Hi everyone! Been a while since i tracked valuepickr, its nice to see that the old timers have created good wealth by being patient with cupid.
A lot has been said about the valuation that its trading at and i have a viewpoint on it too… please share your thoughts if anyone has looked at the valuation with this perspective.
As we all might agree that the company was quite undervalued while mr. Garg was at the helm(though i am a fan) with 12 -15 kinda multiple. So getting in fresh management who is putting his own money on the line should definitely rerate the company… question is how much… so in a market like India with decent growth,roe, margins etc a multiple of 30 to 40 can be justified.
The kicker comes in with the fund raising… as i understand by raising 400cr, historically cupids roce has been 25%+ … lets say they are able to generate 20% on this 400cr conservatively which is around 80cr.
As they are already making 40 to 50cr steady state business. So a few years out( may be 2) we could see a 130 140 cr kinda bottom line… and hence the 3000cr market cap.
This is just my understanding as to why the market might value it in a certain way… its more in the art territory than science now, but as there are no revenues from ivd , nothing from usfda , nothing from Singapore tie ups, there are multiple optionalities attached.
Im not making a bull case, but only trying to understand why this valuation is justified and fiis are willing to invest.
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