Apart from the results, the drastic change in the management’s risk perception is very concerning. The company already has a medium amount of Financial Leverage (As of September 2018, ~50%). By investing aggressively in their Retail operations, they are clearly increasing their Operating Leverage too (Stark increase in Fixed Assets and Working Capital). Combine both of these with the fact that they’re risking the Margins too, and you’ve got a recipe for disaster.
The Share price is comforting, but at what cost? I am forced to remind myself of this wonderful quote from Benjamin Franklin: “The bitterness of low quality remains long after the sweetness of low price is forgotten.”
We live in uncertain times as far as the Capital Market is concerned. Mirza’s antics are really just obscuring the picture more.
Disc: Mirza International ~3% of my PF. I may not add further or may be even be willing to sell.