For last 6 months I have spent considerable amount of Time in Understanding the Scaling up of a Business, what does it take for business’ to scale up in India because thats where the largest money is made!
It has been very hard for most Small Business’ to become big in India & the reason for this is because as soon as you start making 20-40 Crores a Year competition comes in very strongly & tries to disrupt you in every possible way.
Out of 100 business who are Nano Caps with 1-5 Crores of Profits (20-50 Crores Market Cap) , 20% of Business reach the Small Cap Stage of 20-40 Crores of Profits (300-500 Crore Market Cap) if tailwinds are strong though only 5% of those 20% make it to 100 Crores of sustainable Profits.
Once a Company reaches the 100 Crore Profit & is the leader in the niche, it becomes really difficult for Competitors to beat them as they now have Distributor network, good 2/3Rd level management team. The Journey from 100-500 Crores is where the PE Ratio’s typically get re-rated the most, the company gains market share from other unorganized Players & a Multibagger is created. Typically Growth slows after the company crosses the 500 Cr Profit Benchmark as it’s now a leader already & can’t grow more than the Market.
I have divided companies in 4 Parts explaining what can get a Scale up or continuation of Growth.

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