Sekhar

Let's grow together | None are recommendations

[Sekhar @LearningEleven]

Jio Hotstar is the most unique OTT on the planet.

Most OTTs are offer entertainment with advertisement slots.

Jio-Ambani-Hotstar offers advertisement channel with a little bit of entertainment.

[Sekhar @LearningEleven]

@mvaraprasad86 It’s a large cap. If someone wants a stable name to protect drawdown, this could be it. I don’t expect bumper returns.

[Sekhar @LearningEleven]

Timepass talk on Sunday

1. Rentomojo

South Korea - In 2025, LG Electronics’ annual appliance subscription revenue grew 29% to ₹17,300 crore, on top of a staggering 75% growth in 2024 over 2023.

High urban density, particularly the prevalence of apartments, combined with younger generations moving more frequently, makes flexibility and built-in maintenance increasingly attractive compared with outright ownership.

India - Rentomojo is India’s largest organised furniture and appliance rental platform, offering a digital-first, full-stack rental solution across furniture, appliances, fitness equipment and household products through flexible subscription plans.

The company has evolved from a pure furniture-rental business into an integrated, multi-channel model spanning subscriptions, e-commerce and re-commerce. As of FY26, Rentomojo had 2,53,825 live subscribers and 8,51,184 live items across 29 cities, supported by 20 warehouses and 82 experience stores, generating ₹387 crore in revenue.

The real value creation sits in the asset lifecycle. Rentomojo procures products, delivers them to customers on subscription, manages maintenance and refurbishment, and then redeploys the assets across multiple rental cycles to maximise utilisation.

Appliances have quickly become the company’s biggest revenue driver, contributing around 40% of sales. The company also benefited from appliances accounting for 42%-47% of subscription revenue in FY25, while its market share was estimated at around 50%-55% of live subscribers as of March 2025. Profitability has also accelerated sharply, with FY26 PAT growing at a 118.4% CAGR over FY24-FY26, as the company scaled while maintaining healthy asset occupancy of above 82%.

Globally, this business model has already gained traction across multiple markets, with South Korea being the latest notable example.

According to one estimate, India’s appliance rental and subscription market was worth around ₹8,300 crore in 2023 and could nearly triple to ₹29,000 crore by 2028, implying a ~28% annual growth rate. The growth is being driven by urbanisation, a younger workforce seeking flexibility, and the appeal of avoiding large upfront capital expenditure.

So, while the growth opportunity in India’s cities and towns looks undeniably strong, operational challenges could keep Rentomojo on its knees.

Customers can be less careful with rented assets, leading to scratched beds, wobbly tables and damaged sofas. The problem becomes even more important in appliances, where reliability is non-negotiable. Any deterioration in asset condition or service quality could quickly lead to customer dissatisfaction and churn.

Rentomojo’s success, therefore, will depend not just on acquiring subscribers, but on maintaining operational discipline across logistics, installation, maintenance, refurbishment and customer experience. And as the company expands into Tier 2 cities, the economics of logistics, asset utilisation and servicing could become materially different.

The opportunity is clearly large. But in this business, execution is everything.

2. Triveni Power Transmission Limited

Triveni Engineering’s Power Transmission Business (PTB), focused on high-speed gears, industrial gearboxes, and defense propulsion systems, is arguably one of the hidden gems within Triveni Engineering & Industries.

The business is expected to be listed in the next couple of weeks. The NCLT has already approved the demerger, with July 22 being the record date.

With EBITDA margins of around 35%, a strong and diversified customer base, a sticky business model supported by a growing aftermarket segment, and a dedicated multi-modal defense manufacturing facility, PTB appears well-positioned for the next phase of growth. Capacity expansion is currently underway, with the potential to take revenues from FY26 levels of ₹340 crore to a peak capacity of around ₹700 crore over time.

The company has also secured a significant breakthrough order in the defense segment recently, further strengthening its growth visibility.

Another interesting aspect is its Swiss subsidiary, which could emerge as a wildcard. Located in Schaffhausen, Switzerland, a renowned precision engineering and industrial manufacturing hub bordering Germany, it provides PTB with proximity to several leading European OEMs and strategic access to key export markets.

The aftermarket business continues to gain importance. Its contribution to overall gear revenues increased to 40% in FY26, compared to a historical average of just over 30%. Triveni's turnaround time for standard aftermarket solutions is typically 2-3 months, versus an estimated 12 months for some global competitors. To further strengthen this advantage, the company has commissioned a dedicated aftermarket facility in Mysore aimed at improving execution speed and reducing delivery timelines for international customers.

Overall, PTB appears to be entering an interesting phase with multiple growth levers in place. It is certainly a business worth keeping on the watchlist once the standalone listing takes place.

3. Sudeep Pharma

Sudeep Pharma Limited is a diversified specialty chemicals and pharma excipients manufacturer operating three core businesses: Pharma, Food & Nutrition (66% of Q1FY27 revenue) producing phosphates and mineral-based absorbents (Absorbis Bisglycinates, a differentiated, high-margin specialty ingredient), Specialty Ingredients (31% of revenue) manufacturing premixes and encapsulation products, and NSS (acquired May 2025), a European subsidiary in food additives and industrial chemistry.

They generate ~56% of revenue from exports to 44 countries, with 32% from Fortune 500 customers. The business model relies on proprietary chemistry, regulatory approvals (USA, EU, etc.), and long-term customer contracts. Q1FY27 saw revenue of ₹158.3 Cr (up 27% YoY) with industry-leading EBITDA margins of 34.7% and PAT margins of 25.6%, demonstrating both scale and operational excellence in a capital-light, high-margin specialty chemicals franchise.

FY27 growth is anchored on three pillars: First, Absorbis Bisglycinates inflection, Q1 sales alone already surpassed the entire FY26 full-year sales, with two major North American approvals now scaling and visibility of this portfolio becoming a top 2-3 revenue contributor within 2-3 years. Second, Greenfield facility (Navsari) for pharma/food nutrition (5 customers approving, supplies starting Q3 FY27), which will unlock additional manufacturing capacity for the high-margin pharma/nutrition segment. Third, Specialty Ingredients normalization, Q1 was constrained by LPG supply shortage (causing sub-50% utilization), but production has normalized; core specialty (excluding NSS drag) maintained mid-30s margins and is expected to "bounce back" in Q2 with historical 30%+ growth trajectory resuming. Additionally, NSS European market is stabilizing with new leadership, 5 new customer approvals in infant nutrition/dairy signed, and 12-customer project pipeline building, positioning for margin recovery as energy costs moderate.

