In this edition, we talk about the Nvidia CEO’s India visit and the chip giant’s grand plans for the country. We also talk about the rise in gold prices, the ascent of another Indian-born executive in global MNCs, and what the quarterly earnings of India’s two biggest FMCG companies show.
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Move over the Murthys and the Premjis and the Nilekanis and the Nadars. For, Jensen Huang is here. Sorry, who?
If you are seriously asking that question, you obviously don’t track what’s going on in the world of technology, artificial intelligence and semiconductors. So, if you don’t already know, read on.
Huang is the co-founder and CEO of Nvidia, the semiconductor giant whose chips power everything from Tesla’s electric cars to Microsoft’s Xbox gaming consoles. Often clad in a leather jacket, whether on stage of global corporate conferences or in private meetings with prime ministers and presidents, Huang gets a welcome often reserved for rockstars and celebrities. So much so that it has given rise to the term “Jensanity”!
Huang’s popularity has soared over the past couple of years, in line with a surge in Nvidia’s shares amid the AI boom. Nvidia’s stock price has jumped almost 10 times since the beginning of 2023, pushing its valuation close to $3.5 trillion. In the process, it has overtaken Amazon and Microsoft and become the world’s second most valuable company behind Apple Inc.
Now that we all know who he is, here’s why we are talking about him.
Huang, credited with building Nvidia as the foremost provider of the processors critical to generative AI, was in Mumbai this week where he hung out with Indian corporate titans and announced the company’s new initiatives for India.
Nvidia is not new to India, of course. It first came to India nearly 20 years ago. Since then, it has set up engineering and design centres and other offices in Bengaluru and Hyderabad. But now, it is pressing the pedal. Last year, Nvidia said it would develop AI supercomputers in India along with Reliance and Tata Group.
At the company’s packed AI summit in Mumbai, the Silicon Valley giant unveiled plans to supply its artificial intelligence processors chips to billionaire Mukesh Ambani-led Reliance Industries and other Indian companies.
The company said it will supply its Blackwell AI chips for Reliance’s one-gigawatt data centre in Gujarat. Nvidia also plans to supply its Hopper AI chips to Tata Communications to build data centres.
Nvidia has tied up with Tech Mahindra for a new lightweight Hindi-language AI model to develop a custom AI model called Indus 2.0. Besides, it is working with Infosys, TCS and Wipro, to train thousands of developers to design AI agents using its software. Ola Electric is another company that will use Nvidia’s simulation technology to test factory plans.
Nvidia’s growing interest in India comes at a time when the government has been encouraging local companies such as Tata and Reliance as well as MNCs to set up chip fabrication facilities in the country.
While India has a long way to go if it wants to be counted in the same league as chipmaking giants such as Taiwan, Huang talked up India’s potential in AI.
“You have the fundamental ingredients – AI, data and AI infrastructure, and you have a large population of users,” he said. “In the future, India is going to be the country that will export AI.”
Precious Than Ever
Nvidia’s stock is not the only asset that’s making records. Gold and silver prices in India, and globally, also climbed to new highs this week.
Spot gold hit a record high of $2,758.37 this week, extending gains to almost 33% so far in 2024. In India, prices for 24k gold crossed Rs 80,000 per 10 grams for the first time this week. Local prices have jumped almost 25% from the start of this year and have even recovered about 14% after the drop in July following the import duty cut in the Union Budget.
Other precious metals are rising, too. Global spot prices of silver, which is also used as an industrial metal, hit their highest level since 2012 this week. At home, silver prices on the Multi-Commodity Exchange touched a new high of about Rs 1 lakh per kilogram.
Why are gold and silver prices rising? Globally, prices have jumped because of demand for safe-haven assets amid high geopolitical tensions and uncertainty over the US presidential election early next month.
In India, demand during the festival and wedding season has helped push prices higher. On the flip side, high prices are also deterring some people from buying gold this season.
So, what will you do during Dhanteras and Diwali next week? Will you buy that gold ring or necklace you’ve always wanted or do you invest in gold mutual funds or ETFs instead? Let us know!
Smashing the Glass Ceiling
Talking about setting new records, this one is indeed special. This week, Pam Kaur joined a growing list of Indian-origin executives making a mark in multinational corporations around the world.
London-headquartered HSBC, Europe’s largest bank by assets, named Kaur as its new chief financial officer. This makes Kaur, an MBA from Chandigarh-based Panjab University, the first woman to become CFO in HSBC’s 160-year history.
Indian-born Kaur succeeds Georges Elhedery as the CFO. Elhedery was recently named the bank’s CEO. Kaur’s elevation comes barely a decade after she joined HSBC in 2013 and then rose to the role of group chief risk and compliance officer.
Although Kaur maintains a low public profile, she has had a long and successful career at some of the world’s biggest banks in critical functions such as risk and audit. Before HSBC, she worked with Deutsche Bank, Citibank and Lloyds Banking Group at a time when Europe’s banking industry was going through a crisis.
Kaur’s appointment is a moment of celebrations not only for Indian-origin professionals but also for women worldwide. The list of Indian-origin CFOs at MNCs includes Vaibhav Taneja of electric carmaker Tesla, Aradhana Sarin of drugmaker AstraZeneca, Harmit Singh of Levi Strauss, and Rahul Ghai of American conglomerate GE. Kaur also joins the elite group of women in top global banking roles that includes Citi CEO Jane Fraser and Morgan Stanley CFO Sharon Yeshaya.
