The main reason for high valuation is high degree of operating leverage platform businesses tend to enjoy. These businesses tend to have very low marginal cost of production and a very healthy balance sheet due to minimal growth capital required and very short cash conversion cycles. All of this means that the percentage of accounting profit getting converted into free cash flows tends to be very high for a platform business. For example, most of the platform businesses (e.g. CDSL, BSE etc) have their sales/free cash flows ratio in lower single digit.

I also believe one shouldn’t look at price/earning (accounting profits, not real cash) in isolation while valuing a platform business. DCF discounts future cash flows (not accounting profits) and for platform businesses, cash flows tend to have much more robustness and predictability than an asset intensive business that require continuous infusion of CAPEX for revenue growth. And if your platform business happens to be in a fast growing sector, terminal value can also increase dramatically, resulting in higher present value of the business.

How did you arrive at 20% YOY growth for Q4? I’ve taken the 12 month figs and reduced the 9 month figs to arrive at Q4.

L&T’s tech Avatar…a very detailed article on how the company is positioning itself for the future.

today came across this stock Nila Spaces, anyone has any information as screener data for the last Q seems to be eye-catching

JTL Industries FY24 Business Update:

The company is clearly winning the battle in the steel tube and pipes category.

JTL Industries grew sales volumes by 42.5% YOY in FY24.

This is a far better show than the likes of APL Apollo that grew sales volumes by 15% YOY and Hi-Tech Pipes that grew sales volumes by 10% YOY.

The CAPEX plans at JTL Industries are well on track as the company is set to improve on its product mix and capture market share.

The only concern with JTL Industries is that the value-added segment grew at a slower pace (up 34% YOY) than overall volume growth (up 42.5% YOY).

The company never had any issues on the fundamental side and has kept performing much better than its peers.

JTL Management had guided to grow volumes by 35-40% CAGR for the next few years so this volume growth number of 42.5% is at par with what the management had guided in the past.