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.
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.
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.