Saurav

Orbit Research ✦ What. Why. How. When.

[Saurav @sauorbit]

@ajaykulk And that’s where the work starts - understanding what the market is expecting from here, what ASM actually delivers and where the gap comes.

What matters is knowing what to expect, when to expect it and which numbers will show whether the expectation is playing out or not.

[Saurav @sauorbit]

If you’re following #ASMTechnologies you must have seen the change in the business.

ASM is moving from mainly ER&D into DLM, where engineering, electronics, embedded, software, manufacturing come together and the interesting part is that this is now visible in the numbers.

DLM reached 73% of Q1 FY27 revenue, while revenue grew 62% and EBITDA grew 80%. EBITDA margin also reached 23.2%.

So is ASM now moving into a higher growth and higher margin business?

If DLM keeps growing, ASM could move deeper into the customer’s product lifecycle and potentially capture a larger share of the customer’s spending.

But there is another side, more DLM and manufacturing also means more capital, inventory and working capital have already increased while FCF is still negative.

So can ASM turn this higher growth into cash and good returns on the new capital?

The market has also noticed the change, the stock moved from around 2400 in March to 5370 now, with strong moves in April, June and July.

So how much of the improvement is already priced in at 107x earnings?

That makes the September 9 fundraise important. What will be the issue price, dilution, investors and use of the money?

Then Q2 and Q3 become the real test, does DLM stay above 70%, can margins stay around 20%+ and do inventory and cash flow start improving?

If those numbers continue to confirm the change, FY28–FY29 could show whether ASM can turn this expansion into sustained earnings and returns..

@sauorbit
#OrbitResearch
#Supergroup

https://t.co/iWJvs2Z2Lc

[Saurav @sauorbit]

@athena_ug Yes, it’s the 2nd most interesting among the small companies in this space, based on the evidence so far.

Its exposure is more towards SCADA, ADMS, distribution automation, FPI and T&D rather than pure cybersecurity.

[Saurav @sauorbit]

Yesterday I wrote about grid cybersecurity, before that I wrote about grid stability, grid stability chokepoints and grid demand patterns.

Now to confirm this grid bottleneck I picked 4 more companies - POWERGRID, Adani Green, PFC and IREDA , just to map them and see whether we are moving in the right direction.

#POWERGRID → what is required to connect and operate the changing power system

#AdaniGreen → what is actually being built

#IREDA → how renewable projects are being financed

#PFC → how the broader power-sector CAPEX is being financed

Now if you look closely, you will see that almost the same companies are coming up again.

You might be thinking what is new here?

These are the same companies but this is where you have to understand what we are actually doing.

We are not looking for multiple companies.

We are trying to identify the right opportunity, understand why these companies are relevant, what exactly we are looking for and over what time period.

And the more you study one area for example, grid stability - the clearer this becomes.

Because ultimately the question is:

As India’s power system changes, what becomes newly necessary, what becomes difficult to supply, who is best positioned to capture that requirement, when does it reach earnings and how much of that future is already priced in?

@sauorbit

#OrbitResearch

https://t.co/4vNZ00F3eX

[Saurav @sauorbit]

@sama @sama what a vision, you said this in 2016 and now look at us in 2026.

People are actually having love affairs with AI now 😂

Forget 2036, I’m already wondering what’s going to happen by 2028 😈

[Saurav @sauorbit]

On 31 July, the Central Electricity Authority (CEA) of India officially published the Cyber Security Regulations in Power Sector.

So previously I have mentioned about Grid Stability and now add Cyber Security here.

Now if you connect these both then you will have three opportunities:

1) Grid Stability, which I told you before
2) Cyber Security Regulation
3) You have to find the bridge - the company who is involved in both

But before finding the company first we have to understand what this regulation actually means.

What exactly does the regulation force the power ecosystem to change?

What will they now have to do differently? What will they have to buy? And where will this spending go?

And this is not only happening in India.

Look at the Russia-Ukraine war, the power grid itself became a target and cyber attacks were also used to get into the systems controlling the grid.

So now the problem is not only about protecting the physical power infrastructure.

