Enil

@desaidhwanil Thanks for prompt reply. I do agree that the IRR assumption does seem to be quite conservative. I am also cognizant of the fact that having multiple frequencies in their key markets will allow them to earn incremental revenues on much higher margins due to operating leverage. But just to play the devil’s advocate, let me try to put things in numbers.

ENIL has invested close to 350 crores in the auctions, which means that in order to meet the post tax IRR assumption, they’re need to earn additional cash profits of 55 crores (350 crores X 16%) or so. Additionally, they will also need to recover close to 25 crores they will lose by way of interest income (post tax). So essentially, they will need to earn an additional 80 crores at the end of their stated gestation period of 2 years in order to justify the Investment.

Currently they earn between 120-130 crores post tax cash profit (after adding amortisation charges)

I feel is that this will be a steep challenge. I have no doubt on the management’s capability but I think if anything goes wrong the downside is not protected at these valuation levels

But I would love to see your calculation on the IRR if you don’t mind sharing it. Just so that I know where I’m thinking incorrectly.