I don’t think you are differing with me. EV/EBITDA multiple (just like P/E) currently looks low due to outstanding EBITDA performance company has delivered in the recent quarters.
If I’m not mistaken in the last quarter concall, management has guided for slightly lower EBITDA from current 18.2% as they said it’s not sustainable. .
So if EBITDA margins have peaked and start yielding you will have to look at valuation picture again as to how they are placed against historical median. From a quick back of envelope calculation, a 2% moderation in EBITDA margins will inflate EV/EBITDA multiple by 10%.
Point I was trying to make was that commodity stocks go through cycles of mean reversion (from top or bottom) and timing can be a critical factor. These are not your typical consistent compounders where you can hope to make decent returns from any point you enter.
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