Even though I like the business, I never invested in the business because I was not comfortable with the valuation when I first discovered the business about 2-3 years ago.
Between 2014 and 2016, EBITDA margins remained flat at around 16-17%, net margin almost doubled from 3% to 6% and stock price followed.
Source: Capitaline
Most of the change in net margin was simply because of change in depreciation
Source: Capitaline
which has reversed over last 2 years causing net margins to decline. I was actually surprised to see EBITDA margins decline so that’s an additional risk. I think market price does not fully reflect the risks so will stay away for some time.