I haven’t analysed in detail. But here are my thoughts:
Credo Brands reported doubling of sales in 2023 as compared to 2021. What caused this sudden spike in sales and OPM to zoom to 30+ from 18-20 percent?
If I am being totally conservative and assign pre 2021 OPM of 20 percent on sales of 500 crore, PBT will be around 50-60 crores and PAT to be 40-45 crores based on 25 percent tax. Total number of outstanding shares are 6.5 crores. That gives us an EPS of 6-7 and P/E of about 30 on CMP. Things to ponder:
- Why did the sales double in just two years of time? Has management given us a concrete reason?
- Will they be able to maintain this rate? I think market is not sure about this and that’s why the price is down 40 percent from listing.
- Based on CMP of 200-210, it appears it is priced to perfection.
Disc - No holding.
Thanks,
Varun
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