Underlying trends on numbers look decent. High cost inventory impacted nos as to be expected. No laggard between premium, mid premium & economy or brand wise. Broad based growth. All segments especially premium doing reasonably well when looking at sales growth vs value & vol growth. Lyra esp doing well & now ~17% of sales. South inched up yoy from 2% to 4%. 1 way to look at economy segment is ASPs are up 33% FY22 vs FY20, and it grew 8% in volumes this quarter, though on the back of a somewhat favorable base but still. Odds are high I think that margins, cash flows, WC should be back on track from Q3 onwards.
For the next 1-2 years, overall sales & earnings growth outlook should be around 10-12% only. Onus will be on delivery of consistent margins, profitability, free cash flows, resumption of ~20% dividend payouts which can aid multiples to go up. Keen to see what payout they give in FY23, muted in FY22 11% citing covid, vs 18%+ FY20. Imp to see mgnt willing to part with cash.
There are of course factors here not to like. Hence multiples are where they are. For example, CFO has come in from future group for which NCLT has ordered an audit recently. Insider trading case, messy past, unfav treatment to minority shareholders, breakup. Takes long time to get confidence in the market, and that can only happen by consistent delivery. I think management has been trying & has delivered too partially, and the risk reward at current prices are appealing.
Disclosure: invested
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