Observations
Every year in annual report company have mentioned the total amount MT’s of insoluble sulphur sold, however I find it very surprising in FY15 annual report this figure was not mentioned. Since revenue from insoluble sulphur for FY15 being very near to FY14, the quantity(MT sold) will be nearby FY14 quantity sold which was 19224MT.
Assuming 11000MT new capacity being fully operational by FY 2019 we get new capacity of approx 30000MT which is 11-12% CAGR growth. And also not to forget they will have some debt by that time too. The ROA for last 3 years have been around 12% so the returns on incremental capacity seems decent but not great. At this point of time (11 PE). I see less margin of safety for new allocation. Will add if price goes below 430. Positives I see are company is able to generate good cash flows and management seems to be doing what they talk from Mundra Plant capacity addition experience.
Disc : Invested. Will add if there is correction from CMP of 515
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