To be correct they did some equity raise too but promoters might not be sure diluting themselves that migh be reason to mix debt and equity
3 Likes
Q4 FY 25 -Growth & Margin Guidance
- Targeting 15% CAGR revenue growth over next 2-3 years.
- EBITDA margin guidance: 13-14% in 3 years, with potential to reach 15%.
- Interest cost to reduce from Rs. 100 crore to Rs. 10-15 crore p.a. post deleveraging.
- So I did back of the envelope valuation exercise
- Net profit range in 28 -300 to 350
- Exit PE -20
- Exit Marketcap in 28- 6000 to 7000 Cr
Discount Ratio -12%
Discounted to PV- 4200 Cr to 5000 Cr
Current Market Cap- 6791 Cr
So If company becomes 20%-30 % cheaper, then the set up can be interesting.
5 Likes
We can never know full picture regarding the decision of raising debt. We do not have all the information. So, we cannot say whether it was the right or wrong decision.
We need to believe in the management, and assume that they must have explored all the options and chosen what they believed was the better one.
I not saying this specifically for Sheela foam but his holds true for all the companies. We as a public shareholders have a very limited knowledge and hence it is difficult to guess why management opted for something particular.
Again, we can only speculate the intent of management but True reason / logic would never be known to us.
3 Likes
Hi Nikhil,
While I understand your prespective of investing in DMART though as a fellow investor would suggest that you could have also put some numbers behind your story or investment thesis.
As stories are great but numbers tell the real throughput happening on the ground.
Few Pointers:
- Ecommerce is a different turf which they ignored and now new players have occupied the space and they only have a 10% share and mgmt agreed that they are making losses in this space.
- They have been extending the period when the benefits will accrue from the acquisition . If you the FY24 numbers - Reported at INR 850 crores, which was an increase of 10% year-on-year. However, compared to Q3FY25 (INR 967 crores), consolidated revenue decreased by 12.1%.
So I feel the mgmt really need to get their act together else the other players will eat their share - similar to what happened in the luggage space and now VIP is fighting a losing battle.
P.S: Nikhil - I know you sell the sheela foam mattresses - Do you see that more customers have started arguing for bargain? Or do feel the market getting crowded? Looking forward to hearing your prespective from the ground
3 Likes