wow - that was helpful. Arrow textiles looks like an orphaned step child of jaydev mody of delta corp fame. Numbers look a notch below premco's at 25 % EBITDA margin and about Rs. 60 cr. in terms of size - they are also growing well but not as fast as premco
I plan to talk to them to understand what they are doing and how they view premco - at 9 x PE, their valuation is also on par with premco.
I am attaching a doc that is on their website - the one big difference is on ROCE where premco's is at 32 and arrow's is at 14-15 %. That's ridiculously large - so either premco is sweating its assets exceptionally well or these look large because of the historical asset values of premco and hence, may not sustain going forward whenever they add in new capacity, which should be in the not too distant future
This has been a concern I have always had - premco is a 50 year old company and I am sure their assets are at 60's and 70s cost of real estate/machinery. What will incremental ROCE be once this asset gets maxed out ?
premco is generating Rs. 72 cr. of revenues with a net block of Rs. 13 cr. whereas arrow is generating Rs. 47 Cr. with a net block of Rs. 20 Cr.
premco was founded in 1966 whereas arrow was started in 1983 - that's a two decade gap
neither of them have added too much to their net block over the last 5 years - hardly 10-15 % growth.
any counter views ? @ayushmit, @Vivek_6954, @rohitbalakrish_ ?
.arrow textiles.doc (203.5 KB)