FY28 and beyond pivot toward two transformational growth engines. First, Sudeep Advanced Materials (SAM), the battery-grade iron phosphate project is on track for Phase 1 commissioning by March 2027 (25,000 KTPA capacity) at ₹300 Cr cost, with 44 active customers, 28 product approvals, two strategic MoUs signed with South Korean cathode manufacturers, and 7 customers in pre-commercial/commercial validation. Management expects to conclude two binding off-take agreements this year (FY27), which will trigger Phase 2/3 scaling to 100 KTPA; they're also evaluating expansion from 100 to 200 KTPA to meet long-term customer demand by calendar 2030-31.

Second, NSS margin recovery, target is for NSS to deliver similar margins as core specialty (~35%+) by FY28 as European market normalizes and integration benefits materialize. Combined with Greenfield contributions and continued Absorbis growth, the company is positioned to sustain 20%+ topline CAGR while protecting 34-37% EBITDA margins, with SAM becoming a meaningful growth engine once binding off-takes are signed and Phase 1 ramps post-March 2027.

4. Neetu Yoshi

Neetu Yoshi is primarily an engineering and manufacturing company dedicated to the Indian Railways and private railway ecosystems. They manufacture critical safety-grade components (Class A components), assemblies, and sub-assemblies across Wagon & Coach Components (Bogies, couplers, yoke supports, and sub-assemblies for wagons, locomotives, and passenger coaches) and manufacture Turnouts and sub-assemblies used in track infrastructure.

FY26 Performance – Century Mark Achieved:
The company achieved ₹101 crores total income (44% YoY growth) with PAT of ₹25 crores (53% YoY growth), delivering a 25% PAT margin. This exceptional profitability stems from a permanent Section 115BAB tax concession, the company's effective tax rate is 17.5% versus competitor peers at ~25%, creating a sustainable 7-8% tax advantage with no sunset clause.

New Manufacturing Facility - Operational Status:
The company's new bogie manufacturing facility in Hairdwar, Uttarakhand, funded with ₹50 crores of IPO proceeds, would have commenced commercial production on September 13, 2026. This facility is expected to substantially enhance manufacturing capabilities, improve operational efficiencies, strengthen execution capacity, and support increasing demand for the company's products in the railway and engineering sectors.

RDSO Approvals – Latest Milestone:
As of September 17, 2026, the company received RDSO approval for Friction Wedge (Item ID 3100430), a critical safety component for the new-generation high-speed "Raftar" bogie design. This is a high-value addition to the company's product portfolio and is expected to significantly strengthen qualifications for participation in upcoming procurement opportunities. Combined with prior approvals, the company has 25+ certified products with a pipeline of 15-20 additional products awaiting RDSO/railway zone approval.

FY27 Guidance & Revenue Visibility:
Management has provided FY27 revenue guidance of ₹210-220 crores, expecting to sustain 25% PAT margins. Revenue generation is skewed toward H2 FY27 as new production lines progressively ramp up. Peak capacity potential across both plants (old ₹110 Cr + new ₹200 Cr + track products) stands at approximately ₹340-350 crores, expected to be achieved in FY28.

Order Book & Demand Visibility:
Order book stands at ₹140-150 crores with various open orders. The company is positioned for the 1-lakh wagon tender, which will drive indirect demand for bogie assemblies and component sub-assemblies. The wagon industry is expected to return to normal growth trajectory as the mega tender activates.

Capital Expenditure & Working Capital:
No heavy capex is budgeted for FY27; focus is purely on harvesting FY26 investments. The new facility capex is complete, positioning the company to drive operational leverage from H2 FY27 onwards.

Risk Factor:
Biggest anti-thesis: B2G companies may face headwinds in FY27 due to fiscal deficit constraints, which could lead to slower government spending and delays in project awards and execution.

5. Shivalik Rasayan

Shivalik Rasayan is an integrated chemical manufacturer transitioning from legacy agrochemical producer into a research-driven CDMO (Contract Development & Manufacturing) platform, with US FDA-approved facilities for complex oncology and non-oncology.

What Went Wrong: Shivalik delivered decent revenue growth but suffered PAT collapse (especially in Standalone numbers). The culprit is a combination of deliberate transformation costs.

First, R&D spend jumped to ₹94.9 Cr as management attempts to convert the R&D center from a cost center to profit center, this is strategically sound but margin-dilutive near-term.

Second, both new manufacturing plants (Dahej-II FDA-approved API facility and Dahej-III 2,500 MTPA agrochemical facility) came online with ramp-up inefficiencies and underutilization.

Third, the core agrochemical business faces structural headwinds: heavy China intermediate reliance, global oversupply, and freight/energy volatility compressing margins on commoditized technicals. Profitability moderated despite scale, which is why Street focus now shifts to when margin recovery begins.

Current Situation: The company is operationally transitioning well, first commercial NCE-1 product delivered in April 2026, proving CDMO capabilities beyond R&D promises.

Two additional API programs (F2F + NCE-1) are active with a US pharma customer, and interest from Japan/South Korea is expanding the addressable market. Consolidated revenue jumped 18% (₹36.8 Cr), benefiting from strong associate (Medicamen Biotech) performance.

The critical inflection is Dahej-III: management explicitly targets ₹200 Cr revenue potential over the next two years from this new agrochemical facility, which is achievable given new technical launches (Trifloxystrobin, Kresoxim Methyl) and structured export demand. So while profitability contracted, the underlying operational setup is primed for a significant margin and volume inflection starting FY27.

4 Growth Triggers:

1) Dahej-III monetization (₹200 Cr/2 years): New 2,500 MTPA technical-grade agrochemical plant ramps to full utilization with premium-priced new molecules, driving gross margins of 35-40% vs. current commodity pressure.

