MAGNUM Blog

The Indian Gems and Jewellery sector is one of the largest in the world, contributing around 29% to the global jewellery consumption. The sector employs over 4.64 million employees and is home to over 300,000 gems and jewellery players. The sector contributes 7% to the Gross Domestic Product (GDP) of the country.

In November and December, gems and jewellery exports achieved pre-COVID peaks as demand picked up in all major markets, including the US, where Thanksgiving Day spending improved by almost 22%, according to GJEPC. India is the most preferred country in terms of gems and jewellery export. The overall net export of gems and jewellery stood at US$ 29.01 billion in FY20, whereas import was at US$ 26.05 billion during same period. India exported US$ 18.66 billion worth of cut and polished diamonds in FY20P. It contributed 64% to the total gems and jewellery export. India’s top export destinations for gems and jewellery are US, Europe, Japan and China. US accounts for nearly one-fourth of the country’s total gems and jewellery export. India is the world’s largest centre for cut and polished diamonds and export 75% of the world’s polished diamonds. As per reports 14 out of the 15 diamonds sold in the world are either polished or cut in India. India exported cut and polished diamonds worth US$ 18.66 billion in FY20; this accounted for 52.4% of the total gems and jewellery export.

India is the world’s second largest gold consumer. India’s demand for gold reached 690.4 tonnes in 2019. The Government has permitted 100% Foreign Direct Investment (FDI) in the sector under the automatic route. The Rs. 250,000 crore (US$ 35.77 billion) household jewellery industry is probably going to get a major lift through the Government’s decision for FDI in retail. The Bureau of Indian Standards (BIS) has revised the standard on gold hallmarking in India from January 2018 to include a BIS mark, purity in carat and fitness, as well as the unit’s identification and the jeweller’s identification mark on gold jewellery. The move is aimed at ensuring stringent quality check on gold jewellery. The Government has made hallmarking mandatory for gold jewellery and artefacts and a period of one year is provided for its implementation (till January 2021).

Road Ahead

The growth is significant in terms of Exports & the demand cycle to pick-up going forward.

The Domestic Jewellery demand is yet to pick-up, Gold & Gold jewellery are seen as investment in India.

BENEFICIARIES :   TITAN COMPANY, RENAISSANCE GLOBAL LTD, VAIBHAV GLOBAL, RAJESH EXPORTS, THANGAMAYIL, GOLDIAM INTERNATIONAL

Food processing is simply a method by which agricultural products are transformed into food products that are fit for consumption. It involves different ways of processing such as, grinding grain to make raw flour, home cooking, and industrial methods to produce convenience foods including noodles, pasta, Biscuit, Namkeen, Ketchup, Sauce and chips etc. The food processing industry forms a major part of India’s economy owing to the variety of food products that the country harvests and further processes for consumption. India is the largest producer of milk, bananas, mangoes, guavas, papaya, ginger, okra; second-largest producer of wheat, rice, fruits, vegetables, tea, sugarcane and cashew nuts and the third-largest producer of cereals, coconut, lettuce, chicory, nutmeg, mace, cardamom and pepper worldwide. Rising incomes and a growing demand for healthy, packaged food ensure that this industry is likely to sustain all seasons and never fear a recession. The industry also receives growing support from the government.

India’s food processing sector is one of the largest in the world and its output is expected to reach US$ 535 billion by 2025-26. This sector is expected to generate 9 million jobs by 2024.The Indian food industry is expanding at a CAGR of 11% and the food processing sector accounts for 32% of the total food industry. There is growth in the organized food retail sector and increase in urbanization. MSME’s are playing a vital role in India’s food processing chain through various advancements in skills and technology. The online food ordering business in India is witnessing an exponential growth. There is high demand for packaged, healthy and immunity booster snacks such as roasted nuts, popcorns, and roasted pulses. There is a shift in focus from loose to branded packaging.

The Indian Government, in the ‘Make in India’ campaign, has prioritized the food processing sector and promotes investments in the sector. In addition, the government has established 18 mega food parks and 134 cold chain projects to develop the food processing supply chain. These initiatives are likely to boost food processing companies. Also, the recent government initiatives—such as Rs. 10,000 crore (US$ 1.35 billion) scheme rolled out by the Finance Minister, Mrs. Nirmala Sitharaman, to support this industry—have placed the food processing sector on a high growth trajectory.

