As India and China navigate the balance between diplomacy and potential conflict, Indian businesses are actively seeking to reduce their dependency on Chinese products and investments.
Additionally, the China Plus One strategy has emerged as a pivotal approach for multinational corporations (MNCs) looking to diversify their supply chains beyond China.
This strategy aims to mitigate risks associated with over-reliance on a single country for manufacturing and sourcing. As global companies reassess their supply chain strategies, India stands out as a prime candidate to benefit significantly from this shift.
Although government initiatives like ‘Make in India’ and ‘Aatmanirbhar Bharat’ have contributed to diminishing this dependency to some degree, it’s important to acknowledge that many sectors still remain directly or indirectly reliant on China.
Here are Indian stocks that have significant dependency on the Chinese market:
Tata Motors Limited
With a market cap of Rs. 3.42 lakh crores, the shares of a leading global automobile manufacturer surged by nearly 2.5 percent on BSE to Rs.949.2 on Friday.
A major player in the automotive sector, Tata Motors derives around 70 per cent of its revenue from Jaguar Land Rover (JLR), which has a substantial market in China.
Recently,Jaguar Land Rover (JLR) has recently entered into a significant partnership with its Chinese joint venture partner, Chery Automobile Company Ltd.,to revitalize the Freelander brand by developing a new range of electric vehicles (EVs) tailored for the rapidly expanding New Energy Vehicle (NEV) market in China.
Under this agreement, the Freelander name will be licensed to the joint venture, CJLR, which is a 50/50 partnership between JLR and Chery.
Tata Motors acquired JLR from Ford for ~$2.3 billion in 2008, establishing it as a wholly-owned subsidiary.
Further, Tata Motor’s British luxury vehicle brand JLR is set to invest £18 billion (~Rs. 1.9 trillion) until FY28, 20 per cent more than its earlier announced plan of £15 billion, to enhance its product lineup and expand its electric vehicle (EV) offerings.
The company’s revenue from operations stood at Rs. 1,08,048 crores in Q1 FY25, rising by nearly 5.7 percent YoY from Rs. 1,02,236 crores in Q1 FY24, while the net profit grew by 72.4 percent to Rs. 5,692 crores from Rs. 3,301 crores, during the same period.
The stock has delivered positive returns of nearly 51.7 percent in the last one year, as well as around 17.7 percent returns year-to-date.
Tata Motors Limited is a leading global automobile manufacturer of cars, utility vehicles, pick-ups, trucks, and buses, offering an extensive range of integrated, smart, and e-mobility solutions. It is India’s market leader in commercial vehicles and ranks among the top three in the passenger vehicles market.
UNO Minda Limited
With a market cap of Rs. 59,856.5 crores, the shares of a global Tier-1 supplier of proprietary automotive systems and solutions to original equipment manufacturers (OEMs) surged by nearly 2.4 percent on BSE to Rs. 1,068.8 on Friday.
Uno Minda has significantly expanded its exposure in the Chinese market through its recent partnership with Suzhou Inovance Automotive Co., a leading provider of electric vehicle (EV) components. This collaboration focuses on manufacturing high-voltage EV products, such as charging control units, inverters, and motors, specifically for passenger and commercial vehicles in India.
Uno Minda has entered into a Technical License Agreement with Suzhou Inovance, enabling it to produce select EV components. This agreement is expected to significantly enhance Uno Minda’s product portfolio in the electric four-wheeler segment.
The company aims to evolve this partnership into a joint venture, pending necessary regulatory approvals. This move is part of Uno Minda’s strategy to capitalise on expanding the Indian EV market.
The company’s revenue from operations stood at Rs. 3,818 crores in Q1 FY25, rising by 23.4 percent YoY from Rs. 3,093 crores in Q1 FY24, while the net profit grew by 17.2 percent to Rs. 211 crores from Rs. 180 crores, during the same period.
The stock has delivered positive returns of nearly 74.3 percent in the last one year, as well as around 52.7 percent returns year-to-date.
Incorporated in 1992, UNO Minda Limited, formerly known as Minda
Industries Limited, is engaged in the business of manufacturing auto components including lighting, alloy wheels, horns, seating systems, seatbelts, switches, sensors, controllers, handlebar assemblies, wheel covers etc.
The company serves both 2-wheeler and 4-wheeler markets and domestic & international markets.
Caplin Point Laboratories Limited
With a market cap of Rs. 14,936.3 crores, the shares of this pharma company surged by nearly 1 percent on BSE to Rs. 2,018.7 on Friday.
Caplin Point Laboratories aims to increase its presence in China by leveraging its existing supply chain, which currently sources about 35 percent of its products from Chinese vendors. This reliance on local suppliers can facilitate smoother entry into the market, allowing for quicker adaptation to local demands and regulatory requirements.
Caplin plans to diversify its product offerings specifically tailored for the Chinese market, including injectables and other pharmaceutical forms. This aligns with their broader strategy of expanding their product pipeline, which includes 55 Abbreviated New Drug Applications (ANDAs) planned for filing over the next three years.
By increasing backward integration into Active Pharmaceutical Ingredients (APIs), Caplin aims to reduce dependency on third-party suppliers, particularly from China. This strategy is designed to mitigate risks associated with supply chain disruptions while enhancing gross margins.
The company’s revenue from operations stood at Rs. 459 crores in Q1 FY25, rising by 16.2 percent YoY from Rs. 395 crores in Q1 FY24, while the net profit grew by 20.2 percent to Rs. 125 crores from Rs. 104 crores, during the same period.
The stock has delivered positive returns of nearly 83.4 percent in the last one year, as well as around 45 percent returns year-to-date.
Incorporated in 1990, Caplin Point Laboratories Limited is engaged in the business of manufacturing and sourcing APIs, finished formulations, R&D, clinical research and exporting to overseas markets.
Written by Shivani Singh
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