The business has been making losses over the past few years and China would continue to dump
6.5crore shares post preferential shares issue, ~5000cr payout results in ~770 per share and the same is planned to be invested in greenfield projects (in addition to taking in a large amount of debt) where they seem to have no expertise.
Beautifully summed up ! Just a doubt. FY 25 PAT is 265 Crs. At a P/E of 5 , the market cap comes at around 1325 Crs. On what basis did you value Kiri's existing business at 400 Crs?
Hey Sivaganesh Ji. FY25 PAT is not 265 Crs. You are seeing the consolidated view hence you're getting a wrong picture. The 265 Crs is purely an accounting entry which consolidates Dystar's share of PAT with Kiri. In reality, no cashflow/dividends is paid to Kiri. Kiri's standalone PAT is at 4 Crs for FY25.
Given this skewed PE, at the time of the post, we made a simple, conservative assumption of the standalone business being a measly 1 P/B. We might have grossly underestimated the Kiri's standalone business but it is unlikely to be below that. That caps our downside with optionalities for an higher upside.
Hey Swaroop Ji. Missed this comment. Including Dystar, Kiri's P/B is ~5. We made a simple, conservative assumption of the standalone business being a measly 1. We might have grossly underestimated the Kiri's standalone business but it is unlikely to be below that. That caps our downside with optionalities for an higher upside.
Thanks for your interest Mohit ji. As iterated in the article we are only interested in the likelihood of the money materializing. We are not interested in the future of the business.
The business has been making losses over the past few years and China would continue to dump
6.5crore shares post preferential shares issue, ~5000cr payout results in ~770 per share and the same is planned to be invested in greenfield projects (in addition to taking in a large amount of debt) where they seem to have no expertise.
Sounds like a risky bet.
Thanks for your time dh ji. We have clarified this doubt by calculating the potential upside and updated the same at the end of the post.
Also we have iterated that we are only interested in the likelihood of the money materializing. We are not interested in the future of the business.
Also given the risks of the business, we have only vested a small fraction of our portfolio into it.
Hope this clarifies!
Thanks for the response and the effort you put in in sharing the information!
Could you please shed some light as to how the monies received will reach the stockholders?
My understanding was that the management plans to reinvest the proceeds along with some debt into the new businesses.
Are you assuming the stock price will increase by ~700 (fractional share of the settlement money)?
Beautifully summed up ! Just a doubt. FY 25 PAT is 265 Crs. At a P/E of 5 , the market cap comes at around 1325 Crs. On what basis did you value Kiri's existing business at 400 Crs?
Hey Sivaganesh Ji. FY25 PAT is not 265 Crs. You are seeing the consolidated view hence you're getting a wrong picture. The 265 Crs is purely an accounting entry which consolidates Dystar's share of PAT with Kiri. In reality, no cashflow/dividends is paid to Kiri. Kiri's standalone PAT is at 4 Crs for FY25.
Given this skewed PE, at the time of the post, we made a simple, conservative assumption of the standalone business being a measly 1 P/B. We might have grossly underestimated the Kiri's standalone business but it is unlikely to be below that. That caps our downside with optionalities for an higher upside.
Thank you very much for the clarification !
Liked it. One thing I quite did not understand - even if p/b is 1 but how did you arrive at book value of 400 cr without dystar.
Hey Swaroop Ji. Missed this comment. Including Dystar, Kiri's P/B is ~5. We made a simple, conservative assumption of the standalone business being a measly 1. We might have grossly underestimated the Kiri's standalone business but it is unlikely to be below that. That caps our downside with optionalities for an higher upside.
One question I have is the new copper plant does not come live till FY28 so in between cash received and plant go live what would be your strategy?
Thanks for your interest Mohit ji. As iterated in the article we are only interested in the likelihood of the money materializing. We are not interested in the future of the business.
Hope this clarifies.