@ca.rishab
The issues raised by you are valid. One of the problems of small cap investing is that info is always scarce & is perhaps one of the reasons for low market caps for small caps. Another factor that I personally follow for small caps is not to go back more than five years, usually not beyond 2 to 3 years. That’s my style, not necessarily the correct one! Of course the more historical info one has, the better equipped one is in taking a call. Ultimately, it is always a trade off & the investing decision at the end of the day is largely a gut call. If after weighing the pros/ cons, I’m not comfortable with the story for any reason, I too will refrain from investing.
It is perhaps for this very reason that the education business is being hived off. It will probably have no legacy issues in the balance sheet & so would be lean. I feel that the education business itself could value about the same, if not more, than the current market cap, given it high operating margins over the last 6-7 qtrs of over 50% (Stand alone numbers as the NBFC is in a 100% owned subsidiary). A lean balance sheet would also means attractive return ratios. All this if backed by a decent dividend payout ratio, would mean sending positive signals to investors. That said, we have to wait & watch closely, how the story unfolds over the next 3-4 qtrs as nothing is a given.
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