Indigenous Investors Weekly Insights!
Top 3 well curated stories from the stable of Indigenous Investors incase you missed them. These can range from finance to sports, depends on what made the headlines. Stay tuned.
At Indigenous Investors, we pride ourselves on a simple but powerful habit: reading for 5 hours every single day. It’s something we’ve shamelessly borrowed from the Oracle of Omaha, Mr. Warren Buffet. To share the wealth of knowledge we uncover, we’re bringing you 3 top stories that you may have missed this week. If there’s a topic you want us to cover, drop us a line! We’re always excited to read more and refine our process.
Story #1: Nestle India CMD feels that the middle-class of India is shrinking (click here)
Suresh Narayanan, CMD of Nestle India, recently said that the premium consumption remains ‘fairly strong’ but the middle segment is shrinking. It is too bold a statement to put out and conclude that the middle class is shrinking in India.
Yes, we have crossed the USD 2,000 mark in per capita income but we have also seen the income disparity (difference between rich and poor) increase post Covid. Yes, the world is parking all their money in India considering it to be a ‘safe haven’, while the consistently higher interest rates maintained by the RBI to control the balance of payments is hurting consumption.
Instead of mathematically deducing that the middle class is shrinking based on the consumption pattern that has lasted over 2-3 quarters, closer attention needs to be paid on the spending habits of the new generation, who doesn’t let the money rest in their banks by either investing or spending, who seeks value in brands but is not a devotee of a particular brand, who has hundreds of substitutes available at his disposal.
Story #2: Indian companies have raised over INR 1 trillion via IPOs (click here)
As the Indian bourses continued their bull run galloping across the board, Indian companies who launched their IPOs in the current Samvat (Hindu calendar year) have garnered over INR 1 trillion. While there were a few quality issues where investors swarmed like bees, others floated well on the back of the investor sentiment and lack of other avenues.
Notable IPOs this year were Tata Technologies, Bajaj Housing Finance, Hyundai, etc.
Story #3: The changing landscape of Indian auto sector (click here)
The Indian auto sector has proven to be a tricky and dangerous roller coaster for the investors for sometime now. The changing technology from ICE engines to CNG powered vehicles to EVs were already overwhelming for the investors, while the constant news of changing technology within the EV space kept a lot of investors at bay for longer.
However, there is a new dimension to the sector as now the preferences of the buyers are shifting too. The choices of new vehicle buyers have now skewed more from traditional passenger vehicles to SUVs. Two wheelers are a preferred choice and there is a mixed response on EVs based on the type of vehicle.
In spite of the industry giving returns of 50% in the last year against Sensex’s returns of 23%, analysts are still scratching their heads and trying to figure out a direction for the industry as they fail to come to a consensus on the trajectory of demand.
As per our internal calculations, on a 1-year, 3-year and 10-year data, the auto index is lagging the returns generated by its constituent companies by 25% to 75% over the period and if the companies are to continue generating positive results, we could see the market following the results over the long term.
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