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@8sarveshg Thank you for your insightful analysis. I was / am attracted to it as a cheap stock and was running my own numbers till I faced the questions answered by you.
I would be happy if you can clarify some doubts listed below:
In the above statement, I guess you looked at the segment results, applied an estimate of opex to arrive at earnings before depreciation gets deducted. I was curious how you got a depreciation figure of Rs 675 crores (the standalone numbers are 633 crores FEL FY 17 numbers)
I was curious to understand how this approximation works. FY 17 Gross Block, could be approximated as FY 17 Net Block + FY 16 Accumulated Depn + FY 17 Depn. I hope you get why. This assumes insignificant amount of assets were discarded. This adds up to (all Rs crores) 5848+1344+633 = 7825. Adding FY 17 Depn to FY 16 Gross Block will not capture the Net Block added in FY 17. Feel free to correct me. Of course the concomitant effect is that the yields will show to worsen against this figure.
Can you please point me to the source? I could not get it in the May 16 Presentation, not in any filings with Stock Exchanges. They also did not seem to host conference calls, where it could possibly have been mentioned.
Further FEL sold shares in the Future Lifestyle Fashions Ltd in the Sept 16 - Dec 16 quarter to a related party fully owned (directly and indirectly) by the promoters. The earnings of Future Lifestyle Fashions zoomed after the sale with March 17 quarter earnings being 3.6 times March 16 quarter earnings. It is inconceivable that the common promoters did not know of the coming of such a substantial rise in earnings. So the sale of the entire lot just prior to such earnings boost, and after indicating that its potential value is 5x (slide 9 of the May 16 presentation) begs the question of why and raises suspicion. Soon after the sale the valuation has gone up 2.5x - 3x, now out of hands of FEL minority shareholders.