Apple planning to shift 20% production from China to India.

Apple planning to shift 20% production from China to India. And, Sectorial Talks on Pharmaceutical industry.
There was one thing that was common in the melodramatic movies of the 90’s. There were two best friends who had been friends since eternity. At a later stage of their life when they want get their kids married, they meet each other and discuss. Then they share some nostalgia. And then comes that emotional moment when one of them says “Ab is dosti ko rishtedari me badalne ka samay aa gya hai!” Now, understand this from a corporate standpoint.

Apple is still ‘the’ best smartphone brand in the world. Like many other corporate giants, it was also producing majorly in China. But, now due to certain turn of events, it has decided to shift 20% of its production to India. Gaining the one-fifth production capacity of the tech giant would really be a feat for India. It’s not that Apple doesn’t produce in India currently. It does, but the stats are not that attractive. India consumes Apple’s phones worth more than 1.5 billion but, less than phones worth less than 0.5 billion are produced here.

What Does it Mean for India?

If the deal realizes, Apple may potentially become the largest exporter of India. This will take the corporate relationship between India and Apple to the next level (the point that we started from). It is worth mentioning here that Government of India has introduced a PLI (production linked incentive) scheme to attract the companies that currently wish to shift their production form China. According to a news report, the Indian officials are expecting Apple to produce smart phones worth $40 billion (mostly for exports) and avail the scheme incentives.

Sectorial Talks - Pharmaceutical Industry

One way to analyze a pharmaceutical industry stock is to look after the volume and operating ratio or operating profit margin i.e. to look for net sales growth and operating expenses because of high raw material costs, R&D expenses and high cost of exports involved. Currently, domestic market has observed a CAGR of 10% for over last 5 years. It is having huge market competition from China as well as its Asian counterparts and, is capital intensive giving rise to a new factor of cost leadership determining the profitability of a company. Going forward, following the COVID-19 pandemic, industry is expected to grow at 7-8% CAGR and can establish and grow its strong footing on the global market as customers now look at securing their supply chains and reduce dependence on China.

So, to invest in a pharmaceutical stock, do check the net sales growth and operating ratio or operating profit margin. The better the stock fits into this criterion, the better option it would be for investment. It’s quite simple, first the criterion needs to be right in order to select the right stock. The data regarding the company’s revenue and expenses is available on ticker.finology.in