Intrinsic Compounding

The fastest-growing industries of Q2FY27 may not be the ones everyone is talking about. Hundreds of companies have reported their earnings. But somewhere inside those numbers are clues about which industries are accelerating, which businesses are slowing down, and where new opportunities may be emerging. This Saturday, join Ishmohit Arora as he decodes Q2FY27 results live. We'll explore: → Industries witnessing the strongest growth → How to distinguish sustainable growth from temporary spikes → Hidden insights from earnings and concalls → New-age businesses and their path to profitability → What managements are actually saying about AI Topic: Decode the Fastest Growing Industries in Q2FY27 Date & Time: 7th Nov, 7 p.m. Registration Link: learn.soic.in/learn/fast-che… Use a browser to enrol, mobile apps apply an additional 30% Recording will be available 48-72 hours after the live webinar. Limited to 1,000 live participants. Included in SOIC Membership and Market Signals. Support: [email protected]

Wishing you and your family a very Happy Dhanteras from the SOIC Team! 🙏 🪔 ✨

Zen tech to stop giving guidance after serveral Order delays over the last 12 Quarters. Ashok Atluri: "What has happened is that I have been prohibited by the board to make any predictions because my predictions — after my predictions, astrologers are looking good. So, you know, I stopped predicting now completely." @stockscansin

Decent numbers by Alcohol businesses in Q2 Premiumisation playing out

Health of the broader market is improving @stockscansin Stocks above 20DEMA at 60%+

Paid subscription based music revenues growing much faster than Ad- based . India biggest growth opportunity as per Spotify. - Saregama Q2FY27 Concall Data source : stockscans.in/concall-scans Disclaimer : Not a buy / sell recommendation

Space sector forms majority portion of order book for Inox India now One can watch detailed business analysis here - youtu.be/9EQhdoWEAK8?si=eacR… Disclaimer - Not a recommendation to buy/sell

Super strong earnings season Music streaming to CNC machines to Forging cos. Solid show all around @stockscansin

Results of Neuland and Anthem should tell you all you need to know about the lumpiness of CDMO business. Why is the CDMO business lumpy? A generic pharma company sells pills to millions of patients, so demand flows like a river. A CDMO rents out its reactors and chemists to someone else’s drug. It might have 40 clients, but a handful of molecules usually bring in most of the money. Your quarter is decided by their trial data, their inventory, and their last funding round. Now look at how the work actually flows. A molecule needs grams in Phase I, kilos in Phase III, and tonnes only if it gets approved. Roughly 9 out of 10 drugs that enter trials never make it, so the pipeline is always churning. Production happens in campaigns: a client books your plant for a few months, you ship one big batch, then there’s silence until the next order. Revenue is booked on dispatch, so one shipment slipping by two weeks can swing a whole quarter. And when big pharma decides to burn down inventory, as it did after COVID, orders dry up even though patients are still taking the drug. Then comes operating leverage. Reactors, clean rooms, PhD chemists, and quality systems cost the same whether the plant is full or half empty. A 15% dip in revenue can take a much bigger bite out of EBITDA. Divi’s and Laurus both rode COVID-era contracts to record numbers and then spent the next couple of years absorbing the drop. The business wasn’t broken. The base was artificially high. So never annualise a CDMO quarter. Look at trailing 12-month or 3-year numbers. Count the molecules in Phase III, because that’s tomorrow’s commercial revenue. Track client concentration, and listen to what management says about RFPs and inquiry flow. Lumpiness isn’t a red flag. It’s the entry fee for one of the stickiest businesses in pharma: once you’re validated on a commercial drug, replacing you means a regulatory filing and often years of work. Disclaimer: no recommendation to buy or sell. Get used to looking at 18-36month periods to judge the results of CDMO businesses.

Under the US One Big Beautiful Bill, battery cell makers can claim the 45X tax credit, worth roughly $35/kWh for cells. The catch: from 2027, staying eligible means cutting dependence on Foreign Entities of Concern (FEOC). Electrolyte is already being made in the US. But the electrolyte salts and additives that go into it are still mostly shipped from China, with one Japanese and one Korean supplier making up the rest. So when the compliance clock starts, US cell makers can’t just switch vendors overnight. The non-FEOC pool is thin: > 1 Japanese supplier > 1 Korean supplier, plus 1 more trying to come online next year > 2 Indian players currently getting qualified That’s 4–5 credible suppliers globally, for a market China dominates today. This is what supply chain re-alignment looks like on the ground and this is happening across a lot of other themes and industries and one of the bigger megatrends that can be there going forward. Disclaimer - not a recommendation to buy/sell

Bayer upgrades guidance for its Pharma business segment. Both Nubeq and Kerendia continue to fire. Hope this was a good example and will help you learn on how to track CDMO businesses in India :) Read the attached tweet carefully to understand more

