Apple’s desire to increase its iPhone presence in India will be financially powerful, leading Morgan Stanley to raise its share price target for the company.
Apple has extended both its manufacturing And retail efforts in India over the past year, in an effort to make the most of an emerging market.
In a note to investors seen by AppleInsider, Morgan Stanley calls India “Apple’s next frontier of growth”. So much so that India is seen as the source of 15% of Apple’s revenue growth and 20% of installed base growth for the next five years.
India has so far accounted for just 2% of Apple’s revenue growth over the past five years and accounts for around $6 billion in revenue, analysts say. That’s considerably less than China, which has a similar population base but accounts for 18% five-year growth and $75 billion in annual revenue.
With increasing brand awareness, investments in local manufacturingaffordability programs, India’s economic boom and increasing digitalization, Morgan Stanley believes there’s enough at stake to make India Apple’s next growth target.
Based on insights from the AlphaWise India smartphone survey in 2023, analysts estimate that India will achieve 15% growth over the next five years and achieve $40 billion in annual revenue for Apple over the next five years. of the next decade.
India will also be the source of more than 170 million new Apple users over the next ten years, prompting Morgan Stanley to increase its ten-year installed base forecast by 100 million to 2.1 billion. This would mean that India would represent around 10% of Apple users by 2032.
The survey found iPhone purchase intentions and adoption are on the rise, with the product line “extremely skewed” towards new models rather than refurbished devices, and also skewed towards the top of the line. There’s also a strong Apple ecosystem effect at play, with retention rates of 82% surpassing Samsung’s 60% in second place.
“All told, that means India will be just as important to Apple’s growth algorithm over the next 5 years as China has been over the past 5 years, which we think the market is underestimating today,” writes Morgan Stanley.
As a result, Apple continues to be a “Top Pick” for Morgan Stanley, with a price target raised from $190 to $220.
Morgan Stanley is tempering its expectations by saying it could be wrong in a number of areas. For example, India has always been a tough market with a “low propensity to spend”, a higher base of feature phone owners and high import taxes which impact the sale of smartphones manufactured in India. ‘foreign.
Apple has been working to make India a bigger manufacturing hub, but if economic growth and demographic shifts don’t unfold as Morgan Stanley predicts, Apple won’t be as big a beneficiary. Additionally, smartphone competitors could strengthen with competing devices or new affordability programs, which could jeopardize Apple’s expected market share.
