The company is trading at a very cheap valuation of 1xFY26 sales. As per my understanding, the reason is “bear market” + “guidance is revised downward”.
Q1FY25: Company is guiding for a topline growth of 18-20 pc with an EBITDA of around 100 cr for FY 25 ( LY EBITDA was 74 cr )
Q2FY25: The Company is still confident of clocking 80 cr kind of EBITDA for FY 25. Guiding for a much better H2 vs H1.
Then, from 1200-1300 cr topline, they have shifted to 1200 cr topline in the next 4 years.
But, yes, the company is at lucrative valuations. The Panoli plant is expected to start production in Q1. They are guiding for 15% in FY26 and about 20% in FY27, consolidated topline growth.
| Sales Projection | Bear | Base | Bull |
|---|---|---|---|
| FY29 | 1100 | 1200 | 1250 |
| MCAP/Sales | Bearish Case | Base Case | Bullish Case |
|---|---|---|---|
| 1 | 7.00% | 10.00% | 11.00% |
| 2 | 27.00% | 30.00% | 31.00% |
| 3 | 41.00% | 44.00% | 45.00% |
| 4 | 51.00% | 54.00% | 56.00% |
| 5 | 59.00% | 63.00% | 64.00% |
Based on earnings growth + valuation rerating, we can make a good CAGR.
Risks: More intense competition from Chinese on API side, plant not starting on time, valuations had gone to 0.3xMCAP/Sales in 2018-19 bear market.
Disclosure: Invested