Saurav Sarawgi

Entrepreneur, Activist, Investor, Radiologist! Mastering the best of what other people have already figured out.

[Ed Zitron @edzitron]

The generative AI business model does not work. Anthropic and OpenAI encourage wasteful token spend with no way of measuring ROI, brazenly copy other companies' ideas, and their costs increase linearly with their revenues. They're antithetical to good software and good business.

[KEDIANOMICS @kedianomics]

We told you ignore the types of Dubai Paan Bhandarwale Ramu Kaka & their rant that #AI will destroy Indian IT companies.

Now #HCLTech grabs a single contract of 1.1 B USD p.a. for 5 years to implement IT.

Socho zara, Ramu AI karega ya existing established players karenge?

[Saurav Sarawgi @Sauravradio]

@AstroPrashanth9 @grok plz verify

[Deepak Shenoy @deepakshenoy]

Market buybacks are back, as SEBI notes in its meeting. As usual, I will write a Bill Ackman length post on this. You have been warned.

Buybacks are better ways to return cash to shareholders than dividends. Because in a dividend, future earnings are divided among the same number of shares, but a buyback means the company effectively reduces the number of outstanding shares (the bought back shares are cancelled), so in a buyback future earnings are spread across lesser shares.

There's a tax advantage too, now. Current taxation means long term taxes on shares you sell in the market are at 12.5% long term, 20% short term. Dividends are taxed as income so could be as much as 36%. (Promoters, if they participate in a buyback, pay 36%. For dividends, if they earn more than 2 cr. the dividend income taxation can be 39%. So it's beneficial for promoters too) And then, dividends have a TDS of 10% on payments > 5000 or so, so you get less cash.

Companies can buy back in two ways.
1) A tender issue where there's a window for everyone to tender shares, promoters too. Typically done at a premium to market price so that people will tender. This is bad - why would you prefer that your company pays more for its shares than the market is willing to allow? Inefficient, but the pro is that everyone gets a proportionate buyback so if you have 1% of the shares, you are going to get 1% of the buyback amount at least. You could get more if other people don't tender and you tender more.
2) Market buybacks means the company buys back its shares from the market itself, directly. Efficient because it uses the cash better.

Market buybacks were a pain in the previous taxation regime, where any buyback was taxed at the company level with a tax of 20% paid by the company on the buyback. But that meant only 83% of distributable cash was available to distribute. And also, because the company paid the buyback tax, shares bought from shareholders were tax-free for them.

How does this work in a market buyback? It's a pain.

You sell 100 shares. You have no idea who bought the shares. If 37 shares were bought by the company and the remaining 63 were bought by other participants in the market, only the exchange knows who bought and who sold how much.

So the exchange had to match them through a separate trading window opened for buybacks, operated by a merchant banker. The trading terminals of the exchange would display that an order was being bought by the company. The exchange would send an email to whoever sold shares to the company saying hello, you've sold X shares to the company.

Not only is this a pain, it's also gamed - since the company, brokers and the merchant bankers knew about this separate window and the purchaser identity (which isn't in most front ends of discount brokers, only in some terminals that are available to fewer people), it's also a mess that a few people could use that trading window and get lower tax treatment. A person could be almost all the volume in the regular market and still not get any shares sold to the company at the lower tax rate because they didn't use the window.

Now, it's all changed. No trading windows. No having to reveal company's identity as purchaser. SEBI fixed this.

Tax rules have changed, so market buybacks don't have the pain of having to inform people that the company matched your order. So SEBI has re-allowed market buybacks.

And then, since promoter taxation is worse, promoters being allowed to sell during a buyback would bring back the pain that exchanges would have to track every sale - therefore, SEBI says all promoter sales would be blocked during the buyback period.

Merchant bankers are no longer required for market buybacks. The company can have its own trading account and buy all their shares back. Saves fees. Saves the pain that merchant bankers know when shares are being sold or bought (reduces insider trading issues).

The buybacks now have to be done within 66 trading days, roughly three months. And 40% of it has to be done in the first half. This is there to reduce the mess of a big buyback announcement and then not actually buying. (and then going to sebi and saying oh no, couldn't buy)

A company can buyback shares only once in a six month period or so, and can't issue new shares for six months. That is in the companies act, so that will continue.

In essence, companies that have lots of cash can (and should) buy back through market buybacks now.

That's me off the soapbox for now. Put questions.

[Contrarian EPS @contrarianEPS]

More money have been lost in whipsaw of moving averages than below moving average

- Saint Livermore foresight wala

[Varun Malhotra @varuninvesting]

ServiceNow built a real time map of every server, every laptop, every permission inside 85% of the Fortune 500.

