Evercore: Apple may have cracked the Indian smartphone market

Analyst Amit Daryanani expects Apple’s share to grow eight-fold—from 0.5% to 4%—over the next few years.

From a note to clients that landed on my desktop Monday:

All You Need to Know: We think the recent changes to India’s FDIC laws will enable AAPL to sell all their offerings to the Indian consumer without the 20% tariff implication and we expect AAPL to enhance their online and brick-and-motor presence in India over the next few quarters.

Last week, India announced changes to its foreign direct investment laws to allow foreign companies to operate an online store without a brick and motor presence and it lowered local sourcing requirements for foreign companies.

The announcements are part of a push by India to lure foreign companies looking to escape China and both Foxconn and Apple have announced investments in recent days. Transitioning out of China will be challenging, but India remains one of the only replacement options (need large enough population to hire 2M+ workers with churn rate of 50%).

Net/net: We think India opportunity could be an incremental upside driver and assuming AAPL can extend their share from ~0.5% to ~4% over the next few years, it would suggest 12M units and rev/EPS upside of 4.6B/$0.65.

My take: Been down so long in India, 12 million units looks like up to Apple. Besides, <$200 phones may be the biggest share (80%) of the Indian market, per Daryanani, but $500+ phones are the fastest growing (44% vs. 14.5% y/y).


  1. Bruce Oran said:
    This is assuming that India stays in Trump’s good graces and he doesn’t slap a tariff on them as well!

    September 2, 2019
  2. David Drinkwater said:
    I wonder what the perceived market for iPhones is in India, because the idea that 4% penetration means only 12 million units would imply that India only has a population of 240 million. In actual fact, India has a population of nearly 1.4 BILLION. That would be more like a potential 56 million iPhones. Even if that merely turns into a 50 million additional install base (new/used/regifted….), that’s still a lot more revenue and EPS for Apple.

    September 2, 2019
    • Robert Paul Leitao said:

      Beyond the immediately addressable market for iPhones, the easing of restrictions paves the way for Apple to invest more heavily in the development of an app economy in the country. This creates potentially millions of 21st Century job opportunities over time with the majority of the revenue generated through app sales and services returning to or remaining in the country. In my view, the easing of restrictions is long overdue.

      September 2, 2019
    • Turley Muller said:
      I think it’s a matter of income levels. The median income is about $1700, and I think the top quintile is somewhere around $8000. Thus, it’s very small fraction that can afford iPhones. According to government filings, Apple’s revenue in India in 2017 was $1.8B. Accounting for sales of other Apple products, iPhone units probably around 2M+. 12M seems pretty ambitious to me. On of these days…

      September 2, 2019
  3. Jerry W Doyle said:
    American CEOs find erroneously, China to be “sexy.” The beautiful one is India.

    I long have pontificated over the transformational opportunity for India to do what China has done in lifting hundreds of millions of its good Indian citizens out-of-poverty.

    India is sweet Apple nectar, little different then the forbidden fruit many desire.

    India is a demographic spot where the youngest country exists on planet earth! Over 1/2 billion Indians are under 25 years of age. Think of that demographic dividend for Apple!

    Ten of the world’s thirty fastest growing cities are in India! Its urbanization rate at 30 percent is accelerating.

    Over 350 million Indians display reasonable proficiency in English. India is the largest English using country on the planet. Its judicial system is ensconced robustly on English common law.

    India is a genuine, although imperfect, democracy; not an “authoritarian” regime.

    Like China, India is cradling several countries or sub-economies. Each are at different points in transitioning. There is a wealthy economy equivalent of a Japan or Germany. There are parts similar to a Brazil, South Korea, Australia and others to a Bangladesh.

    As soon as the top 150-200 million Indians hit a Japanese or Germany like living standard, then the growth trots forward to the next sub-economy mimicking a Brazil or Australia, and finally catapults down to the Bangladesh like sub-economy.

    In summary, as soon as one sub-economy becomes rich, the growth wave vamooses to the next-in-line poorer one.

    Just like China, India will see serial transitions as one sub-economy after another hits higher living standards.

    China is rapidly growing older, fast barreling in age while India is young and youthful for decades to come.

    India now is the fastest growing economy in the world. India will eclipse China in more ways than one.

    While China evokes fear among nations, India gets America’s smiles.

    In summary, American CEOs have cast their sexual glances toward China. It is India, though, who long has had a sexier look.

    My take: For Apple future success, there is a much better micro-story in that India has a humongous population (the same size as China, but hugely young), a large population of world class companies, a well educated and IT competent workforce, relatively sound financial markets, banks and a well-entrenched rule of law and democracy.

    September 2, 2019
  4. Gregg Thurman said:
    India is a great example of TC’s/Apple’s concept of long range thinking.

    While WS intelligentsia derides iPhone share in India TC/Apple kept working at it. In 5 years time I can see India being the source for 30% of all Apple products, with high single digit smartphone share domestically, not to mention smart watches and services.

    September 3, 2019

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