Top 4 sectors for the future | High growth sectors - YouTube

Hello friends!

We are facing a turbulent time currently due to multiple factors

like the ongoing Russia-Ukraine war, the rising inflation across the world, and the slowing growth and rising interest rates in major economies.

All these factors are expected to put pressure on stock markets everywhere,

particularly given the great momentum that markets have rallied after the fall at the start of the pandemic.

But as every coin has its 2 sides.

There are many emerging sectors that are expected to do well despite the tough market and economic conditions currently.

Thus, in today’s video, we will be looking to explore 4 major growth sectors for the future.

So, without taking much of your time let’s just dive in and discuss them one at a time!

But before moving ahead, hit the subscribe button and like the video if you haven’t already.

Because we post quality content on personal finance and investing every week to help you create wealth.

Now, let’s come back to today’s topic.

The first major growth sector is Clean Energy.

The current high dependence on non-renewable energy sources is creating a lot of problems for the world,

especially for oil-importing emerging nations like India and China.

The major issues related to non-renewable resources like coal and petroleum are:

They are mainly controlled by the cartelized system.

Supply chain disruption can cause large-scale economic disruption and inflation.

Climate change and global warming are due to environmental destruction and pollution.

All of these factors stress the urgent requirement for emerging economies like India to build their own self-dependent energy system.

Energy usage is the most reliable indicator of the advancement of a country.

The consumption of energy is only going to increase in the future for India,

as the population grows, the economy develops, and humans research and develop more and more uses for energy.

Now solely depending on the non-renewable energy sources would not just punch holes in the atmosphere but also in our pockets,

because the supply is limited and the demand is only going to increase in the future.

And here is the solution to all the issues mentioned earlier – Clean Energy.

The Govt of India has also identified clean energy as one of the major focus points for the development of India in the next decade.

There are a number of factors that are expected to promote the growth of this sector in the future such as:

- Reduce dependence on oil imports. - Target to reach 300 GW solar capacity by 2030.

- PLI scheme of Rs. 24,000 cr for the solar cell industry - Emergence of electric vehicle ecosystem

- Systematic closure of old thermal plants - Promotion of rooftop solar for individuals

- systematic phase-out of petrol with ethanol - Promotion of alternative fuels

These factors and the growing environmental consciousness about reducing our emissions and preserving our environment

are expected to spur the growth of the clean energy sector for a long time to come.

Now we will discuss the Top 2 listed companies by market cap who are involved in this space.

First is Reliance Industries.

One thing to note here is that not a lot of pure green energy companies are listed in India.

Hence, we have included Reliance Industries due to just the sheer amount of investment that they have pledged towards clean energy.

It is India’s largest conglomerate that has pledged to invest $67.4 billion into the clean energy segment in India

It includes a 100 GW solar power plant.

Its biggest strength is its strong cash generation ability from its petrochemical business and diversification into defensive sectors

like organized retail and telecom.

Its biggest weakness is its overdependence on its petrochemical business accounted for 42% of the EBITDA in FY22.

Now you can see some key financial ratios of this company.

The 2nd company here is Adani Green Energy.

Adani Green Energy is the largest solar power project company & the largest standalone renewable energy company in India.

Its biggest strength is its strong market position enabling it to win the solar and wind power project tenders by the Govt of India.

The company’s biggest Weakness: Top valuation - PE of 696 times.

Now you can see some key financial ratios of this company.

The second sector is AI/ML: Artificial intelligence and machine learning.

Since ancient times, every invention ever made has been with the purpose of simplifying and reducing the work done by humans.

This has been the case with simple inventions like the wheel or the cart all the way to complex inventions like the AC or computers.

AI/ML is the next frontier in the information technology and computing sector.

Artificial intelligence in simple terms means a machine programmed to sense, reason, act, and adapt like a simple human

Machine learning is used to denote algorithms that can learn and improve themselves over time as they go through more and more data.

Now, why do we need AI/ML?

Simply put, These technologies can be used for complex tasks that are too time-consuming or data-heavy for humans.

A sufficiently powerful AI can go through as much data in a minute as a human would go through in their lifetime.

A machine learning algorithm can slow and steadily learn and adapt itself to perform better at its assigned tasks as it goes through more data.

AI/ML can have a wide variety of applications across different industries and sectors like:

All of the above applications clearly show the trend of AI/ML being used to optimize and simplify critical

but time-consuming tasks and free up human effort for other pursuits or

to enable the creation of things like autonomous vehicles which represent a new frontier in their respective industry.

According to Fortune Business Insights, The market for AI ML is expected to grow at the rate of 38.8% CAGR between 2021 to 2029.

According to the International Data Corporation, India's AI market is to reach a market size of $7.8 billion by 2025 at a CAGR of 20.2%.

The pandemic gave a high demand for the digital transformation in all companies worldwide

and AI/ML comes at the top of the list of this process, especially in certain sectors such as Healthcare, retail, and automotive to name a few.

With high demand in all the sectors, and the technology at a development stage, the future trends and demands look robust

Now we will discuss the Top 2 listed companies by market cap who are involved in this space.

Now, here also there are a lot of big IT companies but they have a very little portfolio of AI/ML.

Thus, we have included those players which have a higher exposure to the AI/ML segment.

First is Tata Elxsi.

Tata Elxsi is the biggest pure-play ER&D company in India.

Its major focus in AI/ML applications is in the media and broadcasting space and the autonomous vehicles space.

