When Being Early Feels Exactly Like Being Wrong

But here is the truth that very few people talk about: The worthless years are often where the real compounding happens.

The world of microcap investing is volatile. The story repeats with company after company.

It all begins with euphoric listing periods followed by even more euphoric rallies only to suddenly come to the realization of the impact it would make on the other side of the road: the downturn. The stock price collapses, the experts call it a pump and dump, and the promoters are dragged for being unprofessional or silent. If you have spent any time in the Indian SME markets, you know the script. A company lists with a bold promise. The price goes vertical. Then, the inevitable: an 80% plus drawdown, the beginning of a painful period where the stock does nothing, and you get countless people telling you that you have been exit liquidity for a pump and dump.

But for the few who look past the ticker tape, these dark years are often where the greatest pivots in Indian tech are actually forged.

The Ghost of 2018

Look back at the trajectory of a popular cloud infrastructure player that listed back in 2018. At the time, many called them just-a-reseller. When one of their biggest clients walked away in 2020, the market cap came crashing down to nearly the value of the cash on their books. For a long time, it was ignored. The company also tried very hard to not come across as a peer to bigger & larger wester players but the comparison was inevitable. It took nearly 4 years after that big client walk-out to re-position and come out as a winner.

• The Commodity Trap: Investors said they were just reselling basic utility services. The global giants would surely crush them. When I posted in June 2024 about this, so many just go on trolling that I had to block a lot of them.

• The Communication Void: Management was not very open to investors and never did any conference call. They did not do roadshows or participate in big events. To the market, they were just stuck in a low margin cycle.

• The Valuation Desert: At its lowest point, the market cap was so low that it was effectively ignored by the mainstream. The market cap in 2020 was just 20 crore. Fast forward to 2025, the company peaked at market cap of 6500-7000cr!

For five years, holding that stock was a test of sanity. You were not just early; you looked like an idiot. But while the market was ignoring them, the team was quietly pivoting. They were not just hosting websites anymore; they were building a relationship with a global GPU giant that no one in India was paying attention to yet. When the AI wave finally hit, that boring, quiet company became the most important infrastructure play in the country. The success did not happen in 2024. It was earned in the silence of 2020.

The Engineering Micro-cap in the Storm

Today, we are seeing a similar story play out with another company. The chart looks identical: a massive post listing surge followed by a gut wrenching crash. Today, the sentiment is toxic. People are thrashing the management for lack of transparency and broken guidance. They see the delayed payments from government contracts and call it a failure of the business model.

• The Working Capital Reality: High debtor days (payment delays from government or power utilities) make the balance sheet look ugly to those used to clean metrics.

• The Communication Gap: Management is currently being slammed for a lack of guidance. To the angry investor who bought at the peak, the silence feels like a betrayal.

• The Reseller Tag: Skeptics say they are just selling someone else’s software tools.

But if you look past the noise, you see

The Capability: They are not just selling software; they are working, or at least trying to, with the national missions of semiconductors and power grids. These are the sectors that take years, not quarters, to move.

The Foundation: Promoters who have been in the business for 20+ years before listing do not usually walk away because of a bad stock chart. They are used to the long game. The founders who have spent their lives building a tech business are simply bad at the investor relations game. Their silence does not mean malice.

The Regret Everyone Has

The hardest part of this journey is the self doubt. You see the price rally and then crash, and you curse yourself for not timing it better. You feel hopeless because the tailwinds everyone talked about seem to be moving at a snail’s pace.

Being early is lonely. In 2020, you were mocked for holding the cloud infra company. Today, you are called a bagholder for some other company. But the worthless phase is where the alpha is hidden.

Markets do not work on our timeline. It takes time for a team to learn how to communicate like a mainboard giant. It takes time for a national mission to turn from a policy paper into a purchase order. it takes time for market to mature and open up to their solution. It takes time for a company to mature out of its messy phase.

In real life, early and wrong look identical for a long time. But for those who can distinguish between a price crash and a capability crash, the reward is life changing.

The Conflict: Conviction or Blindness?

All of us have biases. Some negative, some positive, some could be attributed to conviction while others may call it blindness. I always feel that conviction is only proven in the future. Until then, the line between deep conviction and simple blindness is thin enough to be invisible.

But the market is all about probabilities and probabilistic outcomes. People’s perspectives shape with their skin in the game or not. You get called out for being bullish, you get called out for writing about a business when the price has crashed, basically for anything. It is possible that some companies never achieve their full potential. They fail to scale. We will only find out later.

As an investor, when we study a business, at that point in time, your assessment of the business might be fairly okay, but your assessment of the price could be proven wrong. There is learning to this and any sensible investor would take a leaf out of this and working on improvement. What is important for us retailers is to categorically not allocate too much mental bandwidth to such situations. If the company is posting growth and your conviction is unchanged, I’d let the position be. It is extremely important to move on and work on other opportunities while some companies in your portfolio take the time they need. Moving on does not mean you close the doors for good. Moving on simply means: Let it be, it needs time.