What’s the secret of Kaur’s success? The “Power of Chi”, she says. Here’s wishing she has all the chi—the Chinese word for vital energy—that she needs to reach the skies.
FMCG Woes
Moving back to India, the earnings season is in full momentum with dozens of companies disclosing their quarterly report cards. While we can’t possibly talk about each and every company, we do try and capture the most important industry trends. Last week, for instance, we wrote about tech companies. This week, we dig into the numbers of India’s fast-moving consumer goods companies—market leader Hindustan Unilever Ltd and ITC Ltd.
HUL, the company behind Dove soap, Lakme cosmetics and Lipton tea, reported a fall of almost 4% in consolidated profit after tax for the July-September quarter to Rs 2,612 crore. This missed analysts’ estimates and dragged its shares down. Total sales grew just 2% to Rs 15,729 crore while EBITDA margin at 24.1% declined by 60 basis points a year earlier.
ITC, the company behind Gold Flake and Wills Navy Cut cigarettes as well as Aashirvaad wheat flour and Sunfeast biscuits, said profit rose 3% year on year to Rs 5,078 crore. This also missed estimates and pulled its shares down.
So, what do the results really mean? Well, the results are a clear indication of a slowdown in demand for consumer goods and a rise in costs of raw materials. And ITC said as much. “Subdued demand conditions, unusually heavy rains in parts of the country, high food inflation and sharp escalation in certain input costs (were) witnessed during the quarter,” ITC said in its earnings statement.
What makes matters worse for large incumbents such as HUL, ITC and Nestle is the rise of direct-to-consumer brands and regional players.
What’s the outlook for FMCG companies? Analysts expect the demand slowdown, especially in urban areas, to continue for a few more quarters. So, tighten your belts!
Market Wrap
Indian stock markets fell for the fourth week in a row, dragged down by disappointing quarterly earnings by IndusInd Bank as well as FMCG companies and state-run NTPC. Continued foreign outflows, which have touched $9.6 billion so far in October, exceeding the previous record outflow of $8.35 billion in March 2020, also weighed on market sentiment.
The 30-stock Sensex shed 2.2% over the five-day period while the 50-stock Nifty fell about 2.7%. The four-week losing streak is the longest since August 2023 and has brought the benchmark indices more than 7% down from their record highs last month.
IndusInd Bank was the biggest loser this week, falling almost 23% after reporting a surprise drop in its second-quarter profit and warning about stress in microfinance loans that forced it to increase provisions.
Adani Enterprises, Tata Consumer and Hindalco ended with deep losses of more than 10% each. State-run refiner BPCL, automaker Mahindra & Mahindra, non-bank lender Shriram Finance, Adani Ports, state-run explorer ONGC were the top losers. More than 20 other stocks fell at least 4% each this week.
Only a handful of stocks managed to stay in the green when almost the entire index was a sea of red. HDFC Bank was the top gainer, followed by Bajaj Auto and Tech Mahindra.
Earnings Snapshot
- PNB Housing Finance profit jumps 23% to ₹470 crore on robust demand for home loans.
- JSW Energy profit inches up 0.4% year on year to ₹853 crore.
- IndusInd Bank profit plunges 39% to ₹1,325 crore on stress in microfinance book.
- NTPC Q2 profit falls 29% to ₹4,321 crore on lower power generation.
- Godrej Consumer Q2 consolidated net profit climbs 14% to ₹491 crore, tops forecasts.
- SBI Life Q2 profit increases to ₹529 crore from ₹380 crore a year earlier.
- Bajaj Finance profit rises 13% but misses forecasts as NPAs, bad loan provisions rise.
- Adani Total Gas consolidated profit rises 7.5% to ₹187 crore on steady demand for CNG.
- Adani Wilmar swings to profit of ₹311 crore from loss of ₹131 crore year ago.
- Adani group company ACC profit drops 39% year on year to ₹234 crore.
- Adani group media company NDTV swings to Q2 loss of ₹52.8 crore from year-ago profit.
- Fevicol maker Pidilite’s consolidated net profit grows nearly 19% to ₹535 crore.
- TVS Motor Q2 profit revs up 23.5% to ₹663 crore but misses forecasts.
- Paytm revenue falls 34%, loss after one-time gains widens to ₹407 crore from ₹273 crore year ago.
- Zomato profit jumps nearly five-fold to ₹176 crore.
Other Headlines
- Govt approves ₹1,000 crore fund for space startups.
- Hyundai Motor India’s shares drop 7% on listing after record $3.3 billion IPO.
- Supreme Court sets aside Byju’s payment dispute settlement with BCCI.
- Swiggy trims IPO valuation target to $12.5-13.5 billion from $15 bn, reports Reuters.
- Germany’s Allianz looks to exit insurance JVs with Bajaj Finserv, in talks with Jio Financial.
- Norwegian renewable energy producer Statkraft to sell hydro and solar assets in India.
- Govt removes floor price for export of non-basmati white rice.
- Need to remain cautious on inflation, show minutes of RBI policy meeting.
- GMR Group secures $750 million in debt from Abu Dhabi Investment Authority.
- Goldman Sachs lowers Indian equities to “neutral” from “overweight”.
- National Payments Corporation of India allows Paytm to enroll new UPI users.
That’s all for this week. Until next week, happy investing!
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