Great write up in simple language and bringing in different perspective to valuation thesis. Appreciate if you can specify any books on this subject for learning purpose.
Thank you for your appreciation. I have only read 2-3 books on the markets which helped me develop an initial framework, rest everything that I have learned including the above framework has been on the back of own research, experience and reflecting on what I have observed in the markets.
Time & work in the market will teach you 10x more than books.
Hi, what is your take on the latest development that the transaction between PI and Ind-Swift is cancelled. I understand that this is the nature of market/ M&A or you find any significant negative for PI Industries.
It is negative for sure. Firstly quantitatively the growth that was suppose to come from pharma business in a couple of quarters won't happen now. Secondly, qualitatively it is some bit negative as the acquisition timeline was already delayed when they acquired Ind-Swift and now cancelling the same is another bump. So it reflects badly on company's ability to carry out M&A effectively. But lets see what they have to say on this.
Love your thesis. I think how the optionality plays out is mostly dependent on the execution power of the management. So far, PI Industries management had shown great resilient power and hope they will deliver again with this acquisition. Great analysis Ankush. Thank you for sharing.
Yes, the theory is correct assuming that in this case, PI , will be able to generate a higher multiplier than 1x which the cash enjoys. There are many examples of this where the acquiring company commands a higher multiple (the very fact that a company commands a higher multiplier itself is a testimony about the robustness of the business model, management efficiency and ability to earn better than their CoC and the industry peers), like, HDFC, HUL, etc.
Excellent concept clarity on the subject...
Great write up in simple language and bringing in different perspective to valuation thesis. Appreciate if you can specify any books on this subject for learning purpose.
Thank you for your appreciation. I have only read 2-3 books on the markets which helped me develop an initial framework, rest everything that I have learned including the above framework has been on the back of own research, experience and reflecting on what I have observed in the markets.
Time & work in the market will teach you 10x more than books.
Hi, what is your take on the latest development that the transaction between PI and Ind-Swift is cancelled. I understand that this is the nature of market/ M&A or you find any significant negative for PI Industries.
It is negative for sure. Firstly quantitatively the growth that was suppose to come from pharma business in a couple of quarters won't happen now. Secondly, qualitatively it is some bit negative as the acquisition timeline was already delayed when they acquired Ind-Swift and now cancelling the same is another bump. So it reflects badly on company's ability to carry out M&A effectively. But lets see what they have to say on this.
Love your thesis. I think how the optionality plays out is mostly dependent on the execution power of the management. So far, PI Industries management had shown great resilient power and hope they will deliver again with this acquisition. Great analysis Ankush. Thank you for sharing.
Yes, the theory is correct assuming that in this case, PI , will be able to generate a higher multiplier than 1x which the cash enjoys. There are many examples of this where the acquiring company commands a higher multiple (the very fact that a company commands a higher multiplier itself is a testimony about the robustness of the business model, management efficiency and ability to earn better than their CoC and the industry peers), like, HDFC, HUL, etc.