If they use the 400+ crores cash coming in to clear short term borrowings, they are essentially debt free and will save on interest costs as well. Apart from this they have ~180cr in mutual funds and some cash as well bringing EV closer around the 1000cr mark. Management has guided that Q2 will be the bottom in terms of margins and passing of high-cost inventory.
If I take an average of the EBITDA of the last 5 years – something I’ve seen one of my favourite analysts in the metals space @Rakesh_Arora do – then I get sustainable EBITDA of around 390-400 crs.
So by my rough calculations, the stock is currently available at an EV/EBITDA of 2.5-3 at max. Am I missing something here? Would appreciate your thoughts.
Disc: Invested with a tracking position and studying further
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