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Hottest from the oven ♨️
✅ Budget fever takes over—Union budget is in the last lap of preparation, and that’s all they’re going to be talking about on Dalal Street and literally every business TV channel for a few weeks here. The Halwa Ceremony is done, a symbolic ritual routine that's followed once the final papers are drawn and sent to print, but this year the Finance ministry is going paperless, so all MPs will be getting the docs delivered via an app. Cool stuff.
✅ Uber trimming the tree—the global food-delivery boom wasn’t kind to every player, and US based Postmates was one such. The company ended up selling to Uber, who is now looking to trim all excess. 180+ Postmates staff has been fired, including most of the executive team, as well as Postmates CEO and co-founder Bastian Lehmann who founded the company in 2011. Yeah, that’ll hurt.
Samsung’s $10 billion plan to lure US companies 📱
Samsung is apparently drawing up a plan to spend $10B+ to build out its newest state of the art processor manufacturing facility in Austin, Texas, in a bid to lure more American semiconductor customers.
Some context: production facilities that make semiconductor chips have gazillion moving parts, need specialized conditions, are expensive to build, and are extremely hard to maintain. Contract manufacturers like Samsung and Taiwan-based TSMC (which leads the market today), basically run these gigantic factories to make chips for other companies.
Still early for Samsung’s plans, but they hope to kickstart manufacturing by 2023, trying to beat rival TSMC who will be done building its own $12 billion plant in Arizona by 2024. So far, leading with decade long cutting edge research, TSMC has absolutely dominated the contract space for itself.
What matters: Samsung hopes its process leadership and timeline by then can help them dismantle TSMC’s leadership in this contract business. Highly unlikely, but probable.
Customers like Qualcomm, Nvidia, etc. are demanding vendor diversity, and the US actively seeking to cut reliance on China/Asia and bring some production back, is a big tailwind.
IPOs IPOs IPOs 💰
Too many of them... 2021 has kicked off a busy IPO schedule, with the latest bid coming from a modular kitchenware enterprise, StoveKraft—that sells everything found in the kitchen from stoves to cookware to appliances.
Some quick details for ya:
StoveKraft makes notable brands like Pigeon, Black + Decker, and Gilma
The Pigeon brand is very well known across the nation, and contributes to about 85% of their revenues
In addition to kitchen stuff, they also make LED bulbs
The financials looks pretty solid too:
Revenues of ₹670 crores in 2020, with profits of ₹3.2 crores
2019 revenues grew 21% YoY, which is awesome, but 2020 revenues were a bit soft, growing just 5.2% (thanks early COVID), but recovery is inevitable
They’re planning on using the capital they raise to pay off loans, and streamline operations a bit—which should then boost profits significantly
The biggest strengths of the company is the brand recognition it has across India—Pigeon particularly is a well recognized brand across households. Secondly, solid manufacturing capability, and expertise, and an enviable distribution network forms the basis of the businesses’ moat.
Competition remains the biggest overhanging concern (from the likes of Hawkins, Prestige etc.) as well as challenges posed by digitization—which allows for entry of direct to consumer brands, and tends to weaken the clout of old school companies.
So I guess we’ll see how this pans out. But certainly a long term company that will most likely continue to thrive. 📈
Audio billionaires on the block 🎙️
Clubhouse, the audio-only social app that is literally pioneering its category, raised a new round of capital at a billion dollar valuation. Like a real billion, for a company that was founded in March 2020. WTF.
The game: Clubhouse literally led with FOMO as a strategy. Instead of going mass market and chasing engagement, the company kept a high bar of exclusivity, filtering only credible people with an invite only model. Within 6 months or so, they had a robust platform with a million plus “knowledge hungry” users.
Speculations around business model and the end game are keeping people busy, but one thing is apparent—they’re building for the creator economy from the get go, and for now are keenly doubling down on the gaps left by Twitter in serving knowledge workers. 1.3 million people have downloaded the app so far.
Interesting insights on how the business could mint dolla over time 👇
Closing out—the DTC revolution funders 💥
Last week Fireside ventures, a venture platform exclusively funding consumer brands, closed its second fund of close to ₹860 crores. ITC, L’Oréal, Pidilite etc. pitched in. Fireside basically identifies and invests in disruptive consumer brands across broad categories like cooking, fitness, and working needs. boAt, Mama Earth are a few runaway successes under their belt.
Lockdowns completely altered how consumers “trust” digital first brands, and the shift is expected to offer the Indian DTC market an explosive run over the next 4-5 years. Check em out if the category applies to you.
What else are we Snackin’ 🍿
📈 Tech earnings galore - the next two weeks will see major tech companies including Microsoft, Facebook, Apple, Amazon, Google, Shopify, etc. report earnings, which will likely set the tone of the markets for the next 3 months. So far, expectations are set for nothing short of blowout beats.
Hit that 💚 if you liked today’s issue.
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