I was doing some back calculation based on the management commentary. Following are the points, I have captured from the last earning call:
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Free cash flow generation for the FY25 will be around 225-250cr
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Cash equivalent as of fy24 was 262cr and at the end of fy25 should be 512cr.
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EBITDA will be around 3.5x Net debt
Net Debt = Total debt - Cash and cash equivalent. -
Net Debt as of q1 fy25 is 1862cr and at the end of fy25 should be around 1620cr. I am just deducting the anticipated cash flow of 250cr.
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So, the EBITDA should be around Net Debt/3.5, i.e, 460cr
PAT= EBITDA(460cr) - Depreciation(120cr) - C G&A(14cr, 3-4% of EBITDA) - Interest cost(200cr)
PAT= 126cr
Cash flow = EBITDA(460cr) - C G&A(14cr, 3-4% of EBITDA) - Interest cost(200cr)
Cash flow = 246cr
This is precisely the cash flow number that management outlined in the last earning call; hence, this somewhat proves the fact that the EBITDA for fy25 should be 460cr.
The valuation of 21x is the bare minimum; from my understanding, as this is the average valuation of the last 12 months. Although, I believe over the next 2 years the valuation should re-rate and thereby match that of peers such as Chalet, whose valuation is 33x.
EV= 460x21=9660
Mcap = EV-NetDebt = 9660-1612 = 8048cr
77% upside from here, i.e, the share price could be around 366 from 207 as on today.
Disc: Invested and biased
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