I have recently started studying this co and there a re a few things I could not wrap my head around –

1. How much did the Promoter dilute to PE in 2015 that his stake came down to 31% Pre IPO?? Seems a little off to me given that Vijaya for instance, diluted to Kedaara and yet promoters held 54% post listing
2. Co began in 2011, raised PE money in 2015 – which means within 4 years of beginning operations, they were technically qualified to bid for large B2G Contracts (these often come with a minimal technical qualification rule)
3. co was doing 40-50 crore of rev till 2017, what exactly happened between 2017 and 2019 that revenues tripled, co filed IPO Papers all in the same period ? (this should be the quickest that a startup has began operations and filed for IPO – 8 years)
4. ZERO management bandwidth when it comes to this space. Apart from the COO who is ex Metropolis, I dont see any top management guy who has any experience in the healthcare space. Infact, Yash Mutha has spent 15+ years working at CS backend + top 4 accounting firms. Wonder what experience does that lend to in managing such a complex, government oriented biz

@Worldlywiseinvestors What do you think about this, Ishmohit, since you track IIFL so closely?

Hardik- Thanks.
Over the years, I have realized that the market considers certain aspects while valuing a business. Such hidden insights are sensed by few who can think far ahead due to prior experiences. Hence, great businesses look overvalued on traditional units of measurements.

I was hoping to hear about insights that will disprove the overvaluation impression. As a customer, I like their business and am a regular customer.

evaluation and concerns mentioned are correct, but few points to be noted

1. They have cracked the deal with NVIDIA to manufacture the NVIDIA Grace CPU Superchip and GH200 Grace Hopper Superchip MGX server designs.
   What a Trilion doller company has seen in Netweb that cant see…??
2. NetWeb is the part of PLI scheme that govt has praposed manufacturing of IT hardware under the second phase of the production linked incentive scheme.

Let me perfectly clear. The current share price is nuts. total nuts. Current price is definitely not a right entry point. At almost 8.5-9x 2024 revenue it does not make sense

I am riding the gravy train as far as i can.

Coming to the business.

Theoretically next few years will have higher spends and bring down FCF. But hopefully 4-5 years down the line, overall corporate and brand overheads are spread across larger number of stores, higher revenues resulting in better bottomlines. But this is not guaranteed.

DA and store refurbishments are always high with every retailer bar none worldwide. Its like obsolete machinery or replacement capex for any manufacturer.

On Finance:
A large portion of suppressed Net Income is due to IndAS regulations on how lease is treated. Even the debt on books is just majorly lease liability with just 450 crores of financial debt.

Would love your outlook on where i am going wrong on the business aspects of the company.