1. Jio Financial Services boasts implied market cap of ₹1.6 lakh crore; Is this high valuation justified? Ankit Gohel evaluates in Mint.

Jio Financial Services, the financial arm of Reliance Industries Ltd (RIL), has unsettled shadow lenders space in the country by claiming the second spot. Post demerging with RIL on Thursday, Jio Financial Services (JFSL) boasts off an implied market capitalisation of ₹1.6 lakh crore, that's way behind Bajaj Finance m-cap of ₹4.59 lakh crore, but significantly higher to its contemporaries in the space.

“Jio financials is effectively valued at ₹261.85 per share. They have roughly 620 crore shares. That values Jio financials technically at ₹160,000 crore (roughly $20 billion)," said Deepak Shenoy, Founder, Capital Mind.“But don't go overboard, Jio Fin shares haven't actually traded. What this means is that in the Nifty, Jio Financials will be valued at ₹160,000 cr. temporarily (until it eventually lists, when it will be removed).”

High valuation justified? JFSL’s value derived in a special pre-open session was much higher than analysts’ estimates.

However, experts believe Jio Financial Services high share price is a reflection of the market’s assessment of the company's potential. Lets wait and watch.

2.Joining the semiconductor bandwangon ? HCL Group eyes USD300 million foray in semiconductors with an assembly, testing, marking and packaging (ATMP) unit, reported the Economic Times.

The HCL Group is leading this project and not HCLTech — the group's USD13 billion IT services wing, according to reports. An ATMP facility does not make semiconductors but tests and assembles them before they are shipped to customers.

HCL is slated to apply under the USD10 billion semiconductor incentive programme, which was launched in December 2021.Under this scheme, central and state governments offer subsidies, covering up to 75% of the capex incurred by firms in setting up semiconductor facilities in India.

HCL’s proposal comes close on the heels of world's top memory chip maker Micron's July announcement to set up a government-supported USD2.75 billion ATMP unit in Gujarat.

ATMP units are key links in the semiconductor manufacturing supply chain, connecting fabs (where chips are made) to the markets. While India is trying to get a chip fab, creating an ecosystem and local expertise through ATMP is a stepping stone and a vital link to get to that goal. And if government will give 75% of capex then why not ?

3.Foreign investors sidestep China in rush into Asian stocks, reports the Financial Times. Net inflows into ‘ex-China’ emerging markets exceed those into China for first time since 2017, according to Goldman Sachs data. Now you know why Indian stock markets are hitting new highs.

Foreign investors are injecting less money into Chinese equities than into other Asian emerging markets for the first time in six years, as investor optimism about Chinese growth wanes. Over the past 12 months net foreign inflows to emerging markets in Asia “ex-China”were more than $41bn, outstripping net inflows of about $33bn into mainland Chinese equities via Hong Kong’s Stock Connect trading scheme, according to data compiled by Goldman Sachs.

 The equivalent figures for the previous 12 months were net outflows from emerging markets of $76.6bn and net inflows into China of $42.8bn. The shift reflects the disappointing reality of China’s rebound from harsh Covid-19 restrictions, and highlights how economies elsewhere in the region are benefiting from shifting supply chains and strong US semiconductor demand.

Manishi Raychaudhuri, Asia-Pacific head of equity research for BNP Paribas, said that investors would remain “fence sitters”on China until its growth outlook improved. He described the two dominant themes for Asia this year as “buy India” and “buy AI-driven tech”.

The latter theme has spurred inflows of $10bn and $9bn to Taiwanese and South Korean markets, respectively, as investors bet heavily on an AI-driven surge in semiconductor demand. More recently, foreign buying has shifted to India on the back of robust growth and expectations that the country would benefit from supply chains shifting out of China with US support.

4.Yevgeny Prigozhin, the leader of the Wagner mercenary group, appeared on video for the first time since his abortive coup.

A clip released on Telegram showed Prigozhin apparently welcoming Wagner soldiers into Belarus, and describing recent events on the front line as a “disgrace,” hinting that Wagner may rejoin the war in Ukraine at some point. But the BBC’s Russia editor noted that he has toned down his criticism: There was no personal mention of the Russian defense minister or other officials whom he has previously targeted with vitriol, or suggestions of future “marches for justice.” Instead, he appears to be “honouring the deal he did with the Kremlin,” accepting exile to Belarus in exchange for immunity. Some Wagner troops may now head to Africa, Prigozhin suggested.

