Commercial case: an industrial water treatment company with Rs 350 crore of revenue, 45% of it from five customers, in a market growing 11% where it holds 8% share. Assess market, position and concentration, and say what the sponsor must believe.

Attractive market, mid-sized position, fragile revenue: the case turns on the contracts behind the top five customers. The market is about Rs 4,375 crore, growing 11%, and Pravah's 8% share makes it a meaningful but not leading player. Losing the top customer, 15% of revenue, cuts EBITDA from Rs 56 crore to about Rs 38 crore, a third. The sponsor must believe that the five relationships are multi-year service contracts with switching costs, that the share holds as the market grows, and that the concentration falls as new plants are won.

Size it from the share. Rs 350 crore at 8% implies a market of about Rs 4,375 crore, which at 11% growth becomes Rs 7,372 crore in five years; holding share takes Pravah to Rs 590 crore without winning a single point. Regulation-driven demand is the kind a sponsor likes, because the customer is not choosing to spend. But ask how the deck defined the market: if it includes municipal plants and desalination, Pravah's real share of industrial effluent treatment may be higher and the growth lower. An 8% share in a fragmented market means there are rivals to buy and rivals who can undercut; it is a position to build from, not a moat.

Turn the shares into profit. A food stall outside one office building has good margins until the building empties. The top customer is Rs 52.5 crore of revenue; at a 35% contribution marginRevenue less the costs that disappear with it. Fixed costs such as the design office and service depots do not fall when a customer leaves. that is Rs 18.4 crore of profit, and EBITDA falls from Rs 56 crore to about Rs 38 crore, 33% of it, because the engineers and depots stay. Lose the top two and EBITDA is about Rs 25 crore. With leverage on top, that is the difference between a comfortable deal and a covenant breach, which is why concentration is a debt question before it is an equity question.

Three things, each checkable. First, that the top five are under multi-year operate-and-maintain contracts with real switching costs, so the 45% is sticky revenue rather than five tenders that come up every year. Second, that Pravah can hold 8% as the market grows, which means its order book is growing at least as fast as 11%. Third, that concentration falls, so the new plants being won are with new customers, not more sites for the same five. The diligence asks follow directly: contract terms and renewal history by customer, order book growth, and the customer mix of the last two years of wins. If the pharmaceutical group is building its own in-house treatment capability, the case is dead whatever the market does.

Then give the view. A commercial case ends in a sentence the partner can repeat: good market, credible position, and a price that must reflect the chance of losing a third of the profit to one phone call. That is not a no; it is a reason to structure with less debt than the margin alone would suggest, and to put a customer-retention earn-out in front of the seller.