Panasonic Energy India Company Ltd

Thanks for pointing out the technical factor of the stock possibly taking a breather from an earlier run-up.

However, the trailing PE as well as the run-up isn’t fully reflective of the change in fundamentals IMHO.

After double digit volume growth in FY24, I think that they should do another such year exiting Q4FY25 at 10% margins. RoE should rapidly improve.

So, I see them doing around 365cr rev with 40-44cr EBITDA in FY26 without making extraordinary assumptions.
I’m not assuming a massive rural revival and growth here which could very well be the case due to probable policy focus.

At the sector’s expected volume growth of 4-6% every year, shifting of the industry from ZnC to alkaline as well as minor gains in realisation would push the industry’s profit growth trajectory to over double digits for the next five or more years.

I understand that the narrative is important for the high PE most consumer companies in India have enjoyed. The narrative could very well be:

• a proxy play on growth categories like smart TV/fan remotes, toys etc in a consumer sector where the threat of white-labels are minimal due to safety/reputation playing on consumers’ minds unlike other consumer categories
• a debt-free co with a parent with strong R&D capabilities across group cos that pays relatively handsome dividends

I’m puzzled by Eveready’s price and valuation more than being disappointed by Panasonic’s situation. I consider this as being on the lower side of the risk spectrum and hence plays an important role in my pf even if it doesn’t give multibagger returns.

I don’t mind paying 12-13.3x FY26 earnings for a co like this at all.

I think that the most important thing you pointed out is that nobody seeks stability/robustness in the “microcap” section of the market and hence this might not be as attractive as it would appear if it were trading over 1000cr.

Stock could go down with the market in these illiquid stocks. The recent move of one surveillance measure(ESM) being applied to sub 1000cr cos now doesn’t help in improving liquidity either.