2) CDMO/NCE-1 inflection: As existing projects transition from development to manufacturing, contract gross margins of 40-50% will structurally elevate overall profitability; current pipeline of 3-4 active programs suggests 2-3 could hit commercial supply by FY28.

3) R&D profit-center transformation: Company achieved breakeven on R&D last year and targets profitability this year; incremental ₹20-30 Cr CDMO revenue contribution = 25-40% upside to current PAT.

4) Complex API facility utilization: US FDA-approved facility specifically built for regulated-market APIs (including oncology at 30-40% gross margins) is now receiving validation from US customer programs and geographies like Japan/South Korea; as these scale into manufacturing, both topline and margin profile shift dramatically.

Key watch: Any potential contarct wins for Palbociclib molecule, Standalone EBITDA margin recovery to 19-20%+ and active CDMO pipeline depth (# of projects in manufacturing phase).

That's all for this edition. Have a great Sunday!

Disclaimer: None or buy or sell recommendations. This publicly available information is shared for learning and education purposes.

[Sekhar @LearningEleven]

@mastshanky No tracking it, sorry.

[Sekhar @LearningEleven]

@Janvi_Mhamunkar Maybe international transactions are disabled.

[Sekhar @LearningEleven]

@Janvi_Mhamunkar Sorry for your trouble, payment options and access management is managed by X directly. I have no control.

[Sekhar @LearningEleven]

Sep 20, 2026
https://t.co/aHus1uromF

[Sekhar @LearningEleven]

Timepass talk on Sunday

1. Rentomojo

South Korea - In 2025, LG Electronics’ annual appliance subscription revenue grew 29% to ₹17,300 crore, on top of a staggering 75% growth in 2024 over 2023.

High urban density, particularly the prevalence of apartments, combined with younger generations moving more frequently, makes flexibility and built-in maintenance increasingly attractive compared with outright ownership.

India - Rentomojo is India’s largest organised furniture and appliance rental platform, offering a digital-first, full-stack rental solution across furniture, appliances, fitness equipment and household products through flexible subscription plans.

The company has evolved from a pure furniture-rental business into an integrated, multi-channel model spanning subscriptions, e-commerce and re-commerce. As of FY26, Rentomojo had 2,53,825 live subscribers and 8,51,184 live items across 29 cities, supported by 20 warehouses and 82 experience stores, generating ₹387 crore in revenue.

The real value creation sits in the asset lifecycle. Rentomojo procures products, delivers them to customers on subscription, manages maintenance and refurbishment, and then redeploys the assets across multiple rental cycles to maximise utilisation.

Appliances have quickly become the company’s biggest revenue driver, contributing around 40% of sales. The company also benefited from appliances accounting for 42%-47% of subscription revenue in FY25, while its market share was estimated at around 50%-55% of live subscribers as of March 2025. Profitability has also accelerated sharply, with FY26 PAT growing at a 118.4% CAGR over FY24-FY26, as the company scaled while maintaining healthy asset occupancy of above 82%.

Globally, this business model has already gained traction across multiple markets, with South Korea being the latest notable example.

According to one estimate, India’s appliance rental and subscription market was worth around ₹8,300 crore in 2023 and could nearly triple to ₹29,000 crore by 2028, implying a ~28% annual growth rate. The growth is being driven by urbanisation, a younger workforce seeking flexibility, and the appeal of avoiding large upfront capital expenditure.

So, while the growth opportunity in India’s cities and towns looks undeniably strong, operational challenges could keep Rentomojo on its knees.

Customers can be less careful with rented assets, leading to scratched beds, wobbly tables and damaged sofas. The problem becomes even more important in appliances, where reliability is non-negotiable. Any deterioration in asset condition or service quality could quickly lead to customer dissatisfaction and churn.

Rentomojo’s success, therefore, will depend not just on acquiring subscribers, but on maintaining operational discipline across logistics, installation, maintenance, refurbishment and customer experience. And as the company expands into Tier 2 cities, the economics of logistics, asset utilisation and servicing could become materially different.

The opportunity is clearly large. But in this business, execution is everything.

2. Triveni Power Transmission Limited

Triveni Engineering’s Power Transmission Business (PTB), focused on high-speed gears, industrial gearboxes, and defense propulsion systems, is arguably one of the hidden gems within Triveni Engineering & Industries.

The business is expected to be listed in the next couple of weeks. The NCLT has already approved the demerger, with July 22 being the record date.

With EBITDA margins of around 35%, a strong and diversified customer base, a sticky business model supported by a growing aftermarket segment, and a dedicated multi-modal defense manufacturing facility, PTB appears well-positioned for the next phase of growth. Capacity expansion is currently underway, with the potential to take revenues from FY26 levels of ₹340 crore to a peak capacity of around ₹700 crore over time.

The company has also secured a significant breakthrough order in the defense segment recently, further strengthening its growth visibility.

Another interesting aspect is its Swiss subsidiary, which could emerge as a wildcard. Located in Schaffhausen, Switzerland, a renowned precision engineering and industrial manufacturing hub bordering Germany, it provides PTB with proximity to several leading European OEMs and strategic access to key export markets.

The aftermarket business continues to gain importance. Its contribution to overall gear revenues increased to 40% in FY26, compared to a historical average of just over 30%. Triveni's turnaround time for standard aftermarket solutions is typically 2-3 months, versus an estimated 12 months for some global competitors. To further strengthen this advantage, the company has commissioned a dedicated aftermarket facility in Mysore aimed at improving execution speed and reducing delivery timelines for international customers.

Overall, PTB appears to be entering an interesting phase with multiple growth levers in place. It is certainly a business worth keeping on the watchlist once the standalone listing takes place.

3. Sudeep Pharma

Sudeep Pharma Limited is a diversified specialty chemicals and pharma excipients manufacturer operating three core businesses: Pharma, Food & Nutrition (66% of Q1FY27 revenue) producing phosphates and mineral-based absorbents (Absorbis Bisglycinates, a differentiated, high-margin specialty ingredient), Specialty Ingredients (31% of revenue) manufacturing premixes and encapsulation products, and NSS (acquired May 2025), a European subsidiary in food additives and industrial chemistry.