Road Ahead

Various factors, such as rise in health issues, busy lifestyles and increase in food adulteration, have witnessed demand for ready-to-cook, ready-to-eat meals and healthy, immunity boosting snacks. Safe and processed food categories such as biscuits and snacks have seen a growth amid the COVID-19 crisis.

The growth for this industry is seen growing in double digit going forward. Innovation of new product and easy to use application would be preferable for next generation.

BENEFICIARIES :   GODREJ INDUSTRIES, PARLE AGRO, ITC LTD., AGRO TECH FOODS, DABUR INDIA LTD., BRITANNIA INDISTRIES LTD, HERITAGE FOODS, NESTLE, HATSUN AGRO, VARUN BEVERAGES, TASTY BITE, PRATAAP SNACKS.

India’s total online video market is anticipated to expand to US$ 4.5 billion in revenue over the next five years, growing at a compound annual growth rate (CAGR) of 26% between 2020 and 2025, SVoD market will accelerate by 30% CAGR and reach US$ 1.9 billion by 2025.

The video on demand (AVoD) advertisement segment is expected to rise at a CAGR of 24% over the next five years to reach US$ 2.6 billion by 2025.In 2020, India’s online video industry reported an estimated revenue of US$ 1.4 billion, while advertising and subscription contributed 64% and 36%, respectively. Key services which accounted for a combined ~85% share to the total revenues in 2020 were YouTube (43%), Disney+ Hotstar (16%), Netflix (14%), Amazon Prime Video (7%) and Facebook (5%). He stated that in India and Southeast Asia, the average number of subscription for video-on-demand (SVOD) services subscribed by users is 2.8.

In 2020, OTT content investment in India reached US$ 700 million as domestic and global platforms continue to invest in the emerging opportunity for SVoD in India. OTT content cost is projected to grow at a CAGR of 18% to reach US$ 1.6 billion between 2020-2025.

As the commercial roll-out of 5G is expected to begin in 2021, India’s mobile broadband penetration is projected to reach gradually to 66% by 2025. The new private telecommunications investment has boosted India’s fixed broadband market, which has so far been underpenetrated by only 6% of households. India’s fixed broadband market will expand to 45 million subscribers with over 82% of subscribers via fibre by 2025 at a CAGR of 18%. (Source Media Partners Asia MPA)

Road Ahead

Channels like TV18, ZEE, NETFLIX, AMAZON PRIME, YOUTUBE, etc are setting standards, Educational & Marketing are taking advantage of this viewership.

The growth is phenomenal and can give good opportunity going forward.

BENEFICIARIES :  ZEEL, TV18, UTV, ENIL, SHEMAROO.

The Indian glass industry has been growing across all segments. Sheet and float glass have recorded good growth. This growth has been driven primarily by India’s automotive glazing, and construction sectors. Exports of glassware from India have been growing at a rate of 7% CAGR over the period. The global market for Indian glassware is fragmented and spread across several countries, with no dominant market. USA is the biggest market for Indian glass products. UAE & Poland are the other key markets.

The growth in India’s glass industry is being driven by user segments such as manufacturing, construction, automotive and petrochemicals. These segments are highly competitive, demanding and well-integrated with global trends.

Supplying to key players in these segments will require the glass manufacturers to be capable of developing technically advanced products and customer specifications to user requirements. Hence, technological capability is a key success factor in the industry today.

The glass industry is highly energy intensive and energy consumption is a major cost driver. Energy costs include power consumption and running costs of furnaces. Safety and environmental requirements are also key drivers of costs in this area. The average energy cost as a percentage of manufacturing cost is 30 per cent.

Amid these constraints, glass manufacturers need to find innovative ways for improving energy efficiency and also explore alternate sources of energy. Energy saving strategies such as higher temperature refractories could be adopted. Re-using waste heat to pre-heat new batches is another option that has been estimated to yield upto18% savings in energy. The recycling of glass also leads to an estimated savings of 15-35%.

