In my understanding, there is a fair degree of expectations built into the price and I don’t currently trust the longevity of the margins reported in the Dec 2022 ended quarter. I strongly believe the Market will be judging the next results more on QoQ basis rather than YoY basis.
I’m assuming a sales run-rate of 280-360 Cr. for the next year with 18% EBIT margins and a safe PE of 35 (due to consumption and building product, small base – nature of business); I expect 1300 Cr. Market Cap or 1100 Rs price point to be a safe entry point for long-term investors. Coincidently, 1100-1150 is also the near-term technical support on charts. This holds true even if there are any misses on the next two-quarter results.
However, if the company is successful in maintaining 20%+ margins with decent topline growth, I expect the price to hold at the current levels or 10% + or -.
Only, with a good QoQ sales growth (12%+) and a Margin profile of above 22%, the company should be able to get past the previous highs of 1800+. That scenario may further re-rate the stock to new highs.
Disc:- Major holding from bottom levels. These are my expectations, opinions, and predictions for the price/movements for the upcoming March results.
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