You also have to protect the systems which are controlling and communicating with that infrastructure.

And a few days ago, Trump also took action around the US bulk-power system because of cybersecurity, sabotage and supply-chain risks.

And if you look at what comes under that, you will find transformers, reactors, capacitors, inverters, BESS, protection systems, instrument transformers, circuit breakers and industrial control systems.

Now look at this together.

The same power ecosystem is now being looked at from both sides.

Grid Stability on one side.

Cyber Security on the other.

And somewhere in between, there will be companies who can benefit from both.

That is the bridge we have to find.

So first look at the structural demand, then understand what exactly the regulation is forcing the power ecosystem to change.

Then find where this spending will go, then find the companies.

And after that look at the market, where exactly has the market already priced this in? and where has the market not picked it up yet?

Because this time, you will see the same companies that you read about in the Grid Stability post.

But you will look at them in a different way and that is how we can find the connection.

@sauorbit

https://t.co/8z55YnIGPH

[Saurav @sauorbit]

@babu746512 @stockscansin Thanks to you for reading

[Saurav @sauorbit]

Few days ago @stockscansin published a report on the Fastest-Growing Businesses in Q1 FY27.

Today they also published another report covering businesses from that list that are near their 52-week highs, along with their guidance, outlook and commitments.

More than 60 businesses are covered, now when you see 60+ companies together, what do you normally do?

You start going company by company, looking at who is growing, who is adding capacity, who has new orders and who has given better guidance.

Instead of treating every company as a separate story, I wanted to see whether these individual commitments were actually connected to something bigger.

Because an order by itself tells us one thing, capacity by itself tells us another.

But what happens when the two start appearing together?

Orders lead to capacity, capacity leads to utilisation, and utilisation starts showing up in revenue and margins.

That is where the story starts changing, so I broke the 60+ companies into a chain:

What is changing → How the changes connect → How real they are → When they happen → How they reach earnings → What can break → What the market expects → Where the gap is

The question was not which companies have strong guidance.

It was which companies have different pieces of change coming together and creating a path toward higher earnings.

And this is where the market becomes important.

Even if the business is changing, the stock may not be interesting if the market already expects the same outcome.

Because what matters is not only what happens, but also what is already priced in.

So we need to look at what is expected, what is already priced in and what may still be missing or underestimated.

From here, the focus becomes much narrower:

Gap + Evidence + Catalyst + Timing + Risk

The gap tells us what may be underestimated.

The evidence tells us whether the change is actually developing.

The catalyst tells us what can make it visible, while timing tells us when it can start showing up in the numbers.

That is where the 60+ companies start becoming much more interesting.

Read this report, identify the connections, find where the gap is and see which companies are moving toward an earnings inflection.

Supergroup members, tomorrow morning I will publish the full report, including the ranking based on this report where these pieces come together.

As I have to find and connect how the checkpoints are connected.

@sauorbit

#Orbit_Research

https://t.co/MBqRp0UO1t

[Saurav @sauorbit]

Hi Satyadeep, yes, Bajaj Healthcare is also interesting. I am still studying this space but the peptide and oncology plans make it worth tracking.

Cenobamate already has 8 marketing partners lined up while the peptide facility has a stated potential of around ₹200–300 Cr revenue at full utilisation.

They also have 6 CEP approvals and DMFs filed in the UK/Europe, although management said customer approvals can take another 1–1.5 years, so this looks more like a later opportunity.

Q1 FY27 is already showing some improvement, revenue +11.3% and PAT +14.1%, while debt has come down to 249 Cr but ROCE is still around 11.5%, so the new businesses need to start contributing meaningfully.

For me the main thing to watch is whether API → specialty products → CNS → peptides actually changes the earnings trajectory.

For Q4 FY27 / Q1 FY28, I would mainly track Cenobamate commercialisation, peptide commissioning and the first signs of utilisation.

[Saurav @sauorbit]

Okay many of you requested to analyze the CDMO space, so here it is, yesterday @soicfinance uploaded a video about CDMO Massive Capex Boom, @ishmohit1 and Sid explained it really well, so go watch the video about better understanding.

