Apple is making news in India. Laurene Powell, Steve Jobs’s wife is visiting the holy city of Prayagraj. 
Prayagraj is a sleepy little town of 1.5 million people in the northern plains of India. Every twelve years this town jolts to life as a couple of 100 million people (!!) descend upon this town over a six-week period. The occasion is “Maha-Kumbh” – a once in twelve-year celestial event that is marked by taking a dip at the meeting point of Prayagraj’s three rivers – Ganga, Yamuna and Saraswati (now extinct). Spiritual seekers from all over the world participate in this festival which is a hub for philosophical discourse, spiritual awakening, healing and an opportunity to serve mankind.
Richard Gere, Michael Douglas, Catherine Zeta-Jones, David Lynch, Dalai Lama are some of the famous people who have been in attendance in the past events. Steve Jobs wrote a letter to a friend in 1974, expressing his desire to participate in the Maha-Kumbh but he could never make it. Steve Jobs had however visited India in 1974 on a spiritual quest that had helped shape his perspective about Apple and life. So, it comes as no surprise that Laurene Powell is in India for this confluence of humanity that started on January 13 and will go on till 26th February.
2025 is a momentous year for Apple in India. 50 years after Jobs’s visit to India, India accounts for c.25% of its iPhone production. Apple ships north of 200 million iPhones a year – more than 50 million of these are now made in India, worth c.US$18 billion. This number is c.50% higher than last year and is expected to grow to US$30bn over the next few years. Apple is also looking to make its other products in India. It is expected to employ 200,000 people in its manufacturing operations in India by March of this year. Apple is working hard to diversify away from China due to the geopolitical tensions brewing between US and China over the last decade.
Like all large US technology companies, Apple also has a talented workforce in India that work closely with its Cupertino headquarters. Some 3,000 software and hardware engineers and 17,000 developers work in Apple’s offices in Bengaluru and this number is expected to grow.
Eighteen months after Tim Cook opened the doors of the first Apple Store in India, iPhone became the 5th highest selling smartphone in the festival season in the last quarter of 2024 – cornering c.10% market share and $10 billion by value. At an estimated12 million iPhones sold in India in 2024, India has become a top 5 market for Apple – after Americas, Europe, China and Japan. This is important in light of the fact that Apple is losing market share in China. iPhone sales declined 17% in China from 52m to 43 million units while the smartphone market in China grew 4% to 285 million units. Analysts expect Apple will continue to lose market share in China because they will not be allowed to introduce Artificial Intelligence (AI) features in their iPhones sold in China due to complex data privacy laws of China. This will be hugely negative for Apple. Apple is looking to compensate for the loss of market share in China, by investing more in India. It plans to open four more stores in India in 2025.
If the history of Apple was intertwined with India on a spiritual level, it’s fair to say that the future of Apple is intertwined with India on a commercial level. Apple is increasingly betting on India not only for manufacturing it products and for sourcing its talent, but also as an important market for its products.
This should present an interesting conundrum for investors.
Apple’s market capitalisation is an eye-watering $3.5 trillion dollars making it the most valuable company in the world. The GDP of the country of India is c.US$ 3.5 trillion making it the 5th largest economy in the world. The market capitalisation of equity markets in India is c.US$ 4.6 trillion making it the fourth largest equity market in the world.
India’s earnings are estimated to grow at a mid-teens rate driven by broad progress across all sectors – financials, industrials, consumer, healthcare – you name it. The Indian market is trading at 20 times earnings. Apple is expected to grow earnings at a 9-10% rate and its stock is trading at 31 times earnings! Apple’s earnings are driven by iPhones, Macs, iPads, wearables and services.
Apple has c.5% weight in the widely used MSCI All Country World Index (MSCI ACWI). India is c.2% of this benchmark. This implies that for every $100 invested, global allocators who use the MSCI ACWI benchmark as a ‘guide’ for capital allocation, are allocating $5 to Apple and $2 to India ie. putting more than twice their money in Apple as in India.
Given that Apple itself is investing in India, perhaps it’s about time the investors reconsidered their allocation.
At Trident Capital, we believe that the earnings potential of India’s 1.5 billion people is growing and its durable and hence we are committed to investing in the best businesses of India.
Sachee Trivedi
Founder & CIO, Trident Capital Investments
Luxembourg
16th January 2025