If we look at the capex incurred, it has increased significantly only during the last few years as the company has invested on newer platforms/tech.
Not arguing that it isn’t a capex intensive business but at the end of day, the company will also look at how efficiently have they utilised those assets in which they have invested before doing another capex. I may go wrong but my bet is on the huge operating leverage expected to play out.
Agree on this point and if we look at H1 FY-23 numbers – they generated free cash flows of 125 Cr but we will have to see whether these numbers will sustain (if there are no further plans of large capex then they should)
Posting some old articles where the company/management mentioned about capex plans :
- Investment of over 1000 Cr was lined up for two models – Urbania (which is launched in Q3) and Traveller Electric variant (should be launched in FY24 hopefully)
- Capacity enhancement by 35000 units (CY22 sales were at 24.3k units – so I feel they won’t incur this big capex very soon)
Urbania is a luxury-yet-affordable van and the company will be focusing on export markets with this model – margins might be superior than that of domestic in exports.
Intangibles on the balance sheet accounted in FY22 were only 16.39% of total gross block – that doesn’t make that big a difference imo. Book value has increased primarily because of the capital investment in T-1N platform and Gurkha.
I am not considering it a value buy just on the basis of a single metric – I have mentioned many triggers which I feel can re-rate it once numbers start coming.
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