They generate ~56% of revenue from exports to 44 countries, with 32% from Fortune 500 customers. The business model relies on proprietary chemistry, regulatory approvals (USA, EU, etc.), and long-term customer contracts. Q1FY27 saw revenue of ₹158.3 Cr (up 27% YoY) with industry-leading EBITDA margins of 34.7% and PAT margins of 25.6%, demonstrating both scale and operational excellence in a capital-light, high-margin specialty chemicals franchise.

FY27 growth is anchored on three pillars: First, Absorbis Bisglycinates inflection, Q1 sales alone already surpassed the entire FY26 full-year sales, with two major North American approvals now scaling and visibility of this portfolio becoming a top 2-3 revenue contributor within 2-3 years. Second, Greenfield facility (Navsari) for pharma/food nutrition (5 customers approving, supplies starting Q3 FY27), which will unlock additional manufacturing capacity for the high-margin pharma/nutrition segment. Third, Specialty Ingredients normalization, Q1 was constrained by LPG supply shortage (causing sub-50% utilization), but production has normalized; core specialty (excluding NSS drag) maintained mid-30s margins and is expected to "bounce back" in Q2 with historical 30%+ growth trajectory resuming. Additionally, NSS European market is stabilizing with new leadership, 5 new customer approvals in infant nutrition/dairy signed, and 12-customer project pipeline building, positioning for margin recovery as energy costs moderate.

FY28 and beyond pivot toward two transformational growth engines. First, Sudeep Advanced Materials (SAM), the battery-grade iron phosphate project is on track for Phase 1 commissioning by March 2027 (25,000 KTPA capacity) at ₹300 Cr cost, with 44 active customers, 28 product approvals, two strategic MoUs signed with South Korean cathode manufacturers, and 7 customers in pre-commercial/commercial validation. Management expects to conclude two binding off-take agreements this year (FY27), which will trigger Phase 2/3 scaling to 100 KTPA; they're also evaluating expansion from 100 to 200 KTPA to meet long-term customer demand by calendar 2030-31.

Second, NSS margin recovery, target is for NSS to deliver similar margins as core specialty (~35%+) by FY28 as European market normalizes and integration benefits materialize. Combined with Greenfield contributions and continued Absorbis growth, the company is positioned to sustain 20%+ topline CAGR while protecting 34-37% EBITDA margins, with SAM becoming a meaningful growth engine once binding off-takes are signed and Phase 1 ramps post-March 2027.

4. Neetu Yoshi

Neetu Yoshi is primarily an engineering and manufacturing company dedicated to the Indian Railways and private railway ecosystems. They manufacture critical safety-grade components (Class A components), assemblies, and sub-assemblies across Wagon & Coach Components (Bogies, couplers, yoke supports, and sub-assemblies for wagons, locomotives, and passenger coaches) and manufacture Turnouts and sub-assemblies used in track infrastructure.

FY26 Performance – Century Mark Achieved:
The company achieved ₹101 crores total income (44% YoY growth) with PAT of ₹25 crores (53% YoY growth), delivering a 25% PAT margin. This exceptional profitability stems from a permanent Section 115BAB tax concession, the company's effective tax rate is 17.5% versus competitor peers at ~25%, creating a sustainable 7-8% tax advantage with no sunset clause.

New Manufacturing Facility - Operational Status:
The company's new bogie manufacturing facility in Hairdwar, Uttarakhand, funded with ₹50 crores of IPO proceeds, would have commenced commercial production on September 13, 2026. This facility is expected to substantially enhance manufacturing capabilities, improve operational efficiencies, strengthen execution capacity, and support increasing demand for the company's products in the railway and engineering sectors.

RDSO Approvals – Latest Milestone:
As of September 17, 2026, the company received RDSO approval for Friction Wedge (Item ID 3100430), a critical safety component for the new-generation high-speed "Raftar" bogie design. This is a high-value addition to the company's product portfolio and is expected to significantly strengthen qualifications for participation in upcoming procurement opportunities. Combined with prior approvals, the company has 25+ certified products with a pipeline of 15-20 additional products awaiting RDSO/railway zone approval.

FY27 Guidance & Revenue Visibility:
Management has provided FY27 revenue guidance of ₹210-220 crores, expecting to sustain 25% PAT margins. Revenue generation is skewed toward H2 FY27 as new production lines progressively ramp up. Peak capacity potential across both plants (old ₹110 Cr + new ₹200 Cr + track products) stands at approximately ₹340-350 crores, expected to be achieved in FY28.

Order Book & Demand Visibility:
Order book stands at ₹140-150 crores with various open orders. The company is positioned for the 1-lakh wagon tender, which will drive indirect demand for bogie assemblies and component sub-assemblies. The wagon industry is expected to return to normal growth trajectory as the mega tender activates.

Capital Expenditure & Working Capital:
No heavy capex is budgeted for FY27; focus is purely on harvesting FY26 investments. The new facility capex is complete, positioning the company to drive operational leverage from H2 FY27 onwards.

Risk Factor:
Biggest anti-thesis: B2G companies may face headwinds in FY27 due to fiscal deficit constraints, which could lead to slower government spending and delays in project awards and execution.

5. Shivalik Rasayan

Shivalik Rasayan is an integrated chemical manufacturer transitioning from legacy agrochemical producer into a research-driven CDMO (Contract Development & Manufacturing) platform, with US FDA-approved facilities for complex oncology and non-oncology.

What Went Wrong: Shivalik delivered decent revenue growth but suffered PAT collapse (especially in Standalone numbers). The culprit is a combination of deliberate transformation costs.

First, R&D spend jumped to ₹94.9 Cr as management attempts to convert the R&D center from a cost center to profit center, this is strategically sound but margin-dilutive near-term.

Second, both new manufacturing plants (Dahej-II FDA-approved API facility and Dahej-III 2,500 MTPA agrochemical facility) came online with ramp-up inefficiencies and underutilization.

Third, the core agrochemical business faces structural headwinds: heavy China intermediate reliance, global oversupply, and freight/energy volatility compressing margins on commoditized technicals. Profitability moderated despite scale, which is why Street focus now shifts to when margin recovery begins.

Current Situation: The company is operationally transitioning well, first commercial NCE-1 product delivered in April 2026, proving CDMO capabilities beyond R&D promises.

