This is just a thought experiment, to create an anti-thesis in my mind, because I am invested.
On sales of 1600Cr, I expect EBIDTA margins of max 32% (the mgmt has indicated 30% as a sustainable margin). For simplicity I am ignoring Other income and finance cost. Since the company is into CAPEX mode, depreciation will increase with time, I am assuming it will be 25Cr (its probably very conservative). Tax rate of 25% (it has been higher than this on average).
1600*.32, less 25Cr, less 25%…Net profit is 365Cr. assuming a PE of 30, mcap comes to about 11000 Cr. That is 2.2x from current mcap, returns CAGR from CMP will be less than 15% in 6 years.
Margins, depreciation and tax rate assumed are optimistic, maybe PE too. Odds of mcap doubling from here in 6 years look very low.
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