First Principles Investing
@RahulRao_1992
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🚀 Investing Insights for the Intelligent Indian Investor 🇮🇳 | Writer @ The Indian express | CFA | Aerospace Engineer | Investor since 2014.
Joined June 2023
June Quarter (Q1FY26) has been great for the cement sector. 👉Margins have expanded across the board. 👉Thanks to Price hikes Question as always is: Will the momentum sustain? & which companies stand to gain the most? That and a lot more to be discussed in tomorrow's workshop
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Special Thanks to @AI_Feb21 for putting this together, along with @rastogi_manthan @Kaustubh11dec 🙏🏽
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In summary: Apollo Micro Systems is a high-growth, high-risk story. ✅ Strong order book visibility ✅ Key role in India's defence ecosystem ✅ Aggressive expansion plans ❌ Insane valuation ❌ Major working capital & cash flow issues ❌ High promoter pledge The success of
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The entire bull case for Apollo Micro Systems balances on a knife's edge. The story hinges on two things: 1️⃣ Execution: Can they translate the massive order book into actual revenue & profit? 2️⃣ Working Capital: Can they bring down their working capital days from 258 to
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The cash crunch. 🚩 High-tech defence projects take a long time, and AMS has a serious working capital problem. This is a feature for most defence companies, not a bug. 👉 A lot of cash is stuck in receivables. 👉 The company has even had negative operating cash flow in
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Is the insane 168x P/E valuation justified? 🤯 On the surface, it looks insane. But let's look at the growth story the market is betting on: 👉 Management forecasts 45-50% revenue growth for the next 2 years - meaning EBITDA growth is likely to be MUCH MORE ! 👉 Its
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AMS is on a mission to own the entire food chain. Two key moves: 1️⃣ Acquisition: Bought IDL Explosives for ₹107 cr. This helps them control more of the supply chain (vertical integration) and sell directly to the armed forces. 2️⃣ Tech Transfer MoU: Partnered with a US firm
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It's all about the order book baby📈 AMS management has given an aggressive guidance: 👉 Current Order Book (June '25): ₹735 cr. 👉 Expected Order Book (March '26): To TRIPLE from here! Plus, they bagged their FIRST-EVER export order of ₹113.8 cr. This is a HUGE deal.
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AMS, Kya karte ho bhai? Think of them as the "brains" behind the brawn. They don't build the missile, but they build its intelligence. 👉 Electronics, sensors, guidance systems. 👉 Crucial for missiles, drones, torpedoes & satellites. They are deeply integrated with DRDO,
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🚀 A small-cap defence stock skyrocketed 100% in just 90 days! Apollo Micro Systems (AMS) is the talk of the town, with its P/E ratio jumping from 78x to a whopping 168x. So, what magic beans is this company selling? Is this the private sector's answer to defence PSUs, or a
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@PuneetNandwani Analysts are human beings like you and me and only difference is they write, they haven't run a NBFC business People who know lending business see the changes before the world sees it.
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Worth reading analysis on Samaan, post IHC's deal my 2 cents: - many moving parts in short term: Profit booking, New investors/MFs (no more touch me not stock), Offer price by IHC etc. - it shall take ~2 years to unfold; improved credit rating/ lower cost of capital & rerating
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A comedy of errors ! Can you guess which company?
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🏆 THREAD FINALE: The Investor Takeaway This IHC deal is a massive lifeline, bringing long-term stability and tech access. The company's Intrinsic Value (BVPS) takes a 25%-30% hit (∼₹205), but the future is brighter with a strong new promoter. ⚡️ P.S. Follow for more case
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❔What this means : 1. Book value per share (BVPS) dilution of ~30% with the entry of a Large reputable Investor - Net impact is Good or Bad? Likely Good but over the medium to long term. 2. It also raises the question: Why did Sammaan sell at a significant discount to its
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🧑🤝🧑 DILUTION MATH: The Share Count Effect (Part 2/2) We then calculated the Total Fully Diluted Shares (old shares + all new shares/warrants) at ∼154 Crore shares (Vs 82.8 cr currently) Dividing the new value by the new share count gives us: New BVPS= ₹31,642 Cr / 154 Cr
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🛠️ HOW WE CALCULATED the BVPS DROP (Part 1/2) We took the latest reported Total Equity (Net Worth) of ∼₹22,792 Crore and added the full ₹8,850 Crore cash injection from IHC. NEW NET WORTH= ₹22,792 Cr+₹8,850 Cr= ₹31,642 Crore. This new, higher Net Worth is the value part
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