Now let me put up a poser?
Which among Mayur or Astral will find it easier to double its turnover in next 3-5 years?
To me the answer is clear without needing any arithmetic. Astral can double its turnover from 1000 cr to 2000 Cr easily in next 3-5 years. Can Mayur double its turnover from 500 Cr to 1000 Cr as easily?
Which business is likely to be valued more, as it attains bigger size? (assume can keep growing at similar rates)
Clearly Mayur has a huge advantage in generating Economic Profits. Its spread is 28% vs a mere 10-12% in case of a BKT or Astral.
But as we can empirically understand from above, the Size of the Invested Capital (and thus growing at a faster rate) will also matter a lot even if it invested with a much lower spread.
Unable to capture this from the numbers. Yet something keeps telling me this aspect is not about the subjective parameters, its simple numbers.
Why can’t I catch it?:)) Please help