India, the land of vibrant colors, diverse cultures, and bustling markets, is poised to play a pivotal role in Apple’s growth strategy for the next five years. According to astute analysts at Morgan Stanley, the Indian market holds the key to Apple’s revenue and installed base expansion, thanks to a potent combination of Apple’s investments in manufacturing within India and the country’s own economic prosperity.
In a recently released note, Morgan Stanley revealed their optimism by raising the price target for Apple, primarily influenced by the Indian market, from $190 to a promising $220. Moreover, they even ventured into an elevated bull-case valuation of $270, placing Apple once again in the prestigious position of being Morgan Stanley’s Top Pick.
This optimistic outlook is grounded in a compelling prediction. Over the next five years, Morgan Stanley anticipates that India will contribute to a remarkable 15% growth in Apple’s revenue and a substantial 20% increase in the company’s installed base. To put this in perspective, the projected $40 billion surge in sales over the next decade is equivalent to Apple successfully launching an entirely new product category.
Morgan Stanley’s analysts arrived at this promising conclusion after evaluating various factors. They took into account India’s rapid electrification, a trend that aligns perfectly with Apple’s mission to establish a robust manufacturing and retail presence in the country. Furthermore, a survey commissioned by Morgan Stanley indicated that Indian consumers, with their increasing affordability and desire, are more inclined to purchase iPhones, further fueling Apple’s growth prospects.
However, Morgan Stanley added a caveat to their analysis. They acknowledged that if India fails to meet its targets for economic and demographic growth, Apple may not reap the expected benefits in the country. As with any projection, uncertainties persist, and the realization of India’s potential as a significant growth driver for Apple relies on the achievement of its own developmental goals.
Nonetheless, Morgan Stanley’s premise breathes an unmistakable feeling of confidence. According to the analysts, “All-in,” this suggests that India will be just as crucial to Apple’s growth algorithm over the next 5+ years as China was in the previous 5 years, which we feel the market undervalues now. They provide a clear image of India’s potential to be a revolutionary force in Apple’s future with these statements.
Recent developments lend further credence to this optimistic outlook. Foxconn, an Apple contract partner, announced a $500 million investment in manufacturing facilities in the southern Indian state of Telangana in May.
This strategic move by Foxconn not only expands its foothold in the South Asian market but also has the potential to create an impressive 25,000 direct jobs in the initial phase, according to Telangana’s IT minister, K.T. Rama Rao. Reports suggest that Foxconn, which already manufactures iPhones in India, secured the bid to produce AirPods in the country earlier this year. Moreover, the company recently acquired land in Bengaluru for $37 million, signaling its long-term commitment to India.
As the sun rises on the Indian horizon, Apple finds itself on the precipice of an exciting chapter in its growth story. The country’s burgeoning market, coupled with Apple’s strategic investments and Foxconn’s expanding presence, paves the way for a promising future.
India’s journey to becoming a key growth driver for Apple may still face hurdles, but the potential rewards are undeniable. Only time will reveal whether these optimistic projections will come to fruition, but for now, all eyes are on India as it prepares to leave an indelible mark on Apple’s growth trajectory.