I think the TTM PE was in the mid 30s even when the price was in the 600s-700s
What’s crucial here is that the margin currently is below potential because of commodity price fluctuations, spare capacity, and investments in developing new businesses.
Once you normalise for these things over the next couple of years with solid DD growth – they ‘could’ double profits in 3-4yrs. Key here is optimal capacity utilisation and higher margin pharma/FMCG.
But I think profits will stay below potential since they will continue to invest to increase longevity of growth – so stock will keep looking expensive.
Another point is that steady state free cash flow generation is better than profits reflect. A lot of capacity is relatively new, so depreciation isn’t reflective of maintenance capex.
I don’t think it represents very good value at today’s prices though. My cost is below 350 (and I have bought even in the 700s)
That said I am not selling – but if this small cap mania continues and this stock gets more attention I might be tempted to trim.
The discovery factor here has played out – so fundamentally any more multiple expansion will be over-valuation (maybe already is overdone)
DII and FII holding was around 9-12% each when I first bought. Now both own around 18%.
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