Morgan Stanley analysts have predicted that the major driver for Apple’s five-year revenue and installed base growth will be India. In a note, the company cited the reason to be Apple’s investment in manufacturing in India along with the country’s “economic boom.”
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In the same note, a fresh price target rise was also included, which will be led by India, from $190 to $220, with an improved bull-case valuation of $270. Apple was once again cited by Morgan Stanley as their Top Pick.
In contrast to 2% during the previous five years and $6 billion today, Morgan Stanley analysts predict that over the next five years, the nation may account for 15% of Apple’s revenue growth and 20% of the company’s installed base growth. The $40 billion increase in sales over the next ten years predicted by Morgan Stanley would be “equivalent to Apple ramping up an entirely new product category.”
The analysts base their conclusion on a number of variables, including India’s increased electrification and Apple’s obvious efforts to establish a manufacturing and retail presence in the country. According to a Morgan Stanley-commissioned survey, Indian consumers are more likely to be able to afford and want to buy iPhones.
However, the analysts did add a qualification, saying that if India doesn’t achieve its targets for economic and demographic growth, “we wouldn’t expect Apple to be as significant of a beneficiary in India.”
Nonetheless, Morgan Stanley’s thesis looks quite optimistic. The analysts expressed, “All-in, this means that India will be just as important to Apple’s growth algorithm over the next 5+ years as China was in the last 5 years, something we believe the market underappreciates today.”
Earlier in May, it was announced that Foxconn, the key Apple contract partner, will invest $500 million to establish production facilities in the southern Indian state of Telangana as it broadens its foundation in the South Asian market.
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As per Telangana’s IT minister, K.T. Rama Rao, Foxconn’s investment stands to generate 25,000 direct jobs in the “first phase.” According to Reuters, Foxconn, which already produces iPhones in India, won the bid to produce AirPods in India earlier this year. According to reports, it also purchased land in Bengaluru earlier this month for $37 million.
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