Really interesting and most relevant point you have covered here
Prakash and Manoj.
Adding on to your discussion I personally believe that TIPS might even trade near 100 PE
Here’s why
- The 30%CAGR PAT and sales growth is a very conservative guidance given by the management.
They have been giving same guidance since past 3years and easily managed to grow way beyond that.
Also I have watched many interviews of kumar taurani he has been very confident that in next 3-4 years the industry size can easily grow to 12-15k crores which is 4-5 x of current industry size
So you can get an Idea about next 3years of PAT and sales of TIPS considering a 10% market share.
Also if we look at the paid subscription not even 1cr indians have shifted towards paid till now. So you can imagine how much scale is possible in next 10-15years.
2 Music is an integral part of any Indian wedding and currently we Indians hardly pay for the music public perfomance rights and this segment has the potential to generate 10-20k crores of revenue alone – kumar taurani mentioned in a podcast.
- now look at all the consumer facing businesses in India like Nestle,britannia etc
Their past 10yr median PE has been around 50-75 and their 10 PAT and Sales growth has been around 8-10% CAGR only
But why such high PE ? When they are hardly growing at double digits
Because of extraordinary high ROCE and ROE
That too with high FREE CASH FLOWS.
This is what I believe
And now comparing TIPS which is also a consumer facing business
75 PE at 30-40% PAT growth is not too high and also even when the growth phase stops after 5-10 years still I believe it will trade at around 50-60-70 PE range.
Let me know what all of you think ?
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