1) If we are looking specifically at book value to value Gruh, should we not be cognisant of the fact Gruh pays around 30% of its profits as dividend and so the book value is understated by that extent? Also, this is also a reason that RoE remains high. Managing this consistently for long term is a feat.
2) Personally, I will always pay premium to Gruh when compared to its peers as long as the current metrics remain. By how much is the point of contention. When we look at P/E in the above table, it is 20% premium over Repco and it’s double when we look at P/B. There is no correct metric here I think but I will go with P/E because of RoE.
3) Gruh will grow at 25% for the next 5-7 years and the probability and predictability of this is very very high. The management itself said this during an interview in money control about 3-4 months back. In fact when asked, by how much would you grow this FY, Sudhin Choksey told, I’m not sure as economy is still recovering but over the next 5-7 he said he is confident of growing at 25% minimum (Yes, he said this) and more if economy prospers.
4) Market opportunity being so huge, the financial metrics will stay inflated for all the companies in this sector and more so for the LEADER.
I hold Gruh.
| Subscribe To Our Free Newsletter |