Two additional API programs (F2F + NCE-1) are active with a US pharma customer, and interest from Japan/South Korea is expanding the addressable market. Consolidated revenue jumped 18% (₹36.8 Cr), benefiting from strong associate (Medicamen Biotech) performance.

The critical inflection is Dahej-III: management explicitly targets ₹200 Cr revenue potential over the next two years from this new agrochemical facility, which is achievable given new technical launches (Trifloxystrobin, Kresoxim Methyl) and structured export demand. So while profitability contracted, the underlying operational setup is primed for a significant margin and volume inflection starting FY27.

4 Growth Triggers:

1) Dahej-III monetization (₹200 Cr/2 years): New 2,500 MTPA technical-grade agrochemical plant ramps to full utilization with premium-priced new molecules, driving gross margins of 35-40% vs. current commodity pressure.

2) CDMO/NCE-1 inflection: As existing projects transition from development to manufacturing, contract gross margins of 40-50% will structurally elevate overall profitability; current pipeline of 3-4 active programs suggests 2-3 could hit commercial supply by FY28.

3) R&D profit-center transformation: Company achieved breakeven on R&D last year and targets profitability this year; incremental ₹20-30 Cr CDMO revenue contribution = 25-40% upside to current PAT.

4) Complex API facility utilization: US FDA-approved facility specifically built for regulated-market APIs (including oncology at 30-40% gross margins) is now receiving validation from US customer programs and geographies like Japan/South Korea; as these scale into manufacturing, both topline and margin profile shift dramatically.

Key watch: Any potential contarct wins for Palbociclib molecule, Standalone EBITDA margin recovery to 19-20%+ and active CDMO pipeline depth (# of projects in manufacturing phase).

That's all for this edition. Have a great Sunday!

Disclaimer: None or buy or sell recommendations. This publicly available information is shared for learning and education purposes.

[Sekhar @LearningEleven]

Jan 25, 2026

https://t.co/AfP8NJ0qcd

[Sekhar @LearningEleven]

Timepass talk on Sunday

1. Time to Be a Small-Cap SIP Investor

Small-cap investors are completely squeezed. SMEs are facing a liquidity choke, and metals have suddenly grown Red Bull wings. Yet the age-old truth remains unchanged: small caps create disproportionate wealth when bought at reasonable valuations and held patiently until the tide turns.

That patience, however, demands a strong stomach, one that allows us to see a sea of red in the portfolio. If that isn’t your temperament, the safer route is simple: opt for small-cap funds. Any decently managed small-cap fund tends to deliver 70%+ returns within a year once the cycle turns.

Even ICICI Prudential Small Cap Fund, which had shut the doors to fresh inflows for nearly two years, is now saying, “Mutual Funds Sahi Hai."

So, if you’ve stayed invested through the pain, don’t quit now. Just ensure your stocks are falling because of market conditions, not because earnings visibility has collapsed.

The antithesis is equally important: Holding companies with no earnings visibility is dangerous, such names can permanently destroy capital, even take it to zero.

Conviction matters. So does discrimination.

2. Multi-baggers and the ₹100–1,000 Cr PAT Transition

Amit Jeswani (@Amit_Jeswani1) famously mentioned at an @ias_summit a few years ago that most multi-baggers are created during the journey from ₹100 Cr to ₹1,000 Cr in PAT.

A textbook example of this phenomenon today is MCX.

MCX reported a PAT of ₹149 Cr in FY23, which dropped to ₹83 Cr in FY24, largely due to the technology contract issues that played villain during that phase. Post those setbacks, the turnaround has been phenomenal: PAT jumped to ₹560 Cr in FY25, and for 9M FY26 itself, MCX has already delivered ₹801 Cr. The company is now well on track to cross ₹1,000 Cr PAT for the full year.

Unsurprisingly, the stock has delivered ~10x returns over the last three years.

Another powerful example is Laurus Labs. Laurus already delivered disproportionate returns once during the 2019–2022 cycle, when PAT surged from ₹94 Cr to ₹984 Cr. That was followed by a downcycle, but the next upcycle clearly started from FY24 onwards.

PAT in FY24 stood at ₹162 Cr, while the last four quarters have reported ₹233 Cr, ₹162 Cr, ₹194 Cr, and ₹252 Cr respectively. The stock has already turned into a multi-bagger again during this phase, and arguably, the journey is still far from over.

The real exercise, therefore, is simple but not easy: Identify companies currently in the ₹100–300 Cr PAT range and assess which among them have the management quality, scalability, balance sheet strength, and sectoral tailwinds to compound into a four-digit PAT business.

The hard truth is that nearly 80% of such companies may never get there, which is why this game is never easy. But the formula remains valid, and repeatedly proven.

3. MTF and the Recent Sell-off: A Reality Check

MTF has been the talk of the town lately, and some stocks may indeed have felt the pressure during the recent sell-offs. That said, when you actually run the numbers, the issue appears far less systemic than it has been portrayed.

Yes, the impact will vary from stock to stock, and a few names could see temporary stress. However, at the aggregate market level, the risk seems contained.

Consider this:

Out of 2,134 stocks with MTF exposure, ~83% can be fully unwound within ≤5 trading days based on average traded volumes.

The total MTF outstanding for these 83% names stands at approximately ₹91,000 Cr. The combined market capitalisation of these companies is around ₹382 lakh Cr. Put differently, MTF exposure is a small fraction of overall market value.

4. Hospitals Are Getting “Admitted” Too

In this sell-off, even hospitals, typically considered safe havens during brutal markets, haven’t been spared. Several leading names have seen meaningful corrections from recent highs:

Max Healthcare Institute: ~24%, Narayana Hrudayalaya: ~23%, Artemis Medicare Services: ~22%, HCG: ~21%, Apollo Hospitals: ~16%

Hospitals, of course, go through their own earnings cycles, largely driven by capacity additions and ramp-ups. That said, structurally, the sector remains a strong portfolio candidate for stable and consistent compounding, given predictable demand and improving operating leverage over time. Medical tourism from Bangladesh would have obviously slowed, but this should be more of a short-term blip.

At this stage, it may be worth evaluating how close these names are to their long-term median EV/EBITDA valuations. Any meaningful deviation below historical averages could start throwing up selective entry opportunities.