Shortage of castings, forgings, bearings etc hitting Honeywell aerospace. -Honeywell Aerospace has a problem most companies would love to have: more demand than it can make parts for. Backlog grew 12% in a year to $19.3 billion, and the CFO said growth this year would have been above 8%, not 4% to 5%, if supply had kept pace. -The parts that are missing aren’t chips. They’re the old-fashioned metal parts: castings, forgings, complex machining and bearings. Of roughly 3,000 suppliers, about 70 are critical or constrained, mostly in exactly these categories. -A casting is molten metal poured into a mould. The hardest examples are turbine blades grown as a single crystal of superalloy so they can survive gas hotter than the metal’s own melting point. -A forging is solid metal pressed into shape, like the discs and shafts that spin at very high speed inside an engine. -Bearings are what let those shafts spin. You can’t scale any of this the way you scale an electronics line. You need specialised furnaces and presses, certified alloys, and workers who took years to learn the craft. That’s why management says the problem is mostly on the mechanical side, and avionics and navigation recovered faster because they face fewer raw material constraints. Why did it break? Three things happened at the same time. 1. First, Covid drove experienced people out of the industry, and some suppliers are still dealing with labor shortages after skilled aerospace workers left during the pandemic. 2. Second, aircraft demand came back hard. 3. Third, the industry had spent a decade optimising for margins. Honeywell itself outsourced core technologies and capabilities between 2010 and 2019, and its supply base became dependent on single-source suppliers with limited capex. Outsourcing kept costs down for ten years, and now it’s capping growth.

Trench is Qpower's largest competitor overlapping in coils/reactors and instrument transformers Hitachi + Siemens control ~70-75% of HVDC/FACTS and GE acquiring Trench can be a tailwind for companies like Qpower where thy are expecting the volumes with these 2 customers to go up significantly as GE uses Trench for its in house consumption. This can be a key factor to track for other power equipment suppliers supplying to the likes of Hitachi and Siemens. Disclaimer - Not a recommendation to buy/sell

What are the Power equipments used in a High Voltage Substation?

How compounding takes place in Businesses? A co where 2020's Topline will be their FY27's PAT. Navin Fluorine’s CDMO business is the one the market had written off. In Q4 FY24 it did just Rs 48 crore, down 76% after molecules got deferred. In Q2 FY27, it was the company’s fastest-growing vertical, with revenue up 78% YoY to Rs 239 crore. That’s roughly 5x in ten quarters. The story behind that jump starts fifteen years ago in a lab in England. In 2011, Navin bought 51% of UK-based Manchester Organics for £4.335 million. The company was founded in 1996 and specialised in lab-scale, multi-step synthesis. Navin got a call option on the remaining 49%, and the promoters got a put option, exercisable after four years. Navin took the rest in October 2015. The advantage is easiest to see if you think of CDMO as a funnel. A molecule is first made in grams for discovery, then in kilos for trials, then in tonnes if it gets approved. Manchester Organics works with innovators at that early discovery stage, and it brings deep expertise in fluorination and high-pressure chemistry. Owning it is like owning a cricket academy: you meet the players before anyone knows they’re stars. In the same year, Navin commissioned a cGMP pilot plant at Dewas, so the molecules it met early had somewhere to scale. Dewas was then built out one plant at a time. A multipurpose cGMP plant for CRAMS came in 2015, and the next cGMP addition started commercial production in January 2020. In 2023 the division got its own name, Navin Molecular. The real inflection came that year with a 3-year supply agreement with Fermion starting CY2025. To serve it, Navin committed Rs 288 crore to cGMP-4, a 200 KL plant built in two phases, which nearly doubles the site’s capacity to 420 m³. Phase 1 began commercial production on 31 December 2025. The Q2 FY27 concall filled in the next chapter. Phase 2 of cGMP-4 (about Rs 125 crore) goes live by the end of Q4 FY27, and both phases are dedicated entirely to Fermion. The $100 million FY27 target is within striking distance on order book visibility. Two pipeline molecules are moving. One has been approved in China and is on fast track for FDA approval. The other is a label expansion of darolutamide itself. While building Phase 2, Navin built warehousing up to Phase 6 and effluent treatment up to Phase 5, so it can move to cGMP-5 quickly. Management said it will trigger Phase 5 as soon as GMP utilisation reaches 70-80%. That means three legacy plants, cGMP-4 in two phases, cGMP-5 ready to go, and room for a sixth. On revenue, management puts the peak potential of cGMP-4’s two phases at close to 3x the capital invested, or about Rs 900-1,000 crore by FY28-29. Disclaimer: No recommendation to buy or sell. Data from @stockscansin

Apar on Data centre orders for Cables