The Stock is continuously falling from 1900 to 1350 with Good Volumes in last 2 Days. Is there something which I am missing or is it due to stagnant Order Book ?
5 Likes
Not sure if it makes sense but I was trying to connect it with the recent announcement on NavIC standards. It should eventually boost the order book but there could be some uncertainty in the near term.
The customer base needs to define their adoption plans and timelines for the new standards. Geospatial companies may be unsure of the demand for legacy vs. new-compliant products. This inturn may impact short-term revenue forecasts and hence causing this.
7 Likes
Could it have anything to do with google earth ai?
I think this is a valid question and i tried to give some very high level thought on this.
I think this is same situation as having different AI models to do the work that different IT (or others for that matter) are doing. Though the companies will still strive due to various factors. As far as Google Earth AI and Ceinsys is concerned, Ceinsys will bring value in following:
1. Ceinsys provides specialized solutions for different areas that it works like solutions for infra, utilities, auto engineering, which GAI will not provide. GAI is more of data driven platforms and still need human involvement to drive end to end solutions. Different clients and especially Govt projects will need companies such as Ceinsys to fill the gap.
2. If I am not wrong Google Earth AI mainly uses data gathered around Google Earth satellite imagery for the geospatial analysis while CS uses other sources too such as LiDER, drones etc.
3. Ceinsys provides turnkey project capabilities while Google Earth AI provides upto actionable intelligence.
The other aspect of whether Google Earth will replace some of the capabilities and hence the revenue share of Ceinsys, this is a valid risk with the advent of the AI itself but currently since CS is involved more for GoI projects in geospatial space, the risk is lower in my opinion (though i may be wrong). This risk for the other areas stands as valid as other AI modes pose it to the other companies in those areas and as such should not affect CS because those are new markets that it is still going to grow in.
7 Likes
A good show again. But what am I missing here, is the street not happy with the cashflows that its not inline with a traditional IT companies. I assume everyone knows every qoq there will be a great growth but why street is not appreciating it.
For sure I know I might be missing something. Can anyone help me which number is causing a discomfort.
1 Like
Receivables look terrible to say the least
This is a qualitative observation rather than a quantitative one:
-
The CEO transition appears somewhat precarious. As publicly indicated earlier, Mr. Prashant Kamat is expected to move on from Ceinsys by the end of 2025. His designated successor, Mr. Surejâwho is well credentialed as detailed earlier in this threadâwas expected to assume charge. However, his LinkedIn description, stating that he would be leading a âhigh-growth global technology services organization,â did not clearly indicate Ceinsys at the time. While that could have been for confidentiality reasons, the subsequent developments â being referred to as âCEO designateâ and now tendering his resignation as Whole Time Director (while retaining a non-executive role in the US subsidiary) â do not inspire confidence or stability.
-
The receivables situation, even accounting for Ceinsysâ significant government exposure (B2G), seems to have deteriorated. Following the Jal Jeevan Mission (~55% of Ceinsys revenue comes from here) audit, financial discipline at the customer end could delay collections further.
-
In essence, it feels like a fast-moving vehicle on a slippery road, with the drivers trying to switch places and the new one hesitating to take the wheel.
-
Despite reported growth this quarter, the market may be sensing this instability and reacting to where the company could steer next.
P.S: Ceinsys and AI â if anyone has clearer understanding of this intersection - pleae do help me understand. The companyâs potential narrative could evolve in that direction, especially considering how US-based firms are integrating geospatial intelligence with humanoids and roboticsâan area that could become an exciting frontier for Ceinsys as it matures.
Disc: I had a small tracking position which i might liquidate as i am myself not clear/ cannot fully appreciate where they are heading.
13 Likes
My concerns:
- The order flow has completely stopped.
- The acquisition plan seems to be going nowhere, even though funds were collected long ago. Earning FD interest at the expense of shareholder dilution, without any clear acquisition plan. My question is, if the acquisition was still 4â5 quarters away, why raise money so far in advance? It seems their original plan hasnât really worked out.
- The CEO situation is becoming increasingly confusing.
- Cash inflows from government orders have stopped. In the absence of cash flow, reported profit means little. The stock was rerated earlier on the back of government orders, but now itâs being derated again.
10 Likes
Perfect, I initially assumed that âUnbilled Trade Receivableâ was just a minor issue, but thatâs not the case.
All this time, I thought sector-specific or regulatory factors were the main blockers (considering its peers are on same lines), but things are much clearer now- weâre now catching up to what the street had already priced in.
1 Like
Hey @phreakv6, hope youâre doing well. Would love to know your views on the recent developments whenever you can make the time. Thanks!
2 Likes
@phreakv6 even I second that. Need some expert commentaries.
1 Like
With stock price not moving up and hitting lc on a good result sentiment has turned to bearish compared to ultra bullish one around 52 week high. Same people were giving euphoric exit multiple and what not.
2 Likes
@Souresh_Pal Can you clarify which âsame peopleâ you are talking about ?
3 Likes
Participating crowed in this thread = same people.