In a separate report in New York Times, The head of MI6, Britain’s spy agency, said Vladimir Putin had “cut a deal” with the Wagner group leader Yevgeny Prigozhin during last month’s rebellion to save face.

5.Can Tesla sell a Rs 20-lakh electric car produced in Indian giga-factory? Surajit Dasgupta of Business Standard evaluates. Long Read.

In discussions with the government a few weeks ago Tesla reportedly sprang a surprise. It said it would sell its electric car for Rs 20 lakh in India and set up a plant with an annual capacity of 500,000 units.

Tesla Founder Elon Musk's ambition to build a high-volume affordable car is not new. In 2020, Musk had announced that he would come up with a $25,000 (Rs. 20.5 lakh) car in three years. That did not happen.

But the ambition to build a compact or subcompact car that has a large market in Asia and Europe fits in with broader ambitions. By 2030, the company plans to sell 20 million Teslas across the globe from a mere 1.3 million last year. So Musk will need to come out with car models that can be sold in large volumes.

To achieve this, Musk has clearly said he will need 10 to a dozen giga-factories beyond the five located in the US, China and Germany. One of them could be in India, though Musk has been scouting other venues from Indonesia to South Korea and Latin America.

The market for compact affordable electric cars is expected to boom globally. In five years, estimates suggest that this market would hit over 10 million units. As many as 60-odd model launches are expected in this space in a few years, apart from the ones that are already making a dent in the market, such as the Bolt EV from Chevrolet (priced at $26,500), the Nissan Leaf ($28,400) or Kona Electric ($33,000). Volkswagen has announced a sub-$28,000 model just a few months ago.

In short, it’s a market that Tesla would not like to lose.

But why India? The domestic market for cars priced above Rs 20 lakh is small. Indian manufacturers sell around 30,000 premium cars (that too, the ICE version) a year in a 3.8-million overall market.

And electric cars are in their infancy accounting for a penetration of just over 1 per cent despite the fact there are already sub-Rs 10 lakh cars from the Tata stable. Hyundai, which recently launched its top-end electric SUV Ioniq (at around Rs 45 lakh) has sold only 500 units in six months while Hyundai’s Kona (Rs 23 lakh upwards) sells 60-80 vehicles every month.

Tesla, said experts in the business, is looking at replicating Apple’s strategy in India, which is focused on exports, bringing in its supply chain to India and selling its premium phones that were earlier imported and now mostly made in India for the domestic market.

So Tesla plans to clearly give up its earlier plan on importing a CBU car (where import duties are between 70 and 100 per cent) just like Apple did, which moved from importing to assembling in India, even the latest iPhone 14. Tesla is now looking at assembling the model in India through the completely knocked down or CKD (on which the import duty on the parts is 10 per cent). Apple assembles its phones through its contract manufacturers in India.

Tesla’s focus, those in the know say, is to export its cars in other Asian markets, apart from catering to the domestic demand. The government expects electric car penetration to hit 30 per cent by 2030, though analysts would be happy with half that figure. So experts say it is looking at building a giga-factory of 500,000 cars annually — bringing in all its key suppliers — so that it can push cost efficiencies with high volumes.

The key to success will depend on how quickly Tesla can build its supply chain in India and localise.

Apple is finding it difficult to bring in its supply chain dominated by Chinese companies because of stiff government rules to discourage their entry in India. But the Austin, Texas-based conglomerate faces no such unique challenges.

That is because it can leverage India’s pre-existing vibrant component and export ecosystem involving all the world’s leading car makers. “Putting up an assembly plant is not too expensive; and Tesla can source many of its requirements from India, such as power seats, the glass, and many other components and increase localisation faster,” said an industry veteran, who has worked with both Indian and foreign car companies.

It can also leverage Panasonic, its largest global supplier for lithium ion batteries globally, which has recently announced plans to set up a battery plant in India for electric vehicles. As battery cells are the key cost in a car, it could speed up Tesla’s localisation efforts.

If Tesla’s move to India works out, the company will, like Apple, be able to reduce its dependence on China. Last year, half its cars were made in China’s Shanghai plant and the country accounted for a third of its sales.

Tesla’s entry for India in a new avatar is good news. As the CEO of an auto company that is planning to make electric cars says: “There are still too many open ends. But more global players making in India is good for the Indian industry.” Competition will certainly provide a fillip to the EV industry in India and may also be disruptive some legacy players.