Since the Company has recently carried out around Rs.37cr of Capex, some of the concerns related to management preferences towards their private company have been quelled. That being said, the Company has given out 7.7cr short term loan (most probably to a related party) while funding the Capex predominantly through around 20cr of debt.
Management conflict of interest and the highly competitive nature of the business are big negatives. However the Company, despite its size has best in class return ratios (ROE and ROCE) in the industry, driven by best in class asset turnover and superior NPM. Debt to Equity is also below my median peerset which include Essel Propack, Polyplex, and Uflex.
I have priced in the management risk premium into my valuations and also taken into account the long runway for growth considering latest Capex and industry outlook (somewhere around 12%):
https://niti.gov.in/technical-textiles-sun-rising-sector-indian-textile-industry
I’ve valued the Company at around Rs.187-200cr or (Rs. 214-219 / share).
Please let me know if anyone wants to view my analysis (MS Word) along with my model (MS Excel). This is not an advert so I’ll send it across for free, no worries. Just trying to share my perspective, gain insights and perhaps get some constructive feedback.
Thanks and cheers! 