5. Menon Bearings

Menon Bearings delivered one of the strongest quarters in its history. Exports rose to an all-time high of ~36% of revenues, notably without any adverse impact from US tariffs. In its recent concall, management noted:

“…we have already started additional business with one of the major customers from the US… we hardly see any impact from the tariffs imposed by the USA. On the contrary, our exports are poised to grow further going ahead...”

For a company of this size, this is an interesting and positive development, especially in a challenging global environment.

That said, management also acknowledged that elevated copper prices are a margin headwind. While the company claims a pass-through mechanism, the timing and completeness of quarterly/monthly pass-throughs remain an open variable and need close monitoring.

From a cautionary standpoint, it’s worth recalling that in 2023 the company had articulated an ambition to double revenues by FY26. At the current run rate, the company appears far from that target, and it no longer seems to be a stated objective in the latest investor deck.

Nevertheless, a company executing well amid headwinds deserves a closer look.

6. Zydus Lifesciences - Zycubo (US$50 mn Peak Sales Opportunity)

Zycubo, a brand under Sentynl Therapeutics (a subsidiary of Zydus Lifesciences), has recently received approval from the U.S. Food and Drug Administration for the treatment of Menkes disease.

Menkes disease is an ultra-rare, life-threatening genetic disorder, diagnosed in newborns, with an estimated ~56 new cases annually in the US. If left untreated, median survival is less than 18 months.

Zycubo is the first and only FDA-approved therapy for this condition and has demonstrated meaningful survival benefits. In pivotal studies, when treatment was initiated early, within 10 days of birth, median survival extended to ~177 months, representing a step-change in clinical outcomes.

From a commercial standpoint, @SystematixGrp estimates price realisation at ~US$600,000 per patient per year. While affordability raises legitimate ethical and policy questions, Zycubo offers real hope to families with access through insurance or alternative funding.

7. Mackenna's Gold

Krishnadevaraya was the greatest ruler of the Vijayanagara Empire, presiding over an era of exceptional prosperity where gold, trade, and culture thrived at a civilisational peak. Legend has it that during his reign, gold and diamonds were so abundant that they were traded like grain.

That legacy seems to have quietly endured. Even today, Indian households are estimated to collectively hold ~34,600 tonnes of gold, one of the largest private gold stockpiles in the world. At $4,700 per ounce, this hoard is worth approximately $5.2 trillion.

For perspective, India’s GDP is about $3.7–4.0 trillion, while the total equity market capitalisation stands near $5.0–5.2 trillion.

Some civilisational habits don’t fade, they compound. The Jewellery companies and gold lenders are certainly trying to take advantage of it!

8. Defence Goes Global

On Jan 18, 2026, Rajnath Singh flagged off the first export consignment of guided Pinaka rockets from Solar Defence and Aerospace’s Nagpur facility. This marks the first export of the guided variant, following completion of unguided Pinaka deliveries by late 2024.

Armenia had earlier signed a ₹2,000 crore (US$250 mn) contract in 2022 for four Pinaka batteries, making it the first overseas customer for the Defence Research and Development Organisation (DRDO)-developed system. Pinaka offers precision strike capability up to 75 km (trialed up to 120 km).

This milestone reflects India’s defence export journey, from <₹1,000 crore a decade ago to ~₹24,000 crore today.

Globally, defence spending hit US$2.7 trillion in 2024, with 100+ countries increasing spends. With global tensions unlikely to ease soon, defence remains a structural, multi-year theme.

India, the world’s 5th-largest military spender with the 2nd-largest standing army, is uniquely positioned to benefit from this trend, both domestically and via exports.

From a market lens, the Motilal Oswal Nifty India Defence ETF (MODFENCE) is ~20% off recent highs and near a key support zone. Direction from here is uncertain, but with the Budget approaching, the theme is worth tracking closely.

9. Chemicals: Bottoming Out?

I came across a chart from Nuvama Research suggesting that both RoE and RoCE are likely at the bottom of the cycle after a sharp correction from FY22 peaks.

RoE declined from ~20.5% in FY22 to ~8.1% in FY25 and RoCE fell from ~23.2% to ~11.6% over the same period.

This compression reflects the severity of the chemical downcycle, weak demand, inventory destocking, and elevated costs.

At current levels (RoE ~8%, RoCE ~12%), return ratios are near the lower end of historical ranges. More importantly, the trend now points to stabilisation with marginal improvement, rather than further deterioration (of we course, we can never say never).

While a return to peak profitability will take time, the data suggests that most of the downside to returns has already played out, shifting the narrative toward gradual recovery and operating leverage.

Within this space, a few names I am actively tracking include:

📌Aether Industries – transitioning from a heavy capex phase to monetisation.

📌Acutaas – moving into a faster-growth CDMO phase.

📌Balaji Amines – positioning FY27 as a recovery year.

Each has a distinct playbook, and these are not a BUY or SELL recommendations.

10. DIIs & Retail Running Out of Gas?

Aggregate cash holdings of equity mutual funds have declined from ~7% in April 2025 to ~5.5% by December 2025, the lowest level since H1 2024.

Large-cap funds: ~6% → ~3.9%

Small-cap funds: ~9% → <6%

In simple terms, most funds are already fully invested. That limits incremental buying power from DIIs unless fresh inflows come in. Adding to the pressure, FPIs have already sold ~₹33,000 crore YTD.

With mutual fund cash buffers thin, market upside now depends more on new money and earnings, while corrections may feel sharper in the absence of dry powder.

The open question though: Can the Budget pull a rabbit out of the hat, via tweaks to LTCG, STCG, or STT, to revive FII participation? Or is that asking too much?

That’s all for today’s version. Happy Sunday!

[Sekhar @LearningEleven]

Sep 13, 2026
https://t.co/ZoljaEX8yb

[Sekhar @LearningEleven]

Timepass talk on Sunday

1. Molbio Diagnostics

Molbio Diagnostics is an Indian diagnostics company that developed Truenat, a proprietary, battery-operated, portable molecular testing platform for infectious diseases that can function at remote healthcare settings. The company makes money through a two-component model: selling hardware devices (Uno, Duo, and Quattro versions) as one-time sales, and generating recurring revenue from consumables (test kits/reagents) that are exclusively compatible with their devices. They've scaled to ~12,500 machines across 90+ countries with over 40 million tests conducted to date. Recently, they've expanded beyond Truenat through acquisitions of Prognosys (digital X-rays, 70% stake) and OptraScan (digital pathology, 60% stake). In Q1 FY27, they delivered ₹408 crores in consolidated revenue with 75% now coming from recurring test kit sales, validating their business model. Molbio qualifies under the Medical Devices PLI framework for its indigenous diagnostic technology.

