Upstox Originals
9 min read | Updated on December 22, 2024, 09:43 IST
SUMMARY
Want to participate in some of the hottest trends of 2024? From AI and gamification to companies turning science fiction into reality, there's a lot to explore! India boasts the highest number of listed companies in the world and among them are some emerging businesses that might just be shaping the next big thing. While this isn't investment advice, we've uncovered 5 listed companies with fascinating business models worth checking out.
Exploring listed companies with emerging businesses
Investors are always looking to invest in the next big thing or an investment that excites them. The problems generally are:
These businesses are private companies and so are not open to the entire investing community
With more than 5,000 listed companies, finding out the interesting businesses can be challenging
But what if we said that you can:
Participate in the hottest new trend of 2024 - AI
Make money by investing in companies that develop video games
Invest in companies that make your science fiction dreams come true!
In this article, we look at 5 innovative businesses that are listed on the Indian markets.
A key part of successful investing is understanding the business model of your potential investment. What makes the business click and where are the potential pitfalls? With that in mind, we hope this list is of some help to you.
You must have wondered how ChatGPT quickly responds to every query like an expert. Well, Nvidia’s chips are the brainchild of your favourite AI technologies.
Now if any company in India wants to build such capabilities using Nvidia’s GPUs - E2E Networks is the go-to place. Even infrastructure giant L&T has invested ₹1,407.0 cr for a ~21% stake in this company.
The company provides scalable, accessible, and affordable AI/ML cloud platforms. These are essential for developers, data scientists, startups, and government bodies. Interestingly, E2E became the first company to bring Nvidia’s H200 GPU chips to India. This helped them in providing various AI and data centre-related services providing a potential moat for the company.
Particulars | FY22 | FY23 | FY24 |
---|---|---|---|
Revenue (₹ cr) | 52.0 | 66.0 | 94.0 |
EBITDA margin (%) | 44.0% | 50.0% | 51.0% |
ROE (%) | 16.8 | 20.1 | 30.9% |
Debt to equity (x) | 0.0 | 0.0 | 1.5 |
Free cash flow (₹ cr) | 7.0 | 15.0 | -101.0 |
Particulars | # |
---|---|
Market cap (₹ cr) | 6,887.0 |
PE Ratio | 219.0x |
YTD stock performance | 555.3% |
YTD NSE 500 performance | 20.5% |
Emerging technology companies need to continuously innovate and maintain their pace of product launches to compete efficiently. This could entail consistent capex, which could weigh on cash flows.
We all love video games. What if you could not only play these games but also invest in a company that is making some of your favourite games? That’s what Nazara Technologies does.
Nazara is a gaming conglomerate and is responsible for games like Classic Rummy and PokerBaazi. It has scaled its business with an acquisition strategy (acquired multiple high-growth companies) and nurtured its talent and technology to develop fascinating games.
Particulars | FY22 | FY23 | FY24 |
---|---|---|---|
Revenue (₹ cr) | 622.0 | 1,091.0 | 1,138.0 |
EBITDA margin (%) | 9.0% | 9.0% | 7.0% |
ROE (%) | -3.8% | -2.6% | -6.1% |
Debt to equity (x) | 0.0 | 0.0 | 0.0 |
Free cash flow (₹ cr) | -267.0 | -81.0 | -521 |
Particulars | # |
---|---|
Market cap (₹ cr) | 8,054.0 |
PE Ratio | 96.9x |
YTD stock performance | 16.2% |
YTD NSE 500 performance | 20.5% |
Besides the need to consistently innovate, a key risk with Nazara is M&A risk. If acquired companies don’t scale up to expectations, it could hurt performance and disappoint the investors. Importantly the company has also been raising funds for these acquisitions which presents a risk of equity dilution.
Whether it's exploring new places or heading to older ones, your ride has been incomplete without your guide i.e. Google Maps. Now here is the Indian company that does something very similar. Its business segments can broadly be broken down into:
Data as a Service (DaaS): Providing location data as services.
Platform as a Service (PaaS): Providing mapping platform as services
Software as a Service (SaaS): Providing mapping and location software as services to further leverage this data into other areas.
