I feel one issue here is Mr Jayant Davar setting margin expectations prematurely higher.
One of the institutional analysts even spoke about the management “overpromising and underdelivering” on the margin part, during the Q1 con-call. The margin compression is temporary, but Dalal Street is more focused on the next quarter, so that’ll be a drag on the stock price.
Also, this is likely to be a short-term (1-2 years) play since revenues and profits will see a jump for the next year. The entire new capacity has been booked by customers, and that’ll flow to the top and bottom lines. However, beyond that, I’m unable to see many explicit and major catalysts that could drive revenues and profits upward at a good pace.
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