The numbers on this look amazing to say the least.
If what Nikhilesh is saying above is true, and the company can grow topline 20% YoY, then let’s take a brief look at the company’s returns to try and gauge the earnings power.
In 2015 they had 118Cr in earnings on 3,712Cr of debt & equity capital which is a 3% return on capital. As of 2024 they had 951Cr in earnings on 5,723Cr of debt & equity capital which is roughly a 17% return. In the subsequent 10 years they have invested ~2,017Cr in additional debt and equity capital and using this money were able to grow earnings by ~833Cr!
So, the company has been reinvesting 68% of their capital at 41.3% returns. The return on incremental capital invested is 41.3%!. Multiply the above two and you get the value compounding rate of the company which is 28.1%.
The performance of the stock over the same period has been around 21%-24% annualized so a few basis points off the company’s 28.1%, but if MAHSEAMLES is able to keep redeploying the same amount of capital and earn about the same return on it, then coupled with the tailwinds that aid growth, this will be a good business to hold.
These numbers are very good considering this is commodity sensitive and cyclical. I haven’t looked much deeper into this, but someone in the management seems to be doing the right things.