Recently looked at the company and below are my first impressions.
The company has short term debt of 383cr and receivables of 882cr. The long term debt is 216Cr and investments are worth 230 Cr. Based on these I am guessing the debt position is pretty comfortable.
The cash available is 935Cr. Mcap is approx. 2700Cr. taking the difference the business is available for approx 1800Cr. Assuming that the FY24 sales will be 6000Cr, thats 0.3x P/S. That seems to be very cheap.
Further, the pain of lower realizations can persist for another year or 2, cant say for sure though, but in any case the current levels of OPMs are on the lower side compared to 10yr history.
Additionally, stake sale by promoter took place recently at around 1500/share, so anyone buying now is entering at much lower price, so that could also be a comforting factor.
So, there is a change in ownership in the offing, reversal of margins after couple of years is a good possibility, the share price can further correct for sometime which gives the buyer time to accumulate slowly and monitor the performance of the industry and company. Lastly there is some value left in terms of the valuation of the Thai subsidiary, but that also would keep going down as long as the pain in the industry continues, so not ascribing any value there.
Overall, looks like a value buy, and will demand lots of patience.
Disc: not invested, but thinking to invest.
| Subscribe To Our Free Newsletter |
