They may be valuing Piramal basis P/S and assigning a particular multiple basis their knowledge of what normalized EBITDA levels could look like and not basis what EBITDA levels are right now.
These experts have also consistently maintained that PPL can’t command as high a P/S ratio as Syngene. I think some of them (If we are talking about the same ones) have a lot of experience valuing Pharma cos. consistently on P/S. But their expectation of fair value P/S for a company is most likely underpinned by their deep knowledge of what normalized EBITDA could look like in the business.
I agree with you that blindly assigning a P/S multiple to a Pharma business on hearing the world CDMO or branded OTC is dangerous. This holds for other metrics like P/E and EVEBITDA too.
Edit: And also agree that experts can go wrong. But wrong or right is also a factor of investment horizon. So investors blindly copying experts without understanding all aspects is ultimately down to the investor I believe.
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