Thanks for your comment.
a. Speaking about D-mart, as you also accept that it is a good business, meaning it is worth having the scrip in one’s portfolio. Now coming to the valuations, yes, the valuations are high but that’s always been the case right from the start, if you go back and look at the historical PE, D-mart has always been trading at higher valuations. Back in June 2018, D-mart was trading at a PE of 200 and at the time, the EPS of the company was around 7, in the next quarter of September 2018, the EPS rose to 12 and the valuations dropped to around 100-120. Now coming to the current scenario, the valuations of the company is around 120 with an EPS of 32. So 2 years ago when D-mart was quoting at a PE of 200, EPS of 7 and the share price of 1500, everyone was shouting of company having higher valuations and suggesting everyone to stay away from it, and now everyone can see how the share price has performed since then. So in my view, the company right now is trading at historical valuations and since then it has grown tremendously. I do agree to your point, that the company seems to be trading at higher valuations by just looking at it’s PE, but at the same time the company has lot’s of positives to back it up, and on top of that it has tremendous growth prospects (at least in my viewpoint, but you can choose to disagree on that). So unless, there are no issues with the management, absence of any worthy competitor, and inflation stays at bay, i would always bet on the D-mart to grow further (and quoting higher valuations).
b. On Adani Green, I completely agree with you. It is a highly risky bet i am taking, this is the kind of business one needs to track every quarter, and the moment you think your thesis are not playing out, that’s the moment you get out of the scrip, but i am betting on Adani Green because i believe in renewable energy theme.
For Adani Green the numbers don’t match but for D-mart the numbers do match (again you are completely free to disagree on this).
Thanks!!
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