Road Ahead

Demand in Housing Automobile and Manufacturing segments are seen rising therefore the demand of glass also will rise going further. We expect 6-7% growth in the sector forward.

BENEFICIARIES : ASAHI INDIA, LA OPALA RG, BOROSIL, EMPIRE IND, SAINT GOBIAN.

Oil and gas sector among the eight core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. The need for oil and gas is projected to grow more as expansion in gas-based plant are finding more traction and cheap productivity, thereby making the sector quite conducive for investment.

India’s oil refining capacity stood at 249.9 million metric tonnes (MMT), making it the second-largest refiner in Asia. Private companies own about 35.29% of the total refining capacity in FY20. India’s consumption of petroleum products is almost come back to Pre-Covid levels. Export of petroleum products from India has shown tick down due to current environment.

State run energy firms, Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation, plan to spend US$ 20 billion on refinery expansions to add units by 2022. Disinvestment in BPCL is ongoing. With 8,748 kms of refined products pipeline in India, IOC was leading the segment with 51.25% of the total length of product pipeline network as on March 01, 2020The Government is planning to set up around 5,000 compressed biogas (CBG) plants by 2023. The Government is planning to invest US$ 2.86 billion in the upstream oil and gas production to double natural gas production to 60 bcm and drill more than 120 exploration wells by 2022. Government of India is planning to invest Rs 70,000 crore (US$ 9.97 billion) to expand the gas pipeline network across the country.

The energy trade between India and US is likely to cross US$ 12 billion in FY22. As on April 01, 2020, there were 24,670 LPG distributors (of PSUs) in India. The total number of OMC retail outlets at 66,817 at the beginning of April 2020.Private players like Reliance Essar are also expanding their foot print day by day to compete with OMCs.

Road Ahead

Energy demand of India is anticipated to grow faster than energy demand of all major economies on the back of continuous robust economic growth. India’s energy demand is expected to double by 2035. Primary energy consumption is projected to increase by two-fold by 2035Growth of 7-8% can be projected going forward.

BENEFICIARIES : IOC, BPCL, HPCL, ONGC, RELIANCE, GAIL

The Abrasives industry in India currently has two major players offering a full range of Abrasives products. In terms of value and volume, the metal fabrication segment of the end-use industry is projected to grow at the highest CAGR during next financial year as government thrust to develop infrastructure in our country is promising.

The metal fabrication segment is the fastest-growing end-use industry segment in the abrasives market. This growth is attributed to its usage and demand in the metal fabrication for cutting-off and grinding, removing welds and excess material, surface blending, finishing, and polishing.

Industrial demand is weak in the domestic market and likely to persist. While exports are seeing some green shoot in this industry. Despite the bleak environment, expects not to lose volumes and in-turn take this opportunity to gain.

Asia Pacific is the fastest-growing market for abrasives due to its increasing economic growth. owing to the rapid growth in industries such as automotive, machinery and metal fabrication in the region. The growth of this region is supplemented by the increase in the consumption and production of industrial products in developing economies such as India and China. Augmented demand for automobiles is expected to indirectly drive the growth prospects of the abrasives market in the coming years.  The rise in the sales of electronic devices is likely to boost the demand for coated abrasives in the electronic industry during the forecast period, especially in the consumer goods sector.

Abrasives Market is the emerging market, and it is expected to grow at CAGR of 5-6 % during the period (2020-2024)Abrasives are used in automotive, electronics, construction, and manufacturing industries to provide a superior polished surface finish during manufacturing. Beyond this, they are used to shape materials through grinding and remove surface layers of paint or corrosion, cut hard materials made of steel or concrete, and polishes finished products. Furthermore, investments in R&D activities to produce innovative and less hazardous abrasives are expected to provide opportunities for growth in the future.

Road Ahead

Robust growth of the Infrastructure sector is expected to drive the market and also due to rising environmental concerns, leading automobile manufacturers are manufacturing low-weight automobiles, which are economical, emit low carbon dioxide, and yet provide superior performance. Customer centric approach to give a specific finish, speed of cutting and stock removal or cutting requirements.

BENEFICIARIES : GRINDWELL NORTON, CARBORANDUM UNIVERSAL, WENDT INDIA.