Key Growth Drivers
Growth will be driven by four pillars:

1) Geographic expansion for Truenat into Europe (with EU IVDR certification for CT/NG test) and USA (via OptraScan's recent FDA approval)

2) Disease portfolio expansion from 30 current tests to 52 total assays, particularly HPV which received government approval in India

3) Acquisition strategy through Prognosys and OptraScan

4) R&D-led development of new point-of-care platforms for non-communicable diseases, which management believes represents a market 10x larger than molecular diagnostics. The company spends 5-6% of revenues on R&D with 153 scientists and 207 patents.

FY27 Outlook
Management is guiding for ~25% top-line growth and 24-25% EBITDA margins for the full year. Q1 FY27 delivered ₹104 crores EBITDA (25% margin) and ₹52.7 crores PAT. While Prognosys should maintain ~19% EBITDA margins similar to last year, OptraScan will remain unprofitable in FY27 but is expected to contribute meaningfully from FY28 onwards. Export revenue, which just started scaling three years ago and contributed ₹67 crores (16%) in Q1, is expected to become a major growth driver. The TB tendering cycle (their largest current business) has a newly signed two-year rate contract, providing revenue visibility.

Of course, valuations aren't cheap!

2. Big Tech Enters Pharma

The Transformation and Key Players
In 2026, a fundamental shift has occurred as frontier AI companies, Anthropic, OpenAI, Google DeepMind, NVIDIA, Microsoft, and Meta, have moved beyond passive technology partnerships to become strategic participants embedded across the entire drug development value chain. Rather than simply providing cloud infrastructure or generic AI tools, these companies are now acquiring wet labs, developing custom biological foundation models, and establishing internal drug pipelines. Google/DeepMind focuses on structural biology through Isomorphic Labs and AlphaFold 3, NVIDIA provides the computational infrastructure backbone via BioNeMo and generative chemistry platforms, Microsoft emphasizes ambient clinical intelligence and multimodal pathology, Meta contributes open-source protein modeling tools (ESM-2, ESMFold), and OpenAI powers enterprise health workflows and clinical trial optimization.

Anthropic's Distinctive "Lab-in-the-Loop" Strategy
Anthropic has emerged with the most aggressive approach, acquiring Coefficient Bio for ~$400 million, hiring Nobel laureate John Jumper from DeepMind, and launching Claude Science, a specialized research platform that natively renders 3D protein structures and manages secure compute clusters for sensitive biological datasets. Within 100 days in 2026, Anthropic moved beyond being an infrastructure provider to establishing an end-to-end drug discovery execution model. The company secured enterprise-wide deployments with major pharmaceutical firms including Bristol Myers Squibb, Novo Nordisk, AstraZeneca, and Sanofi. Claude for Healthcare & Life Sciences includes HIPAA-ready integrations and automates administrative bottlenecks from prior authorization appeals to regulatory filing reviews, positioning Anthropic as both a technology enabler and direct biotech operator.

Why This Shift Matters
Tech companies are racing into healthcare because of three convergent forces: unprecedented data scale from genomic sequencing and digital pathology that fuels massive foundation models, regulatory acceleration with clear FDA sandboxes for AI-native software and biopharma, and massive ROI potential from reducing drug discovery timelines from years to months. Unlike previous waves of tech-pharma collaboration that remained peripheral, today's integration is structural, companies are not simply selling tools but fundamentally reshaping how drugs are discovered, validated, and brought to market, making biotechnology one of AI's most high-stakes and lucrative application domains.

One segment that's going to enjoy this pace and scale - CDMO

3. Anup Engineering

This is the notes from June 28th, 2026, below, I have added current state

Incorporated in 1962, Anup is engaged in design and fabrication of process equipment which mainly includes heat exchangers, pressure vessels, centrifuges, columns/ towers and small reactors that find application in refineries, petrochemicals, chemicals, pharmaceuticals, fertilizers and other allied industries.

This is a well-known story, and many of you may have owned this stock in your portfolio a few years ago.

Over the last couple of years, however, the company has put in significant effort to diversify into newer product lines and business verticals. More importantly, those initiatives are now beginning to show encouraging results.

If they can scale these verticals well, Anup could be an interesting player in the years to come!

Technical Services: Has executed ~10 POs worth ₹4.5 Cr at a high ~40% EBITDA margin; it targets ₹200 Cr in 3 years, though its small current base limits FY27 expected contributions to <₹20-25 Cr.

Nuclear (Kaiga-5/6, NPCIL): The first order is currently under execution (margin undisclosed), representing a strategic entry point into the SMR and conventional nuclear sector.

Thermal Power (NTPC EPC): The company has bagged its first order (margin undisclosed), which is part of a larger 14 GW Indian thermal power pipeline highlighted by management.

Clean Energy Storage (European tech co.): Secured both initial and repeat orders with undisclosed margins; management highlighted this vertical's strong potential for generating recurring revenue.

Skid Packages (ADNOC, Middle East): Currently building its track record with a first order worth ₹30 Cr on a 12-month cycle; management expects to secure 4–5 more orders per year once delivered.

Air-Cooled Heat Exchangers: Secured its first export and air heater orders this week; it is a volume-driven, short-cycle business with a ~15% EBITDA, making it margin-dilutive compared to legacy levels (~21%+).

What's the latest

Anup Engineering posted poor Q1FY27 (weakest quarter in three years) and stock naturally tanked.

Management clarified that the low revenue in Q1 was due to delayed order intake last year and supply chain challenges, pushing revenue recognition to later quarters.

Management projects a consolidated revenue growth of 5-10% and an EBITDA margin of approximately 15%. These numbers didn't inspire the market and added to more fall in the stock price.

Management noted that revenue and profitability will be skewed towards the second half of the year due to project execution timelines.