The Geospatial Policy of 2021 allows only Indian companies to collect, prepare, store and disseminate granular geospatial data (data about a geographic location) and maps within India. This gives them an edge over foreign competitors like Google. Fast forward to 2024, demand for Genesys’ growth is evident from its order book ₹541.6 crore, 2.72x of FY24’s revenue. Here are some key places where its services are critical:
GPS-based toll collection method
Digital India Land Records Modernisation Programme
Other digital initiatives in drones, automobiles, and mapping of infrastructure projects etc.
Particulars | FY22 | FY23 | FY24 |
---|---|---|---|
Revenue (₹ cr) | 120.0 | 181.0 | 198.0 |
EBITDA margin (%) | 23.0% | 32.0% | 41.0% |
ROE (%) | -43.0% | 8.7% | 8.2% |
Debt to equity (x) | 0.1 | 0.1 | 0.1 |
Free cash flow (₹ cr) | 8.0 | -223.0 | -61.0 |
Particulars | # |
---|---|
Market cap (₹ cr) | 3,698.0 |
PE Ratio | 78.8x |
YTD stock performance | 120.1% |
YTD NSE 500 performance | 20.5% |
Genesys International relies heavily on government regulations and customers for its business.
Remember those movies, where characters are frozen for years and then brought back to life after centuries? Yes, that’s cryogenics.
We are of course oversimplifying a very complicated subject, but the point is that this company is involved in the transportation and storage of liquid in cryogenic conditions.
They are one of the largest manufacturers of cryogenic equipment, designed for the storage, distribution, and transfer of cryogens across temperature ranges, from 2~200 degree Kelvin. With over three decades of experience, they have engineering expertise, which has helped them build a comprehensive product portfolio.
Currently, cryogenics is only about 7% of its overall revenue, but the company has huge plans. Per management guidance, they expect to achieve 25% revenue growth by FY25.
Particulars | FY22 | FY23 | FY24 |
---|---|---|---|
Revenue (₹ cr) | 783.0 | 966.0 | 1,131.0 |
EBITDA margin (%) | 21.0% | 21.0% | 22.0% |
ROE (%) | 24.0% | 26.7% | 27.5% |
Debt to equity (x) | 0.1 | 0.0 | 0.0 |
Free cash flow (₹ cr) | 25.0 | 164.0 | 97.0 |
Particulars | # |
---|---|
Market cap (₹ cr) | 10,407.0 |
PE Ratio | 53.4x |
YTD stock performance | 21.6% |
YTD NSE 500 performance | 20.5% |
One of the biggest risks for the company is ensuring a strong order book for its existing products. The company will not just have to tap domestic and international markets to ensure sustained growth.
Turnaround investing! It’s like sitting in the rocket before launch. Read more about them in The comeback stories. Regardless of the business, successful turnarounds have created wealth for shareholders. But it's not a cakewalk, these opportunities need to be carefully analysed just like a smart fund manager because of the high risk it involves.
Now here is the company that does that - Autumn Investment & Infrastructure.
It is getting into the business of investing in turnaround assets through asset reconstruction business. It also plans to build NBFC, AMC, and advisory for credit business. It eventually aims to build a full suite of financial services. The said business expansion will be funded through internal accrual and equity fundraising, although it is unlikely to take on debt.
Particulars | FY22 | FY23 | FY24 |
---|---|---|---|
Revenue (₹ cr) | 907.0 | 374.0 | 2412.0 |
EBITDA margin (%) | 94.0% | 88.0% | 123.0% |
ROE (%) | 21.4% | 8.0% | 28.4% |
Debt to equity (x) | 0.3 | 0.3 | 0.1 |
Free cash flow (₹ cr) | -308.0 | -26.0 | 531.0 |
Particulars | # |
---|---|
Market cap (₹ cr) | 30,081.0 |
PE Ratio | 7.5x |
YTD stock performance | 131.9% |
YTD NSE 500 performance | 20.5% |
The current business is dependent on equity investments which cater to more than 90% of the revenue..
Reiterating here, these are not investment recommendations. While these emerging businesses may seem exciting, profitability and cash flow metrics for these companies might give investors pause. Just like any other investment, one should rigorously analyse these opportunities before making a decisions. On a more encouraging note, emerging businesses also command attractive valuations given that they represent technologies or products which have a strong future outlook.
About The Author
Next Story