Now here I picked those companies:

#Neuland Laboratories
→ Peptide manufacturing + CMS/CDMO capacity + commercialisation

#Laurus Labs
→ CDMO expansion + peptide capability + capacity ramp-up

#Divi’s Laboratories
→ Complex chemistry + peptide capability + pharma programmes

#Shilpa Medicare
→ Peptide/biologics capability + higher-value manufacturing

#OneSource Specialty Pharma
→ Specialty CDMO + biologics manufacturing + capacity expansion

#Gland Pharma
→ Complex injectables + CDMO + peptide opportunity

#SaiLife Sciences
→ Integrated CRDMO + peptide research + customer programmes

#Navin Fluorine
→ Specialised chemistry + CDMO + new capacity

#Aether Industries
→ Complex chemistry + CDMO + capacity expansion

#Anthem Biosciences
→ Integrated CRDMO + advanced molecule development

I’m not following these CDMO space closely as I’m more towards grid, battery, data center, defence and semiconductor.

But while looking at this space, one thing becomes interesting.

Demand is increasing → companies are adding capacity → new capabilities are being built → the next question is who can actually convert this into commercial business and earnings?

And that is where I think the interesting part starts, because having a CDMO opportunity is one thing.

Having the capability → getting qualified → getting the customer → commercialising → ramping volumes → seeing it in earnings is a completely different thing.

So if you really like this CDMO space, you can read the PDF report I have created based on:

→ Across all companies, where is growth/capex/capability actually increasing?

→ Across those companies, what is causing that change?

→ Which companies actually have the capability and exposure to capture it?

→ What are those companies building, and what future business does it support?

→ Which of those developments can actually move toward commercialisation?

→ When does it reach earnings, and how much can it change them?

→ How much of this is already known by the market, and where is the gap?

The market appears to expect _

We think _ could happen instead.

The difference comes from _

The evidence is _

The key thing that would prove us wrong is _

That forces the expectation gap to become specific.

So don’t just think who has the biggest CDMO opportunity?

Also think who has the strongest combination of evidence, monetisation path, earnings inflection, timing, expectation gap and acceptable risk.

@Sauorbit #OrbitResearch

https://t.co/L2v6LpMTMB

[Saurav @sauorbit]

@neeraj10071988 @soicfinance @ishmohit1 Hi Neeraj.

I’ve posted the 5 companies we shortlisted for further study in the Research tab, have a look when you get time and let me know if there’s any specific information you want me to dig into further.

[Saurav @sauorbit]

Hi, sorry for the late reply. First of all, my domain knowledge is much lesser than in other sectors. I’m still studying this to find out which companies could have good potential over the next few years.

But I’m curious what is driving the weights and entry levels here - is it based mainly on valuation, the expected business/earnings inflection or the stock’s potential rerating?

Also, what timeline are you working with - the next 12 months, 2 years, or longer? Would be interesting to understand what specific business or market checkpoints you are expecting.

[Saurav @sauorbit]

#AzadEngineering at 2,850 - Is 132x PE Justified?

Azad is moving from qualification and customer development into capacity utilisation, higher value aerospace work and eventually production at scale.

Now, if we look at the new capacity, it should start contributing meaningfully from H2 FY27, making Q3/Q4 FY27 the first major earnings checkpoint.

So, at 2850, what is the market already pricing? Strong aerospace growth, high margins, new capacity, MHI, Rolls-Royce and the GTRE opportunity.

But then, what is still left to prove? Whether capacity utilisation can rise faster, revenue can accelerate and operating leverage can kick in.

This is where the valuation becomes important., the question is not whether Azad will grow, its whether these things can happen faster than what the 132x PE already expects.

If we look ahead, Q2 FY27 should show the early ramp-up, Q3/Q4 FY27 should show whether revenue is accelerating and FY28 should tell us whether the new capacity is really scaling.

So, if this happens faster than expected, the valuation can work but if growth only meets expectations, 132x leaves very little room for error.

