Please don’t call me sir. I bought between 103-105 on the day the news broke out about the ED action. The price has reverted back and I have better ideas at the moment. This of course has no bearing to anyone else who has a different horizon/investment thesis.
Some pointers on my high allocation ideas, and those I’m currently evaluating.
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My model is for Satin is that they’ll do around 250 Cr. of PAT in FY24. This would make FY24 book value 225. If the industry structure remains robust for a few more quarters, Satin too should re-rate. Depending on how this plays out, from 1-1.5x FY24 book, upside ranges from 32 - 100%.
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Man Industries has guided for 300 Cr. of EBITDA in FY24 on the back of a strong order book, volumes from new capacities, and additional volumes coming through at the end of FY24. If they grow conservatively at 20% and manage to reach double digit margins, they could do around 270 Cr. of EBITDA. They’re virtually debt free, and will receive around 150 Cr. of cash for land that they’re trying to monetise. If this happens, FY24 EV/EBITDA is around 2.6-3 before taking into account any spend on stainless steel pipes.
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Market is pricing in a recovery for Coastal Corp. They claim to have sold out their capacities in their new plant to Japan and South Korea, thereby avoiding competition from Ecuador incrementally. A reversion on US shrimp inventories, and a really cheap ethanol plant are additional optionalities for Coastal. I’ve shared some reading material on the former here:
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Sudarshan has put up an immense amount of capacities in the last few years, possibly at the worst time in the cycle. Margins look to be recovering, and they should start reporting volume growth too. I’m going to be quite patient here, and possibly pick up other peers once the sector as a whole starts to recover.
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Solara has been battered for a year now, and is trading at really cheap valuations. If they manage to scale up their new plant - and with some luck, have the USFDA issues sorted out soon - margins should start to recover. Management has guided for reversion in margins in the second half of FY24. At this price, any improvement in the business could lead to a quick rally.
For the majority of my portfolio, I am not looking for multibaggers or huge winners. I have found having a broader view on sectors and companies more rewarding, and this helps me find mispricings.
This is not financial advice, I am often wrong. Please do your own due dilligence.