Siddharth Mehta is very excited about investing in the Indian market rather than any other emerging and developed one. Because India has seen a tremendous increase in the overall penetration of the internet owing to strong growth in low-cost smartphones, a significant reduction in data prices, the creation of an ecosystem of products and services driven by the government’s digital initiatives, and the development of low cost, robust payment systems. Today, there are over 758 Mn internet users in India with ~700 Mn smartphones. In fact, the average data consumption per user per month in India is the highest in the world at ~13.5 GB and Indians spend almost 6.5 hours per day online.
Talking about its initiation towards being digital and its impact on the market is tremendous. Over the course of the last decade, India has laid down the digital infrastructure pipelines – so much so, that today Digital activity has become part of daily lives of over half the country and has enabled India to circumvent the challenges posed by its poor physical infrastructure. Be it bank accounts, KYCs, daily transactions, accessing government services, education services, and even COVID vaccinations, all of this is now digitally led in India. Just to put things in perspective, India has the highest volume of real time payment transactions with over 25 Bn transactions in 2020. China was next at about 16 Bn transactions in 2020!
In such a scenario, it can be said that India is now on the path to becoming the largest digitize business hub in less than twenty years. COVID-19 also plays an essential role to help India in rolling out the digitalization aspects. It has acted as an accelerator for the adoption of the digital economy. In every sector and in every business aspect, digital activity has become extremely important and relevant as this was the only way for consumers to access products and services and for businesses to operate.
Pandemic has accelerated growth in the digital space!
Siddharth Mehta founder and CIO of Bay Capital said that "The digital transformation of India is only just accelerating, and we believe the internet economy could grow 10x in 10 years from here on (to get to more than $800 billion), resulting in many large businesses accreting significant shareholder wealth. The nature and shape of the Indian economy and financial markets will be very different in 2030 than they are today."
Today, the digital ecosystem has evolved, and many segments have consolidated with clear leaders emerging. Across the globe, the nature of digital economy dictates that the consumer would tend to gravitate towards fewer platforms. Within this, leadership businesses will end up having far larger share of traffic, revenue as well as profit pool! Many large digital, consumer tech companies are already profitable on EBITDA level and PAT profits look imminent. Quite a few of these franchises plan to list in the next 12-24 months and will be very well sought after by public market investors due to the growth and profitability profile.
In the last 20 years, technology has leapfrogged significantly and digital has become a part of our daily lives. With each passing moment, consumer awareness and dependence on internet is only increasing and this has led to rapid decline in customer acquisition costs and increased the overall Life Time Value of the customer for digital businesses. The impact of this has not been lost on the overall investment community as well. Focusing on investment opportunities in India’s internet/digital ecosystem as a result of digital transformation, Siddharth Mehta of Bay Capital has stated that "Yes, indeed, there are many outstanding businesses that have created tremendous scale and are seeing their paths to profitability getting accelerated. We are particularly interested in those businesses that are solving uniquely Indian problems in uniquely Indian ways and those that are targeting the next billion internet users in India."
The initiative towards Digital activities of several investors such as Siddharth Mehta IL&FS Former Director will change the overall scenario of digital transformation in business very dramatically in 3-5 years.
