The Indian FAANG

Many would feel that the previous decade was a lost opportunity for India, we did not perform to our potential. India is currently experiencing very favorable demographics and we cannot let this decade slip away.

Globally the previous decade was all about FAANG stocks in USA and Baidu, Alibaba and Tencent in China, India missed out on this, can we get a potential FAANG in India ? .

Jio Platforms recently raised $20 Billion in less than 4 months, that's more than the entire forex reserves of Pakistan, it is one its way to get global attention and if things turn out well next year it could see a possible US Listing. This could be India’s super app.With India slowly shutting off China from the tech sector we could lot of home grown companies that grow rapidly along with their American counterparts.

Then there is Flipkart where Walmart recently infused more than a billion dollars valuing it upwards of $24 Billion plus it has a sizeable stake in Phonepe which again would be worth a few billions, next we have PAYTM valued at $16 Billion, Flipkart and PAYTM are heavily losing money now but they could turn around in a few years, digital advertising will explode in India and Flipkart and PAYTM would take a pie of it and could turn profitable because of their wide reach.

The largest privately held edtech is from India currently valued at $10.5 Billion and currently during the Covid crisis it allowed people to access some of their content for free because of which the number of subscribers grew to 50 Million plus, that is a huge number and with Indian diaspora abroad and because of usage of English it has already started making foray abroad and it is a rare unicorn which is making money.

After Byju’s we have a half a dozen ed tech companies which are valued upwards of $200-300 Million and some of them are differentiating themselves, with the sheer size of students in India and quality education being expensive, ed tech has been a boon to a lot of students especially those outside of India’s metros.

Then we have Zerodha the Indian Robinhood – the largest broker in India it has active users of more than 2 Million and this in a under penetrated market like India and Indian brokerages already struggling from the past few years have found it extremely difficult to survive in the current scenario. Zerodha has seen growth from the millennials who are buying stocks for the first time and it has making decent profits which could keep growing and was privately valued at $1 Billion which sort of makes it undervalued.

Then there are food delivery companies Zomato and Swiggy and personally it does not make sense for both these companies to fight each other with threats from google and amazon.They could potentially get merged or get acquired by one of the unicorns or global companies, same would be for Ola.

Another dark horse could be Airtel, with Vodafone Idea struggling if the Indian telecom market becomes a duopoly then Airtel cannot be left behind, currently valued at $40 Billion, it could give an opportunity to Amazon or Microsoft to pick a stake in it. Apart from Telecom it has interests in Broadband, data centers,which in their own right could be huge. 

 Also one area where India was lagging was IT Products, though we were world leaders in IT services space we did not any Indian company hogging limelight for its products that is changing also we have unicorns like Druva and Icertis which are riding the cloud wave.

Then we have gaming, cheap data and a large population makes India an attractive destination for gaming and we already have a gaming unicorn.

So the future looks bright and early identification of these companies will create tremendous wealth for the shareholders, but most of these are currently owned by foreigners so a large part of the gain will accrue to foreign share owners, wherever possible and at reasonable valuations we as retail shareholders should own these shares, or it would mirror the lost opportunity of the last two decades in private banking where most of the largest private banks are now owned by foreigners.

Also market looks overheated now, so if there is a correction Indian retail shareholders should buy into quality stocks and hold on to them, it is difficult currently with most of them unlisted but whenever opportunity arises we have to own them for long periods.