So this is happens when you are trying to correlate current news to stock price rising.
If you go through the last 4 quarters concall and presentation you will see management has been guiding for 20% volume growth CAGR for the coming 3-4 years . At an ROCE of 20 % which in itself is pretty good for any auto ancillary the company should have been at a PE of 20 with these growth forecasts . Earlier due to rate hikes and slowdown in europe the growth did not come last year.
Now with the last quarter sales begin highest quarterly sale with highest operating profit even in a high interest environment. Investors are feeling confident that the company can deliver on their growth forecasts and can grow at 20-25% CAGR at 20% ROCE .
If the quarterly profit for the coming year on average will be around 17.50 Cr, then the yearly net profit will be around 70 cr . At 20 PE for the company should have a market capitalization of 1400, which will put the price target around 1200 for the share .
If you study the company well, they are focusing on very high growth industries and providing material to many EV cars, have developed robust tie ups with various technologically advanced companies to cater to the coming EV adoption for the automobile industry.
Also you will see their operating margins have been highly stable in these times of turmoil signifying pricing power .
All this can give investors confidence to be confident of the growth being stable and even accelerate in the coming years .
If you take into account FY 24-25 profits in account too, the share price can go to 1400-1500 too .
Invested from lower levels.
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