@vinamrachaware – good effort.
Couple of questions:
1. How did you arrive at the FCF figure of 44 million?
2. Assuming the initial cashflow as 44 million, what is the logic behind growing it by 13.7%?
I am raising this question because textile industry by nature is very high capex intensive i.e. in simple terms it needs frequent upgradation of technology, machinery etc to compete with other players
If you see the historical FCF generation of Ambika, I think it has generated positive cash flow in only 4 out of last 9 years which includes major capex in 2007, 2008, 2011 and 2014. If you apply negative FCF every alternate year based on historical trend, I guess the fair value will go below CMP.
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