Rain Industries: Shouting Mid Cap Value Buy
Rational and Logic:
2022 CY profit – close to INR 1600 cr, 2021 CY profit – INR 700 cr, and expected CY 2023 profit will be around INR 700-1000 cr,
Sector PE at 34, EPS of last year at more than 40, at the current price and market cap appears a value buy.
Consistent EPS growth over the last few years
Significant sales growth as well, which is stable
The company have honest promoters, also Mohnish Pabrai, a US based investor and follower of Warren Buffet, is a big shareholder in the stock.
High debt seems to be playing on the company’s valuation, but the company will have increased cash flows as a result of savings in their cash flows now that capital expenditure is over.
Triggers for Upgrade: Recent re-rating of stock by India Ratings, Increase in Book Value over the past few years, Start of a plant in India going forward (this will take some time in my view depending upon the availability of the raw material).
Ind-Ra expects net adjusted leverage (net debt/EBITDA) to have reduced to around 2x in 2022 (2021: 3.20x; 2020: 4.28x, 2019: 4.63x) and the interest coverage (gross interest expense / operating EBITDA) to have increased to 7x-7.5x (4.9x; 3.5x, 3.3x), due to an improvement in the operating profit, led by a strong recovery in the commodity prices.
link to India Ratings Report – India Ratings and Research: Most Respected Credit Rating and Research Agency India
Disclosure: I am a current shareholder, too.
| Subscribe To Our Free Newsletter |