Gas sector is among the core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. India’s economic growth is closely related to its energy demand, therefore, the need for gas is projected to grow more, thereby making the sector quite conducive for investment.

The Government has adopted several policies to fulfil the increasing demand. It has allowed 100 per cent Foreign Direct Investment (FDI) in many segments of the sector, including natural gas, petroleum products and refineries among others. Today, it attracts both domestic and foreign investment as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India.

India has been the fourth-largest Liquefied Natural Gas (LNG) importer since 2011 after Japan, South Korea, and China. Gas pipeline infrastructure in the country stood at 16,981 kms at the beginning of April 2020. Government of India is planning to invest Rs 70,000 crore (US$ 9.97 billion) to expand the gas pipeline network across the country.

A gas exchange is planned in order to bring market-driven pricing in the energy market of India and the proposal for the same is ready to be taken to the Union Cabinet according to Mr Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Government of India.

The Oil Ministry plans to set up bio-CNG (compressed natural gas) plants and allied infrastructure at a cost of Rs 7,000 crore (US$ 1.10 billion) to promote the use of clean fuel. As on March 01, 2020, Gas Authority of India Ltd. (GAIL) had the largest share (71.61 per cent or 11,411 kms) of the country’s natural gas pipeline network (16,324 kms).

With 8,748 kms of refined products pipeline in India, IOC was leading the segment with 51.25 per cent of the total length of product pipeline network as on March 01, 2020.Under City Gas Distribution (CGD) network, 86 Geographical Areas constituting 174 districts in 22 States / Union Territories are covered.

Road Ahead

Energy demand of India is anticipated to grow faster than energy demand of all major economies on the back of continuous robust economic growth. India’s energy demand is expected to double to 1,516 Mtoe by 2035 from 753.7 Mtoe in 2017.  Moreover, the country’s share in global primary energy consumption is projected to increase by two-fold by 2035.Natural Gas consumption is forecast to increase at a CAGR of 4.31 per cent to 143.08 million tonnes by 2040.

BENEFICIARIES :   GAIL, IOC, MGL, IGL.

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and now focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. With current focus on Bullet Train project, also Road development by NHAI, Railways corridors, Waterways development, Renewable Energy projects, etc have been in focus and also lot of LOIs, Contracts, and Work Orders have been allocated.

In September 2020, Ministry of Petroleum & Natural Gas announced that it aims to operate 50% of fuel stations, which are owned by public sector oil companies, using solar power within five years—under the government’s green energy drive. Electrical charging station for next gen EV cars are all getting Nod for development.

With Surplus current account deficit, Foreign inflows, Stimulus, Incentive the Infra growth in India would be growing exponentially in next 5-10 years. The largest deal was done by Abu Dhabi Investment Authority, Public Sector Pension Investment Board and National Investment and Infrastructure Fund as they made investment worth US$ 1.1 billion in GVK Airport Holdings Ltd.  The Government set a target of constructing roads worth US$ 212.80 billion in the next two years. Indian energy sector is expected to offer investment opportunities worth US$ 300 billion over the next 10 years. NHAI will be able to generate revenue of Rs one lakh crore (US$ 14.31 billion) from toll and wayside amenities over the next five years. Government has given a massive push to the infrastructure sector by allocating US$ 24.27 billion to develop the transport infrastructure. Indian Railways has received an allocation of US$ 10.33 billion in Union Budget 2020–21 and will get more allocation going forward.

Road Ahead

India plans to spend US$ 1.2 trillion on infrastructure during 2020–23 to have a sustainable development of the country.  India’s Northeast states in focus for Development of infrastructure projects for the region.

Growth opportunity in this sector are infinite and companies gets order on performance and capabilities to develop projects with help of finance schemes.

BENEFICIARIES :   KEC INTERNATIONAL, LARSEN & TOUBRO, IRB INFRA, IRCON INTERNATIONAL, RIIL, PNC INFRA

Market Size Battery Industry in India is more than Rs. 20,000 Cr. Amara Raja Batteries, Exide Industries, Panasonic Energy, Indo-National have good market share in this industry in India. In this industry, 60%-65% of the market share is of the organized players and the rest 35%-40% is of the unorganized players.