Every AI agent in the enterprise will have to consult this map before it can do anything.

and the stock is down 62%

21 things every $NOW investor should know.

Bookmark this

THE BUSINESS

1. ServiceNow runs the back office of every big company. IT tickets, HR onboarding, security alerts, legal workflows, finance approvals. ~$13B in annual revenue.

2. 85% of the Fortune 500 are customers. 630 of them pay 5M+ per year, growing 22%.

3. 200B market cap. S&P 100 constituent.

THE NUMBERS

4. Q1 2026 subscription revenue: $3.67B, growing 22%. Growth ACCELERATED from 19.5% the prior quarter. The "AI is killing SaaS" narrative is not showing up in the numbers.

5. 16 transactions over $5M in net new ACV in Q1. Up 80% YoY. The biggest customers are not cutting back. They are expanding aggressively.

6. Renewal rate 97% in Q1. Would have been 98% excluding one Federal agency closure. Customers who signed in 2011 are paying ~35x what they started at.

7. Remaining performance obligations: $27.7B, growing 25%. Backlog is roughly twice the annual revenue line.

THE MOAT NOBODY TALKS ABOUT

8. The product everyone fixates on is ticket management. That is not the moat. Companies are absolutely switching to Jira for tickets at a fifth of the price. That risk is real.

9. The actual moat has a boring name. CMDB. Configuration Management Database. A real time map of every server, every laptop, every application, every integration, every permission across an entire enterprise's IT infrastructure.

ServiceNow has built it for 85% of the Fortune 500.

You cannot take that map with you.

10. Pat Casey designed the platform in 2008 as a single instance. Every product (IT, HR, security, AI) runs on the same architecture.

11. AI agents can only automate what they can see. Before an agent resolves a ticket, onboards an employee, or responds to a security alert, it needs the map.

THE CEO

12. Bill McDermott. Started at 17 running a deli on Long Island. Eventually moving into EVP at Siebel Systems. Then CEO of SAP. Now ServiceNow.

13. The Siebel detail nobody mentions. Siebel was the ServiceNow of the 2000s. 45% market share. Massive switching costs. Salesforce came along, took the business, and Oracle bought up the scraps six years later.

McDermott watched the disruption playbook in real time. From the inside.

14. His annual pay is roughly 3x his entire stake in the business. Not a ton of skin in the game

THE $11.6B M&A SPREE

15. Three acquisitions in six months. Moveworks for $2.85B (AI agents). Veza for 1B (identity security). Armis for $7.75B (cybersecurity, the largest acquisition in company history).

16. Armis raised at $6.1B in November 2025. ServiceNow paid $7.75B in December 2025. They saw something the late stage VCs didn't or they paid a premium.

17. The pitch: become the "AI control tower" for the enterprise. Vendor agnostic orchestration of every AI agent that runs in a Fortune 500. Strategically right.

THE BUYBACK ILLUSION

18. Q1 free cash flow: $1.66B. Q1 share buybacks: $2.22B. Stock-based compensation: ~13% of revenue annually. The buyback is not a return of capital. It is a defense against dilution.

THE RISKS (HONEST)

19. ~150,000 tech workers laid off in 2026. ServiceNow sells per-seat to most of them. When Microsoft cuts 10,000 and Meta cuts 8,000, those are seats that disappear at renewal.

Jevons paradox (more workflows offsetting fewer humans) is real but takes years to show up. Mid-market seat compression is happening right now.

20. The market is treating ServiceNow's AI exposure as a risk. The opposite is more likely. Enterprise AI cannot scale without governance, permissions, audit trails, and a real-time map of every system. ServiceNow already does all four for human workflows.

THE BOTTOM LINE

21. This is a wonderful business at the high end of fair price. 97% renewal. Accelerating growth. The CMDB is the most underrated asset in enterprise software right now.

My full breakdown is on youtube (link in profile)

Bonus: Fred Luddy founded ServiceNow in 2003 at age 49...and his reasoning: "I couldn't start a company at 50."

[Aham | Bengal Hindu Archives @ahamasmiyodhhah]

🚨MUST WATCH VIDEO :

An excerpt from a Suman Chattopadhyay's YT video. If you don't understand Bengali, ask @grok to translate it to English, maybe it can help, or request some of your Bengali friends to do it.

Link : https://t.co/W3fTdGAXWN

One of the key points is why I expect @BJP4Bengal to have around 60 seats despite the best efforts & intentions of @AmitShah @narendramodi.

