Yes, I studied the business. Most of my analysis is captured in my original post. I bought in initially because I thought it was undervalued, there was good margin of safety, and the triggers were in place for growth on exports and EV. I also found some comfort in Nalanda Capital having held it for several years (their entry price was very low, of course), which I thought was a good vote of confidence on the management. Low debt was another factor. I also liked their focus on one segment and that they had a wide customer base there. They now seem to be contemplating broadening their portfolio – not sure of where they are on that journey as there is not much news or disclosure about it, but I think it’s a positive. If they execute well, I think this will get rerated even more.
Regarding the domestic sales, well, domestic auto growth has been quite poor anyway. So I don’t see that as an issue. Exports should also be more profitable. Operating cash flow/EBITDA ratio, I am not sure. Good point, I will probably have to study it further. But their OCF numbers in value terms, I expect that it will go up.
Personally, I think the current move up could be due to the land sale in Thane, but who knows, maybe it’s business performance driven only. While I have a reasonable position, would have been nice if I had bought in more given how the share price has shot up! But given what I knew, uncertainty of exports growth, and the uncertainty on the impact of the Waluj plant fire, I am ok with that. I don’t feel like adding now though, it’s run up too quickly. Probably will wait for Q1 results to see what I should do. Win some, miss some!
Let me also say these are just my thoughts currently, and I might change my mind too. Sometimes I book out profits, sometimes I hold on or add. It’s as much what the gut says as it is analytical.
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