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The company is expected to deliver robust revenue growth owing to the MoU for off-take arrangement with majority clientele. It is projected to reach a stable fixed asset turnover ratio of 3.5 which lies in higher range of industry average. The operating margins (Ebit & Ebitda) are anticipated to be around 10% & 12% respectively which is pretty good according to industry standards. Depreciation costs as a percentage of Gross Profit are supposed to be constant at 7% at par with the industry. Although initial finance costs will be high owing to high borrowings but are scheduled to consolidate by fy 30 to well below industry average of 3%. The company EPS is expected to grow at a CAGR north of 16% in the initial years but will coalesce at 12% in the long run. Average Book Value of the company is forecasted to be around ₹240 Cr. with a 5-year CAGR of 25%. Asset growth will be bolstered by strong high-quality cash growth. Negative CFO in the first year will be due to high capex.
Growth in %
0.30%
1 Year
2.09%
6 Year
10.80%
11 Year
Growth in %
0.12%
1 Year
3.82%
6 Year
25.26%
11 Year
Growth in %
0.12%
1 Year
3.82%
6 Year
25.26%
11 Year
Growth in %
-0.15%
1 Year
2.05%
6 Year
10.91%
11 Year
Growth in %
0.29%
1 Year
2.84%
6 Year
12.47%
11 Year
Growth in %
12.52%
1 Year
9.31%
4 Year
7.35%
8 Year
Growth in %
6.39%
1 Year
9.37%
4 Year
21.53%
6 Year
The company is proposed to have a steady decreasing D/E Ratio owing to increasing repayment of debt until FY 31 by which borrowings will be NIL. Interest-Coverage ratio is supposed to grow at a steady pace owing to strong quality of earnings which shall reflect boost in operating margins.
Operating Margins are predicted to be on the higher range of industry average at 10% in spite of higher assumptions of raw material cost (81%) and moderate contingency costs during the project (1.5%). This is due to locational advantage (next to steel plants), great proximity to end user (120 km from port), surplus availability of local feedstock (3x availability), low competition in domestic market, exclusive contract with end user.
Profitability ratios are expected to see steep rise after FY 25 with ROE peaking to 25% and above owing to increase in utilization rate and thereupon increase in earnings & cash flow. However, increase in Book Value driven by the increasing retained earnings with respect to y-0-y fixed earnings will put a damper in the growth of ROE in the distant future unless the company finds new channels for aggressive growth. The long-term ROE is predicted to be stable near 18% well above the industry average of 11 to 12%. The predicted ROCE is also envisaged to merge with industry average of 20% driven by strong quality of cash flow from operation. The company's marketing plan for overall 87 % of the end products are secured through long term contract to end customer or disinfectant unit of Vikrant group.