One of the very important questions asked in the con call was that while other companies in this business are making losses how come KPI Green is so highly profitable. The management glossed over this question without offering any substantial justification.
Will definitely like to know more on this.

With reference to the con call and points raised here.

1. Exclusivity with Nvidia – in a market where demand-supply dominance keeps alternating, exclusivity isn’t necessary a good thing and flexibility to source from wherever available is the right strategy.
2. Capex – loosely put couple of hundred crores; they have not thought out this wanted to communicate the 30-40% growth as the key theme.
3. Infra utilization – they rent DC and invest in GPUs, Network, etc. They couldn’t give sense on utilization, but given they are looking for growth and investing in Capex utilization is likely to be high
4. Churn – They didn’t give a number and mentioned how churn may not be a simple metric to calculate. Next time, let’s push for a 1-year retention number as that will take care of anomalies of lumpy demand across quarter.
5. USP is a tough thing to articulate for anyone. They spoke of their cost / price advantage (which is key) and customization for the target segment which is mid-market.

This company is tiny at this point in time, but a good acquisition target at some point provided they keep scaling. Given their market penetration, growth should be possible over foreseeable future.

• Net Debt has reduced from 910 cr in FY23 to 698 cr in Q1 FY24.
• WC days have also reduced from 95 to 72.
• Order book status is currently 2678 cr. Defence order book out of which is 1054 crores.
• Defence revenue reached a new high at INR 155 crores, with a growth of 142% YoY. Defence revenue expected to exceed INR 700 crores annually.
• EBITDA margins increase was supported by defence sales.
• Expectation of higher prices in the second half of the year for raw materials. This might affect margins in H2FY24. Need to check.
• Plans to increase global manufacturing presence from 8 to 12 countries. Expansion plans in Indonesia and Australia to contribute to volume growth. Expectation of breakeven in South Africa and profitability in Australia in FY24.
• Future Outlook: Expected annualized volume growth expected to be 15-20%. Margins should be maintained around 20-22%. Improvement in housing and infrastructure demand is expected from Q3 onwards. Capex plans of INR 750 crores for the year, funded by cash generation from operations.