‘Foreign-return’ startups on the rise; India’s monthly mobile exports hit record $1B

During the 2021 bull market, many Indian startups planned to be listed overseas as tech stocks soared to unprecedented levels in countries like the US. Now that tech stocks have returned to earth, many of these startups are seeking a return to India as they attempt to go public locally.


Credit: Tenor

Also in this letter:
■ India’s monthly mobile phone exports hit a record US$1 billion in September
■ Infographic Insight: VPN Demand Rises Amid Wars and Conflicts
■ Infosys becomes India’s fourth largest company by market capitalization after the Q2 show

Startups are exploring reverse flipping to bring ownership back to India

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Indian start-ups that had formed or were considering merging with blank check companies to explore overseas listings are reversing their strategies and considering local public offerings.

Flip and reverse it: Market participants say some of these companies are now exploring so-called “reverse flipping” to bring their property back to India and list locally, like tech unicorns Zomato, Paytm and Nykaa did last year.

Why? The tech-heavy Nasdaq’s more than 20% correction and the rapid decline in interest in Special Purpose Acquisition Vehicles (SPACs) this year have dulled the appeal of an overseas listing.

Recent easing of round-tripping rules by the Reserve Bank of India (RBI) and government policy support for startups are also fueling the postponement.

case study: On Oct. 3, Walmart-owned PhonePe announced that it had reversed its overseas structure and was also eyeing a listing in India. Market participants say at least three other big startups are currently trying to bring ownership back to India.

How it works: A company with a foreign holding structure cannot be listed in India and Indian companies are prohibited from listing directly abroad. To circumvent this, Indian companies eyeing foreign listings would set up a holding company overseas that would own the Indian business. This holding company would then be listed on the Nasdaq or acquired by a SPAC.

This process is called “flipping” because the corporate structure of the company changes from domestic to foreign. “Reverse flipping” is simply the process of flipping back foreign property.

India’s monthly cell phone exports hit a record $1 billion in September


Monthly mobile phone exports from India hit $1 billion (over £8,200 billion) in September for the first time ever.

What is driving the growth? They have been boosted by the government’s Production-Linked Incentive (PLI) scheme, which has prompted global players like Apple and Samsung to increase local production for both domestic and foreign markets.

Industry leaders say export growth was primarily driven by Apple contract manufacturers Foxconn, Wistron and Pegatron, and Samsung — leading global participants in the 40,995-crore PLI program announced in April 2020.

Also read |Apple could shift a quarter of iPhone production to India by 2025: JP Morgan

Using the numbers: According to data available exclusively from ET, April-September mobile phone exports more than doubled to $4.2 billion from $1.7 billion in the corresponding period in 2021.

Previously, the highest monthly export of mobile phones was in December 2021, when $770 million worth of devices were shipped. Exports were about US$700 million every month from June to August this year.

The estimated value of mobile phone exports in September 2022 showed more than 200% growth compared to September 2021, the data showed.

The global majors account for around 75-80% of smartphone exports from India.

Ambitious goal: Launched in 2020, the PLI program for smartphones aimed to squeeze out manufacturers from dominant regions such as China and Vietnam.

Assisted by the program, India is attempting to catch up with the two countries that still lead the world in mobile phone exports. India aims to export US$60 billion worth of mobile phones by 2025-26.

Also read | Apple’s iPhone 14 Manufacturing in India Shows Maturity of Indian Manufacturing Capabilities: Moody’s

Infographic insight

VPNs grow amidst conflicts, wars_Graphic_ETTECH_2

ETtech Deals Digest

Funding for Indian start-ups barely picked up steam this week as cautious investors remained wary of making big, risky bets. In the current macroeconomic climate, big deals will be absent or rare for some time.

Multiple reports and studies this week showed that funding for Indian startups is at a multi-year low. According to a report by CB Insights, VC funding in India hit a 21-month low in the July-September quarter with 387 deals raising a meager $2.8 billion compared to $9.8 billion , collected in 525 deals in the same period last year.

This week, edtech startup Adda 247 and cryptocurrency platform Pillow topped the funding charts, raising $35 million and $18 million, respectively.

Here’s a list of all the startups that raised funds this week

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Infosys becomes India’s fourth largest company by market capitalization after the Q2 show

Infosys is enrolling 40,000 freshmen in H1FY23

Infosys’ robust second-quarter performance breathed new life into its long-suffering stock, which rose nearly 5% on Friday, making the IT company India’s fourth-largest company by market cap.

jargon cracker: Market capitalization, or market capitalization, is the total value of a publicly traded company’s outstanding common shares owned by shareholders. It is equal to the market price per common share multiplied by the number of common shares outstanding. (Common stocks are simply those that give holders the power to elect the board of directors and vote on company policies.)

Using the numbers: With a market capitalization of Rs 6.25 lakh crore, the IT major has again ranked fourth behind Reliance Industries, Tata Consultancy Services and HDFC Bank, overtaking FMCG giant Hindustan Unilever Ltd on the list of largest publicly traded companies in India.

Result-oriented: After Infosys reported a 23.4% YoY increase in consolidated sales for the September quarter to Rs.36,538 billion, global brokerage firm CLSA raised its price target on the stock to Rs.1,800 per share, showing upside potential of over Rs.28 signals % of daily high of Rs 1,490.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi.