By AltG Innovation Centre On Behalf Of Poornima Vardhan And Taponeel Mukherjee
"Data is the New Oil" is one of the most powerful statements for India. Access to data via mobiles to a Billion Indians has unlocked the hidden potential of India's consumer markets. It has driven India to be the growth engine of the world today.
While we have already seen data catapult B2C businesses such as e-commerce, the big question for the next 10 years is: What is the next set of industries that see exponential growth due to this trend?
The answer is B2B-focused data businesses. The $1 trillion B2B market in India is teeming with opportunities, but many investors have fallen short due to misplaced investments and a lack of in-depth understanding of Indian businesses and their specific needs.
Market Size And Growth: The B2B database market is currently over $2 Billion in revenues and growing at close to double digits.
The Golden Opportunity- B2B database businesses across India, often overlooked but offering incredible growth, attractive margins, and a wealth of potential buyers.
What makes B2B data businesses a 10-20X Returns Opportunity?
1. Cheap Valuations: With a focus on direct consumer-centric solutions so far, B2B-focused data businesses are highly undervalued today.
As India's economy continues to grow, the role of micro, small, and medium enterprises (MSMEs) is set to increase from its current contribution of 30% to a projected 50-60% of the total economy. This trend is reminiscent of similar developments witnessed in the United States and China as these countries hit key inflexion points in their economic growth trajectories.
Financial data opacity must be reduced to improve access to credit, export opportunities, and research and development and drive economic growth through MSMEs. Thus, financial data businesses across industries will serve millions of MSMEs by removing investment complexities and opacity, making the B2B financial data services sector the essential infrastructure for driving growth in India.
As shown by the chart below, financial data businesses have outperformed the S&P 500 Index by a factor of ~5X in the last 20 years. With a surge in India's economy and rising incomes, Investors can expect similar returns from this sunrise sector in the next 5-10 years.
2. Massive Multiple Arbitrage: Valuations of these cash flow generating businesses are particularly attractive, ranging from 3-7X EBITDA, especially when compared to public comparables like Indiamart, which trades at a P/E ratio of almost 60.
3. Highly Fragmented Market: The market is highly fragmented, with no player holding more than 1% of the market share.
Conclusion
With India's B2B market witnessing incredible growth, exemplified by Indiamart's successful IPO with a $2.3 billion market cap and 365% stock performance, the potential for exceptional returns has never been more evident.
Our APEXX Formula predicts that investing in India's S&P Global presents a 10-20X return on investment opportunity.
Disclaimer: Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.