Hi Sunil,

In my limited and flawed view this is too hypothetical a scenario :).

Need to get into the specifics of the business the company is in (Business model, Competitive advantage, pricing power, relationship with suppliers etc). you would have to take a qualitative call on the nature of the business.

Purely from a valuation perspective, i have not been in favor of using earnings to arrive at a intrinsic value range (especially given the fact that Profits are so inconsistent across the years). For example what would explain a drop in profits from 200 cr to 10 cr the next year.

Maybe a safer way would be to determine the growth in book value factoring in future investments to be made and the dividend expected to be paid out. (Playing it safe assuming the company was to be liquidated what would the investors get out). In addition you should also look at Enterprise value of the company (which takes care of Cash balance and debt levels).

Also would be important to look at Cash Flow patterns (Free cash flows, Op cash flow and how much of the business is self funded for future growth without needing additional capital).

Regards,
Pulak

Hi, Is there a possibility that those of you who are able to participate in the call tomorrow can share the details of the call later with the forum ?

I think one has to be a bit conservative in making assumptions and take management’s guidance with a pinch of salt. I work with an eps estimate of 22-23 based on which current price of 660 odd is fair price. With bouts of pessimism and optimism, it will swing above and below this price unless something meaningful comes out in q3 q4 results.

Till that time I expect the stock to remain sideways within a range of 50-60 Rs plus or minus the fair current price.

Gruh results need not be tracked on a QoQ basis because of the super track record the company built over the years. This quarter, the results are good enough.

The business would grow at 25% thereabouts for the next few years barring any unforeseen circumstances. Stock growth is different from business growth, do not confuse between the both. I read somewhere that Gruh grew its net profits at 25% plus over last decade but the stock grew at 43%. So, there might be some consolidation before the stock moves. Typically it consolidates for sometime before starting its run, this time it looks like it’s taking time. It will be expensive when compared to other stocks for sure because of its track record. Typically, it will under go only time correction, price correction on a larger scale in not possible.