trading economics most likely provides soda ash prices trading in china, however Indian soda ash prices may have come down quite dramatically due to imports from Europe. On the other hand soda ash prices in yuan terms is still lot higher from 2021 levels on the other hand GHCL is saying that soda ash prices are the lowest as compared to last few years and may expect a turnaround…
Hence wanted to check if there is a way to track soda ash prices in India

An observation –

Dependence on plain vanilla US generics ( even for larger players like – sun, cipla, dr reddy ) …… is falling with every subsequent qtr

Share of profits from branded mkts are increasing with every passing qtr

Bigger guys like – Sun, Cipla, Dr Reddy are sitting on cash like 5-6-7 k cr ( company to company ) and are now spending these on either niche / specialty or limited competition complex generics. Plus they r generating tons of Cash every year

Eg – Sun’s specialty portfolio is doing very well. With increased R&D dollars, it should only get better

The pain caused by heavy dependence on plain vanilla generics may not get repeated easily ( all companies seem to be aware of this and are acting accordingly )

May lead to a structural re-rating of the sector

An interesting observation –

Ppl or Mkts keep taking about the shift from unorganised to organised players in various sectors due various factors- known to all of us

There r 2 sectors where the unorganised sector is rolling out red carpet for the organised sector- hotels / hospitals

A lot of standalone hotels / hospitals are willingly handing over their operations to organised chains like – royal orchid, kamat hotels, taj group etc

Similar things are beginning to happen in Hospitals – like with Shalby, KIMS

I m sure – the trend is only gonna accelerate

The organised players either get into a management contract or take up the assets on lease

Its a win win for all

I wonder – what will be the size of these hospital / hotel chains after 5-6 yrs

They can simply keep adding to their profits without capex and without creating any new capacity too ( hence the supply may also remain limited )

Possible Goldilocks Scenario

Disc: biased, invested in a lot of Hotel and Hospital companies

That’s a good question & to be honest your guess is as good as mine in terms of what is the exact NPV of Five-Star business finance. That is as far as valuation goes.

As far as pricing goes – I think this goes back to the age old debate of should financials be “priced” at P/B or P/E. There are some who argue that P/B if there will be constant equity dilution, and P/E only if no plans to dilute (like Gruh back in the day) It could be argued Five-Star falls in the latter (Gruh finance) category.

Five- Star has stated in the October earnings call (if i am not mistaken), that they ideally should not need to raise capital (maybe ever, if not at least for the next 5 years) If you look at their CAR it is greater than 50% and they have high return ratios RoA (8%+ now should come down to 6.5% steady state in the next few years). So they should be able to finance growth for at least the next 5-6 years (may be more) through internal accruals while maintaining a max leverage ratio of 4x (current leverage little above 2x)

So if we assume P/E is the right metric and just crudely straight line their earnings at 35% (which is their stated guidance) 3 years out. They should conservatively be around 2,000 cr PAT. (They are currently close to 900-1,000 cr PAT annualizing last quarter’s number) Assign whatever P/E multiple you choose (based on growth expectation then & RoE at 4x leverage) & you will get your target market cap 3 years out. (current market cap 22,500 cr)

It must be said that the above calculation is extremely crude and i am sure flawed in many ways but it’s made just to illustrate a larger point.