I appreciate your thinking .Even if we assume that each asset of 100 cr yields 9 cr pa (though added cranes doesnt increase expense proportionately ) ,the value of gross block of 2490 cr (77% new cranes ) with a 9% per annum discount rate over 40 years and a terminal value growth rate of 0% is approximately 27,244.Todays market cap is 5300 cr only ! Discounting for such long period of 40 years have risk ,hence I used 15% pa for 25 years and terminal value of 2% .
In good companies like say Unilever for Management Accounting, they used to work on ‘Remainder Life Replacement Value. While for financial accounting book value was taken!If one can do that ,the difference will be stark ,suggest we think like that and then let’s hear others views here .
I am only saying we think like business owners/ promoters who is increasing capacity slowly but regularly (learning from past mistake) as he cannot exit the business .We as investors have an advantage over him .We know there is immense life time value with a huge tailwind (atleast till 2030 ) .We dont know the exact value or the exact tail wind when it can slow down ? Hence my 2 cents is we as long term value investors see value in it and exit when tailwind stops .
Disc: Views may be biased bcos of my holdings please do your own due diligence /scuttle butt
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