Kotak Daily 28-Nov-23.pdf (1.0 MB)
Kotak has retained the sell target on Balkrishna.
Valuations
What convinces me is the valuation comfort of the company is not favorable.
In the past, the PE has always peaked out around 40. At this point the PE is closer to 48 and PEG is nearing 7. The upside seems pretty limited. Also, technically closing in on previous high levels.
Business Outlook
The North America business which seems slow on recovery contributes only 17% of the business. Which means 83% should start working. I am a bit concerned, the tone of concall was still too cautious. Is there something missing ?
SoM Targets
Management has been speaking about achieving 10% SoM since a few years but there seems to be no clear strategy in terms of achieving the same.
Missing Guidance
Seems like a very general guidance of H2 to be better than H1.
Disc: Please do your own due diligence before taking any action. I have booked out on my positions based on the analysis above. Hence, it may be a biased viewpoint.
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