| Original Shareholding | Post infusion | |||
| GDL | 53% | GDL | 50% | |
| IFC | 20% | IFC | 16% | |
| Others | 27% | Others | 22% | |
| Norwest | 14% | |||
| Post money | 420 | |||
What should be the holdco discount? 60% empirically?
Valuation of Snowman - INR 250 crores => FY13 P/E of 25.0 x or FY15 P/E of 15 x; seems high
Bear Case, I would value it at 10 P/E - INR 100 crores - INR 150 crores is the range of valuation
CFS - 10 P/E for a 15% RoE business - 90 crores => 900 crores
Rail - INR 30 crore PAT => INR 300 crore valuation - 60% holdco discount? => 180 crores
Overall: Valuation should be around 1250-1300 crores
Trades at 1210 crores
5%+ div yield + atleast 10% growth in EPS => 15% CAGR in stock price; longer term only private player who has actually scaled.
Other triggers:
- Passing on the rail freight increase to customers
- uptick in the economy; therefore CFS volumes
- 7 times P/OCF
So why hasn't the stock performed over the last two years?
my two cents:
- earnings growth tapered off - investors like to see atleast 15% growth in earnings on a constant basis
- need insulation from cyclical businesses
- Indian market is more growth oriented - value needs patience and patience needs large quantum of capital
Disc: I own some in the stock
Your penchant for brevity as well as preference for sticking to the numbers while avoiding excessive extrapolation in valuation techniques makes this blog a refreshing sight.
ReplyDeleteIt's funnier still to see that you did not bother to exactly employ dcf which tend to be applied by analysts especially when it comes to companies like this one.
Hope the current investing climate with whole scale sectoral (power,infra,realty and even small scale nbfc's) as well as market cap (small and microcap incredibly so) revulsion , across the board insider purchases as well as restructurings finds you in good spirits.
Cheers
p.s. truly wish you had given me the comfort of a good 'ol anchoring bias with a few more numbers in your thesis...lol
You are absolutely right. This blog is meant exactly to serve the purpose of avoiding excessive extrapolation and living in the future... If the techno commercials are right i.e if a specific company is a leader in three different things, I believe that it is most likely that it will continue to remain so in the future as well! Newton's first law of inertia:) I guess! a lesson I'd learnt very early in my school days - the first ranker remained first ranker in the class until she moved out to another school:)
DeleteBtw, nice to know you and thanks for the feedback