Company has generated free cash flow of around Rs 120 Cr and has now announced a CAPEX of Rs 128 Cr.
Reason
To maintain and cater to the growing demand of our customers.
Capex will be completed in next 24 -36 Months.
Exisitng capacity is 305 KL.
Proposed capacity 207 KL.
Current Capacity utilisation 62%.
Take away points:
Free cash flows generated is being utilised for CAPEX. Company is presently debt free and future CAPEX will also not require any debt as frees cash flow will be sufficient to take care of expansion.
Current capcity utilisation will further increase from 62 % to 90% there by operational leverage will start playing to further improve margins.
Company is having visibility of future growth.
Efficient captial utilisation.
CAPEX investment seems to be chanelised in higher margin products.
Management walks the talk so we can easily infer that Company is having visibility of future orders and therefore increasing capacities. It also ratifies the point that vendors have trust in Neuland.
I look forward for above criterion in compounding stocks.
Disclosure: Invested and will further build position through SIP.
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