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Cracking the India Investment Code: Small Deals & Large Platforms

Revenue vs EBITDA Margin graph of Insurance Broking companies

By AltG Research On Behalf Of Poornima Vardhan And Taponeel Mukherjee

So, what do you do to generate huge returns with rapid growth in India’s GDP and extreme competition for large deals?

You go small on the deal and large on the platform via Roll-Ups!

What does AltG’s APEXX Formula tell us about the state of markets today?

A snapshot of a pool of insurance brokers and software businesses is below.

Revenue vs EBITDA Margin graph of Software companies

What’s common in the charts?

Many businesses with EBITDA Margins higher than 15% and annual revenues lower than $10 Million.

What’s the implication?

Given recent valuations, you’ve got a couple of Billion dollar Roll-Ups ripe for execution that can continue to accrete capital at twice the GDP growth rate.

How do these smaller businesses enjoy these margins?

They are exceptional “local monopolies” that serve an exclusive customer base by providing an essential service. A “local monopoly” implies that they have customer stickiness for the product, and the cost of replacing this business for a competitor and a customer is exceptionally high.

What’s the big takeaway from this?

The APEXX Formula suggests that India’s market abounds with hidden opportunities for a large revenue base generated by a fragmented industry with a high EBITDA margin. The opportunity for Roll-Up platforms to create value for all stakeholders abounds.


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