Good morning my dear readers,

I was trying to think of a 'wife joke' to kick start this Friday, but its too early in the morning, brain isn't working yet.

(Also, a bit scared).

~~

There is a big opportunity in the Defense Sector.

Recently, Mr Baba Kalyani was speaking and some of his words really resonated with me.

Some of the highlights of his talk were,

1- The Defense sector will drive Manufacturing growth in India for the next 30 - 40 years.

(Yes, you read that right and no, my coffee is clean. He really did say 30-40 years).

2- Said that Indian Govt policy on Defense manufacturing is 90% complete.

3- Over the next 25 years, he believes that there is a 10-20x opportunity in Defense manufacturing.

4- He also sees India's defense expenditure becoming 10x by 2047 ($72bln to $700bln).

**5- He also sees that as demand for defense products goes up, the public sector 'capacities' will run out.

As a result, a large part of the delta ($70bln to $700bln) will be captured by the private sector, especially who have their own IP.

(Very important point - A) Pvt sector will benefit most going forward. B) Investors should focus on companies with their own IP, not generic companies).

6- Basically it is a huge opportunity in Defense right from large corporates to the MSMEs.

7- He goes on to say, (Very importantly), that Indian companies will also probably end up supplying reliable products globally.

8- He also said that the EU has announced that every country will increase their Defense budget.

~~

Long story short,

We need to identify companies in the defense sector which have their own IP.

But I also think that investors must always wait for value to emerge, basically around bearish market conditions and then be very patient.

~~

**Recently I met an Indian defense company which produces software that goes into naval ships.

The key takeaway for me was that, every time the Naval ship changes any equipment like Guns or Missiles, the software must be updated and that brings in big, additional revenue for this software company.

~~

The amount of opportunity that exists in India today, especially in the unlisted side, I think if Warren Buffett was young and in India, he would have gotten dizzy, not knowing which companies to buyout.

~~

That is all from me today my friends, please suggest some Sci-fi movie options on OTT.

I saw Dune on Netflix and absolutely loved it.

(Cannot wait for part 2 to release next month).

My Best,

Neil Bahal

Founder

Negen Capital

Ps - If you are not scared of your wife, do suggest some wife jokes too.

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