Don't rejoice based on merely the voter turnout yesterday. The main game happens during counting. Hope @ECISVEEP have measures in place to at least ensure 90% of vote-counting.

@viprabuddhi @AryamanBharat @sougat18
@crispeconomiX @surajitdasgupta @MeghUpdates @SudhanidhiB

[Sonia Shenoy @_soniashenoy]

“My current hypothesis is that AI improves productivity by a large amount for software developers but it does not take away the need for people to implement these things” says @RajeevThakkar of @PPFAS when asked about his decision to buy into beaten down tech names.

He says whenever something becomes cheap, demand simply explodes and that’s the reason he is bullish on tech names.

Thoughts ? 💭

[Saurav Sarawgi @Sauravradio]

@SanaSecurities Yea,, I agree ☝️

[Manish R. Jain @mrjain]

48 hours ago @claudeai released the Wealth Management plugin and of course I had to dig in and check it out. I've created a thread on how to use it and what are the inputs and outputs. I'm sharing all the PDFs involved.
[1/12]

[Saurav Sarawgi @Sauravradio]

@darshitpatel84 Indicates, that IT index has lot of intrinsic value and market wants to flush out weak hands 🙌

[Mohandas Pai @TVMohandasPai]

India need bold policy to become an AI power. Biggest issue is inadequate funding and eco system. We need a 50000cr AI/Deep tech Fund over next 3 years. An AI City in Bengaluru. Current AI funding inadequate. Need Help from PM ⁦@narendramodi⁩ ⁦@PiyushGoyal⁩ ⁦

[CNBC-TV18 @CNBCTV18News]

Leveraging the AI opportunity: When will India get its own Large Language Model (LLM)?

Is AI helping build revenue or threatening jobs? Shereen Bhan spoke with India's IT giants, including TCS' K Krithivasan, Wipro's Rishad Premji, Infosys' Salil Parekh & HCL Tech's C Vijaykumar at Davos' World Economic Forum

@ShereenBhan | @RishadPremji | @wipro | @mohitjoshi74 | @tech_mahindra | @k_krithivasan | @TCS | @hcltech | @Cognizant | @Infosys

#AI #India #Davos #WEF #HCLTech #Wipro #TechMahindra #TCS #CNBCTV18Digital

[Porinju Veliyath @porinju]

Investors need to cautious on vague and speculative assets like gold, silver, bitcoin etc which have no fundamental values but driven by sentiment and market frenzy.
Discl: never regretted for staying away.

[Rihard Jarc @RihardJarc]

The unconditional selling in software stems from the investors' lack of fundamental understanding of many of these software names.

For some, AI is an enhancer, not a disruptor.

[Itamar Golan 🤓 @ItakGol]

We might already live in the singularity.

Moltbook is a social network for AI agents.

A bot just created a bug-tracking community so other bots can report issues they find.

They are literally QA-ing their own social network.

I repeat: AI agents are discussing, in their own social network, how to make their social network better.

No one asked them to do this 🦞

This is a glimpse into our future.

[Rajat Sharma @SanaSecurities]

What people do not factor in their calculation when they buy the theory - 'You can't catch the bottom' is this - You don't have to catch the bottom.

If you hold Rs. 100 in bonds where it grows 8-9%, then Rs. 100 will turn into (~ 8.5%)

Rs. 108.5 in 1 year
Rs. 117.2 in 2 years
Rs. 127.72 in 3 years.

Assume that markets (or your portfolio grows at 14% per and there is a minor correction of just 15% at the end of year 2. Then the result will look like this-

Rs. 114 in 1 year
Rs. 129.6 in 2 years (post 15% correction 116.28)
Rs. 125.58

If this correction happens in year 1, you will end up with Rs. 125.9.
If this correction happens in year 3, you will end up with Rs. 110.

So.... bottomline, If you think there is a possibility of a 15% correction anytime over the next 3 years, you don't have to then time the market. Just wait for that correction. Unless you feel markets will not fall at least 15% sometime in the next 1095 days, and will keep groing over 14% each year.

[Saurav Sarawgi @Sauravradio]

@contrarianEPS I too am optimistic abt complaint whiskey consumer’s bright future and alpha they will be generating over non drunkard constantly ADHD public.

[Contrarian EPS @contrarianEPS]

only people who drink whiskey have learnt compounding, they'll stay long-term

non-whiskey drinkers can continue intraday

[Chidanand Tripathi @thetripathi58]

I don’t understand why more people don’t use Google Gemini for stock research.

Not for tips.
Not for predictions.

But for thinking clearly before risking money.

Here are 10 detailed prompts I actually use 👇