It is a standard practice for firms whose revenues are dependent on IP. They amortize the cost over 5 years. Many pharma companies and other businesses that invest heavily in customer acquisition also capitalize this kind of spending on their balance sheet. IS IT BAD? - Difficult to say as you will have to analyse the situation depending on whether you have confidence in the mgt/business. Please go through the 3 videos by Aswath Damodaran on youtube where he values META when it was dropping to about $89 a share.
It is very much possible that they are doing so. The promotors have more than 73% ownership if I remember correctly. For the year ended March 2023, the MD and Chairman took home around 16Cr in total (salary, commission and dividends) from the company. This excludes the amount taken home by both their sons, his wives and hid daughter-in-laws. If you factor that in, it would be a huge sum of money that they cashing in. Its always better to have more money. So why not take in another 6 Cr in two years? I don’t know if they did this almost every year before FY19 and if they are still continuing to do so. On the other hand, its a small amount relative to the 2000 Cr of revenues at that time.
On a different note, I think 100% of their revenues come from export. For the skeptic that I am, it could all be a scam and might just be plugging in numbers on a computer screen! hahaha.
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