Assuming an EPS growth of 30% over FY 15 EPS of 4.5 (as per Annual Report) we get an EPS of 5.85 for FY16E. I have not accounted an equity dilution of about 10% over the next 18 months due to promoter warrants. Let’s assume EPS will even grow higher to negate the equity dilution.
At the current price of 130, it is trading at 22 times FY 16 EPS and 29 times current year EPS. For a company with no free cash flow, Capex intensive, relatively high D/E is it not expensive? The price is running ahead of its fundamentals?
Compared to this, Repco and PI are trading at similar valuations (a bit higher) and have better visibility and financial metrics, cash flows, better promoter (?). With this logic I’m not looking into Granules besides not being convinced about promoter somehow (I could be proven wrong just like many times before).
Disclosure: Not invested in Granules but invested in Repco and PI Ind – so holding bias could be masking my thinking!
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