Black Box’s numbers should show improvement over the next 4-8 quarters. In the most recent concall, co guided to a number of steps that they have taken to improve the margin profile of the co from the 4.5 per they did in fy2023 and moving up to 8-9 per margin range. I think exit q4 for fy24 should be closer to 7.5 per and exit q4 fy25 should be closer to 9 per.
Co is the in the digital infrastructure play with majority of its revenue coming from North America in which they have a healthy order book and marquee clients. Fy24 revenue should be closer to 7000-7200 crs and fy25 revenue around 8000 crores with a conservative 680 crs ebitda.
Similar cos in the US like convergeone have got taken our private at 11-13x ev ebitda and presidio is looking at a similar multiple to ipo. The margin profile of these companies is similar to what black box is projecting.
If black box does 680-700 crs ebitda in fy25, it can trade at 9000 crs market cap at some point in the cycle. There are no comparable peers in the indian market and the scarcity premium can be an added factor too.
at cmp the market cap is 3200 crores.
Applying 12x multiple to fy25 nos, it is a potential 3x opportunity. Improving margin profile and improved cash flows should be a trigger for the stock.
Technically too, the stock seems to have broken a long term downward trendline.
Disclosure- purchased at 170-190 range.
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