Even though Q1 was a disappointment, they still secured new orders worth ₹538 crores from April to date, marking the best-ever start to a financial year.

A bit more fall, this could become an interesting bet fir value players.

Good thing here is, management was quite honest and transparent. Analysts questioned the conservative 5-10% growth. Management clarified they would rather under-promise and over-deliver given global macro uncertainty.

4. Aegis Logistics

Aegis Logistics is India's leading energy and chemicals logistics infrastructure company, operating across the full value chain from sourcing, logistics, storage, to distribution. The company has three main segments: LPG (largest), Liquids storage at ports, and Gas Distribution. Their vertically integrated model, presence across all links from sourcing to final distribution, is their core competitive advantage, enabling supply reliability, operational flexibility, and stronger customer value propositions.

In Q1 FY27, they delivered record results: revenue of ₹2,357 crores (37% YoY), normalized EBITDA of ₹727 crores (184% YoY), and PAT of ₹545 crores (212% YoY). The LPG segment EBITDA was ₹591 crores (296% YoY), while the Liquids segment posted ₹136 crores EBITDA (28% increase). Distribution margins reached ₹7,000 per metric ton, representing a structural improvement from the historical ₹4,000 baseline. Of course, some of these numbers could be one-off beneficiaries of the damage caused by the Iran war.

Key Growth Drivers
Growth is being driven by four pillars:

1) Distribution volume scaling, distribution achieved record 280 kt with 91% YoY growth, with management targeting 2 million tons (from 750k last year, targeting 1 MT this year, 1.5 MT next year), representing closer to 50% growth potential

2) Port infrastructure expansion across seven major terminals, major capex programs at JNPA (₹1,675 crores), Pipavav (ammonia terminal commissioned, VLGC jetty and rail gantry in progress), Kandla, Kochi, Mangalore, and a ₹20,000 crore MOU at Vadhavan Port

3) Pipeline connectivity enablers, Jamnagar-Loni complete, Kandla-Gorakhpur expected H1 FY27, which will drive throughput enhancement and evacuation efficiencies

4) New product diversification, ammonia terminal at Pipavav now operational with 15-year Hindustan Zinc agreement and 10% ITOCHU partnership (targeting 25% in 3 years), creating a new high-margin distribution platform beyond storage revenues.

FY27-28 Outlook
Management is guiding for 25% baseline volume CAGR growth in logistics with upside potential from infrastructure enablers driving step-up growth beyond 25%, particularly in distribution targeting 50% growth.

Distribution margins are expected to sustain at ₹7,000-plus through procurement efficiency gains as volumes scale, freight costs will decline with larger vessel usage and better rates as distribution reaches 2 million tons.

The company is targeting cumulative capex of approximately $1.2 billion in FY27 with a $5 billion pipeline through 2030-31, maintaining disciplined funding through equity, internal accruals, and debt targeting 0.6x gearing.

EPS CAGR of 25%-plus is expected to continue despite a larger base, supported by strong cash generation.

Multiple port capacity expansions are expected to come online through FY27-28, and with ammonia distribution ramping immediately, the company projects a transformational year for Pipavav with significantly improved operational efficiency positioning Aegis as the leading logistics player across energy transition opportunities.

5. Shivalik Bimetal Controls

The challenge & OLA's earlier struggles
India's 2W EV market exploded in 2022-23 but lacked domestic infrastructure for battery pack assembly. The critical weak link was electrical bus bars, precision connectors that carry current between battery cells. OLA and competitors either imported complete packs (slow, expensive, foreign-designed) or assembled locally using suboptimal soldered/brazed connections prone to resistance buildup and thermal failures. Early fire incidents in 2023-24 (likely caused by poor electrical connections generating localized heat and thermal runaway) destroyed consumer trust, cratering 2W EV demand. OLA's rapid scaling backfired because they lacked access to a domestic, specialized supplier of precision battery connection components, forcing them to choose between expensive imports or risky low-quality assemblies. The root cause wasn't intentional negligence but ecosystem immaturity.

What SBCL is offering
SBCL is filling this gap by localizing EB (Electron Beam) welded bus bars, the global gold-standard for precision electrical connections that minimize resistance, heat generation, and failure risk.

Rather than selling commodity components, SBCL is offering integrated cell-connecting systems (CCS) and bus bar assemblies that OEMs can directly plug into battery packs.

SBCL is the first domestic supplier capable of producing these at volume and scale, creating instant value for OEMs. Incremental cost is immaterial (₹100-300 per pack in a ₹25,000-40,000 battery), OEMs will prioritize safety certification and supply security.

Management explicitly framed this: "Safety was the biggest concern... when an EB-welded component adds this dimension of safety, cost doesn't drastically go up." Once an OEM qualifies SBCL's design, switching becomes costly and risky, creating durable competitive moats.

Growth Prospects (3-5 Year Horizon)
SBCL has multi-year revenue visibility from customer order pipelines. The Pune facility's Phase 1 targets ₹30-50 crores in FY27 (year 1) from a single OEM; Phase 2 capacity additions will enable 2-3 additional OEM programs, scaling to ₹150-200 crores in FY28 (year 2) and ₹300+ crores by FY29 (year 3).

All of these estimates may change significantly if SBCL is able to onboard large OEMs!

Management has 2-3 new OEM designs in qualification pipeline expected to commercialize by late FY27, and the long-term 4W EV opportunity could be 3-5x larger. Capex required is modest (₹20-25 crores incremental), and customer concentration has improved from 35-40% to projected <20%, providing earnings stability.

That's all for this edition. Have a great Sunday!

Disclaimer: None or buy or sell recommendations. This publicly available information is shared for learning and education purposes.

[Sekhar @LearningEleven]

So many intellectuals asking why to celebrate just the testing of chips.

I would celebrate every milestone irrespective of which party is in power.

Are we running late, yes we are. At least, we started our journey. All political parties including Congress and BJP have their role in this delayed process.

We need to stop politicising every thing and celebrate milestones.

[Sekhar @LearningEleven]

@HKumar69657 Good company

[Sekhar @LearningEleven]

Laurus Labs- Latest presentation is an absolute stunner!

Top notch integrated pharma platform in making - Sky is the limit!