Roll up brands
Auto temp check, ITC's fire quarter, and Indonesia's biggest ever IPO.
Hi 👋, Tanvi here.
Filter Coffee hits your inbox every morning with notable tech and business news scoops to jump start your day.
Sign up below for free. 👇
Let’s go ahead and get started:
Market summary: 📊
After solid gains for more than a couple days straight, Dalal Street showed some restraint. US investors returned after a 3 day weekend to take out some profits and pull the markets down.
US:
S&P 500 - down 0.049%
Nasdaq - down 0.23%
India:
Nifty 50 - down 0.051%
Sensex - down 0.049%
What’s brewing hot? ☕
✅ RBI in a good mood—top Indian banks were caught with their pants down when the RBI cleared the air that the circular from 2018 that banks were citing to call crypto transaction illegal is actually outdated, torn down by the Supreme Court. RBI also advised the banks to go easy on preemptive policing, to not block transactions outright, but sure go ahead and keep diligence on. Crypto enthusiasts cheer the regulator’s rare shift in tone, which could end up spurring the tech’s adoption in India. HOLDERS 1, Banks 0.
✅ Ford writing Tesla’s obituary—if electrifying the US’ largest selling vehicle, and then getting nearly 100K pre-bookings in a couple days wasn’t enough for Ford to make Tesla’s life harder, then it's the marketing that’s gotta do it. Ford is pitching the F-150 as an alternative to a home-based inverter, claiming the truck can power an average house for nearly 4 days if power ever goes out. Issaa party in Detroit, with the “retiree-favorite” Ford stock now up nearly 31% since launch.
Hottest from Venture Street 💰
Mensa Brands, the D2C holding company kicked off by ex-Myntra CEO Ananth Narayanan, closed on a $50 million Series A round led by Accel Partners, Falcon Edge Capital, and Norwest, with a bunch of others pitching in.
We’ve written about this rapidly expanding model a couple times before—but holding companies like Mensa buy out leading “independent” digital brands, scaled solely on marketplaces like Amazon, Flipkart, and others, consolidating them under a single umbrella, sharing knowledge, and saving on operating costs.
Small merchants who grow these brands from 0 to 1, are more than happy to walk away with a fat payout, instead of grinding to scale these companies from 1 to 100. Billion dollar enterprises like Thrasio in the US rule this model, while India has seen quite a few emerge, with GOAT Labs the most recent major player to make waves.
Anyway, Mensa aims to pick majority stakes for now in 50 profitable online brands by 2023, across personal care, home, beauty, and apparel, with 100% ownership after certain targets are hit.
Bottomline: digital commerce weakens the moat of recognizable vertically-integrated traditional brands, and shifts power to upstarts leading with data and agility. And with India’s ecommerce expected to top $100B+ by 2024, with less than 5% of it owned by DTC companies, the room for giants to scale here is massive.
And while we’re on raises, 😎
Riding high on COVID’s push for better health services, Plum, the modern group health insurance platform for enterprises, raised $15.6 million for its Series A led by Tiger Global.
The startup basically provides group health insurance coverage to employees of small businesses, charging a $1 monthly fee per employee—bringing transparency, a modern UI, and other staple elements of the digital world, which are hard to find with traditional vendors.
600 enterprises use the platform today, and with India’s $3.5 billion group health insurance space having less than 1% digital penetration as of today, sky's the limit here.
Quick peek down the auto lane 🚗
Automotive numbers for the month of May are out, giving a good read into how tightly the average consumer is holding his or her purse strings… and it's not looking pretty.
Relative to April, May sales have cratered:
TVS motors says sales of two wheelers are down a damning 30% compared to April
Maruti Suzuki? Even worse—hitting a total freeze with unit sales down more than 70%!
Mahindra hit with a 56% decline in car sales. Tractor sales are down only 12% though, which indicates farming-India is putting up an odd resistance to COVID
Others including Tata Motors, Volvo Eicher report an equally gloomy outlook
What matters—auto giants have shown ample discipline and courage in recovery last year, proving they can take it and likely thrive this time too. It's the broader automotive supply chain, smaller vendors, logistics providers and other SMEs that we’d worried about, who minus access to credit, and other perks of free capitalism, may never survive the freeze.
Outstanding numbers, stock still a dog… 🤷♀️
Meme-stock favorite ITC reported a pretty solid quarter, smashing investor expectations, despite the pandemic’s pressure on operations.
Quick look at numbers:
Revenues grew 24% YoY to ₹14,157 crores—thanks to retail price increases
Profits however dropped 1.3%, because raw material prices jumped and of course, operating in the pandemic is expensive
Bread-and-butter ciggy empire grew 14.2% YoY—we see ya’ll stressing out
The emerging FMCG business grew a promising 16% YoY
Lastly, the agriculture business threw a surprise, with revenues growing 78% to ₹3,368.92 crore
Stock barely showed a heartbeat though… well whaddddaaya expect?
Bottomline—hard to get too bullish on consumer goods businesses just yet. Of course demand will stay strong, showing excellent growth in recovery, but the damage on the bottomline and cost structures could linger for a couple quarters before things smother out, which will need patience from investors.
So, I guess we just HODL away...
Closing out—Indonesia’s LARGEST IPO ever👋
Despite what your instincts might tell ya, it's not software, nor is it payments, ride hailing, or ecommerce. It’s noodles… quite literally.
Monde Nissin, à FMCG giant in Southeast Asia, which makes Lucky Me! instant noodles and other consumer products in Indonesia, is going public, raising about $1 billion from the public markets.
Founded nearly 42 years ago, the business had a grinding rise to prominence, winning from the recent explosion of the consumer class in the SEA region, and now is slowly transforming itself to capitalize on emerging fads. For example, $800 million+ was spent on purchasing a UK based popular fake-meat company, and is currently one of Monde Nissin’s hottest selling business units.
Big picture—file the IPO as yet another data point added to unconventional, fad-like product sellers, seeing multi-billion dollar market exits, things that looked like mere jokes a few years ago...
What else are we snackin’ 🍿
📉 Going down - manufacturing activity nationwide slid to a 10 month low with the Purchasing Managers’ Index, an average computed by surveying inventory levels, is down to 50.8 compared to 55.5 last month.
🐦Ads incoming - Twitter, under pressure to monetize its platform further, will be showing ads on Fleets. Markets are desperately waiting to see predictable, stable growth, or it's Dorsey’s head on the spike by winter.
Hit that 💚 if you liked today’s issue.
You can forward this email or share FC on social media by clicking the button below. Thanks and Ciao! 😀