeroad, which had recently found itself in the middle of a data leak incident, has raised some ₹11 crore from a Mauritius based VC firm called MA Willmind.

Founded in 2012, the company to date has raised over $50 million from VCs including the big Tiger Global, but mostly failed to catch wind while its peers have successfully scaled into mammoth ventures in that time. Now, in the era of COVID and with India’s holiday season coming up, they are hoping to see a good day once again. We say good luck.

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Revival in the making 📱

Micromax is hopeful of making a comeback in India’s smartphone market, armed with a new line of devices called “In”, and bolstered in its operating position by incentives from India’s smartphone focused PLI scheme.

Some context—at one point, Micromax had done the impossible—dethroning a brand like Samsung to clinch the highest market share of phones in India, as a burgeoning middle class hungry for modestly priced devices couldn’t get through their line up fast enough. Moreover, their phones were pretty innovative, touch screens were just taking off, and sleek looks still mattered to consumers—all of which helped Micromax big time.

However, the Chinese flooded Indian markets with cheap lookalikes, manufactured for a fraction of the cost of Indian phones, destroying the local competition and snatching profits overnight. Micromax was a casualty of this warfare, reduced down to less than 2% share of the pie.

Anyway, times have changed now. The Chinese find themselves in a precarious situation in the domestic markets and the invaluable weight of the government has breathed a new life into domestic brands. With its new brand now, Micromax is targeting the ₹7,000-₹15,000 sweet spot that could matter to the middle class and emerging “Bharath”.

Odds of success are pretty high, and the addressable base is in the millions, but this time instead of the Chinese, Micromax is likely to compete with cash-rich internet platforms looking to trap consumers in their bundle of services.

Bottomline: seems like the low to mid-cost device market has suddenly become the battleground for Indian tech once again. With Flipkart, Jio, making big moves here recently, and now Micromax doubling down, it’s only fair to expect more to come. The unequivocal winner of the heightened competition however is the domestic smartphone manufacturing industry.


Tweet of the day 🐦


What else are we snackin’ 🍿

🚗 Saving face - Jaguar Land Rover, the UK based subsidiary of the Tatas, has reinstated almost 85% of its furloughed employees in the UK as the carmaker plans to ramp up production as demand revives in some markets. The Tatas had taken a lot of criticism from locals for furloughing employees and this move is likely to help make amends.

🤝 Insta bets on Indian creators - Instagram has launched its first consumer marketing campaign in India as the platform celebrates its 10th Birthday. The campaign, called “Do your thing”, is meant to inspire creators and display the company’s show of support to solo entrepreneurship.

💳 Watchout fintech players - Time to upsell is here. Paytm is looking for card issuing partners to launch co-branded credit cards, hoping to scale to 20 Lakh cards over the next 12-18 months. With existing distribution advantages, they could quickly turn the heat on competitors across the board.

😷 Some relief in the making - total coronavirus cases in India have crossed 75 lakh with new infections reported daily dropping below 60K for the first time this month. The death toll is sustaining at around 1.15 lakh with 579 deaths reported in the span of 24 hours.

🚕 No mask, no ride boys - Uber has introduced its mask verification feature in India, asking riders who have been tagged for not wearing masks on a previous trip, to take a selfie which shows them wearing a mask to book their next trip. Yes please!


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