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Esab India

showingreality
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5 Messages

esab india is one of the three MNC companies that I am really bullish on. The company has gone through a tough time in the last 5-6 years due to almost no capex activity however during this period the company kept becoming more operationally efficient and has done through restructuring by reducing work force, offering them VRS and moving some of their factory operations. All this effort is now reaping results with the turn over of the company for FY 2019 being the highest ever and profitability also improving. The company s stock price is around 880 and with an EPS of around 37 the PE works out to be about 24-25. Given that the company has become more operationally efficient, it has started growing and the capex cycling is reviving with green shoots clearly visible, this is a great time to jump on to this company and sit back and watch this company grow at 15-20% per annum for the next 3-4 years. Since it is an MNC corporate governance concerns are minimal and the recent dividend is also a good example of company sharing rewards with small shareholders. Also, given the large dividend payout the company s metrics such as ROCE will improve. An MNC growing at 15-20% with Net profit margin of almost 10% and excellent return metrics cannot continue to trade at 25 PE. The stock can reach 1500 in 3 years.

12.17 PM May 10th
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