The company’s biggest strength is its good diversification among customer segments

which includes industrial sectors like automobiles and high-rising sectors like OTT, media & comms, and Healthcare devices.

The company’s biggest Weakness: High customer concentration - Top 5 customers accounted for 36.9% of revenues in FY22.

You can see the key financial ratios of this company.

Second is L&T Technology Services.

L&T Technology Services is a leading engineering service, research & development (ER&D) company.

It is a listed subsidiary of the Indian Conglomerate Larsen & Toubro.

Strength: Large diversified customer set which includes over 69 Global Fortune 500 companies and 53 of the top 100 R&D spenders in the world.

The company’s main Weakness: High geographical concentration risk as over 60% of its revenues come from the USA.

You can see the key financial ratios of this company.

The third sector is Gaming.

This is the space that requires no introduction!!

The Indian gaming market is in its nascent stage.

The Gaming sector witnessed 40% growth between 2019-2020 and has generated $ 1.5 billion in net revenue.

This is expected to cross the $5 billion mark by 2025.

The mature markets of the gaming Industry of China & USA still showcase a compounded annual growth rate of 8-13%,

highlighting the huge potential for an emerging market like India.

India is the 2nd country in the ranking of smartphone users,

and with relatively low penetration compared to peers it leaves a great growth opportunity for the mobile gaming sector in India.

Another big advantage to the gaming industry in India is the low data charges.

India has one of the cheapest data charges in the world.

With the increasing market penetration, digital inclusion, and the pandemic push, over 45% of India’s mobile users got in online gaming.

Other factors like the young population, developments in the sector like Metaverse & VR,

and the rise of numerous gaming startups, all suggest that the Gaming industry should witness exponential growth in the coming future.

Now we will discuss the top 2 listed companies by market cap who are involved in this space.

First is Delta Corp.

Delta Corp is the largest gaming company in India operating multiple casinos in the state of Goa

and owning Adda52 which is one of the top online poker platforms in India.

It also runs an online rummy site Adda52rummy.com and an online sports fantasy site called LeagueAdda.

Its biggest strength is its 1st mover advantage in the online card games space with Adda52, India's oldest online poker game to have come up.

The company’s biggest weakness is its high dependence on the legacy casino gaming business

which requires a lot of capital to expand and faces a lot of regulatory hurdles in expansion in other geographies.

You can see the financial ratios of this company.

Nazara Technologies. Nazara Technologies is one of the leading online game producers in India.

The company owns WCC and CarromClash in mobile games, Kiddopia in gamified early learning,

Nodwin and Sportskeeda in eSports and eSports media, and Halaplay Technologies & Qunami in trivia-based games.

The company’s biggest strength is its presence across various sub-sectors in the mobile gaming space in India.

Its biggest weakness is its low promoter holding of only 19%

You can see the financial ratios of this company.

The fourth sector is Defence.

The ongoing Russia-Ukraine war and the rising inflation across the world have taught everyone

to be self-reliant or AtmaNirbhar for critical resources like food, technology, and defense.

The Govt of India has long been pushing for AtmaNirbhar Bharat across industries, especially the defense sector.

India’s Defence Budget for the year 2022-23 is $70.6 Billion.

The defense expenditure accounts for 15.5% of the total Union Budget which is the highest among all the ministries of the central government.

This highlights the large potential for the industry and also shows how critical the defense sector is to India,

particularly given the military threat from China in the North & East and Pakistan in the Northwest.

Over the last 10 years, the total defense expenditure has risen at a CAGR of 9% and it is expected to stay on a similar trajectory in the future.

Along with such a budget allocation, With a recent increase in FDI limits to 74% in the Defence sector,

the government is showing clear indications of boosting the defense sector to support national security and become self-reliant and self-sufficient.

The PLI scheme announced for the drone sector also highlights the importance that the Govt of India is putting in this sector,

particularly in developing drone technology and manufacturing in India.

The increasing mutual trade agreements and joint ventures with countries like UAE, Kazakhstan, USA, etc

for defense manufacturing also offer huge potential growth opportunities

to boost the defense manufacturing for both private and public sectors and to increase the exports for this sector.

Now we will discuss the top 2 listed companies by market cap who are involved in this space.

First is HAL (Hindustan Aeronautics Limited).

HAL is the biggest aerospace company listed in India.

It is involved in designing and manufacturing fighter jets, helicopters, jet engines, and marine gas turbine engines,

avionics, software development, spare supply, overhauling, and upgrading of Indian military aircraft.

The company’s biggest strength is its strategic importance in the Indian defense and aerospace industry.

Its biggest weakness is the high competition from international players- Lockheed Martin, Raytheon, Boeing & Airbus.

You can see the financials of this company.

Second is Paras Defence & Space Technologies.

Paras Defence & Space Technologies is a leading player in the defense and space engineering products space in India.

The company operates in 4 major segments

which are Defence & Space Optics, Defence Electronics, Heavy Engineering, and Electromagnetic Pulse Protection Solutions.

The biggest strength is its long industry presence of over 40 years which has helped it amass a strong order book of over Rs 600 Cr in FY22.

Its biggest weakness is its high working capital requirement which stood at 451 days as of March 2022.

You can see the financials of this company.

Thus, we come to the end of our video.

Hope we were able to provide you with vital information on 4 of the high-growth sectors for India in the future.

Let us know in the comments below whether we may have missed any high-growth sectors in our list here.

So, that was it for today’s episode. Tell me, did you learn something new and interesting?

On what topics do you want us to make more videos? Let us know all this in the comments!

Don't forget to subscribe to the channel.