During last AGM, management said they want to slowly focus more on international market than domestic. B2G nature of domestic business has had its challenges.
Now with renewed focus on GIS mapping by government, I wonder how company strategises. IMO this coming from centre is advantageous, in comparison to state governments.
@phreakv6 Your views?
Ceinsys is promoted by Meghe group which has rich political history. Don’t think B2G will be an issue for them.
The company regularly participates in domestic tenders (see screenshot below) and should be able to capitalize on any opportunity that comes by.
Two-third of their business comes from B2G so sure it will not change overnight. I was merely pointing at management intent from the last AGM. The unbuilt revenue and release of funds have been a concern.
Given the renewed focus by the central govt, they perhaps may re-calibrate their domestic focus
1b2b8540-9825-4ac2-8b45-6354736adfe0.pdf (364.7 KB)
Many triggers for ceinsys tech
•Strong order book
•Budget allocation and government focus on geospatial industry
• recently share warrants at Rs.559.9 were issued for further expansion and for putting money into their allygrow business which is also doing well.
• water industry as an overall theme is doing very well and majority of the order book of ceinsys tech comprises of water industry.
•company is owned by meghe group and B2G risk is comparatively low as meghe group is involved in government and politics.
• this isn’t a major point but the company is also improving its investor relations by posting first ever investor presentation.
Disclosure: invested from lower levels.
Ceinsys Tech event at Lucknow
Rating Update for Ceinsys
Just sharing
The latest results are out. Check the below link
https://www.bseindia.com/xml-data/corpfiling/AttachLive/df2415d0-c3c0-4939-876a-7ea22a4973ad.pdf
I hope you find this useful.
First ever concall
Concall Notes
Company Overview:
Q1 FY2025 Financial Performance:
Order Book and Business Development:
Market Dynamics and Growth Potential:
Acquisition Strategy:
Margin Guidance:
Government Business:
Risks and Challenges:
Technological Advancements:
Overall Outlook:
I was reading the business and had some doubts and would love to get them clarified:-
I would appreciate if someone can shed some light into these questions and/or share some resources which I can use to further understand the business.
IMO among two verticals, GIS is what it is and the other one is everything else. If we try hard, we can imagine all kinds of synergies between GIS and stuff in “everything else”. In reality, it may not make a huge difference. Even if it does, one should not give any weight to it in the valuation exercise. At least for now.
From ER&D to data centre consultation, they are perhaps trying to incubate some ideas for potential future verticals.
In ten years it may start looking like any other IT service company (minus BFSI et al) where Geo has highest weightage but has few other streams.
If I were to question one thing, it would be does company has a clear mission other than “dekhi jayegi”.
New order
dadf95c8-5ca8-4d4a-ad47-697d7380baf9 (1).pdf (624.9 KB)
Disclosure: invested
: Ceinsys 2024 AGM notes:
Hardik Jain
1. Order book ?- 750 crores , 18-24 months timeline.
2. Allygrow allygram what do they do ? - design for GM for 4wheelers and off road vehicles , 30% is held by Grammar.
3. Unbilled revenue ? : work is done and invoice yet to raised, its normal and will be seen qoq.
4. Growth ?- cant answer, but in fy24 grew 54% , q1fy25 grew by 54%, so there is going to be growth but no more comments on numbers
2nd speaker:
Acquisition: nothing yet, will inform .
Data centre : not into EPC, not going to spend capex to setup DC, design and maintain DC. 25-30% growth as per reports of 3rd party.
We have expertise. We will hire more ppl. No capex. Will be giving services only not EPC.
Outlook : no guidance, but see the past year we are growing well.
Margins : cant give exact margins, expect margins to sustain or increase . Margins good as we are matured in the industry. We will target higher margin orders in future.
500 cr topline : cant answer.
Mainly GiS and tech solutions, 70% geospatial ( in water management )
Order pipeline : additional 200-400 crore possible on top of 750 cr.
Gis: CEinsys 5% market share in India . mobility : 1-2% market share in India, tata and lot Kpit top competitors.
Gis Genesis rmsis, sic etc top competitors.
Gm and Grammar 30% revenues for ally.
Govt initiates on water, land mapping etc on Gis in budget. Total outlay of these schemes 113,000 crores, Ceinsys is major beneficiary.
US acq : US geospatial market, telecom market. More ppl in US now hired.
Cant give numbers on US.
Roadmap : Within 3 yrs 28-29 million n USD for ACQ , care edge will monitor the fund utilisation.
Keshav Garg :
Trade Rx : below 75 crore now. Risk for more than 6 months ones, no risk they will be paid as centre and state release the funds.
Bad debts : provision is made for accounting, but we will recover it.
Q4 will be heavy due to govt orders.
CAdsys not a competition.
Fy25: no significant capex. Will be met through operational inflow. Will be debt free.
Manish Gupta:
What has changed ? We are matured and able to serve higher level , can deliver full end to end solution rather than piecemeal.
Reason for order-book build up : technically capable now as we are matured.
Girish Gupta:
DC : same as above.
MegNext : developing the in house product .
Notes i took for self, pls dont treat this as transcript of agm from Ceinsys management. There would be lot of errors on my notetaking.
Disclosure: Holding and have added more in last 30 days.
After going through this thread, AR, quarterly transcript n presentation I gotta these queries
How come their attrition is so low at 1% or so?
Why we have 2 CFO resignations in a matter of an year?
Negative working capital that too with government as their major client
CEO salary is more than 10% of company’s net profit
While the story is interesting, I am finding it tough to triangulate a few things. While everyone has spoken about the interesting bits, id like to play devils advocate here
The copmany seems to be focusing on too many things. Geospatial, Auto ERD primarily mechanical, AI through Megnxt and now data centres. How are these businesses related? One can make a remote link between geospitail and navigation for auto but thats more of a justiication than merit
As highlighted, how is it even possible to have negative working capital cycle here. This just doesnt add up. The nature of the business does not allow you to have -ve working capital. This primarily comes from payables which are at 700+ days. I dont see why any vendor would work with their customer if they pay in 2 years. even mangements explanation on call doesnt seem legit tbh.
166 cr of receivables vs reported revenue of 250 cr. not a one off. it was 159 cr in 23 and 180 cr in FY 22 vs revenue of ~200-220 cr. High share from unbilled revenue.
Provision as a % of TR avg 15% over the past 3 years.
Tailwinds in the industry aside, how these materialise into economics is equally important, if not more. This is just based on a prelim look at financials. Will dig deeper in the notes.
For Point 1
Just change the word focusing to trying you might digest company efforts. If you observe their money minting business is still same so no need to worry as long as long not too much of cash is deployed towards these new verticals.
This Point is difficult for me to answer
Company works with Govt so receivables will be delayed, this is common across other industries
Provision is also common but what % could be topic of discussion.
What worries me most is their exposure to political parties.
What if Govt Changes in Maharashtra ?.
i think due to geospatial service now ceinsys is getting order from some states water departement via jal jiwan scheme
#1. If i am not wrong, its the incoming investor who insisted on Data centre and hence they ventured into it.
Even im worried about their payable period and not satisfied with the answer provided by the management
Nobody questions capital allocation till it goes wrong. Im not suggesting that it will in this case but ny observations are based on historical case studies . The ingredients were similar. Getting into businesses which are hot themes so to speak (like AI and data centre in this case) with little linkages to current state of the business is usually considered a red flag. Id leave it to each investors judgement though and am in no way propagating a definitive view.