Earlier, there was a difference of 30% in the prices of batteries between organized and unorganized players. But post GST, this difference has come down to 10%-15%. After the implementation of GST, the unorganized players faced a lot of problems.

The opportunities for the battery industry, specifically to the organized players like are the Electronic Vehicles (EV). E-vehicles are the next big thing. This opportunity will open up in the next decade, that is by 2022. The OEM’s have planned on shifting to e-vehicles as soon as possible. Mostly all the companies have started working towards it with the R&D procedure being run with full speed. Many major companies have the timeline to start the rollout of the e-vehicles by 2022.Thus, this new e-vehicles market looks like a major opportunity which can be grabbed by these 2 companies.

NEW HORIZON AHEAD (E-Vehicle Market)

The companies have started their preparations for this market. These companies too have R&D running at great speeds to benefit from this market.

For this, Exide Industries has found a foreign partner to help them out. Amara Raja Batteries already has foreign partner. Johnson Controls hold 26% stake in the company. Johnson Controls have the uniqueness to provide technology support and gain stake in the company.

Road Ahead

These companies majorly have lead based batteries, which are also the main products of the companies. And in the last 3 years the prices of lead have increased significantly. As a result of this, the Net profit margins of these companies have gone down.

Auto sector has seen downturn in the recent times. This has directly impacted the auto-ancillary companies, battery companies included. But the auto sector will reach a consolidation in the next couple of quarters after which it may experience a revival. The cycle of the auto sector will take turn toward the positive side & E Vehicles could be the game changer for these companies.

BENEFICIARIES :  AMARA RAJA, EVERADY, PANASONIC ENERGY, INDO NATIONAL.

The growing demand for power, light and communication has kept a high demand for cables and wires, which constitute roughly 40% of India’s electrical industry. Wires and cables play a vital role in every aspect of infrastructural growth and finds extensive usage and applications across a number of industries.

Wire and cables demand directly dependent on the growth of the manufacturing industry and infrastructure in the power, telecommunications, residential and commercial sectors. The government’s initiatives on various fronts like – Renewable power, Housing, Automobile, infrastructure and digitization (Railways, Roadways, Warehousing, Logistic Parks, Smart Cities) are sure to generate a lot of business for the wire and cable industry in foreseeable future.  The Transmission and Distribution sector continues to remain in focus, especially, with the outlay of Rs. 2.6 lakh crore announced by the Government for the five-year period ending FY2022. There is also a sharper focus on high voltage transmission lines along with the Government’s aims to provide 24×7 power, which is opening up opportunities in the sector. DISCOMS which have joined the UDAY scheme are expected to improve their T&D infrastructure through renewed investments. The government’s target of generation of 100 GW of solar energy by 2022 and measures such as excise duty exemption for ferro-silicon magnesium used for manufacturing components for wind-operated electric power generators have augmented the demand for electrical wires and cables.

The Indian power sector has an investment potential of INR 15 trillion (USD 225 billion) in the next 4–5 years. Also, the government is planning to achieve targets of tripling per capita power consumption in India which would require an additional 455 GW of installed capacity along with significant investments and operational improvements in T&D networks.

The Govt. plans to spend INR 850,000 crore in the next five years to modernize Indian Railways. The Cabinet cleared the INR 82,000 crore (USD 12.3 billion) dedicated freight corridor for decongesting existing network. Further, rapid urbanization, is boosting demand for wires and cables in the residential & commercial buildings and power distribution sectors.

Indian automotive sector is one of the world’s biggest. Around 7.1% of the gross domestic product (GDP) in the country is in the sector. India is also a major car exporter and has powerful expectations of export growth in the near future. The rising demand for low-voltage wires in electrical installations of automobiles is another factor adding to the growth of the market.

Road Ahead

The growth going forward can be expected to grow at 13-15% over next 5 years. The Development pace in INDIA to outperform so would this sector benefit from the same.

BENEFICIARIES : KEI Industries Limited Polycab India Limited Finolex Cables Limited V-Guard Industries Pvt. Ltd. KEC International Limited Havells India Ltd. Sterlite Technologies Ltd.