1.6x Potential - Technical and Share Price calculation explained
Chart is self explanatory.
The management is confident of maintaining & improving margins ( since increase in raw material prices are passed on to the customer )
with peak revenue potential of 1250 Crore from capex incurred ~ with expectations of 60% capacity utilization by 2025.
At Existing 16% margins, 1250 Cr Revenue would roughly equate to around 200 Cr EBIT and 110 Cr Net Profits ~ 95 EPS
The 10 Year Median PE of the company has been around 20.
That would equate to a share price of 95 x 20 = 1900 ~ at peak utilization capacity.
It is a 40% upside potential from here on a conservative calculation.
Aggressively, if I assume increased margins of 18% and 3 Year Median PE of 25 ~ It would roughly equate to share price of 2600
A simple average of the two gives an expected value of 2250.
It wont happen overnight, since unlocking capacity utilization can take years, but such mental models can help build expectations and understand risks.
Note : It is not an investment advice, just for educational purpose. Small Cap shares are very risky, and share has been in downtrend for a while - please do your due diligence before investing.
The management is confident of maintaining & improving margins ( since increase in raw material prices are passed on to the customer )
with peak revenue potential of 1250 Crore from capex incurred ~ with expectations of 60% capacity utilization by 2025.
At Existing 16% margins, 1250 Cr Revenue would roughly equate to around 200 Cr EBIT and 110 Cr Net Profits ~ 95 EPS
The 10 Year Median PE of the company has been around 20.
That would equate to a share price of 95 x 20 = 1900 ~ at peak utilization capacity.
It is a 40% upside potential from here on a conservative calculation.
Aggressively, if I assume increased margins of 18% and 3 Year Median PE of 25 ~ It would roughly equate to share price of 2600
A simple average of the two gives an expected value of 2250.
It wont happen overnight, since unlocking capacity utilization can take years, but such mental models can help build expectations and understand risks.
Note : It is not an investment advice, just for educational purpose. Small Cap shares are very risky, and share has been in downtrend for a while - please do your due diligence before investing.