Even I am waiting! I need money but it’s stuck due to this delay. So, I can’t sell the upcoming newly listed company’s stocks

To me, it looks like a great opportunity to add onto some of my ITC shareholdings. I was waiting for the Budget to be over. Was skeptical / afraid – of unfavourable actions on the part of GoI wrt taxation

That risk being out, next one year looks good for ITC’s business prospects

Q3 FY24 Update:

No. of shares = 215 cr (As of 31-12-2023 as per published data)
Embedded value (9MFY24) = 45,173 (growth=20% yoy)
VNB (9MFY24) = 2267 Cr

iev + vnb(9MFY24)/share = 47,440/215 = 220.65

Valuation(08/Feb/24) = 591/220.65 = 2.67x

To me, this looks undervalued as compared to its historic valuations.

I am not sure whether my calculations are correct.

This calculation is based on 9MFY24 data.

If the calculation is correct, then it looks undervalued as of now. Even if we consider 3x, then also share price should be 661.

Disc: Holding.

Sharda Motors Q3 results.

9M EPS at 71. (not annualised) 9M Net profit 211 crores Market cap 4100 crores. Net cash 660 crores. Saleable valuable land in NCR region.

Technically on charts stock price close to previous swing high of 1380. All time high at 1494. Stock price has been making a series of higher highs and higher lows on weekly chart.

sharda q3 fy 24 results.pdf (1.3 MB)

disc: invested.

Q3 FY 24 Con-call

• Consolidated revenue saw a modest 2% increase, reaching Rs. 448 crores.
• EBIT also experienced a healthy 10% growth, reaching Rs. 78 crores compared to the previous quarter’s EBITDA of Rs. 71 crores.
• Consolidated PAT stood at Rs. 53 crores, slightly higher than the previous quarter.
• The consolidated EPS for the quarter was an impressive Rs. 5.82 per share.
• An interim dividend of Rs. 2 per share has been approved by the board.

Current Operational Performance:

• The company operates in three key areas within the pharmaceutical industry: API and intermediates, CDMO, CMO, and Xanthine and intermediates.
• The regulated market accounted for 53% of sales in the API and intermediates segment.
• Strong scale-up and commercial manufacturing expertise in the CDMO, CMO business have contributed to a revenue share of 14.2% in Q3.
• The company added one new customer, three new commercial products, and six new R&D products in the CDMO, CMO segment.
• The Xanthine segment experienced a commendable 20% growth over the last year.

Future Outlook:

• The company anticipates approximately 8-10% EBITDA growth in FY24 and remains on track to achieve its long-term goal of 17% annual growth in the next 2-3 years.
• Plans are in place to strengthen the company’s leading position in the Xanthine segment and to enhance the API CDMO segment by introducing more value-added products and acquiring new customers.

Concerns:

• Pricing pressure in the Xanthine segment is anticipated to continue until the middle of the next year.
• The company has seen a decrease in absolute growth due to the postponement of certain projects, resulting in sales being moved to the next financial year.

Other Points:

• CapEx for the next 2 years will be funded through a mix of internal accruals and borrowings.
• The company aims to maintain a debt-equity ratio between 0.3 and 0.35.

In conclusion, the company’s strong financial performance in Q3 FY24, with record EBITDA and net profit, is a positive indicator of its future growth potential. The focus on expanding the CDMO, CMO business, and strengthening its position in the Xanthine segment bodes well for future prospects. However, the company should be mindful of pricing pressure in the Xanthine segment and the impact of project postponements on future sales. The strategic approach to funding CapEx through a mix of internal accruals and borrowings reflects prudent financial management.