Great Results for Q1 which is intrinsically weak for Capital goods.
Have to take into account that elections also happened in the this quarter.
I am looking at this another way. When we had a capacity of 1500 machines at the starting of the year we sold 1284 machines by the end of the year ( approx 85% utilisation ). Now we have a capacity of about 2000 machines and a conservative environment having tailwinds 85% of utilisation comes to 1700 machines. Since NEXA product is already 27% of the order book which was in single digits last year and the new orders are of defence and aerospace as tendering process as picked up pace expecting a average realisation of 22 lakhs is reasonable taking my estimates of Revenue to a minimum of 375 crore at a 17% margin a PAT of 48 is possible. A possible doubler of PAT for a second consecutive year may command a 100 PE in a bull case taking market Cap to 5K at the time of announcement of the new facility in which the business can further inch up the operating margins to 25%+ due to the government policies applicable in the new facility helping swell the PAT to higher % levels of revenue.
Having said that, “ what i see is all there is “, and i do seem to realise how little information we have as investors creating a HALO effect and jumping to conclusions activated by system 1 ( book reference – Thinking fast and slow by Daniel Kahneman )
Post reading the above, even my post may infuse confirmatory bias to your independent judgement in a bull market. Most of us do not want more information that may spoil our story – the human design. Best for facts to emerge and watch the story unfold and learn from it both ways.
Good luck investors, concall tomorrow at 3 PM.
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