1 Like
@harsh_jain1 @vivek_lakhani I am no expert and just happen to be following this business for last 2+ years. The same concerns come time and again whenever it corrects and then vanish as price moves up. When it fell from 700 to 400 again it was the same story. They have had very good cash conversion on long-term basis and I cannot let that be changed by what short-term balance sheets are showing (large project work started in Q4, so FY25 and H1 FY26 balance sheet is bound to reflect badly on cash flow). I have given them the long rope and have done ok in the process. Its an ambitious company that has moved from 260 Cr mcap to 2600 Cr mcap and have grown business proportionately through acquisitions and doing bigger and bigger projects. So I am bound to be biased in my view. Someone who bought at higher levels and is sitting on a drawdown or someone who sold is bound to have a negative view. Someone who considered but gave it a pass at higher levels (rightfully so) is bound to feel schadenfreude. Each of us has different priors and that will cloud our thinking, for good or bad. I am perhaps wrong in my sitting tight here but my priors tell me its ok to do so. The outcome might make me regret, but I have learned over time to not fret the outcome (resulting, as in poker).
The main reason I have held it in the last year is for the acquisitions to go through. I think its not far away considering the pref/warrants will lapse if not exercised by Apr 18, 2026. After putting in 120 Cr, I doubt if promoters/FII investor is going to let that happen after spending so much money, time and effort on it for 2 years. If and when the acquisitions go through, this company should look quite different deriving 30-40% revenues from pvt. sector while being geographically diversified (US/EU/ME). After having held it for 2+ years, I would rather wait another quarter or two and see it through. At current prices cash flow and delay in acquisitions is all discounted. I like it that the money raised for acquisitions remains untouched and this temporary poor cash flow has not seriously deteriorated the balance sheet.
I would also request people to not tag and ask for opinion on stocks. I write when I have something new to say and hate repeating stuff (I find it hard to ignore when someone specifically tags). Since these days I dont have anything new to say, my posts have come down as well averaging just 2 a month incl. book reviews. Main reason for writing for me was to learn by writing because writing is thinking. Some of the posts on bempedoic acid for eg. helped me understand so much about the innovator cdmo business from the ground up. Thats been the benefit of writing for me over days/weeks as an idea is tossed and turned and matured into some new insight. Thats the only kind of writing I want to do and it can only happen when it happens and cant be coerced. It comes in bursts and then goes into a lull. I donât want to dilute that by writing posts like this which add very little value.
Disc: Invested since Oct '23 and no recent transactions
119 Likes
Hey, thanks for the detailed response. Sure, I get it, will not tag you any further.
1 Like
Q2FY26 Concall Notes:
- Revenue 82%. PAT 120%
- Margin 21.77% vs 18.67%
- Segment Growth:
- Technology Solutions: 146%
- Geospatial and Engineering: 39%
- WCC at 160 days. Expect reduction to 120-130 days.
- High receivables at 410 Cr.
- 80% are less than 6 months old. 10% are 6-12 months old. 10% are over a year.
- 80-82% are from government projects.
- Reason for delay: Recoveries from Jal Jeevan Mission were slow in H1 due to government review of the schemes.
- Review is over and funds have started flowing. 60 Cr received.
- Confident of recovering almost all the money in the next 3 months.
- Trade payable increased due to delay in receivables.
- Going forward, not relying 100% on JJM. Have built a strong pipeline in other domains (energy & municipal segments).
- Expected order inflow: 700-800 Cr in H2. Success rate: 70-80%.
- H2 > H1. Should be able to cross 600 Cr for FY26.
- EBITDA margins are expected to steadily improve as revenue mix shifts towards higher margin technology projects.
- 235 Crs available for acquisitions. Looking for companies in complementary fields.
- Two targets in the final DD stage. Expect an announcement in the next 1-2 months.
- Consolidated profit < Standalone profit because the company is investing heavily in business development in the US.
- Over the last 5 quarters, 36 Cr have been expensed for business development and 8 Cr have been capitalized as IP.
- The US team is focused on expanding beyond VTSâs original telecom domain to sell ceinsysâs entire suite of services.
- Expect revenue from the US to improve starting Q4FY26 or Q1FY27 which will then absorb these costs.
- Kamat will remain CEO until December. Surej will take over as the CEO thereafter.
- Operating leverage is kicking in. Absolute employee cost is stable at 33 Cr while the revenue increased from 90 to 163 Cr.
Disclaimer: Invested & Biased.
23 Likes
JJM scheme will not see much capex in future just like other Govt schemes. Broadly in line with Govt capex tightening approach in this term. This will put huge pressure on Ceinsys to show top line growth unless they pull the rabbit out of their hat by building strong funnel outside JJM.
Recent price action in my opinion is not so much for long receivables days but for the above mentioned reason.
3 Likes
It might be true that market is anticipating overall slowdown in government spending in the sector. Genesys has shown similar price correction in 20-25 per cent range over the last month.
In my view this a temporary blip of uncertainty and is in fact a good trigger for company to think beyond JJM.
Since the Kumbha Mela discussion started officially previous week or so, any idea about the quantum of project available to Ceinsys?