@sauorbit
#Orbit_Research

https://t.co/Ds3K3AEAGw

[Saurav @sauorbit]

Vikas, first understand Azad has already crossed the qualification stage and is now moving into the capacity use and production stage of the defence and aerospace cycle.

The recent news around new capacity, MHI, Rolls-Royce and GTRE is important because now we have to see when these things start becoming real business and real money.

Now the question is how fast that growth can come into sales, profit and EPS.

The first big check should be around Q3/Q4 FY27, when the new capacity should start adding to sales. FY28 will tell us whether this growth is also improving ROCE and cash flow.

Then we have to watch MHI and Rolls-Royce moving from qualification to actual production and GTRE moving from testing to certification and then production.

But at 2850, the stock is already at 132x P/E, 66.6x EV/EBITDA and 12x P/B. Current EPS is only 21.5, so the market is already paying for a much bigger Azad in the future.

What can still surprise the market is if capacity fills faster, EPS grows faster, ROCE improves, cash flow turns positive, or MHI, Rolls-Royce and GTRE start giving meaningful business earlier than expected.

FII holding has fallen from 16.16% to 13.30%, DII from 11.71% to 10.32% in the latest quarter, while promoter holding is stable and public holding has gone from 17.69% to 20.53%.

So I would not say institutions are leaving Azad but I would keep an eye on this because they are not adding like they were during the earlier rerating.

If earnings come much better than expected, 2850 can still work but if Azad only delivers what the market already expects, then the current valuation gives us very little room for mistakes.

So for me, the business looks good for the long term, but I would rather get a better price or wait for the next few quarters to prove the earnings growth before taking a bigger position.

https://t.co/8NwmBxzZip

[Saurav @sauorbit]

My friend, we can all copy and paste from AI, books, people or anywhere else we learn from, what matters is what we do with that learning.

If a tool helps us learn faster, improve our thought process, connect different things and make better decisions, then it becomes useful. If it doesn't improve any of those things then simply using AI doesn't create much value.

AI is just another tool today, much like Google became one for learning a few years ago. The tool is available to everyone, how we use it and what we do with it is what makes the difference.

And as for the 25 lakh, I’ll leave that to my work, decisions, direction, urgency and speed. Eventually, the outcome will tell us whether I was right or wrong.

Anyway, I’ll take your comment as a reminder to make my thinking clearer next time. Thanks for the advice, my friend. Happy to connect.

Btw, this is from AI too 😉

[Saurav @sauorbit]

This made me think about how familiarity can sometimes give us the feeling that we know someone better than we actually do.

When we have known someone for years and repeatedly talk about the same things, we become very familiar with their goals, opinions and interests. Over time, that familiarity can feel like knowing the person.

But knowing someone’s thoughts on a subject is very different from knowing the person behind those thoughts.

Perhaps that is the uncomfortable part of relationships. We may know someone for decades, respect the way they choose to live, and still realise that there was so much of their life we never really knew.

Sorry for your loss. I hope your friend rests in peace. Om Shanti.

[Saurav @sauorbit]

Yes definitely, there is no doubt that the semiconductor and electronics sector looks promising.

But we also have to keep in mind what India can supply and what India cannot and within that space, which layer we should focus on so that we can see the returns in the near term.

One more sector I would add is grid stability and cybersecurity.

If you see the recent CEA’s cybersecurity regulations, the CERC rules coming in April 2027 and now the US move on foreign made transformers and other grid equipment because of grid security concerns — this space is also becoming interesting.

So for me, it is not just about finding a good sector. We have to think cycle-wise and timeline-wise, see which layer benefits next and most importantly where the market has not discovered the opportunity yet.

[Saurav @sauorbit]

Yes and I think we can also look at VCP this way.

The interesting part is not simply that the falls are getting smaller.

It is that the market’s response to selling is changing, a 20% fall shows plenty of supply. If the next fall is 13% and then 5%, sellers are having less and less impact on price.

If this is also happening with lower volume, it can suggest that supply is getting thinner.

And when supply becomes thin, it takes much less new demand to move the price higher.

So perhaps VCP is less about the contraction itself and more about watching the balance between supply and demand change before the breakout.