TMT stock pitch: Orvanta Cloud, an Indian software-as-a-service company with ARR of Rs 800 crore growing 30% and net revenue retention of 115%, trades at 9x EV/ARR against peers at 7x. Pitch it and name the two metrics that justify or break the premium.

Orvanta's premium is justified by its growth: peers are priced on a line that gives about 9.8x ARR at 30% growth, and Orvanta trades at 9.0x. The two metrics are net revenue retention and new-customer ARR, which split the 30% into 15 points each. Retention is the one that breaks the pitch: at 105% growth falls to 20% and the line gives 6.9x, about 24% less value. The pitch is a long only while retention holds near 115%.

Two gyms with the same number of members are not worth the same if one adds members twice as fast and keeps them longer. For subscription software the multiple of revenue tracks growth, so a premium multiple is fair only if it comes with a premium on the metric the market prices. Plot the peers: EV/ARR climbs with growth from 5.2x at 14% to 8.9x at 26%. The line through them is the market's price for growth, and Orvanta's 9.0x has to be judged against that line, not against the 7.0x average.

Split the 30% into its engines. An NRR of 115% means the existing base grows 15% with no new customers at all; the other 15 points must come from new customers. Net revenue retentionRevenue this year from customers who were already paying a year ago, divided by what those same customers paid a year ago; above 100% means upgrades outweigh cancellations. is the higher-quality engine, because it needs no new sales spend and shows customers are getting value. New-customer ARR is the second metric: Rs 120 crore of ARR from new logos next year keeps the other 15 points coming.

Retention. If mid-sized customers cut seats in a slowdown and NRR falls to 105%, growth drops to 20%, the peer line gives 6.9x, and on today's ARR the enterprise value would be about 24% lower. A pitch that names its breaking metric and the level at which it breaks is far stronger than one that lists every risk. Close the pitch this way: priced fairly for 30% growth, attractive only if retention holds, so the metric to track each quarter is NRR, followed by net new ARR.

Say the limit of the method too. Five peers make a thin regression, and growth is not the only thing priced: gross margin and the path to free cash flow matter more as growth slows. With a portfolio manager, one sentence on that shows you know where the line stops being useful.