Few thoughts:
1.A company whose sales growing at 11% is trading at a PE of 32.Isnt it pricey?Even a back of the envelope calculation would make the price look very expensive.
2. The company seems to be more focused on margins than sales growth.The reason why companies shift focus from growth to margin expansion is only when they couldnt find new avenues for further sales and how does this impact the value of the company?Guess you guys are smart enough to figure it out
3.Finally,cmp seems more than fair and any negativr surprises in growth would only make thinga worse for the stock. Having said that,the returns for this stock are front loaded and there is hardly any scope for over performance vis a vis mkt from here,but if you are a long term investor who doesnt care about a year or two mkt performance there isnt anything to worry
3.I may look a little mean here but how long would buyers of garments,competitors,employees,and suppliers entertain an operating margin of 42% and a ROCE of 58%?
Disclosure: Not invested and not planning to invest even if it gets corrected by another 30%. (Below which will re-access the value with lower sales growth and adjust the returns to a more meaningful number and take a call)
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