One of the things that concerns me about the valuations overall is that the business has 2 divisions: 1 is hugely exciting (aka shunts) & 1 is sort of mature where there are some tailwinds due to China + 1. Looking at valuations and multiples on an aggregate basis misses the fact that one of the divisions in the company has far lesser value than the other.
Hypothetically, assuming the earnings are broadly split 50:50 between the 2 divisions; If we assume the Bimetal Division to be valued at TTM 20x P/E (20x 26cr); then this division would have a value of ~500 cr. That would imply that the Shunt Division is being valued at ~2400 cr or ~100x TTM P/E.
A lot of work needs to go into justifying those valuations. I have been trying to size up the market 7-10 years from now and trying to estimate growth rate of the overall shunt market. Happy to share work, please DM if interested. However, there are still a lot of gaps in the analysis. Most importantly, the understanding of which shunts except the BMS are actually the high value shunts with realisations of $0.5-$1/piece. Most of the shunts which power the low power systems (windows, seats, etc) seem to be low value which are unlikely to move the needle much.
If we start thinking like this, it also becomes evident that Smart Meters, even though will provide an impetus to short term growth; are barely relevant to justify 100x PE. The potential of smart meters as a segment is completely dwarfed by that of autos in the long run and once EV penetration starts hitting 40-50%.
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