Now I realize that doing a multiples analysis is very simplistic, but I want to understand if there is any margin of safety for Netweb at these levels. Please let me know what you think about my points below:
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Nvidia has a 60% EBITDA margin (which may drop), with a 262% y-o-y increase in revenue in the quarter ended April 2024. It does not do any manufacturing work, nor does it bother with customized services/setup. It trades at ~33x TTM sales
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Netweb, by comparison, has a 14-15% EBITDA margin, which doesn’t have much scope to increase significantly, 115% y-o-y revenue growth in Q4FY24, and does manufacturing, as well as customized services/setup work. It is currently trading at ~17x TTM sales.
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Unless revenues more than double in FY25, there is no margin of safety at the current price, in my opinion
Disclosure: Not invested, but recently started tracking the stock