First they won’t be making CAPEX today rather over the next three years and that too highly weighted towards FY26. So in today’s rupees, the CAPEX amounts to less than 1000 Crs.
Second, let’s say I was being too optimistic with my assumptions and do a simple calculation:
In FY24,25 and 26 they will make a combined CAPEX of 1000 Crs meaning cash outflows and thereafter 5 years of cash inflows of 400 Crs (15% margins if 10,000 Rs pellet prices) and then a 2.5 multiple for all the future cashflows. If we discount all these cashflows to today at 15% discount rate, we get ₹450 Crs a NPV.
I might be wrong about the estimates as future is unknown, but given the track record of this management team’s performance (high returns on incremental capital invested), it would be more profitable of long term shareholders if they invest internally rather than pay dividends.
I could be wrong, but I will talk the odds
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